November 2nd, 2023
5 year fixed high ratio 5.79%.
5 year uninsured conventional 6.14% to 6.39%.
5 year fixed range for 120 rate hold 5.79-6.44% depending on if insured or conventional, and the amortization needed.
5 year high ratio variable rate mortgage is prime less 1.20 = 6.00%.
5 year conventional variable with 30 year amortization – in the range of approximately 6.30% to 7.05%. The available discount off the prime will depend on the lender, and potentially the amount being borrowed, the amortization, and whether the property is owner occupied or a rental.
The Stress Test rate is currently the greater of 5.25% or your contract rate + 2.00%.
Rates are subject to change & subject to qualification.
The next Bank of Canada rate announcement is December 6th, 2023.
Prime rate is currently 7.20%.
Here is the latest Monetary Policy Report from the Bank of Canada from October 25th, 2023.
The above is a snapshot of current mortgage rates. Some of the above rates are for insured mortgages and/or have a maximum amortization of 25 years.
Interest rates have become more complex to quote. The variables that will impact the available rates are as follows: whether the transaction is a purchase or refinance; rental or owner occupied; conventional mortgage; conventional insured; high ratio; the loan-to-value ratio; credit score; verifiable income; the amortization, and/or the timing of the completion date. The interest rate landscape is dynamic and constantly changing. Different lenders can specialize discounting different terms.
For more information on the topic of choosing fixed or variable, click here. Monoline lenders are the sources for conventional insured mortgages. Click here for more information on the role of monoline lenders in today’s lending environment.
What is CHIP? What are Reverse Mortgages?
CHIP is a reverse mortgage, a loan secured against the value of your home. It lets you release the capital in your home without having to sell or move. The money you receive is tax-free and yours to use as you wish. You can arrange a CHIP mortgage for purchase or refinance. Reverse Mortgages are provided by HomeEquity Bank.
Here is an overview on Reverse Mortgages provided by the Government of Canada, Financial Consumer Agency.
The Benefits of CHIP
- Keep your home. Maintain complete ownership and control of your home for as long as you choose to stay.
- No payments. With CHIP, you never have to make regular payments until you no longer live in the home. You do however, have to pay your property taxes, have valid & adequate fire insurance, and maintain your property.
- Relieve financial stress. Use up to 55% of the equity in your home to pay off debts or handle unforeseen expenses.
- Enjoy retirement. The money you access through CHIP is tax-free.
- Income Advantage or Lump-sum single advance. You can take the funds as a lump-sum or pay yourself a monthly amount.
- If your preference is Income Advantage, you are required to take a minimum $20,000 lump sum, and the minimum amount you can take is $1,000 per month for a maximum of 15 years.
Who Can Qualify?
- Canadian homeowner.
- Age 55 or older.
- Own your own home.
- It’s your primary residence.
Other Interesting Facts
- If there are 2 spouses on title, both have to be at least 55.
- The reverse mortgage is ongoing even if one spouse passes away.
- Can be registered interalia up to 3 properties as long as one of them is your primary residence.
- Bed & Breakfast properties are considered on an exception if owner occupied.
- Prepayments available up to 10% of the outstanding principal and interest within 30 days of each anniversary date without penalty.
- You can choose to pay the interest only each month, or no payments at all.
- After 5 years, there is no prepayment charge if payment is made within 30 days of the reset date.
What Can I Expect for Costs & Rates?
- Please note that the information below regarding interest rates and prepayment charges is reflective for what is available today, and is subject to change.
- There are some initial set up costs that include: appraisal, administration, and legal fees. In total, these are approximately $3,000.00.
- Independent Legal Advice is required.
- Interest rate pricing is subject to change; as of October 23rd, 2023, the available rates are: 6-month at 8.49%, 1-year at 8.99%, 3-year at 8.48%, and 5-year at 8.19%. Variable is at 10.15% (prime + 2.95). The available rate will depend on the location of the property.
Are There Penalties if I Want to Payout My Mortgage?
- Yes. If you payout the mortgage during the first year, the penalty is 5% of the outstanding balance. If you payout during the 2nd year, the penalty is 4% of the outstanding balance. If you payout during the 3rd year, the penalty is 3% of the outstanding balance.
- After the 3rd anniversary, the penalty is 3 months’ interest.
- After the 5th anniversary, the penalty can be waived with 3 months’ notice.
Please note this content is provided for information purposes, and may be subject to change without notice.
Here is what you need to know about foreign buyer financing for real estate purchases in British Columbia, Canada.
- If you are obtaining a mortgage, you will need a Canadian bank account. While you are visiting, take the time to have an account opened. Nowadays, most banks require you to show your ID in person with respect to account opening. Even if you put a nominal deposit at the start, it is worth the exercise for future use.
- Check the bank’s wire transfer policy to find out what they will need from you when you are ready to move money. Some institutions require you to be physically present in the branch to sign wire transfer forms. This is relevant because most lenders now require you to have your downpayment and closing costs in your Canadian account 2 weeks to 30 days prior to completion, depending on the lender.
- Keep copies of all wire transfer documentation. This will form part of your downpayment verification.
- Also while you are here, visit a real estate lawyer. Banks are getting increasingly demanding about “know your client” requirements and some make it a part of their mortgage instructions that the lawyer see the clients in person. If you are working with a realtor, ask them for a referral and book an appointment before you leave to back home.
- Depending on which lender you are approved through, you may have to come back to Canada to sign your closing documents in person.
- Available financing is usually 65% and often up to 80% for US Residents. If you are considering a property purchase that is over $1 million, the financing may be reduced to fit the banks’ sliding scale. This can be a grey area where exceptions are requested and granted depending on the strength of the applicant and the property.
- My role as your mortgage broker is to find the best available rates for the property you wish to purchase, and provide you with information regarding the minimum down payment. The down payment amounts can vary depending on what type of property you are buying, and the location. We always try to secure an approval with no broker or lender fees, but in some cases, they are applicable. If this is the case, there is always full disclosure, and we do not proceed without your permission.
- Get to know the difference between Canadian fixed rate and variable rate mortgages here.
- Review our Resources page for other useful pages of information.
The documentation needed to apply for a loan is usually:
- Completed online application, available here.
- Permission is required to obtain your credit report. Here is our Consent & Authorization Form.
- Income verification; any or all of tax returns, employment letters, and paystubs.
- Downpayment & asset confirmation via bank/asset statements.
- A more detailed information post on the required downpayment documents is available here.
- A banker’s reference letter may be needed if a credit report cannot be obtained.
- Other documents as required upon review of application.
Your closing costs will be comprised of the following:
Depending on the location where you purchase, there is an additional Property Transfer Tax for Foreign Entities and Taxable Trustees:
- Tax is 20%.
- Squamish, Whistler, Pemberton, Lillooet, and the Sunshine Coast, are NOT included in the catchment areas.
- This tax applies to the Capital Regional District, Fraser Valley Regional District, Regional District of Central Okanagan, Nanaimo Regional District and Greater Vancouver. The areas for each region can be found here.
- Only on residential property; if property is farmland or commercial with a residential component, tax applies on the residential component.
- Tax is meant to target foreign and domestic homeowners who do not pay income tax in B.C.
- The tax applies in the Metro Vancouver Regional District (excluding Bowen Island and Electoral Area A, except the part of the electoral area that is the UBC and University Endowment Lands), the Capital Regional District (excluding the Gulf Islands and Juan de Fuca), Kelowna-West Kelowna, Nanaimo-Lantzville (excluding Protection Island), Abbotsford, Chilliwack, and Mission. Most islands are excluded. The tax has recently been expanded to include: Lions Bay, Squamish, North Cowichan, Duncan, Ladysmith and Lake Cowichan.
- The BC Government’s FAQ is available here.
- Click here for the BC Government information summary, and here for their infographic.
Underused Housing Tax:
- The Underused Housing Tax is an annual 1% tax on the ownership of vacant or underused housing in Canada that took effect on January 1, 2022. The tax usually applies to non-resident, non-Canadian owners. In some situations, however, it also applies to Canadian owners. Click here for the Canadian government web site for more information.
When you go to sell the property there will be a withholding tax pending receipt of Canada Revenue Agency (CRA) Clearance Certificates:
- You will have a tax security withholding amount calculated and held back from the sale proceeds until Canada Revenue Agency (CRA) issues Clearance Certificates. You will need the assistance of an accountant to work through this process.
- The amount of the holdback may be 25% of the sale price if the property is deemed to be residential use, or may be approximately 36% if the property is deemed to be business use, or short term rental. The actual amount is calculated using a percentage of the current assessed value of the land and improvements of the property and the sale price. In some instances it can be 50% of the gross sale price. These are not the actual tax liabilities, but security for the tax liability on gains in value.
- The process still needs to be followed even where a capital loss has been suffered.
Here is our summary of First-time Buyer Information
First-time Buyer Benefits:
- RRSP withdrawal of up to $35,000. For eligibility & withdrawal guidelines, click here.
- The BC Government Property Transfer Tax is waived for prices up to $500,000. There is a partial exemption available for prices up to $525,000. For eligibility guidelines, click here. This is the detailed pdf of the Guide from the BC Government: First Time Home Buyer – PTT Guide.
- Federal Government First-Time Home Buyers’ Tax Credit (HBTC). For eligibility and more details, click here.
- Newly Built Home Exemption (also available to repeat home buyers). This exemption waives the property transfer tax for newly built homes valued up to $750,000. A partial exemption may be available for homes valued between $750,000 and $800,000. For full eligibility guidelines and occupancy requirements, click here.
- The new federal First Home Savings Account will be available in 2023. Here is an article from the Globe and Mail that discusses: Globe and Mail – Tax-Free Savings Account for New Home Buyers. More information will be provided as soon as it become available.
- Available September 2nd, 2019 – new Liberal Government First-Time Home Buyer Incentive.
– Find out how much you are eligible for a mortgage. This provides you with a realistic sense of how much home ownership will cost in terms of what your monthly payments, strata maintenance fees, and property taxes will be. You will also find out how much you need for a down payment and how much to budget for your closing costs. For more information on what a pre-approval means in today’s lending environment, click here.
– If you are planning to purchase with less than 20% down, you will have an insured mortgage with CMHC, Sagen, or Canada Guaranty. The insurers will require proof that you have the equivalent of 1.5% of the purchase price over and above your down payment. So, when you are budgeting how much you need, keep in mind that you have to verify not only the down payment, but the 1.5% as well. In actuality, your closing costs may end up being more or less than the 1.5% figure. It will depend on the price, and if you are eligible for the Property Transfer Tax waiver.
– The minimum down payment requirement is 5% for up to $500,000 of the purchase price, and 10% for the portion above $500,000. Homes that are $1,000,000+ require a minimum down payment of 20%. Click here for an information link with a chart for minimum down payment amounts.
– The documentation needed for a pre-approval is as follows:
- Completed mortgage application, available here.
- Permission is required to obtain your credit report. Here is our Consent & Authorization Form.
- Income verification by way of a signed employment letter & current paystubs. The employment letter needs to confirm your starting date of employment, position, and salary. Also, if you are new to your employer, confirmation of being passed the probation period is also helpful. If you are paid hourly, the hourly rate should be stated along with what your guaranteed hours per week are.
- If you are self-employed, the banks will ask for both the T-1 General tax return + the Notice of Assessment for the last 2 year’s. All outstanding taxes are required to be paid and up to date, so your most current CRA Statement of Account may be required.
- If you are an owner in a company, you will also have to provide the last 2 year’s company financial statements, and company ownership documents.
- Confirmation of down payment by way of your last 3 months’ bank/investment/RRSP statements.
- Family gift letter (if applicable).
- A more detailed information post on verifying downpayment is available here.
- Wondering about the possibility of a co-signer? Click here for our FAQ.
– Consult a local real estate professional. They have knowledge of the local market and available listings. They also provide valuable advice during the offer negotiations.
– Speak with a lawyer or notary public for a quote on their fees and availability. Most law offices do conflict of interest checks to make sure they are only acting for you in the transaction. If you have initiated the relationship with the law firm, it will be easier for them to accommodate you when you have an accepted offer.
– When you find the right property, the offer writing stage begins. This is where your realtor will be a big help. The offer is usually written with subjects such as: subject to financing, subject to inspection, subject to review of strata information, etc. You are usually given a window of roughly 7 to 14 days to fulfill these subjects.
– Speak to an insurance broker about obtaining adequate insurance for your new purchase. Properties that are “fixer uppers” or “rental” will have different requirements that you need to know up front. Click here for our blog post that covers home insurance in detail.
– Once you are satisfied that your financing is in place & and the property meets your expectations, you remove your subjects and give a deposit to make your contract “firm and binding.” The amount you give for the deposit forms part of your down payment. Congratulations!! You have bought a home!!
– Then approximately 2 weeks before closing, you may have an appointment with the bank that has given you the mortgage. They often call this the “branch fulfillment” appointment where you may be required to show your ID, choose a payment frequency, and have any remaining questions answered. Not all lenders have the appointment, it depends on which bank you are approved with.
– Once the branch fulfillment appointment is complete, the mortgage instructions are released to your lawyer or notary’s office, and preparation of the conveyance and mortgage documents begins.
– Approximately 2 to 3 days prior to the completion date, your lawyer or notary will give you the exact amount of funds needed to close. They will ask you to bring in a bank draft or certified cheque payable to them “in Trust.” This amount will be comprised of the balance of down payment funds, legal fees, property tax adjustments, possibly title insurance, and the BC Government Property Transfer Tax if applicable.
– Then final packing & moving day!! Your realtor will arrange to meet with you to give you the keys to your new home.
– If you are a Non-resident of Canada, check out our Foreign Buyer Financing information.
– Get to know the difference between fixed rate and variable rate mortgages here.
– Check out this great information page from the Bank of Canada; What’s behind your mortgage rate.
– An overview of the mortgage approval process is available here.
– Review the list of potential closing costs here.
– Review the CMHC Step by Step Homebuying Guide.
– CMHC’s list of 10 Words to Know When Buying a Home: cmhc-10-words-to-know-when-buying-a-home.
– Mortgage Overview from the Government of Canada, Financial Consumer Agency.
-Check out our Resources page for more useful information pages.
Annie de la Chevrotiere
Professional Mortgage Broker
Mortgage broker services with over 25 years experience behind every approval. We advocate for home ownership, refinances to help cash flow, knowledge, and peace of mind.
Why use a mortgage broker? For results, expertise & efficiency. We track the 5 & 10 year bond yields daily to gauge the short term upward or downward pressure on interest rates. This helps to secure the lowest rate for you when you are obtaining a mortgage approval or pre-approval.
Want to see what our clients have to say about our service? Our latest Google reviews are on our blog page, here.
Whether for a purchase or a refinance, I am available 7 days a week to find the right mortgage options and rates for you. I am a professional that takes the time to explain the application process and answer all of your questions. International time zones are accommodated. In most cases, I am paid directly by the lender so there are usually no fees for my service. In situations where a fee may be payable, advance notice is provided with full disclosure.
Our financing is sourced from various institutional & private lenders which provide first, second, and interalia mortgages. Also on this site, there is information on different types of mortgages such as Reverse, and Construction mortgages. There are also speciality pages devoted to First-time Buyers & Non-residents.
Curious about interest rate risk versus penalty risk? This is discussed on the Fixed or Variable page, here.
The pre-approval process starts with the on-line application, and from there I let you know what is needed for supporting documents. We review the numbers with you so you understand what your payments will be and what you will need to budget for a down payment and closing costs. We work together to meet your objectives for your mortgage financing requirements. For more information on what a pre-approval means in today’s lending environment, click here.
Click here to see our feature article in Daily Hive.
For your convenience, you can also schedule a call by clicking one of the links below:
Full contact details here.
I look forward to assisting you!
The Mortgage CentreThe Mortgage Centre became Canada’s first national mortgage broker organization in 1989.