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See the best Ontario mortgage rates, all in one place.
Current ON mortgage rates
Best mortgage rates in Ontario
How to get the best mortgage rate in Ontario
Start your search online (Hi 👋) to compare current Ontario mortgage rates from various lenders in Ontario. With Money.ca, once you’ve clicked on the best rate, we connect you to a mortgage broker who can finalize your documentation or find a better mortgage for your financial situation.
While major banks offer a wide range of mortgage products, their rates and terms may not suit your needs. Local credit unions typically have more personalized service. Online banks have lower overhead costs.
Before you use the calculator, know the mortgage rule
There is a rule of thumb with mortgages that will save you from making a major mistake in buying your home—it’s known as the 20/30/3 rule.
1. 20% down on your mortgage (avoid mortgage insurance and much higher interest payments.
2. Household expenses (e.g. mortgage, insurance, maintenance, utilities, etc.) should be less than 30% of your gross household income.
3. The price of your home should be less than three times your gross household income.
Using our rates table
How to use our Ontario Mortgage rates table
Follow these quick and easy steps to get the lowest mortgage rate.
Purchase - If you’re buying your first home, use the Purchase type for your mortgage. It’s the initial loan from the lender to cover the cost of your property minus the down payment. Your rate factors in your credit score, total down payment, income, loan size, and term.
Renewal/Switch - When your mortgage term ends, the mortgage needs renewal if you still owe money on your house. At this point, you can choose to switch lenders. Switching may involve more paperwork and costs, such as appraisal or transfer fees, but the savings can be significant.
Refinance - Refinancing your mortgage means breaking it, which may incur fees and penalties. However, it is a fantastic tool to consolidate debt, access needed home equity, or secure a lower interest rate.
Select Ontario as your province.
Enter your home’s appraised value or your best estimate.
The choices change based on your mortgage type. The down payment is how much you must put down on the house today. The remaining balance is how much you have to pay on your remortgage. The desired mortgage amount is how much of a loan you need.
Canada's most popular term and variable rates are available in the drop-down tool.
You can sort by the lowest rate, choose your preferred mortgage provider, select “get this rate” and begin your application process. It’s that easy.
What is a mortgage rate?
What is a mortgage rate, and how does it impact the home-buying process?
Ontario mortgage rates refer to the interest rates charged on mortgage loans by lenders (banks, credit unions, and more) in Ontario, Canada.
These rates determine the cost of borrowing money to purchase real estate within Ontario, be it a house, condo, or any type of home. Mortgage rates in Ontario can vary widely depending on several factors, including the lender, the type of mortgage (fixed or variable), the term length (e.g. 1-year, 5-year, etc.), and the borrower's creditworthiness (your credit score).
Your mortgage rate determines your payment schedule, the downpayment you need, and ultimately, how much home you can afford.
The value of understanding mortgage rates can’t be overstated
Financial planning. Knowing the rate you'll be paying, whether fixed or variable, open or closed, and more allows you to better budget for the most significant personal finance purchase of your life. It solidifies your financial forecast over the mortgage term and helps you maintain financial stability.
Cost of borrowing. Mortgage rates directly impact the total cost of borrowing. Even a slight difference in the interest rate can significantly affect the monthly payments and the total amount paid over the life of the mortgage. Understanding how rate changes work will help you manage your long-term financial commitments.
Rate comparisons. By understanding mortgage rates, you can compare different mortgage products and lenders more effectively—prepayment privileges and penalties and annual lump sum payments could save thousands of dollars.
Interest rate risk management. Historically, variable rates are lower in Canada, but we’re seeing a lot of market volatility right now. Understanding how rates are determined and what factors influence changes in the rate is crucial for managing interest rate risk. This knowledge can inform decisions about switching between fixed and variable rates or choosing the right time to lock in a rate.
Negotiation power. A solid understanding of mortgage rates and the factors that affect them provides leverage when negotiating terms with lenders.
In summary, for homebuyers in Ontario, a thorough understanding of mortgage rates is not just about securing a loan to purchase a home. It's about making informed financial decisions that will impact your life and your family’s for years to come, ensuring they choose the best option for their unique situation.
Historical mortgage rates
Historical Ontario mortgage rate trends
Mortgage rates 2000-2024
How are rates determined
Ok, so how are Ontario mortgage rates determined? What goes into the rate?
Mortgage rates in Ontario, as in the rest of Canada, are influenced by various domestic and international factors. Here's an overview of the critical determinants:
Bank of Canada's policy interest rate. The overnight rate directly impacts the prime rates that banks charge their customers. Changes in the policy rate can lead to adjustments in variable mortgage rates. Fixed mortgage rates, while influenced by the policy rate, are more directly tied to the bond market. A higher policy rate can lead to higher mortgage rates and vice versa.
Bond market. Government bond yields impact fixed mortgage rates, particularly the 5-year Canadian government bonds. When investors demand higher yields on these bonds (to compensate for inflation or if alternative investments offer better returns), banks typically raise fixed mortgage rates to maintain their profit margins. Conversely, when bond yields fall, fixed mortgage rates often do too.
Economic conditions. The overall health of the economy can influence mortgage rates. In times of economic growth, rates may rise due to increased demand for credit and higher inflation expectations. During economic downturns, rates may fall as the Bank of Canada lowers its policy rate to stimulate borrowing and investment.
Inflation. The Bank of Canada closely monitors inflation with a target of keeping it within 1% to 3%. High inflation can lead to higher mortgage rates as lenders demand higher returns to compensate for the reduced purchasing power over time.
Lender's funding costs. The cost for banks and other lenders to acquire the money they lend out also affects mortgage rates. These costs can vary based on several factors, including demand for mortgages and the lender's access to funds.
Regulatory changes. Government and regulatory policies can also impact mortgage rates. For example, changes in mortgage qualification rules or capital requirements for banks can influence the rates offered to consumers.
Competition. The level of competition among lenders in Ontario can also play a role. More competition can lead to lower mortgage rates as lenders vie to attract borrowers.
International events. Global economic events and trends can influence Canadian mortgage rates. For instance, if global investors view Canada as a safe haven, demand for Canadian bonds might increase, leading to lower bond yields and potentially lower fixed mortgage rates.
Gross domestic product (GDP). The overall health of the economy, measured by GDP, can influence mortgage rates. A strong, growing economy can lead to higher mortgage rates as demand for credit increases, while a weak economy can lead to lower rates to stimulate borrowing and investment.
Employment rates. High employment levels can lead to increased demand for housing, potentially pushing mortgage rates up. Conversely, higher unemployment can lead to lower rates as lenders aim to encourage borrowing.
Consumer confidence and spending. High consumer confidence and spending can boost economic growth, potentially leading to higher mortgage rates. When consumers are cautious, spending decreases, leading to lower rates.
While these factors can provide a general understanding of what influences mortgage rates, the specific rate offered will also depend on your credit score, down payment, the amortization period, and whether the mortgage is fixed or variable.
Ontario's housing market
Ontario’s current housing market
In the most recent housing market monthly report, Ontario Real Estate Board reported a year-over-year 3.7% decrease in residential sales activity in the province in August 2024. Through the MLS systems of the Ontario real estate board, reportedly 13,484 units were sold this August. Home sales were 23.8% below the 5-year average and 26.6% below the 10-year average for the same month. A decline in home sales activity shows a relatively subdued Ontario housing market in August, with buyers patiently waiting for lower rates as the Bank of Canada continues its rate reduction cycle.
On a year-to-date basis, Ontario home sales totaled 117,460 units over the first eight months of the year. This was a modest decline of 2.8% from the same period in 2023.
Consistent with the trend observed throughout 2024, a wave of new listings hit the market, with some 29,837 residential properties freshly listed for sale in August. This signifies a 0.7% year-over-year increase compared to August 2023.
The surge of new listings, along with slow demand, has led to a decrease in the average home price in Ontario. The average home price in Ontario in August 2024 was $867,787, marginally lower than June' $884,761, and May's $890,634.
As a result of these shifting dynamics, many potential buyers are taking a more cautious approach, weighing their options and waiting for more favorable conditions before making a purchase. This hesitance is reflected in the increasing number of homes that are remaining on the market for longer periods, leading to a growing inventory that could further pressure prices downward. The uncertainty surrounding interest rates and the overall economic climate is causing some buyers to reconsider their financial commitments, which may prolong the current trend of subdued sales activity. As we move into the fall/winter months, it will be crucial to monitor how these factors evolve and whether they will lead to a more pronounced shift in the Ontario housing market.
Overall, the dollar value of all home sales in the province in August 2024 was $11 billion, a moderate 4.8% decrease compared to August 2023.
New mortgage rules 2024
New mortgage rules in effect from 2024
The federal government has announced major changes to homebuying rules in Canada, taking effect on December 15, 2024.
30-year mortgage amortizations: First-time home buyers and those purchasing new builds will be eligible for 30-year mortgage amortizations.
Increase in maximum purchase price for all insured mortgages: The maximum allowable purchase price for an insured mortgage (where the down payment is less than 20%) will increase from $1 million to $1.5 million.
Affordability impact: These changes represent some of the most significant affordability measures for first-time buyers in decades, offering more flexible options for entering the housing market.
Getting the best rate
How can I get the best mortgage rate in Ontario?
Securing the best mortgage rate in Ontario involves a combination of preparation, research, and strategic decision-making. Here are some steps you can take to improve your chances of getting a favourable mortgage rate:
Improve your credit score. Lenders use your credit score as a critical indicator of your creditworthiness. A higher credit score can help you qualify for lower mortgage rates. Pay your bills on time, reduce debt levels, and check your credit report for errors to improve your score. Avoid applying for new credit cards or other financial products that will put a hard check on your credit and could cause a dip. Finally, keep your credit utilization ratio at 30%. If you have a $10,000 limit on your credit card, you should be spending about $3,000 on it monthly.
Save for a larger down payment. The more money you can put down upfront, the less risk you pose to the lender. A down payment of 20% or more can help you avoid paying for mortgage default insurance and qualify you for better rates.
Shop around. Don’t settle for the first mortgage offer. Compare rates from different lenders, including banks, credit unions, and mortgage brokers. Each lender may offer other rates and terms, so shopping around will help you find the best deal.
Negotiate. Don’t be afraid to negotiate with lenders. Use offers from other lenders as leverage to get a better rate. Even a small difference in the interest rate can result in significant savings over the life of the mortgage.
Use a mortgage broker. Mortgage brokers have access to a wide range of lenders and can often secure rates that are not publicly advertised. They can negotiate on your behalf and help you find the best rate based on your financial situation.
Time your mortgage. Interest rates fluctuate based on economic conditions and the Bank of Canada’s policy interest rate. If you can afford to wait, monitor the market trends and apply for a mortgage when rates are lower.
Consider mortgage features. Sometimes, there might be better options than the lowest rate if it comes with restrictive terms. Look for features like prepayment privileges or the ability to port your mortgage, which can save you money or offer flexibility in the long run.
Strengthen your financial health. Lenders look at your debt-to-income ratio to determine your mortgage repayment ability. Lowering your debt, increasing your income, or choosing a property within your budget can make you a more attractive borrower.
Lock in a rate. If rates might increase soon, consider getting a rate hold, where a lender guarantees a certain interest rate for a specific period (usually 90 to 120 days) while you shop around.
Consider the mortgage type and term. Decide whether a fixed or variable-rate mortgage suits your situation best. Fixed rates offer stability, while variable rates can be lower but come with the risk of increasing. The term length also affects your rate; shorter terms sometimes have lower rates but require more frequent renewals where rates could be higher.
Fixed vs. variable
Should I pick a fixed or a variable-rate mortgage in Ontario?
Choosing between a fixed and variable mortgage rate depends on your financial situation, risk tolerance, and the economic environment. Here's a breakdown of the differences and considerations for each type:
Fixed mortgage rates remain the same for the entire mortgage term, regardless of changes in the market interest rates, so your mortgage payments will be consistent throughout the term.
Variable mortgage rates fluctuate with the lender's prime rate, which is influenced by the Bank of Canada's policy rate. Your monthly payment amount might stay the same, but the proportion of your payment towards interest vs. principal can change.
Pros
Predictability:Your payments remain unchanged, making budgeting easier.
Security: Protection from rising interest rates, which can be beneficial in a high or rising rate environment.
Lower rate initially:Variable rates are often lower than fixed rates initially, potentially saving money if interest rates remain stable or decline.
Lower penalties for breaking the mortgage early:Typically, the penalty for breaking a variable rate mortgage is lower than for a fixed rate mortgage.
Cons
Potentially higher costs: Fixed rates are often higher than variable rates at the outset because you pay a premium for the stability and protection against rate increases.
Penalties for breaking the mortgage early: These can be higher than variable-rate mortgages.
Uncertainty: Your interest rate can increase, leading to higher payments or a longer amortization period if your payments don’t cover the interest portion.
Budgeting challenges: Fluctuating payments can make budgeting harder, especially if rates rise significantly.
Two other mortgage types in Ontario are gaining in popularity.
1.
Adjustable-Rate Mortgages (ARM). It’s similar to a variable-rate mortgage in that your interest rate can change. However, with an ARM, your monthly payments adjust with the interest rate. While you may benefit from lower payments when interest rates are low, consider the risk of a significant increase should Ontario mortgage rates rise. Be sure to have a plan in place. An example of this would be Scotiabank's Flex Value Mortgage.
2.
Hybrid mortgages. Hybrid or combination mortgages split the loan amount into different portions, each with its own rate type (fixed, variable, or adjustable), essentially diversifying your risk amid rate volatility. A hybrid mortgage combines the stability of fixed rates with the potential savings of variable interest rates. Still, these mortgages can be complex, and you must ensure you understand your contract's terms and conditions. Meridian Credit Union currently offers Hybrid mortgages in Ontario.
How to choose between variable vs. fixed mortgage rates in Ontario
Consider your risk tolerance
If you prefer stability and predictability in your payments and would find it stressful if your rates and payments increased, a fixed rate might be better.
If you can handle fluctuations in your payment amount and are willing to bet that rates will stay the same or decrease, you might prefer a variable rate.
Understand the economic environment
In a low-rate environment that feels like it’ll rise, locking in a fixed rate might save you money in the long run.
If rates are high but expected to fall, or if you believe they will remain stable, a variable rate could be more advantageous.
Know your financial situation
Consider your ability to absorb potential increases in your mortgage payments. A fixed-rate offers peace of mind if you have a tight budget.
Suppose you have more flexibility in your budget or an emergency fund to cushion potential increases in interest rates. In that case, you might take advantage of the initially lower rates of a variable mortgage.
Ultimately, there's no one-size-fits-all answer. It's about balancing your financial stability, risk tolerance, and the potential for rate changes. Consulting with a financial advisor or mortgage broker can help you make an informed decision based on your personal financial situation and the current economic outlook.
BoC announcements
Why are BoC announcements so important when it comes to mortgage rates?
Whether you’re renewing your mortgage or shopping for your first mortgage, Bank of Canada (BoC) announcements are essential due to their direct and indirect impacts on mortgage rates.
Understanding why these announcements matter can help you make more informed decisions when shopping for a mortgage or managing your existing mortgage.
Here's how BoC announcements can affect your mortgage rate:
Direct impact on variable rates
Influence on prime rate. The BoC's policy interest rate (or the overnight rate) directly influences the prime rate banks charge their customers. Variable mortgage rates are typically tied to the prime rate, moving up or down in tandem with it. When the BoC raises or lowers the overnight rate, variable mortgage rates follow suit shortly after.
Indirect impact on fixed rates
Influence on bond yields. Fixed mortgage rates are more closely tied to the bond market, specifically the yields on government bonds. While the BoC's policy rate does not directly set fixed mortgage rates, its announcements can influence economic expectations and investor behaviour, affecting bond yields. A BoC announcement that signals higher future interest rates can lead to higher bond yields, prompting lenders to raise fixed mortgage rates. Conversely, signals of lower future rates can lead to lower bond yields and fixed mortgage rates.
Should you listen to every BOC announcement?
For prospective and current variable rate holders.
If you have a variable-rate mortgage or are considering one, paying close attention to BoC announcements is crucial. These announcements will give you a clear indication of whether your interest costs are likely to increase or decrease in the near term. Either way, these factors can influence your decisions, such as whether to lock in a fixed rate or adjust your budget to accommodate higher or lower payments.
For prospective and current fixed rate holders.
While the direct impact of BoC announcements on fixed rates is less immediate, understanding the central bank's outlook on the economy can provide valuable insights into long-term trends. For example, suppose the BoC signals concern about rising inflation. In that case, it may indicate that higher interest rates are on the horizon, potentially affecting the decision to lock in a fixed rate now rather than later.
More factors to consider
Why the lowest mortgage rate isn’t always the best choice
The best mortgage rate is not just about the lowest interest rate but also the terms and conditions that best suit your financial situation and goals. Consulting with a financial advisor or mortgage broker can provide personalized advice tailored to your circumstances.
While a low rate can save you money on interest payments, other factors are equally important in ensuring the mortgage meets your financial needs and circumstances.
Factors beyond the interest rate
Flexibility in terms. Some mortgages with very low rates come with strict terms that can limit your flexibility. For example, making extra payments, increasing your regular payment amount, or paying off the mortgage early without facing steep penalties can be more valuable in the long run than a slightly lower interest rate.
Prepayment privileges. Allows you to pay off a portion of your mortgage principal early without incurring penalties. Lenders offer different prepayment options, and having the flexibility to make extra payments can significantly reduce the interest you pay over the life of your mortgage.
Penalty fees. Understanding the penalties for breaking your mortgage before your term is crucial, especially for fixed-rate mortgages. Some lenders calculate penalties using interest rate differentials, which can be significantly higher than others that use a more straightforward three-month interest formula.
Portability. A portable mortgage allows you to transfer your existing mortgage to a new property without penalties. This feature can be precious if you move before your mortgage ends.
Assumability. An assumable mortgage allows a future buyer of your home to take over your mortgage at its current rate and terms—an attractive selling feature if rates have risen since you locked in your mortgage.
Mortgage lender. There are many types of mortgage lenders, and they play a critical role in choosing where you get your mortgage. Let’s break it down.
Types of lenders in ON
Types of Mortgage Lenders
In Ontario, there are a variety of mortgage lenders to choose from, each offering different products, terms, and service levels. Understanding the types of lenders available can help you make an informed decision when shopping for a mortgage. Here are the main types of mortgage lenders in Ontario:
1. Banks
Banks are Ontario's most traditional and common source of mortgage financing. They offer various mortgage products, including fixed-rate, variable-rate, and adjustable-rate mortgages. Banks typically have stringent qualification criteria but may provide better rates for customers with solid credit profiles. However, because of Canadians’ love of banks, they may also inflate their rates, thinking you won’t go elsewhere. Here are some examples of bank mortgage providers in Ontario.
Royal Bank of Canada. As one of Canada's largest banks, RBC offers a wide range of mortgage options, including fixed and variable-rate mortgages and specialized products for first-time homebuyers.
Toronto-Dominion Bank. TD Bank provides various mortgage solutions, including fixed and variable-rate mortgages and home equity lines of credit (HELOC).
Bank of Montreal. BMO offers competitive mortgage rates and options, including fixed and variable-rate mortgages and special programs for first-time buyers.
CIBC. CIBC provides various mortgage options, including fixed and variable-rate mortgages and its Home Power Plan, which combines a mortgage with a line of credit.
Scotiabank. Scotiabank offers a broad array of mortgage products, including fixed and variable-rate mortgages and the Scotia Total Equity Plan, which allows homeowners to use their home equity to lower their borrowing costs.
National Bank of Canada. While having a more significant presence in Quebec, National Bank also offers mortgage products in Ontario, including fixed and variable-rate mortgages and offers for first-time homebuyers.
Desjardins Group. Though primarily a Quebec-based credit union, Desjardins also offers mortgage products in Ontario, including fixed and variable rate options.
Equitable Bank.A smaller bank compared to the others listed, Equitable Bank offers competitive mortgage rates and products, including fixed and variable-rate mortgages.
2. Credit unions
Credit unions are member-owned financial institutions that often provide more personalized service than banks. They may offer similar mortgage products but can sometimes provide more flexible terms or better rates, especially for members. Credit unions are regulated provincially, which can affect their mortgage products. Here are some examples of credit unions that are mortgage lenders in Ontario.
Adjala Credit Union Limited
Alterna Savings & Credit Union Ltd.
Bay Credit Union Ltd.
FirstOntario Credit Union
Meridian Credit Union
Kawartha Credit Union
For a complete list of approved credit union mortgage lenders, visit the CMHC-approved lenders for Ontario.
3. Online banks
While they don’t carry the same weight or global brand equity, online banks are pushing into the mix of preferred lenders due to their lower overhead costs. Without brick-and-mortar property fees to pay, they can often offer lower rates or cash-back rewards if you get a mortgage with them. Here are some examples of online bank mortgage lenders in Ontario
Tangerine. Known as one of Canada's most popular online banks, Tangerine offers portable mortgages. It was founded in 1997 and was formerly known as ING Direct.
nesto. Positioned as Canada's trusted lender for online mortgages, nesto provides a seamless home financing experience with the expertise of over 300 advisors.
Bridgewater Bank. Recognized for understanding that a mortgage is one of the most exciting and important financial decisions you'll make.
First National. One of Canada's largest non-bank mortgage lenders, specializing in residential and commercial mortgages. Founded in 1988, it offers a variety of mortgage solutions.
Simplii. Known for its cashback offerings in credit cards, high-interest bank accounts, and mortgage rewards programs.
4. Trust Companies
Trust companies offer various financial services, including mortgage lending. They can be an option for individuals who may not qualify for a mortgage with a bank or credit union due to non-traditional income or credit issues. Trust companies may offer competitive rates and terms, particularly for investment properties. Here are some examples of Trust companies in Ontario
Home Trust Company. A one-stop mortgage lender offering mortgage, Visa card, and deposit products.
Equitable Trust Company. Active in providing deposit services and originating mortgages in Ontario, Alberta, and Manitoba.
Community Trust. Offers residential mortgages, term deposits, GICs, and a maximizer savings account as a flexible alternative. Community Trust powers Questrade’s Questmortgage program.
For a comprehensive list of all loan and trust companies currently registered in Ontario, refer to the Financial Services Regulatory Authority of Ontario (FSRA) Loan and Trust Companies page
5. Mortgage Investment Corporations (MICs)
MICs pool money from investors to lend to borrowers as mortgages. They often focus on niche markets, such as commercial properties or borrowers failing to meet traditional lending criteria. MICs can offer more flexible lending criteria but may charge higher interest rates.
Here are some examples of Mortgage Investment Corporations (MICs) acting as mortgage lenders in Ontario:
CMI MIC Funds. A CMI MIC focuses on Canada's real estate market as an alternative investment and lending corporation.
Atrium MIC. ATRIUM® has provided creative financing solutions since 2001 and is one of Canada's largest mortgage investment corporations.
Fisgard. In Canada, MICs like Fisgard focus on lending money secured by mortgages on real estate. They are structured as corporations and operate under specific regulations.
Fundscraper.Offers information on Mortgage Investment Corporations as a real estate investment alternative, mentioning Nest Capital MIC, which has provided historical annual returns to investors.
ONMICA. Ontario Mortgage Investment Companies Association: A non-profit volunteer-run association of Ontario alternative mortgage lenders structured as MICs.
6. Private Lenders
Private lenders are individuals or companies that offer personal loans, including mortgages, often to borrowers who need help to secure financing through traditional means. While private lenders can provide loans with less stringent qualification requirements, they typically charge higher interest rates and fees to offset the increased risk. Here are some examples of private mortgage lenders in Ontario.
THINK Financial. Best for short-term financing—a top choice for those seeking short-term mortgage solutions.
Approved Equity. Recognized as one of Ontario's best private mortgage lenders for 2023, Approved Equity does not require income or credit checks.
Castleton Mortgages. Located in Toronto, Castleton Mortgages is highly rated by customers.
New Haven Mortgage Corporation. A trustworthy private mortgage lender that caters to a wide range of borrower needs throughout Ontario.
Freedom Capital. Offers private mortgage financing services across Canada, even to those with bad credit history and low income.
7. Online Lenders
Online lenders offer mortgage products through digital platforms, often with streamlined application and approval processes. They can provide competitive rates and flexible terms, especially for borrowers with strong credit profiles. Online lenders range from traditional banks with online operations to fintech companies specializing in digital financial services.
Picking a lender in ON
Choosing the right mortgage lender in Ontario
When choosing a mortgage lender in Ontario, consider factors such as the interest rates offered, fees and penalties, terms flexibility, and customer service level. It's also wise to consult with a mortgage broker.
Mortgage brokers don't lend money themselves but work with banks, trust companies and credit unions and negotiate to find you the best rate and terms. Essentially, they do the calling around and contact multiple lenders for you for free. The lender pays them.
That said, even when a broker comes to you with a mortgage lender, it’s essential to ask all the right questions about the lender because until your term renews, you’ll be dealing directly with the lender. Here’s how to check if the suggested lender is right for you.
Evaluating a mortgage lender in Ontario
When evaluating a mortgage lender, consider the following:
Interest rates. While the interest rate is a critical factor, it's not the only one. A lower rate could come with stricter conditions or higher fees.
Fees and penalties. Ensure the lender is transparent about all fees, penalties, and terms associated with their mortgage products, such as breaking your mortgage early, switching lenders, or making extra payments beyond what’s allowed.
Reputation. Look for lenders with a strong reputation for customer service. Reading reviews and asking for recommendations from colleagues, friends, and family can provide insights into a lender's reliability and the quality of its service.
Customer service and support. Choose a lender that offers clear, understandable advice tailored to your needs. How do they communicate with you? Is a chat function important, or is a 9-5 phone call sufficient?
Flexibility and options. Consider lenders that offer a range of mortgage products and features such as pre-approvals, mortgage payment lump sums or doubling up payments, and bundling with other financial products like chequing accounts, HELOCs, or investments.
Terms and conditions. Beyond the rate, pay attention to the mortgage terms, such as your amortization schedule, the term length, and any conditions that could alter the rate offered.
Long-term relationship. Think about whether a lender is someone you can have a long-term relationship with. Your mortgage needs may change, and having a lender willing to work with you over time can be beneficial.
Impact of rate hikes
Impact of rate hikes on monthly mortgage payments in Ontario
In our current market, many Ontarians are concerned about rising mortgage interest rates and rightfully so.
Only 3-5 years ago, people bought homes they could barely afford thanks to historically low-interest rates.
Today, the lowest Ontario mortgage rates are about 5%, and 3-5 years ago, they were about 2.5%. Let’s look at an $800,000 home using our Ontario mortgage calculator. They put 20% down ($160,000) on a five-year fixed-rate mortgage five years ago.
At 2.5%, their bi-weekly mortgage payment is $1,433.49.
Five years later, they paid $113,675.33 towards their principal, lowering their total amount owing to $523,324.67 with 20 years left on their term.
At 5%, their bi-weekly mortgage payment jumps to $1,719.45, or an extra $571.92 per month upon renewal.
So, pay close attention to mortgage rate fluctuations and be prepared for all your costs, especially when buying your first home.
Your closing costs
Ontario closing costs | Budgeting beyond your mortgage
Ontario closing costs item
Description
Fees, taxes and surcharges
Land transfer tax (LTT) Ontario
LTT is a scaling tax based on the price of the home due on the closing date of purchase. Your lawyer will calculate the amount due and collect and remit to the Ontario government on your behalf.
0.5% on the first $55,000 of the purchase price,1.0% on the amount exceeding $55,000 up to and including $250,000,1.5% on the amount exceeding $250,000 up to and including $400,000, 2.0% on the amount exceeding $400,000 up to and including $2,000,000,2.5% on the amount over $2,000,000 for residential properties.
Municipal Land transfer tax (Toronto only)
If you’re buying a house in Toronto, your lawyer will process the amount due and collect and remit to the city Of Toronto on your behalf
0.5% on the first $55,000 of the purchase price,1.0% on the amount exceeding $55,000 up to and including $250,000,1.5% on the amount exceeding $250,000 up to and including $400,000,2.0% on the amount exceeding $400,000 up to and including $2,000,000,2.5% on the amount over $2,000,000 for residential properties.
Legal fees and disbursements
From land transfer tax to title insurance, your lawyer will do a lot of the legal paperwork, crossing the Ts and dotting the Is for you.
Typically range from $1,500 to $2,500, but can vary based on the complexity of the transaction.
Home inspection fee
A home inspector will examine your potential home for structural damage or problems and look for needed repairs such as air gaps, plumbing leaks, and building code standards. It’s not mandatory, but it's worth the fee for the largest purchase you’ll ever make.
Generally, between $300 and $500, depending on the size and condition of the home.
Home appraisal fee
A certified independent appraiser will professionally appraise the property to determine its market value. Your lender may require it to ensure the amount of money doesn’t exceed the lender’s investment based on the loan-to-value ratio.
In Ontario, appraisal fees can range from approximately $300 to $500 or more, depending on the complexity of the appraisal. It’s due when the appraisal happens.
Mortgage default insurance
This insurance protects lenders if a borrower defaults on a mortgage with less than a 20% down payment. You can pay for this through CMHC, Genworth Financial or Canada Guaranty.
It can range from 0.6% to 4.5% of the mortgage amount. The premium is added to your total mortgage amount and paid over the life of your mortgage.
Title insurance
This insurance protects against losses from ownership disputes, liens, and defects in the title of a property, ensuring the buyer's legal ownership rights. You pay this one-time fee to your lawyer.
The price ranges from $250 to $400.
Ontario new home warranties plan act fee
Protects buyers of new homes by ensuring builders adhere to a warranty that covers defects and other issues. Tarion, a non-profit organization, administers it.
The warranty fees range from approximately $600 to over $2,000, typically paid by the builder, who may pass on the cost to you.
HST
Only applies to new and substantially renovated homes, but rebates may be available
13% of purchase price
Adjustments & financial reconciliations
Where certain prepaid expenses by the seller are reimbursed by the buyer. These expenses are pro-rated, meaning the buyer reimburses the seller for the portion of the cost that covers the period after the buyer takes ownership. Examples include property taxes, condo fees, utilities, fuel oil, rent and security deposits, or prepaid service contracts.
Varies widely
Ontario Home insurance
Insures your home against fire, damage, and more. Mandatory if you have a mortgage in Ontario.
$800-$2000 annually.
Final thoughts on finding the best mortgage rates in Ontario
If you're shopping for your first home, be prepared. Work to improve your credit score and use the time to save for a larger down payment and closing costs. That money in your pocket will go a long way to a smoother home-buying experience. Get pre-approved for your mortgage. When you need a mortgage, shop around, consider the best loan type and term for you and your family, and remember to negotiate the rate and all those closing costs.
Start shopping early to renew your mortgage or refinance your home. Don’t wait for your current lender’s renewal offer (they prey on procrastinators). Shop around, find a few rates with terms and conditions that appeal to you and then negotiate among them, especially with your current lender. Don’t hesitate to switch lenders—and be mindful of any fees. If you can, take the time to reassess your financial goals, make a lump sum payment, and review your budget to see if you can shorten the amortization period or if you need to lengthen it to make the money work.
Buying a home is a long-standing commitment. With all the costs of maintenance and renovations over the years, it’s not a commitment to be taken lightly.
Mortgage glossary
Ontario mortgage rate glossary
Basis points. A basis point is one-hundredth of a percentage point (0.01%). Think of basis points as a way to describe changes in interest rates and other financial percentages. For Ontario mortgage rates, a small change in basis points can significantly impact the total interest paid over the life of a mortgage.
Let’s say your Ontario mortgage rate is 5% on a 25-year mortgage for a $300,000 house. Using our Ontario mortgage calculator, your monthly payment is $1,746.03. A 25 basis point increase in your mortgage rate would increase your monthly payment to $1,788.85 (or an increase of $42.82 per month)
Prime rate. The prime rate is the interest rate banks use as the basis for their own rates. The Bank of Canada's policy interest rate heavily influences the prime rate. Any rate swings in variable and adjustable-rate mortgages are due to changes in the prime rate. When the prime rate changes, these mortgage rates change accordingly. A higher prime rate will increase the cost of borrowing.
Amortization period. The amortization period is the total length of time it takes to pay off a mortgage in full (assuming regular payments and no changes in the interest rate). The amortization period doesn’t directly affect your Ontario interest rate. A longer amortization means paying more interest on your mortgage. Shorter amortization periods lead to higher monthly payments but lower total interest costs.
Debt-to-income ratio (DTI) or Gross-Debt-to-Income (GDI). A measure of an individual's monthly debt payments compared to their gross monthly income. Lenders use DTI to assess borrowers' ability to manage monthly payments and repay debts. A lower DTI can help secure a better mortgage rate.
First-Time Home Buyer Savings Account (FHSA). A tax-advantaged savings account in Canada designed to help first-time homebuyers save for their first home. Contributions are tax-deductible, and withdrawals to purchase a first home are tax-free.
Canada Mortgage and Housing Corporation (CMHC): A government agency that provides mortgage liquidity, assisting in creating a stable housing market and financial system in Canada. It offers mortgage loan insurance for high-ratio mortgages (less than 20% down payment).
Land transfer tax (LTT). A tax the buyer pays when a property changes hands. In Ontario, the amount varies based on the property's purchase price. First-time homebuyers may be eligible for a rebate of all or part of this tax.
Loan-to-Value Ratio (LTV). The ratio of the loan amount to the appraised value or purchase price of the property, expressed as a percentage. It helps determine the loan-to-value ratio, which lenders use to assess the loan risk. The lower the ratio, the less risky the loan is for the lender.
Bond yields. Bond yields represent the return an investor realizes on a bond. You can calculate the yield as the annual interest payment divided by the bond's current market price. Essentially, it reflects the income you expect from the bond, expressed as a percentage. For fixed-rate bonds, the yield inversely correlates with the bond's price: as the price of a bond increases, its yield decreases, and vice versa.
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