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Rob McLister: Today’s lowest national insured and uninsured mortgage rates, updated daily
Published Oct 24, 2024 • Last updated 12 hours ago • 17 minute read
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Bookmark this page to find the lowest national mortgage rates in Canada. Photo by Getty Images
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Canada’s mortgage market is changing all the time. Bookmark this page to find the top national insured and uninsured mortgage rates, updated daily, based on data from MortgageLogic.news. Postmedia and Imaginative.Online Inc., parent of MortgageLogic.news, are compensated by certain mortgage providers when you click on their links in the charts.
Can’t view the charts on this page? Try clicking here
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Looking to save on your mortgage? We’re here to help
On the hunt for a budget-friendly mortgage? You’ve just struck gold. This is Canada’s one and only compilation of mortgage rates that aims to showcase top-notch pricing from every mainstream lender and rate aggregator — provided their rates pass muster.
This vast array of options is key because having a buffet of reputable lenders at one’s disposal improves the odds of landing a killer deal.
But if you want the lowest overall borrowing cost, the quest doesn’t end with the headline rate. Below, you’ll find the ultimate playbook for negotiating the lowest overall borrowing costs in Canada.
How to qualify for the lowest mortgage rates
First off, it’s essential to understand that the lowest mortgage rates require default insurance. Why? Because mortgage insurance is like a safety net for lenders, making loans less risky and, therefore, cheaper to offer.
Most new mortgages with less than a 20 per cent down payment require this insurance by law.
Now, we get that it might seem backwards to put less down and get a better rate. However, insured mortgages actually cut down costs and risks for lenders compared to uninsured financing.
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Quick tip: If you switch lenders at maturity and don’t increase your borrowing or amortization, make sure the new lender keeps your insurance in force, as that could qualify you for lower rates today and in the future.
Besides borrower–paid default insurance, lender-paid insured mortgages (a.k.a. “insurable” mortgages) are the next best way to get lower rates.
Insurable rates apply to conventional mortgages sporting at least 20 per cent equity, an amortization of 25 years or less, and an owner-occupied home that was purchased for less than $1 million. Insurable pricing can often be 10-25 basis points (bps) less than uninsured rates. (One basis point is equal to 0.01 per cent or 1/100th of a per cent.)
Quick tip: A 10 bps rate savings keeps over $470 in your pocket over five years, for every $100,000 borrowed with a 25-year amortization.
Insurance aside, to qualify for the best prime mortgage rates, you’ll typically need:
- A 720-plus credit score. Some lenders allow lower scores — or require higher scores — but this is a good rule of thumb
No derogatories on your credit report in the last few years, such as missed payments - Monthly housing costs that are less than 39 per cent of your gross monthly income. Housing costs include mortgage payments, heating cost, property taxes and half of any condo fees
- A total monthly debt load that is no more than 44 per cent of your gross monthly income. Your monthly debt load includes housing costs from all owned properties, loan payments, alimony, child support and three per cent of any credit card or unsecured credit line balances
- Provable income. For example, a job letter and pay stub, and/or tax documentation from the past two years if self-employed, or if you’re using bonus, contract, commission or part-time income
- A closing date within the lender’s rate hold period. Sometimes the lowest rates require a close within 30 days, for example
- A marketable home. Rural or quirky homes that are harder to sell may not qualify for the lowest rates
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Quick tip: Federally-regulated lenders must calculate your debt ratios using a stress test rate, which is 200 bps above your actual contract rate, or 5.25 per cent, whichever is higher. This hurdle often makes it harder to qualify for some terms than others. For folks with high debt-to-income ratios, the stress test often dictates what rate and term they’ll get approved for.
Update: Effective Nov. 21, 2024, the government’s stress test no longer applies when borrowers switch lenders, regardless of whether they have an insured or uninsured mortgage. This loophole requires that the mortgage amount and amortization remain the same.
Here’s what you need to know about rate surcharges
If you’re a non-prime borrower who needs more lender flexibility, prepare to open your wallet wider — much wider. Non-prime borrowers include those who have:
- Bad credit or no credit
- Hard-to-prove income
- High debt ratios
- Offshore residency
- Unconventional income sources
- Unusual properties
These factors can cost you at least 100-200 bps more than the best rates. Plus, don’t forget the cherry on top: non-prime mortgages typically entail lender and/or broker fees of one per cent of the mortgage amount, or more — sometimes much more depending on how risky your application is.
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Lenders also apply surcharges to offset extra risk. Here are some common rate premiums:
- Amortizations over 25 years (if uninsured): add 10 bps
- Amortizations over 30 years (if uninsured): add 100 bps or more, plus lender fees
- Non-owner occupied rental properties: add 10-25 bps
- Vacation homes: add 10-25 bps
- Pre-approvals: add 0-25 bps
Pre-approvals often cost more. That’s because most pre-approvals don’t end up closing, leaving the lender with hedging costs and no revenue.
Quick tip: Only non-prime lenders offer amortizations over 30 years. However, if you get a home equity line of credit (HELOC), the amortization on its low interest-only monthly payments is technically infinite — assuming you don’t make principal payments.
A rate-negotiation survival guide
Saving as much as possible on your mortgage rate takes legwork. Here’s an eight-step survival guide for braving the negotiation jungle:
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- Use the criteria above to confirm if you’re a prime borrower who qualifies for the best rates.
- Figure out the best mortgage term for your needs. Get professional advice if you aren’t sure.
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Quick tip: Over the long run, shorter terms and variable rates have historically saved borrowers more than longer-term rates, like a five-year fixed. Long-term fixed rates typically do better when the prime rate is well-below its five-year average. Short and variable rates tend to outperform when the prime rate is above its five-year average and flattening out.
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- Once you decide on the appropriate term, confirm the type of mortgage you need: A) default-insured; B) insurable; or C) uninsurable.
- Shortlist a few rates that look promising and call the provider directly for the pros and cons. Grill them using the “Mortgage gotchas” checklist below.
- Call an experienced high-volume broker to get their take on the rates you’ve found. See if they can offer better. And, if you’re renewing your mortgage and don’t mind your current lender, ask it to beat the rates you found elsewhere. Information is power, so it often pays to call one or two brokers for a second opinion, even if you plan to stay with your existing lender.
Quick tip: For those who haven’t been around the block in the mortgage business, it’s easy to make costly mistakes. Choose a mortgage adviser who’s been swimming with the lending sharks long enough to avoid getting chomped — preferably someone who’s been licensed for at least two to five years. Volume helps too. High-volume brokers often get better service and buying power from lenders. Look for a full-time broker who’s closed at least $10 million to $25 million of mortgages in the past year.
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- Be sure that a lender’s terms and flexibility match your five-year plan. For example, if you might need to move and get a bigger mortgage before your existing mortgage matures, be sure the lender lets you do that at its best rates and with no penalty. Be pleasant but firm with your lender at renewal. Politely remind them that they don’t have to pay compensation to a broker or employee if you renew. That leaves them more profit margin versus a new customer, plus they have the security of knowing that you pay as agreed. For these reasons, they should be able to beat the rates that new borrowers get.
- Figure out which option(s) present the lowest likely overall cost over your expected borrowing timeframe.
- Apply and lock in your chosen rate to protect against rate increases before closing. If the mortgage has a variable rate, lenders typically allow you to lock in the discount from their prime rate, but they won’t let you lock in the prime rate itself.
Quick tip: No lender can quote a rate with certainty until you apply. They need to see your credit, income, down payment, monthly obligations and property information to confirm they meet minimum guidelines. Applications do not bind you to the lender, however. In most cases, you can get out of a deal anytime before closing, even if you’ve signed the approval (a.k.a. “mortgage commitment”). That said, contact a real estate lawyer if you have doubts about the wording in your mortgage agreement.
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Don’t bother trying to negotiate specific wording in the lender’s mortgage contract. Big lenders have their contracts locked down. Unless it’s a mom-and-pop private lender, you have virtually no chance of convincing a lender to change its ironclad legalese. Your best bet is to read it, understand it and if you don’t like it, walk away.
‘Mortgage gotchas’ to keep your broker or lender on their toes
There are so many ways a lower rate can cost you more in the long run. If a lender or broker is trying to sell you on a rate, here are 14 questions to ask them:
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- How long is the rate guarantee good for? Make sure it’s long enough to last until your closing date. The longest rate guarantees with reasonable rates are 120 days, 130 days, 150 days. A few lenders go out to 180 days, but beyond that, the rate surcharges get steep.
- How long will it take to get approved? Lower rates often mean busier lenders. If your purchase contract has a tight conditions removal timeframe, make sure the mortgage adviser can meet the condition deadline. If you love the property you’ve put an offer on, don’t be afraid to pay a little more for speed. In competitive real estate markets, slow lenders can cost you your dream home.
- What documentation do you require? Make sure you can provide what the lender asks for, including proof of down payment (typically three months of statements showing where the money came from). Income proof is mandatory, too, unless you don’t mind paying steep rates. Proving income can be trickier for those who are new on the job or self-employed. Lenders refer to the self-employed as “business for self,” or “BFS” borrowers. For BFS applicants, the best rates require two years of provable income on tax documents, like notices of assessments and/or tax returns. Some non-prime lenders allow BFS borrowers to provide six to 12 months of bank statements — sometimes none. However, the less you prove, the higher rates you pay.
- How much can I prepay without penalty? Make sure it’s sufficient if you plan to make prepayments — and check whether the lender allows multiple prepayments. Some allow only one on the anniversary date. That’s restrictive, and it can cost you if you want to make a prepayment before breaking the mortgage early.
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Quick tip: If you’re breaking a mortgage early and facing a prepayment penalty, check your lender’s policy. You might be able to make a prepayment to reduce the balance the penalty is calculated on. Some lenders, however, don’t let you make a prepayment within 30 days of discharging the mortgage.
- How is your early prepayment penalty calculated? If you’re paying out a variable mortgage early, the standard penalty is three months of interest calculated using your actual contract rate, not the prime rate. Some no-frills lenders charge up to three per cent of the principal, however, so beware. If the mortgage is fixed, the fairest method is for the lender to compare your actual rate at the time you break the mortgage to the actual rate it offers for a term similar to your remaining term. Most lenders employ a more costly formula, however, whereby they use artificial comparison rates. These fake rates can boost your penalty considerably. Big Six banks are notorious for this. Experienced mortgage brokers know who the “fair penalty” lenders are.
- How is the mortgage compounded? All fixed mortgages are compounded semi-annually, but some variable rates are compounded monthly. Monthly compounding can cost you roughly $159 more per $100,000 borrowed over five years, assuming a 3.99 per cent rate amortized over 25 years.
- Do you charge a reinvestment fee? Some lenders stick departing borrowers with “reinvestment fees.” These extra charges can set you back up to $500, on top of all the other fees, if you break the mortgage early.
- What is your conversion policy if I switch from variable to fixed? Some lenders only let you convert a variable rate to a five-year fixed. Some allow you to switch to any term longer than your remaining term. Most will not let you convert a variable rate to a one- or two-year term.
- How much is your discharge fee? Lenders hit you with discharge fees when you pay off their mortgage. In provinces that don’t regulate discharge fees, some lenders charge up to $500. Most discharge fees are $75 to $400. If you have a mortgage and line of credit combo, check if the lender charges separate discharge fees for each portion. Note: if you are switching lenders, your old lender may charge you an “assignment fee” instead of a “discharge fee.”
- Do you cover all fees? When you switch to a new prime lender, most of them foot the bill for your legal, appraisal and lender title insurance costs. Most will not cover your old lender’s “discharge fee,” however.
- Do you charge any cancellation fees if I don’t go through with it? A few deep discount brokers and non-prime lenders do, albeit some provinces like British Columbia prohibit cancellation fees.
- What is your rate drop policy? It’s important to know how many times a lender will let you reset your rate lower if rates drop before you close. Some don’t allow resets at all, some allow just one, and some don’t restrict rate drops — so long as it’s done a specified number of days before you close (e.g., seven-plus days).
- How much title insurance do I have to pay if I use your lender, if any?
- Is there a bona fide sales clause in this mortgage? Bona fide sales clauses are like handcuffs. They prevent you from paying out the mortgage early unless you refinance with the existing lender or sell the property to an arms-length buyer.
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Features often matter more than the final rate
“You get what you pay for” rings true for mortgages as well. Mortgages that are more flexible cost the lender more, so they usually charge heftier rates. However, shelling out a bit extra initially could save you loads down the line — if you need flexibility later. Here are some of the most common features to scout for:
Portability: If there’s a chance you might move before the mortgage matures, make sure you can take your mortgage to that new property to dodge early payoff charges. Beware: some lenders only allow same-day ports. That means your old and new mortgages must close on the same day, a logistical headache. Others give you up to 180 days. The more the better, but 60 days is usually enough. Note that most credit unions don’t allow portability across provincial boundaries.
Mid-term refinances: If you might need to borrow more before maturity, make sure you can do so without penalty. If you have what’s called a collateral charge, some lenders let you add new borrowing without affecting your existing mortgage rate.
Quick tip: If you’re increasing your borrowing before the mortgage matures, make sure the lender doesn’t bury penalties in its refinance offer by increasing the rate.
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Early-renewals: Some lenders let you renew your mortgage before maturity. That can sometimes help you lock in a good rate before a Bank of Canada rate hike cycle begins.
Fixed-payment variables: Most variable rates have locked-in payments, so when prime rates climb, your monthly bill doesn’t (see exception below). Other lenders sell adjustable-rate mortgages, whereby the payment rises and falls with the prime rate. Fixed-payment variables provide payment protection but only to an extent. If Canada’s benchmark prime rate soars 275 bps or more — and your payment doesn’t cover the interest due — most, but not all, lenders will raise your “fixed” payment to cover the interest.
HELOCs: If you like the idea of tapping into home equity whenever it suits, seek out a readvanceable mortgage. You’ll need at least 20 per cent equity, a reasonable debt-to-income ratio and strong credit to get one. Readvanceable mortgages let you borrow on demand with low interest-only payments — typically at prime rate to prime plus 0.50 per cent. Some lenders even have a feature where your borrowing limit automatically rises as you make principal payments on the mortgage portion.
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Prepayment options: Folks who expect to have spare cash flow, and who want to prepay their mortgage to save interest, should consider prepayment flexibility. Lenders commonly allow a 10 to 30 per cent annual prepayment option. Some low-frills mortgages allow no prepayments or just five per cent annually. Don’t bother paying a higher rate for more than 10 per cent prepayment privileges unless you’re fairly sure you’ll use it.
Quick tip: If you’re breaking the mortgage early, some lenders prohibit prepayments within 30 days of the date of discharge.
Hybrid terms: Some lenders let you diversify rate risk by mixing parts of your mortgage into different terms — like pairing a long-term fixed with a short-term fixed or variable. That can be a smart move for rate diversification. Just be sure to keep the term lengths identical. If you don’t, the lender might have you over a barrel when the shorter term renews. In that case, if you didn’t like their renewal offer, you’d be stuck with penalties if you bail.
Published rates: Other things being equal, look for a lender that transparently advertises its renewal, early refinance and variable-to-fixed conversion rates. Check to ensure they’re decent, especially if you plan to potentially borrow more after closing.
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Assumability: The feature is over-rated because few people use it, but assumability lets a future buyer of your home take over your mortgage. That’s occasionally appealing to buyers if you have an ultra-low rate with enough time left on your term. Just a heads-up: in some cases, if the new owner misses payments, the lender might come knocking on your door.
Cash rebates: Many banks now lure new customers with cash rebates, sometimes topping $4,000 for sizable mortgages. This can cut your effective borrowing costs materially. There’s a catch, however. Cashback offers often require that you open a bank account and use it for your mortgage payments. And, if you break the mortgage early, expect those rebates to be clawed back proportionally.
Bridge financing: Bridge loans provide cash to cover the down payment on a new property while you wait for your old one to sell. If your lender doesn’t offer cost-effective bridge financing, that can be a problem if you move before your mortgage matures.
Skip-a-payment: Payment holidays, as they’re called, let you skip one or more payments each year. That can give you financial breathing room when times get tight.
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Service: How easy is it to get support after closing? Do you offer annual mortgage reviews to see if I can save money by refinancing? Do you offer strategies to use my mortgage as a tool to build net worth quicker? These are all questions worth asking.
Seven final questions to lock down your mortgage rate
When haggling with a mortgage lender or broker, here are seven questions to ask:
- Will you buy down my rate further? Many mortgage pros work on commission and can dip into their own earnings to lower your interest rate. It never hurts to ask a mortgage originator if they can “buy down” your mortgage rate. Note, however, that some mortgage advisers add value far beyond rate discounts, including advice on mortgage strategies that could save you thousands. Expert advisers, if they’re genuinely value-added, don’t typically buy down rates.
- Has anyone at your lender got a rate lower than me in the last week? If so, how do I get the same?
- How many lenders did you compare before quoting my rate? This applies to mortgage brokers only since lender reps only sell their own products.
- Will you tell me if rates drop before I close? If you don’t ask, some lenders and brokers will pocket the rate difference to earn extra compensation for themselves.
- If your rate is a cash-back effective rate, how do you calculate the cash rebate? Some brokers quote “effective rates” that include cash back. The problem is, some don’t calculate the cash rebate correctly. Ask them to share their math to ensure they’ve given you a rebate that’s big enough.
- Why are you recommending the term you are? Many mortgage originators get paid more for recommending longer terms. If a mortgage salesperson recommends a specific term, make sure they explain why. Ask what math, future projections and research they did before proposing a term. If you get a shifty answer, find another mortgage expert.
- What else can I do to get a better rate? For folks who aren’t bankable borrowers, there are ways to seem more appealing to lenders. That might include boosting one’s credit score to 720-plus, paying down revolving credit so you owe less than 30 to 50 per cent of the credit limit, and amassing two years of tax-documented income (if self-employed).
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By now, you’ve probably realized that Canada’s lowest mortgage rate isn’t the Holy Grail of financing. Minimizing total borrowing costs matters far more, and achieving that entails some legwork.
So, before you sign on that dotted line, make sure you’ve asked more questions than a contestant on Jeopardy. After all, you want to find a mortgage that fits you like a tailored suit. Only after you’ve nailed that part down should finding the lowest rate become paramount.
Read more from Rob McLister
Who’s afraid of the big bad variable rate mortgage?
How to qualify for a mortgage when your current income doesn’t cut it
How to avoid the financial misery that comes with too much mortgage
For mortgage seekers, a good broker is paramount. Here’s how to find one
Why the smart money is buying single-family homes
What 30-year amortizations mean for mortgage consumers
Why obsessing about paying off your mortgage early costs you money
If you’re tapping the parental ATM for a down payment, here’s how to do it right
For young people, the fastest route to home ownership runs through the trades
Robert McLister is a mortgage strategist, interest rate analyst and editor of MortgageLogic.news. You can follow him on Twitter at @RobMcLister.
For the latest mortgage rate changes, check this page daily.
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