The 7 Best Banks for Mortgages in Canada – For numerous Canadians, the overall value of their homes is directly linked to their net wealth. As indicated by a Stats Canada report, Canadian residential real estate constituted more than 21% of the national wealth at the beginning of 2022. Despite a downturn in the stock market and several interest rate hikes from the Bank of Canada, real estate prices have consistently increased throughout the country. It is evident that mortgages play a crucial role in the personal finance of millions of Canadians.
Selecting the most suitable bank for a mortgage in Canada can be a daunting task. In reality, the best bank might be the one with which you already have an established relationship, given their familiarity with your financial history. However, prudent prospective homeowners understand the importance of exploring various options to find the most favorable mortgage rates. Since mortgage rates can fluctuate daily, being aware of your choices can result in substantial savings over the long term. If you’re curious about the type of mortgage rate you qualify for, tools like a mortgage qualifier calculator can serve as a valuable starting point.
Fixed Rate Mortgages vs Variable Rate Mortgages in Canada
Given the swift series of interest rate increases from the Bank of Canada in recent years, the discussion surrounding fixed-rate mortgages versus variable-rate mortgages has become commonplace. Historically, variable-rate mortgages were generally considered a more favorable option than fixed-rate mortgages in Canada. However, this trend shifted when the Bank of Canada opted to initiate interest rate hikes to combat inflation in the Canadian economy.
As the name implies, a fixed-rate mortgage comes with a consistent interest rate throughout the duration of the current term. Whether the overnight interest rate experiences fluctuations, the interest rate remains constant for the entire mortgage term. This stability means that your payment amount remains unchanged, facilitating easier planning for your financial commitments.
In contrast, a variable-rate mortgage witnesses the interest rate adjusting in tandem with the lender’s prime rate, which, in turn, moves in line with the Bank of Canada’s overnight rate. While variable-rate mortgages offer clear advantages in a low-interest rate environment, the picture changes when interest rates start to rise, potentially leading to a significant increase in borrowing costs. Utilizing a reliable mortgage calculator is recommended to determine your mortgage payments when dealing with a fluctuating interest rate.
Before deciding on either a fixed or variable-rate mortgage, it is crucial to organize your financial situation. This includes ensuring your credit score is in good standing and getting your finances in order. Conducting thorough research will enhance your understanding of your rights throughout the mortgage application process. For instance, lenders are legally obligated to disclose information such as payment amount, frequency, term length, and interest rates in a clear and understandable manner.
Best Banks for Mortgages in Canada
BMO: Best Bank to Switch Your Mortgage to in Canada
The Bank of Montreal, or BMO, stands as one of Canada’s Big 5 banks and holds the distinction of being the country’s oldest financial institution. Ranking as the eighth-largest bank in North America based on total assets, BMO boasts a customer base exceeding 12 million individuals across Canada.
BMO has earned a reputation as a trusted lender for Canadians, offering a notable feature by openly embracing clients looking to transfer their mortgages from other financial institutions. While other banks also accommodate such transfers, BMO distinguishes itself by providing cash-back bonuses. As of June 2023, making the switch to BMO for your mortgage could result in cash rewards of up to $4,200, offering an opportunity to further reduce your mortgage balance.
The only requirement for this bonus is that the initial principal of your mortgage must be $100,000, a condition typically met in the Canadian real estate market. Here are the amounts you stand to earn by transferring your mortgage to BMO:
| Value of Mortgage | Cashback Amount |
| $100,000 to $499,999 | $1,100 |
| $500,000 to $749,999 | $2,100 |
| $750,000 to $999,999 | $3,100 |
| $1,000,000 + | $4,100 |
Meridian Credit Union: Best Bank for a Friends and Family Mortgage in Canada
Meridian, Ontario’s largest credit union, boasts a membership exceeding 365,000 individuals and maintains a presence with over 90 branches throughout the province. Officially established in April 2005, it resulted from the merger of Niagara Credit Union and HEPCOE Credit Union. Meridian provides a comprehensive range of financial services to Ontario residents, encompassing personal banking, mortgages, credit cards, insurance, and investments.
Among its distinctive mortgage offerings, Meridian features the Friends and Family Mortgage, a unique solution allowing up to four individuals to secure a mortgage collectively. Particularly suitable for multi-generational families purchasing a home together, this mortgage comes with the requirement that at least one of the individuals on the mortgage must reside in the property as their primary residence. Additionally, the property cannot be utilized as a rental property according to Meridian’s mortgage policies.
RBC: Best Bank to Get a Mortgage with a High HELOC in Canada
The initial bank on our roster needs little introduction. The Royal Bank of Canada, commonly known as RBC, holds the position of the largest bank in Canada based on total assets and ranks as the tenth largest bank globally by market capitalization. Additionally, RBC claims the title of the largest mortgage lender in Canada, managing a substantial mortgage portfolio valued at approximately $365 billion.
RBC distinguishes itself by offering competitive fixed and variable mortgage rates to its clientele. However, its standout feature lies in the widely acclaimed HELOC (Home Equity Line of Credit) program. The RBC Homeline Plan is recognized nationwide as one of the premier HELOCs available in the country. RBC sets itself apart by providing lower interest rates on HELOCs compared to many of its other lending products. Moreover, it grants clients the flexibility to repay the line of credit according to their own terms and schedule.
Under the RBC Homeline Plan, clients can access up to 80% of their homes’ value. Notably, the convenience extends to accessing the RBC Homeline Plan HELOC through online banking or in person at any of the more than 1,200 RBC branches situated across Canada.
Tangerine: Best Bank for an Online Mortgage in Canada
In Canada, a number of emerging financial institutions operate exclusively through online and digital platforms. By eliminating the expenses associated with physical branch locations, these digital banks can provide benefits such as higher interest savings accounts, commission-free trading, and reduced mortgage rates.
Tangerine, formerly known as ING Direct, is a notable example of a purely online Canadian bank that has been in existence since 1997. Currently, it operates as a wholly-owned subsidiary of Scotia Bank. With a client base exceeding 2 million as of 2023, Tangerine offers a diverse range of financial services.
Among the online mortgage lenders in Canada, Tangerine stands out for offering highly competitive mortgage rates. Additionally, it is among the select few mortgage lenders providing a fixed 10-year mortgage rate, allowing customers to secure a favorable rate for the next decade. The process of applying for Tangerine mortgages is streamlined and can be conveniently completed through their desktop or mobile applications.
TD: Best Bank to Use a Mortgage Broker Within Canada
The Toronto-Dominion Bank, commonly known as TD, holds the position of the second-largest bank in Canada based on both assets and market capitalization. Renowned for its substantial global customer base, TD also boasts a more extensive presence in the United States compared to most other Canadian banks. As of the first quarter of 2023, TD’s mortgage portfolio exceeded $244 billion.
While TD offers mortgage rates in line with other major Canadian banks, it distinguishes itself by collaborating with mortgage brokers. This sets TD apart, as not all banks in Canada engage with mortgage brokers. The advantage of TD working with mortgage brokers lies in the intermediary role they play during mortgage negotiations. Mortgage brokers have the ability to collaborate with TD to secure the most favorable mortgage rate on your behalf.
Opting to work with a mortgage broker doesn’t guarantee the lowest rate, but it streamlines the process by allowing them to explore options among different lenders on your behalf. Utilizing a mortgage broker to secure a competitive mortgage rate at TD offers a level of convenience and access to options that may not be available with other major banks in Canada.
Coast Capital: Best Bank for Mortgages in British Columbia
Situated in British Columbia, home to one of Canada’s most dynamic real estate markets and consistently ranked among the world’s priciest, the topic of mortgages is a perennial highlight on the west coast. Coast Capital, Canada’s largest credit union in terms of customer count, boasts over 600,000 members and a network of more than 50 branches across BC.
Given their deep roots in the BC real estate landscape, Coast Capital stands as an authority on the intricacies of the market. The credit union specializes in offering competitive fixed-rate mortgages with terms extending up to 10 years. While they provide only one variable mortgage rate, it covers a span of 5 years. Coast Capital extends its services beyond mortgages to encompass personal banking, loans, lines of credit, and personal investments, including Guaranteed Investment Certificates (GICs) and mutual funds.
A distinctive feature of Coast Capital is its provision of High-Ratio mortgages, catering to individuals lacking the 20% down payment. This allows applicants to secure a mortgage with as little as 5% down for homes valued up to $500,000 and 10% down for homes valued up to $1 million. However, High-Ratio mortgages are not applicable to homes exceeding $1 million in value. It’s important to note that applicants opting for a Coast Capital High-Ratio mortgage must also obtain mortgage default insurance, incurring an additional cost.
Equitable Bank: Best Bank for a Reverse Mortgage in Canada
A reverse mortgage allows you to take a loan out against the value of your home. This is strictly for Canadians that are over the age of 55 who need additional financial assistance in retirement. A reverse mortgage is similar to a HELOC, but the principal and interest do not need to be paid back until the last owner leaves the house or when the property is sold.
Equitable Bank has recently gained popularity for its personal online banking platform, EQ Bank. For Canadians seeking out a reverse mortgage, Equitable Bank offers the lowest rates among Canadian banks as of June 2023. Along with the minimum age of 55, Equitable Bank only offers reverse mortgages to residents of Ontario, British Columbia, Alberta, or Quebec.
After applying for a reverse mortgage, applicants can receive conditional approval within 2 days. The cash received from a reverse mortgage is tax-free because it is considered a loan and not taxable income. Older Canadians often need additional capital for things like healthcare, paying off high-interest debts, and home improvements or renovations.
Bonus: The Best Online Mortgage Brokers in Canada
Navigating the mortgage landscape may seem daunting, and while your bank might appear as a natural starting point, it’s far from the only option. A mortgage is a monumental financial commitment, making it crucial to survey the market and compare mortgage rates. Furthermore, applying for a mortgage through an online mortgage broker can open up a wider range of choices from both bank and non-bank lenders, ensuring you secure the best deal. In this segment, we’ll introduce you to the top online mortgage brokers in Canada, empowering you to make a well-informed decision.
Nesto
Nesto.ca is an online mortgage broker that has helped more than 400,000 Canadians find the best mortgage rates for their homes. This site introduced the first 150-day mortgage rate hold in Canada, which allows prospective home buyers to lock in a low mortgage rate until they find a house. Nesto offers competitive mortgage rates for fixed rates of between 2 and 10 years and variable rates for between 3 and 5-year terms.
Perch
Perch is a Canadian online mortgage broker that specializes in providing same-day pre-approvals in as little as 20 minutes. Both its 5-year fixed and 5-year variable mortgage rates are lower than any of the big 5 banks in Canada. With flexible repayment options and optimal refinancing rates, Perch is paving the way for digital mortgage brokers. It even welcomes the new generation of workers who do not work a salaried 40-hour work week. This makes Perch an ideal mortgage broker for freelancers and self-employed Canadians.
Rocket Mortgage
After starting as Edison Financial in 2020, the company changes its name to Rocket Mortgage in 2022. It operates in Canada under the umbrella of the American mortgage and loan giant, Rocket Companies. Rocket Mortgage offers competitive rates and works with over 50 lending partners in Canada including Scotia Bank and First National Financial LP.
Pine
Pine.ca is another 100% digital mortgage broker that aims at providing assistance to Canadians in plain language. The platform boasts a 10-minute mortgage application online and approval within 48 hours. As of June 2023, Pine is only available for homebuyers in British Columbia, Ontario, and Alberta. With zero fees and lower rates than the big 5 banks, Pine is another online platform that is disrupting the Canadian mortgage broker market.
Breezeful
Breezeful.com is yet another online mortgage broker that operates in both the United States and Canada. The site uses technology to partner with Canadian home buyers with over 30 different lenders available in every Province and Territory. Along with standard fixed and variable-rate mortgages, Breezeful offers an intuitive mortgage calculator, mortgage refinancing and renewal, private mortgages, second mortgages, and even the ability to rent to own in Canada.
The FHSA: the Best Way to Save for a Mortgage in Canada
Starting from April 1, 2023, Canadians gained access to a new tax-friendly avenue for saving toward their first home—the First Home Savings Account (FHSA). This registered Canadian account allows individuals to contribute up to $8,000 annually until they reach a maximum contribution of $40,000.
Similar to a Tax-Free Savings Account (TFSA), contributions to the FHSA and any accrued interest, capital gains, or dividends remain tax-free. Additionally, FHSA contributions qualify for tax deductions, mirroring the benefits of a Registered Retirement Savings Plan (RRSP).
One important aspect of the FHSA is its limited lifespan; it can only remain open for 15 years. Upon reaching this period, individuals have the option to allocate the funds and their gains toward a new home. Alternatively, they can contribute the amount to their RRSP or Registered Retirement Income Fund (RRIF), without impacting the annual contribution limit. Withdrawals from the FHSA, if not directed to an RRSP, are considered taxable income for that specific year.
To open an FHSA, individuals must be at least 18 years old and residents of Canada. To qualify for the FHSA, the home purchase must be the individual’s first, and they must not have owned a property in Canada in the preceding four calendar years.
