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Mortgage Refinance

TD Bank Mortgage Rates

TD Canada Trust Mortgage Rates

TD Canada Trust is a leading bank based in Canada. It is one of the top 10 North American banks, and for a good reason. TD Canada offers multiple professional financial services, intending to change the lives of their customers and community. Mortgage services are amongst their many services.

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With TD Canada, you can get a mortgage on your home, whether you are a new homeowner or you are making a switch from a different bank. Their mortgage services are comprehensive, affordable, and flexible. Read on to learn more about TD’s mortgage rates and options.

Canada’s Mortgage Rules

TD Canada adheres strictly to the mortgage laws of Canada as a country. Any customer who wants to apply for a mortgage with TD must be familiar with these rules. While your mortgage consultant might run over them with you, there is no harm in knowing some of the basics of Canada’s new mortgage rules. So here they are.

Stress Test: Customers who apply for mortgages are required to pass the qualifying criteria, also known as the stress test. This will determine whether they can afford a mortgage if interest rates increase. A TD mobile mortgage specialist can shed more light on the qualification criteria for individual customers.

Uninsured mortgage rates: Customers should know that the Office of the Superintendent of Financial Institutions has raised the qualifying rate for uninsured mortgages. From the previous 4.79%, it has now been increased to 5.25%. For customers with down payments over 20%, the stress test either uses the new qualifying rate of 5.25% or the customers’ mortgage interest rate plus 2%, depending on which is higher.

Insured mortgage rates: For customers whose down payments are less than 20%, the stress test uses the insured qualifying rate or the customers’ mortgage interest rate plus 2%, depending on which is higher.

These are just a few things to know about the current mortgaging laws before applying for a mortgage loan with TD.

TD’s Mortgage Options

At TD Canada Trust, they offer many different mortgage plans and options for customers. This allows them to cater to the individual needs of customers. Their options include:

First-time homeowners

TD understands the pressure and confusion that accompanies purchasing a home for the first time. This is why they offer mortgage services specifically for first-time homeowners. These services help customers decide on the best home and mortgage plan to suit their budget and tastes. The TD mortgage rate Canada for first-time homeowners varies.

First-time homeowner mortgage services include:

– Helping customers make smart financial decisions on how much they can afford to spend on a mortgage, including their current and future expenses.

– Assisting customers with pre-qualification for loans by assigning them to a loan officer.

– Walking customers through the process of mortgage application with sound financial advice.

– Educating customers on the real estate market, especially as new home buyers, and how to make offers on homes.

Home Loans and Down Payments

TD Bank offers mortgage plans for customers who can only afford to make low down payments due to money shortages. Their home loan options and their features include:

– FNMA Home Ready: 3% minimum down payment and flexible underwriting.

– TD Bank Right Step Mortgage: 3% minimum down payment and payments can come from gifts or grants.

– FHA Mortgage: 3.5% minimum down payment with no income limits.

– FNMA 97 Mortgage: 3% minimum down payment and only applicable for first-time home buyers.

– Veterans Administration Mortgage: no down payment or mortgage insurance required.

– FNMA Refi Now: high debt-to-income ratios and no cash back at closing.

You can get more information about all these home loans and down payment options at TD Bank’s official website.

Construction Loans

TD construction loans offer services to customers that are building new homes or renovating their current homes. TD construction loans offer the following features:

– Flexible down payments

– Both fixed and adjustable-rate options

– Interest-only payments during construction

– Initial loan payment

– Fixed-rate mortgage after construction.

The application requirements for construction loans can be found on TD Bank’s official website.

Mortgage Refinancing

TD Bank also offers mortgage refinancing services. These are applicable for customers who want to change their mortgage plan, lower their monthly payments or make significant purchases.

To apply for mortgage refinancing, customers will have to fill out a mortgage application and submit documents like credit reports. Closing costs will apply and can be up to 1-3% of the new mortgage cost. TD also offers a mortgage refinance calculator to give customers an idea of the probable cost of their new mortgage loan after refinancing.

Mortgage Affordability Calculator

TD offers the opportunity for customers to calculate a range of affordable house prices. This information is useful as customers enter the real estate market and trustworthy as it gives them a price range. All that customers have to do is fill out a questionnaire survey with some key information that will allow the calculator to give you a value for a home you can afford. This information includes details such as your desired location, annual income, monthly expenses, and others.

TD Mortgage Rate Canada

TD mortgage rates in Canada are as follows currently:

Fixed-Rate Mortgages:

I year fixed closed – 2.79%

2 year fixed closed – 3.54%

3 year fixed closed – 3.69%

4 year fixed closed – 4.14%

5 year fixed closed – 3.99%

6 year fixed closed – 5.24%

7 year fixed closed – 5.35%

10 year fixed closed – 5.06%

1 year fixed open:

4.50%

6-month convertible mortgage:

3.04%

5-year variable closed:

TD mortgage prime rate – 0.70%

5-year variable open:

TD mortgage prime rate + 1.00%

Annual percentage rates apply and vary and can be viewed on TD’s website.

Conclusion

TD Bank is a versatile and highly rated bank that offers services of all kinds. The mortgage plans create avenues for all classes of customers to suit their unique needs. The TD mortgage rate in Canada is affordable and can be fixed or variable, depending on what is most convenient to customers.

Whatever your mortgage needs may be, TD bank has an option for you.

TD Mortgage Interest Rates – Frequently Asked Questions.

What is the TD mortgage prime rate?

The TD mortgage prime rate is the standard TD mortgage interest rate for variable rates. Customers that apply for variable interest rates pay in terms of ‘TD mortgage prime rate + or – interest rate’. The TD mortgage prime rate is currently 3.35%

What is the difference between a fixed and variable interest rate?

TD mortgage interest rates can be fixed or variable. Fixed rates remain constant throughout your mortgage payment time. Variable rates may vary monthly depending on changes in the TD mortgage prime rate.

Can mortgage rates be negotiated?

While TD bank has a very vast array of mortgage options, in certain situations, customers could negotiate better rates.

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Mortgage Refinance

The Complete Guide to Mortgage Rates for 2022

Mortgage Rates 2022

A mortgage is an important subject for every homeowner or potential homeowner. Getting a mortgage for your house can be one of the biggest financial decisions you will make, and it is necessary to have the right information needed to make the best choice when it comes to what mortgage type to choose. Different mortgage rates and terms depend on the type of house you want to acquire and your credit score.

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If you are a newbie planning to get your first home through a mortgage, relax; the journey is exciting, and this post will also guide you in understanding how a mortgage works and how to get the best mortgage rates possible. In simple terms, a mortgage is a repayable loan that you can get from the bank or a broker to purchase a home; most times, the loan is often secured by collateral and paid back monthly. In Canada, you must make a down payment on your property to qualify for a mortgage.

Best Mortgage Online has highlighted the mortgage rates available in Canada for 2022 and how to ensure you get the best mortgage rates for your home financing.

Mortgage Rates in Canada

The current mortgage rates in Canada have experienced a significant reduction since the period of the COVID-19 era in 2020 and parts of 2021. Although there are experts’ projections that the mortgage rates will increase before the end of 2022, the increase will still be low or at par compared to what we had before COVID. If you plan to get a house, this might be your best chance of getting the best mortgage rates.

A mortgage rate is determined by the terms agreed upon by the lender. The term means the period where factors like interest rates and payment frequency of the mortgage are in effect. There are differences in the rates that apply depending on the type of lender and the duration of payment. Although mortgage terms are flexible, Canada’s most common term is five years. The mortgage rule is that the lower the number of years, the lower the rate applicable.

Fixed vs Variable Rates

The fixed vs variable mortgage rate is one of a home buyer’s major decisions. A wrong choice can cost you thousands of dollars or save you thousands of dollars if you make a favorable choice. To get the best mortgage rates in Canada, you need to choose between fixed or variable rates. It depends on the type of house you want to mortgage and the duration you propose for completing the payment. Here are the significant differences between fixed and variable rates:

Fixed rates:

  • The interest rates on a fixed mortgage remain unchanged for the entire duration of the mortgage term
  • The rate of a fixed mortgage can be typically high, but it provides a stable repayment plan and amount
  • Breaking the mortgage attracts a high penalty called Interest Rate Differential Penalty

Variable rates:

  • The interest rates on variable mortgages are not fixed and can go lower or higher depending on the current market rate set by the Bank of Canada
  • The initial rate of a variable mortgage is often lower than that of a fixed, but the rate can also be higher at a certain period.
  • The penalty for breaking the variable mortgage is far lower, and you can switch to a fixed rate at any time without breaking the mortgage.

We have put together some of the mortgage rates provided by top lenders in Canada:

LenderFixed MortgageVariable MortgageDuration
Nesto3.44%1.20%5-year
Tangerine3.54%1.37%5-year
Laurentian Bank3.54%2.45%5-year
TD Bank4.59%2.60%5-year
Desjardins Group4.74%2.45%5-year
HSBC4.74%2.65%5-year
BMO4.79%2.45%5-year
CIBC4.79%2.45%5-year
Home Trust Company4.79%2.45%5-year
National Bank of Canada4.79%2.45%5-year
Royal Bank of Canada4.79%2.45%5-year
Banque Scotia4.79%2.65%5-year

How to Get the Lowest Mortgage Rates in 2022

For most individuals, the variable rate is always the best choice due to the many advantages compared to fixed rates. Here are some reasons why variable mortgages might be the best way to get the lowest mortgage rates in 2022.

  • Variable has historically cost less than fixed-rate: The expert report provides that in 90% of most cases, a variable mortgage always has a lower rate than a fixed mortgage. The common fear about variable rates is that they can also increase when the market price surges, but history has proven to us that this rarely occurs. You can save more money by going for a variable mortgage.
  • Effect of COVID–19 on mortgage rate: Despite the health challenges that have occurred because of the pandemic, it has a different effect on the mortgage rate. The pandemic has greatly impacted the economy, and one of the mechanisms of the government to stimulate the economy is to control the interest rates through the Central Bank of Canada. From all indications, the rates will still be kept relatively low in 2022 to continue stimulation.

Comparing Mortgage Rates

Another way of getting the lowest mortgage rates even after selecting a variable mortgage is to compare different mortgage rates. Different lenders offer mortgage services and offer different rates for their services. It is often recommended to compare the different lenders’ rates and select the lowest one with great options.

When comparing mortgage rates across lenders might be tricky for first-time home buyers. The first thing to do is compare the annual percentage rates and not just the interest rates. The annual percentage rates are more comprehensive and include interest rates, fees and other associated costs. A lender might have a low-interest rate but a higher annual percentage rate cumulatively. Calculating the total rates will make your choice of lender much easier.

Conclusion

Mortgages are highly important when it comes to home buying. It is even more important to understand how a mortgage works if you try to save costs. There are commonly two forms of mortgage with different rates. One of the best forms of mortgage rates in Canada is the variable mortgage; it has lower interest rates and allows you to save more money than the fixed rate.

The variable rate is even more advantageous in 2022 since the market has an even lower rate due to the impact of COVID-19 on the mortgage rate. To effectively save cost when it comes to home buying, you can compare the rates offered by different lenders and select the one most appropriate.

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Best Mortgage Online is focused on helping residents of Canada to acquire homes with the best mortgage rates. For more information, you can check https://bestmortgageonline.ca/.

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New Purchase Mortgage

How to Prepare for High Mortgage Rates in Canada

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For the last ten years, Canadians have enjoyed relatively low-interest rates. Not only that, but due to the pandemic, the Bank of Canada lowered its interest rate even more. However, it doesn’t mean things will stay like that forever. There’s an expected increase between April and September.

The increase will come just in time for the busy spring real estate season. Many Canadians wonder, will the increase in interest rates affect them? If you’re one of those people, you’re looking for answers. That’s why we’re here to help.

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Let’s talk see what can be done to prepare for high mortgage rates in Canada.

Real Estate Interest in Canada

The first step is to understand how interest rates work. The bank will give you a specific interest rate when you take out a loan. That is the percentage of your loan that you will have to pay each year. Of course, the higher the interest rate, the more you’ll have to pay back in the long run.

A thing to remember is that not all interest rates are created equal. For example, the Bank of Canada offers three types of mortgages: fixed, variable, and convertible.

  • Fixed Mortgages: A fixed mortgage means that your interest rate will stay the same for the entire term of your loan. That can be helpful if you’re worried about interest rates going up in the future.
  • Variable Mortgages: A variable mortgage means that your interest rate can go up or down, depending on the market. That could be either positive or negative, depending on your situation.
  • Convertible Mortgages: A convertible mortgage is a mix of fixed and variable. That means that your interest rate will start as a variable, but if it goes up too much, you have the option to switch to a fixed mortgage.

How High Mortgage Rates Might Affect You

Now that you understand how mortgages work, let’s talk about how high mortgage rates might affect you.

If you have a variable mortgage, there’s a chance that your monthly payments could go up. That could be a big problem if you’re on a tight budget.

If you have a fixed mortgage, your payments might go down. But the only downside is that you won’t be able to take advantage of lower interest rates in the future.

No matter which type of mortgage you have, it’s essential to make sure that you can afford your monthly payments. That means doing some math and seeing if your current budget can handle a higher interest rate.

What Causes Interest Rates to Fluctuate?

Now that you understand how high mortgage rates could affect you, let’s talk about what causes interest rates to fluctuate.

A few things can cause interest rates to go up or down.

The most common is the economy. The rates will surely go up when the economy is doing well because people are more likely to borrow money. But conversely, when the country’s economy is doing poorly, interest rates will decrease because people are less likely to borrow money.

Another thing that can affect interest rates is inflation. Inflation happens when the cost of goods and services goes up, so you’ll need more money to buy the same thing in the future. So if inflation is high, it’s more likely that interest rates will go up.

The last thing that can affect interest rates is politics. For example, if a new president is elected, they might change their economic policy and cause the interest rate to go down.

Tips for Preparing for High Mortgage Rates in Canada

Now that you know how high mortgage rates might affect you, it’s time to start preparing. Here are some tips:

  1. Start saving: An excellent way to prepare for high mortgage rates is to start saving. That means putting away a little bit of money each month, so you have a cushion if your monthly payments go up.
  2. Shop around: Another good way to prepare for high mortgage rates is to shop around for the best interest rate. It could help you save a ton of money in the long run.
  3. Get pre-approved: If you’re thinking about buying a house, getting pre-approved will help you know how much you can afford. That will make it easier to find a home that fits your budget.
  4. Stay informed: Finally, it’s crucial to stay informed about what’s going on in the world of mortgages. This way, you’ll be prepared for any changes that might happen in the future.
  5. Pay Off Your Debt ASAP: This is not specific to mortgages, but paying off your debt will help you no matter what happens with interest rates. When you have less debt, you’re in a better position to afford your monthly payments if they go up.
  6. Keep Your Budget Balanced: Another essential thing to remember is to keep your budget balanced. That means not overspending, even if interest rates do go up. When you have a tight budget, it’s easier to weather any storm.
  7. Build an Emergency Fund: Finally, another good way to prepare for high mortgage rates is to build an emergency fund. That is money that you can use in case of a financial emergency. When you have this money saved up, you don’t have to worry about going into debt if your monthly payments go up.

Closing Thoughts

The best way to prepare for high mortgage rates in Canada is to stay informed and be prepared for any changes that might happen in the future.

You can start by saving money each month, so you have a cushion if your monthly payments go up. Then, you can look for the best interest rate and get pre-approved for a mortgage.

Finally, you can pay off your debt, so you’re less burdened financially. By following these tips, you’ll be ready for whatever happens in the world of mortgages.

To get more and more updates on latest mortgage rates in Canada or Refinance rates in Canada visit our Best Mortgage Online Blog or Contact us through following button.

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Understanding Home-ownership in Canada: From Selecting to Paying off Your Mortgage

Home Ownership experience

Back in 2016, nearly two-thirds of Canadian families – 63% of them, to be exact – owned their homes. However, only 43% of these people had paid off their mortgage. Between 1999 and 2016, mortgage debt represented 66% of the overall increase in debt for Canadian citizens.

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If your dream is to own a home, you should know that purchasing a house can significantly boost your credit score. However, many people are interested in the homeowner’s lifestyle, but they are also worried about getting into debt. To help with this dilemma, here are some essential factors you should be aware of regarding home ownership in Canada.

Choosing Between Different Types of Mortgages

Even if you want to buy a house, it is crucial to be aware that you are not required to do so. The only way to do so is mandatory is when you apply for a mortgage loan. There are several different options available for mortgages in Canada – fixed-rate mortgages, variable-rate mortgages, and variable-rate mortgages with a fixed payment. Because of the higher interest rates associated with variable-rate mortgages, obtaining a fixed-rate mortgage loan for your first home is probably best.

Mortgage Payment Frequency

People who ask themselves, “Do I have to pay my mortgage in Canada?” should know this is a common question. Fortunately, there are several options available for scheduling your monthly payments. Monthly payment schedules include the following:

  • Weekly payments (1/52 of the total loan amount)
  • Biweekly payment schedule (1/26 of the total loan amount – half of a monthly payment)
  • Semi-monthly payments (twice per month – 1/24 of the total loan amount)
  • Monthly payments (1/12 of the total loan amount for twelve months)

Regardless of which schedule you choose, it is essential to know that your mortgage loan probably won’t be paid off by the time you retire. On average, Canadians who live in major cities will still have a mortgage balance of $110,000 after 25 years of making payments on their homes.

Amortization and You

The word “amortization” might sound intimidating at first, but it is nothing to worry about. Amortization means that part of your mortgage payment schedule goes towards paying down the principal amount of your home loan. The rest of your payments go towards interest charges. If you pay off your house by making lump-sum payments or by letting your mortgage loan terms expire, you will have to pay the penalty.

You may be wondering what would happen if you did not make a mortgage payment for a while. Unfortunately, this can lead to the loss of your home and other serious consequences that could ruin your financial stability. It would help if you tried to avoid this by setting up an automatic withdrawal schedule for paying your mortgage in Canada.

Obtaining a Mortgage in Canada

The only way you can obtain a mortgage loan in Canada is by applying for one with a financial institution or bank. Of course, this means that you will need to submit extensive paperwork and go through several different stages. Make sure that you provide the bank with all of your monthly income and banking information so they can determine whether or not you are eligible for a loan.

When it comes to receiving a mortgage in Canada, there is one thing you should know: the larger your down payment is, the better off you will be. Your credit score and history play a significant role when it comes to determining whether or not you are eligible for a loan. If you have several different types of credit accounts that are all maxed out, then the bank will probably reject your application.

Your credit history is even more critical if you apply for a mortgage with little money down. That is because the more significant the down payment you make, the lower your actual home loan amount will be. In addition, you should know that banks and other lending institutions typically require a minimum down payment of 5% to 10%.

Figuring Out Your Down Payment

One of the main concerns about home-ownership in Canada is that you have to pay a down payment. Banks might require you to pay as much as 20% of the purchase price before giving you a mortgage loan. To buy a home worth $500, 000 your down payment needs to be at least $100 000. However, it is essential to know that you can buy a house with less than 20% down.

Suppose you have a family member willing to invest in your house by becoming a part of the ownership structure called “equity sharing.” In that case, it might be possible to buy a home even without paying any money upfront. It is also possible to finance more than 80% of the purchase price by taking out a second mortgage loan.

How to Pay Off Your Mortgage Faster

One of the main benefits of home ownership is that you can access all sorts of financial assistance programs. For example, suppose you want to renovate your house and higher-quality materials than your budget allows. In that case, it might be possible for you to finance the purchase by taking out a home renovation loan.

In addition, you might be able to take advantage of the tax relief offered by the Canada Revenue Agency. For example, if you make a down payment of more than 20%, you might qualify for a refund on your taxes over several years.

Another way to pay off your mortgage faster is to invest in a tax-free savings account. Regarding other ways to pay off your mortgage faster, it is essential to know that the longer your amortization period, the more you will have to pay in interest.

In Conclusion

If you want to buy a home without worrying about getting into debt or paying a down payment, it might be a good idea to get in touch with a mortgage specialist. It is also possible for you to improve your credit score to access different types of loans. In addition, there are several different financial assistance programs available when it comes to home-ownership in Canada.

If you have any query related to Mortgage, home equity, home-ownership, home loan or refinance then visit our website home page or Call us directly at 1-855-567-4898 (toll free).

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New Purchase Mortgage

Mortgage Affordability in Canada – How Much Mortgage Can You Afford?

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With interest rates at historic lows, now is a great time to purchase a home, but it could also be a potentially dangerous situation. Stretching your mortgage debt service ratios beyond what is comfortable is tempting, but the risk of doing so will depend on mortgage interest rates. Canadians, in general, have mortgage debt service ratios that are well into the comfort zone, but for some consumers, it is a different story.

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Mortgage Debt Service Ratios in Canada: The National Picture

We have seen a sharp increase in mortgage lending due to lower interest rates over the last few years. As a result, mortgage credit has been growing at 5.5% per year on average, with mortgage debt service ratios in Canada remaining somewhat stable. The mortgage debt service ratio is the proportion of household income dedicated to mortgage payments or rent of a rental property. Banks want to ensure that mortgage borrowers can afford their mortgage payments before approving the loan.

The mortgage debt service ratio is a mortgage regulation. The government uses it to determine Canada’s maximum mortgage amount and mortgage qualification. It also plays a role when considering housing affordability in Canada for would-be home buyers, especially in today’s low mortgage interest rate environment.

Mortgage Debt Service Ratios: The Details

A couple of years ago, TD Bank researched mortgage debt service ratios in Canada. They found that most Canadians had mortgage debt service ratios within comfortable limits; however, there were some exceptions. 

For instance, the Bank said that many homeowners take on too much money relative to their income levels. That could be problematic if interest rates increase significantly over the next few years and mortgage payments become more and more un-affordable for consumers.

Gross Household Income vs Net Household Income

Banks consider total gross household income when determining mortgage affordability in Canada. That is because mortgage payments are a significant portion of an individual’s monthly spending.

Mortgage lenders use the net household income figure for mortgage affordability, but these two figures can be very different. Gross household income, for instance, does not include deductions such as RRSP contributions, charitable donations and other write-offs. For this reason, it may not accurately reflect what consumers spend at the end of the year on expenses like mortgage debt service ratios.

The minimum down payment required by various Canadian Provinces is another crucial factor in mortgage affordability. It determines how much money you will need before shopping for your new home or condo.

GDS Ratio and TDS Ratio

GDS (Gross Debt Service) and TDS (Total Debt Service) ratios are mortgage loan affordability metrics that lenders use to determine whether or not mortgage interest rates will be manageable for mortgage borrowers. In general, mortgage lenders want to know that your minimum monthly payments on housing costs, including mortgage principal and interest, property taxes and heating costs combined, won’t exceed 32% of household income. The Bank of Canada has also emphasized that the maximum affordable mortgage debt service ratio should be 40% when gross income is under $100,000.

Your Credit Score Will Affect Mortgage Rates

Your mortgage affordability or qualification will depend on your credit score and mortgage rates. As mortgage interest rates increase, your monthly mortgage payments will also increase. That means it’s even more critical to know Canada’s mortgage rules before starting your home or condo shopping process.

Down Payments in Canada

Down mortgage payment of at least 20% is typically what mortgage lenders require in Canada. However, some mortgage down payment assistance programs are available for first-time home buyers. Moreover, suppose you can’t afford the “mortgage debt service ratio” rule. In that case, your mortgage lender may still approve your mortgage loan request if you have vital compensating factors, such as excellent credit history and a long employment record.

It’s also important to note that mortgage guidelines vary across Canada. Therefore, it’s essential to know your province’s minimum mortgage down payment requirements before starting your home or condo shopping process. In addition, while interest rates play a role in housing affordability in Canada, not all consumers will qualify for the same mortgage interest rates or get approved for loans with the same terms and conditions.

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How to Make Your Mortgage More Affordable

A mortgage calculator helps determine your monthly payment based on the purchase price of the home you are interested in. In addition, this mortgage affordability calculator will ask about your gross household income and down payment, mortgage interest rate and amortization period to determine how much money you need to borrow.

Increased borrowing power may allow you to buy a bigger home or condo. However, it may also mean that mortgage rates in Canada become unaffordable for mortgage borrowers who aren’t prepared to manage their mortgage payments at higher interest rates. Therefore, it’s essential to consider all possible outcomes before getting into “affordable” mortgage debt, which could negatively affect many aspects of your financial well-being in the long term.

Your net household income helps calculate mortgage affordability, including the mortgage debt service ratio; however, other factors are essential. For example, your net income is $5,000 per month, but you spend $3,000 on mortgage payments and another $2,000 to cover property taxes and heating costs. 

These additional expenses might limit your true mortgage affordability. Calculating the TDSR helps consumers understand their maximum mortgage amount based on their monthly housing expenses before making mortgage shopping calculations.

Your credit score will also play an essential role in determining the mortgage interest rate you qualify for as well as whether or not you can get approved for a mortgage loan at all. The higher your credit score is in Canada, the more likely you will qualify for mortgage debt at a better interest rate. A mortgage qualification letter from your mortgage lender is required in Canada before homeowners can close on a mortgage loan.

In Conclusion

Mortgage rates in Canada affect mortgage affordability. Your mortgage payment is based on the total amount of mortgage that you need to borrow and the mortgage interest rate charged by your lender. To determine mortgage qualification and how much you can afford, mortgage lenders will also ask about your gross household income and down payment.

It’s important to note that different mortgage interest rates apply based on how many compensating factors a consumer has (such as excellent credit history and a long employment record). Still, education on mortgage debt service ratios is essential to understanding how much mortgage you can afford.

We are available to walk you through all mortgage processes and help you pick and acquire the most suitable loan.

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For more articles on Mortgage, please refer to our Best Mortgage Online home page. Also, our sister site Best Insurance Online hosts news, tips, reviews and more on Insurance in Canada for your reference.

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New Purchase Mortgage

Best Commercial Mortgage Rates You Can Find in Canada

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When it comes to getting housing units in Canada, the most sought-after option is a house mortgage from the bank or mortgage broker. You can get a mortgage to finance your residential home and commercial property.

A commercial mortgage is similar to what you have for a residential mortgage; the only difference is that this mortgage is taken for non-residential buildings commonly referred to as commercial property. Commercial property covers many facilities that cannot be financed under the residential mortgage plan.

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Commercial mortgage rates are determined by the type of properties and their use. There is no fixed rate for a commercial mortgage as it differs for different properties and the mortgage company involved. In this article, Best Mortgage Online will provide you with the right information about the best commercial mortgage rates you can find in Canada.

Commercial Mortgage vs. Residential Mortgage

As introduced above, the type of property involved sets the major difference between a residential and commercial mortgage. While the residential property is usually sought after by regular home buyers or small real estate investors, commercial property is normally meant for real estate investment corporations, partnerships or limited companies.

The commercial property is usually used for business purposes against homes solely used for residential purposes. As you might have imagined, the rates set for a commercial mortgage are typically higher than a residential mortgage, as well as the repayment conditions. However, the repayment period is usually longer than those allowed for a residential mortgage.

In the case of residential mortgage, qualification is usually based on credit scores, personal income etc. But, for a commercial mortgage, the property you are taking out a mortgage for usually serves as collateral till the loan is paid back. It also requires you to have a higher down payment than residential properties. The down payment for commercial property can be as high as 25 – 35% of the cost.

What Counts as Commercial Property?

To be clear about how rates for commercial mortgages are calculated, it is necessary to differentiate between what type of property qualifies for a commercial mortgage and how it is different from a residential one.

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The common commercial properties that can be financed in Canada include the following:

  • Multi-Family residential property (5 units and above)
  • Mixed-use properties
  • Office buildings
  • Industrial buildings
  • Warehouses
  • Retail plazas
  • Medical buildings
  • Farmlands
  • Shopping malls
  • Construction projects

These commercial properties under this form of mortgage come with specific Loan-to-Value up to 85% depending on the property type. Properties such as farmlands or vacant spaces can have an LTV as low as 50%. Still, the more functional the property is, the higher the LTV provided by the mortgage company.

Commercial Mortgage Rates in Canada

A commercial mortgage company in Canada can help you get the best mortgage for properties at the lowest rate possible. Asides from this, the process of getting a commercial mortgage might be a bit more complicated with a lot of paperwork. Still, you can easily do this with the assistance of a commercial mortgage company.

When it comes to commercial mortgage rates, there is no one-size-fits-all solution. Instead, the rates depend on the type of property to be financed and the borrower’s financial status. For instance, stable properties connected with borrowers with good credit scores carry better rates than riskier properties with borrowers with not a great credit score.

Commercial mortgages are often based on BBB corporate bonds. Mortgage lenders apply a risk premium to the business loan based on its risk. As a result, riskier borrowers must pay a greater premium, whereas low-risk borrowers’ rates will be closer to a BBB corporate bond yield. On the other hand, these rates are often higher than CMHC-insured commercial rates, which pose the least risk to lenders.

On average, in Canada, the conventional rate for commercial mortgage rate for five years is between 4.3% – 8.3%, while a five-year rate for Canada Mortgage and Housing Corporation (CMHC) is between 3.2% – 5.3%. Additionally, CMHC insures business mortgages against failure. This safeguards mortgage lenders by ensuring that they are compensated if a business borrower fails on the mortgage.

How to Apply for Commercial Mortgage?

Although different mortgage companies have different regulations when applying for a commercial mortgage, there are still basic similarities. For example, the following steps are often required to apply for a commercial mortgage.

  1. Put your business finance in order: One sure thing a potential lender will be looking out for is the viability of your business in terms of profitability and income history. This gives the lender a sense of credibility and the ability to repay the mortgage. Therefore, before applying, you should ensure that your finance is in order.
  2. Determine the type of mortgage you want: Even for commercial mortgages, different service plans are still dependent on the property type. Therefore, before applying for a mortgage, it is best to look at the different plans available and pick the most suitable one for your intended purpose.

Some of the points of consideration include the repayment plan, interest rate, location of the property, production or repair time, and recurring costs like operational fees, legal fees etc.

  • Put together your business documents: Time is of the essence during application for a commercial mortgage as there are most likely other interested parties bidding for the same property. Therefore, it is advantageous to have all the required documents beforehand to beat the competition.

Typical examples of documents required during this stage include; a well-articulated business plan, updated financial statements, details about the commercial property and other useful documents or information about your business.

  • Make an offer: Commercial mortgage is quite a serious investment. It is usually capital intensive and carries a higher risk than a residential mortgage. Therefore, it is best to make an offer with your mortgage company to get the best possible mortgage conditions suitable for your company.

Conclusion

The commercial mortgage requires more capital than a residential mortgage; it is only granted for specific types of properties. It also requires different or additional requirements with varying rates and conditions. The rates on commercial mortgages are generally higher; mortgage companies insured by CMHC have a rate between 3.2% – 5.3% for five years.

For ease of getting a commercial mortgage, it is recommended that you have all your documents – financial statements, business proposals etc. – handy before applying. You should also apply early enough to ensure ample time for proper application review.

At Best Mortgage Online, we can assist you in getting the right information to prepare you for a commercial mortgage. Contact us with the button below.

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New Purchase Mortgage

Mortgage Down Payment in Canada: Everything You Need to Know

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If you’re reading this, you’ve probably come across the news that prices of down payments in Canadian cities have skyrocketed over the past year. As CTV News reports, in 2021, housing affordability has worsened by the widest margin in nearly 30 years.

But despite all of this, many Canadians are still out there buying properties. Whether you’re buying your first home or owning multiple properties, you know that the buying process starts with saving for a down payment. 

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To help you start, here’s everything you need to know about down payments in Canada.

How Minimum Down Payment Works in Canada

When a down payment is mentioned, people usually think of the minimum amount you must pay as a deposit. However, the term mortgage down payment covers different deposits with varying credit conditions.

The Loan-to-Value Ratio (LTV) is how much of your home’s price is paid by the mortgage. Most mortgage lenders use this insurance to keep themselves safe even when they don’t have collateral.

The minimum mortgage down payment in Canada ranges from 0% to 20%. In addition, all high-ratio mortgages require mortgage default insurance, which protects against losses in case of borrower default, death, or disability.  

The amount you put down will affect the mortgage rate and mortgage payment. For example, if you put down a mortgage down payment of less than 20%, there will be mortgage insurance fees.

The mortgage insurance premium is payable to the mortgage insurer, the Canada Mortgage and Housing Corporation (CMHC), or Genworth Financial Canada Ltd. This amount is usually included in your monthly mortgage payment. Exclusions from mortgage insurance include:

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Different Types of Minimum Down Payments

Though mortgage down payment is usually used interchangeably with mortgage insurance, there are also different types of mortgage down payments.

Cash Committed Mortgages

If you need a mortgage loan but don’t have the minimum 20% mortgage down payment, your mortgage advisor can help you get a cash-committed mortgage loan. A cash-committed mortgage loan requires mortgage insurance because the loan amounts are greater than 80% of the property’s value.

A cash-committed mortgage loan requires mortgage insurance because the loan amounts are greater than 80% of the property’s value.

Lender Mortgage Insurance (LMI)

If you plan to borrow more than 80% of your home’s price and can’t meet mortgage down payment requirements, it will be an interest-only mortgage with mortgage default insurance. That means mortgage insurance premiums must be paid with interest charges until the mortgage is paid off, or mortgage down payment can be increased to 20% or more of the home’s value.

CMHC Mortgage Loan Insurance Premium (CMHC MIP)

If you need mortgage financing and cannot make a minimum 5% mortgage down payment, you can apply for mortgage loan insurance with the Canada Mortgage and Housing Corporation (CMHC. The CMHC mortgage loan insurance premium is payable to mortgage default insurance.

National Housing Act Mortgage Loan Insurance Premium (NHA MIP)

The National Housing Act mortgage loan insurance premium is payable to mortgage insurer Genworth Financial Canada Ltd., on mortgage loans with mortgage rates more than the mortgage down payment.

Mortgage Loan Insurance Premium (MIP)

The Canada Housing and Mortgage Corporation (CHMC), a mortgage insurer under the National Housing Act, operates as Canada Guarantee. This mortgage insurance premium is payable to mortgage insurer Genworth Financial Canada Ltd., on mortgage loans with mortgage rates more than the mortgage down payment.

How Much Mortgage Down Payment Do I Need?

You don’t need to pay a 20% mortgage down payment to get a mortgage loan, but you must avoid borrowing more than 80% of your home’s value. You can calculate this by taking your property value and subtracting the mortgage down payment.

Different mortgage lenders have different mortgage rates and insurance premiums for mortgage down payments. You can lower your monthly mortgage rate by making mortgage down payments of more than 5% of the home’s value, e.g., 10%, 15% or 20%.

Time You Need to Save Up for a Down Payment

You need to consider how much time you need to save up for a down payment. Luckily, the National Bank of Canada recently released a report outlining how much time people need to save money to make the first down payment. 

If you saved 10% of your pre-tax household income, it would take you slightly under six years – or 69 months – enough to save for a down payment on a typical Canadian home. As at this time last year, there had been 57 months of saving at the same rate.

Putting away 10% of your household’s pre-tax income may take decades in Vancouver, Victoria, and Toronto.

Average Down Payments by Province

Next, you need to realize that your down payment vastly varies from province to province. That can help you determine how much money you’ll need for a down payment on a house in your area based on the average price of homes in your area. 

Here are the average don payments in Canadian provinces, according to the latest Real Estate & Housing Market Forecast report:

  • British Columbia: The average down payment in British Columbia is $159,762.64, or 22.5% of the purchase price of a property.
  • Ontario: Ontario homebuyers, on average, make a larger down payment than residents of any other province (aside from British Columbia). 
  • Quebec: According to first-quarter data, Quebec residents made the smallest down payment on a home, with an average of less than 15%.
  • Alberta: The average down payment in Alberta was $62,929.45, making it the second-lowest in the test markets, behind only Quebec’s 15.15 percent.
  • Nova Scotia: The average down payment in Nova Scotia is 18.54 percent ($57,781.46), the lowest among the test markets at $363,330.

Closing Thoughts

The mortgage down payment is the cash a home buyer needs to pay as a deposit on a mortgage. Mortgage insurance reduces this for buyers who can’t complete a down payment. Depending on mortgage rates and insurance premiums, you can calculate mortgage down payments in Canada.

Let us at Best Mortgage Online help you find the best loan rates to assist you in your home purchasing process. Contact us via the button below.

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Mortgage Renewal/Switch

Will Your Mortgage Renew Automatically in Canada?

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Will Your Mortgage Renew Automatically in Canada?

In Canada, when a borrower takes out a mortgage loan to purchase a property, the loan is typically secured by a written agreement called a “Mortgage.” The borrower agrees to repay the mortgage using monthly payments consisting of interest and principal. The period used for repayment of principal is referred to as the term.

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In most cases, borrowers will sign a mortgage for a term of 5 to 25 years. However, once the borrower has paid down the principal to 80% of the property’s original value, he may be able to renegotiate his loan with his lending institution to obtain lower monthly payments.

What Does Mortgage Renewal Mean?

Renewing a mortgage means that the borrower will take out another written agreement with the lending institution, paying off the original loan and signing up for a new term to pay down the principal. Each time this is done, borrowers may be charged fees to obtain their new mortgage.

When Does Mortgage Renewal Occur?

When you renew your mortgage depends on whether or not it has an automatic renewal clause or “option.” At least 30 days before the expiry of your current mortgage, you should receive notification from your lending institution regarding its renewal policy. Borrowers are typically informed if their mortgages will automatically renew subject to certain conditions. These conditions include:

  • The property value increases;
  • The creditworthiness of the borrower;
  • The property type; and,
  • Changes in market conditions.

Suppose your lender does not include an automatic renewal clause in its mortgage agreements. In that case, borrowers are required to make arrangements with their lending institution before the expiry date of their mortgages to obtain new loan terms. Failure to do so may result in a default on the original agreement.

Borrowers who fail to pay their outstanding debts will be subject to foreclosure proceedings by their lenders. They will also lose any accumulated equity in the property, which generally reverts to the lending institution.

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What Happens When Your Mortgage Expires?

If you have a fixed-rate term with no options or renewals attached, your mortgage will expire at maturity. That means that your lender cannot ask you to renew or extend the term of your agreement, and for this reason, a fixed-rate mortgage is a good choice if you think that you might want to move from the property in question before the end of the term.

When Does Your Mortgage Renew Automatically?

During the fixed-rate term of your mortgage, you may wonder what will happen to your rate and monthly payments if they aren’t changed when your agreement expires. That is a good question and one that your lender’s automatic renewal clause can answer.

When Does Your Mortgage Not Renew Automatically?

Most mortgages contain an automatic renewal clause with terms that range from six months to five years. The length of time will vary depending on the type of property involved, how much has been paid off on the existing loan, the borrower’s creditworthiness, and market conditions.

For example, borrowers with “substantial equity” in their homes may have a renewal term of 10 years, while those with no equity usually have to renew for five. With this being said, the bank will not provide a more extended renewal option than the borrower needs or wants.

Borrowers who want a definite expiry date can choose a five-year option and then renegotiate the terms of their loans at maturity. Those who prefer to pay off their mortgages earlier can opt for shorter terms, such as 18 months or two years.

What Happens During Your Mortgage Renewal?

Once your mortgage has been automatically renewed, you will be required to sign another agreement with your lending institution. This document will list all of the original loan details along with the new interest rate, repayment date, amortization period, and other information.

The bank will not automatically save you money on your new rates or terms. To receive the best possible renewal package from your lender, you must call the institution during this time to negotiate a more competitive interest rate and term.

Let’s say that your mortgage is renewed at a higher rate than that on the original agreement. Then, it may be possible for you to refinance with another financial institution within a short period following its expiration. 

That particular strategy may spare you some of the higher associated costs involved with breaking before maturity, as well as those incurred from being charged an early termination fee by your current lending institution.

How Can Your Mortgage Renew Automatically in Canada?

If you need a new mortgage, consider how it will renew automatically in Canada. Some lenders offer personalized renewal terms tailored to your specific requirements. These may include:

  • The ability to lock in interest rates;
  • Mortgage renewal guarantees; and,
  • Loans with flexible terms.   

Pros and Cons of Automatic Mortgage Renewal

There are advantages and disadvantages for borrowers who choose to have their mortgages automatically renewed. For example, suppose you are out of the country or plan on moving far away from your property before the end of your fixed-rate term. In that case, automatic renewal may be beneficial because it reduces one more element that could prevent you from renewing.

On the other hand, if you expect rates to fall over the next few years, it might make sense for you not to renew your mortgage but instead opt for a shorter term to take advantage of lower interest rates. In this case, opting out of automatic renewal will give your lender less bargaining power when terms with you at renewal time.

The Bottom Line On Automatic Mortgage Renewal

Keep in mind that there may be a cost involved with breaking your mortgage agreement before maturity, even if your lender does not renew it automatically. However, you can avoid this expense by calling your lender before the automatic renewal date and negotiating a better deal.

If you are looking to acquire home loans, more information on Mortgage in Canada, loan rates in states of Canada, etc. let Best Mortgage Online help you.

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