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The best mortgage rate available at the time of your home purchase can save you tens of thousands of dollars. Even just a little variance in interest rates can mean a huge difference in how much money you spend on your monthly mortgage payments.

What this means is that the extra effort you put into comparing rates across lenders to find a good deal is worth it.

Read on to find out how to go about finding the best mortgage rates available in Canada.

Related: Complete Home Buyer’s Guide for Canadians

The Best Mortgage Rates in Canada

Here are the three options for finding the best available mortgage rates in Canada.

1. Use a Mortgage Broker

Like I mentioned earlier, a mortgage broker works with multiple lenders and financial institutions including banks, trust companies, credit unions and more to get you a low rate.

Instead of shopping around for the best rates yourself and having multiple credit checks that ding your credit score, a mortgage broker can use one credit check to give you access to various lenders.

Mortgage brokers offer you free service (they are compensated by lenders) and they assist you with your application.

A mortgage broker I recommend is Intellimortgage.

Intellimortgage Rates

Why use Intellimortgage?

  • Best rate guarantee: They provide you with a guarantee that your rate will be the lowest in Canada and if you find a lower rate elsewhere, they will match it or pay you $500.
  • After-approval rate guarantee: If mortgage rates fall after you have been approved (by 0.1% or more), you can switch lenders at no cost.
  • Varied lender options: Intellimortgage has access to more than 350 advertised mortgage rates.
  • Closing date guarantee: Your mortgage financing is guaranteed to close on schedule or they will pay you $500 in cash.
  • Convenient application: They handle all the paperwork so you don’t have to worry.
  • No surprise fees: Intellimortgage will not charge you any fees. They are paid by lenders and redirect two-thirds of this fee back to you in lower rates and cash rebates.

Read my complete Intellimortgage review.

2. Use a Mortgage Rate Comparison Site

A rates comparison website aggregates the advertised rates from multiple lenders in one place. You can also look at the terms and conditions of the different offers before making a choice.

A popular mortgage rate comparison site in Canada is Ratehub.

Ratehub Mortgage Rates

Ratehub showcases over 100 mortgage rates on their platform. They also host multiple homeownership-related calculations and resources.

Read my Ratehub review here.

3. Use a Bank

Yes, you may find the best mortgage rate at a bank, especially if it’s an online bank.

Banks sometimes post promotional rates that beat the competition. The problem though is that this is not usually the case.

Digital banks aka online or virtual banks are able to offer better rates than brick-and-mortar banks because they spend less on overhead costs and pass on some of these savings to customers in high-interest savings and low mortgage rates.

Two online banks that routinely offer great mortgage rates are Tangerine and motusbank.

Tangerine Bank Mortgage Rates

Canada’s most popular online bank, Tangerine Bank, often posts some of the best mortgage rates available through a bank.

Read my Tangerine review here.

Credit Unions

If you already bank with a credit union, check what their mortgage rates are. For example, residents of Ontario can take a look at the rates on offer by Meridian credit union and compare them with the rates elsewhere.

Canada Mortgage FAQs

Before you start searching for a competitive mortgage rate, you need to be familiar with some of the related terminologies that will come up. It’s important to understand these basic terms so you can choose the right mortgage for you.

What is a mortgage?

A mortgage is a type of loan you apply for in order to buy a home. The house serves as collateral and you are required to make periodic payments back to a mortgage lender until you pay off your entire mortgage loan.

Amortization vs. Mortgage Term

The amortization period refers to the number of years it will take to pay off your mortgage loan in full. A typical mortgage in Canada has a 25-year amortization period.

On the other hand, a mortgage term refers to the length of time you are locked-in with a lender and are bound by their terms and conditions i.e. interest rates, prepayment terms, and penalties, etc.

The most common mortgage term in Canada is the 5-year fixed rate.

Variable vs. Fixed Mortgage Rate

A fixed mortgage rate is one that stays the same throughout the mortgage term. For example, a 3% 5-year fixed-rate mortgage means that you will pay an interest rate of 3% for 5 years and it won’t change.

A variable mortgage rate varies depending on the prime rate which your lender sets based on the prevailing lending interest rate set by the Bank of Canada.

What this means is that when the prime rate (benchmark rate) goes up, your mortgage rate rises; if the prime rate falls, your mortgage rate drops.

A fixed-rate offers certainty to homeowners and is the most popular type of mortgage. The stability you get often comes at a premium.

A variable-rate can fluctuate during your mortgage term. However, you can save money when the rates are lower. The differential between variable-rate and fixed-rate mortgages has narrowed in recent years.

best mortgage rates canada

Mortgage Broker vs. Bank

Mortgage brokers are specialists who have a connection with multiple lenders. They can help you find the best rates you qualify for and assist you in the application process. Mortgage brokers often have access to mortgage loan offers that are not available publicly.

Banks offer you their own mortgage products and rates which may not be competitive.

Open vs Closed Mortgage

An open mortgage gives you the flexibility to pay off your entire mortgage balance at any time without penalty. This flexibility comes at a premium.

A closed mortgage (most common) restricts you to the agreed mortgage and prepayment terms. You are penalized if you back out of your contract and pay off your mortgage balance before the end of your mortgage term.

Most closed mortgages allow you some flexibility in increasing your mortgage payments or putting down a limited lump-sum.

Conventional Mortgage vs. High-Ratio Mortgage

A conventional mortgage (aka low-ratio mortgage) is one in which the home buyer has a down payment that is 20% or more of the home’s purchase price.

Essentially, for a conventional mortgage, the mortgage loan is not more than 80% of the purchase price of the property. Conventional mortgages are required to be insured by the Canada Mortgage and Housing Corporation (CMHC).

When your down payment is less than 20% of the property’s appraised value, it’s known as a high-ratio mortgage by CMHC and you are required to obtain mortgage default insurance.

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How Much Money Can You Save?

How much money can you save when you shop around for lower mortgage rates?

Here’s an example.

Mortgage Savings Rate Calculation

As of the time of this writing (October 2019):

  • Lowest mortgage rates posted on Intellimortgage: 2.38% 5-year fixed.
  • Lowest rate posted by a Big Five bank: 2.97% 5-year fixed.
  • The difference in mortgage rates: 0.59%

On a $400,000 mortgage loan, you will pay:

  • $1,768.05 monthly (@ 2.38%), or
  • $1,886.83 monthly (@ 2.97%)
  • Difference in monthly mortgage payments: $1,886.83 – $1,768.05 = $118.78
  • Savings in year one: $1,425.36
  • Savings during the 5-year term: $7,126.80

Bottom line: The best mortgage rates at the time of your home purchase can save you a lot of money.

The Best Mortgage Rates in Canada