Mortgage is a loan that helps individuals purchase properties in Ontario, Canada. Mortgages in Ontario are offered by a variety of financial institutions such as banks, credit unions, and mortgage companies. To be eligible for a mortgage in Ontario, an individual must be of legal age, have a steady income, a good credit score and have a sufficient down payment. The types of mortgages available in Ontario include fixed-rate mortgages and variable-rate mortgages. The term of a mortgage in Ontario is usually 25 years, although 30-year terms are also available. The Government of Ontario and the Canada Mortgage and Housing Corporation (CMHC) also offer various programs for first-time home buyers to help them with the purchase of their first home.
The main types of mortgages available in Ontario are fixed-rate mortgages and variable-rate mortgages. Fixed-rate mortgages have an interest rate that stays the same for the term of the loan, while variable-rate mortgages have an interest rate that can change.
The minimum down payment required for a mortgage in Ontario is 5% of the purchase price. However, it is recommended to have a higher down payment to lower the overall cost of the loan and to avoid mortgage insurance.
One of the Bank of Canada’s mandates is to control inflation. In order to do this, it uses the target for the overnight rate to influence lending and borrowing behaviour. When the BoC increases the target for the overnight rate, this makes it more expensive to borrow money; consequently, people tend to spend less. When people spend less and save more, demand in the market goes down, which then decreases the rate of inflation.
When the Bank of Canada increases its target for the overnight rate, banks and other mortgage lenders also increase their prime lending rates. Since variable mortgage rates and home equity lines of credit (HELOCs) are directly tied to a lender’s prime rate, when the BoC hikes its policy interest rate, variable mortgage rates and HELOC rates then also go up.
On the flip side, fixed mortgage rates are not tied to the prime rate. Instead, they are directly influenced by 5-year bond yields. As bond yields go up, the cost to lend money also increases. As a result, lenders raise their fixed mortgage rates. As of March 2022, bond yields have, for the most part, steadily increased in response to the BoC’s outlook and escalating inflation. Hence, fixed mortgage rates have also been climbing up. However, bond yields experienced a slight dip at the end of 2022, resulting in discounts for some fixed-rate mortgage products.
Mortgage pre-approval is when a lender evaluates your financial situation and credit history to determine how much you can borrow. Mortgage pre-qualification, on the other hand, is when a lender gives you an estimate of how much you can borrow based on the information you provide. Both pre-approval and pre-qualification are used to help home buyers understand their borrowing potential and budget accordingly.
Yes, the Government of Ontario offers a land transfer tax refund for first-time homebuyers and the Canada Mortgage and Housing Corporation (CMHC) offers a Home Buyer’s Plan that allows first-time homebuyers to withdraw up to $35,000 from their RRSP for a down payment.
It’s simple to concentrate on the final purchase price or the size of your mortgage when making home-buying plans. The most important figure for you, however, will be your regular repayment. After all, the amount you’ll need to deduct each month from your paycheck is for your mortgage payments.
The size of your mortgage payments can vary depending on a number of important variables. A few of these are:
It’s crucial to take into account the requirements you’ll have to meet in order to be granted a mortgage when thinking about your monthly mortgage payments. The following are some of the most crucial items that potential lenders will look for:
Purchase Price
Minimum Down Payment
Less than $500,000
5%
$500,000 – $999,999
5% of the first $500,000 and 10% of any amount over the first $500,000
$1,000,000 or more
20%
Prior to using our mortgage payment calculator, calculating mortgage payments was difficult. The mortgage payment calculator on RateHub.ca provides all the tools you need to run various scenarios and determine which mortgage is best for you. Continue reading to learn more about the calculator’s operation.
Start by entering the purchase price in the calculator. Next, choose a mortgage rate and amortization period. You have the option to enter a different rate in addition to the best rates displayed by the calculator for your province. The calculator will now display the amount of your upcoming mortgage payments.
Depending on the amount of your down payment, the mortgage payment calculator will by default display four different monthly payments. It will calculate the price of mortgage default insurance automatically. To see how your regular payment will be impacted, you can alter the down payment amount and the frequency of your payments.
Our calculator also estimates how much money you’ll need for closing costs and the amount of the land transfer tax. Additionally, you can use the calculator to calculate your monthly expenses in total, determine your payments in the event that mortgage rates increase, and display the evolution of your outstanding balance.
Before you start looking for a new home, it’s a good idea to use the calculator to figure out what you can afford. Use the “Renewal or Refinance” tab to calculate mortgage payments without taking a down payment into account if you are renewing or refinancing and know the total amount of the mortgage.
You can reduce your monthly mortgage payments in a few different ways. A lower mortgage rate, a larger down payment, an extended amortization schedule, or a reduction in the purchase price are all options. Use the calculator to determine your payment under various conditions.
Remember that your maximum amortization period is 25 years if your down payment is less than 20%. It’s always a good idea to ask a mortgage broker for help if you’re having trouble locating a lower mortgage rate.
Saving thousands of dollars in interest is possible if you can pay off your mortgage more quickly. All of the strategies needed to speed up mortgage repayment will, however, require you to make larger monthly payments over a shorter period of time. Understanding the fine print is crucial because some lenders may tack pre-payment penalties onto your mortgage. However, there are some methods you can use to pay off your mortgage more quickly, such as:
Faisal Susiwala is a highly skilled realtor in waterloo, Ontario who has built a strong reputation as a reputable, creative and dependable professional. He has achieved a deep understanding of the real estate market over the last 32+ years, and has earned the title of the #1 Agent in Canada, and operates under the world’s #1 Real Estate Brand.
