Scotiabank (TSE: BNS) is the third largest bank in Canada in terms of assets and market capitalization, with a market cap of over $90 billion as of July 2021. This makes Scotiabank a Tier 1 Canadian bank, and one of Canada’s Big 6 Banks. Incorporated in 1832, Scotiabank has established itself as Canada's most international bank, with extensive operations throughout Latin America, the Caribbean, Central America and parts of Asia. Scotiabank offers a diversified portfolio of financial services to customers with four distinct business lines: Canadian Banking, which makes up 37% of the company's earnings, International banking which makes up 16%, Global Banking and Markets, making up 29%, and Global Wealth Management, which makes up 18%. In total, Scotiabank has over 900 branches in Canada and over 2600 branches and offices worldwide. This allows Scotiabank to have over 90,000 employees across 120 countries, while serving 23 million customers globally.
A Scotiabank fixed rate mortgage reduces the risk of any future interest rate changes by letting you keep your interest rate the same over your mortgage term. This can give you peace of mind especially if you are a new homeowner or have a large mortgage amount, which is why it's very common for buyers to get fixed rate mortgages. If you are arranging a mortgage for a future or current home, your fixed interest rate can be guaranteed for up to 130 days before the closing date on your home. If interest rates go up during that time, you will be guaranteed the lower rate still.
The rates shown are for insured mortgages with a down payment of less than 20%. You may get a different rate if you have a low credit score or a conventional mortgage. Rates may change at any time.
A Scotiabank variable rate mortgage provides you with a fixed mortgage payment, however the interest rate and amount of interest you will pay will fluctuate with the prime rate. Should the prime rate rise, more of your monthly payment will go towards interest payments, while if the prime rate falls, more of your monthly payment will go towards your principal balance. Although this makes it a helpful option if you expect interest rates to fall, the stability that a fixed rate mortgage offers may be your best option if you are risk-averse.
Another form of a variable rate mortgage offered by Scotiabank is a convertible mortgage. This type of mortgage will allow you to have a variable interest rate while having the option to convert to a fixed mortgage rate in the future. This can provide you with some benefits if interest rates fall, while providing you with the stability long term of a fixed interest rate.
The rates shown are for insured mortgages with a down payment of less than 20%. You may get a different rate if you have a low credit score or a conventional mortgage. Rates may change at any time.
The Bank of Nova Scotia was started in 1832 in Halifax, Nova Scotia by a group of merchants and citizens that wanted to have a public bank. Upon its inception, Scotiabank was operating in challenging times, however continued to survive and grow its business slowly until it merged with The Union Bank of Prince Edward Island, which allowed it to to expand its operations across Canada and abroad.
By the year of 1910, Scotiabank was the 6th largest bank in Canada, merging with multiple banks over the next decade and going from 97 branches in 1910 to 306 branches in 1923. As the 1950’s rolled around, Scotiabank was busy introducing new products to the market, including a bank deposit account with an interest rate that was linked to the prime rate. Innovations like this helped increase Scotiabank's market share in Canada to over 13% by 1970.
In the late 1980s and early 1990s, Scotiabank was back acquiring more financial institutions, including Mccloud Young Weir Limited in 1988, Montreal Trust in 1994, and The National Trust Company of Toronto in 1997. During the 2000s, Scotiabank continued to acquire financial institutions, however this time the bank focused on growing its wealth management business and acquiring banks abroad. To grow wealth management, Scotia bought ETrade Canada in 2008, Dundee Wealth in 2011, Jarislowsky Fraser in 2018, and MD Financial Management in 2018 as well. To grow its presence abroad, Scotia bought Censosud in Chile in 2015, The Discount Bank in Uruguay in 2016, BBVA in Chile in 2018, and CitiBank Columbia in 2018.
If you are self-employed or working in a commission based occupation, Scotiabank self-employed mortgages can help you purchase a home. You will need a minimum downpayment of 10% of the purchase price to be able to qualify for a self-employed mortgage with mortgage insurance. If you do not qualify for mortgage insurance, you will need at least 20% down. In order to get a self-employed mortgage, you will also need to have a good credit score, sufficient income, and to pass a mortgage stress test.
All 6 major banks in Canada offer mortgages to self-employed individuals, with the following requirements and minimum down payments:
|Bank||Additional Requirements||Minimum Down Payment|
|RBC||Notice of Assessment(s) and proof of self-employment status.||No mortgage insurance: 20%+, 5% - 19.99% with mortgage insurance|
|TD||Last two Notice of Assessments, information on your debts and assets.||No mortgage insurance: 20%+,|
5% - 19.99% with mortgage insurance
|Scotiabank||Proof of income and Notice of Assessments.||10%|
|BMO||T1 form for the last 2 years and financial statements for the last 3 years.||No mortgage insurance: 20%+, 5% - 19.99% with mortgage insurance.|
|CIBC||2 or more years of financial statements, a list of assets and liabilities, article of incorporation.||No mortgage insurance: 20%+, 5% - 19.99% with mortgage insurance|
|National Bank||Having been self-employed for at least 2 years, with proof of 2 years or more of good financial and credit management.||10%|
As the COVID-19 crisis hurt many gig-economy workers and small businesses, it may mean that the amount of income you have earned has fallen drastically over the last 12 to 18 months. Since Scotiabank and other lenders will look at your last two years of income tax returns and business financial statements, you may be restrained in how much you are able to borrow for the next 2 years. As well, the pandemic may have eaten away at your ability to save up a 20% down payment, which may also mean the added cost of getting private or CMHC mortgage insurance.
If you or a family member plan on occupying the property as a principal residence, you may be able to put down as little as 5% of the purchase price for a high-ratio mortgage. If not, you will need a 20% down payment or more because you will be ineligible for mortgage insurance. As well, to cover your down payment you may be able to use your existing home equity if you have some.
If your vacation home isn't your primary residence, you will be charged capital gains taxes if you decide to sell the property and the sale price is higher than your adjusted cost basis. Your adjusted cost basis is your purchase price plus the cost of any renovations you have done on the property.
Another important tax consideration is on your rental income if you rent the property out when you are not using it. This will allow you to earn income, while also allowing you to subtract any costs of renting the property out from the income you make. This means you will be able to deduct the cost of expenses for the property for when you aren't using it, along with depreciation to drastically reduce the taxes you would pay on your rental income from the property.
Depending on if you plan on occupying part of the investment property, you may only need as little as 5% down because you will be eligible for mortgage insurance. If not, you will need at least 20% down. Other options to purchase an investment property include leveraging existing home equity if you already own a property through the Scotia Total Equity Plan (STEP). STEP allows you to use your existing home equity to cover a downpayment.
To qualify for a mortgage loan for an investment property, you will need:
What To Consider When Purchasing An Investment Property
Three major factors that you should consider when determining if a rental property is the right investment for you are:
The Price: When you are trying to determine if what you are paying is a fair price or not, using comparable sales nearby and a calculation called a capitalization rate (Cap rate) can help you make a more informed decision. A property’s cap rate is the operating income the property brings in after expenses, divided by the purchase price. Usually the higher the cap rate is, the better the returns that can be made renting it out. Buying a property with a high cap rate may be more risky however, as a higher cap rate is usually because the properties location or condition might not be desirable. However, a property with too low of a cap rate may make it hard to generate worthwhile returns from renting it out, especially with the risk and time commitment involved in an investment property.
Expenses: Common expenses you can expect to cover as a landlord include:
Location: When you are looking for the right location to purchase a property in, it's important to pick a city and location that is growing, has a stable economy, and has a low crime rate. All of these factors will influence your ability to not only rent out the property, but also will help the property appreciate in value. If you pick an area that is not very desirable, it may also become hard to rent the property out and you may not be able to raise your rental rate over time because there isn't much demand to live in the area.
If you are planning on purchasing an investment property that you will not live in, if and when you go to sell the property you will incur a capital gains tax if you sell it for a profit. The way to calculate if you are selling a property at a profit is by getting your adjusted cost basis by adding your total purchase price along with any renovations done on the home over time, then subtracting this amount from your sale price after the cost of selling the home.
Another important tax implication for a rental property is how rental income is calculated. When you own an investment property, you are able to reduce your taxable income with operating expenses, interest costs and depreciation associated with the property. This means that it's likely you will pay a low tax rate.
With the Scotia Total Equity Plan (STEP), you are able to borrow against the home equity that you have built up in your home. With STEP, you only need to have at least 20% of your home's value in equity to be able to access this money. STEP allows you to save money on interest payments by letting you consolidate multiple credit products under the plan. Since it is backed by the value of your home, the interest rate you will pay will be very attractive. Some of these credit products you can use with STEP include: your mortgage payment, line of credits, and credit cards. As you continue to pay down your mortgage over time and as this leads to you having more equity in your home, your credit limit for the plan will automatically increase.
STEP is very simple and works in 3 steps:
With a low interest rate that is much lower than other credit products such as a credit card, STEP will give you more flexibility in where and how you spend your money. Potential uses for STEP include:
Every major Canadian bank offers a similar product to STEP, where you are able to access the equity in your home as you pay down your mortgage. These programs are:
|RBC Homeline Plan|
|TD Home Equity Flexline|
|Scotia Total Equity Plan|
|BMO Homeowner Readiline|
|CIBC Home Power Plan|
|National Bank’s All-in-One|
Scotiabank posted rates are the official rates used when calculating your mortgage break penalty, which is the fee you will pay if you want to break your mortgage or refinance early.
Similar to RBC, TD, BMO, and National Bank, Scotiabank will calculate your penalty based on a method called the interest rate differential, and will use this as your penalty if it is larger than 3 months worth of interest payments. The way that the interest rate differential method works is Scotiabank will compare the interest rate on your mortgage to the posted rate that is similar in length to how long is remaining on your mortgage term. To get how much the mortgage break penalty would be you multiply the difference between the interest rate on your mortgage and the posted rate by your mortgage amount, then multiply that by how long is remaining on your mortgage term.
You have a $200,000 mortgage and 2 years left on your term. If the posted rate for a 2-year term is 3% and your mortgage rate is 3.5%, then the difference between your mortgage rate and the posted rate is 0.5%. With $200,000 left on your mortgage and with 2 years left on your term, you multiply 0.5% by $200,000, than by 2 years to get a mortgage break penalty of $2000.
|Bank or Lender||Variable Rate Mortgage||Fixed Rate Mortgage|
|3 Months’ Interest||Greater of 3 Months’ Interest or the IRD amount|
Are you looking to pay off your mortgage early? Or refinance the terms of your mortgage at a lower interest rate? Maybe you sold your home and purchasing a new home, in which a mortgage transfer will apply. Whatever the case, you most likely will have to pay a mortgage break penalty set by your lender. Whatever the situation, our Scotiabank prepayment charge calculator will help you determine the cost to break your mortgage so you can be confident about your mortgage decisions.
This is an add-on feature to your monthly Scotiabank mortgage payments that will give you the peace of mind with your mortgage being covered if anything happens to you in the form of a critical illness, disability, or death. These forms of mortgage protection insurance will be offered to you when you complete your home purchase and receive your mortgage, and your payments will not increase over the time you have coverage. Coverages will be offered to you for your first 30 days risk-free, meaning that if you do decide to cancel your mortgage protection insurance coverage, you will receive your money back. Coverages for mortgage life insurance and critical illness insurance are calculated per $1000 in coverage, with the following monthly rates:
|Age||Life Insurance||Life Insurance on a $500k Mortgage||Critical Illness||Critical Illness Insurance|
on a $500k Mortgage
Note: Premium rates are current as of September 2022
Considering that there is no health check and only a few verbal health questions before you're accepted, mortgage protection insurance can also be a good way for someone not eligible for individual life insurance to get some form of coverage.
All of the major banks in Canada also offer this add-on coverage, however Scotiabank allows you to cover the largest amount of mortgage balance, with a $1,000,000 mortgage life insurance limit:
|Coverages Offered||Mortgage Life, Critical Illness, and Disability Insurance.||Mortgage Life and Critical Illness Insurance.||Mortgage Life, Critical Illness and Disability Insurance.|
|Mortgage Life Insurance Coverage Limits||$750,000||$500,000||$1,000,000|
|Coverages Offered||Mortgage Life, Critical Illness, Disability, and Job-Loss Insurance.||Mortgage Life, Critical Illness, and Disability Insurance.||Mortgage Life, Critical Illness, and Disability Insurance.|
|Mortgage Life Insurance Coverage Limits||$600,000||$750,000||$1,000,000|
This feature lets you pay up to double your normal monthly mortgage payment each month. If you do decide to pay more of your mortgage each month, the extra payment will go solely to reducing your mortgage principal, meaning you will pay less interest over your term and pay down your mortgage much quicker.
Scotia’s Match-A-Payment is a very helpful tool, however all 6 Canadian banks offer similar options to help pay down your mortgage quicker:
|Bank||Feature||How Often Can You Use It?|
|RBC||You can Include an additional monthly mortgage payment in-addition to regular payments.||Monthly|
|TD||You can Include an additional monthly mortgage payment in-addition to regular payments.||Yearly|
|Scotiabank||You can Include an additional monthly mortgage payment in-addition to regular payments.||Monthly|
|BMO||Permanently raise your monthly mortgage payment by up to 20%.||Yearly|
|CIBC||You can Include an additional monthly mortgage payment in-addition to regular payments.||Monthly|
|National Bank||You can Include an additional monthly mortgage payment in-addition to regular payments.||Monthly|
This feature will help you manage any sudden interruption to your life or your finances by allowing you to miss a mortgage payment if you have already doubled a payment once in your term. Although using Scotiabank’s Miss-A-Payment feature will result in your mortgage being paid down slower and more interest being charged over your term, it can give you valuable time to recover from an unforeseen event, such as a job loss.
Although MIss-A-Payment will allow you to miss a mortgage principal and interest payment, it won't mean you don't have monthly payments to make. If you have mortgage protection insurance or pay your property tax through Scotiabank, you will still need to pay these monthly commitments.
4 of the 6 major banks in Canada offer mortgage holders the flexibility of missing a monthly payment over their term. The banks that do not offer a similar feature are National Bank and CIBC:
|Bank||How The Feature Works|
|RBC||Skip up to the equivalent of 1 months worth of mortgage payments every 12 months.|
|TD||Skip up to the equivalent of 1 months worth of mortgage payments every 12 months.|
|ScotiaBank||Skip up to the equivalent of 1 months worth of mortgage payments if you have prepaid at least one payment during your term.|
|BMO||Skip up to the equivalent of 1 months worth of mortgage payments every 12 months.|
|CIBC||CIBC does not offer this feature.|
|National Bank||National Bank does not offer this feature.|
Scotiabank’s Annual Mortgage Prepayment Privileges: For closed mortgages where you are not able to pay off or refinance your mortgage in full without paying a break penalty, Scotiabank offers annual mortgage prepayment privileges. These privileges allow you to pay 15% of your mortgage principal off per year without a penalty on most mortgages, helping you to become mortgage-free much faster.
All 6 big banks in Canada offer different mortgage prepayment terms:
|Annual Prepayment Privileges||10%||15%||15%||20%||20%||10%|
Note: Limits are for closed mortgages and are current as of September 2022. Your actual limit may vary depending on your mortgage agreement.
|Yearly Prepayment Privileges|
Depending on your mortgage agreement and if Scotiabank wants you to pay municipal property taxes through them, you may need to pay your property taxes in monthly installments along with your mortgage payments. Even if you are not required to pay this way, Scotiabank will let you still pay your property taxes through them if you choose to.
Multiple factors go into Scotiabank’s decision to have you pay property taxes through them instead of directly to your municipality. These include:
Depending on these factors, Scotiabank may be less comfortable with you paying the property taxes yourself. The reason the bank cares so much is because if you fail to pay your property tax amount, the municipality has the ability to put a lien on your property. This lien takes priority over the money you owe the bank, meaning that the bank would need to pay off the lien before getting possession of the house if you were to default on your mortgage.
When you sign up for your mortgage and fill out the agreement between you and Scotiabank, they will include if you need to pay through them. If you are required to pay through them, your monthly payments will be estimated based on the information that you receive from your municipality and give to Scotiabank.
If you do not have to pay through Scotiabank then you will be required to present proof of payment within 30 days after the due date. As well, Scotiabank will also check with the municipality to see if you have paid your taxes in full and on time.
When you are ready to get a mortgage, it is a good idea to have the the documents below prepared for your meeting. Your Scotia mortgage representative will also ensure you have homeowners insurance.
|Agreement of Sale|
|Copy of Deed|
|Two forms of Identification|
|Recent Payment Slip|
|Land & Building Tax and Water Rates|
|Confirmation of Savings/Debt Information|
If you are looking at purchasing a home and you need a mortgage, getting pre-approved before you start your home search can help you monumentally. A mortgage pre-approval is when you fill out an application with your lender, and that lender then provides you with a commitment to providing you a mortgage. During this process you will learn how much the bank is willing to lend to you and what the terms of the mortgage will be. Although a pre-approval is a commitment to provide the funds offered, you will still need to go through a final approval process before you will get the mortgage loan.
Some of the information you will need to complete your mortgage pre-approval application include:
With the process of getting a mortgage pre-approval not costing you money and being quick especially when done online, there is limited downside to getting one. The benefits of getting a pre-approval however are:
Considering that the information that you will learn during your pre-approval process will be crucial in your home buying process, getting pre-approved before you start seriously searching is usually your best course of action. If you decide to wait until you find a house that you want to put an offer in before getting pre-approved, your offer will not look as appealing to sellers because you may need to put in a financing condition.
Scotiabank offers you the opportunity to get a mortgage pre-approval either online or in-person at your local Scotiabank branch. Both ways of getting pre-approved have their pros and cons to be aware of. Doing your pre-approval application in-person will allow you to discuss your options with a knowledgeable representative, which can help you feel more confident about the home buying process as the representative answers your questions and gives you added reassurance. An online pre-approval gives you the benefit of being able to fill out the application from the comfort of your home, while the pre-approval process is also much faster. Online pre-approvals can be processed in minutes, while in-person applications may take a few days to process.
Scotiabank offers you the convenience of getting a mortgage in a branch, over the phone, and online. The phone number to call to speak with a Scotiabank mortgage representative is 1-877-303-8879. To find a location to visit in order to meet with a representative, the Scotiabank branch locator will guide you to a location in your area, and will also provide you with directions. As you search for a branch to visit, you are also able to see the hours of operations and the languages available at the branch, so that you can find the right branch to book an appointment at. Scotiabank’s institution number is 002.
As a way to get a better understanding of what the experience of banking at and getting a mortgage with Scotiabank would be like, we analyzed user reviews from the websites InsurEYE and PlanetRate:
InsurEYE: 3.4/5 from 54 reviews
PlanetRate: 3.1/10 from 70 reviews
|✔ Pros||✖ Cons|
Along with all the other big 6 banks in Canada, you are no longer able to make a mortgage deferral request with Scotiabank. If you are in a position where you are experiencing financial difficulties, talking with a Scotiabank representative about your options may be helpful.