This article has been updated from a previous version.
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Are you ready to start looking for a home? If you want to see what kind of mortgage rates you can get from First National Financial and other top Canadian lenders, you’re in the right place. LowestRates.ca makes it easy to compare First National mortgage rates in Canada.
We can also help you get a handle on everything you need to know about the mortgage process — from mortgage types and terms, to the factors that impact your interest rates, to tips that can help you pay off your mortgage faster.
First, let’s define some essential terms and concepts when it comes to home mortgages.
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If you choose a variable-rate mortgage, your First National mortgage loan rates will change along with the prime rate, also called the prime lending rate. The exact formula will be detailed in your mortgage contract. Knowing what the prime rate is and where it comes from is important to understanding what will influence your mortgage interest rates during the course of your mortgage term.
The prime lending rate is the best interest rate a lender offers to its borrowers. In other words, it’s the interest rate the most creditworthy (or “prime”) borrowers receive on their loans. So, logically, First National’s prime mortgage rates are the lowest interest rates available on mortgages to First National’s most qualified homebuyers.
Each financial institution sets its own prime rate that serves as a baseline for interest rates on all of its variable-rate loans. Like all lenders, First National bases its prime rate largely on a target overnight rate set by the Bank of Canada.
Major financial institutions in Canada lend and borrow money from each other overnight. The rate they typically charge each other for these loans is called the overnight rate. The Bank of Canada, Canada’s central bank, uses monetary policy to influence the overnight rate to try to steer the economy toward a balanced inflation rate. To do this, the Bank of Canada sets a target overnight rate, sometimes called the policy interest rate.
Lenders typically update their prime rates after the Bank of Canada adjusts its target overnight rate. This impacts the interest rates borrowers can get on many types of loans. The Bank of Canada sets its policy interest rates according to national and global economic trends.
The main thing to keep in mind is that if you opt for a variable-rate mortgage, your interest rates will vary in line with your lender’s prime rate, which is heavily influenced by larger economic trends and actions of the Bank of Canada. This will impact how much of your mortgage payment goes toward principal and interest each month, and how long it takes you to pay off your mortgage loan.
In periods of stronger economic growth, interest rates tend to be higher, as more people look to borrow money to make major purchases or start or expand businesses. In periods when the economy is weaker, interest rates tend to be lower.
First National’s posted mortgage rates are the interest rates the lender advertises publicly for its different mortgage loan products. For example, First National lists standard mortgage rates for three categories of mortgage loans:
The posted rates vary depending on some other factors, like whether the homebuyer has mortgage default insurance from the Canada Mortgage and Housing Corporation (CMHC).
Lenders provide posted rates to give customers a sense of their offerings, but remember that your mortgage rate will depend on a variety of factors specific to your situation. This includes your credit history and the lender’s assessment of your finances, the home you decide to buy, and more.
In the end, posted mortgage rates are too general to tell you what your final rates are likely to be. To learn what mortgage rates you might actually qualify for — and get the best rates available — you’ll need to get quotes and compare options from different lenders based on your specific circumstances. This is where LowestRates.ca comes in: We streamline this process for you, letting you compare First National mortgage rates side-by-side with rates from other leading lenders across Canada.
A fixed-rate mortgage lets you lock in First National’s current mortgage rates for the entire duration of your mortgage term. Fixed-rate mortgages are the most popular type of mortgage with Canadian home buyers because they offer security and predictability. If you’re worried that interest rates are going to go up in the near future, your fixed interest rate will protect you from that unfavorable change in the market, letting you pay down your mortgage faster with lower interest payments.
If interest rates in the overall economy decrease, your fixed-rate mortgage will insulate you from that market shift as well, meaning you won’t benefit from lower rates. Still, many homebuyers are willing to give up the opportunity to benefit from potentially decreasing interest rates in exchange for protection from rising interest rates over the course of their mortgage term. Today’s low-interest rate climate only strengthens this preference for many borrowers.
As with most lenders, First National’s fixed mortgage rates are slightly higher than their variable interest rates. Variable-rate mortgages involve greater risk on the part of the borrower, so their interest rates are typically lower. Fixed-rate mortgages offer greater security to borrowers and more risk to lenders, so the interest rates on these types of loans are typically a bit higher.
A variable rate mortgage, sometimes called an adjustable-rate mortgage, has interest rates that change over the mortgage term. These changes happen according to a set formula and schedule that will be detailed in your mortgage contract.
First National mortgage interest rates for adjustable-rate mortgage loans change in accordance with the lender’s prime rate. This is standard practice for all mortgage lenders who offer variable-rate mortgages. Each lender has their own prime rate that fluctuates along with changes in the market and the policies of the Bank of Canada. First National’s variable mortgage rates follow the formula, “Prime - 1%” or in certain cases “Prime - 0.90%.”
Variable-rate mortgages expose the borrower to the risks and rewards of changes in market conditions. When the lender’s prime rate goes up, more of your monthly mortgage payments will go toward interest, and it will take longer for you to pay down the principal on your mortgage loan. When the lender’s prime rate falls, more of your monthly payments will go toward the loan’s principal and less will be needed to cover interest charges. This lets you pay down your mortgage faster with the same monthly payment amount.
Adjustable-rate mortgages typically come with lower interest rates than fixed-rate mortgages, because the homebuyer takes on more risk.
There are a couple of ways that First National and its mortgage products are distinct from other lenders and loan options. First, First National Financial LP is not a bank or a credit union. Instead, First National is a financial institution that specializes in making mortgage loans, for both residential and commercial properties. First National is the largest non-bank lender in Canada.
That said, your First National mortgage is likely to be similar to a mortgage from any other type of mortgage lender in most ways. First National offers different mortgage types to choose from, including closed and open mortgages and fixed-rate and adjustable-rate options.
First National highlights its prepayment options for borrowers with closed mortgages who want to pay down their mortgage faster. Here are some of First National’s prepayment privileges (yours will depend on your mortgage type and specific contract terms):
Every mortgage lender has their own criteria and lending standards. But all generally take into account the same factors that help provide a portrait of a prospective borrower’s finances. Typically, borrowers are asked for information and proof of the following as part of their mortgage application:
The items above will factor into whether First National approves you for a mortgage, and if so, whether you qualify for First National’s best mortgage rates.
Pre-approval helps speed the homebuying process, giving you a ballpark estimate of how much the lender is willing to loan you for your home purchase and locking in First National’s mortgage rates today for a set period of time as you shop for a home (anywhere from 60 to 130 days). This protects you from possible rising interest rates during this time.
With pre-approval, you also typically get an estimate of your monthly mortgage payments for the maximum amount the lender will offer you. Potential buyers with pre-approval are usually more attractive to sellers, since they are a step ahead in the mortgage process and have a better sense of what size mortgage they can afford and what their lender will provide.
Pre-approval does not guarantee you will be approved for a mortgage, but it’s a useful first step. You will be asked for some details of your finances, similar to what is required as part of the official approval process for your mortgage: income, employment, down payment amount, assets, debt. Usually less documentation is required at this stage, since you will need to gather more complete and up-to-date documents later on for final approval.
The size of mortgage that makes sense for you will depend on your income and how much debt you already have. Lenders typically calculate two ratios for borrowers, called the gross debt service ratio and the total debt service ratio. Together, these ratios offer a snapshot of your debt as part of your overall financial situation.
The GDS ratio shows the percentage of your total income that you spend on housing costs. Housing costs include your mortgage payment, property taxes, and utilities. Lenders usually prefer a GDS ratio of 35% or less.
The TDS ratio compares your housing costs plus any other monthly debt payments, like auto loans, credit cards or student loans, to your total income. Lenders typically want to see a TDS ratio of 42% or less.
First National has an online mortgage affordability calculator you can use. It lets you plug in your income and debt payment figures plus different numbers for your First National mortgage rates, down payment amount and amortization period, and shows you what size mortgage you might be approved for.
Keep in mind that there may be a difference between what a lender is willing to offer you and how much you feel comfortable actually borrowing for your mortgage.
The details of your First National mortgage will be determined by the type of mortgage you choose and any adjustments made during negotiations. Your mortgage contract will spell out your mortgage term — the length of time the contract covers — plus your monthly payments, how the interest rate is determined and other specifics.
Typically, with any lender, you will need to abide by certain rules about how and when you make mortgage payments in order to avoid penalty fees. There will also be penalties for breaking your contract through actions like refinancing or selling the home during the mortgage term or switching to another lender.
If you have a closed mortgage, this means you’ve agreed to make payments on a defined schedule. Making additional payments or paying off your mortgage early could lead to prepayment penalties. Many lenders, including First National, offer some limited options for making accelerated payments without penalties, to help pay off your mortgage faster. It’s important that you understand the details of what’s allowed under your contract, since prepayment penalties can be significant!
If you pay off your mortgage in full during the mortgage term, then congratulations! You are now mortgage-free! If you still owe money on your mortgage loan, then the end of your mortgage term just means it’s time to renew your contract or find another lender to work with, under a new mortgage contract.
It’s always a good idea to compare rates and other details of your mortgage contract if you renew with the same lender vs. options available from other lenders. You can contact First National for information about mortgage renewal when you near the end of your term. You can also use LowestRates.ca to compare First National mortgage rates with those offered by other leading lenders across Canada.
The amortization period is a rough estimate of how long it will take you to completely repay your mortgage loan. It’s an estimate rather than a solid schedule because you will probably have multiple mortgage contracts during this time, and they may have different interest rates and other terms. You should learn details of your amortization period during the negotiation of your mortgage contract.
The longest amortization period allowed in Canada is 30 years. However, 25 years is standard. Your amortization period can’t be longer than this if you need to qualify for mortgage default insurance from the Canada Mortgage and Housing Corporation — required if your down payment is below 20% of your home’s purchase price.
If you want to pay off your mortgage quickly, there are a couple of ways to approach this. One is to choose a shorter amortization period. This means you will pay off your mortgage on a shorter schedule, but your monthly payments will be higher.
Otherwise, you may be able to pay off your mortgage faster by making extra payments above the minimum required each month (called prepayment or accelerated payments). However, you must beware of any prepayment penalties your lender may charge and when these apply. You’ll need to check the specific rules in your mortgage contract. Prepayment penalties can be high.
Again, the exact prepayment privileges you’ll enjoy with a First National mortgage depend on the type of mortgage you choose and the details of your contract.
The cost of breaking your First National mortgage will depend on the type of mortgage you have and the specific terms and conditions of your mortgage contract. Typically, homebuyers with closed mortgages agree not to sell or refinance their homes before the end of the mortgage term, or they can be charged penalty fees. Switching to another lender before your mortgage term is up can also result in penalties. So can failing to make the required monthly payments on time.
It’s crucial to understand what you’re agreeing to and how all the rules and penalties work before signing your mortgage contract. If you know you may want to move to a new home or refinance before your mortgage term is up, or pay off your mortgage ahead of schedule, it’s best to negotiate terms with your lender in advance, or opt for a type of mortgage that allows this without penalties.
Penalties for breaking a mortgage contract can be significant — high enough to cancel out any savings you might otherwise see on interest payments for paying off your mortgage early, for example. It’s important to understand penalty charges anytime you want to take action that could be considered breaking your mortgage.
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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.
This article has been updated from a previous version.