What should you do in Ottawa to get the best mortgage?

More than two million Canadians will renew their mortgages over the next year-and-a-half. CTV News asked more than 50 mortgage brokers across Canada how to get the best mortgage deal. This is what we found.

Brittany Sousa is paying attention to interest rates like never before.

"We're definitely watching it very closely because we have to renew in July," she said.

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Sousa and her fiancé bought their Orléans home before the pandemic and after five years planned to move into a bigger home. High interest rates have halted that plan for now.

"Definitely on the backburner," Sousa said. "We're going to probably stay in the house for definitely a little while longer and just continue to build up our equity in the home and then hopefully re-evaluate and hope that things start to balance out."

CTV News Ottawa spoke to five local mortgage brokers to get their opinion on the market.

"Well, we're definitely anticipating that we're on the cusp of the Bank of Canada reducing the interest rates either in June or July. Once that starts to happen, though, we are anticipating it will be a slow decrease in rates. It won't happen quickly, and it won't happen aggressively like it did when the rates went up," said Sue Hameed, mortgage broker with Mortgage Architects.

"Start shopping early. Make sure you deal with a broker who has access to so many lenders and can shop it around for you and get the lowest, not only the lowest rate option for you, but really advise you on the bigger picture and make sure you're getting into your renewal in a strong position where you can manage the monthly payments and, you know, weather the storm, as we say."

Jason Anbara, Mortgage Approvals Ottawa president, also expects rates to start dropping.

"The only reason I would say to get out of your variable mortgage would be to lock in for a term of three years, not more than that, because we are expecting rates to start dropping, hopefully by the second half of this year," he said. "If you're at a variable rate, you're most likely above six per cent where you can lock in at a three year term under five.So it would make sense if you're looking to refinance and pull some equity out, I would go to a three-year fixed if you're on a variable."

Vanessa Wilson, mortgage agent with Referral Mortgages, says she expects a later rate drop than some others expect. 

"Personally, I do think that they are going to hold off a little bit later. Maybe cut in June or September. The issue is the inflation in the U.S. is really sticky right now so us dropping our rates too far in advance of the U.S. could devalue the loonie,' she said. 

Wilson says people should consider different mortgage options.

"The lowest rate may not be the best rate, the best mortgage option for you. There's differences in mortgage products," Wilson says. "Having flexibility in your mortgage can really save you thousands in the long run. So, looking at for those short-term savings sometimes initially on the onset can actually cost you significantly more in the long, long run, if you don’t have any privileges associated with your mortgage."

Smart Debt Mortgages' Andrew Thake tells CTV News Ottawa mortgages are not a one-size-fits-all kind of item.

"Depending on the client and their goals and their finances and even where they think interest rates are going to go, that answer can vary greatly," he says. 

"See what your bank has to offer, chat with a mortgage broker so that you can cover all the bases, and then you can make the most educated decision from there."

Mortgage Brokers Ottawa Founding Partner Frank Napolitano says a lot of Canadians are looking forward to possible rate drop.

"They certainly need it," he says.

"I talked to well-established people, couples who have two incomes, a growing family, and they're struggling to make ends meet. They're almost living paycheck to paycheck. And it shouldn't be that way. The interest rates have done that. And it's not only hurting the mortgage side, it's hurting businesses as well that live off of lines of credit."

Responses to CTV News' Mortgage Broker Questionnaire

Note:  All questions are based on a typical Canadian household renewing a mortgage.

Broker Name:  Frank Napolitano

Broker Company:  Mortgage Brokers Ottawa

 

Question #1:  What is the best type of mortgage to have right now?

VARIABLE RATE	FIXED RATE	IT DEPENDS
5-year-variable

With over 60% of mortgages coming up for renewal in 2025 and 2026 in Canada, and the costs of everything sky rocketing over the last 4 years, Canadians will be in even more financial stress if mortgages that are currently in the 1.50% to 2.50% range come up for maturity and the options are todays rates that are in the 5’s. With interest rates expected to come down over the next 12 – 18 months, a variable rate mortgage while coming at a premium at the onset, also gives one the ability to wait for rates to come down then convert to a better fixed rate mortgage.

Question #2:  What is the best rate you can get right now?  (Specify rate and term length)

VARIABLE RATE	FIXED RATE	IT DEPENDS
5-year variable at prime minus 1.05% or 6.15%	5-year fixed 4.79%

 

Question #3: Should I get out of my variable mortgage if I have one?

YES	NO	IT DEPENDS
	X

At this point you’ve managed to get through the worst of rates, if all economists are correct and interest rates and Bank of Canada start to reduce, then best to waith this out for a few more months so you can lock in at better rates.

Question #4: Should I opt for a longer amortization period?

YES	NO	IT DEPENDS
		X

Depends, if you are struggling with monthly cash flow and leaving balances on your higher rate credit cards or personal loans, then yes; but if you can manage to keep your lifestyle intact and monthly obligations are under control, then best to payoff your mortgage as quickly as possible.

Question #5: Can I trust a bank for mortgage renewal advice?

YES	NO	IT DEPENDS
	X

Bank employees (I used to be one) are compensated on branches profits so on many occasions, advice is given based on what makes the bank more money not necessarily what works best for customers, perfect example is banks call mortgage maturities 6 months in advance and suggesting that clients early renew so they are getting out of their 2.89% mortgage and into a new one at 5.25% because the staff member suggests that interest rates could climb between now and the maturity date when their own bank economist suggests that interest rates are likely to soften over that 6 month period.

Question #6: What piece of advice would you pass on to anyone looking to renew their mortgage?

Shop around, not only for rate but more importantly for advice that is personalized based on your circumstances. Many Canadians are hurting financially even though they have received raises and haven’t changed any of their spending habits but with everything especially necessities rising at a quicker pace than their income, they are embarrassed or stubborn to refinance all of their debt into a mortgage because they don’t want to disrupt their plan to be mortgage free, but in fact they are hurting themselves by shelling out hard earned money to higher credit card rates and sacrificing their lifestyle.

Broker Name: Sue Hameed

Broker Company: Mortgage Architects 12728

 

Question #1:  What is the best type of mortgage to have right now?

VARIABLE RATE	FIXED RATE	IT DEPENDS
	2 or 3 year fixed terms

 

Question #2:  What is the best rate you can get right now?  (Specify rate and term length)

VARIABLE RATE	FIXED RATE	IT DEPENDS
	5.19 3 year fixed

But rates are fluctuating weekly and there could be better rates available by the time this airs.

Question #3: Should I get out of my variable mortgage if I have one?

YES	NO	IT DEPENDS
	X

Unless under financial duress, then gettting out of the variable into a fixed and re-extending the amortization could be a good solution.

Question #4: Should I opt for a longer amortization period?

YES	NO	IT DEPENDS
X

If it maintains cash flow and avoids having to dip into high interest credit to make ends meet.

Question #5: Can I trust a bank for mortgage renewal advice?

YES	NO	IT DEPENDS
	X

I would not use the word trust but rather looking at it that the bank can only offer their best product/rate and with a broker they shop around across dozens of lenders to secure the best deal.

Question #6: What piece of advice would you pass on to anyone looking to renew their mortgage?

Start shopping around early, lock in a renewal rate as early as 120 days before to provide some certainty but ensure your broker continues to check rates and applies rate drops as they happen since the rate environment remains very volatile.

Broker Name: Vanessa Wilson

Broker Company:  Referral Mortgages

 

Question #1:  What is the best type of mortgage to have right now?

VARIABLE RATE	FIXED RATE	IT DEPENDS
		X

It really depends on the borrower's personal situation in terms of mortgage qualification and risk tolerance.

Currently, most borrowers are opting for a short term fixed mortgage (1-3 yr.) as they may be lower than the variable rates. The fixed rates provide more certainty with the mortgage payments and could help qualifying for the mortgage.

Some borrowers who believe that the Bank of Canada will cut rates aggressively over the next year or two may opt for the variable rate. Should the Bank of Canada cut rates, the variable may offer more savings over the period of the new term. 

Question #2:  What is the best rate you can get right now?  (Specify rate and term length)

VARIABLE RATE	FIXED RATE	IT DEPENDS
	X

Interest rates change each day, currently, we are able to obtain 3 year fixed rates on insured mortgages as low as 4.79% or 4.69% on a 5 year fixed rate.

On conventional mortgages, 3 year fixed rates are at approximately 5.24% or 4.79% on 5 year fixed.

It’s important to know that the “lowest rate” doesn’t always mean you are obtaining the best product. Ensuring that you have flexibilities within your mortgage with privileges is equally important. Life happens, there are unexpected events and the importance of having flexibility is equally important. Nominal upfront savings on rate can sometimes actually cost you substantially more in the long run. Consumers should avoid solely focusing on the rate but rather the rate and overall mortgage product.

Question #3: Should I get out of my variable mortgage if I have one?

YES	NO	IT DEPENDS

This depends on your overall financial situation. As an example, if you have accumulated consumer debt and are paying higher interest on those balances it could be better for you to refinance and consolidate those payments into a fixed mortgage. This could offer lower payments and help your credit utilization. Higher credit utilization lowers your credit score.

If you have remained in a variable mortgage over the period of the interest rate increases and rate cuts are anticipated, you may be able to recoup savings should there be significant rate decreases over the next two years.

If you are in a variable rate mortgage, you can always try contacting your lender to discuss the option of converting your variable rate mortgage into a fixed rate mortgage. Typically the rates offered are higher than the ones offered if we were placing you in an entirely new mortgage. The lender will also have you re-sign a new term if you are converting into a fixed.

Question #4: Should I opt for a longer amortization period?

YES	NO	IT DEPENDS

Everyone is in a different financial situation, selecting a longer amortization or re-amortizing an existing mortgage can help you reduce the payment amount. If you have high interest debt that you want to pay off or if you are having challenges with keeping up with your bills, this may offer you some payment relief.

If your goal is to pay off the mortgage quickly, a lower amortization will help you achieve this goal.

Question #5: Can I trust a bank for mortgage renewal advice?

YES	NO	IT DEPENDS

As mortgage brokers, we do not represent one lender over another and our obligation is to act in the clients best interest. Your current lender may not have the best option for you at the time of your renewal.

Brokers have access to a wide range of lenders, such as banks, credit unions, monoline lenders and alternative lenders which really helps us provide the best possible advice and options to our clients.

Whenever you are offered a renewal it’s always best to review your financial goals and compare your lending options. Typically, I always offer to discuss your financial goals with you and review the current renewal offer and compare it with all of our lending options. This way I can provide a cost comparison and help highlight any savings.

Question #6: What piece of advice would you pass on to anyone looking to renew their mortgage?

It’s best to have an honest professional review your financial goals and lending options with you, it’s a free service. Depending on your current financial situation and overall goals, we have the expertise to help identify potential savings or strategies to help you achieve those goals. If it’s best for you to take the offer from your current lender, we will advise you to do so. Whether you are simply looking to renew, eliminate high interest debt or are considering a move in the near future we can offer the best options and scenarios to help support your decisions. 

Broker Name:  Andrew Thake

Broker Company:  Smart Debt Mortgages

 

Question #1:  What is the best type of mortgage to have right now?

VARIABLE RATE	FIXED RATE	IT DEPENDS

The best type of mortgage for a client, whether fixed or variable has quite a few determining factors that go into it. Some factors are their interest rate outlook thoughts, risk tolerance, monthly cashflow, and more. It’s important to assess the client’s current finances and future goals to assure the best mortgage is recommended. 

Question #2:  What is the best rate you can get right now?  (Specify rate and term length)

VARIABLE RATE	FIXED RATE	IT DEPENDS

The best rate for a client is the one that fits their finances, needs and goals. Some factors that affect rates are credit score, closing date, down payment, amortization, type of mortgage, house price, and more. For a specific example, five year fixed rates are as low as 4.69% currently. Variable is as low as 5.95%. 

Question #3: Should I get out of my variable mortgage if I have one?

YES	NO	IT DEPENDS

Variable rates have been climbing for quite some time and there is talk that decreases are on the horizon. Fixed rates have already started to decrease this year. To lock into a variable at this time, may mean you are locking in at the peak. If you’ve spent the time doing the rate climb, you might as well enjoy the ride back down, if you are comfortable waiting for this to come. 

Question #4: Should I opt for a longer amortization period?

YES	NO	IT DEPENDS

This depends on a clients cashflow and down payment amount. Typically, people go for a 25 year amortization however for some this can go up to 30 years. However, many lenders charge a higher interest rate for a 30 year amortization. For those wanting a more favourable monthly cashflow over rates, the 30 year is something to consider however if you can make the 25 year work, it can come with good interest savings. 

Question #5: Can I trust a bank for mortgage renewal advice?

YES	NO	IT DEPENDS

It’s important to have options. A bank will be able to show you one option where a broker can show you options with dozens of lenders, even major banks. A one stop shop. As we may be entering a declining rate environment, having flexibility is important as well. Some banks have large penalties to break the mortgage compared to other types of lenders and if wanting to take advantage of possible lower rates in the future, the smaller the penalty to break the mortgage, the better.

A broker may be more likely to call you during your mortgage term, if they find a lower rate for you and the savings outweigh the penalty. 

Question #6: What piece of advice would you pass on to anyone looking to renew their mortgage?

Shop around. Once you have the renewal rate from your bank, look online and also talk to a broker. A broker will be upfront, if your bank’s offer is a good one, they will tell you and you can renew your mortgage confidently with your bank knowing you did your homework and are getting a great rate. However, if the broker can find a lender with a lower rate, than time to save some money!

Broker Name:  Jason Anbara

Broker Company: Mortgage Approvals Ottawa

 

Question #1:  What is the best type of mortgage to have right now?

VARIABLE RATE	FIXED RATE	IT DEPENDS
X

 

Question #2:  What is the best rate you can get right now?  (Specify rate and term length)

VARIABLE RATE	FIXED RATE	IT DEPENDS
	3-year 4.99

 

Question #3: Should I get out of my variable mortgage if I have one?

YES	NO	IT DEPENDS

If you are looking to refinance I would switch to a 3 year fixed, otherwise I would stick with variable as we expect prime to come down in the next 12 to 24 months.

Question #4: Should I opt for a longer amortization period?

YES	NO	IT DEPENDS
X

Yes, if required for affordability.

Question #5: Can I trust a bank for mortgage renewal advice?

YES	NO	IT DEPENDS
	X

I wouldn’t as they have only one option available to you where a broker has multiple options.

Question #6: What piece of advice would you pass on to anyone looking to renew their mortgage?

Please make sure to use a mortgage broker as it has never been more important to have multiple options available to you rather than you walking into a bank that only provides one.