TD Bank mortgage rates: What you need to know.
Buying a home is a big step, and you want to make the smartest decisions possible when it comes to your mortgage. Few Canadian institutions enjoy the brand-recognition that TD Bank has and that’s what makes it the first option for millions of current and prospective homeowners looking to secure mortgages. But can TD Bank truly offer you the lowest mortgage rate? You need to shop the Canadian mortgage market to be absolutely sure.
There’s a lot to take in, but don’t worry. LowestRates.ca can help you understand the process, including how to find the best mortgage for your unique financial and personal circumstances. Let’s start with some basics.
Time is a key ingredient in a mortgage loan agreement. One way is through the amortization period, or how long it’s expected to take you to pay back the amount borrowed, plus interest, in full. Interest rates come from another time element: the mortgage term, which can vary from six months to 10 years. Depending on the length of time and type of mortgage, your interest rate can vary.
Typically, borrowers will go through more than one mortgage term, possibly several, before fully satisfying their debt. Most common for borrowers are fixed rate and variable rate mortgages:
- Fixed rate mortgages: Keep the same interest rate throughout the mortgage term
- Variable rate mortgages: Have a fluctuating interest rate throughout the mortgage term based on the lender’s “prime rate”
Hybrid mortgage agreements also exist, combining elements of fixed and variable mortgages.
LowestRates.ca allows you to compare mortgage rates today, as well as those from more than 75 banks and brokers. It’s free, only takes three minutes and there’s no obligation to accept what is offered to you. Plus, you’ll see whether TD Bank can truly offer you the lowest rate. Explore your options by entering your postal code above and accessing mortgage quotes by clicking “Get Started.” To learn more about getting the best TD Bank mortgage rates, keep reading.
Types of TD Bank mortgage rates.
TD Bank’s prime mortgage rates.
There’s a lot of discussion about prime mortgage rates when shopping around -- for example, “prime plus 1%” -- but what does it mean?
TD Bank’s prime interest rates follow the standard used by Canadian banks and financial institutions when they set interest rates for mortgages and other variable rate loans. Banks and lenders set their own prime rates, but they can change depending on broader economic factors nationally and globally. The Bank of Canada, the country’s central bank, sets what is called the policy interest rate and this is used to benchmark the rate at which banks borrow and lend money among themselves called the “overnight” rate. Because these rates impact the cost to the bank, it impacts in turn their prime rates, and the cost to you, the borrower.
As an example, in a “prime plus 1%” mortgage, you would be charged interest based on TD Bank’s prime rate, plus an additional 1%. This precise amount of interest could change throughout the length of your mortgage, depending on changes to the prime rate.
Mortgage rates vary between lenders and between mortgage products. By comparing TD Bank mortgage loan rates using LowestRates.ca’s mortgage comparison tool, you can see how different lenders stack up against each other.
TD Bank’s posted mortgage rates.
Posted mortgage rates are simple to find on the TD Bank website, or the sites of other lenders. In fact, interest rates for a variety of lending products are easy to access. But they aren’t the be all, end all -- there may be better rates available for you. How, you ask?
The options presented for TD Bank mortgage rates online are based on elements like the time frame of your mortgage, also known as its “term.” TD Bank, for instance, offers fixed rate mortgages ranging from six month to 10 year terms. They also offer five year open or closed terms on variable mortgages. Because the variable rate is based on TD Bank’s prime rate, it may change during the mortgage term. This is the opposite of fixed interest rates, which like their name suggests, don’t change during the entire mortgage term.
Posted mortgage rates can be helpful when researching mortgage products, but they aren’t necessarily the best rates available. For instance, lenders will use a “stress test” -- which accounts for your ability to afford payments at the Bank of Canada's qualifying interest rate -- when deciding what interest rate they can offer you. This qualifying rate is often higher than the rate you’ll end up paying.
Getting personalized quotes from LowestRates.ca and exploring the lender options available to you can help you find the best fit for your needs.
TD Bank’s current fixed rate mortgages.
Think interest rates will go up? Then a fixed rate TD Bank mortgage might be the right fit for you. Terms from as little as six months up to 10 years are available. By choosing a fixed rate mortgage your interest payments won’t change. That way you’re always sure how much of the total mortgage loan you’re paying off within your mortgage term. With a TD Bank fixed rate mortgage, borrowers also have the option for a maximum 15% prepayment of the mortgage’s original principal amount once a year at no charge.
Fixed interest rates can be higher than variable rates, since variable interest rates fluctuate based on the bank’s prime rate. While this means borrowers may not benefit if the prime rate dips, you won’t pay more if the interest rate goes above the fixed rate. TD Bank offers a fixed rate, one year open mortgage, but terms longer than that are closed. With an open mortgage, you can go above and beyond your regular payment schedule, paying larger or more frequent amounts without financial penalties. Borrowers can even pay off the entire balance. If you don’t plan to take advantage of extra payments, this option might not be for you because interest rates tend to be higher for open mortgages than closed ones.
With many different options available, it pays off to compare TD Bank mortgage interest rates online. LowestRates.ca can help you find the best available rate and terms.
TD Bank’s current variable rate mortgages.
Variable rate mortgages can fluctuate depending on changes to TD Bank’s prime rate. This means it can drop below the original rate you signed on at, but it can also leave you with higher interest payments than expected unlike a fixed rate mortgage. What occurs isn’t that you necessarily pay more out of pocket according to your payment schedule, but that less of your regular payment gets directed to your principal amount (if the prime rate increases) or more of it does if the prime rate dips. Depending on economic conditions, this element of risk can be advantageous or disadvantageous for borrowers.
TD Bank offers five year closed and five year open variable mortgage options. Borrowers can also lock in the interest rate by converting to a fixed rate mortgage option at any time, keeping their regular payments subject to certain conditions. Partial or full prepayments can also be made at any time, although there’s a fee to do so within year one or two or the term. Once a year with the open mortgage option, borrowers can increase payments by any amount, with no penalty. With the closed mortgage, payments can only be increased by up to 100% once a year, without a fee and borrowers don’t have the prepayment options.
The mortgages offered by TD Bank have different attributes and options to best suit your borrowing needs. Compare TD mortgage quote rates against other mortgage lenders on LowestRates.ca to find out which mortgage option best suits your unique needs.
Your questions about TD Bank mortgages, answered.
What makes a TD Bank mortgage different from other mortgages?
In addition to fixed and variable mortgage options TD Bank offers a 6 month convertible mortgage which allows you to select a six month term with a fixed rate, until you're ready to choose a longer term mortgage. Borrowers can keep selecting this term until they find an interest rate they are comfortable with.
TD Bank also offers the possibility for new immigrants to Canada to buy their first home in the country, even without a Canadian credit history, provided they meet other qualifications.
How do I get approved for a mortgage from TD Bank?
TD Bank will consider different factors when they evaluate your mortgage loan application. You can apply for pre-approval once you've selected the type of mortgage you're looking for, with a term that's right for your needs. This preapproval gives you a preliminary idea of how much the bank will lend you. Requirements differ between lenders, but some of the following will come up when your mortgage application is assessed.
Debt: How much debt you have, and what kind. All types of debt are considered by banks when making this assessment.
Down payment: How much have you saved to put towards the cost of your new home. If it’s less than 20% you will have to purchase mortgage default insurance.
Credit history: Your credit score and history of bill payments and debts.
Income: Your household earnings including proof of income.
Assets: Material items of value you own including other properties.
Why is pre-approval from TD Bank important?
First things first, pre-approval doesn't guarantee TD Bank will authorize your mortgage loan. Even though it’s not a necessary step to take, it's a great starting point.
Mortgage pre-approval, also known as mortgage prequalification or mortgage preauthorization, gives you perspective on what kinds of options you have and lets you compare different loan options. Pre-approval means you know the maximum loan amount you qualify for, allows you to estimate monthly mortgage payments and at TD Bank gets you a 120 hold on the interest rates you’ve been quoted, if you move forward with the mortgage.
How much mortgage can I afford from TD Bank?
This amount depends on factors unique to you, like your household income and expense profiles. It also includes new expenses you’ll take on like condo fees or property taxes.
The amount you’ve saved for a down payment is also important: if it’s less than 20% of the mortgage’s value, you’ll need to purchase mortgage default insurance which can increase monthly payments. Though you won't know for sure how much of a mortgage you'll qualify for until you apply, there are considerations that can help you estimate.
Lenders like TD Bank keep two debt service ratios in mind: Gross Debt Service (GDS) and Total Debt Service (TDS). GDS is the amount of monthly household income (like condo fees, mortgage payments, and taxes) that covers your housing costs. This should be 35% or below your household's pre-tax income. TDS is a similar percentage looking at housing costs plus other debts (like car payments and other loans). This should be 42% or below your household's pre-tax income.
By using a mortgage calculator, you can get a rough estimate of how much your payments might be. This can be helpful advice as you research different options and providers.
What are the terms and conditions of TD Bank mortgages?
Several key terms and conditions will be negotiated between you and the lender before you officially become a mortgage holder. But there are some general issues to consider.
For instance, if you may sell your home it’s important to know if your mortgage is portable or assumable. A portable mortgage means you take your existing mortgage with you when moving to a new home, keeping your current rates and terms. Meanwhile, an assumable mortgage is one where a mortgage's outstanding balance and terms transfer from a home's current owner to a buyer.
Additionally, there may be financial penalties for breaking closed mortgage contracts or for paying the mortgage off early. These penalties vary between lenders and mortgage options.
What happens when your term ends on your TD Bank mortgage?
When the term ends, borrowers need to renew their mortgage or move it to a new lender if it isn’t fully paid off by the final day of their current mortgage term. This means the decision is yours about whether you want to keep your mortgage with TD Bank or explore other lending options.
Whether you’re buying a home, refinancing, or renewing your mortgage, you can use LowestRates.ca to compare what TD Bank offers with mortgage rates from across Canada.
How long will it take to pay off my mortgage from TD Bank?
The length of time to pay off your mortgage depends on your amortization period. First, the size of your down payment may impact how long of an amortization period you’re permitted. At TD Bank, down payments of less than 20% have a maximum amortization period of 25 years. With a down payment greater than 20% an amortization period of up to 30 years is permitted.
Amortization schedules can change when mortgage terms are updated. Estimates are always based on the current interest rate of a borrower’s mortgage. While some borrowers prefer lengthier amortization periods because the regular payments are lower, they’re also paying over a longer period of time.
How can I pay off a mortgage sooner from TD Bank?
There are several ways to pay back your mortgage sooner. One is to take advantage of lump-sum payment opportunities offered by TD Bank on several of their mortgage options. This lets you pay up to 15% of the original principal value off once yearly without a penalty. Borrowers can also choose the shortest amortization period combined with the largest regular payments you can comfortably afford, increasing payment size up to 100% once yearly if their financial situation allows.
While increasing the size of your down payment helps, the frequency of your regular payments makes a big difference. Advancing the frequency of your payments can make a significant difference towards paying down your debt faster. You can choose different options from weekly to monthly, including semi-monthly (24 payments a year) or biweekly options (payments every two weeks). Over time this saves interest costs and helps you pay down more of your principal sooner.
How much does it cost to break a mortgage from TD Bank?
This depends on the rules outlined in your mortgage agreement but could come up if you want to pay your mortgage off early or move to a different lender. Generally speaking, breaking your mortgage before the final day of the term (its maturity date) means there will be a financial penalty to pay.
Breaking a mortgage with a variable-closed term mortgage might cost three months’ interest, but doing so with a fixed-closed term mortgage can be more complicated. In that case, an interest rate differential will be used, which looks at the time left in the term, the remaining principal, and current interest rates on the amount you are going to prepay.
It’s important to understand how such penalties can impact you if you choose to break your mortgage agreement.
Your questions about getting a mortgage through LowestRates.ca, answered.
How are mortgage rates determined on LowestRates.ca?
LowestRates.ca works with 75+ 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.
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 across 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, 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.