Nerdy Tip: Refinancing a mortgage involves more than seizing on the lowest rate you can find. Refinancing can trigger large prepayment penalties, which need to be considered when deciding whether it’s the right move financially.
Mortgage Type
Property Value
Mortgage Balance
Rate Type
Province
Mortgage Term
Lender |
Lender Highlights |
Rate |
Payment |
Term |
|
|---|---|---|---|---|---|
Meridian |
|
4.49%
Fixed |
$2,221
Monthly |
5 yrs.
Term |
Explore Now |
Meridian |
|
4.59%
Fixed |
$2,244
Monthly |
5 yrs.
Term |
Explore Now |
Manulife Financial |
|
4.84%
Fixed |
$2,301
Monthly |
5 yrs.
Term |
Explore Now |
First National |
|
4.84%
Fixed |
$2,301
Monthly |
5 yrs.
Term |
Explore Now |
MCAP |
|
4.84%
Fixed |
$2,301
Monthly |
5 yrs.
Term |
Explore Now |
Neo Financial |
|
4.84%
Fixed |
$2,301
Monthly |
5 yrs.
Term |
Explore Now |
Disclaimer: These rates do not include taxes, fees, and insurance. Your actual rate and loan terms will be determined by the partner’s assessment of your creditworthiness and other factors. Any potential savings figures are estimates based on the information provided by you and our advertising partners. Mortgage Brokerage Licensed in ON #12984, BC #X301004, MB and AB. Homewise can pursue mortgage brokering activity in SK, NL, NS and NB.
Data source:
Mortgage refinance rate update: October 2024
Based on activity in the government bond market in October, fixed mortgage refinance rates aren’t likely to decrease in the short-term. When bond yields increase — and they’ve trended upward for much of the month — lenders are more likely to increase their fixed rates than lower them.
Variable mortgage rates are set for another decrease when the Bank of Canada delivers what’s expected to be an oversize cut to the overnight rate on October 23. A 50-basis point cut would bring the country’s lowest variable rates down to around 4.8%.
Explore more of Canada’s best mortgage rates
Why are mortgage refinance rates higher?
There are various theories around why mortgage refinance rates are typically higher than purchase mortgage rates.
One is that lenders assume greater risk when they extend homeowners more credit over a longer period of time. If you refinance your mortgage, borrow against your home equity and opt for a longer amortization period, for example, it adds extra time during which you might fail to make good on your mortgage payments.
Another possible explanation is that refinances can result in lower profits for lenders. Let’s say you agree to a five-year fixed rate mortgage at 5% but are able to refinance at 3% after two years. The result is three years of savings for you, but three years of reduced earnings for your lender. Charging a higher rate on your refinance mitigates these losses. (Hefty prepayment penalties help, too.)
How to get the best mortgage refinance rate
Refinancing a mortgage requires applying for a new home loan. To be approved, the lender will put your finances under the microscope again. Before offering you the best refinance rate, your lender will want to see:
- Debt service ratios well below the limits laid out by the Canada Mortgage and Housing Corporation and other mortgage insurance providers. These limits include a gross debt service ratio of 39% and a total debt service ratio of 44%
- The highest credit score you can manage. A score of 700 or higher, for example, will demonstrate creditworthiness to lenders.
- On-time mortgage payments since becoming a homeowner. Missed mortgage payments are the reddest of flags.
Your current lender may not approve a refinance if your credit score has decreased or you’re experiencing debt issues. That doesn’t mean you’re out of options. There are plenty of B lenders that specialize in bad credit mortgages where you may be able to get refinanced.
Other mortgage refinance costs to consider
With all things mortgage-related, there’s more to think about than just the interest rate you’re offered. That’s especially true when it comes to refinancing, where other costs can include:
- Prepayment penalties. Refinancing before the end of your mortgage term means breaking your mortgage contract, paying off your loan in full ahead of time and paying what can be a hefty penalty. How much you pay will depend on your interest rate type and how your lender calculates your penalty amount.
- A home appraisal. Your lender will use a professional appraisal to determine your home’s value before deciding how much you can borrow against it.
- Legal fees. As with your original mortgage, a real estate lawyer will be required to facilitate the transaction.
- Mortgage discharge fees. You may have to pay to discharge your mortgage if you refinance with a new lender.
An opportunity to lock in at a lower rate will always sound enticing, but the benefits have to be weighed against the total cost to ensure you’re making the right long-term decision for your household.
Frequently asked questions about mortgage refinance rates
As of July 25, 2024, some lenders are offering five-year fixed mortgage refinance rates for below 5% on certain loans. Five-year variable refinance rates are still closer to 7%.
Shaving 1% off of your mortgage rate will reduce the interest you pay over the rest of your term. Whether you save money overall will depend on how much your prepayment penalties, legal fees and home appraisal cost you.
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