Find the Best Fixed Mortgage Rates in Canada

Aside from obvious upfront costs such as your down payment and ongoing monthly mortgage payments, there are a few other closing costs you should be prepared for when buying a home.

• Land transfer tax: This is often one of the largest upfront expenses when purchasing a home. Most property purchases in Canada are subject to a land transfer tax, with the exception of Alberta and Saskatchewan. The amount varies by jurisdiction. You can use our Land Transfer Tax Calculator to calculate this cost for homes in your area.
• Home insurance: Also known as property insurance, this covers your home in the event of unexpected damages, such as flood or fire. While home insurance isn’t mandatory in Canada, it’s strongly recommended, as most lenders won’t consider a mortgage without proof of home insurance. Compare home insurance quotes with us to find the best deal.
• Property taxes and utilities: These are the ongoing costs of maintaining your home. The amount varies by municipality and utility provider.
• Home renovations/repairs: You may love nearly every aspect of your new home, except potentially a dated bathroom, awful room colours or unfinished basement, just to name a few examples. Your new property may also require some minor (or not-so-minor) repairs before you can truly settle in. Budget carefully for these expenses, as renovation costs can climb quickly. If you’re renovating for accessibility reasons, you might be eligible for the Home Accessibility Tax Credit (HATC) on qualifying expenses or goods made while renovating.
• Furnishings: This is a cost that is often overlooked by buyers, and can be most impactful for first-time buyers who suddenly find themselves with an entire home or condo that needs to be filled with furniture, appliances, window coverings, etc.

Your credit score can be the most important factor in determining whether you can get a pre-approval, and for how much. Lenders want to know that you will repay your debt, so they consider the following factors: payment history, outstanding debt, credit history age, applying for new credit too often and the type of debt you are looking for (long-term debt vs. short-term debt).

Credit scores range from 300 to 900, with 750 being in the “excellent” category. Most lenders require a score between at least the 600-700, but the higher your score, the lower the interest rate you'll be able to negotiate.

Anyone obtaining a mortgage must prove they can handle payments at a higher rate than their actual mortgage rate, in the event rates rise in the future.

There are currently two variations of the stress test in effect, depending on whether your mortgage is default insured or uninsured. Both are based on the benchmark qualifying rate:

• Default-insured mortgages (those with less than 20% down payments) are stress-tested on the greater of your contract rate or the Bank of Canada's 5-year fixed posted rate (a.k.a. benchmark rate).
• Uninsured mortgages (those with 20%+ down payment) are stress-tested on the higher of your contract rate plus 200 bps, or the benchmark rate.

Prime, or the prime lending rate, is the interest rate Canada's major banks use when pricing variable mortgages and lines of credit. Each bank sets its own prime rate, but the country's Big 6 banks usually have the same rate, with the exception of TD Bank.

Prime rate is directly influenced by the Bank of Canada’s (BoC) overnight lending rate. If the BoC raises or lowers its target overnight rate, a change in prime rate nearly always occurs in the following days.

The answer to this depends solely on your own financial preferences. Do you want interest rates that stays the same throughout your term, or one that fluctuates whenever the Bank of Canada changes its key lending rate? Will you sleep more soundly knowing your mortgage rate won't change over the course of your mortgage term, or are you willing to take some risk in exchange for potential interest savings?

When making this decision, it's important to consider current interest rate forecasts and market conditions. While it's impossible to predict the future with any certainty, economic conditions and even the Bank of Canada can provide clues as to where interest rates may be headed.

In the long run, homeowners can end up paying extra for a fixed rate – but this isn’t always the case. The spread between fixed and variable rates can narrow significantly. Or, as is the case as of late 2020, numerous fixed-rate mortgages can be found at a discount to variable rates.