Best Mortgage Rates in Canada
Number of Years
Fixed or Variable
| Lender | Rate | Monthly Payment |
|---|---|---|
Alterna Savings | 1.65% | $1,933 |
nuborrow | 1.69% | $1,942 |
DUCA | 1.84% | $1,977 |
motusbank | 1.89% | $1,988 |
Canada Life | 2.02% | $2,018 |
Equitable | 2.04% | $2,023 |
First National | 2.09% | $2,034 |
Peoples Bank | 2.09% | $2,034 |
Tangerine | 2.14% | $2,046 |
Canadian Western | 2.14% | $2,046 |
HSBC | 2.19% | $2,058 |
Laurentian | 2.20% | $2,060 |
First Ontario | 2.24% | $2,069 |
National | 2.24% | $2,069 |
Simplii Financial | 2.24% | $2,069 |
Scotiabank | 2.29% | $2,081 |
MCAP | 2.34% | $2,093 |
TD | 2.34% | $2,093 |
BMO | 2.34% | $2,093 |
CIBC | 2.37% | $2,100 |
CMLS | 2.44% | $2,117 |
RBC | 2.49% | $2,129 |
Manulife | 2.49% | $2,129 |
Desjardins | 4.74% | $2,705 |
Investors Group | 4.79% | $2,719 |
ICICI | 5.14% | $2,816 |
Notes
- Rates above apply to high-ratio insured mortgages only. You can select other mortgage rates by changing your mortgage reason or down payment.
- Terms and conditions may apply. Promotional rates may apply only to customers with an established credit and employment history. For alternative mortgages, see Private Mortgages in Canada.
| Bank or Lender | Annual Prepayment Limit | Frequency (per year) |
|---|---|---|
RBC | 10% | Once |
TD | 15% | Once |
Scotiabank | Varies, up to 20% | Once |
CIBC | Varies, up to 20% | Once |
BMO | 20% (10% for BMO Smart Fixed Mortgages) | Once |
HSBC | 20% | Once |
Equitable Bank | 15% - 20% | Once |
Peoples Bank | 20% | Once |
First National | 15% | Once |
motusbank | 20% | Once |
Tangerine | 25% | Multiple |
Simplii | Varies, up to 20% | Multiple |
MCAP | Varies, up to 20% | Multiple |
Laurentian | 15% | Once |
National Bank | 10% | Multiple |
Desjardins | 15% | Multiple |
CMLS | 20% | Multiple |
DUCA | 20% | Once |
Manulife | 20% | Multiple |
Coast Capital | 20% (or 30% for “You’re the Boss” Mortgage) | Once (or multiple for “You’re the Boss” Mortgage) |
Alterna Savings | 20% | Once |
Did You Know That Your Downpayment Can Impact Your Mortgage Rate?
The majority of Canadians save at least 20% down when they buy their home. However, did you know that a 20% downpayment usually leads to the highest mortgage rate?
Insured mortgages with a downpayment of less than 20% usually have the lowest mortgage rates. These mortgages, also called high-ratio mortgages, are usually insured by the CMHC or a private mortgage insurer. Lenders are protected by the insurance and due to the lower risk are willing to offer lower rates. However, you will have to pay CMHC insurance premiums, which can cost more than your potential interest savings.
Mortgages with a downpayment of more than 35% also tend to have lower mortgage rates compared to a 20% downpayment. The larger downpayment gives a bigger loss buffer for the lender which lets them offer a lower mortgage rate.
Home Equity Line of Credit Rates
| Lender | Rate | Minimum Monthly Payment (Interest-only) |
|---|---|---|
Laurentian | 2.70% | $225 |
motusbank | 2.75% | $229 |
TD | 2.95% | $246 |
RBC | 2.95% | $246 |
CIBC | 2.95% | $246 |
BMO | 2.95% | $246 |
nuborrow | 2.95% | $246 |
How to Get the Best Mortgage Rates in Canada
Your Downpayment
Recommendation: A down payment of less than 20% or higher than 35%. These are equivalent to a Loan-To-Value (LTV) of more than 80% and less than 65% respectively
Reason: These two ranges reduce the risk of the mortgage for lenders. A down payment of less than 20% requires you to get mortgage insurance, which takes off the risk for the lender. Similarly, a downpayment of more than 35% gives lenders a bigger buffer in case home prices go down or you default on your payments. In either case, lenders can price in less risk into their mortgage rates.
Fixed vs. Variable Mortgages
Recommendation: Choose based on the currently available rates.
Reason: There is no one-sized-fits-all answer as fixed and variable rates can change from day to day. We recommend looking at both options and seeing which has a lower interest rate. Generally, variable-rate mortgages have lower starting interest rates but their rates can move up (and down) with bank Prime rates which follow the Bank of Canada's Target Overnight Rate.
Your Mortgage Term
Recommendation: Stick to the popular 5 year term unless you plan to sell your home earlier.
Reason: The 5 year term is the most popular term length in Canada and is available from most, if not all, lenders. This increases competition and gives you more choices. However, if you break your mortgage early by selling your home or paying it off sooner, you may have to pay significant penalties. If you plan to sell your home soon, choose an open mortgage or shorter term length.
Your Credit Score and History
Recommendation: You should have a good credit score of 640 or above and a credit history of over a year.
Reason: Lenders will use your credit score and history to measure your credit-worthiness and the risk of lending to you. A high credit score and long credit history can show lenders that you are capable of handling loan payments and bills. Learn more about building your credit score.
Using a Mortgage Broker
Recommendation: We recommend using a mortgage broker to find the best available rates.
Reason: There are many lenders in Canada, some of which only offer mortgages through mortgage brokers. To get access to the widest range of mortgage rates, we recommend working with a mortgage broker. Remember that a mortgage broker is always looking to get you the best rate they can while a bank branch advisor or representative's objective is to get you to work with their bank.
Using a Mortgage Broker Can Get You Better Rates From the Big Banks
Mortgage brokers work with most lenders, including the some of the Big Banks: TD, Scotiabank, CIBC, and more. Aside from finding you the best mortgage, they can help you get you an even lower rate through a rate buydown. Your mortgage broker can give up part of their commission to get you a lower rate. This means that by working with a mortgage broker, you can often get a lower rate than you would by working directly with your own bank.
WOWA Commission-Sharing Advantage
Recommendation: By working with WOWA, you can get up to 5 basis points off your lowest rate.*
Reason: If you work with WOWA and get a mortgage from certain lenders, we will share our commission with you and buy-down your mortgage rate. This way, you can get a lower rate than even the lowest rate on the market.
*Applicable to certain lenders only. Availability of buy-down will depend on the specific terms of the mortgage.
Top Real Estate Agents in
Canada's Top Mortgage: the 5-Year Fixed
In Canada, out of the $1.1 trillion CAD in outstanding residential mortgages in May 2020, the 5-year fixed rate mortgage takes the crown with over $570 billion, or almost 50%, of all mortgages in Canada. There are more 5-year fixed rate mortgages than all variable rate mortgages combined. The 5-year fixed rate mortgage is so popular that the CMHC uses the Bank of Canada's 5-Year Benchmark Posted Rate for its mortgage stress test.
Comparison of Fixed-Rate Mortgages in Canada
Mortgage Prepayment Penalties
Fixed Rate Mortgage Penalty Interest Rate
For fixed-rate mortgages, lenders usually use the greater of three months of interest or an interest rate differential (IRD). Each lender has their own IRD calculation. The interest rate that they use for their IRD is usually based on either their current advertised mortgage rates or their posted rates, which can often be much higher.
| Advertised Rate IRD | Posted Rate IRD |
|---|---|
RBC TD Scotiabank CIBC BMO HSBC Peoples Bank motusbank Simplii Laurentian Desjardins CMLS Coast Capital Equitable Bank* | Tangerine Manulife Alterna Savings First National MCAP DUCA |
Variable Rate Mortgage Penalty Interest Rate
Most lenders determine the mortgage break penalty for a variable rate mortgage by calculating three months of interest. The interest rate that they use can depend from lender to lender, but is usually either your current mortgage interest rate or the lender's prime rate.
| Based On Your Mortgage Rate | Based On the Lender's Prime Rate |
|---|---|
RBC TD Scotiabank BMO HSBC Equitable Bank First National motusbank Tangerine MCAP National Bank Desjardins CMLS DUCA Manulife Coast Capital Alterna Savings Laurentian* | CIBC Peoples Bank Simplii Laurentian |
Mortgage Help and Common Questions
Amortization Period
The amortization period is the total length of time over which you plan to pay off your mortgage.
What amortization period should I choose?
While we cannot give advice for your specific situation, here are some general guidelines:
- The most common amortization period in Canada is 25 years. Unless you have specific concerns, a 25 year amortization works well in most cases.
- Choosing a shorter amortization period will lower your lifetime interest cost, but will result in a higher monthly or bi-weekly payment.
- If you choose an amortization period of over 25 years, you must make at least 20% down payment. See the section on CMHC insurance below.
Term
The term of your mortgage is the length of time for which you sign a legal agreement with your lender. For the length of the term, you are obligated to their conditions and penalties.
What term should I choose?
The most common term length in Canada is 5 years. Unless you have specific concerns, a 5-year term generally works well. Each lender will offer different options for term length and rates; contact your lender for more details.
What happens at the end of a term?
At the end of each term, you have the option to renew or refinance your mortgage.
- Renewing your mortgage involves signing for another term with your existing lender. Your monthly payment and interest rate may change.
- Refinancing your mortgage involves signing a new term agreement, possibly with a different rate or lender. Refinancing allows you to take advantage of lower rates or better options not offered by your current lender.
Interest Rates
The interest rate determines how much interest is added to the unpaid portion of your mortgage loan.
How does the interest rate affect the cost of my mortgage?
A higher interest rate can significantly increase your monthly or bi-weekly payment, as well as inflate the term and lifetime cost of your mortgage. Conversely, a lower interest rate can save you tens of thousands of dollars over time.
What’s the difference between a fixed and variable rate?
- A fixed interest rate is guaranteed to remain unchanged for the length of your mortgage term.
- A variable interest rate can change during your mortgage term. This will not affect your mortgage payment for the duration of the term, but adjusts what percentage of your payment goes to paying off the mortgage principal.
What controls a variable interest rate?
Your variable interest rate is directly controlled by your lender via their Prime Rate. Each lender can choose to increase or decrease their own prime rate, in turn increasing or decreasing your variable interest rate.
Lenders will usually adjust their prime rate to reflect changes in the Bank of Canada’s Policy Interest Rate. This means that lenders will tend to have similar or identical prime rates. All major Canadian banks currently have a prime rate of 2.45%.
Should I choose a fixed or variable rate?
Variable rates allow you to take advantage of future decreases in interest rate. On the other hand, fixed rates are preferable if interest rates rise in the future. Unfortunately, long-term fluctuations in the prime rate are difficult if not impossible to predict.
However, a 2001 study found that between 1950–2000, choosing a variable interest rate resulted in lower lifetime mortgage cost than a fixed rate up to 90% of the time. According to the study, if you are comfortable with the risks involved, a variable rate may reduce your long-term mortgage cost.
Payment Frequency
The payment frequency determines how often you will make mortgage payments.
What’s the difference between monthly and bi-weekly payment frequency?
- A monthly mortgage payment is made once per month (12 times per year).
- A bi-weekly payment is made once every two weeks (26 times per year).
Which payment schedule is right for me?
While we cannot give advice for your specific situation, here are some general guidelines:
- Most people choose to synchronize their mortgage payments with their monthly or bi-weekly paycheck.
- Choosing a bi-weekly payment schedule will slightly lower your term and lifetime mortgage cost.
CMHC Insurance
Mortgage default insurance, also known as Canada Mortgage and Housing Corporation (CMHC) Insurance, protects your mortgage lender in the case of default.
Do I need CMHC insurance?
Under Office of the Superintendent of Financial Institutions (OSFI) regulations, you are required to purchase CMHC insurance if your down payment is below 20%.
You may be ineligible for CMHC insurance if:
- your purchase price is $1,000,000 or above, or
- your amortization period is longer than 25 years.
In these cases, you must make a down payment of 20% or higher.
How much does CMHC insurance cost?
Your CMHC insurance cost is calculated as a percentage of your purchase price. The exact percentage depends on your down payment amount, and decreases for larger down payments.
Since March 17, 2017, the following CMHC premiums apply in most situations:
| Down Payment (% of Purchase Price) | 5–9.99% | 10–14.99% | 15–19.99% |
|---|---|---|---|
| CMHC Insurance (% of Mortgage Amount) | 4.00% | 3.10% | 2.80% |
How do I pay for CMHC insurance?
Your lender is actually the party responsible for paying CMHC insurance costs. In the majority of cases, your lender will pass these costs down to you by adding the CMHC insurance premium to your mortgage loan amount. This will slightly increase your monthly or bi-weekly payment.
In some cases, your lender may allow you to pay CMHC insurance costs as a lump-sum, or not pass down the cost to you at all. Contact your lender for more details.
What is a high-ratio mortgage?
A mortgage with a down payment below 20% is known as a high-ratio mortgage. The term ratio refers to the size of your mortgage loan amount as a percentage of your total purchase price.
All high-ratio mortgages require the purchase of CMHC insurance, since they generally carry a higher risk of default.