Homebuying10 questions to ask when getting a mortgage
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Are you searching for the best mortgage rates in Thunder Bay, Ontario, Canada? Whether you’re a first-time homebuyer or looking to renew or refinance your mortgage, getting the cheapest mortgage rates for your Thunder Bay home is a smart financial move that could save you thousands of dollars.
Looking for the most competitive bank mortgage rates in Thunder Bay (or broker mortgage rates in Thunder Bay) can be a time-consuming task. Luckily, LowestRates.ca is here to save you time and money. In just three minutes, we allow you 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. We’ll show you current mortgage rates in Thunder Bay from multiple leading lenders and brokers, letting you easily identify the best deal.
Need some info to help you choose the right mortgage product? We’ve got you covered. Read on for answers to all your burning mortgage questions. You’ll be able to tell the difference between things like fixed vs. variable rates, open vs. closed mortgages — and more! — in no time.
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Conventional vs. high-ratio mortgages: which is cheaper?
You can start an application for a variety of different mortgage products on LowestRates.ca, so you’ll need to decide what kind of financing option is best for you. The first thing to determine when applying for a mortgage is whether it’s a conventional or a high-ratio mortgage.
These terms refer to the size of your down payment relative to your total mortgage amount. With a conventional mortgage, the homebuyer’s down payment is at least 20% of the home’s purchase price.
If your down payment amount is less than 20% of the sale price, you’ll need a high-ratio mortgage. These mortgages require you to carry mortgage default insurance through the government-run Canada Mortgage and Housing Corporation (CMHC) or private providers Sagen or Canada Guaranty. This insurance protects the lender in case you can’t make your mortgage payments. The insurance premium is typically added to your monthly mortgage payments.
Mortgage rates for high-ratio mortgages are generally lower because the cost of mortgage default insurance is already factored into your monthly premiums.
Conventional 5-year fixed mortgage rates vs. high ratio 5-year fixed mortgage rates in Ontario
| Date | Average Conventional Rate | Average High Ratio Rate |
|---|---|---|
| 09/20 | 1.90% | 1.77% |
| 10/20 | 1.90% | 1.79% |
| 11/20 | 1.85% | 1.71% |
| 12/20 | 1.82% | 1.64% |
| 01/21 | 1.81% | 1.65% |
| 02/21 | 1.69% | 1.60% |
| 03/21 | 1.91% | 1.75% |
| 04/21 | 2.01% | 1.81% |
| 05/21 | 2.04% | 1.81% |
| 06/21 | 2.05% | 1.81% |
| 07/21 | 2.05% | 1.76% |
| 08/21 | 2.07% | 1.79% |
Last Updated: September 1, 2021
Fixed rate vs. variable rate mortgages: which is cheaper?
Before you run a mortgage rates comparison in Thunder Bay, you’ll need to choose between a fixed rate vs. a variable rate mortgage. LowestRates.ca can help you find the lowest mortgage rates in Thunder Bay for the specific financing option you are interested in.
With a fixed rate mortgage, your interest rate will remain steady throughout the length of your mortgage term. This means market swings won’t affect you. You’ll miss out on savings if interest rates drop, but you will also be protected from rising rates that could make your mortgage more expensive and extend the time it takes you to pay it off. This stability is appealing to many borrowers, making fixed-rate mortgage products the favoured choice of most Canadian homebuyers.
With a variable rate mortgage, your interest rates fluctuate over the course of the mortgage term, reflecting economic trends. Your mortgage contract will spell out how often your interest rate changes and the formula for setting it. Variable rate mortgages can be appealing to homebuyers who are more risk-tolerant. That’s because Thunder Bay’s variable mortgage rates tend to be lower than the interest rates on fixed mortgage products.
Ultimately, it’s a matter of preference which product you choose. Fixed mortgage rates in Thunder Bay are typically slightly higher, but in exchange you get greater stability and security, knowing your rate is locked in throughout your mortgage contract. Variable rate mortgages let you realize savings when interest rates are trending down, but they also leave you exposed to higher costs if that trend reverses.
5-year fixed vs. 5-year variable mortgage rates in Ontario
| Month | Fixed | Variable |
|---|---|---|
| 09/20 | 1.84% | 1.74% |
| 10/20 | 1.84% | 1.77% |
| 11/20 | 1.77% | 1.74% |
| 12/20 | 1.73% | 1.68% |
| 01/21 | 1.72% | 1.63% |
| 02/21 | 1.65% | 1.52% |
| 03/21 | 1.86% | 1.36% |
| 04/21 | 1.95% | 1.35% |
| 05/21 | 1.97% | 1.34% |
| 06/21 | 1.96% | 1.34% |
| 07/21 | 1.93% | 1.29% |
| 08/21 | 1.96% | 1.27% |
Last Updated: September 1, 2021
Factors that affect your Thunder Bay mortgage rate
Two factors determine how much interest you’ll pay on your Thunder Bay mortgage loan: the size of the mortgage loan and the interest rate. That’s why it’s important to shop around for the best mortgage rates in Thunder Bay before you close the deal on your purchase.
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Typical mortgage amounts in Thunder Bay
The size of your mortgage will depend on the market where you live, your down payment amount and your interest rate.
Let’s use the median price of single-family detached homes in the city to show how you would calculate your mortgage in Thunder Bay. For the second quarter of 2021, the average price is $280,000 according to sales figures from the Canadian Real Estate Association (CREA). With a down payment of 20% ($56,000), your remaining balance would be $224,000. This would be the amount you’d borrow to pay for the home and the principal amount on your mortgage.
You can purchase a home with a down payment of less than 20% of the sale price. In this case you’ll need to leave room in your budget for mortgage default insurance. You can add the premium payments to your monthly mortgage payments, or you can pay them all at once as part of your closing costs. Mortgage insurance premiums increase the size of your mortgage.
Thunder Bay’s housing market and home prices
Home prices in Thunder Bay have been on a steady upward trend for years, but remain affordable in comparison to the rest of Ontario.
The median sale price for a single-family detached home was $280,000 in the second quarter of 2021, according to sales data from CREA. This represents a 19.1% increase over prices during the same period in 2020.
In June of 2021, it was taking an average of 13.5 days for single-family detached houses to sell in Thunder Bay, a slightly more rapid pace than in June of 2020, when the average selling time was 14 days.
Thunder Bay closing costs and land transfer tax
Closing costs are all the expenses related to sealing the deal on your new home purchase. Experts say you should expect to spend between 1.5% and 4% of your home’s purchase price on these items (aside from your down payment). For a home costing $250,000, that means your closing costs would be between $3,750 and $10,000. Fees can vary depending on your situation.
Typical closing costs include the following:
- Title insurance or land survey fee
- Mortgage default insurance
- Sales tax on mortgage default insurance
- Property appraisal fee
- Home inspection fee
- Legal fees
- Homeowners insurance premiums
- Goods and services tax (GST) or harmonized sales tax (HST) if your home is brand new
- Estoppel certificate for condos
Closing costs can also include municipal and provincial land transfer taxes. The city of Thunder Bay does not charge a municipal land transfer tax. In Ontario, the following land transfer tax rates apply:
- For a home costing $55,000 or less: 0.5%
- For a home costing more than $55,000, up to $250,000: 1.0%
- For a home costing more than $250,000, up to $400,000: 1.5%
- For a home costing more than $400,000: 2.0%
- For a home costing more than $2 million: 2.5%
There are tax rebates available to first-time homebuyers in Ontario to reduce the cost of the land transfer tax.
Your questions about Thunder Bay mortgages, answered.
What’s the difference between a mortgage term and an amortization period?
Before you start looking for the cheapest interest rates and best mortgage lenders in Thunder Bay, it’s essential to know some key home buying terminology.
Here’s the difference between the mortgage term and the amortization period:
Mortgage term: This is the duration of your mortgage contract. This is the period you’re committed to your lender and the arrangement you’ve agreed to for your home loan repayment, including factors like how interest is determined, the size of your monthly payments, etc. Most homebuyers have multiple mortgage contracts and mortgage terms throughout the life of their mortgage loan. The most common mortgage term in Canada is five years, but lenders offer terms ranging from six months to 10 years.
Amortization period: This is the estimated timetable for paying off your mortgage. This describes the full lifetime of your home loan. If you plan to make a down payment below 20% of your house’s purchase price and need to buy CMHC mortgage insurance, then the longest amortization period you’re allowed is 25 years. This is the max permitted by CMHC to insure your mortgage.
What’s the difference between an open mortgage vs. a closed mortgage?
In the world of home buying, the words “open” and “closed” refer to how flexible your mortgage contract is about the pace of repayment on your loan. This impacts your mortgage interest rate.
Open mortgage: With an open mortgage, you can pay off your loan early, sell or refinance your home at any time without paying penalty fees. In other words, you have broad prepayment privileges. In exchange for this flexibility, you typically pay higher interest rates.
Closed mortgage: Most homebuyers opt for a closed mortgage because their interest rates are typically lower than with open mortgages. Closed mortgages require you to make your repayments over a specific time frame and charge prepayment penalties for paying off your mortgage early, refinancing or selling before the end of the mortgage contract. That said, many closed mortgage products do allow you limited prepayment privileges, meaning you can make additional payments above your monthly minimum amount up to a certain maximum figure.
Each lender has different policies about what kinds of prepayments are allowed without a prepayment charge (if any), so be sure to ask about this before you close the deal on your home if you’re interested in faster repayment of your mortgage. Prepayment penalties can be large enough in many cases to cancel out any savings on interest from paying off your home loan early.
How much does it cost to live in Thunder Bay?
Thunder Bay is the most populous city in northwestern Ontario. Your living expenses in Thunder Bay depend on some individual factors, like whether you commute to work using public transit or own your own vehicle, how many dependents you have and whether you own your home or rent.
Thunder Bay’s home prices are affordable compared to much of Ontario, with the median price for a single-family detached house at $280,000 in the second quarter of 2021, according to CREA sales figures.
Many Thunder Bay residents feel the need to own a car to get around, and auto insurance throughout the province of Ontario is pricey. Thunder Bay’s auto insurance rates are less than those in the Greater Toronto Area, however.
How much does getting a lower interest rate matter in Thunder Bay?
Securing the lowest mortgage interest rate in Thunder Bay is important if you want to reduce the cost of your home. But there are a few other factors that you should consider, too. Here are other items to look out for that could impact the cost of your home loan:
Prepayment penalties: If you’d like to make faster repayments on your mortgage to try to pay off your loan ahead of schedule, beware that your lender may have rules about this — and penalty fees if you don’t follow them. These fees can add up to more than you might save on interest payments, so it’s important to understand the specific terms of your mortgage contract.
Prepayment privileges: Prepayment privileges in your mortgage contract mean you’re allowed to make accelerated payments beyond the minimum monthly payment amount without incurring penalty fees. If you have an open mortgage, your contract may not have any prepayment penalties, since this type of mortgage is the most permissive about early repayment. With a closed mortgage, policies vary by lender. Some offer limited prepayment privileges, like the ability to pay up to a certain percentage of your home’s purchase price each year as a lump sum in addition to monthly mortgage payments, or the option to double a mortgage payment annually. Make sure you understand exactly what your prepayment privileges permit so you don’t get slapped with a fee!
Portability: Portability describes the ability to take your current mortgage with you to your new home if you buy a new property. This is called “porting” your mortgage. This means you will keep the same terms as your mortgage contract on the home you are leaving when you move to your new home. There may be a fee associated with porting your mortgage. Portability is one feature of your mortgage contract you should learn about before signing, so you understand what will happen if your circumstances change during the course of your home loan repayment period — if you get a job in a new city and need to move, for instance, or if you believe you might want to move to a different home before you have paid off the first one.
Your questions about LowestRates.ca, answered.
How are mortgage rates determined on LowestRates.ca?
LowestRates.ca works with 75+ banks and brokers to bring you competitive mortgage rates from lenders in 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 for Thunder Bay. 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 in 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.
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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.