|Lender||Variable Rate||Fixed Rate|
Rocket MortgageMore From Rocket Mortgage
First NationalMore From First National
Alterna SavingsMore From Alterna Savings
EquitableMore From Equitable
ICICIMore From ICICI
HSBCMore From HSBC
Kawartha Credit UnionMore From Kawartha Credit Union
TDMore From TD
Investors GroupMore From Investors Group
Canada LifeMore From Canada Life
BMOMore From BMO
DesjardinsMore From Desjardins
RBCMore From RBC
First OntarioMore From First Ontario
National BankMore From National Bank
CIBCMore From CIBC
TangerineMore From Tangerine
Simplii FinancialMore From Simplii Financial
DUCAMore From DUCA
LaurentianMore From Laurentian
MeridianMore From Meridian
motusbankMore From motusbank
ScotiabankMore From Scotiabank
CMLSMore From CMLS
Canadian WesternMore From Canadian Western
ManulifeMore From Manulife
Home to 38.7% of Canada’s population, it is no wonder that Ontario accounts for close to 38% of all new housing starts and construction in Canada. With the Government of Ontario projecting Ontario’s population to increase from 14.7 million in 2020 to over 20 million by 2046, and with net migration accounting for 83% of the population growth during this period, Canada’s most populous province will continue to lead the country in real estate activity.
While the Toronto housing market will naturally be top-of-mind when thinking about places to buy a home, increasing numbers of homebuyers are looking outside of the big cities. A Fall 2020 survey by RE/MAX found that 32% of Canadians no longer want to live in large urban centres, and that 48% want to live closer to green spaces. This suggests activity in suburban areas will remain strong into the future.
Early 2021 saw a large spike in the number of mortgages being registered in Ontario. $23.9 billion of mortgages were registered in January 2021 alone, the largest amount in a single month in seven years. This was largely driven by growth in the number of first-time home buyers in Ontario, with numbers of transactions not seen since Teranet started collecting data in 2015. Meanwhile, the number of non-first-time home buyers in January 2021 was below the peak seen in 2017.
The average price of a house in Ontario rose 37.6% from the year before to $866,307 in May 2021, according to the Canadian Real Estate Association. In Toronto, the average sold price of a house was well over $1.1 million in May 2021. The competitive nature of Ontario’s housing market means that lenders compete to offer low mortgage rates to Ontario mortgage borrowers.
With such a bustling real estate market comes a multitude of mortgage lenders for homebuyers to choose from. Naturally, Canada’s Big Banks (RBC, TD, Scotiabank, CIBC, BMO) operate in Ontario and are also the largest lenders: The Big Five held 72.6% of all mortgages in Ontario in 2018. Other banks accounted for 7.7%, credit unions made up 6.1%, while B Lenders such as monolines and trust companies made up another 6.1%. Finally, private lenders accounted for 6.7% of all mortgages in Ontario.
|Lender||Number of Branches in Ontario||Value of Canadian Residential Mortgages1 (End of 2020)||Average Mortgage Rate of Outstanding Mortgages1 (End of 2020)|
|Meridian Credit Union||89||$11 Billion||-|
|National Bank||65||$65 Billion||-|
|Desjardins Ontario Credit Union||44||$5.51 Billion||-|
|Alterna Savings||36||$2.03 Billion||-|
|FirstOntario Credit Union||29||$3.35 Billion||3.64%|
|Kawartha Credit Union||22||$1.27 Billion||3.59%|
|DUCA Credit Union||16||$3.10 Billion||3.55%|
|Laurentian Bank||3 by appointment only||$15.98 Billion||2.96%|
|Canadian Western Bank||1||$6.07 Billion2||3.40%2|
|First National||Brokers across Ontario||$83.6 Billion||-|
|CMLS||Brokers across Ontario||-||-|
|MCAP||Brokers across Ontario||-||-|
|Canada Life||Advisors across Ontario||$22.24 Billion||-|
|Investors Group||Advisors across Ontario||-||-|
|Lender||Value of Canadian Residential Mortgages1 (End of 2020)||Average Mortgage Rate of Outstanding Mortgages1 (End of 2020)|
|Equitable Bank||$17.13 Billion||3.99%|
|Manulife Bank||$20.40 BIllion||-|
|Ontario||Toronto||Non-Big 8 Markets|
|Big Five Banks||72.6%||74.0%||71.3%|
Looking specifically at Toronto, the numbers dramatically change. The Big Five Banks hold 74% of all mortgages in Toronto, with other banks, such as HSBC, at 8.7%, credit unions at 2.9%, and Ontario private mortgage lenders at 8.9%. What stands out is the much lower market share that credit unions have, which is half of their province-wide share.
The opposite is true when we look at Ontario’s smaller real estate markets. Outside of Ontario’s Big Eight Real Estate Markets (Toronto, Ottawa, Mississauga, Brampton, Oakville, Hamilton, Vaughan, and Markham), the Big Five Banks have 71.3% market share, while credit unions have 8.6%, and private lenders at 6.1%. Credit unions are more popular in smaller Ontario markets than they are in Toronto, while private lenders have a slightly lower share.
Private lenders are also more popular in Toronto compared to Ontario as a whole. This may be due to higher house prices in Toronto. The average Canadian mortgage held at a private mortgage lender in 2019 was $254,986, while the average mortgage held at a bank is $220,650. People turned down for a mortgage by a bank may be turning towards private lenders as an alternative.
Increasing home prices may also attract the attention of private lenders as homeowners’ equity rises with prices. Those seeking to unlock their home’s equity can find the numerous numbers of private lenders to be enticing, however they can come with much higher mortgage rates along with additional fees, and negative changes in housing prices can leave you underwater.
With the Greater Toronto Area projected to grow by 36.7% to 9.5 million by 2046, and with the GTA estimated to account for 49.8% of Ontario's population, alternative and private lenders will play an increasingly larger role in the GTA.
Demographics also play a large role in what kind of mortgage lender a homebuyer will choose to work with. 21.3% of Generation Z in Ontario (those under 24 years old) have their mortgage through a private mortgage lender, compared to only 5.7% of Millenials.
|Big Five Banks||Credit Unions||Other Banks||Private Lenders||Trust Company|
|Gen Z (Under 24)||55.9%||2.2%||16.7%||21.3%||3.9%|
|Gen X (40-54)||71.2%||3.2%||8.8%||5.6%||11.1%|
|Baby Boomers (55-73)||73.9%||3.7%||8.0%||6.1%||8.3%|
|Above 74 years old||75.7%||4.6%||7.3%||6.4%||6.2%|
There are also smaller mortgage lenders that specialize in certain customer groups. Wealth One Bank of Canada is a federally regulated bank that focuses on self-employed borrowers, newcomers, and those with foreign income sources.
The five-year fixed mortgage is the most popular mortgage option in Ontario as it offers the perfect balance between predictability and stability in mortgage payments, while not being excessively long. With a five-year fixed mortgage rate, you will be locking your mortgage interest rate and mortgage payments for five years. During this time, your payments and interest rate won't change.
49% of all outstanding Canadian mortgages in late 2020 were five-year fixed-rate mortgages. More and more Ontarians chose five-year fixed mortgages in 2020 as interest rates fell, showing that Ontarians particularly favour fixed rates if interest rates are currently low so as to lock-in these low rates.
How are 5-year fixed mortgage rates set in Ontario? They follow the 5-Year Government of Canada bond yield, with 5-year fixed mortgage rates generally priced at a spread above the government bond yield. This spread can narrow or widen due to various factors.
For many homeowners, the mortgage renewal process can be a hassle. From comparing rates, setting up appointments, gathering documents, and signing papers, the process can take up time, especially if your mortgage term is only one or two years. Having to renew your mortgage every two years can feel like a burden to some borrowers.
Not having to worry about mortgage rates and renewing for five years gives many homeowners peace of mind, and they’re willing to pay for this through a slight premium on their mortgage rate. While 2-year and 3-year mortgage terms might have a lower mortgage rate, the small premium for a 5-year mortgage term allows more time for homeowners to not have to worry about their mortgage.
If you’ve got a particularly good deal and are happy with current low mortgage rates, you might decide to lock-in your rate for a longer term. Locking in a rate for 5 years lets you avoid any short-term fluctuations in market interest rates. A 2-year term term won’t give you much time to enjoy your interest savings, and it’s possible that interest rates may increase during these two years, meaning that you’ll need to renew again at a higher rate.
There were over 1,600 licensed mortgage brokers and 12,000 licensed mortgage agents in Ontario in 2018 by the Financial Services Commission of Ontario. This includes over 1,200 principal brokers. The large number of mortgage brokers opens up plenty of options for you, making it easier to get the best mortgage rate in Ontario. 61% of first-time homebuyers consulted with a mortgage broker, while 39% obtained a mortgage through their mortgage broker. Mortgage brokers can not only make the mortgage process easier, they may also be able to access lower mortgage rates through their network of lenders and through negotiating on your behalf.
Dominion Lending Centres is Ontario’s largest mortgage brokerage and is also among Canada’s largest mortgage brokerages. It’s also Canada’s only publicly traded mortgage brokerage, trading on the TSX Venture Exchange under the ticker “DLCG”. Dominion Lending Centres has 554 franchises, 6,592 mortgage brokers, and funded over $51 billion in mortgages across Canada in 2020. Dominion Lending Centres two main broker subsidiaries are:
M3 Financial Group claims to be the largest non-bank mortgage originator in the country, funding $54 billion in mortgages in 2020. M3 works with 133 mortgage lenders, helping borrowers get the best possible mortgage rate. M3 Group has over 6,000 brokers across Canada and includes well-known names such as:
Some other major mortgage brokerages in Ontario are:
Chartered banks, including banks in Ontario, are federally regulated. Federal regulators include the Financial Consumer Agency of Canada (FCAC) and the Office of the Superintendent of Financial Institutions (OSFI). Banks that are members of the Canadian Deposit Insurance Corporation (CDIC) will also need to follow CDIC’s by-laws.
In Ontario, credit unions and mortgage brokerages are regulated by the Financial Services Commission of Ontario (FSCO), now known as the Financial Services Regulatory Authority (FSRA).
Private mortgage lenders do not need to be licensed in Ontario if they source through a licensed mortgage broker, however private lenders dealing directly with the public will need to be licensed.
Ontario credit unions are also regulated by the Financial Services Regulatory Authority (FSRA). Provincial credit unions that are members of the Deposit Insurance Corporation of Ontario (DICO) will also need to follow DICO’s by-laws.
|Regulators||Laws and Regulations|
|Banks||Financial Consumer Agency of Canada (FCAC)|
Office of the Superintendent of Financial Institutions (OSFI)
Canada Deposit Insurance Corporation (CDIC)
|The Bank Act|
102 Regulations, including:
Cost of Borrowing (Banks) Regulations (SOR/2001-101)
Mortgage Insurance Business Regulations (SOR/2010-68)
|Credit Unions||Financial Services Regulatory Authority (FSRA)|
Deposit Insurance Corporation of Ontario (DICO)
|Credit Unions and Caisses Populaires Act, 1994|
Ontario Regulation 237/09
Ontario Regulation 238/09 (Cost of Borrowing and Disclosure to Borrowers)
|Mortgage Brokers||Financial Services Regulatory Authority (FSRA)||Mortgages Act, 1990|
Mortgage Brokerages, Lenders and Administrators Act, 2006
13 Regulations, including:
Ontario Regulation 191/08 (Cost of Borrowing and Disclosure to Borrowers)
Ontario Regulation 409/07 (Mortgage Brokers and Agents: Licensing)
It’s important to check to see if your mortgage broker or agent is licensed. You can check to see if they are licensed by searching for your broker or agent on FSRA’s website.
Ontario’s Mortgage Brokerages, Lenders and Administrators Act outlines responsibilities that mortgage lenders have. For example, a mortgage broker has a duty to verify a borrower's identity, to verify that a borrower has the legal authority to obtain a mortgage for a property, and to ensure the accuracy of a borrower's mortgage application.
A mortgage broker must ensure that the mortgage will be suitable for the borrower, including disclosing any risks that the mortgage might have. For mortgages of $400,000 or less, a mortgage broker cannot require a borrower to make a deposit. Brokers need to keep mortgage agreements and other related documents for at least six years after the term of a mortgage ends.
For reverse mortgages, borrowers need to provide a written statement from a lawyer that shows that the borrower has received independent legal advice.
Lenders will need to disclose required information to the borrower at least two business days before a mortgage agreement is signed. This disclosure includes the cost of borrowing, which needs to include things such as the mortgage principal, total amount of payments, APR, an amortization schedule, and any brokerage fees.
This disclosure is also required to be given to borrowers at least 21 days before renewal. The cost of borrowing of the mortgage when renewed, including the mortgage rate, cannot be higher than the cost of borrowing shown in the disclosure statement.
For mortgages with a term length longer than 5 years, no prepayment penalties can be charged other than three months of interest once 5 years has passed.
In 2017, Ontario’s mortgage arrears rate was 0.1%. At the end of 2020, 0.12% of mortgages in Ontario were delinquent for at least 90 days. This is lower than Canada’s national average of 0.25%.
If a mortgage has been delinquent for more than three months in Ontario, the borrower has defaulted and the lender will have a power of sale. Ontario’s Mortgages Act regulates powers of sale in Ontario. A power of sale allows the mortgage lender to sell the property to recover their loss. Before the property can be sold, the lender will need to provide written notice to the borrowers at least 45 days before the sale. This notice can be provided as soon as 15 days after default. Written notice by registered mail is required for deceased borrowers.
Lenders can sell the home without providing notice to the borrower if the lender requests for a power of sale without notice from a judge of the Ontario Superior Court of Justice.
Dominion Lending Centres alone funded 51,486 Canadian mortgages in 2020. Ontario's mortgage industry is a multi-billion dollar one, and while less than 30% of Canadians have a mortgage, 60% of homeowners do have a mortgage. FSCO estimates that Ontario mortgage loans reached $1.4 trillion in 2015, with billions more in mortgages being borrowed every year. In 2020, RBC lent out an additional $19 billion in mortgages to Ontarians, while HSBC lent out $1.27 billion.
The high level of household debt means that mortgage payments make up a large amount of Ontarians budgets. In Toronto, the average monthly scheduled mortgage payment was $1,866 in 2021. In lower cost areas of the province, such as Windsor, the average monthly mortgage payment was $1,082. While Windsor mortgage rates can be different from Toronto mortgage rates, this difference in mortgage payment amounts is mostly due to significantly higher home prices, and higher mortgage balances, in the GTA.
|City||Average Monthly Mortgage Payment|
|Kitchener - Cambridge - Waterloo||$1,438|
|St. Catharines - Niagara||$1,204|
If you've been comparing mortgage rates online, you might be wondering why mortgage rates for refinancing are higher than initial purchase mortgage rates for when you're buying a home, or even when you’re transferring your mortgage and switching to a new lender. A quick look at the list of Ontario mortgage rates above separate rates into three categories: new mortgages, switch/transfer, and refinancing. For TD, refinance mortgage rates are 0.10% higher than new mortgage rates, while for First National it can be as much as 0.40% higher.
There are a few reasons for this difference between refinance and new purchase rates. The first is added risk with some mortgage refinances. With a cash-out refinance, you’re increasing your mortgage so that you can borrow more money to use for things like debt consolidation or home renovations. As you’re increasing your mortgage balance, you’re increasing your level of debt. A higher loan-to-value (LTV) ratio makes your mortgage more risky, which can explain the higher mortgage rate for refinancing. Your mortgage payments will also be larger, which can make it more difficult for some borrowers to afford.
What if you’re not looking to borrow more money, and you’re just looking to lock-in a lower mortgage rate? If so, you’re actually reducing the risk of your mortgage, as a lower mortgage rate can allow for smaller mortgage payments. You’ve also shown a history of regular mortgage payments, which makes you more reliable compared to a borrower looking to purchase a new home with no mortgage payment history with the lender. Are refinance rates still higher?
The answer is that it depends on the lender. Mortgage lenders concentrate their efforts on certain areas. For example, some B-lenders might focus only on originating new mortgages which they can then bundle and pool into mortgage-backed securities (MBS), which they then sell off to investors. As their business is in originations, lenders that focus on mortgage originations might want to have competitive new purchase mortgage rates, while their refinance mortgage rates are less of a priority.
The opposite can also be true, where some lenders want to direct their attention on refinancing rather than new purchases. For example, MCAP's refinance mortgage rates were 0.05% lower than their new purchase rates in July 2021. Other lenders might have their refinance rates being the same as their new purchase rates, such as Scotiabank.
One might even speculate that some lenders purposely have higher refinancing rates to discourage borrowers from refinancing at a lower rate, or to make up and partially offset losses from lower mortgage interest payments should a borrower refinance.
In Ontario, the average home sold price was $866,000 in May 2021. If you're looking to buy a house in Ontario with a home purchase price of $866,000, then your minimum down payment would need to be 7.11%. This is because the minimum down payment is 5% for the amount under $500,000, and 10% for the remainder up to $999,999. In this case, your down payment would need to be at least $61,573.
Along with a $32,177 CMHC insurance premium for making a down payment less than 20%, your required mortgage amount for an average Ontario home would be $836,604. To put this into perspective, you would need to have a household income of at least $150,000 with no other monthly expenses in order to afford a mortgage for the average home price in Ontario.
If you make a down payment of 20% to avoid the cost of the CMHC insurance premium, your down payment would need to be at least $173,200. Your mortgage amount would then be $692,800.
Looking at CMHC data on the average value of a new mortgage in 2021, the average new mortgage in Ontario was $403,720 in 2021. In comparison, the average new mortgage in Toronto was $499,640. Other areas of the province can be significantly lower. For example, the average new mortgage amount in Sudbury was $209,599.
|City||Average New Mortgage Amount|
|Kitchener - Cambridge - Waterloo||$368.730|
|St. Catharines - Niagara||$305,595|
You might be wondering why the average home price in Ontario is $866,000 while the average new mortgage amount in the province was only $403,720. That’s because most mortgage borrowers in Ontario make a down payment that is larger than 20% for a new mortgage. In this case, these numbers suggest that the average down payment would be 53%.
Looking at the 2020 annual reports of major banks gives us a better clue of average down payments in Ontario. For HSBC, 82% of HSBC's Ontario mortgages were uninsured, which means a down payment of at least 20% is required. Out of these uninsured mortgages, the average loan-to-value (LTV) was 63.2% for new mortgage originations in Ontario. That would be the same as a 36.8% average down payment.
Other banks have similar numbers. RBC's average LTV for Ontario mortgages was 71%, CIBC was 63%, and Scotiabank was 64.1%. This shows that most borrowers make a down payment that is more than the minimum down payment. This reduces the average new mortgage amount to be lower than what is required.
|Bank||LTV||Equivalent Down Payment|
Toronto’s housing market is expensive, which means that your average Toronto mortgage will be larger than those seen in the rest of the province.
Looking at Toronto housing market data, the average sold price in May 2021 was $1,108,453. Since the purchase price is over $1 million, you will need to make a down payment that is at least 20%, or $221,691. This would make a required mortgage of $866,762.
The table below shows the minimum required down payment and mortgage amount for the average detached home, semi-detached home, townhouse, and condo apartment in Toronto for May 2021. Since the average purchase price of a townhouse and condo is below $1 million, the required down payment is less than 20%.
|Property Type||Average Sold Price||Minimum Down Payment||Mortgage Amount|
Comparing mortgage rates in Ontario is especially important due to Ontario mortgages being generally large. A small difference in Ontario mortgage rates can result in you paying thousands of dollars more on your mortgage.
For example, let’s look at the impact of a mortgage rate that is 20 basis points (0.2%) more than a mortgage rate offered by another Ontario mortgage lender on a mortgage of $886,762, the average required mortgage for Toronto.
With a fixed mortgage rate of 2% for five years, the total interest paid over the five years would be $79,546, while your monthly mortgage payment would be $3,670. At an Ontario mortgage rate of 2.2%, your total interest cost over the 5-year term would be $87,637, while your monthly mortgage payment increases to $3,755.
This shows that the difference between a 2% mortgage rate and a 2.2% mortgage rate can mean paying an additional $8,091 in interest over five years. It pays off to get the lowest mortgage rate!
Newcomers to Ontario, including new immigrants, might find it difficult to get a mortgage in Ontario. The largest barrier for newcomers would be their lack of Canadian credit history. That’s why many major banks and lenders offer mortgage programs for Ontario newcomers.
To qualify for mortgage options for newcomers, you will either need to be a permanent resident or have a temporary resident status. If you have permanent residence (PR) status, you will usually only be eligible for newcomers mortgage programs if you have been in Canada for less than five years. If you're a non-permanent resident looking to get a non-resident mortgage, then you must have a work permit.
Banks that offer mortgage programs for newcomers to Ontario include RBC, Scotiabank, TD, and CIBC.
Many other Ontario mortgage lenders offer special mortgage programs for newcomers. For example, Alterna Savings gives a 0.10% discount off their posted mortgage rate for newcomers getting a mortgage that is larger than $150,000, and a 0.05% discount for mortgages smaller than $150,000. An Ontario mortgage broker can also help newcomers with getting a mortgage.
Ontario mortgage lenders will require you to get mortgage default insurance if you make a down payment that is less than 20%. For some lenders, you might still need insurance even if you make a down payment that is as large as 35%.
CMHC provides mortgage default insurance through their CMHC Newcomers insurance, which has the same CMHC premiums as their regular mortgage insurance. To qualify for the CMHC Newcomers program, permanent residents will need to have a minimum credit score of 600, or be able to provide alternative sources of credit if they don't have a Canadian credit history, such as rent payments. If you don't have a history of regular rent payments, then you will need to provide proof of regular payments of three other obligations. Alternative obligations will need to be regularly scheduled for the previous 12 months, such as utilities, cable, insurance premiums, or savings.
For non-permanent residents from the United States, the CMHC will use an international credit report to obtain their U.S. credit history. For non-permanent residents for other countries and if an international credit report is not sufficient, the mortgage lender may ask the borrower for a letter of reference from a financial institution.
Non-permanent residents must make a minimum down payment of at least 10% for CMHC-insured mortgages, and they can only purchase 1-unit owner-occupied properties. Permanent residents can purchase properties with up to 4-units, such as rental properties, including non-owner occupied properties.
Ontarians have enjoyed particularly low mortgage rates in Ontario in 2020 and 2021, but that seems to be changing over the next few years. The Bank of Canada plans on possible rate hikes in 2023, while some of Canada's major banks are forecasting the Bank of Canada to increase rates as early as 2022. Increases in the Bank of Canada's policy rate would mean that Canada prime rates will increase. Increasing prime rates will increase Ontario’s variable mortgage rates.
RBC Economics predicts that the Bank of Canada's policy rate will increase from the current 0.25% to 0.75% by the end of 2022, while TD Economics predicts that it will increase to 0.5% by the end of 2022. A jump from 0.25% to 0.75% means that the overnight rate would increase by 300%. Looking at prime rates, Desjardins predicts the prime rate to be as high as 3.45% by the end of 2022, a large increase over the current prime rate of 2.45%. Ontario variable mortgage rates may become much higher in a few years.
Ontario fixed mortgage rates, largely driven by government bond yields, will also face upwards pressure. Desjardins expects their posted Ontario fixed mortgage rates increasing to up to 6.95% by 2024, with a lower range of 4.55%.
Getting the lowest mortgage rate in Ontario doesn't mean that you need to be a perfect borrower, but you may still need to meet a few general requirements. High-ratio mortgages with mortgage default insurance will generally have Ontario’s best mortgage rates. To qualify for mortgage insurance, such as CMHC insurance, you’ll need to meet some of CMHC’s eligibility requirements. The CMHC changed their mortgage rules in July 2021.
To qualify for a CMHC-insured mortgage, you will need to have a minimum credit score of 600. You'll also need to have debt service ratios of 39% or less for Gross Debt Service (GDS) and 44% or less for Total Debt Service (TDS). The home purchase price must be less than $1 million, and your mortgage amortization can’t be more than 25 years.
Meeting these requirements makes you eligible for insured mortgages, which have better rates than uninsured mortgages. However, although insured mortgages have the lowest mortgage rates in Ontario, you’ll need to pay for mortgage insurance premiums.
Having a higher income gives you access to lower rates and can make you eligible for a larger mortgage amount. Having a low income, bad credit score, and a high LTV will generally cause you to have higher mortgage rates.
If you make a down payment that is larger than 20% but you still meet CMHC’s mortgage rules, you have an insurable mortgage that can still qualify for low mortgage rates. For more information on the differences, visit our insurable vs uninsurable mortgages page.
Most mortgages in Ontario are uninsured. 74% of RBC mortgages in Ontario are uninsured, with 26% being insured. 74% of CIBC’s Ontario mortgages are also uninsured. For CIBC's uninsured mortgages, the average LTV on their outstanding mortgages was 52%. CIBC's insured mortgages had an average LTV of 55%.
67% of HSBC’s Ontario mortgages are uninsured, while TD is at 73%.
|Lender||% of Mortgages Uninsured||% of Mortgages Insured|
Some mortgage lenders are only available in Ontario. This is most commonly the case for credit unions, who are provincially regulated. There are over 70 credit unions that only operate within Ontario. This includes FirstOntario Credit Union, Alterna Savings, Community Trust, DUCA, Kawartha Credit Union, and Meridian, which are credit unions that only operate and originate mortgages within Ontario. Alterna Bank, a subsidiary of Alterna Savings, offers mortgages to all provinces, excluding Quebec.
Founded over 80 years ago, FirstOntario Credit Union has grown to become the sixth largest credit union in Ontario. You will need to be a member of FirstOntario Credit Union in order to be eligible for a mortgage with them. FirstOntario only offers mortgages for properties within Ontario. FirstOntario membership shares cost $5 each. Members 21 years of age or over must have at least five membership shares, with their total shares increasing to at least 30 shares over 25 years. This means that if you were to have a mortgage with FirstOntario for 25 years, you would need to have purchased at least $150 in membership shares.
FirstOntario is a member of the Credit Union Central of Ontario, which allows FirstOntario to offer CMHC-insured high ratio mortgages alongside traditional mortgages. High-ratio FirstOntario mortgage rates can be lower compared to mortgages without CMHC insurance. In addition to CMHC-insured mortgages, FirstOntario’s high ratio mortgages can also be insured by Sagen (Genworth) or Canada Guaranty.
FirstOntario is an active part of the local community, especially in their main servicing regions of Hamilton, Halton, Niagara, and Southwest Ontario. FirstOntario is committed to local football and hockey teams (Hamilton Tiger-Cats and Hamilton Bulldogs), and invests back into the community through the FirstOntario Centre, FirstOntario Concert Hall, FirstOntario Performing Arts Centre St. Catharines, and the FirstOntario Arts Centre Milton.
FirstOntario Credit Union members received $623,000 in dividends in 2020. With 1.8 million membership shares, each share would have received a $0.34 dividend. This is equivalent to at least $1.70 per member in 2020.
Kawartha Credit Union has 22 branches across the Kawartha Lakes region of Ontario. Founded 60 years ago, Kawartha Credit Union now has over 70,000 members with a local presence in Cornwall, Huntsville, Kingston, Parry Sound, Trenton, Cobourg, Bracebridge, Peterborough, and more. Kawartha membership shares are $5 each. You'll need to purchase at least 5 membership shares in order to be eligible for Kawartha's products and services. Kawartha Credit Union only offers mortgages for properties within Ontario.
Kawartha Credit Union is a member of Credit Union Central of Ontario, which means that Kawartha can offer high-ratio mortgages with CMHC, Genworth, or Canada Guaranty mortgage insurance.
In addition to member shares, you'll receive Affinity Shares, which is based on the total balance of your loan and deposits. An annual cash dividend is paid to Affinity Shares members. In 2019, the dividend was $0.47 for every $1,000 balance.
For example, if you have a $500,000 mortgage with Kawartha Credit Union, you would have received $235 in cash in 2019. Combined, Kawartha handed out over $1.1 million in profits through their Affinity Shares dividends in 2019. This extra bonus can help indirectly reduce your Kawartha Credit Union mortgage rate.
Kawartha Credit Union has given away over $2 million to local community programs, including donations to food banks, local hospitals, shelters, and universities and colleges.
Meridian Credit Union is the largest credit union in Ontario and the second largest in Ontario. 370,000 members trust Meridian with over $23 billion in assets spread out over 92 branches throughout Ontario. Meridian Credit Union mortgages are only available for residents of Ontario. Meridian's savings and chequing accounts are open to anyone in Canada. Meridian offers high-ratio mortgages with CMHC insurance.
Meridian offers Rate Scoops, which are alerts sent a few days before any Meridian mortgage rate changes.
To become a member, you'll need to purchase a Meridian membership share. Membership shares are $1 each. Meridian members can hold up to 1,000 membership shares (for a total of $1,000) per member. You can also choose to invest in Meridian's Class A Shares, which provide a minimum dividend of 4% per year. Class A shares cost $1 each, and you can buy as little as you’d like.
Many major banks and lenders offer rental property and investment property mortgages if you're looking to purchase an investment property, such as for generating rental income. The down payment required for a rental property will depend on whether or not you will also be living in the property.
For a duplex, which is a home with two units, the minimum down payment is 5% for the first $500,000 and 10% on the remainder if one of the units is owner-occupied. For triplex or quadplex multi-family homes that are owner-occupied, the minimum down payment is 10%. If the property will not be occupied by the owner, then the minimum down payment is 20%.
When applying for a mortgage, your lender may consider rental income when calculating your debt service ratios. Some lenders might only consider 50% of your rental income when adding it to your household income. You may be required to provide form T776 Statement of Real Estate Rentals, provide current lease agreements, or your opinion of current market rent.
If you're looking to purchase a rental property that has more than four units, then you will need to get a commercial mortgage. Applications for commercial mortgages can be more difficult, and commercial mortgage rates can be higher than rates for residential properties with four units or less.
Ontario's housing market is one of Canada's most active and expensive markets. The average home in the province sold for $857,754 in June 2021, a 26.1% year-over-year increase. The majority of this increase has come from detached and semi-detached properties in the suburbs of Southern Ontario where prices have risen by 20+% in most regions. Ottawa's housing market has also seen an incredible climb upwards this past year with average sold prices up by more than 20% for most property types, including condos.
Looking at housing prices in Ontario over the past 35 years, house prices have more than tripled. Statistics Canada’s new housing price index gives us a look at how house prices and land prices have changed in Ontario from 1986 to 2021. This price index follows changes in the selling prices of new homes.
Over those 35 years, Ontario housing prices have increased by 342%. Ontario land prices have increased by 251%.
Over the same period, Canadian housing prices increased by 277%, while Canadian land prices increased by 279%. Ontario’s real estate market outperformed the country in housing prices, but slightly lagged behind in land prices.
While Ontario real estate shows impressive returns over this 35 year period, there were times when prices dropped or stagnated. For example, Ontario housing prices fell close to 21% from 1990 to 1992, while the cost of land only fell 11%. Housing prices in Ontario wouldn’t recover to 1990-levels until 2002, 12 years later. This means that if you bought a home in Ontario in 1990, your home would have been worth less than your purchase price for 12 years.
There were also times that Ontario’s housing market did exceptionally well. From 2003 to 2008, housing prices increased close to 24%, while land prices increased 14%.
For Ontario land prices, the cost of land has lagged behind increases in the cost of houses in recent years. The opposite was only seen from 1986 to 1990, when high inflation levels pushed up the price of land. In this period, Ontario land prices increased by 203%, while home prices increased 166%.
Refinancing your mortgage makes sense if:
You might decide to refinance your mortgage if current mortgage rates are significantly lower than your fixed mortgage rate. However, it doesn’t always make sense to refinance if rates aren’t significantly lower, or else the cost of mortgage penalties would eat up your interest savings.
For example, let's look at a $500,000 mortgage with monthly payments and a 25-year amortization. You signed a 5-year closed mortgage two years ago with a fixed mortgage rate of 3%. There's three years left in your mortgage term, but current 5-year fixed mortgage rates are only 1.99%. Does it make sense to refinance your mortgage?
If you decide not to refinance, you'll be paying $42,912 interest over the remaining three years at the 3% mortgage rate. If you do refinance, you will pay $28,360 interest over the remaining three years at a 1.99% mortgage rate. However, you will be charged a $9,900 mortgage break penalty. This leaves you at a net savings of $4,652. In this case, refinancing can save you $4,652 over three years.
If current rates aren't that much lower than your fixed rate, it might not make sense to refinance. If current rates are 2.5%, you will pay $35,697 interest over the remaining three years. After the $9,900 mortgage penalty, you'll be at a $2,685 net loss. The mortgage penalty is greater than your interest savings!
The remaining term of your mortgage will also affect the payoff of refinancing early. With three years remaining when comparing a 3% mortgage rate and a 2% mortgage rate, you will save $4,652 after penalties for a $500,000 mortgage. If there are four years remaining on your mortgage term, you’ll have more time to enjoy the interest savings, with $5,794 net savings.
Having one year remaining on your current term will reduce potential refinancing savings to $1,155, while six months remaining will cause a $1,286 net loss.
If you’re looking to refinance to lower your mortgage interest rate, then your mortgage amount, term remaining, and the difference in rates will affect your potential mortgage interest savings. With Ontario mortgage rates expected to rise over the next few years, you might even want to consider renewing or refinancing your mortgage early. To see your potential interest savings for refinancing your Ontario mortgage, visit our mortgage refinance calculator.
You can use a mortgage refinance to borrow money by using your home equity. You can refinance your mortgage up to 80% of your home's value. The difference between your mortgage refinance amount and the current amount of your mortgage will be the additional amount of money that you are borrowing.
For example, if your home is worth $1 million and you currently have a mortgage of $500,000, you can refinance your mortgage up to $800,000. The difference, $300,000, is the additional amount that you are borrowing.
With a cash-out refinance, you will receive this amount in cash. You can then use it for large expenses such as home improvements or renovations, for investing, paying off debt, or for large purchases. For smaller purchases, or if you need to access your home equity often, a home equity line of credit (HELOC) might be a better option than a mortgage refinance.
Ontario’s competitive housing market means that many home buyers in Ontario are making offers to buy houses with no conditions. Unconditional offers, which include no property inspection, financing condition, or condition about the sale of the buyer's home, can be very risky and dangerous, but are becoming more and more commonplace. Even so, having a finance condition can be very important for home buyers when making an offer,
A financing condition protects you if you're not able to get financing to purchase the home. Many Ontario home buyers still put a financing condition in their offer even if they're pre-approved for a mortgage because pre-approval still doesn't guarantee that you'll get a mortgage. The only guarantee for a mortgage is when you are approved for a mortgage.
You might be declined for a mortgage even if you have been pre-approved if your financial situation has greatly changed. If you've lost your job or declared bankruptcy in the period between receiving your mortgage pre-approval and when it's time for final mortgage approval, you might not be approved for a mortgage.
Other reasons might be that you were pre-approved for a set amount, but the actual amount that your mortgage can be is smaller. This can happen if a home appraisal shows that the property has a significantly lower value than expected, or if your current financial situation doesn't warrant as high of a borrowing amount.
Not having a finance condition can be risky. If you're not approved for a mortgage or you're not approved for the full amount, you'll need to come up with the difference. Backing away from the sale and breaching the contract means that you will lose your deposit and you can even be sued by the seller.
The Ontario Mortgages Act gives certain rights to mortgage borrowers, also referred to as mortgagors.
Some mortgage rights include: