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Getting ready to apply for a mortgage in Victoria? Or maybe you already have one and want to renew at the end of your term. Luckily for you, LowestRates.ca can help you find some of the most competitive mortgage rates in Victoria.
Borrowing costs are at historic lows, so now is a great time to shop for a mortgage. See just how low today’s rates can go by applying for a quote. Read on to find out how to get the best mortgage rates in Victoria.
This is a bit of a tricky question to answer. You’ll get a lower interest rate with a high-ratio mortgage because if you put down less than 20%, you’ll be required to get mortgage default insurance from the Canadian Mortgage and Housing Corporation (CMHC). That protects the lender if you stop making mortgage payments one day. On the other hand, a conventional mortgage (one with a down payment of 20% or more), will have a higher rate. However, your monthly payment might be lower since you are borrowing less money. Check out the graph below detailing today’s mortgage rates in Victoria to get an idea of the difference.
|Date||Average Conventional Rate||Average High Ratio Rate|
Last Updated: May 1, 2021
Here’s a simple answer: variable rates are historically lower than fixed rates. Since 2019, however, there have been periods where fixed and variable mortgages have been on par with each other. Check out the graph of current mortgage rates in Victoria below to see the difference yourself.
Last Updated: May 1, 2021
There are many factors that affect mortgage rates in Victoria, B.C. When a lender is deciding whether to give you a mortgage, they need lots of evidence that you’ll be able to make payments. Read on to find out what factors lenders consider so you can know how to find the best mortgage rates in Victoria, Canada.
Down payment: When it comes to a down payment, the benchmark is 20% of the sale price. If you put down less than 20% on your mortgage, you’ll be required to pay for mortgage insurance, which protects the lender in case you stop making payments. This insurance also entitles you to a lower mortgage rate since the lender knows that your debt will be repaid even if you default.
If you put down 20% or more (this is known as a conventional mortgage), your interest rate will be higher than an insured mortgage. However, your lender may offer you a discounted mortgage rate if you put down significantly more than 20% as a down payment, as you’ll have even more equity in your home which in turn lowers the lender’s risk.
Fixed versus variable: Fixed mortgage rates in Victoria are usually higher than variable rates, as is the case everywhere in Canada. That’s because you’re paying more for the peace of mind of stable, equal payments for the duration of your mortgage term. Variable mortgage rates in Victoria, on the other hand, will come with a lower rate. But they also come with the risk of potentially fluctuating interest rates.
Debt service ratios: There are two key debt service ratios, or the amount of your income that goes to servicing debts, that you cannot exceed to qualify for a mortgage.
Credit score: Like any money you borrow, the interest rate on your mortgage will be affected by your credit score. The best mortgage rates go to those with “excellent” credit scores, which are scores of 750 or higher. The lower your credit score, the higher your mortgage rate will be. Unfortunately, if you have a poor credit score or no credit history, you may not even qualify for a mortgage at a traditional lender.
Employment: Mortgage lenders will want to see that you are employed full time and earn enough to cover your mortgage payments. If you’ve just started a new job, the lender will want to see that you are past your probation period at your current position before you qualify.
Business owners and the self-employed can still qualify for a mortgage, but your lender will likely request proof that you have a stable source of income, meaning you may have to provide more pieces of documentation than a salaried applicant.
Income: The higher your income and the lower your debt service ratios, the more appealing you are to any potential lender. It’s important to note, however, that a lender is less likely to consider irregular income such as bonuses or freelance work as part of your income calculation. That’s because this sort of income is seen as less steady than that from a full-time job.
Broker versus bank: Another factor is your lender. Broker mortgage rates in Victoria are going to be different than bank mortgage rates in Victoria. It’s important to compare your options to see which lender will give you the best deal. You can use LowestRates.ca so that you can quickly find the best mortgage lenders in Victoria.
Victoria is one of the more expensive housing markets in Canada, so it’s natural that you’ll be carrying a large mortgage amount unless you have a big down payment. Read on to find out how Victoria’s housing market will impact your mortgage amount and that affects the average mortgage rate in Victoria.
Victoria’s housing market and home prices
Victoria has one of the most temperate climates in the country, and it’s a popular retirement destination. So it’s no surprise that Victoria is not a cheap city for housing. And that has a big impact on mortgage interest rates in Victoria.
According to the Victoria Real Estate Board, the average single-family home in the city costs $932,000 as of January 2021. This represents an 8.3% increase in prices when compared to prices a year ago.
Meanwhile, the average condo in the city costs $518,800. Condo prices actually fell 0.9% in January 2021 when compared to a year earlier (good news for those looking for a deal).
Based on our data, the average B.C. homeowner puts down a 21.85% down payment when they buy their property. This is one of the highest down payment rates in Canada.
That helps us figure out a typical mortgage amount for someone buying in Victoria. If you put down 21.85% on a $932,000 home (that’s a $203,642 down payment), you’ll need a $728,358 mortgage.
For condos, 21.85% down on a $518,000 property nets out to a $113,183 down payment, meaning you’ll need a mortgage of $404,817.
We hope you find this information useful as you work to find your best mortgage rates in Victoria, B.C.
There are a number of closing costs to keep in mind when you’re buying property. Before you bid on your dream home, you need to know whether you can afford them. Let’s run through some of these costs.
Home inspection: This is an important cost if you’re buying a house. Your offer may be conditional on a home inspection to make sure there are no unforeseen problems.
Legal fees: You’ll need to pay a lawyer to review your documents, handle registration and land title search as well as any legal questions you may have stemming from the sale. This can cost upwards of $1,000.
Property insurance: Most mortgage lenders require you to get condo or home insurance when you buy a property.
Mortgage insurance: If you put down less than 20%, you’ll be required to register and pay for this insurance. Mortgage companies in Victoria can help you figure out this cost.
Property transfer tax: In B.C., you must pay a transfer tax of 1% on the first $200,00 of a home’s fair market value and 2% on the rest. Fair market value refers to what the house would sell for on the open market. Usually, it’s quite close to what you will end up paying.
Misc. costs: You’ll have to make sure you’ve saved up for additional costs such as moving, painting the home, new hook-up fees for internet, cable or hydro and any outstanding costs, such as GST.
These are two terms that are commonly confused. Mortgage amortization is the total amount of time it’ll take to pay off your mortgage. In Canada, if the down payment is less than 20%, the longest your amortization can be is 25 years. If you put down 20% or more, you can stretch your amortization out to 30 years. This might be helpful in lowering your monthly payment if trying to stick to a budget.
A mortgage term, on the other hand, is the period of time during which the conditions of your mortgage are in effect. This includes your interest rate, any break penalties, and any privileges you have such as lump-sum payments.
Mortgage terms can range from one year or more than 10 years, with 5-year terms being the most popular in Canada. During your term, you’ll be tied to your current lender, and you’ll likely incur costs if you break your term. An important decision to make when choosing your term is whether you intend to stay at your home for the long-haul, or if you expect to make a change in the near future. For instance, if you’re buying a condo to live in for a few years before you make the jump to a house to start a family, you might want to consider a 3-year mortgage term over a 5-year term. Otherwise, you might pay a steep penalty when you break your term early.
An open mortgage gives you more flexibility to change the conditions of your mortgage. For instance, you could opt for an open fixed-rate mortgage, so that if you decide to switch to a variable-rate mortgage, you won't pay a penalty. Essentially, you get more freedom with an open mortgage. However, that freedom comes at a cost. Interest rates tend to be higher for open mortgages.
Closed mortgages, as their name suggests, are more restrictive. You’ll pay higher penalties if you decide to break or refinance your mortgage early. However, closed mortgages have lower interest rates as the lender knows you’re less likely to surprise them with a change given the costs.
Most people opt for closed mortgages when shopping for home mortgage rates in Victoria.
Victoria has a higher cost of living compared to most cities in Canada due to the high cost of rent and homeownership in the city. Victoria is a popular retirement destination, so it is constantly attracting new people.
As mentioned above, the average house in the city sells for slightly under $1 million, while condos average more than $500,000. Even if you secure a cheap house mortgage rate in Victoria, expect to pay a lot of money for it.
Auto insurance in Victoria is only offered by a provincial Crown corporation, the Insurance Corporation of British Columbia (ICBC), meaning you don’t have any alternatives if you find insurance too expensive.
Unfortunately, you’ll find that it’s not much cheaper to rent in Victoria. The city has the fourth most expensive rent for a one-bedroom apartment in Canada, according to a report from PadMapper in 2020.
It matters a lot. Given the high cost of housing in the city, you can save a substantial amount of money by taking the time to find the lowest mortgage interest rate in Victoria.
Here’s an example. Say you’re buying a $1 million house. You decide to put down 20% so that you can save on monthly insurance costs and get a conventional rate mortgage. You opt for an amortization period of 25 years.
Now let’s take some time to calculate your mortgage in Victoria. Let’s say you walk into your local bank branch and you get offered a 5-year fixed mortgage, with a 2.5% rate. Your monthly payment would be $3,584, or about $43,008 a year.
But let’s say you go to LowestRates.ca, where you are offered a better rate of 1.74%. Suddenly your monthly payment is down to $3,288, or $39,456 a year.
That’s an annual savings of $3,552.
All it took was a few minutes to shop the market. Make sure you compare mortgage rates in Victoria.
LowestRates.ca works to bring you competitive mortgage rates from 75+ banks and brokers 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.
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.
With homebuyers facing a red-hot housing market, they need all the help they can get.
Rates are expected to rise earlier than previously thought. What does that mean for borrowers right now?