So, you’ve decided to buy a home. If you are like most people, you probably don’t have enough money in savings to buy your new home with cash. Thus, you will have to take out a mortgage loan to pay for your residence. Whether you are searching for the cheapest bank mortgage rates or are looking for information on other Canadian mortgages, we are the best resource for connecting home buyers with lenders in Canada. Our tools and mortgage information pages have helped many Canadians better understand the ins and outs of mortgages, thereby preparing them for the mortgage process. More important, we partner with Canada’s best lenders to get you the most favorable loan terms and interest rates on bank mortgages and other loan products. Learn more about the mortgage rates that banks offer & browse the best rates below.
Bank Mortgage Rates vs. Mortgage Broker Rates
As a home buyer, you are probably well aware that you have the option of going directly with a bank for your mortgage or working with a broker to obtain a home mortgage loan. There are different reasons for going with each option, but it is important to know first how banks determine the interest rates on the loans they issue to home buyers.
Variable mortgage interest rates are tied to the prime interest rate set by the Bank of Canada. Generally speaking, banks take the prime rate and then subtract a certain number of percentage points to determine the interest rate they will offer on variable mortgages. Fixed mortgage rates, on the other hand, are tied to the bond market. Banks take the going rate for Government of Canada bonds and then add 1 to 2 percentage points in order to make a profit over and above what they would earn if they were to invest their funds in the bonds themselves. This means that fixed mortgage rates increase as bond interest rates increase, and they decrease as bond rates decrease.
With this information, it is easier to see the difference between broker mortgage rates and the best bank mortgage rates. In the first place, brokers do not offer loans themselves; rather, they partner with several different lending institutions to help buyers choose from among several different lenders. In effect, they act as an intermediary between lenders and the banks offering mortgages at current mortgage rates. Brokers do not set the rates themselves; rather, they shop loans around for their customers to get a loan at the desired rate. Banks, on the other hand, set rates themselves, and they do not shop the interested buyer’s loan around to other institutions. When buyers apply for a loan at a bank, they get information on the loans offered by that particular bank but not on the loans offered at other institutions.
In any case, deciding between a bank mortgage rate and a broker mortgage rate (See Mortgage Broker Vs. Bank) depends on which of these options is best for your particular situation. Here are the pros and cons of Canadian bank mortgage rates to help you decide between broker and bank rates:
PROS
• Getting a mortgage rate from your current bank is helpful for consolidating your finances. Borrow from your existing bank, and you will not have yet another financial institution to worry about.
• If you are an existing customer of the bank, you may be able to get a better rate than what a broker could obtain at the same institution.
• Familiarity with your existing bank helps you to understand its policies, giving you a better idea of what you are getting into when you choose a bank mortgage rate.
CONS
• The mortgage rank you obtain from your existing bank may not be lower than what a broker can obtain by shopping your loan around.
• Your bank will not provide you with the tools to compare the mortgage rates it is offering with the current bank mortgage rates offered by other institutions.
• Brokers can obtain volume discounts on mortgage loans that they pass on to you, lowering your cost to borrow money even further.
Bank Mortgage Rates Canada: Are They Right For Me?
Now that you have seen the pros and cons of bank mortgage rates, we can help you make the final evaluation as to whether a bank mortgage rate is the best choice for you. If you prize convenience above all else, you are better off with a bank mortgage rate because you can often get a good bank rate at an institution where you already have an account. On the other hand, if you do not mind having several different accounts at several different institutions and are more interested in getting the cheapest mortgage rates available, you should choose a broker for your mortgage. You should also go with mortgage brokers if your credit is not the best because they can help those with low credit scores get good rates even when the best bank mortgage rates are not available to borrowers with a poor credit history.
Bank Mortgage Rates: Some Interesting Facts
We have not yet covered everything that there is to know about Canadian bank mortgage rates. Here are a few more interesting facts and statistics related to bank rates in Canada:
• Over 50 percent of Canadians choose bank rates over broker rates.
• Many of the banks that offer mortgage rates directly to consumers also partner with mortgage brokers.
• Qualifying for a mortgage can take less time when you work directly with your bank because it has ready access to your deposit history, account balances, and more. Qualifying for a mortgage through a broker, on the other hand, can take significantly longer.
Get the Best Bank Rates Today!
We have helped countless Canadians find the best mortgage rate for their needs. Bank mortgage rates are one of the most popular and traditional financing options for homeowners in Canada. Choose a rate on this page or fill out the online mortgage application form for more information on current bank mortgage rates and to get free bank rate quote.
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