Overview of TD Canada Trust
TD Canada Trust, commonly known as TD Bank, is one of Canada’s Big Six Banks. With over 1,100 branches across the country and assets of over CAD 1.3 trillion, TD has grown to become the second-largest bank in the country.
The bank provides a full suite of financial services, including chequing and savings accounts, credit cards, lines of credit, auto loans, and mortgages.
As of August 2024, its market capitalization was over 140 billion CAD. In addition to its extensive Canadian operations, TD has a significant US subsidiary, giving the bank greater size and operational scale.
What are Current TD Mortgage Rates?
Below, we compare TD’s latest mortgage rates to the top competing rates available at mid-sized mortgage lenders.
TD Prime Rates
In addition to its overall prime rate, TD uses a separate mortgage prime rate as a pricing benchmark specifically for its mortgage products. This mortgage prime rate is currently 6.85%, which is 0.15% higher than TD regular prime rate and the prime rates of other Big Six Banks in Canada.
| Current TD Bank Prime Rate | Current TD Mortgage Prime Rate |
| 6.70% | 6.85% |
TD’s higher mortgage prime rate means its variable-rate mortgages will be more expensive relative to the other major banks that maintain the same prime rate. Understanding TD’s mortgage prime rate helps explain why its variable—and adjustable-rate mortgages may be priced higher than competitors.
TD Fixed Mortgage Rates
TD’s fixed-rate mortgage provides stable payments and protects against interest rate increases during the mortgage term. TD offers fixed terms from 6 months to 10 years.
Benefits include payment predictability, qualifying based on current rates, and avoiding rate spikes. Drawbacks are a lack of flexibility, potential penalty fees, and the lack of benefit of declining rate markets.
| Term | TD Posted Rate | Lowest Rate of Big Six Banks |
|---|---|---|
| 6-month | 8.04% | 6.39% |
| 1-year | 7.84% | 5.88% |
| 2-year | 6.77% | 5.95% |
| 3-year | 5.22%* | 5.09% |
| 4-year | 6.54% | 4.99% |
| 5-year | 4.84%* | 4.64% |
| 6-year | 7.01% | 5.44% |
| 7-year | 7.12% | 5.56% |
| 10-year | 7.26% | 5.78% |
* Special Rates
As shown above, TD’s fixed mortgage rates tend to be 10-55 bps higher than the top rates available from other lenders. The largest rate premiums are seen on shorter 1-2 year terms, where discounts tend to be greater at alternative lenders.
TD Variable Mortgage Rates
The TD variable-rate mortgage fluctuates based on the TD prime rate, but your monthly payment stays the same. It offers lower initial rates but is subject to increasing over time.
The benefits are lower initial costs and the ability to pay more principal when rates fall. The drawbacks are exposure to rising variable rates and difficulty qualifying if rates go up. Terms are typically five years before renewal is required.
| Term | TD Rate | Lowest Rate of Big Six Banks |
|---|---|---|
| 5-year | 6.44% | 5.75% |
TD’s 5-year variable rate mortgage is priced 69 bps higher than competitive variable rates on the market. This rate difference applied over a 5-year term, results in thousands of dollars in extra interest costs for customers.
An alternative to fixed and variable rates is Adjustable Rate Mortgage.
This hybrid product combines fixed-rate and variable-rate mortgage features. The rate remains fixed before adjusting to TD’s prime rate. Available terms range from 6 months to 10 years.
For example, a 5-year adjustable mortgage rate could be fixed for the first three years before becoming variable. This would balance rate stability with flexibility.
How TD Sets Mortgage Rates?
TD determines its mortgage rates based on several factors, including:
- Cost of funds – The bank’s underlying cost to obtain capital that is lent out as mortgages. This depends on TD’s financial strength and market conditions.
- Prime rate – The prime rate acts as a benchmark for pricing variable-rate mortgages. TD sets its prime rate at the discretion of senior management.
- Competitor rates – TD reviews competitors’ mortgage pricing to align with the broader market.
- Customer characteristics – Credit score, income, assets, mortgage amount and other attributes factor into mortgage rates offered.
- Product type – Specialty mortgages may be priced differently than standard fixed and variable mortgages.
- Term – Longer 5-year mortgage terms often have lower rates than short 6-month or 1-year terms.
- Discounts – Discretionary rate discounts may be offered to preferred customers.
Understanding TD’s mortgage rate methodology helps explain why its pricing is often higher than smaller competitors. The major banks tend to price based on a higher cost of funds and desired profit margin.
TD Mortgage Products
In addition to its standard fixed and variable rate mortgages, TD offers a range of specialty mortgage products.
TD Cash Back Mortgage
The TD Cash Back mortgage provides a lump sum cash rebate of up to 5% of the mortgage amount, to a maximum of $25,000. The cash is paid on closing and can be used for any purpose like consolidating debts, renovations, investments or savings.
How to qualify:
- Stronger credit scores and income are required
- Maximum 80% loan-to-value ratio with mortgage insurance
- 7-year fixed term only with a higher interest rate
Refinance Mortgage
- Allows extracting equity from an existing property for debt consolidation or cash-out
- Open mortgage terms facilitate the blending and refinancing of any existing mortgages
- Cash-out refinancing provides tax-free access to equity for other uses
- Penalties may apply if refinancing away from an existing TD mortgage
Renewal Mortgage
- Designed for existing TD mortgage holders when their term expires
- Requires minimal paperwork for clients staying with TD
- Allows maintaining original amortization and avoiding discharge fees
- May miss out on better rate and term options by not shopping lenders
TD Green Mortgage
This mortgage product has the same qualification criteria as standard mortgages. Still, it offers a discount off TD’s posted rates and a cash rebate of up to 1.5% for environmentally-conscious borrowers when purchasing ENERGY STAR appliances or solar panels. Discounts and rebates apply to fixed and variable rate terms from 1 to 10 years.
TD Home Equity FlexLine
This product provides access to a revolving home equity line of credit with rates as low as prime + 0.5% and the option to lock in portions of the balance into fixed terms. It gives flexibility to access extra funds as needed, up to 65% of the home’s value.
These products have lower qualification thresholds than standard mortgages. Borrowers must have sufficient equity in their property and income to support the ability to cover payments on a maximized credit line.
Other Specialty TD Mortgages
In addition to its standard mortgage offerings, TD has several specialty mortgage programs tailored to specific borrower situations:
New Immigrant Program
- Designed for new immigrants or residents who lack an established Canadian credit history
- Allows for high-ratio mortgages with as low as 5% down payment when combined with mortgage insurance
- Flexible documentation requirements such as acceptance of foreign credit history
- Ideal for newcomers looking to purchase a home in Canada
Rental Property Mortgage
- Extended amortization periods up to 30 years are available
- Financing offered for residential rental properties with up to 4 units
- Minimum 20% down payment required
- Offers stability of fixed payments with rental income potential
Self-Employed Mortgage
- Intended for borrowers who are self-employed or own their own business
- Requires 2 years of self-employed income history
- Needs more documentation such as financial statements, tax returns
- Minimum 20% down payment on investment properties
- Qualifying based on less stable self-employed income may be more difficult
Vacation Home Mortgage
- Available for financing a secondary residence used recreationally
- Higher minimum down payments required, often at least 20%
- Income from short-term rentals generally cannot be used to qualify
- Ideal for purchasers wanting a vacation property for seasonal use
Agriculture Mortgage
- Specialized financing for hobby farms, rural land, and commercial operations
- Flexible terms and variable payment schedules tailored to seasonal cash flows
- Lending based on agricultural income and the productive value of land
- Farm Credit Canada also offers alternative financing options
Key Features of TD Mortgages
Making Prepayments
Many borrowers want flexibility to make extra lump sum payments or increase their payments to pay off their mortgage faster. TD offers the following prepayment options:
- Increase regular mortgage payments by up to 100% once per calendar year
- Make lump sum prepayments of up to 15% of the original mortgage principal annually without penalty.
This allows borrowers to take advantage of extra funds to pay down their mortgage faster and save on interest. Paying off just 10% more per year can shave years off a mortgage.
Payment Flexibility
TD offers features to provide flexibility in case of financial difficulty:
- Payment vacation – Pause payments for up to 4 months, once per term.
- Skip-a-Payment – Skip 1 monthly payment each year.
These options allow borrowers to defer payments when needed. However, interest still accrues and gets added to the mortgage balance.
Pay Property Taxes Through TD
Unlike most lenders, TD offers non-mandatory property tax payments through the bank for the convenience of escrow . Each month, the one twelfth of your estimated annual municipal property tax is collected and paid on the borrower’s behalf when due.
Mortgage Insurance with TD
TD offers mortgage life insurance, critical illness insurance, and disability insurance to provide financial protection. Premiums are paid as part of the mortgage payment. Coverage can provide peace of mind in case of death, illness, or loss of income during the mortgage term.
TD Mortgage Break Penalties
If you break your TD mortgage to switch lenders, payout penalties apply. Avoiding a penalty requires renewing into a new term with TD.
| Types of Mortgage | TD Break Penalty |
|---|---|
| Fixed Rate Mortgage | Greater of 3 Months’ Interest or the IRD amount |
| Variable Rate Mortgage | 3 Months’ of Interest |
Pros and Cons of Getting a TD Mortgage
Advantages:
- Large banking institution with 150+ years of history in Canada
- Access to a full suite of banking products and services
- Ability to meet in person at over 1,100 bank branches
- Discount rates may be offered for high-net-worth clients
- Mortgage can be integrated online with other TD accounts
Potential Disadvantages:
- Mortgage rates tend to be higher than smaller lenders
- Inflexible prepayment options without high penalties
- Restrictive default insurance that can’t be switched lenders
- Major banks with less personalized service and advice
- Incentives for staff to promote TD products
As Canada’s second-largest bank, TD provides stability but not necessarily the lowest mortgage rates or greatest flexibility.
How to Get a Mortgage from TD Bank?
There are a few different options to get a mortgage with TD:
Apply online – TD has an online application process for applying and getting pre-approved for a mortgage. This can provide mortgage estimates and conditional approval.
Meet with a mortgage specialist – Many TD mortgages are sold through the bank’s own specialized mortgage agents. They can advise on TD’s mortgage options and rates, while negotiating discounts.
Work with a broker – TD works with approved mortgage brokers who are able to access competitive TD rate specials and term options on clients’ behalf. Brokers shop multiple lenders.
When applying for a TD mortgage directly, having a co-applicant, strong credit score, and substantial down payment will improve chances of approval and better rate offers. TD also requires proof of Canadian property fire insurance from an approved provider.
More Guide on Top Banks for Mortgage! Discover our Best Banks for Mortgages in Canada:
- RBC Mortgage Rates and Reviews 2024
- CIBC Mortgage Rates and Reviews 2024
- Scotiabank Mortgage Rates and Reviews 2024
- Equitable Mortgage Rates and Reviews 2024
- Desjardins Mortgage Rates and Reviews 2024
- National Bank Mortgage Rates and Reviews 2024
The Bottom Line
TD Canada Trust offers comprehensive mortgage products and options for Canadian homebuyers and owners. While TD’s mortgage rates have historically tended to be higher than those of alternative monoline lenders, discounts may be available for select clients. The bank provides the convenience and integration benefits of a significant financial institution.
Whether TD Bank is the right option depends on an individual’s priorities. Our expert at Best Mortgage Online can help you understand total costs and find the best lender for your unique needs and goals.
FAQs
What is TD's mortgage prime rate?
TD uses a separate mortgage prime rate currently 0.15% higher than its regular prime rate. This means TD's variable-rate mortgages are priced higher than competitors'.
How often does TD change its mortgage rates?
TD typically reviews its mortgage rates weekly and may adjust them based on market conditions, competitor actions, or changes to the Bank of Canada overnight rate.
How do I get the best mortgage rate from TD?
You can negotiate TD's posted rates by getting pre-approved, making a large down payment, maintaining other TD accounts, and requesting discounts. Checking brokers can also help.
Does TD offer 10-year mortgage terms?
Yes, TD offers both 10-year fixed-rate and variable-rate mortgage terms. The 10-year fixed rate provides long-term payment stability.
What closing costs are there for a TD mortgage?
Typical closing costs on a TD mortgage include legal fees, property appraisal fees, land transfer tax, title insurance, and administrative fees.
Can I port my TD mortgage to a new property?
Yes, you can port an existing TD mortgage to a new property when moving, provided you qualify based on the new property's value. Some fees may apply.
What is TD's prepayment charge on mortgages?
TD charges a penalty equal to 3 months' interest or the IRD calculation if you break your mortgage term. Prepaying over 15% annually also incurs fees.
Does TD offer mortgage refinancing and renewals?
Yes. TD allows refinancing a mortgage or renewing your existing TD mortgage when the term expires. Renewals have minimal paperwork.
How do I submit documents for my TD mortgage application?
You can submit documents at a TD branch through an advisor, email, fax, or mail. Uploading documents through TD's secure online portal is recommended.
Can I make extra lump sum payments on my TD mortgage?
Yes, TD allows prepaying up to 15% of the original mortgage principal annually without penalty through a lump sum payment. This helps pay down the mortgage faster.