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Your Guide to Getting the Best Mortgage Rates in Toronto

The best mortgage rates in Toronto can be hard to find without a licensed mortgage broker. You might still be left shopping around in Toronto as each mortgage broker has their favourite mortgage lender they prefer to send their business to. That lender may offer the broker better rates or the most extensive options for their clients. It could also be that that lender may have the most competitive compensation and commission structure in Toronto to entice the local brokers. 

But how can you ensure that the solution presented to you best matches your borrowing situation? Additionally, spending so much time searching for the lowest rate in Toronto adds to your bottom line. Additional time may be required for due diligence to build trust before discussing your finances with someone.

Using nesto’s licensed mortgage experts can help you find the best mortgage rates in Toronto by narrowing down your most suitable options.

At nesto, we make your rate shopping experience in Toronto easy by providing solutions to the concerns we’ve just illustrated.

About the Greater Toronto Economy

  • Greater Toronto is home to 8 million people, while almost half live in the City of Toronto, which is made up of Etobicoke, North York, East York, and Scarborough. Markham, Mississauga, Hamilton, and Brampton are all larger cities with more than half a million inhabitants each. Vaughan, Richmond Hill, Oakville, Burlington, Oshawa, Whitby, Ajax, and Pickering have populations of over 100,000 each.
  • Greater Toronto’s GDP is more than half a trillion dollars, its labour market participation rate is 67%, and its unemployment rate is 5.9%.
  • The average home price in Greater Toronto is approximately $1 million, ranging from approximately $600,000 in northern parts of the GTA to just over $1.2 million in Oakville and Milton.
  • Greater Toronto’s average household income is $151K, and the median is $83,900.
  • Greater Toronto’s average mortgage balance is around $566K.
  • Greater Toronto’s municipal tax rates range from 0.71% to 2.1%.

About the Ontario Housing Market

Home sales in Ontario declined significantly in 2023 and are projected to remain low into early 2024. Early December data suggests a pick-up in housing activity compared to late December of last year; however, caution is warranted as sales volumes tend to be low in December, and unseasonably warm temperatures may have had an impact.

Condominiums, especially investor-owned condos, are facing a number of challenges in 2024, including a potential decline in sales and affordability issues. In 2024, the Toronto condo market experienced a significant decline in sales as investors sold off properties amid affordability concerns. Condominiums are facing particular challenges in 2024 as investors struggle to afford properties amid higher interest rates. Investors may sell off condos as a result. New home construction is expected to slow down in 2024 due to a number of factors, including financing difficulties, inflation, and labour shortages.

There’s a lot of uncertainty surrounding Ontario’s housing market heading into 2024. Royal LePage predicts average home prices in Toronto to increase by 6% in 2024, and in Ottawa by 4.5%. CREA projects an increase in Ontario’s number of sales for 2024 (from 161,696 in 2023) by 13.9% and a slight year-over-year increase in the annual average home price (from $793,000 in 2023 to $793,400 in 2024). According to TD economist, sales volumes are expected to remain at a low level in 2024, while Royal LePage expects average home prices to increase, and ReMax expects a decrease.

Ontario Mortgage Strategy

The Bank of Canada (BoC) manages economic risks by adjusting the overnight policy rate, influencing all prime rates in the country, at which variable-rate mortgages (VRM) and adjustable-rate mortgages (ARM) are priced. Bond yields are impacted by the BoC’s ability and expectation to control Canada’s inflation, as well as economic growth. Bond yields directly impact pricing on fixed mortgage rates, as bond traders determine the price for existing government bonds. 

Fixed mortgage rates are typically 1.5% to 2% higher than their corresponding bond yields due to lenders’ mortgage funding costs. A 5-year fixed rate could offer immediate relief for homeowners in Toronto despite being a high starting point. Risks exist in shorter-term fixed and variable rates, and there’s a chance the prime rate may not decrease as quickly as expected or may even increase if inflation isn’t controlled. 

Long-term rates have recently decreased, but short-term rates won’t decline until the Bank of Canada (BoC) nears its 2% inflation target. The bond market anticipates a 0.50% rate cut by the BoC in mid-2024, aligning with the spring lending season. US T-bill yields are pushing up Canadian bond yields, impacting fixed rates in Canada as the US budget deficit continues to grow. 

Mortgage brokers may advise well-qualified borrowers to consider adjustable-rate mortgages (ARMs) as the BoC approaches a reduction in its policy rate. However, these borrowers should have substantial savings to handle potential rate increases, as the path to lower rates is full of ups and downs. Borrowers taking on an ARM will benefit from immediate savings as their lender lowers their prime rate.

The mortgage strategy for borrowers in Toronto benefits from Canada’s Mortgage Charter, announced in the federal government’s Fall Economic Statement.

Ways the Mortgage Charter helps Ontario mortgage holders’ and homeowners’ mortgage strategy in 2024

Borrowers in Ontario with insured mortgages will only have to re-qualify at their contract rate when switching lenders

The Office of the Superintendent for Financial Service (OSFI) has reinterpreted existing mortgage guidelines, allowing previously insured Toronto mortgage borrowers to skip the stress test when transferring their mortgages between lenders. This change means typical Toronto households could qualify with a $25,000 annual income for every $100,000 mortgage balance, compared to the $29,000 required to stress-test a similar mortgage. 

At nesto, we operate without physical branches and offer more significant savings than big lenders. Therefore, nesto can offer lower rates to ensure manageable payments for mortgage holders and first-time homebuyers (FTHB) in Toronto—borrowers in Toronto, who can easily qualify to move to nesto at maturity. Prospective homeowners and first-time homebuyers in Toronto can expect a simple and easy approval process at nesto.

Borrowers in Ontario who are at risk of negative amortization can make prepayments or sell their principal residence without incurring any prepayment penalties

Mortgage holders in Toronto could make prepayments, but each lender’s mortgage solution has its own prepayment rules. nesto offers competitive rates with flexible prepayment options on our full-featured mortgage solutions and limited mortgage solutions for clients seeking a lower rate without the extras. 

If you’re a variable-rate mortgage (VRM) holder in Toronto who’s experienced negative amortization, nesto provides competitive uninsured rates to refinance your mortgage. Furthermore, nesto’s mortgages ensure that you won’t be at risk of negative amortization or payment shock through our adjustable-rate mortgage (ARM) if you make timely scheduled repayments.

Land Transfer Tax & Rebates in Toronto

Ontario charges a Land Transfer Tax (LTT) on all home purchases throughout the province. Premiums are determined based on your property’s purchase price tiers, calculated as:

  • 0.5% on amounts up to $55,000
  • 1% on amounts between $55,001 and $250,000,
  • 1.5% on amounts between $250,001 and $400,000,
  • 2.0% on amounts between $400,001 and $2,000,000,
  • 2.5% on amounts exceeding $2,000,000

Additionally, the City of Toronto charges its own Municipal Land Transfer Tax (MLTT) on properties purchased within its boundaries. The MLTT on the same premium rates and tiers used to calculate the Ontario LTT but has additional tiers after a $2,000,000 purchase price for properties with up to 2 single-family residences. Multi-family residences such as condominiums are limited to a 2% tax on values exceeding $400,000. 

Rebates and refunds on the Ontario Land Transfer Tax (LTT) are available to all qualified first-time homebuyers (FTHB) who are considered residents of the province. The maximum rebate is $4,000. To qualify for a transfer tax rebate, the home you purchase must be owner-occupied and worth at least $368,000. Homes worth less than that will not be subject to a land transfer tax, and a full rebate will apply.
Learn more about how the Ontario Land Transfer Tax, Rebates and Exemptions work in Toronto.

Toronto Land Transfer Tax and Rebates

The City of Toronto charges its own Municipal Land Transfer Tax (MLTT) on properties purchased within its boundaries. For properties up to 2 single-family residences, the MLTT is calculated on tiers of the purchase price as:

  • 0.5% on amounts up to $55,000
  • 1% on amounts between $55,00.01 and $250,000,
  • 1.5% on amounts between $250,000.01 and $400,000,
  • 2.0% on amounts between $400,000.01 and $2,000,000,
  • 2.5% on amounts between $2,000,000.01 and $3,000,000,
  • 3.5% on amounts between $3,000,000.01 and $4,000,000,
  • 4.5% on amounts between $4,000,000.01 and $5,000,000,
  • 5.5% on amounts between $5,000,000.01 and $10,000,000,
  • 6.5% on amounts between $10,000,000.01 and $7,000,000,
  • 7.5% on amounts exceeding $20,000,000

Multi-family residences such as condominiums are limited to a 2% tax on values exceeding $400,000.

First-time Purchaser Rebates on the Toronto Municipal Land Transfer Tax (MLTT) are available to all qualified first-time homebuyers (FTHB) who are considered residents or citizens of Canada. The maximum rebate is $4,475. The home you purchase must be owner-occupied and worth at least $400,000 to qualify for a transfer tax rebate. Homes worth less than that will not be subject to a land transfer tax, and a full rebate will apply.

Learn more about how the Toronto Land Transfer Tax, Rebates and Exemptions work in Toronto.

First-Time Home Buyer Programs in Toronto

Ontario has a few first-time homebuyer (FTHB) incentives available through the province and federally. Learn more about all the FTHB programs and processes for obtaining a mortgage for your first home while saving your hard-earned money.

First-Time Home Buyer Grants may be available through municipalities, the province, or federally throughout Ontario. Homeownership grants are also available through various regions and counties, such as Waterloo, Simcoe Lambton, Dufferin Kingston, Muskoka, Brantford, Niagara, and Chatham-Kent. Contact the municipality offices to learn if such programs exist where you’re looking to purchase your first home.

Ontario Land Transfer Tax Rebates are available to all qualified first-time homebuyers (FTHB) and considered residents of the province. The maximum rebate of  $4,000 is available on owner-occupied properties valued at $368,000 or more.

First Time Home Buyers Tax Credit (HBTC) amounts to a maximum of $1,500, which can be claimed by the buyer upon meeting qualifying criteria. Learn more about the First Time HBTC to find out your eligibility.

Ontario New Housing Rebate may be available if you paid the HST to buy, build, or substantially renovate a house located in Ontario. You may be entitled to claim a provincial new housing rebate for some of the provincial part of the HST that you paid. If you paid no HST, the rebate is limited to $16,080. If you paid HST, the maximum rebate is $24,000. For more information, see Ontario New Housing Rebate for owner-built houses or Ontario New Housing Rebate for houses purchased from a builder.

Canada Green Home Grants of up to $5,000 are available to eligible Ontario homeowners for recommended and eligible retrofits such as home insulation, windows and doors, heat pumps and renewable energy systems. Additionally, a Canada Greener Homes Loan is an interest-free loan of up to $40,000 with a repayment term of 10 years, open to homeowners who have an active application (at the pre-retrofit stage) with the Canada Greener Homes Grant.

The Registered Retirement Savings Plan (RRSP) Home Buyer’s Plan (HBP) in Toronto allows you to withdraw up to $35,000 ($70,000 for a couple) from your RRSP to buy or build a qualifying home for yourself or a related person with a disability. Learn more about the HBP to find out your eligibility.

The First Home Savings Account (FHSA) in Toronto allows prospective homebuyers to contribute $8,000 a year up to a lifetime maximum of $40,000 toward buying their first home. Withdrawals and investment incomes will be tax-exempt if the funds are used to purchase a home. Learn more about the FHSA to find out your eligibility.

New Construction Funding for Indigenous Housing financing programs for Indigenous communities (First Nations, Métis, and Inuit) in Toronto may be available through organizations or the provincial or federal government. Learn more about on-reserve and off-reserve eligibility.

Learn About Rates and Mortgages in Toronto

Our frequently asked question (FAQ) section addresses common questions regarding mortgage rates and mortgages in Toronto. We’ve designed this section to help you make informed choices for your first or next home purchase, renewing your existing mortgage, switching your mortgage to nesto, or refinancing your home in Toronto.

What are today’s mortgage rates in Toronto?

Today’s best default-insured mortgage rates in Toronto are on a fixed 5-year mortgage and on an adjustable-rate mortgage. An adjustable-rate mortgage (ARM) is similar to a variable-rate mortgage (VRM) without the risks of hitting your trigger rate or negatively amortizing once you’ve hit your trigger point.

Today’s average insured rates from the 6 biggest banks, which hold almost 70% of all mortgages in Canada, are 5.47% on a 5-year fixed mortgage and 6.94% on a 5-year variable mortgage. However, these rates are significantly higher than those available at nesto. At the same time, 4 of these banks’ (and not to mention your big green credit union) VRMs can cause negative amortization if prime rates rise rapidly during your term. If your variable mortgage rate rose significantly during your term, you could be at risk of payment shock and need to refinance to avoid negative amortization.

Why get Toronto mortgage rates at nesto?

At nesto, we offer some of the most competitive rates in Toronto or anywhere else in Canada. We’re the biggest 100% digital online mortgage lender in Toronto, with realtime pricing on all our mortgages. We’re so confident that you’ll find the best rates in Toronto right here at nesto that we’ll even back it up with our low rate guarantee, or we’ll pay you $500* if we can’t beat your rate. With nesto, you’ll save time.

On top of our lowest rates on offer, we save you time from spending hours looking for the best rate or having to visit a mortgage provider in person. Your mortgage will be completed online, and from start to finish, you can do it in the cozy comfort of your home or chalet. There is no need to shovel your driveway or fill the boat with gas to cross the lake to sign your mortgage application in person before your offered rate changes. So sit back on your Muskoka chair and complete your mortgage application faster than it takes you to walk down to your nearest LCBO. With nesto, you’ll save money.

Imagine all the time you can save shopping for your mortgage rate each time it comes up for renewal. At nesto, we’d prefer to offer you a low rate every time you renew your mortgage with us instead of spending that money to acquire a new customer. You can be confident that you won’t have to negotiate when your mortgage term ends. You’ll be offered the best rates at renewal without negotiation. And since our variable mortgages are indeed adjustable-rate mortgages, you’ll not be at risk of negative amortization. If you decide to take our adjustable-rate mortgage (ARM), once the 5 years on your mortgage term have been completed, you’ll have 5 fewer years to owe on your mortgage amortization. However, during periods of monetary tightening, VRMs can increase in amortization, so you start with 25 years and end with 40 years or more after your 5-year term is completed. With nesto, you’ll save time, every time. If time is money, and nesto is saving you time finding the best rate and locking it in, then you’ve already started to save with us. You’ll save even more from our low rates once your first mortgage payments kick in. We offer easy-to-understand prepayment options. And unlike the bank or your local credit union, we have no posted rates to supercharge your prepayment penalty if you decide to pay your mortgage earlier than planned. Like most mortgage finance companies, we use your contract rate to calculate prepayment penalties.

Should I get an open or closed mortgage in Toronto?

Closed mortgages come with much lower interest rates – typically, the difference between the 1-year open and 1-year closed at any given time with most banks will be more than 1.5%. The difference between a 5-year open mortgage rate and a 5-year closed mortgage rate will be more than 3%. That’s more than 1.5% to almost 4% savings on your mortgage rate by choosing a closed mortgage versus avoiding an annual prepayment limit on your open mortgage.

Choosing an open or closed mortgage for your home financing depends on your long and short-term plans. If your plan involves switching homes or lenders because you must move away from Toronto, an open mortgage may be a good option. However, this flexibility comes with much higher rates than a closed mortgage. 

What if you’re expecting a big windfall of money, such as a large bonus at work or an inheritance from a relative? Once again, it may be a better option to go with an open mortgage so you have the flexibility to maximize your prepayment. However, these prepayment privileges should only be utilized once you have met your primary financial goals. Goals include putting aside 6 to 12 months of your budget in cash savings for any unplanned circumstance, such as a layoff at work. 

Maximizing your RRSP and TFSA limits to set aside money for retirement and long-term savings should also be prioritized as money needs time to grow (a concept that is inverse to that of paying down a mortgage due to amortization), and these investment vehicles provide a hedge against diversification risk. As well as building an emergency fund that should be at least 10% of your gross annual income in case of major repairs or maintenance if any issues arise with your home or car. Setting aside cash for inflationary pressures is also good financial planning. This way, you can avoid dipping into your credit line or emergency savings.

Should I use a mortgage broker or lender in Toronto?

Using a mortgage broker gives you access to advice that sometimes you can’t find directly from a lender. A mortgage broker is an intermediary between yourself, the borrower, and lenders (or financial institutions). Of course, with one quick search online, you’ll easily be able to locate multiple mortgage brokers around Toronto. Throughout Ontario, dealing with a mortgage broker gives you the peace of mind that you’re getting licensed professional advice that meets provincial regulations from the Financial Services Regulatory Authority (FSRA) of Ontario.

If you review the resources Ontario’s provincial mortgage regulator provides, you’ll find reasons to work with a broker. What if we told you there is a way you can have it all? 

By making nesto your starting point, you’ll get professionally licensed advice for your mortgage in Toronto. Our mortgage experts who can assist you with your property in Toronto are provincially registered brokers in Toronto, regulated through FSRA. You’ll also be dealing directly with nesto as a lender. Our prime lending mortgage borrowers in Toronto can be assured that no broker incentives, commissions or finder’s fees are added to their rate. Additionally, nesto is not required to pay our mortgage experts a finder’s fee since you come to us directly, and they are not acting as an intermediary between the borrower and the lender. Instead, they advise you on your mortgage solution as a mortgage expert. Unlike a brokerage, non-bank lender, financial institution, or credit union, we do not pay them a finders’ fee and add the fee to our rate as a premium. Instead, nesto pays our mortgage experts a salary and passes the savings to you, the borrower, with the most competitive rates in Toronto.

Should I find a mortgage with a rate hold in Toronto?

Securing your mortgage rate hold in Toronto is an excellent way to protect yourself from possible rate hikes over the short term. This concept is similar to choosing a fixed mortgage rate to protect yourself from potential increases over the long term. However, unlike your rate being predictable for years over your term, you’ll get predictability for months with your rate hold. Mortgage rate holds and rate locks in Toronto come at a cost for the lender; the longer a lender holds the rate for you, the higher the cost for them. You’ll notice that a premium is added for longer rate holds. Lenders will offer a quick close rate (close within 30 or 60 days) on the money they want to lend out before that rate expires, as they have already bought and paid for those funds at that rate. At nesto, we’ll hold your mortgage rate for up to 150 days- the longest rate hold period in Canada, everywhere in Canada – including all of Ontario and most definitely in Toronto.

It’s important to differentiate between a fixed mortgage rate hold versus a rate hold discount, which is held on a floating mortgage rate such as those on variable or adjustable mortgages. The lender will hold the discount (to their prime rate) they provide you on a floating mortgage. For example, if your lender in Toronto gives you a rate of 4.95% on a fluctuating mortgage where the lender’s prime rate that day is set at 6.45%, you’re receiving a discount of 1.50% from their prime rate. Whether this discount is held for 30, 60, 90, or 120 days or from the time your mortgage application is funded until the end of your term, your discount will carry in whichever direction the lender’s prime moves. 

Typically, most lenders in Toronto will move their prime with the Bank of Canada’s policy rate and the nation’s Big 6 Banks. With an adjustable-rate mortgage (ARM), your payment will adjust up or down with the changes in the prime rate. In contrast, with a variable-rate mortgage (VRM), your payment won’t adjust – the interest component on your payment amount will adjust, making more of your payment go toward interest and less toward your principal. A rate hold is a great option when your new home purchase in Toronto closes in the next 3 or 4 months or your mortgage is up for renewal within 90 or 120 days. Most lenders will allow you to hold your rate once your mortgage application is approved. Your lender will also hold rates for you for a similar period before your mortgage matures to early renew your mortgage without a penalty. Consider this your cue to start shopping to understand the market and future rate expectations. With nesto’s 150-day rate hold period, we’ll provide you with a low rate and peace of mind.

What Affects My Mortgage Rate in Toronto?

Multiple factors can affect your mortgage interest rate in Toronto or anywhere else in Canada. These same factors will also affect your mortgage qualification and the speed at which your mortgage underwriter processes your application and grants you approval. In order of importance, mortgage rates in Toronto are priced based on these factors: location, downpayment, purpose, mortgage term, mortgage type, amortization period and mortgage restrictions


The fact that your property is located in Toronto plays a significant factor in the mortgage rate your lender offers. The main reason its location plays such an essential factor is the ability of the lender to resell the property if you were to default on your mortgage. For instance, if the local economy in Toronto is in a downturn and those living in and around Toronto are leaving the area for better jobs and career opportunities, the lender must be compensated for the additional risk of lending money there. This negative migration in Toronto creates a demand risk. 

On the reverse side of the same equation is supply risk. If it’s costlier to lend money in Toronto, fewer lenders will provide mortgages there. When fewer lenders lend in Toronto, the risk is more significant for those who lend in Toronto.

The good news is that nesto is available in Toronto and all towns and cities in the Toronto Region. At nesto, we are committed to providing you with the best mortgage options in the Greater Toronto Area (GTA). You can be assured that no other lender can offer our competitive rates in Toronto than they would in the rest of Canada. No other mortgage lender or broker in Toronto can provide such competitive rates from the comfort of your muskoka chair. Watch your 100% online mortgage get approved by nesto before you can even make an appointment to sign documents at your local bank.

Downpayment / Capital

Downpayment on a mortgage is also commonly known as capital or equity, and it’s usually measured as a ratio or percentage of the property’s purchase price or market valuation. They are measured as a factor, referred to as the loan-to-value (LTV) ratio. Or as a percentage, which is referred to as the downpayment. For example, an 85% LTV ratio means you’ve got a 15% (100% – 85% = 15%) downpayment or capital on your mortgage transaction. Meanwhile, the percentage directly refers to the downpayment or capital itself from the property’s value as a whole (100%).

It’s commonly assumed that a lower downpayment will mean your mortgage interest rate in Toronto will be higher. However, this is not always true as the lowest (5% to 19.99%) downpayments on your home purchase give you access to insured mortgages which carry no risk to the lender in Toronto. Therefore, you’ll get access to nesto’s lowest rates in Ontario since your mortgage is default-insured by CMHC, Sagen or Canada Guaranty, and it poses no risk of default to your lender. Your LTV ratio will determine if you’ll need to pay for or purchase mortgage default insurance. LTV is the single biggest factor for insured or insurable mortgage pricing when it comes to purchases and renewals. However, insured and insurable pricing is limited to a purchase price or market value of a maximum of $1 million on the subject property. With refinances, downpayments are considered the capital or equity in your property. You refinance a property when you own it – have already financed (or purchased) it during a previous transaction. You’ll need at least 20% equity in your property, as refinances are limited to 80% LTV.


The purpose of your property in Toronto plays a significant factor in accessing the lowest Ontario mortgage rates. Lenders need to understand what purpose your property will serve. Will it be a primary residence, vacation home, cottage or chalet, second home for your child attending school in Toronto, or investment/rental property? The main risk that property use brings is that there is proof from past economic downturns that borrowers are willing to pay for the roofs over their heads above all else. 

The logic behind your higher rate for a mortgage on your Toronto property solely for investment purposes is if money is tight, you’re likely to pay the mortgage on your primary residence before other obligations. The lender sees this as a risk and will add a premium on your mortgage rate for your investment or rental property. In the same vein, a borrower won’t be able to access the lower insured or insurable mortgage rates in Toronto on properties that do not meet the insurer’s lending criteria, especially those properties not being used as primary residences, are valued at more than $1 million, carry a mortgage amortization greater than 25 years, have been previously refinanced, or are looking to be refinanced.

Mortgage Term

The mortgage term you choose for your property in Toronto is vital in determining your mortgage rate in Toronto. Each fixed mortgage term’s rate is determined by a similar term for the corresponding bond determines each fixed mortgage term’s rate. 

Typically, lenders add a 1% to 1.5% premium to the bond’s yield to determine the corresponding fixed mortgage rate for that term. This premium is their funding and origination costs—the cheaper it is for the lender to finance new client acquisition and overhead expenses, the less their premium is on your rate in Toronto. You will be charged higher premiums if your property is a rental or your mortgage is uninsured in Toronto.

Floating rates, such as variable and adjustable mortgages throughout Ontario, work differently than fixed mortgage rates in Toronto. Floating rates are priced against your lender’s prime rate. Once you’ve secured your floating mortgage, your rate will fluctuate with your lender’s prime rate. The discount on your adjustable or variable mortgage rate is the funding and origination premium the lender attaches to your mortgage pricing. Typically, lenders only offer 3 floating mortgage options: 6 months, 3 years, and 5 years. 

The premium the lender charges decreases for longer terms as the lender expects to retain your mortgage for longer. Also, if you pay off your mortgage early, lenders expect to recover more interest the longer you have left on your term. Additional premiums will be added to your mortgage rate in Toronto if your property is a rental or your mortgage is uninsured.

Amortization Period

The amortization period can be the most significant factor in your mortgage rate in Toronto, as well as make a substantial impact on your cost of borrowing. When amortizations exceed 25 years on your home purchase or mortgage renewal, they cannot access the government-backed insured or insurable rates from CMHC. Mortgages that carry amortizations greater than 25 years, those underwritten on properties with over $1 million valuations, or for refinance purposes cannot be default insured by CMHC, Sagen or Canada Guaranty.

Banks and credit unions typically charge 10 to 50 bps (1 basis point is 0.01%) more on their uninsured mortgage rates in Toronto – those with amortizations over 25 years. Prime lenders will provide you with amortizations for up to 30 years. If you’re looking at amortizations exceeding 30 years, you’ll have to go through an independent broker who works with a subprime lender and be willing to pay an additional 3% to 5% combined on your rate and fees.

Mortgage Restrictions

Finding the lowest rate in Toronto may come with some restrictions. Reviewing your mortgage contract to ensure you’re not restricted from selling or refinancing is valuable. Typically, mortgage lenders will institute a “bona fide sale” clause that could limit you from selling your home to a related party or refinancing with another lender before your term ends. The lowest restricted “no frills” mortgage is typically labelled limited or restricted

Some lenders will make it very complicated by giving discounts in exchange for a mortgage feature. For instance, many mortgages will only let you make a 10% prepayment on your mortgage anniversary date in lieu of a lower rate. Other lenders may not allow mortgage porting, early renewal conversions or blend and extends, mortgage assumptions on their restricted mortgage solution. 

At nesto, we’ve simplified our restricted mortgage in Toronto, available throughout Ontario. Our limited mortgage provides the borrower with the lowest possible rate in exchange for having no prepayment options or prepayment privileges. Your prepayment charge or a prepayment penalty is calculated as the greater of the estimated interest rate differential (IRD) or 3 months of interest or 2.9% of the remaining balance if paid out before the completion of your term.

Mortgage Type

The mortgage type you choose for your property in Toronto or anywhere else in Canada will significantly affect your mortgage rate. There are various types of mortgages, such as fixed-rate mortgages and floating-rate mortgages. Floating mortgages are more commonly known as adjustable-rate mortgages (ARM) or variable-rate mortgages (VRM) in Toronto. In Toronto, mortgages can also come as open versus closed, reflecting the flexibility in limits and restrictions with their prepayments. Mortgages in Toronto can also be registered as a standard or collateral charge or have revolving home equity lines of credit (HELOCs) set up under a collateral charge. If suitable, all types of mortgages in Toronto provide different options and solutions that can be tailored to your financial situation.

Open vs Closed Mortgages

Open mortgages in Toronto do not have prepayment limits and penalties. Closed mortgages have set prepayment limits and penalties, which are calculated based on one of the following methods: a 3-month interest rate penalty, an interest rate differential (IRD) penalty, or a penalty calculated as a percentage of the remaining mortgage balance. 

Typically, in Toronto or elsewhere in Toronto, the credit unions and chartered banks calculate the IRD penalty using a discounted method – where the differential is the discounted rate you received at the start of your mortgage compared to their current posted rate for the remaining term on your mortgage. Whereas nesto doesn’t have any posted rates, the rate we advertise is the rate you will receive on your mortgage, and future considerations for prepayment penalty calculations are made similarly.

Open mortgages in Toronto are more suitable for borrowers willing to pay a higher interest rate for flexibility. Closed mortgages in Toronto are ideal for borrowers looking for lower interest rates if they are confident they will not need to move or sell their home during their term.

Fixed vs Variable Mortgages

Choosing a fixed versus floating mortgage is a personal choice, and it can be the right choice with the right advice. Except for a few short periods over the last 40 years, fixed mortgages have typically dominated as a choice in Toronto or elsewhere in Toronto. 

Interestingly, the 5-year fixed mortgage has been the go-to choice for most mortgagors in Toronto during the same time. Why is the 5-year fixed the most popular mortgage option in Toronto? It is likely true for many reasons, most notably as it matches the market/business cycle and provides a reprieve for the lender’s resources in renewing borrowers more often. As large banking institutions and credit unions continue to offer a range of financial services, the mortgage’s typical 5-year term ties in well with their borrowing and investing client’s 5-year financial plan reviews.

Fixed Rate Floating Rate (ARM and VRM)
Locks rate over 1, 2, 3, 4, 5, 7 or 10 years.The rate floats with changes to the lender’s prime rate, which fluctuates with the Bank of Canada’s policy rate.
Typically priced higher than the floating rate.The rate is a discount/premium from the lender’s prime rate.
Provides stability with consistent mortgage payments.The rate is typically discounted more than a fixed rate but can sometimes float higher.
A mortgage penalty is calculated as the greater of 3 months of interest or the interest rate differential (IRD).A mortgage penalty is calculated as 3 months of interest.
Unable to switch from fixed to floating rate without paying a penalty.You can convert by locking into a fixed rate from a floating rate. You’ll only pay a penalty if you reduce the remaining term at conversion.

There are two types of floating-rate mortgages: fixed payments and fluctuating payments. Fixed payment floating-rate mortgages are more specifically called variable rate mortgages (VRM), while those with fluctuating payments are called adjustable-rate mortgages (ARM). With ARMs, the payment adjusts with changes to the lender’s prime rate. Commonly, they are both known as variable-rate mortgages. However, not all variable mortgages are created the same, as some come with negative amortization and trigger risks. If you decide to take a floating mortgage from nesto for your property in Toronto, your risks are limited as your payment will adjust with changes in our prime rate. 

Your adjustable-rate mortgage (ARM) from nesto will protect you from negative amortization. Today, our prime rate is , while our lowest insured and insurable rates are and , respectively.

Historically, over the last 40 years, floating mortgages may have saved Ontarians more money in interest-carrying costs; however, that may no longer be the case as rates are expected to stay higher for longer while those in Toronto, as well as all other Canadians, grapple with future periods intermittent volatility. Periods of volatility will continue in the new polarizing world and could be experienced through cost overlays due to climate change. For first-time home buyer (FTHB) who are getting used to all their new bills related to owning a home, it is recommended that they choose a fixed mortgage to provide some stability during the first term of their mortgage. As an FTHB, you could access our lowest insured fixed rate in Toronto, currently at . Have you got a 35% downpayment towards your first home in Toronto?  Then, you could access our lowest insurable rate, currently at . Choosing a fixed mortgage will provide you with predictability on your most significant monthly obligations (mortgage payment, condo fees, property taxes, homeowners’ insurance and utility/heating costs), as it takes time to build back your savings after so much spent on your downpayment and closing costs.

What are the Different Types of Mortgages?

Open vs Closed Mortgage

With an open mortgage, you can prepay any amount anytime without a prepayment penalty. The compromise for having an open mortgage is that interest rates are higher to make up for the flexibility of paying it off at any time.

When deciding between an open vs closed mortgage, the most important feature of an open mortgage is that it allows you to pay off the balance in full anytime without a prepayment penalty. The compromise for having an open mortgage is that interest rates are higher to make up for the flexibility of paying it off at any time.

An open mortgage only makes sense for someone unsure about their short-term goals, such as being relocated for work or knowing that a separation or divorce is imminent after the maturity date. An open mortgage may be suitable for someone expecting a large inheritance earmarked for a prepayment – more than the annual allotment on their mortgage contract. It is best to complete a cost analysis to ensure that the interest saved with an open term exceeds the penalty due to a prepayment over and above your allotment.

Fixed Mortgages

Toronto‘s most common mortgage term is 5 years, specifically the 5-year fixed-rate mortgage. While this is only sometimes the most economical option for everyone, it has become the most popular. A fixed-rate benefits budgeting and offers financial stability, given that mortgage payments always remain the same. 

Deciding on a fixed rate is a question of personal choice and risk appetite. We recommend speaking with a mortgage professional to assess any material risks that may pose a concern for you over the term of your mortgage. 

For a first-time home buyer (FTHB) who is getting used to all their new bills related to owning a home, it is recommended that they choose a fixed rate to provide some stability during the first term of their mortgage. By making their most significant monthly obligations (mortgage, condo/maintenance/strata fees and property taxes) static amounts, they can take the time to put together a financial plan and start to put aside some money towards their emergency savings.

Variable Mortgages

A variable rate mortgage has proven to save borrowers more money than a fixed rate over time. Every borrower’s circumstances and goals differ; therefore, an advisor should thoroughly discuss all current financial restraints and future considerations before deciding on the most suitable mortgage.

With a variable mortgage, the interest rate will fluctuate depending on benchmark rates, whereas a fixed rate remains the same throughout the mortgage term. Deciding on a variable is a question of personal choice and risk appetite. We recommend speaking with a mortgage professional to assess any material risks that may pose a concern for you over the term of your mortgage.

How nesto works

At nesto, all of our commission-free mortgage experts hold concurrent professional designations from one or more provinces. Our clients will receive the best advice and care when they speak with specialists that exceed the industry status quo. 

Unlike the industry norm, our agents are not commissioned but salaried employees. This means you’ll get free, unbiased advice on the most suitable mortgage solution for your unique needs. Our advisors are measured on the satisfaction and quality of advice they provide to their clients. 

nesto is working hard to change how the mortgage industry functions. We start with honest and transparent advice, followed by our best rates upfront. We can offer you these low rates using the fintech industry’s best-in-class and safest technology to provide a 100% digital online experience and process to reduce overhead costs.

By working remotely across Canada, all our mortgage experts and staff spend less time commuting to work and more time with their friends and family. This makes for more dedicated employees and contributes to our success with happy and satisfied clients.

nesto is on a mission to offer a positive, empowering and transparent property financing experience, simplified from start to finish.

Reach out to our licensed and knowledgeable mortgage experts to find your best mortgage rate in Canada.