Variable rates are expected to stay low until at least 2023, whereas fixed rates are on the rise.
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Conventional vs. high-ratio mortgages: which is cheaper?
On LowestRates.ca, you can initiate the application process for a variety of mortgage products. Conventional mortgages and high-ratio mortgages are the two main types of mortgages you can apply for on your pursuit of the lowest mortgage interest rate in Burlington.
A conventional mortgage means that the homebuyer has put at least 20% of the property’s purchase price down. With this type of mortgage, the homebuyer does not have to purchase mortgage insurance from the Canada Mortgage and Housing Corporation (CMHC).
A high ratio mortgage, on the other hand, is where homeowners put down less than 20% of the purchase price as a down payment, which means they are required to purchase mortgage insurance from the CMHC.
Below, you’ll see a rates comparison of high ratio mortgages and conventional mortgages in Burlington, Ont., Canada.
Conventional 5-year fixed mortgage rates vs. high ratio 5-year fixed mortgage rates in Ontario
|Date||Average Conventional Rate||Average High Ratio Rate|
Last Updated: April 1, 2021
Fixed rate vs. variable rate mortgages: which is cheaper?
The key to finding a great mortgage loan for your new Burlington home is to compare offers from various brokers, banks and mortgage companies.
When doing so, the top question on every homebuyers’ mind is: how do the current variable house mortgage rates in Burlington compare to the best fixed mortgage rates in Burlington?
We were wondering the same thing.
To answer that question, we decided a Burlington mortgage rates comparison was in order. Our approach was to compare 5-year fixed mortgage rates and 5-year variable mortgage rates that prospective Burlington homeowners have applied for on our site.
After doing this comparison, we found Burlington homeowners are getting a fantastic mortgage loan deal whether they opt for a fixed or variable rate on LowestRates.ca. Our average 5-year fixed rates and 5-year variable mortgage rates for Burlington have been more or less equal for the past year. Read on to discover more insights about what makes a fixed mortgage rate different from a variable mortgage rate.
5-year fixed vs. 5-year variable mortgage rates in Ontario
Last Updated: April 1, 2021
Factors that affect your Burlington mortgage rate
Most people don’t like risk, especially mortgage companies, banks and lenders. As a borrower interested in purchasing a home in Burlington, the more risk you represent the less likely you’ll qualify for a low mortgage rate — or a mortgage at all in some cases. To assess how risky a borrower you might be, the best brokers, lenders and mortgage companies in Burlington will analyze a few different aspects of your profile to calculate whether you qualify:
Down payment: Homebuyers need to be able to make a down payment of at least 5% of the home’s market value. If you can’t clear this hurdle, you won’t qualify for a mortgage.
Debt service ratios: Having a mortgage payment to make each month is a big financial commitment. Knowing that you’ll be able to meet it is reassuring to brokers, banks and lenders. To determine whether you can, lenders employ two formulas to compare your monthly income against your monthly expenses:
- Gross debt service ratio (GDS): This calculation determines what portion of your income each month will be going towards property expenses i.e. mortgage payments, property taxes, utilities, etc. All of these expenses are then added up and divided by your gross annual income. If the percentage is 32% or less, the bank or lender will be confident in your ability to pay your housing costs each month.
- Total debt service credit ratio (TDS): This calculation takes all of the property expenses used to calculate the GDSR and adds on any other monthly payments you may have (e.g. student loan, car loan, or minimum credit card payments). The total of these costs is then divided by your gross annual income. If the percentage is 40% or less, the mortgage company will be confident in your ability to make all of your payments each month.
Credit score: A good credit score speaks loudly about your dependability as a borrower. It tells mortgage companies and lenders that you have a strong, consistent history of making payments on-time on both installment loans (a car loan, for example) and revolving credit (a credit card). Your credit score also communicates a few other important factors about you: that you use less than 20%-30% of your available credit, have maintained long-standing relationships with banks and lenders, and have avoided opening too many new accounts.
Income: The amount of income you earn each month factors heavily into your ability to meet your debt requirements every 30 days. If you have a good job and make a good living, it’s only logical that you should be able to pay your bills and the mortgage for your Burlington home on-time each month.
Typical mortgage amount in Burlington
To calculate the mortgage on a typical Burlington, Ontario will depend on a few different things. First of all, which Burlington neighbourhood do you want to live in? Next, you have to consider whether you’ll qualify for the lowest possible mortgage rate. After that, there’s your down payment. The more you can afford to put down on the purchase price of your home, the lower your monthly mortgage payment will be. On the contrary, if you can’t afford to put down 20% or more, you’ll have to get mortgage loan insurance through the Canada Mortgage and Housing Corporation (CHMC). The premiums will be rolled into your mortgage payments.
What’s the purpose of this insurance you ask? It protects the lender in case you miss a mortgage payment. With CMHC mortgage loan insurance you can qualify for a mortgage for up to 95% of the purchase price of your Burlington home.
Burlington’s housing market and home prices
In Burlington, the average sale price for a home between Jan. 10 to Feb. 7, 2021, was $1,000,000, up 29% vs. a year ago.
Single-detached home (3-bedroom)
The median sale price for a single-detached home rose 30% on a year-over-year basis to $1,200,000.
Townhouse unit (3-bedroom)
The median sale price for townhouse and row units rose 23% on a year-over-year basis to $822,000.
Burlington closing costs and land transfer tax
Taking on a mortgage is just one of the costs you will incur when you buy your new home in Burlington. Be sure and include the following items in your budget as well when calculating the total costs required to purchase your new place.
Property valuation (appraisal) fee: To have a fair and impartial sense of what your home is worth, your bank or lender will want you to have a property valuation or appraisal done. The cost for this will be somewhere between $400 and $500.
Home inspection fee: On the surface, you might think your potential new home looks to be in excellent condition. But how old is the roof? The foundation? The furnace? The windows? The electrical system? Unless you’re an expert, you probably don’t know. Find out for sure by hiring a home inspector. A home inspection in Burlington will be around $450 plus tax.
Title insurance: What if you buy a property and afterwards discover that there are major things wrong with it? If you have title insurance you’re covered. It protects your ownership of the title (i.e. the Burlington property you’ve purchased) against any losses you might incur because of undetected or unknown defects to the property. The cost is approximately $250. Purchase it through your lawyer.
Mortgage default insurance: If the down payment you make on your new Burlington home is less than 20%, you will have to get mortgage loan insurance through the Canada Mortgage and Housing Corporation (CHMC). The cost is determined by taking the mortgage loan amount and dividing it by the purchase price.
Legal fees: There are a lot of parties involved in the purchase of a home. Yourself, the seller, your lender, the City of Burlington, and more. Consequently, there is a lot of paperwork that needs to be attended to. This will require the services of a real estate lawyer. The cost will range from $2,000 to $3,000.
Land transfer tax: Whenever a piece of property is sold from one person to another land transfer tax must be paid by the purchaser. In Burlington, because it is part of the GTA, there are two land transfer taxes that must be paid: a municipal one and a provincial one. The rate of tax ranges from 0.5% to 2% and depends on the price of the property you are purchasing.
Home insurance: As a general rule of thumb, the more it would cost to rebuild your home and replace its contents, the more expensive your home insurance will be.
Your questions about Burlington mortgages, answered.
What’s the difference between a mortgage term and an amortization period?
Mortgage term: The mortgage term is the amount of time that you commit to your mortgage rate, lender and the terms and conditions of the contract. At the end of the term, you’ll renew your contract with the mortgage company for the remaining principal at a new rate. The process repeats until you’ve paid off the mortgage on your Burlington home. A mortgage term can vary in length, from six months to 10 years, with the most common term in Canada being five years.
Amortization period: The amortization period is the amount of time it will take you to pay off your entire mortgage. In Canada, the maximum amortization period is 35 years. But, if your down payment was less than 20% and you were required to purchase mortgage insurance from the Canadian Mortgage Housing Corporation (CMHC), then your maximum amortization period is 25 years.
What’s the difference between an open mortgage vs. a closed mortgage?
An open mortgage gives you the flexibility to pay off the mortgage on your Burlington house at any time. With a closed mortgage, if you pay it off before the mortgage term ends, you have to pay a penalty.
So why would anyone choose to go with a closed mortgage?
Because a closed mortgage generally offers a lower interest rate than an open mortgage. With an open mortgage, the rate is usually variable and a little higher.
How much does it cost to live in Burlington?
Owning a Home: Average cost in Burlington as of February 2021.
- 3-bedroom, detached house: $1.2M
- 3-bedroom townhouse: $816K
- 2-bedroom condo: $606K
Renting a Home: Average cost in Burlington as of February 2021.
- Studio: $1,480/mth.
- One-bedroom: $1,705/mth.
- Two-bedroom: $1,964/mth.
- Three-bedroom: $2,400/mth.
- Four-bedroom: $3,200/mth.
Car insurance: Becoming a resident of Burlington means you need to be prepared to pay a little more for car insurance than what you paid in the previous town or city you lived in. Many Burlington residents commute to surrounding areas, chiefly Toronto, for work. Commuters pay higher auto insurance rates as the more time you spend on the road, the higher the probability you’ll be involved in an accident or collision.
How much does getting a lower interest rate matter in Burlington?
Over the course of the mortgage that you’ll have on your Burlington home, you will pay out thousands of dollars in interest. The lower the mortgage rate, the lower the total amount of interest you’ll pay. That’s why it’s so important to invest the time beforehand to shop around and compare Burlington bank and lender mortgage rates whether before you sign on the dotted line.
Not all mortgages are alike. Besides having a low interest rate, some mortgages feature other ways they can save you money.
Prepayment privileges: At the beginning of having a mortgage it may seem like you’ll never be able to put some extra money on it but you never know. What if you get a bonus? What if you inherit some money? What if you win the lottery? Having a mortgage with prepayment privileges means you can make additional payments whenever you want. Can making extra payments really make a difference? Absolutely — making just one extra payment per year can reduce the amortization period of your mortgage and lower the amount you’ll pay towards interest.
Portable mortgage: You may love your Burlington home now but down the road, you may decide you want something bigger or to live in a different neighbourhood, or you could get transferred. With a portable mortgage, you’ll be ready for anything because if you do move to a new home you can take your mortgage with you. And that will save you money because you’ll avoid the charges that would have incurred if you had to close and open a new mortgage.
Your questions about LowestRates.ca, answered.
How are mortgage rates determined on LowestRates.ca?
LowestRates.ca works with multiple banks and brokers to bring you competitive mortgage rates from lenders in Canada and we’re always adding new ones. We work with our partners to obtain their best deals and offers, and then we let them compete for your business. All you have to do is answer a few questions, and in minutes you’ll be provided with today’s mortgage rates. There’s no obligation, but you can choose to speak with our broker partner to secure your best rate and see if you're eligible for more savings.
Is it safe to get a mortgage online?
Yes, it’s safe — you no longer need to visit a bank branch or mortgage broker’s office in person to apply for a mortgage. It’s becoming increasingly common for Canadians to apply for mortgages online. LowestRates.ca only works with reputable, trustworthy financial institutions. Your credit score won’t be affected and your information is secure. We don’t share your information with anyone unless you want to connect with a mortgage broker. We take care of the heavy lifting by comparing the market for you and can connect you with the best mortgage lenders in the country.
How do I know I’m getting the lowest rate?
We have a strong selection of lenders on LowestRates.ca including the big banks and many independent providers. This ensures we’re always delivering you a competitive rate. Even if you’re not ready to commit to anything, you can use our site as a starting point for research (it’s totally free, and you’re under no obligation).
The better informed you are, the more likely you'll negotiate a better deal for yourself. And, really, that’s what we care about the most.
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