Most Requested Mortgage Information in Toronto

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Mortgage Rates Information

Are Toronto Mortgage Rates the Lowest in Ontario?

When Will Toronto Mortgage Interest Rates Go Down?

How Much Income is Needed to Buy a Home in Toronto?

How Much Does 0.10% Save on Mortgage Interest Costs?

Comparing Different Lender Types in Toronto: Which Lender is Best?

Variable Rate or Fixed Rate?

Strategy to Save on Mortgage Rates in Toronto

Mortgage Brokers Information

Pros and Cons of Using a Mortgage Broker

Mortgage Broker Interview Question Checklist

How Much Do Mortgage Brokers Get Paid?

Different Types of Mortgage Brokers

How a Mortgage Broker Can Help Increase Mortgage Approvals

Is it Easy to Become a Mortgage Broker?

About Brent Richardson, Altrua Principal Mortgage Broker

Are Toronto mortgage rates the lowest in Ontario?

Lenders consider the following information when discounting mortgage rates. Toronto mortgage rates are often the best in Ontario because Toronto scores highly in each area.

Size of mortgage: Bigger mortgages can see more rate discounting.

Lender competition locally: Toronto has more lender options than elsewhere in Ontario.

Local housing market stability: The economy is diverse, and demand is relatively high, supporting market stability.

Consumer dynamics: Banks look at culture and shopping behaviour. In some parts of Ontario, homeowners are more agreeable with the first rate offered, but not as much in Toronto.

However, this doesn’t mean the same great mortgage rates Toronto aren’t available in other areas of Ontario. Because of the internet, some of the lower rates originating in Toronto are readily available in other areas.

When will Toronto mortgage interest rates go down?

As the largest housing market in Ontario with higher property values, mortgage interest rates have a major impact on households in Toronto. So, understanding how the mortgage interest rate forecast affects Toronto mortgages can help you strategize and save.

As of November 2024, the Central Bank of Canada has achieved its target to get inflation to the 2% range.

This sould continue to keep pressure down on mortgage rates, amongs other factors, as long as inflation remains lower.

As of November 2024, there is evidence that fixed mortgage rates could start falling in mid 2024 if the financial markets detect sufficient economic weakness.

Given this, a fixed mortgage rate of 2 or 3 years could position Toronto homeowners to pass through this inflationary battle with more savings and potentially renew into a lower mortgage rate at term maturity.

How Much Income is Needed to Buy a Home in Toronto?

The following purchase prices include the corresponding income and down payment and an estimate for property taxes and heating costs. 25 year amortization was used for minimum and 10% down payment and includes mortgage insurance premiums within the mortgage. The 20% down payment uses a 30 year Amortization and does not include mortgage insurance. This assumes good credit and best mortgage rates as of January, 2024.

These should be used for a rough pre approval estimate only. A personalized pre approval is required for an accurate and reliable result.

How Much Does 0.10% Save on Mortgage Interest Costs?

Comparing Different Lender Types in Toronto: Which Lender Is Best?

There are 4 types of mortgage lenders in Toronto, each with different strengths and mortgage options. These include:

Banks

These are the big banks you’ve heard of, like TD Bank, National Bank and Royal Bank. These are large, trusted lenders that can compete well with each other on rate, especially for larger mortgages, mortgage renewals, home equity line, and mortgage refinance.

Mortgage Brokers

Mortgage Brokers, like Altrua Financial, typically partner with multiple lender sources and, with knowledge of multiple rates and lender requirements, work to find a solution that best fits the borrower’s position. That solution could be a lower mortgage rate, debt consolidation or credit repair. It’s important to note that every Broker is different – Brokers will have different focuses, niches, lender relationships and business structures. They can help make borrowing easier, but it’s important to find the broker that works best with you.

Credit Unions

Credit Unions, like Alterna, Meridian and DUCA are member owned, not shareholder owned. Also, they are regulated by the Province of Ontario directly instead of Federally like the big banks. These features can give Credit Unions a natural edge in Toronto. We often see them as last to increase rates, most competitive in specific rate categories and offering more flexible programs than other lenders. These mortgage lenders will continue to have a significant presence in Toronto lending and real estate.

Institutional Lenders

Also known as ‘Discount Lenders’ or ‘Monoline Lenders’, they only focus on mortgages (not on bank accounts, investing etc…). These lenders include major names such as MCAP, Equitable Bank, First National and MCAN Financial. These lenders typically do not have a branch network and high advertising budgets and work with Mortgage Brokers to offer their services. This can help make these enders extremely efficient, and for Toronto homeowners seeking the best mortgage rates, it will often be the best choice. The fine print of their mortgages is often more flexible; accordingly, these lenders are popular and currently account for over $400 Billion in Canadian mortgages.

Best Mortgage Lender Conclusion:

The best lender type for you will depend on your mortgage requirements. For example, a $1.2 million home purchase, refinance, and consolidation may see a better rate with a Big Bank or Credit Union. Whereas a $750,000 home purchase may attract a better rate from an Institutional lender. Some borrowers may require a private lender. Moreover, lenders change rates and policies constantly. So having a good, experienced Broker in your corner can help you to navigate this maze.

Variable Rate or Fixed Rate?

Borrowers in Toronto are looking to save as much as possible on their mortgage rate, and whether to take a fixed rate or variable rate mortgage is one of the keys to this decision.

While in 2024 variable mortgage rates in Toronto have fallen out of favour, the variable will likely be more relevant once rates start falling, perhaps in mid-late 2024. So, it’s a good idea to understand the key highlights of fixed and variable.

For more detailed information on Fixed vs Variable, check out our comprehensive guide here.

Variable Rate Mortgages

• Move up and down with the Bank of Canada Prime Rate
• Involve a 3 month interest penalty to break
• Can lock into a fixed rate (presumably when rates fall)
• The variable mortgage rate is currently higher than many fixed mortgage rates but may drop below fixed in 2025
• Have provided lower borrowing costs in the long term
• Typically 5 years in mortgage term.

Fixed Mortgage Rates

• Have constant rate and payment for the duration of the term.
• Mortgage Term can be 1-10 years.
• In 2024, the shorter the term, the higher the rate
• The most popular term is 5 years, but the 3 year is gaining.
• Fixed rates can provide more certainty and peace of mind in volatile times.

Strategy to Save on Mortgage Rates in Toronto

• Higher credit: A credit score above 680 usually results in the lowest rates. The maximum credit score is 900.
• Mortgage type: There are various mortgage types, including mortgages for properties valued at $1m or higher, refinance/equity take out, high ratio, straight mortgage renewal, 30 year amortization. Typically, purchases under $1m and straight mortgage renewals have lower rates. In contrast, mortgage refinances and properties valued over $1m can see a slight rate premium.
• Property type: Expanding on the above, if a house is purchased for over $1m this mortgage type is called ‘uninsured’. This industry regulation attributes more lending risk to homes valued over $1m – even if the mortgage amount is very low. If purchasing close to the $1m price point, consider slightly less than $1m to help keep rates lower.
• Down payment: A down payment of less than 20% (insured mortgage) will have the lowest rates, especially for insured or insurable mortgage rates. But so can a higher down payment such as 35% down payment. Often first time buyers will have less than 20% down, while those upgrading or renewing their mortgage will have built up enough equity to fit the 35% down payment requirement for lower rates.
• Fine print: A handful of mortgages available in the Greater Toronto Area have less flexible fine print and a reduced rate. To summarize, some mortgage lenders can earn more profits by restricting fine print flexibility while offering a lower rate. The fine print should always be understood and considered alongside the rate. Ultimately, if the best mortgage rate does not equal the lowest mortgage cost, then it may not be in the best longer-term interest of the borrower.

Your best mortgage rate will be dependent on your unique requirements. Connect with us at Altrua for more. 

Mortgage Assistance and Housing Programs in Toronto

Check out the associated link for more information to see details for each program. These are first time home buyer incentives, except for the CMHC program, which is open to all homebuyers in Toronto.

• Municipal Land Transfer Tax Rebate (Toronto only)
• Home Buyers Plan (RRSP): Allows up to $35,000 to be deducted per buyer
• Tax Free First Home Savings Account (TFSA)
• First Time Buyer Tax Credit
• CMHC low down payment programs: As little as 5% down payment, of which can be gifted.

Closing Costs in Toronto: Be sure to Factor this into Your Mortgage Approval

Land Transfer Taxes are the same across Ontario. However, the City of Toronto has imposed a land transfer tax on property purchases. More specifically, the land transfer tax in Toronto can be found here. If you are a first time buyer, there is a land transfer tax rebate of $4000 from the Province of Ontario and discounting off Torontos tax as well.

Legal Fees are typically $1500 – $2000 to purchase a property and $1,000 – $1,500 to sell a property.

HST on the CMHC fee (if applicable): If your mortgage is less than 20% down payment and involves mortgage default insurance, than the 13% HST needs to be paid on the premium. Since the CMHC fee (included in the mortgage) is often $10,000 or more, the HST can often be in the $1,000 – $2,000 range.

As a rule of thumb, borrowers should expect to earmark 1.5% – 2% of the purchase price for closing costs. It’s usually a good idea to err on the side of caution with a bit too much set aside rather than fall short on closing.

Toronto Housing Market 2024 Price Pattern and What to Expect

The Toronto housing market is very dependent on mortgage interest rates. This correlation between property values and interest rates can easily be seen in 2024:

In January – February 2023: Property values were far lower when fixed mortgage rates were high in the 6% range.

In March – June 2023: The Toronto property values increased quickly as fixed rates dropped by over 1% in anticipation of lower Bank of Canada rates later in 2023.

But in July 2023 – onwards, 2024: Bank of Canada rate drops were not seen happening in late 2023, fixed rates spiked upwards by over 1% again. So in August – onwards in 2023, the housing market began softening again.

There are other factors affecting the market too, including supply constraints and local employment. But the most powerful factor in Toronto remains interest rates.

What does the future hold?

Although there is no guarantee, we can reasonably expect the housing market here to increase when rates fall again. Currently, it is forecasted that fixed rates fall in mid 2024, with the first Bank of Canada Rate drop in late 2024.

At this point, we likely see Toronto property values increase. So, if a shorter-term mortgage rate was selected in 2024, this could time the renewal date to coincide with lower mortgage rates and higher property values.

Toronto’s Economy: A Growth Engine for the Future

Critical to Toronto’s housing market is its economy. Here we will take a brief look at what is driving the local economy here, and how it’s expected to keep supporting a robust housing market.

• Diverse
• Tech and education focus
• Within 8 hours (1 day) drive of over 50,000,000 consumers
• Attracting diverse, international talent
• High standard of living
• Major city, with dollar advantage

The Toronto Economic Development Council plans to focus on these strengths, and continue building momentum for long term growth and prosperity.

Pros and Cons of Using a Mortgage Broker

Even though at Altrua, we’re mortgage brokers, and we love what we do, it’s important for transparency and fairness to look at both pros and cons of working with a mortgage broker. Looking at these points helps us to improve on strengths and minimize weaknesses and can help you to make an informed mortgage decision.

Mortgage Broker Pros

• More options: Brokers typically dont lend funds but partner with large stable banks and other lenders that lend the funds. The broker knows best options and from one perspective seen more as an advisor than a lender.
• Compare rates: Brokers can easily compare rates that apply to your unique situation and requirements. There is also a deeper understanding of the mortgage fine print to help align the right mortgage product with your goals.
• Discounted rates: Some brokers can discount rates, even lower than Bank branches may be able to discount their own rates. Brokers are excellent for mortgage rate competition in Toronto.
• Improve approval experience: Skilled brokers can provide a well structured, intuitive and well managed mortgage process that pulls from working with many different lenders, over many files. Mortgage brokers are on your side, working for you – not the lender.
• Closing management: If there is a problem or issue with the closing, a skilled broker should be able to navigate the intricacies at hand, to close the mortgage. In an unfortunate/bad-case scenario, other lenders may be available to ensure a closing.
• Lender efficient: Mortgage lenders can often save money by paying a broker instead of advertising and closing the mortgage in house. In addition, the right broker can buy down the interest rate and allow for Brokerage based efficiencies. The idea is the most efficient path from the lender directly to you, the client, with the cost savings passed on at each step.
• Works for you: Similar to obtaining lawyer representation, a mortgage broker represents you, their client, foremost. From here the right mortgage is selected to best fit the needs of the clientele and long term advice is provided to keep a continuation of those savings.
• Most are free and no obligation: Mortgage brokers that focus on prime lending are paid by the lenders, not by their clientele. In situations of b mortgages, alternative, or private mortgage lending, there can be associated fees, but these should be disclosed clearly and early on if this is the type of mortgage solution required.

Mortgage Broker Cons

• Not as familiar: The unfamiliar can be uncomfortable for those working with their bank for many years. However, a good broker will focus on building trust and providing high comfort levels early on.
• More information may be needed: Because big banks have excessive amounts of banking, employment and history on their clientele, they often request more information with the banks. However, the technology available to brokers is improving, allowing for a more automated approach for information gathering, making it easier for customers.
• Varying experience: Many brokers are part-time or dont see new files regularly. So, there can be vast differences between the experiences with brokers.
• Varying lender access and relationships: Some brokers have better mortgage lender relationships, helping to provide better rates and smooth approvals.
• Some charge fees: Some brokers charge fees even for private rate lending. However, this is very rare, and shoppers can easily select a broker that doesn’t have fees for their low rate lending.
• No access to some lenders: Mortgage brokers dont have access to ALL lenders. Many good brokers will have access to more lenders (ie. 50+) than are needed to offer a sizable bouquet of options and extreme rate competition. However the best brokers will recommend to lenders their brokerage does not work with, as long as it is in the client’s best interest.

One of the main themes in the ‘cons’ category is that different brokers (or bankers for that matter) will provide different levels of service based on experience, business strategy, lender relationships and personality. Because there are so many brokers in Toronto, the customer experience can vary greatly, too.

The following checklist will help you understand what kind of mortgage broker you’re working with and if they are best equipped to work with your approval.

Mortgage Broker Interview Question Checklist

1. Does the broker charge a fee?
2. What is your experience in working with mortgages? (Typically, it takes 3 years and over 100 files to really learn well)
3. How many lenders do you have access to? (it should be 10 minimum – but many have over 30)
4. What are your top 3 lenders, how much of your business goes to these 3 lenders?
5. What is your strategy for discount rates? (shop, management discretion, buydown)
6. What features do you look for in the fine print?
7. How do you ensure approvals happen smoothly? (What are your best practices? – docs earlier, checks etc…)
8. What else do you look for in a mortgage?
9. What does your pre approval process look like?
10. How do you help me after the mortgage closes?

How much do mortgage brokers get paid?

This is one question that many customers have on their mind, but are not comfortable asking. In financial services, how the mortgage professional is compensated should be transparent. Most full time brokers earn in the $50,000 – $75,000 range consistently. There are about 10% who can earn considerably more in the $100,000+ range, and there are also a lot of brokers, perhaps part time or new to the business, who earn substantially less.

Here is a breakdown of how mortgage brokers get paid:

Typically mortgage brokers are paid by commission. In trying to build trust, some brokers will advertise that their brokers or agents are commission free, but will instead offer agent bonuses for meeting sales targets or will let go of staff who do not meet minimum quotas. Either way, lenders typically pay the mortgage brokerage about 1% of the total mortgage amount on 5-year fixed mortgage rate, or $1,000 for every $100,000. How the Brokerage uses this 1% commission to pay their agents and broker staff can vary widely.

On a standard commission structure, the mortgage brokerage will keep about 10% – 20% of the lender paid commission. The rest goes to the mortgage agent working on the file.

From here cost of running the brokerage is taken from the commission.

What else affects how much the broker gets paid?

• Length of the term: The longer the term, typically, the more the broker will get paid. As a rule of thumb, it’s about .20% of gross commission for each year of the term.
• Broker buydowns: Mortgage brokers have the ability to use commission to lower the interest rate. At Altrua Financial, this is not done on exception but is standard practice for clients. A typical buydown will reduce the broker commission by about 50% and these funds savings are essentially passed on to the borrower.
• Lender promotions and bonuses: Sometimes lenders will offer additional incentives to close business with them. Also, lenders will often offer additional incentives to close larger volumes of business with them.

While the commission structure may seem like an expensive way to pay mortgage brokers, lenders actually prefer it.

At the end of the day, the lender is paying someone to close your mortgage. If this person is in a bank branch, that person is getting paid (and probably with a bonus/incentive structure) and the bank needs to cover other overhead costs as well.

Lenders prefer paying the broker commission because it is a ‘variable expense’: They have the broker do the work of finding the customer, having the conversation and gathering the current documents, and only pay for the mortgages they close on. Banks and lenders find this more efficient and are often able to save on transaction costs, and at Altrua, we work to pass this efficiency on to you the customer in the form of lower rates.

Different Types of Mortgage Brokers

There are two main types of mortgage brokers in Toronto. The Traditional or ‘full service model, and the discount brokerage model. These will be compared below, along with a unique 3rd ‘hybrid model’ that Altrua is working to lead.

Traditional Service Broker model 

Typically works out of individual local branch offices. May meet face to face or do home visits. Typically place more emphasis on the in person connection, mortgage fine print, and long term benefits and may not discount the rate as far as online brokerages typically will.

Discount Broker model

The relationship is usually established virtually, online and over the phone. While there is an emphasis on service and answering all of your questions, there is also an emphasis on efficiency and closing higher volumes of business. These higher volumes and efficiencies are then passed on to you, the customer, in the form of a lower mortgage rates.

Hybrid Broker model 

This brokerage model seeks to offer the best of the traditional and online and is the one Altrua Financial is innovating on. The model seeks to offer the same high level of personalized, solutions focused service as the full service brokerages, while at the same time working through a secure online presence. More specifically, as much time as is needed is spent with customers to ensure they are 100% satisfied with better options and strategies without sacrificing the best mortgage rates. Because the service is offered online, it also saves customers time because they can work from the comfort of their home or office.

How a Mortgage Broker can Help to Increase Mortgage Approvals

There are likely some bad actors in the Toronto mortgage industry working within Banks and the Broker channel who may offer immoral or illegal means to increase mortgage approval amounts. This behaviour is wrong and will lead to customer and lender issues.

There are some legitimate ways that a mortgage broker can use their skill, lender relationships and experience to help borrowers increase their mortgage approval amount if this is desired.

Here are some of the general practices that experienced mortgage brokers can apply to increase mortgage approvals:

• The application setup or ‘structure’: The ways different aspects of a mortgage application (ie. income, payments, down payment/equity…) relate to each other and affect the approval amount. By optimizing the application setup or structure, we can often find ways to increase the approval. For example, reducing the amount of down payment, and paying off a different debt instead can have an overall positive effect on the application.
• Access to more lenders: Various lenders have different mortgage approval flexibilities and limits. Usually, with a stronger application, and if the borrower is willing to accept a slightly higher rate, there can be more lender flexibility for maximum approval. There are alternative lenders as well that will allow for significantly higher approvals if desired.
• Access to Ontario Credit Unions: The Credit Unions in Ontario currently offer programs that do not involve the stress test rate. By qualifying the application at the contract rate, this can potentially increase the approval by 10% – 20%. The rates for these mortgage types can be slightly higher, but these are not alternative or private mortgage rates.

Is it Easy to Become a Mortgage Broker? 

Is it easy to become a mortgage broker in Toronto? The short answer is yes, and no.

It is quite easy to pass the entry-level Mortgage Agent exam. These exams are offered across the City of Toronto and the most popular course is offered by an institution called REMIC.

The course itself may take approximately 50 -100 hours of study and then an exam is written and a course certificate is provided if passed. From here, to be licensed, a Toronto Mortgage Brokerage must review, interview and accept the candidate into their Brokerage to be formally licensed. This process takes some motivation and effort but is not seen as difficult compared to entry into other professions.

What makes becoming a mortgage broker difficult is the real world, in-field learning that needs to take place. There are 3 major areas that need to be covered to excel as a mortgage broker or agent:

• Lender Guidelines and Underwriting
• File management and business operations
• Sales and marketing

The keystone skill is learning lender guidelines/ policies and mortgage underwriting. When this area is mastered, a higher level of service can be offered to customers.

But how does a new broker get customers when they dont have a high level of mortgage and underwriting knowledge? This is what makes becoming a broker very difficult. It takes at least 10 file completions to have a sense of how to approve a mortgage, and it takes at least 100 mortgages closed to develop a more proficient intuition and skill. Over 80% of brokers dont ever get the opportunity to see this many files and may work with a Sr. Broker behind the scenes to complete files.

To start in the industry, many good brokers have experience working directly with Banks or as mortgage underwriters with a lender. This way, once they become a broker, the guidelines and underwriting skills can be more easily developed while growing the other aspects of their business.

About Brent Richardson and Altrua Financial

Hi, I’m Brent Richardson, author of this article and Principal Mortgage Broker/ Owner of Altrua Financial. There are many ways for a lender to reach Toronto homeowners looking for great mortgage financing options. However, I believe that education and customer empowerment are best.

I consider myself fortunate to have the opportunity to provide this information and would be happy to answer your specific questions and provide you with a pleasant, best rate mortgage transaction. Connect with Altrua today or book an appointment in the calendar just below.