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TD Canada Trust is Canada’s second-largest bank by market capitalization (which is currently at $156.4 billion), regularly jockeying for the top spot with the Royal Bank of Canada (RBC). The bank boasts more than 22 million customers worldwide, including more than 11 million in Canada and 6.5 million in the U.S. In fact, according to a report from Forbes, TD is ranked as the 19th largest bank in the world.
Headquartered in Toronto, TD was born out of a 1955 merger between the Bank of Toronto, founded in 1855, and the Dominion Bank, founded in 1869. Since then, TD gained a wealth management division and acquired Canada Trust in 2000, along with the U.S. entities such as Banknorth and Commerce Bancorp.
TD is also one of the largest mortgage providers in Canada, selling mortgages primarily through its branches and mortgage specialists. Like most of Canada’s big banks, TD is a major participant in the broker channel, with roughly 10% market share among broker lenders. It offers reasonably competitive rates to well-qualified borrowers – thanks in large part to its sheer scale and low funding costs.
Rates are based on a home value of $400,000
Rates are based on a home value of $400,000
Rates are based on a home value of $400,000
All of Canada’s big banks, including TD, advertise three types of rates:
When bargaining, you should always enter negotiations armed with data. Thanks to rate comparison sites like RATESDOTCA, it’s now easier than ever to see what other rates are available in the marketplace. In terms of rate features, the majority of TD's mortgage rates include a standard 120-day rate hold and flexible 15% lump sum and 100% payment increase prepayment privileges.
TD’s rates are based on a standard 25-year amortization, though uninsured rates can be amortized up to 30 years, typically for a rate premium of about 0.10%. The bank also offers standard payment frequency options, including monthly, rapid semi-monthly, semi-monthly, rapid bi-weekly, bi-weekly, rapid weekly and weekly payments.
TD’s selection of mortgage products isn’t much different from what you will find at any of the other big banks. Its most popular mortgage product – like most other big lenders – is the 5-year fixed. Many borrowers prefer fixed rates due to the payment stability they offer since you know exactly what your monthly payment will be for the duration of the mortgage term.
If you’re looking for a rate that offers more repayment flexibility, TD also offers a 1-year fixed open mortgage, allowing you to repay the principal at any time without penalty. Given its higher rate – typically around 150 basis points more than TD’s other fixed rates – this should only be considered when you need short-term mortgage financing in a rising rate environment and will be repaying the loan in less than six to nine months.
For those who want to take advantage of a falling prime rate (which is the foundation of variable-rate pricing), TD Canada features several floating rate mortgage products, also known as variable rate mortgages.
The bank offers both 5-year closed and open variable-rate mortgages, and lets you lock in – or 'convert' – to a fixed rate at any time during the term. But be forewarned that there’s a price to pay for that security, particularly when converting from a floating rate. In our experience, the bank is unlikely to offer you its most competitive fixed rate when converting from a fixed to a variable.
One of the positive features of TD’s floating rates is the fact the bank is a fixed-payment variable rate lender (not all are). This means that rather than having your monthly mortgage payment fluctuate as prime rate rises or falls, the interest portion of your payment will fluctuate rather than the payment itself. That makes it a good floating-rate option for people worried about the chance of higher rates in the future. (Note: If the prime rate rises so much that you’re not covering your interest due each month, TD reserves the right to increase the payment, but rates would have to climb a lot for this to happen.)
One element that many don’t like about TD’s variable rates is that they compound monthly. On a standard $300,000 mortgage that costs you about $257 more interest over five years, versus semi-annual compounding.
Another concern some have is TD’s past appetite for increasing prime rate even when the Bank of Canada doesn’t move. It did this in 2016, unilaterally raising its 'mortgage prime rate' 15 basis points above the standard prime rate, causing thousands of variable-rate holders to pay more.
TD's advertised special offer 5-year fixed and variable rates
*As of March 7, 2023
| Year | 5-yr fixed | 5-yr variable |
|---|---|---|
| 2023* | 5.54% | 6.45% |
| 2022 | 3.79% | 2.05% |
| 2020 | 2.97% | 2.35% |
| 2019 | 3.24% | 3.35% |
| 2018 | 3.89% | 3.30% |
| 2017 | 3.39% | 3.20% |
| 2016 | 2.94% | 2.95% |
| 2015 | 2.89% | 2.95% |
Both five-year fixed and five-year variable rates were significantly higher in the first quarter of 2023 than they were during the same period in 2022, at 5.54% and 6.45%, respectively.
The reason for the increases is the Bank of Canada’s ongoing battle with inflation, which has been nearing 40-year highs. In January 25, 2023, the Bank of Canada raised its overnight lending rate by 0.25% to 4.50%. This isn’t the first such rate hike either, as the Bank of Canada has been steadily raising its rates since March of 2022, back when the target was still at only 0.50%. Unfortunately, this has impacted every major bank in Canada.
The good news is that there has been a slight drop in inflation, so there’s definitely light at the end of the tunnel. However, it’s too early to judge if the storm has truly passed. After all, the Bank of Canada is yet to rule out further rate hikes.
If you’re looking to buy a home, the best course of action is to wait and see. In the meantime, keep your eyes peeled for the best current mortgage rates on RATESDOTCA.
TD’s Home Equity FlexLine makes it easy to access the equity you’ve built up in your home to cover major expenses such as renovations, investments, your children’s education, or a second property. TD’s FlexLine HELOC is among the bank’s more popular products due to its flexibility, as the name suggests.
The FlexLine can be divided into two portions:
A re-advanceable mortgage like TD’s FlexLine can be invaluable for those needing quick access to their home’s equity for a wide variety of uses, including paying for a child’s post-secondary education, home improvements and renovations, starting a business, investing, or even as an emergency fund, which could effectively replace the need to have a large amount of cash sitting around.
TD’s Flexline is currently only available through the bank’s mortgage specialists and not the mortgage broker channel. Though, there had been rumours that it might eventually become available for those using brokers.
TD's advertised special offer HELOC rates
*As of January 27, 2023
| Year | Rates |
|---|---|
| 2023* | 6.90% |
| 2022 | 3.70% |
| 2020 | 2.95% |
| 2019 | 4.45% |
| 2018 | 4.45% |
| 2017 | 3.70% |
| 2016 | 3.20% |
| 2015 | 3.20% |
Despite being a great alternative to a traditional mortgage, TD HELOC is not immune to the recent interest rate hikes. In fact, its rates seem to be faring worse in 2023 than traditional TD mortgage rates, sitting at 6.90%.
The Bank of Canada has been steadily increasing its target overnight rates since early 2022 to combat the rising inflation. The rates went from 0.50% in March of 2022 up to 4.50% by the end of January of 2023.
While this is certainly not great news, inflation has experienced a slight drop recently, which may indicate that the constant rate increases are over. That said, the Bank of Canada has not ruled out the possibility of increasing its rates further, so it remains to be seen how things will play out in the near future.
Get started now and compare today's mortgage rates from TD Bank!
There are a number of benefits of getting your mortgage from TD. Here are some of them:
All banks have some blemishes. Here are some of the potential disadvantages of getting your mortgage from TD:
If you’re in the market for a TD-branded mortgage, you generally have four ways to go about getting one:
-A TD mortgage specialist
-TD’s call centre
-Online
-Through the mortgage broker channel
For existing TD Bank clients wanting to renew an existing mortgage, you’ll have to call the bank and negotiate your renewal rate or accept an online renewal offer. For new clients, you can either use a mortgage broker, contact an in-house TD mortgage specialist or go online to TD’s website.
Using a TD mortgage specialist
Despite TD Bank participating in the mortgage broker channel, a majority of the bank’s mortgages are sold through its in-house team of mortgage specialists who work off of commission. What you may not realize is, similar to a mortgage broker, TD’s mortgage specialists can buy down your rate by forgoing a portion of their commission. It’s important to note that mortgage specialists often only serve new bank customers, and not clients wanting to renew their existing mortgage.
Online
TD offers a fast Digital Mortgage application option, often with better rates than its standard advertised specials. Unfortunately, at the time of this being written, you have to submit to a credit check to get a rate quote. Competitors like Scotiabank quote aggressive online rates without that level of commitment. TD bank advertises online pre-approvals in as little as five minutes. Live mortgage representatives are available to help customers through the process.
TD-approved mortgage brokers
There are only two big banks in Canada that offer mortgages nationwide through the broker channel, and TD Bank is one of them. The latest available data showed TD with roughly 10% of the market share in the broker market.
While TD’s in-house mortgage specialists and branch reps can usually offer clients the same mortgage rates as brokers, brokers have an advantage in that they can use some of their commission to buy down rates (While mortgage specialists technically can buydown rates for their clients, deep discount brokers often buy down more.). If you’re set on a mortgage from TD, it may be worthwhile shopping the bank against a TD-approved broker to see if they can offer you a lower rate after buy-down.
If you currently have a mortgage with another lender and want to switch to a TD mortgage, the bank’s mortgage specialists are happy to assist.
While you can switch your existing mortgage to TD Bank at any time, TD recommends exploring your options 120 days before your maturity date. TD’s mortgage specialists will then assist to help you find an appropriate term based on your financial and life goals.
Once you choose the mortgage product you want, you can apply online and TD’s mortgage specialists will guide you through the rest of the process.
Depends on why you want to do it! If you want to keep paying your mortgage, but not with TD – because maybe another bank offers you a lower mortgage rate – you can just switch providers. Like other banks, however, TD may charge you a prepayment penalty, if you happen to get out of your mortgage before the end of your term. So, be sure to review your mortgage agreement with TD before making any decisions.
If you’re looking to sell your current home to buy another one, you can port your mortgage without a pre-payment charge or too many changes to your current agreement.
If, however, you want to get out of a mortgage because you can’t afford your payments, consider some of the following alternatives before committing to such a drastic move:
Finally, if none of the alternatives work, here are some ways to fully get out of your mortgage:
While TD Bank’s pre-approval process used to be more cumbersome compared to other big banks (it required a face-to-face meeting to complete the application), the coronavirus pandemic in early 2020 accelerated the bank’ adoption of a fully digital process.
A mortgage pre-approval from TD is good for 120 days and lets you know how big of a mortgage you will qualify for, barring any drastic changes to your financial health.
A pre-approval specifies the term, interest and mortgage amount, but typically comes with a number of conditions attached.
Should interest rates fall after you’ve received a pre-approval, you can ask TD to have your pre-approved interest rate adjusted to match current rates.
Your best chance at scoring the best TD Bank mortgage rate is through negotiating. Keep in mind that big banks, TD included, don’t typically advertise their best rates. There’s almost always room to negotiate, particularly if you’re a well-qualified borrower and have a long banking history with the bank.
To prepare for your negotiation, make sure to compare mortgage rates that other banks and non-bank lenders are offering. That way you’re fully informed. Just make sure that those rates are for comparable terms, with similar features and conditions—in other words, you should be comparing apples to apples.
In the event your TD mortgage rep refuses to play ball in the negotiations, don’t be afraid to try a different rep who may quote you a better rate. Remember, even a small rate difference on your mortgage can work out to hundreds or even thousands of dollars in savings over the term. Barring that, you can threaten to take your business to another lender offering a lower rate (assuming you’re well-qualified).
Remember that bank specialists and their employers want your business and are usually willing to come down on rate in order to secure it.
TD Bank, together with the other big six banks, helps set the country’s benchmark prime rate. That rate is based on a mode average of the banks’ prime rates.
TD is rarely the first bank to announce its prime rate following a Bank of Canada interest rate cut, although it typically follows the other big banks in lockstep. The bank’s prime rate is used to set interest rate pricing on Home Equity Lines of Credit (HELOCs).
For mortgages, however, TD is unique in that it has a separate (and higher) “mortgage prime rate.” As of this writing, TD’s mortgage prime rate is 15 basis points higher than the prime rate of its competitors.
The bank has faced much criticism from its customers ever since it hiked its prime rate independent of a Bank of Canada rate move in November 2016. The end result was TD’s mortgage customers paying a higher rate for variable-rate mortgages compared to other big bank variable-rate customers.
You can get them from a different mortgage lender, of course! All you need to do is shop around until you find the one that suits you best. The easiest way to do so is by consulting a rate comparison site like RATESDOTCA, which will show you the available rates in seconds.
You can search online for other banks and mortgage companies to find out their rates, then put them into a spreadsheet and manually compare them yourself.
Another option is to contact a mortgage broker, who will work with you to get you the lowest mortgage rate possible.
Both options would require some effort on your part. The easiest option is to instead use a comparison site like RATESDOTCA to look up the available rates immediately.
Buying a home is an enormous financial decision for most buyers, but it can be even more overwhelming for those who are new to the country.
Like many other lenders, TD offers specific banking options for newcomers to Canada, including mortgages.
To be eligible for TD’s New to Canada banking package, applicants must:
-Be a permanent or temporary resident of Canada for at least five years
-Have never held a TD chequing account
-Supply proof of status using a Permanent Resident Card or Temporary Permit
-Be at least the age of majority in your respective province
TD’s services are also offered in a variety of languages to assist those new to the country.
While it may seem like a good idea to break your mortgage early and change lenders, TD makes you pay for that privilege. If you prepay more than your annual privileges allow, penalties apply.
On variable mortgages, the penalty is three months’ interest.
On fixed mortgages, the penalty is the greater of three months’ interest or the interest rate differential (IRD). Big bank IRD penalties are notorious for being in the thousands, often tens of thousands, of dollars. The more short-term posted rates fall, the bigger they usually get.
Paying out a closed TD mortgage before maturity also entails a discharge/assignment fee in most provinces (e.g., $260 in Ontario and $75 in B.C.) and in some cases a mortgage reinvestment fee of hundreds of dollars.
Many borrowers fret renewal time, but the process need not be complicated. The best advice for renewing a mortgage is to give yourself plenty of time before the mortgage comes up for renewal.
If your lender doesn’t reach out ahead of time, you should contact them roughly 60 to 120 days before your renewal deadline, which will give you time to shop around if the rates your bank offers you are less than desirable.
Remember that you should always negotiate the first rate your bank offers you. In nearly all cases you should not accept the first rate offered since they almost always come down on the rate if you can do some sweet talking.
If push comes to shove and you threaten to pull your business, make sure you’re prepared to follow through. If you choose to switch your mortgage to a new lender, you will be subjected to the mortgage stress test, so you’ll want to make sure you’re able to qualify. If not, you will be forced to renew at your existing lender…on its terms.
| Year | Rates |
|---|---|
| January 2023 | 6.70% |
| December 2022 | 6.45% |
| October 2022 | 5.95% |
| September 2022 | 5.45% |
| July 2022 | 4.70% |
| June 2022 | 3.70% |
| April 2022 | 3.20% |
| March 2020 | 2.60% |
| March 2020 | 3.10 % |
| March 2020 | 3.60% |
| October 2018 | 4.10% |
| July 2018 | 3.85% |
| January 2018 | 3.60% |
| September 2017 | 3.35% |
| July 2017 | 3.10 % |
| November 2016 | 2.85% |
| July 2015 | 2.70% |
TD Bank’s prime rate is the highest it’s been in years, sitting at 6.70%. Since March of 2022, the Bank of Canada has been steadily increasing its rates, which peaked in January of 2023, at 4.50%. The reason for this is the recent spike in inflation.
If you look at TD’s gradual rate increase, it mirrors the Bank of Canada’s pattern perfectly. RBC’s prime rate, for instance, is also at 6.70%. The same applies to the other major banks in Canada. They’re all following the same trajectory.
So, what does this mean for the future? It appears that inflation is slowing down, though this is hardly a guarantee that more rate increases won’t happen. That said, there’s definitely cause for optimism, so hopefully, we’ll see those rates go down soon.
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