Are you in the market for a new mortgage or looking to refinance your current one? As a Canadian homeowner, securing the best mortgage rates is crucial. A 5-year fixed rate can provide stability and peace of mind when it comes to your monthly payments. But with so many options out there, how do you know where to start? Fear not! We’ve done the research and compiled a list of the best mortgage rates Canada has to offer for 5 years fixed mortgages. So sit back, grab a cup of coffee, and let’s dive into this exciting topic together!
What are the best mortgage rates in Canada?
Mortgages are an essential part of purchasing a home, and finding the best mortgage rate can save you thousands of dollars over the life of your loan. As a resident of Canada, you have several options when it comes to securing a mortgage, and with so many lenders offering different rates, it can be challenging to determine which one is the best fit for you. In this article, we’ll take a closer look at the best mortgage rates in Canada and what you should consider when selecting a mortgage.
What is a Mortgage Rate?
A mortgage rate is the interest rate charged on a mortgage loan. It is the cost of borrowing money from a lender to purchase a home, and it is usually expressed as a percentage. The mortgage rate you receive will depend on several factors, including your credit score, the amount of the down payment you can afford, and the term of your loan.
Fixed vs. Variable Mortgage Rates
When it comes to choosing a mortgage, you’ll need to decide whether you want a fixed or variable rate. A fixed-rate mortgage has an interest rate that remains the same throughout the term of the loan, usually between 1-10 years. A variable-rate mortgage has an interest rate that fluctuates based on market conditions, and it can change at any time during the term of the loan.
Fixed-rate mortgages are the most popular choice in Canada, with around 70% of homebuyers opting for this type of loan. They provide certainty and stability, which makes budgeting easier. With a fixed-rate mortgage, you’ll know exactly how much your monthly payments will be for the entire term of the loan. However, you’ll typically pay a slightly higher interest rate than with a variable-rate mortgage.
Variable-rate mortgages are less popular but can offer more flexibility. The interest rate on a variable-rate mortgage can fluctuate with the prime lending rate set by the Bank of Canada. If the prime rate goes down, your interest rate and monthly payments will decrease. If the prime rate goes up, your interest rate and monthly payments will increase. While variable-rate mortgages can be riskier, they often have lower interest rates, which can save you money over the life of the loan.
Best Mortgage Rates in Canada
When shopping for a mortgage, it’s essential to compare rates from multiple lenders. While the best rate will depend on your specific financial situation, here are some of the best mortgage rates currently available in Canada.
- Scotiabank
Scotiabank offers some of the lowest fixed and variable mortgage rates in Canada. Their 5-year fixed mortgage rate is currently 1.99%, and their 5-year variable rate is 1.80%. While these rates are low, it’s important to note that they may not be available to all borrowers.
- TD Bank
TD Bank offers competitive rates on both fixed and variable mortgages. Their 5-year fixed mortgage rate is currently 2.14%, and their 5-year variable rate is 1.85%. They also offer a unique “mortgage switch” program, which allows existing customers to switch to a new TD mortgage without paying any legal or appraisal fees.
- RBC Royal Bank
RBC Royal Bank offers low rates on both fixed and variable mortgages. Their 5-year fixed mortgage rate is currently 2.24%, and their 5-year variable rate is 1.83%. They also offer a “mortgage special” program, which provides additional discounts to borrowers who have a qualifying RBC account.
- BMO Bank of Montreal
BMO Bank of Montreal offers competitive rates on both fixed and variable mortgages. Their 5-year fixed mortgage rate is currently 2.24%, and their 5-year variable rate is 1.90%. They also offer a unique “cash back” program,
How to get the best mortgage rate in Canada?
Buying a home is a significant investment, and securing a mortgage is an essential part of the process. The mortgage rate you receive can have a significant impact on your financial future, as it determines the amount of interest you’ll pay over the life of your loan. With so many lenders offering different rates, finding the best mortgage rate in Canada can be a daunting task. In this article, we’ll discuss some strategies to help you get the best mortgage rate possible.
- Improve Your Credit Score
Your credit score is one of the most critical factors that lenders consider when determining your mortgage rate. A high credit score indicates that you’re a responsible borrower and less of a risk for the lender. If your credit score is less than ideal, you may want to take steps to improve it before applying for a mortgage.
You can improve your credit score by paying your bills on time, reducing your debt, and avoiding new credit applications. The higher your credit score, the more likely you are to receive a lower mortgage rate.
- Increase Your Down Payment
The down payment is the amount of money you put towards the purchase of a home. The larger your down payment, the less money you need to borrow, which can result in a lower mortgage rate. A down payment of 20% or more may also allow you to avoid paying mortgage default insurance, which can add thousands of dollars to the cost of your loan.
If you’re not able to put down 20%, you may still be able to secure a lower mortgage rate by increasing your down payment. Even a small increase in your down payment can make a difference in the rate you receive.
- Shop Around
It’s essential to shop around and compare rates from multiple lenders before committing to a mortgage. Different lenders may offer different rates and terms, so it’s essential to do your research to find the best option for you.
You can work with a mortgage broker to help you compare rates and find the best deal. Mortgage brokers have access to multiple lenders and can negotiate on your behalf to get the best rate possible. Just be aware that some brokers may charge a fee for their services.
- Choose the Right Term
The term of your mortgage is the length of time you have to pay back the loan. The most popular mortgage terms in Canada are five years, but you can choose a term between one and ten years.
Shorter-term mortgages typically have lower interest rates than longer-term mortgages, but your monthly payments will be higher. Longer-term mortgages have higher interest rates but lower monthly payments. Choosing the right term depends on your financial situation and goals. If you can afford higher monthly payments, a shorter-term mortgage may save you money in the long run.
- Consider a Variable-Rate Mortgage
While fixed-rate mortgages are the most popular in Canada, variable-rate mortgages can offer lower interest rates. With a variable-rate mortgage, your interest rate fluctuates based on market conditions. If interest rates go down, your payments will go down. If interest rates go up, your payments will go up.
Variable-rate mortgages can be riskier than fixed-rate mortgages, but they can also save you money in the long run. If you choose a variable-rate mortgage, make sure you can afford higher payments if interest rates increase.
The different types of mortgages available in Canada
When it comes to buying a home, most people will require a mortgage to finance their purchase. A mortgage is a type of loan that is used to buy a property, with the property acting as collateral for the loan. In Canada, there are several different types of mortgages available to borrowers. In this article, we’ll take a look at the most common types of mortgages in Canada.
- Fixed-Rate Mortgage
A fixed-rate mortgage is the most common type of mortgage in Canada. With a fixed-rate mortgage, the interest rate remains the same for the entire term of the loan, usually between one and ten years. This type of mortgage is ideal for borrowers who want predictable monthly payments and the security of knowing their interest rate won’t change.
One potential downside of a fixed-rate mortgage is that the interest rate is typically higher than other types of mortgages. Borrowers may also face penalties if they want to pay off their mortgage early or refinance before the end of their term.
- Variable-Rate Mortgage
A variable-rate mortgage is a type of mortgage where the interest rate fluctuates based on market conditions. With a variable-rate mortgage, the interest rate can go up or down, which can affect the amount of your monthly payment.
Variable-rate mortgages typically have lower interest rates than fixed-rate mortgages, but they can be riskier since the interest rate can go up. This type of mortgage is ideal for borrowers who are comfortable with a bit of uncertainty and want to take advantage of lower interest rates.
- Open Mortgage
An open mortgage is a type of mortgage that allows borrowers to pay off their mortgage in full or make extra payments without incurring penalties. This type of mortgage is ideal for borrowers who have the flexibility to pay off their mortgage early or who want to take advantage of lower interest rates in the future.
Open mortgages typically have higher interest rates than closed mortgages, but borrowers have more flexibility when it comes to paying off their mortgage.
- Closed Mortgage
A closed mortgage is a type of mortgage that has restrictions on prepayments or early mortgage payments. With a closed mortgage, borrowers are typically limited to making prepayments up to a certain amount per year without incurring penalties.
Closed mortgages typically have lower interest rates than open mortgages, but borrowers have less flexibility when it comes to paying off their mortgage.
- Portable Mortgage
A portable mortgage is a type of mortgage that can be transferred from one property to another without penalties. This type of mortgage is ideal for borrowers who plan on buying a new property in the future and want to take their mortgage with them.
Portable mortgages typically have higher interest rates than other types of mortgages, but they can save borrowers money in the long run if they plan on buying another property.
- High-Ratio Mortgage
A high-ratio mortgage is a type of mortgage where the borrower has a down payment of less than 20% of the purchase price of the home. With a high-ratio mortgage, borrowers are required to pay mortgage default insurance, which protects the lender in case the borrower defaults on their loan.
High-ratio mortgages typically have higher interest rates than other types of mortgages, but they allow borrowers to buy a home with a smaller down payment
The pros and cons of fixed and variable mortgage rates
There are a few things to consider when comparing fixed and variable mortgage rates. The main difference between the two is that with a fixed rate, your interest rate will never change for the life of your loan, while with a variable rate it will fluctuate along with market conditions.
The benefits of a fixed rate are that you can budget your monthly payments knowing that they won’t go up, even if interest rates in general do. This can give you peace of mind, especially if you plan on being in your home for many years to come. On the other hand, since variable rates are lower than fixed rates when you first take out your mortgage, you may be able to save some money in interest payments over the life of the loan – as long as interest rates don’t rise too high.
Of course, there is also some risk involved with a variable rate mortgage. If interest rates go up sharply, your monthly payments could become unaffordable. That’s why it’s important to make sure you can comfortably handle an increase in your payments before choosing this type of loan.
How to compare mortgage rates in Canada
When shopping for a mortgage in Canada, it is important to compare mortgage rates from different lenders to get the best deal. Mortgage rates can vary significantly from one lender to another, so it pays to shop around.
There are a few ways to compare mortgage rates. One way is to go to a comparison website like Ratehub.ca or MortgageRates.ca, where you can compare rates from multiple lenders side-by-side. Another way is to contact different banks and credit unions directly and ask for their best rate.
When comparing mortgage rates, be sure to compare apples to apples. That means comparing the same type of mortgage (e.g., fixed vs. variable), with the same term (e.g., 5-year vs. 10-year), and with the same features (e.g., pre-payment privileges). Once you’ve found the best rate, be sure to negotiate with the lender for even better terms.
Conclusion
Finding the best mortgage rates in Canada is an important step when purchasing a home or refinancing. With 5 year fixed rate mortgages being popular, it’s wise to do some research and know your options before committing to one. Fortunately there are several online tools that can help you compare quotes from multiple lenders so you can make sure you get the best deal possible. Additionally, talking with your bank or broker will give you greater insight into how much money you need to spend and what type of interest rate is available for different loan types.