Ontario is a populous province and is home to the most mortgage lenders in Canada. The province has the most competitive mortgage market since the average mortgage rates are below every other province. Ontario has the most banks, mortgage brokers and credit unions in Canada, and they are vying for your mortgage business. Ontario seems to have the same mortgage selection as any other province, with a high concentration of large mortgages. However, the area has a higher-than-average ratio of mortgages with 30-year amortizations. This is because of increased property values, which lead borrowers to try and minimize their mortgage payments. Here is where to find the best mortgage rates in Ontario.
1. First-time Home-buyer Rebates. Buying a home is expensive if you factor in the closing costs. Fortunately, there are opportunities available to home-buyers.
- RRSP Home Buyer’s Plan. You can take some money out of your retirement plan to help pay the home cost. However, you must be a first-time home-buyer or helping a relative with a disability to qualify for this program.
- First Time Home Buyers Tax Credit. This program lets you claim up to $5000 in tax credits in the same year you buy a home.
- GST/HST New Housing Rebate. This program is only available when you buy an eligible house. Eligible homes include those that have been substantially renovated before purchase or built on owned land.
2. Mortgage Brokers. With thousands of mortgage products available and tens of thousands of licensed mortgage professionals, home-buyers are inevitably overwhelmed with options. So, you must research to navigate the market and understand what mortgage rates are available for you. The first step to buying a home is getting prequalified and issuing the pre approval necessary to start home shopping. The preapproval will let you know the maximum amount you can afford. You will then take the preapproval letter to your real estate agent.
3. How Lenders Determine their Mortgage Rates. Canada has two broad categories of mortgages; fixed-rate and variable-rate. The fixed-rate mortgage is where the borrower’s interest rate remains the same over the entire term of their mortgage. The variable-rate mortgage is where the rate can fluctuate with changes in the bank or lender’s prime rate. The variable option has two types; the typical variable-rate and adjustable-rate mortgage. In the former option, your payment does not change with fluctuations in the prime rate. Instead, changes in the rate determine how much of your mortgage payment goes towards paying interest and principal. In the latter option, your mortgage payment changes as the lender’s prime rate goes up or down. Choosing the best option depends on you. However, research shows that variable-rate mortgage holders pay less interest on their mortgage over time. Canadian homeowners have enjoyed low-interest rates in the past few years. Unfortunately, new applicants will not enjoy the low rates. However, the current mortgage rates seem to be climbing as the Bank of Canada tries to get inflation under control. Ensure you compare mortgage rates from various providers to get the best prices.
