This article has been updated from a previous version. The importance of ‘the home’ cannot be overst...
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Are you ready to purchase a home? Buying a home is one of the most important financial moves you’ll make in life. Naturally, you want to find the best mortgage rates on the market. You’ll also want to be as informed as possible as you select the type of mortgage product to use. Fortunately, LowestRates.ca can help with both.
With our fast, free online quote tool, LowestRates.ca helps you compare Desjardins mortgage rates in Canada against 50+ banks and brokers to be sure you’re getting the best rate. If you’re not not sure what type of mortgage you need, don’t worry. We’ll go over the key terms and concepts you need to know so you can determine exactly what kind of mortgage makes sense for you.
Let’s start with the big picture: the amortization period. This is the estimated time frame for paying off your mortgage loan in full, including interest. Within the amortization period, the vast majority of home buyers have a series of different mortgage contracts, each with a specified term of a few months to 10 years. For example, you can have a 25-year amortization period with a five-year term.
During a mortgage term, you repay your loan according to rules detailed in the contract with your lender. The mortgage contract spells out your monthly payment amounts, how interest is calculated on your loan, and how much of each payment goes to paying down the principal vs. covering the interest.
Your mortgage contract also governs other aspects of your relationship with your lender, including prepayment privileges and penalties, what happens if you break your contract by selling your home before the term is up, or switching to another lender, and more. Many of the different mortgage types you’ve probably heard of deal with differences in these kinds of mortgage contract rules. For example, you’ll need to decide between an open vs. a closed mortgage to buy your new home:
Some closed mortgages allow limited prepayment privileges. This means that as long as you follow certain rules, you can make extra payments (beyond your regular monthly payment schedule) to pay down your loan balance faster, without getting hit with penalty fees.
We’ll get into much more detail below about mortgage types, including fixed-rate vs. variable-rate mortgages, how a bank’s prime rate can impact variable-rate loans, and more. The Desjardins mortgage rates available will vary according to what mortgage type you opt for as well as other factors like your down payment amount, your credit history, the size of your mortgage and more.
When you’re ready to apply for your mortgage, be sure to compare Desjardins mortgage rates with offerings from other lenders. LowestRates.ca’s free online quote tool makes finding the most competitive rates for any type of mortgage easy.
Desjardins’s variable mortgage rates are set in relation to the bank’s prime rate. So, what exactly is the prime rate? Every bank or lender sets a prime rate as a benchmark figure, a reference point that helps determine all the interest rates at any given moment for all of their variable-rate loans. The “prime” in Desjardins’s prime mortgage rates means the rates are available to the bank’s most qualified borrowers.
When the prime rate changes, the interest rates on variable rate loans change, according to formulas detailed in the loan documents. So, what causes Desjardins’s prime rate to change? Financial institutions usually adjust their prime rates following certain actions by the Bank of Canada, the country’s central bank. The Bank of Canada works to encourage stable, long-term economic growth, and one tool it uses to do this is its policy interest rate. The policy interest rate heavily impacts the interest rates major financial institutions charge when lending and borrowing money from each other on a short-term basis. This in turn affects interest rates for borrowers.
The Bank of Canada adjusts its policy interest rate to steer Canada’s economy in a positive direction in relation to global economic trends. So, to sum up, major trends in the global and national economies and interest rate policy by the Bank of Canada all filter down to influence Desjardins’ prime rate, and, ultimately, the interest rates banks offer customers.
Understanding the role of the prime rate in variable-rate mortgages can help you make a more informed decision when considering your mortgage options. The next step in finding the best mortgage rates is comparing Desjardins mortgage rates online to other lenders using LowestRates.ca’s fast, free quote tool.
Desjardins, like other mortgage lenders, publishes a list of standard mortgage rates for all of their different home-loan products. Desjardins’s posted mortgage rates allow the bank to advertise to potential borrowers and they let people make broad comparisons in rates from one institution to the next, or between different types of mortgage products.
The posted rates may also be used during the mortgage application process, as part of the formula used to determine whether you qualify for a loan (even if they’re different from the rates you end up paying as part of your mortgage if you’re approved).
However, posted rates are actually not all that useful if you want to know what Desjardins mortgage loan rates you might actually be offered. Posted mortgage rates have limited usefulness because they don’t reflect the individual factors that the lender will consider when calculating what rates to offer you for your mortgage. These include factors like your credit score, income, debt levels, down payment amount and more. You may be able to get better Desjardins mortgage interest rates than what is posted publicly by getting individualized quotes from LowestRates.ca.
Fixed-rate mortgages are popular because they allow the homebuyer to secure Desjardins current mortgage rates for the entire duration of the mortgage contract. This creates predictability and security for the borrower, and is especially appealing in times when interest rates are low.
Opting for a fixed-rate mortgage means whatever happens with the economy or your bank’s interest rates, the interest rate on your home loan will not be affected and will remain the same for the full length of your mortgage contract. If interest rates in the overall economy fall, you could miss out on savings. But most borrowers are willing to forego this potential benefit because fixed rates provide protection against rising interest rates. When interest rates are already low, many homebuyers are more concerned about avoiding the risks of rising rates than garnering potentially modest savings if rates happen to fall further.
As with most lenders, Desjardins’s fixed mortgage rates tend to be higher than their variable mortgage rates. Still, fixed-rate mortgages are by far the most popular with Canadian home buyers because of the stability they provide.
Desjardins offers fixed-rate mortgages in terms ranging from six months to 10 years in length. The most common term length for a fixed-rate mortgage in Canada is five years. Desjardins notes that’s the most popular with their customers as well, followed by a seven-year mortgage term.
To find Desjardins’s best mortgage rates for fixed-rate mortgage loans, and see how they stack up to other lenders’ offerings, use LowestRates.ca’s fast, free online quote tool.
Variable-rate mortgages have interest rates that fluctuate along with the bank’s prime rate. Your mortgage contract will spell out the exact formula Desjardins will use to calculate your interest rates through the course of the mortgage term.
Variable mortgage rates are typically lower than fixed mortgage rates, because the borrower takes on more of the risk of fluctuations in the market than they would with a fixed-rate loan. Desjardins offers variable-rate mortgages with fixed payment amounts, meaning your mortgage payment stays the same each month but the amount of your payment that goes toward principal and interest varies. When the interest rate is lower, more of your payment will go toward your principal, allowing you to pay down the balance on your mortgage faster. When the interest rate is higher, you’ll pay down your mortgage balance at a slower rate, with more of your payment covering interest.
Desjardins designs these variable-rate, fixed-payment mortgages for borrowers with moderate risk tolerance and typically offers a five-year term.
For borrowers it deems “bold,” Desjardins offers a third variable-rate mortgage option, in which both the interest rate and payment amount fluctuate during the loan term. For a closed version of this type of loan, with limited prepayment options, Desjardins offers a five-year term. For an open version of this type of loan, the bank offers one-year and two-year term options.
Along with its standard mortgage loan offerings, Desjardins offers some specialized products and features that many homebuyers might find enticing.
Most Desjardins mortgages come with some prepayment privileges. Prepayment privileges allow you to make extra payments beyond the monthly minimum amount without incurring penalties (these fees are often called prepayment penalties). Typically with a Desjardins mortgage, in addition to your regular monthly payments, you can make additional payments of up to 15% of the original loan amount each year. Desjardins also lets you double individual mortgage payments without penalty. Taking advantage of these prepayment privileges can help you pay down your mortgage balance faster in the long run.
Another special offering from Desjardins is the possibility to custom-design a hybrid loan to your exact preferences. Desjardins hybrid loans combine different loan types into one mortgage, with each type being applied to a different tranche, or portion, of the total mortgage amount. For example, for a $200,000 mortgage, you could opt for a five-year, variable-rate mortgage covering 60% of the total, or $120,000. You could combine that with a three-year, fixed-rate mortgage applied to the remaining 40% of the mortgage amount, or $80,000.
A Desjardins hybrid mortgage gives you the flexibility to design the product that works best for your financial situation and preferences.
Once you have decided what type of mortgage product you prefer, it’s time to gather your documents and apply for approval for your Desjardins mortgage. The mortgage application is how a lender determines whether it’s safe to lend you money and what mortgage rates to offer you, so they’ll take into account a variety of factors that together create a snapshot of your financial circumstances. You’ll need to submit documents showing your identity and income, any assets — valuable property you own, like a car, boat or cottage — and the types of debt you owe and the balances and payments for these, including credit cards, auto loans and student loans. Lenders will also want to evaluate your credit history to see how you have handled repaying creditors in the past. They will also ask for your down payment amount, how much money you have set aside to cover the initial payment and closing costs on your new home.
Pre-approval is an important part of the mortgage process because it gives you some useful information as you shop for a home and lets you compare mortgage rates and products. It also provides your mortgage broker and sellers with greater confidence that you are a potentially serious and qualified buyer. However, it is important to keep in mind that pre-approval is not a guarantee of final approval for a Desjardins mortgage.
To get pre-approved for a mortgage, you’ll provide your lender with information similar to what’s required in the mortgage application, usually with much less formal documentation required. The lender will then tell you the maximum amount they’d likely be willing to lend you for your new home and provide an estimate for your monthly mortgage payments. They will give you a quote for interest rates and provide a temporary freeze on your rates. The pre-approval process lets you lock in Desjardins mortgage rates today while you shop for a home, protecting you against potential rate increases that could disrupt your home buying plans.
There are some industry standards for determining the size of mortgage you can afford. Most lenders calculate your gross debt service (GDS) ratio and total debt service (TDS) ratio. These figures compare your income to your housing costs (GDS) and to your housing plus other debts (TDS). Most lenders want to see a GDS ratio below 35% and a TDS ratio below 42% when taking into account the size of your mortgage.
Desjardins and other lenders have mortgage affordability calculators available on their websites that you can use to plug in different figures and estimate the amount of mortgage you might be able to qualify for. Keep in mind that what a lender deems affordable for purposes of approving you for a mortgage might not be an amount you actually feel comfortable putting toward this expense. You should determine what you consider affordable based on your own budget needs, and consider borrowing less than the maximum your mortgage lender will give you.
Mortgage terms and conditions are all of the rules that govern your mortgage contract. These include how the interest rate is set, the length of the mortgage term, your monthly payment amount, prepayment options, penalties for breaking your mortgage early, and more.
If your interest rate is fixed, your mortgage contract will spell out this figure and it won’t change for the length of your mortgage term. If your interest rate is variable, your mortgage contract will give the formula that governs the interest rate at any given time and explains when and how it may change.
Another important element of your mortgage contract is what it says about prepayments. Open mortgages let you make accelerated payments or pay off your mortgage early with no penalty fees. With closed mortgages, there are nearly always penalty fees for certain prepayment situations. These can be high enough to cancel out any savings you might be trying to achieve on interest payments by paying down your mortgage balance faster, so it’s important to familiarize yourself with your lender’s prepayment terms before signing your contract.
Desjardins offers certain prepayment privileges with most of its closed mortgage products, including allowing accelerated payments of up to 15% of the original mortgage amount annually, and an option to double individual mortgage payments. These “privileges” mean you can choose to make these types of extra payments without having to pay a penalty fee.
The most common mortgage term in Canada is five years, but Desjardins offers other options ranging from as short as six months to as long as 10 years. Whatever term you choose, it’s important to understand what happens at the end of your mortgage term, which is simply the end of your current mortgage contract. As this point approaches, you can either renew your mortgage with the same lender or shop for a new one (unless you’ve paid off your mortgage loan in full). Your existing lender can discuss renewal options with you before your current mortgage term ends.
If you’re renewing your mortgage contract, it’s a good idea to use LowestRates.ca’s free online quote tool to see if you can get a lower mortgage rate by switching to another lender.
The period of time it takes you to pay off your mortgage completely is called the amortization period. The most common amortization period for Canadian homebuyers is 25 years. This is also the maximum amortization period allowed by the Canada Mortgage and Housing Corporation (CMHC), to qualify for their mortgage default insurance. This kind of insurance coverage is mandatory for any homebuyer making a down payment below 20% of their home’s purchase price.
If you want to pay off your Desjardins mortgage quickly, one option to consider is a shorter amortization period for your mortgage loan. The amortization period is the estimated timeline for paying off your mortgage in full. The standard amortization period in Canada is 25 years, with that schedule stretching to as long as 35 years. However, if you can afford the larger monthly payments that go with a shorter amortization period, opting for a shortened schedule is a great way to free yourself of your mortgage faster and save on interest payments in the process. You look into amortization options of 15 or 20 years, for instance.
Another option for paying off your mortgage faster is to make additional payments beyond the monthly mortgage payments. Before you do this, it’s very important to know what your mortgage contract allows. Closed mortgage contracts typically carry prepayment penalties that can cancel out any savings on interest from paying down your balance faster. Some closed mortgage contracts do have prepayment privileges, meaning certain specific ways you’re permitted to make extra payments without being charged penalty fees.
With many of its mortgage loans, Desjardins lets you pay an additional 15% of the original mortgage amount each year beyond your monthly mortgage payments without penalties. Another prepayment option is to double your regular monthly mortgage payment. This is also allowed without a fee. However, if you already have a mortgage with Desjardins, be sure to check your contract for specific terms. If you don’t yet have a Desjardins mortgage but know you might want the option of making accelerated payments, be sure to discuss this during the negotiation process.
A final option is an open mortgage contract, which usually comes with a higher interest rate but allows maximum flexibility for paying off your mortgage faster without penalty fees. This type of mortgage may make sense if you know you will want to pay off your home very quickly or sell it soon.
The fees for breaking a mortgage contract with Desjardins will depend on the type of mortgage product you choose and the specific details of your mortgage contract. Different types of contracts come with different terms that can make it easier or harder, and more or less expensive, to switch lenders, refinance, or sell your home during your mortgage term.
Open mortgages typically allow the greatest flexibility in these regards, but tend to come with significantly higher interest rates. Closed mortgages have lower interest rates along with higher penalties for paying off your mortgage early. If you prefer a shorter time commitment to the same lender and contract, you might consider choosing a shorter mortgage term. Desjardins offers terms as short as six months, as well as one-year and two-year options, and so on. These shorter mortgage terms give you the opportunity to choose another lender or different terms or sell or refinance your home sooner than the standard five-year mortgage term.
LowestRates.ca works with 50+ banks and brokers across the country to bring you the best rates. 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.
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 across the country.
We have a strong selection of lenders on LowestRates.ca, including the big banks and many independent providers, and we’re adding more lenders all the time. 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.
This article has been updated from a previous version. The importance of ‘the home’ cannot be overst...
This article is updated from a previous version. Mortgages take a long time to pay off because for the fir...