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Kelowna is known for its sandy beaches, sprawling parkland, and beautiful waterfront. If you’re looking for a location that offers outdoors activities like boating, swimming, proximity to hiking and nature, this gem in British Columbia’s Okanagan Valley might be the perfect place for you to live.
And if you’re interested in purchasing a home there, you’re likely curious about average mortgage rates in Kelowna. Luckily, LowestRates.ca makes it easy to compare mortgage rates from 75+ banks and brokers across Canada. Just tell us whether you’re buying a home, renewing or refinancing and click the “Get Started” button above. In just three minutes, we’ll show you available broker mortgage rates for Kelowna, as well as bank mortgage rates. We shop the market for you, and there’s no obligation to take the rates we offer.
Read on to learn everything you need to know about home mortgage rates in Kelowna, including how to get a mortgage loan in Kelowna and how to qualify for the best mortgage rates.
LowestRates.ca can help you find the best mortgage rates for a home in Kelowna, whether you’re getting a conventional or a high-ratio mortgage. Ultimately, the type of mortgage you get will depend on the amount of money you have saved up for a down payment in relation to the home’s price.
A conventional mortgage is one where a buyer puts down 20% or more of the home’s purchase price upfront. A high-ratio mortgage is a loan for a mortgage with less than 20% down. This type of mortgage is also called an insured mortgage because the buyer is required to buy mortgage default insurance.
The more money you put down up front when buying a home, the lower your monthly, bi-weekly, or weekly mortgage payments will be. There are advantages and disadvantages to both mortgage types: Purchasing a home with a conventional mortgage lowers your overall lending cost, but purchasing a home with a high-ratio mortgage may allow you to buy your home sooner.
Whether your mortgage is considered conventional or high-ratio, LowestRates.ca allows you to compare rates from the best mortgage lenders in Kelowna and across Canada to help you find the best loan for your situation.
|Date||Average Conventional Rate||Average High Ratio Rate|
Last Updated: September 1, 2021
You’ll also want to consider whether a fixed interest rate or variable interest rate is right for you.
A fixed rate means the interest rate stays the same over the term of your mortgage. Let’s say you choose a five-year fixed rate mortgage when purchasing your home. Your mortgage payment will stay the same over the course of the entire five-year term.
The interest rate on a variable rate mortgage, meanwhile, may fluctuate over your mortgage term. Variable rates are based on the prime rate that your lender sets. Each lender’s prime rate fluctuates based on several economic factors, such as the Bank of Canada’s overnight lending rate. If the Bank of Canada increases its overnight rate, lenders typically follow suit by increasing their prime rate. The inverse is true as well: If the Bank of Canada prime rate is lowered, lenders will also lower their prime rate, which would result in a lower mortgage payment.
If you’re wondering how fixed mortgage rates in Kelowna compare to variable mortgage rates in Kelowna, you can use LowestRates.ca to compare both options.
Last Updated: September 1, 2021
When searching for the best mortgage rates in Kelowna, Canada, it’s important to understand what factors affect your mortgage rate. These factors will help lenders calculate mortgage interest rates for your Kelowna home.
Down payment: To qualify for a mortgage in Canada, a homebuyer must be able to put at least 5% of the purchase price down as a down payment. That means if you purchase a home that costs $500,000, you’re required to put down at least $25,000 as a down payment.
You can put as much as you’d like down as a down payment, but the Canadian government sets minimum down payment requirements based on the price of the property:
It’s also worth noting that you will be required to get mortgage default insurance if you plan on putting down less than 20%. There are three companies that offer mortgage default insurance in Canada: Canada Mortgage and Housing Corporation (CMHC), Canada Guaranty, and Sagen (formerly known as Genworth Canada). Working with mortgage companies in Kelowna (or any broker across Canada) will not only help you get best mortgage rates, they will also help arrange mortgage default insurance if you require it.
Gross debt service ratio (GDS): This is a number, calculated as a percentage, that lenders use to determine whether or not they believe a homebuyer will be able to afford the cost of a mortgage. The GDS is calculated by adding a homebuyer’s mortgage costs, property taxes, utilities (such as heating and hydro costs), and 50% of condo fees (if applicable). That number, divided by a household’s gross (before tax) income will provide the lender with a homebuyer’s GDS. In Canada, the GDS must not exceed 39% for a borrower to qualify for a mortgage in Canada.
Total debt service ratio (TDS): This is a number, calculated as a percentage, that also helps lenders determine whether or not a homebuyer can afford a mortgage. TDS is calculated by adding the total number of monthly expenses (such as car loans, credit debt, and other financial obligations) and dividing it by a household’s gross income. The maximum TDS for a homebuyer to qualify for a mortgage in Canada is 44%.
Credit score: A credit score signals to a lender how reliable a homebuyer is when it comes to managing and paying down debt. To qualify for the cheapest mortgage rates in Kelowna, a buyer must have a good credit score. Credit scores are calculated using information in a person’s credit report, which most Canadians have (anyone who has ever been given credit, such a credit card, line of credit, or car loan will have a credit report).
So, what qualifies as a good credit score? Credit scores in Canada range from 300-900. According to Equifax, one of North America’s major credit bureaus, a score between 660 and 900 will be in the range of good, very good, and excellent. Homebuyers with scores within that range will have a better chance of qualifying for the lowest mortgage interest rate in Kelowna.
Income and employment: Finally, a homebuyer’s income is a major determining factor when it comes to qualifying for house mortgage rates in Kelowna.
The type of income also matters. Lenders like to see that a homebuyer has a history of making enough income to afford the mortgage on their home. They will want to determine whether a buyer is a salaried employee, self-employed, and has additional investment income or income from a rental property.
Buyers who have a salaried job with at least two years of employment history typically have the easiest time qualifying for a mortgage. That doesn’t mean a self-employed buyer won’t qualify for the best of today’s mortgage rates in Kelowna; you might just be required to provide additional supporting documentation to prove your income.
To calculate the cost of a mortgage in Kelowna, buyers will have to consider a number of different factors. Mortgage costs depend on where a home buyer plans to live and the type of home they want to purchase. The higher the cost of the home, the higher the mortgage. That means, more sought-after and competitive neighbourhoods will typically cost more; additionally, single-family homes typically cost more than condos or townhouses.
The down payment will also impact a buyer’s mortgage amount. The more money a buyer puts down toward the purchase of a home, the lower their mortgage amounts will be. For example, using Lowestrates.ca’s mortgage payment calculator, a home that costs $500,000 with a 5% down payment ($25,000) and a five-year fixed rate of 1.9% will cost $2,072 per month. That same home with a 20% down payment ($100,000) will cost $1,675 per month.
Your mortgage interest rate will also determine your mortgage costs. Assuming the same home cost as above with 5% down but a mortgage interest rate of 3.5% will result in a cost of $2,471 per month.
Remember, a buyer who puts down less than 20% toward a home will have to have mortgage default insurance. That cost is rolled into the mortgage payments. All of these factors need to be taken into consideration when you calculate the costs of a Kelowna mortgage.
Kelowna’s housing market, like many markets across Canada, has been on the rise. The benchmark cost of a home in Okanagan-Mainline was $671,700 in June 2021, according to the Canada Real Estate Association’s (CREA) National Price Map. That’s up from $520,100 a year prior — an increase of 29%.
That follows the trend seen in British Columbia, where the average price increased 22% year-over-year in June, from $745,194 to $909,810.
Of course, home prices differ based on home type.
The benchmark price for a single family home in the Okanagan Valley, where Kelowna is located, was $804,800 in June (up from $604,500 a year prior); condo prices, meanwhile, increased to $431,800 from $350,600.
Going back even further, it’s clear that Kelowna’s housing market has been on the rise. Benchmark prices for single-family homes in the Okanagan Valley have increased 69% over the last five years.
If you’re interested in buying a home, you should also know about closing costs. These are the costs you’ll incur in addition to the down payment.
Closing costs vary by property, home type, and region, but all home purchases require the buyer to have a certain amount set aside for closing costs. Closing costs typically range from 1.5% to 4% of the purchase price of the home. Here are a few examples:
Some other closing costs include:
Buyers are also responsible for taxes. These include transfer taxes. Land transfer tax in B.C. is based on the fair market value of the land when it was registered. In addition to land transfer taxes, buyers are responsible for paying general property taxes. General property taxes are based on a sliding scale:
Finally, B.C. has a foreign buyer’s tax. This is a 20% tax on the price of the property for all foreign nationals who purchase homes in certain B.C. markets, including the districts of Central Okanagan (which includes Kelowna), Metro Vancouver, Fraser Valley, Capital and Nanaimo.
It’s important to understand the difference between a mortgage term and an amortization period. Keep both in mind when doing a mortgage rates comparison for Kelowna. One is the time your current rate is locked in and the other is the entire lifetime of your mortgage.
Mortgage term: The amount of time a home buyer is contracted or locked in at their current mortgage rate. Mortgage terms typically range from one to five years, but are also available in shorter and longer terms (as short as a few months and as long as 10 years). Five years is the most popular mortgage term in Canada.
Amortization period: This is the amount of time it will take to pay off the entirety of a mortgage. The amortization period of a mortgage depends on a few factors. If a home buyer chooses a high ratio mortgage and puts less than 20% down, the maximum amortization period is 25 years. However, conventional mortgages can be amortized up to 35 years in Canada.
Some lenders offer both open and closed mortgages. A mortgage’s payment flexibility is determined by whether it’s open or closed.
Open mortgage: An open mortgage means the buyer can make as many additional payments on the mortgage as they’d like, without penalty. These payments are called prepayments. Prepayments are a good way to pay a mortgage down faster.
Closed mortgage: A closed mortgage is one that typically limits how much a buyer can pay toward their mortgage each year. While closed mortgages sometimes offer lump payment options, their payment rules are stricter than open mortgages. The tradeoff, though, is that lenders typically offer lower interest rates for closed mortgages.
There are several costs, in addition to housing costs, that should be considered when living in Kelowna. Costs fluctuate based on whether you own your home or rent, whether you own a car, and the type of home you live in.
Both rent and home prices have been on the rise in Kelowna over the past few years. Still, it offers more affordable real estate than major urban centres like Vancouver.
Car insurance will be a major expense, regardless of where you live in B.C. due to the fact that the province has some of the highest car insurance rates in Canada. The base premium for insurance in British Columbia is $1,063 but will fluctuate based on factors such as age and driving history. The average cost for car insurance in B.C. is $1,832, according to the Insurance Bureau of Canada.
A buyer will pay close attention to interest rates when looking at today’s mortgage rates in Kelowna. After all, interest rates are a major factor in determining the affordability of a mortgage in Canada. However, it is just one important element of a mortgage. Before you sign a mortgage contract, there are a few things you should consider.
Prepayment privileges: If you’re someone who is a diligent saver and likes to pay debt down as quickly as possible, the flexibility of an open mortgage will allow you to put as much money toward paying off your mortgage as you’d like. Those prepayment privileges might mean a lower overall cost of owning, despite typically having higher interest rates, if the buyer is diligent about making additional payments.
Penalties: It’s also important to look at the penalties when considering a mortgage. Some mortgages charge a penalty for breaking a mortgage. So, if a buyer is unsure about whether or not they plan to own the home over the course of the mortgage term, a mortgage that offers portability might be attractive.
Portability: A portable mortgage is one that allows the homeowner to move the existing mortgage — with its current term and amortization period — from one property to another. This is an attractive feature for people who plan on moving within their mortgage term or those who might have to relocate for work or other circumstances.
LowestRates.ca works with 75+ banks and brokers to bring you competitive mortgage rates from lenders across Canada. 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 in the country.
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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.*
When it comes to shopping for mortgages, most homebuyers in Canada tend to take a conservative approach.