With homebuyers facing a red-hot housing market, they need all the help they can get.
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Halifax borrowers get some of the best mortgage rates in Eastern Canada because of the city’s competitive lending environment. This combination of low rates and reasonable home prices make now a great time to apply for a mortgage, renew your loan, or refinance in Halifax. You can compare the best mortgage rates in Halifax from 75+ Canadian banks and brokers right here at LowestRates.ca.
There are two different types of mortgages you can get: conventional and high-ratio mortgages.
A conventional mortgage is when you make a down payment of 20% or more on the property’s purchase price. For example, on a $600,000 home, that’s equal to a down payment of at least $120,000.
A high-ratio mortgage is when you make a down payment of less than 20% of the purchase price. In that case, you must also buy mortgage default insurance, either from the Canada Mortgage and Housing Corporation (CMHC), Sagen (formerly Genworth Canada), or Canada Guaranty.
Even though the mortgage interest rates on a Halifax home with a high-ratio mortgage is typically lower than a conventional mortgage, the overall costs will usually be higher because you also have to buy mortgage insurance.
|Date||Average Conventional Rate||Average High Ratio Rate|
Last Updated: May 1, 2021
Before buying a home, you’ll want to do a comparison of mortgage rates in Halifax. When you’re looking for Halifax’s lowest mortgage rates, you’re going to have to choose a lender for your home loan. You’re also going to have to decide between a fixed or a variable rate mortgage.
Fixed mortgage rates in Halifax (and across Canada) are the same for the entire mortgage term, which is typically five years. The rate on a variable rate mortgage will usually change when the Bank of Canada raises or lowers its overnight rate. The typical term for a variable rate mortgage is also five years.
While variable rates tend to be markedly lower than fixed rates, that’s changed in the last year. Now, both variable and fixed rates are nearly identical. However, fixed rates are currently a little lower than variable rates.
In a 2019 report, the CMHC notes that almost seven out of 10 Canadian buyers choose a fixed rate. While it’s unknown how many Halifax buyers choose variable rates for their mortgage, it’s likely that the majority prefer fixed rates.
Last Updated: May 1, 2021
There are a number of factors that determine whether you get the cheapest mortgage rates in Halifax. Below are some of the factors that lenders look at when they calculate your mortgage rate on a Halifax home.
Down payment: The down payment will be the biggest factor when it comes to the amount of your mortgage loan in Halifax. It will also play a part in determining your mortgage rate. In Canada, you must make a down payment of at least 5% of the total purchase price, but it may be higher in some cases. The federal government sets the rules around the down payment requirements. Here’s what’s required:
If the down payment is less than 20%, you’re required to get mortgage default insurance.
Debt service ratios: Halifax’s best mortgage lenders will also be looking at the amount of debt you’ll have when you get a mortgage. They will be looking at two debt ratios in particular.
The first is called the gross debt service (GDS) ratio, which shows what percentage of your income goes toward housing costs. This includes your mortgage payments, property taxes, heating, and condo fees (if applicable) divided by your pre-tax income. This amount should ideally be below 35%, but below 39% is acceptable.
The second ratio is the total debt service (TDS) ratio, which shows what percentage of your income goes toward housing costs and other debt obligations. This includes everything in the GDS plus any regular loan or credit card debt payments. The GDS is divided by your salary before tax and should be below 42%, but below 44% is acceptable.
Credit score: Your credit score will also play a role in whether you’ll get the lowest mortgage interest rate for a Halifax home. A credit score ranges from 300 to 900, and gives lenders a snapshot of what kind of borrower you are. If you have a high credit score, it shows that the risk of you being unable to pay back a loan is low. If your credit score is low, it appears as though you’re more likely to default on a loan. Most lenders will want you to have a credit score of at least 600 before they consider lending to you. But if your score is excellent, your lender will usually reward you by giving you one of the best mortgage rates in Halifax (or Canada for that matter).
Employment and income: Mortgage companies in Halifax will need to know what your annual income is, how long you’ve been with your current employer, and your type of employment ( full-time, contract, or part-time work). In the event that you’re self-employed, your lender will require additional documentation, such as copies of your income tax returns, bank statements showing income and expenses, and notices of assessment showing that you’ve paid all your taxes.
In case you’re unsure, Halifax’s mortgage rates for a house are the same as they would be for a condo.
With the Nova Scotia Association of Realtors noting that the average sale price of a home in Halifax-Dartmouth reached nearly $400,000 in December 2020, the typical mortgage amount has also increased. On a $400,000 property with a 20% down payment, the typical mortgage amount would be $320,000.
Keep in mind that the total cost of the mortgage will be a lot higher because of the amount of interest paid over the life of the mortgage. If you don’t make a down payment of 20%, you’ll need to get mortgage default insurance. The insurance premium is often added to the balance of the mortgage, meaning the mortgage amount will be larger.
If you make a down payment of 5% (or $20,000), you’ll need to get a $380,000 mortgage. However, the insurance premium is 4% when your down payment is between 5% and 9.99%. On a $380,000 mortgage, the premium is $15,200. That means your mortgage will be $395,200.
Before the pandemic, price growth in Halifax’s housing market had been fairly modest. However, that changed as demand for houses soared in the city and throughout most of the country.
The average price of a home sold in Halifax-Dartmouth was $397,378 in December 2020 — a year-over-year increase of 19.4%. And 504 properties were sold that month, which was a 44% increase compared to December 2019. More than half of the properties sold in Nova Scotia were in Halifax-Dartmouth.
While a 19.4% increase sounds like a lot, the South Shore part of the province saw the average price of a home sell for $348,479 in December 2020 — a 44% increase on a year-over-year basis.
The cost of buying a home also includes a lot of additional expenses that you need to pay before taking possession of the property you buy. These are called closing costs and they typically add up to about 3% to 4% of the purchase price.
Here are some of the common closing costs:
Your closing costs may also include a land transfer tax. In Nova Scotia, this is called a deed transfer tax (DTT) and the rate (which varies from 0.5% to 1.5%) is set by each municipality. The amount payable is calculated based on the property’s sale price. For Halifax residents, the DTT is 1.5%. On a $400,000 home, that’s $6,000.
A mortgage term and an amortization period are two different things, and it’s easy to get confused.
The term is the length of the mortgage you’re getting, which is typically five years. However, mortgage terms can be as short as six months and as long as 10 years. When the term is up, you can renew your mortgage with the same lender or shop around for a better rate. Over time, you’ll likely have multiple mortgages from one or more lenders.
The amortization period is the length of time it’s expected to pay off your mortgage (both principal and interest). The typical amortization period is 25 years, but you can get a mortgage with a 30-year (and sometimes a 35-year) amortization. However, in order to get a mortgage with an amortization of more than 25 years, you need to put at least 20% down. If you want to get an amortization of 15 or 20 years, that’s also possible. The shorter the amortization period, the less interest you’ll pay.
Buyers not only need to compare current mortgage rates in Halifax, they also need to choose between an open and closed mortgage.
A closed mortgage typically has a lower interest rate than an open mortgage, but it comes with restrictions. For instance, you might only be able to make one mortgage prepayment annually that’s limited to a certain percentage of the original mortgage amount. There are also financial penalties if you decide to refinance or pay off your mortgage before the term ends. The restrictions and penalties vary from lender to lender so it’s best to review what they are before signing on the dotted line.
An open mortgage is more flexible, but it has a higher interest rate than a closed mortgage. You can pay off the entire mortgage whenever you like without having to pay a penalty. Open mortgages typically have a term of five years or less. These types of mortgages are for people who want to make extra payments whenever they’d like, who intend to pay off the mortgage early, or expect to sell and pay off their mortgage in the near future.
Halifax is the place where Maritime culture intersects with big city life — where heritage meets hip. Residents love this city’s laid-back lifestyle, and they relish the abundance of indoor and outdoor activities available at their doorstep.
Living in Halifax is less expensive than Toronto or Vancouver. For instance, the average price of a Toronto home sold in December 2020 was nearly $930,000 — more than twice as much as in Halifax. While the average mortgage rate in Halifax is higher than Toronto (which is a more competitive mortgage market), the cost to finance a home is still lower than Canada’s largest city.
Renting in Halifax is also lower than most major urban centres. According to the CMHC, the average monthly rent was $1,170 in Halifax in 2020. That was lower than Toronto ($1,523), Vancouver ($1,508), Victoria ($1,275), and Calgary ($1,195). However, rent in Halifax was higher than Edmonton ($1,153), Winnipeg ($1,107), and Montreal ($891).
Long commutes aren’t much of an issue for Haligonians. Statistics Canada reports that just 3% of drivers in Halifax spend 60 minutes or more commuting to work compared to 7.2% in Montreal, 7.7% in Vancouver, and 11.1% in Toronto. That means less money spent on gas. And average annual auto insurance rates in Nova Scotia were $891 in 2020, which are lower than British Columbia ($1,832) and Ontario ($1,528).
While getting one of the best home mortgage rates in Halifax is important for home buyers, there are other things you should consider before choosing a mortgage:
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With homebuyers facing a red-hot housing market, they need all the help they can get.
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