The Bank of Nova Scotia (also known as Scotiabank or “Scotia” for short) is ranked as Canada's third-largest bank by market capitalization. The firm is a leading provider of mortgage rates and one of the most competitive big banks.
Scotiabank counts more than 10 million customers in Canada and more than 950 branch locations. Worldwide, the company serves more than 25 million customers. The company was founded in 1832 in Halifax, Nova Scotia, but later moved its headquarters to Toronto in 1900. Scotia has billed itself “Canada’s most international bank” due to its large presence in Latin America and the Caribbean.
Scotiabank is one of Canada’s major mortgage providers, and the largest lender in Canada’s mortgage broker channel. Most of Scotia’s mortgages are sold through its Home Financing Advisors, who provide personalized mortgage advice to clients at their homes, at work or on the go. The company’s marquee mortgage product is the Scotia STEP, a readvanceable mortgage and line of credit in one.
Most Scotia mortgages include two key features:
Most of Scotiabank's mortgage rates are based on a 25-year amortization, but 30-years is available with no surcharge, unlike most of the other big banks.
There are three types of mortgage rates that big banks quote: posted rates, special offer rates and discretionary rates. In the case of Scotiabank, there’s also a fourth and fifth category: broker rates (which are obtained by those using a mortgage broker) and online-only rates (via Scotia’s eHOME division).
There are three standard types of mortgages offered by Canada’s big banks, including Scotia. Those are: fixed, variable and hybrid.
Historically, Canadians’ preferred term has been the 5-year fixed term. Scotia clients are no exception.
Most of Scotiabank's fixed mortgage rates come with a 120-day rate hold, a 15% annual lump-sum prepayment option and a 15% annual payment increase option. If you’re obtaining your Scotia mortgage rate through a broker, they can often get you 20% prepayment privileges upon request.
If you have a fixed-rate mortgage and prepay more than the allowable amount, you’ll potentially face a steep prepayment penalty (more on that below). And in the event you’re paying out the mortgage, you'll also be dinged a discharge/assignment fee of up to $270, depending on your province (as of summer 2018).
While the 5-year fixed rate may be Canada’s favourite, the 5-year variable is the second-most requested term.
One of the benefits of Scotiabank’s Flex Value variable rate is that you can choose a fixed-payment option. This means that even if prime rate rises or falls, your monthly mortgage payment remains the same over the term. Instead, the amount that goes to interest rises or falls depending on which way prime rate moves. If prime rate climbs, for example, the portion going to cover interest will rise while the amount going towards principal decreases.
One of the benefits of a variable rate—aside from being able to take advantage of a historically low prime rate—is that floating rates entail a prepayment penalty of just three months’ interest. This can be far less than the cost to break a fixed rate, which often entails five-digit penalties (more on prepayment penalties below).
Scotia’s Value Mortgage is a less-frills version of the bank’s standard five-year fixed.
Other things to know about the Value Mortgage:
Aside from its standard mortgage products, Scotia offers a variety of specialized mortgage options. Here are some of them:
The Scotiabank Total Equity Plan (STEP) is the bank’s marquis lending product and a great option for homebuyers who want quick access to the equity from their home.
This is a readvanceable mortgage product that allows homeowners to access up to 80% of the equity in their home. The mortgage can also be split into up to three types of mortgages and terms, including fixed and variable rates.
Scotia allows up to 65% of the mortgage to be in a revolving line of credit, meaning you only have to pay the interest each month. You can repay the outstanding amount as quickly as you want without penalty.
The remaining 15% can be borrowed in the form of an amortizing mortgage portion, which means payments are scheduled and include both interest cost and principal (similar to a regular mortgage).
The STEP can also be registered for the full home value, allowing you to increase your credit limit later without using a lawyer. That saves you legal fees. (A new application is required each time you ask for a higher credit limit.)
Customers find STEPs useful for a range of purposes, including renovations, business capital, emergencies and leveraged investing (using strategies like the Smith Manoeuvre).
These were the bank’s standard rates. They applied to lines of credit of $50,000 or more.
There are several ways to obtain a mortgage from Scotiabank. Here are more details about some of those channels
Launched in 2019, eHOME is Scotiabank’s digital mortgage offering. With it, Scotia became the first Big 6 bank to display its discounted rates online (without the need to haggle with a mortgage advisor). You must start an application to have access to the rates, but you don’t need to submit to a credit check.
Scotia boasts fast closing times through eHOME—nearly as quickly as you’re able to get your documents together and arrange your lawyer. In many cases, a physical appraisal isn’t even required as appraisals—particularly in the post-COVID world—can be done electronically.
As of June 2020, eHOME is only for purchases and not available in Quebec. This will change eventually. Additionally, mortgage applications can only be submitted with a maximum of two applicants on any one deal.
For more information, visit Scotiabank’s eHOME portal.
A large percentage of Scotia’s mortgages are sold through its team of Home Financing Advisors. These commissioned salespeople operate similar to a mortgage broker, often meeting their clients at home, work or a public place, with most of their subsequent communications taking place electronically.
Like a mortgage broker, Scotia’s mortgage advisors can also forfeit part of their commission and buy down a rate to offer the client an even better deal. Remember that when dealing with a Scotia Home Financing Advisor, particularly if you find their initial rate offer high.
Other points to keep in mind:
While mortgage brokers can get you a Scotia mortgage rate similar to the bank’s team of Home Financing Advisors, a few things differentiate the two.
While both can use their commission to buy down those rates, this is a practice more commonly associated with brokers, since many of them publicly advertise bought-down rates.
Scotiabank is one of only three big banks that participate directly in the broker channel. It dominates market share among broker lenders with approximately a quarter of the market (as of year-end 2019).
Virtually all mortgage brokers listed on RATESDOTCA can also help you get a competitively priced Scotia mortgage.
If you’ve been reading the sections above, you’ll know that Scotiabank’s best mortgage rates are often not advertised on its website. Scotia’s lowest rates are sometimes reserved for well-qualified buyers who are willing to negotiate.
Even though dealing with a big bank can be intimidating, remember that they always have room to negotiate if they really want your business. To ensure you’re a client whose business they’ll fight for, be sure to maintain a high credit score and clean credit history.
It also helps if you’re seeking a large mortgage, like $400,000+. Just remember, your finances and debt obligations must be able to easily support such a mortgage.
Before attempting to negotiate Scotiabank’s rate offer, be sure to do your research (using this site, for example). Step one is to inform yourself of the rates currently being offered by other lenders for a comparable mortgage. This information can be used as leverage during your negotiations, but keep in mind Scotia may only choose to match a rate quote from another big bank as opposed to a smaller brokerage or credit union.
While it may seem intuitive that clients who have been loyal to their bank would be rewarded with lower mortgage rates, it sometimes doesn’t work that way.
In fact, existing big-bank mortgage clients are often offered inferior rates compared to those offered to new clients. This is largely because your bank knows most clients are “sticky.” In other words, they usually accept a slightly higher rate to avoid spending time and effort to seek a new lender.
Knowing this, you should never accept the first rate you’re offered at renewal, whether it’s from Scotiabank or any other lender. Let the bank know you plan to explore other lenders unless they sharpen their pencils. Since this process can be time-consuming, be sure to get started no later than 60 to 120 days before your mortgage is up for renewal.
For mortgage renewal tips and a gameplan on how to deal with your lender’s mortgage rate offer, check out this story: Prepare for Your Lender’s Mortgage Renewal ‘Song and Dance’.
All this said, Scotiabank is notorious for contacting borrowers six months before renewal with “special” early renewal offers. Sometimes they’re great deals, sometimes they’re not. You have to compare to the market to know.
A mortgage from a big bank isn’t everyone’s cup of tea, but there are some of advantages of having your mortgage with Scotiabank:
As with any lender, there are sure to be some downsides. Here are some disadvantages of getting a mortgage from Scotiabank:
As one of the country’s Big 6 banks, Scotiabank’s prime rate is used in the Bank of Canada’s formula for setting the benchmark prime rate. Virtually all floating-rate mortgages and lines of credit are priced using the prime rate.
Prime rate typically changes only when the Bank of Canada adjusts its overnight target rate. While Scotia is rarely the first bank to announce its prime rate changes following a Bank of Canada rate move, it nearly always follows the movements of the other big banks.
One of the biggest drawbacks of getting your mortgage from a big bank is the high penalty often charged when breaking a fixed-rate mortgage.
Large penalties aren’t usually an issue for variable-rate mortgages, since their penalties entails three months’ interest. But, for fixed rates, the penalty is calculated based on the greater of:
Unlike some of the other lenders, Scotia is fairly transparent about its prepayment charges and how they are calculated. They even have a webpage dedicated to the topic.
To learn more about breaking a Scotiabank mortgage, visit the bank’s guide: What You Need to Know About Mortgages & Mortgage Prepayment Charges.