Mortgage questions, answered.

Why is the rate I’m offered different from the one I saw online?

Advertised rates are usually for a best-case file: an insured mortgage, a specific term and a quick close. Your rate depends on your down payment, credit, the property, your amortization and whether the mortgage is insured. I’ll show you what drives yours. You can also see today’s rates on my rates page.

What’s the difference between a posted rate and a discounted rate?

Banks publish posted rates that few people actually pay. The rate you get is a discount off posted. That matters later, because many banks use the posted rate to work out the penalty for breaking a fixed mortgage, which can make it much bigger. Here’s what it costs to break your mortgage.

Fixed or variable: which is better?

Neither, on its own. A fixed rate locks your rate and payment for the term. A variable rate moves with prime, so it can cost less if rates hold or fall and more if they rise. Penalties differ too. Breaking a variable usually costs about three months’ interest, while breaking a fixed can cost much more.

The right choice depends on your cash flow, how much payment movement you can live with, and whether you might sell or refinance before the term is up. I’ll run both on your numbers. More on fixed vs variable.

What moves fixed rates?

Government of Canada bond yields, mainly the five-year. When yields rise, lenders usually raise fixed rates within days, even if the Bank of Canada hasn’t moved. When yields fall, fixed rates tend to follow more slowly. Here’s how bond yields affect fixed rates.

Can I hold a rate?

Yes. Most lenders hold a rate for 90 to 120 days on a pre-approval, purchase or renewal. If rates go up in that window, you keep your held rate. If they go down, I’ll push for the lower one.

How does the Bank of Canada affect my mortgage?

The Bank of Canada sets its policy rate (the overnight rate). The big banks move their prime rate with it, usually within a day, and variable-rate mortgages and lines of credit are priced off prime. Fixed rates aren’t set by the Bank of Canada directly. They follow bond yields, which react to what markets expect the Bank to do next.

How often does it change rates?

The Bank announces its decision on eight scheduled dates a year (see the schedule). Each time, it can hold, cut or raise. I write up what each decision means for borrowers on the blog.

If the Bank raises rates, does my payment go up?

It depends on your mortgage:

• Fixed: no. Your rate and payment are set until the end of your term.
• Adjustable-rate variable: yes. Your payment changes when prime changes.
• Fixed-payment variable: your payment stays the same, but more of it goes to interest. If rates rise far enough, your lender can raise the payment.

Your mortgage documents say which one you have. Or send me your statement and I’ll check.

Should I wait for rates to drop?

Nobody can call rates reliably, me included. For a renewal, the practical move is to hold a rate 4–6 months before maturity and take a lower one if it shows up. For a purchase, a pre-approval with a rate hold protects you while you shop.

What does a mortgage agent do, and what does it cost?

I compare your options across 50+ lenders (banks, credit unions and private lenders), recommend the one that fits, and handle the application and paperwork through to closing. For most residential mortgages the lender pays me, so there’s no cost to you. Some files, usually private or alternative lending, involve a fee. If yours does, you’ll see it in writing before you commit.

Why not just go to my bank?

You can. But your bank can only offer its own products. I can put your bank’s offer next to other lenders’, and if your bank’s offer is the best one, I’ll tell you.

What is the mortgage stress test?

To qualify, you have to show you could afford your payments at a higher rate: the greater of your contract rate plus 2% or 5.25%. Federally regulated lenders apply it to new mortgages and refinances, and most other lenders use something similar. A straight switch at renewal (same balance and amortization) to a federally regulated lender doesn’t need it. More on switching at renewal.

Will shopping around hurt my credit?

A mortgage credit check can cause a small, temporary dip. When you work with me, I usually pull your credit once and use that report with every lender I approach, so you’re not piling up inquiries. More on credit checks and your score.

What’s the difference between a pre-qualification and a pre-approval?

A pre-qualification is a quick estimate based on what you tell me. A pre-approval goes further: I check your credit and documents and get a rate hold in place. Neither is a final approval. That comes once the lender reviews the property and your full file, which is why your offer should be conditional on financing. More on pre-approvals.

What documents will I need?

Most files need:

• Photo ID
• A recent pay stub and an employment letter (if you’re self-employed, two years of tax returns and Notices of Assessment instead; see self-employed mortgages)
• 90 days of statements showing your down payment
• The property details: your purchase agreement, or your current mortgage statement and property tax bill

I’ll send you a checklist built for your file.

How much do I need for a down payment and closing costs?

The minimum down payment is 5% of the first $500,000 of the price and 10% of the part between $500,000 and $1.5 million. At $1.5 million and up, it’s 20%. These minimums apply to a home you’ll live in, whether or not it’s your first. With less than 20% down, the mortgage needs default insurance (CMHC, Sagen or Canada Guaranty). The premium is usually added to the mortgage, but in Ontario the 8% PST on it is paid at closing. Refinances can’t be insured, so you need at least 20% equity.

For closing costs, set aside 1.5% to 2% of the price for land transfer tax, legal fees and adjustments. First-time buyers get up to $4,000 of Ontario land transfer tax back. More on down payments and closing costs.

Can I use my RRSP or FHSA for my down payment?

If you’re a first-time buyer, yes. The Home Buyers’ Plan lets you take up to $60,000 out of your RRSP, which you repay over 15 years. A First Home Savings Account lets you save $8,000 a year, up to $40,000, and withdraw it tax-free for your first home. You can use both on the same purchase.

How long does it take?

A pre-approval can often be done within a couple of business days once I have your documents. On a purchase, we work to your financing condition, often five business days. For a refinance or a switch, plan on a few weeks, since appraisals and payout statements set the pace. That’s why I suggest starting a renewal 4–6 months out.

Do you only work in Waterloo Region?

No. I’m based in Waterloo, but I’m licensed across Ontario and work with clients by phone and video wherever they are in the province.