The federal government has just launched a major new incentive to help make housing more affordable for Canadians. On May 27, a new GST rebate was tabled for first-time homebuyers purchasing newly built homes (full news release).
First-time Buyers purchasing newly built homes would receive:
A full rebate of the 5% GST on new homes prices up to $1 million, and
A partial rebate on homes between $1 million and $1.5 million
That’s a potential savings of up to $50,000 — money that can go toward making your home ownership more achievable.
To qualify, borrowers must:
Be a first-time home buyer (no ownership in the past 4 years)
Use the property as your primary residence
Be a Canadian citizen or permanent resident
Sign your purchase agreement on or after May 27, 2025
This is great news for both the housing market and young Canadians trying to get their foot in the door. It applies whether they’re buying a home from a builder, building one themself, or purchasing in a co-op.
If you or someone you know is thinking about buying their first home, reach out today to find out how this rebate could help.
After seven straight cuts, The Bank of Canada announced today that it is holding its policy rate at 2.75%, pausing its rate-cutting cycle for the first time since last summer.
What this means for you:
If you have a variable-rate mortgage: Your interest rate and payments won’t change for now. If your mortgage adjusts with the prime rate, it will stay the same until the Bank of Canada makes its next move.
If you have a fixed-rate mortgage: There’s no immediate impact, but if rate cuts resume later, it could mean lower rates when it’s time to renew.
If you have a line of credit or other loans tied to prime: Interest charges will remain steady, with the prime rate expected to stay at 4.95% at most lenders and TD Bank’s mortgage prime rate remaining at 5.10%.
What’s next?
The next rate decision is coming on June 4, 2025, and economists will be watching economic data and inflation trends to see if more rate cuts are ahead.
If you have questions about what this means for your mortgage or want to discuss your options, feel free to reach out. I’m always happy to help!
Why do mortgage pre-payment penalties rise as rates fall? And why some borrowers are still breaking their mortgage early
With fixed mortgage rates trending lower in recent weeks, some homeowners are starting to wonder if it’s worth breaking their mortgage to lock in a better deal, and we’re reviewing the potential savings with more and more homeowners.
But before making any moves, there’s one important thing to understand: your prepayment penalty could be higher than you expect—especially if rates keep falling.
Here’s why that happens, and what it could mean for you.
The basics: How mortgage penalties are calculated
If you have a variable-rate mortgage, your prepayment penalty is usually straightforward: it’s likely three months’ worth of interest. But if you have a fixed-rate mortgage, your lender will typically charge you the greater of:
Three months’ interest, or
The Interest Rate Differential (IRD)
The IRD is where things may get tricky – and more costly. In its most general sense, it’s based on the difference between:
Your current mortgage rate, and
The rate your lender would charge today for a new mortgage with a similar remaining term.
Why do penalties go up when rates come down?
When interest rates fall, the IRD tends to get bigger. That’s because your existing mortgage rate is likely higher than the current rates your lender is offering. The bigger that gap, the more your lender loses if you break your mortgage early – and the higher the penalty you’ll pay.
In short: when rates fall, the cost of breaking your fixed mortgage can rise.
With fixed mortgage rates already down sharply from their peak – and potentially heading even lower – IRD penalties are becoming a real concern for borrowers who locked in during the rate spike of 2022 and 2023. As the gap between your current rate and today’s lower rates grows, so does the cost of breaking your mortgage early.
Some lenders calculate IRD penalties using the rate difference between your existing mortgage and a current rate for a comparable remaining term. In some cases, especially with today’s unusual yield curve (where shorter-term rates may be higher than longer-term ones), this can result in even steeper penalties than borrowers expect.
What you can do
Before making any decisions about refinancing or breaking your mortgage early, it’s worth getting a penalty estimate, which I can help you with. Some lenders post online calculators, but they don’t always tell the full story – especially since penalty calculations can vary widely from lender to lender, so it’s important to get an expert to walk you through it.
If you’re wondering whether it makes sense to break your mortgage early and take advantage of lower rates, I can help you crunch the numbers.
Let’s chat before you make a move – it could save you hundreds or thousands of dollars in interest and could reduce your monthly cost!
The Bank of Canada just lowered interest rates again, cutting its policy rate by 25 basis points to 2.75%. If you have a variable-rate mortgage or a line of credit, this likely means some relief in the form of lower interest costs.
What this means for you
Most lenders are expected to drop their prime rate to 4.95% in the coming days, which will bring down borrowing costs for many Canadians. TD Bank, which typically prices its mortgage prime rate slightly higher, is expected to lower its rate to 5.10%.
If you have a variable-rate mortgage with adjustable payments, you can expect to save about $14 per $100,000 of mortgage balance on a 25-year amortization. If your variable-rate mortgage has fixed payments, more of your payment will now go toward your principal. Fixed-rate mortgages won’t be affected immediately, but if rates keep trending lower, it could mean better renewal or refinancing opportunities down the road.
What’s next?
Looking ahead, the Bank of Canada will be keeping a close eye on both inflation and broader economic risks, including the potential impact of U.S. trade tariffs. The next rate decision is set for April 16.
If you’re wondering how this could impact your mortgage strategy, let’s chat. I’d be happy to help!
Spring is just around the corner — even if there’s still snow on the ground! As the weather warms up, many homeowners start thinking about renovations to refresh their space, improve energy efficiency, or add value to their property.
Whether you’re upgrading your kitchen, adding a rental suite, or making energy-efficient improvements, there are several financing options to help make your project a reality.
One of the most cost-effective ways to fund a renovation is by leveraging your mortgage:
Refinancing: If your home’s value has increased, you may be able to refinance your mortgage and access additional funds at a lower interest rate compared to personal loans or credit cards.
Home Equity Line of Credit (HELOC): A HELOC allows you to borrow against your home equity, giving you flexibility to withdraw funds as needed during your renovation.
Purchase Plus Improvements Mortgage: If you’re buying a home that needs work, this option lets you roll renovation costs into your mortgage right from the start.
Renovation-specific loans: Some lenders offer loans specifically designed for home renovations, providing structured repayment terms and competitive rates.
Government programs to consider
There are also government-backed programs designed to support home renovations:
Greener Homes Loan: If you’re planning energy-efficient upgrades like new insulation, windows, or a heat pump, you could qualify for an interest-free loan of up to $40,000 through this federal program.
Secondary Suites Loan: Homeowners looking to create a legal secondary suite may be eligible for financing assistance to help offset construction costs. This is particularly beneficial if you plan to rent out the space for additional income.
Provincial rebates and incentives: Many provinces offer additional rebates and incentives for energy-efficient home upgrades, such as grants for solar panels, insulation, and high-efficiency heating systems. These programs vary by province and can help offset renovation costs significantly, making eco-friendly upgrades more affordable.
Municipal incentives: Some cities and municipalities also provide rebates or financing for home improvements, particularly those focused on sustainability and accessibility. Happy to share if there are any additional programs in your area.
Finding the right option for you
Each financing option has its benefits and requirements, so it’s crucial to find what fits your needs.
Consider factors like interest rates, repayment flexibility, and eligibility criteria before making a decision.
No matter the size of your project, the right financing can bring your vision to life without added financial stress.
Thinking about a spring reno? Let’s explore your options — reach out today!
With all eyes on mortgage rates the past couple years, choosing the right product can feel overwhelming, especially with so many options available.
Whether you’re buying your first home or looking to refinance, understanding the differences between fixed-rate, variable-rate, and adjustable-rate mortgages (ARMs) can make a big difference in your decision-making.
Here’s a quick and easy guide to help you understand these options.
Fixed-rate mortgages: Stability and predictability
A fixed-rate mortgage remains a popular choice among borrowers. According to a 2024 consumer survey by Mortgage Professionals Canada, 75% of borrowers opted for a fixed mortgage rate. However, interest in variable rates grew toward the end of the year as the Bank of Canada introduced several rate cuts.
Fixed-rate mortgage are not directly impacted by the Bank of Canada policy rate decisions. The interest rate stays constant throughout the term, ensuring consistent monthly payments for principal and interest, which makes budgeting easier.
Who is it for?
Fixed-rate mortgages are ideal for homeowners who prefer stability and plan to stay in their home for at least the length of the term selected. It’s also a good choice if you expect interest rates to rise in the future.
Key benefits:
Predictable payments for the term of your mortgage
Protection against rising interest rates
Considerations:
The initial rate may be higher compared to variable or adjustable-rate mortgages
Typically higher prepayment penalties if you break your mortgage before the end of the term
Less flexibility if rates decrease during your term
Variable-rate mortgages: Savings with some risk
A variable-rate mortgage (VRM) offers an interest rate that fluctuates with the lender’s prime rate, which is influenced by the Bank of Canada’s policy rate. While your payments may remain fixed, the portion of your payment going toward interest versus principal can change over time as rates rise or fall.
Who is it for?
Variable-rate mortgages suit borrowers who are comfortable with some risk and believe rates may decrease—or stay low—over the term of the mortgage. It also suits individuals that may look at selling or refinancing before their term is up, as the penalties are more predictable than fixed rate mortgages.
Key benefits:
Historically lower interest rates compared to fixed-rate mortgages
Potential savings when rates drop
Predictable pre-payment penalties
Considerations:
Monthly payments may increase if rates rise
Requires a tolerance for unpredictability
Adjustable-rate mortgages: A blend of flexibility and risk
An adjustable-rate mortgage (ARM) isn’t offered by all lenders in Canada. Scotiabank and National Bank are among Canada’s Big 6 banks who do offer it, and a number of Mortgage Finance Companies do as well. With an ARM, both your interest rate and monthly payment fluctuate with changes to the lender’s prime rate. Unlike a VRM, your payment changes immediately, typically within 30 days, when prime shifts, which can lead to greater monthly cost swings.
Who is it for?
ARMs may appeal to borrowers who want lower initial rates and have the financial flexibility to manage changes in monthly payments. As with VRMs, it may suit individuals that may look at selling or refinancing before their term is up, as the penalties are more predictable than fixed rate mortgages.
Key benefits:
Typically offers lower starting rates than fixed or variable options
Opportunity to pay less during periods of lower interest rates
Predictable pre-payment penalties
Considerations:
Payments can increase significantly if prime rate rises quickly
Less predictable budgeting
Which mortgage type is right for you?
Choosing between these options comes down to your financial goals, risk tolerance, and how long you plan to stay in your home. A fixed-rate mortgage provides peace of mind, while a variable-rate mortgage offers savings potential with some uncertainty.
Let’s find the right fit together
I’m here to help you weigh your options and choose the mortgage that works best for your unique situation. Whether you prioritize stability or are open to taking a calculated risk for potential savings, I’ll guide you every step of the way.
Reach out today to explore your options and make an informed decision about your mortgage.
This morning, the Bank cut its policy rate by 25 basis points, lowering it to 3.00%. This is the sixth straight rate cut and will result in a lower prime rate—which affects variable-rate mortgages and other loans.
We anticipate most lenders will lower their prime rates to 5.20% in the coming days, with TD Bank’s mortgage prime, which is priced slightly higher, likely dropping to 5.35%.
If you’d like to read more details, you can find the full statement from the Bank of Canada here.
How does this impact you?
For variable-rate mortgage holders: You may see a drop in your interest costs soon. If your payments are fixed, a larger portion of your payment will go towards your principal balance. If your payments adjust with the prime rate, your monthly payment should decrease by about $14 per $100,000 of mortgage debt (on a 25-year amortization).
If you have a fixed-rate mortgage: Your payments won’t change for now, so you can expect no immediate impact.
Other loans tied to the prime rate: Personal loans or lines of credit will also see interest charges decrease.
Looking ahead
The Bank of Canada’s next rate decision is scheduled for March 12, so there will be plenty of economic data released in the meantime that could influence the Bank’s next rate decision.
As always, if you’d like to discuss how this change affects your mortgage or explore your options, I’m here to help!
Today, the Bank of Canada cut its policy rate by 50 basis points (0.50 percentage points), bringing it down to 3.25%. This is the fifth reduction this year and will result in a lower prime rate — which affects variable-rate mortgages and other loans.
We anticipate most lenders will lower their prime rates to 5.45% in the coming days, with TD Bank’s mortgage prime, which is priced slightly higher, likely dropping to 5.60%.
If you’d like to read more details, you can find the full statement from the Bank of Canada here.
How does this impact you?
If you have a variable-rate mortgage: This could mean lower interest costs soon! If your payments are fixed, more of your payment will go toward reducing the principal. If your payments adjust with the prime rate, your monthly payment should reduce by roughly $28 per $100,000 of mortgage loan, based on a 25-year amortization.
If you have a fixed-rate mortgage: Your payments won’t change for now, so you can expect no immediate impact.
Other loans tied to the prime rate: Personal loans or lines of credit will also see a drop in interest charges.
Looking ahead
The Bank of Canada’s next rate decision is scheduled for January 29, 2025. We’ll need to wait for incoming data to see if a rate cut is likely for January.
If you have questions or want to discuss how this rate cut impacts your mortgage, I’m here to help! Feel free to reach out.
When shopping for a mortgage, it’s easy to get drawn in by the lowest advertised rate. After all, who doesn’t want to save on interest?
But there’s more to a mortgage than just the rate, and focusing solely on this number can sometimes mean paying more over the life of the loan.
Here’s why the lowest rate may not always be the best choice—and why working with a mortgage professional can help you find the right fit for your unique financial situation.
1. Understanding mortgage terms
A mortgage’s interest rate is only one aspect of the overall agreement. Different mortgages come with various terms, repayment structures, and penalties. Low rates may sometimes be “teaser” rates that adjust after a set period, or they may require a high-ratio mortgage insurance premium, which adds extra cost. Fixed and variable rates, for example, offer different benefits depending on your financial goals, and a very low variable rate may not suit someone looking for payment stability.
Some mortgages come with steep penalties if you decide to break your term early. For instance, a lender with a lower rate may also impose hefty charges if you need to refinance or sell your property mid-term, which can be a big factor for borrowers who anticipate lifestyle changes within the next few years.
2. Flexibility and prepayment options
Some low-rate mortgages have limited flexibility, which may not be suitable for everyone. Prepayment options, for example, allow you to make extra payments or increase your monthly payments without penalties, helping you pay down your mortgage faster. Mortgages with rigid terms might limit your ability to pay down your principal early, locking you into the agreement.
Mortgages with slightly higher rates sometimes come with the added benefit of generous prepayment terms, meaning that even if you’re paying a bit more in interest, you can save on the total cost by reducing your principal more quickly. Being able to pay off your mortgage early or make lump-sum payments can be a great advantage if your financial situation improves or you receive a financial windfall down the line.
3. Portability options for future plans
Another factor to consider is whether a mortgage is portable. This feature allows you to transfer your mortgage to a new property without paying a penalty. If you’re considering a move in the next few years, a portable mortgage can provide flexibility. Often, the lowest-rate mortgages lack this feature, which could mean penalties or having to requalify when you move.
4. The value of guidance
The best mortgage aligns with your financial goals and lifestyle. While a low rate may sound appealing, a mortgage professional can help you see the full picture and tailor solutions that truly meet your needs –– saving you time, stress, and money.
If you’re ready to explore a mortgage solution that provides the right balance of rate and features for your needs, I’m here to guide you through your options and help you make a confident, informed choice for the long run.
The federal government has just unveiled a new mortgage refinancing program to help homeowners build additional living spaces, such as basement apartments or converted garages.
Starting in January 2025, this insured refinancing option will make it easier to create rental units and, in turn, help homeowners manage rising mortgage costs. A similar program was available until 2016 but was phased out to cool the housing market. Now, with housing in short supply, it’s back – giving homeowners a chance to add rental opportunities and even generate extra income.
As the government stated, “New rental suites would provide more homes for Canadians and could provide an important source of income for seniors continuing to age at home.”
Key program details:
Eligibility: You must already own your home, live in one of the current units (or have a close relative living there), and plan to add new units.
Refinancing: You can access insured refinancing to fund the creation of additional units.
Unit requirements: The new units must be self-contained, like basement suites or laneway homes, and follow local zoning rules. Short-term rentals like Airbnb are not allowed.
Number of units: You can have up to four units on your property, including your existing home.
Property value: The “as improved” property value must be under $2 million.
Loan-to-value (LTV): You can refinance up to 90% of your property’s value, including the new units.
Amortization: Up to 30 years.
Project costs: Financing must not exceed the total cost of the project.
This program could be a good option if you’re considering adding a rental unit or creating more space for family.
However, it’s important to understand the costs and how refinancing might impact your finances. If you’d like to see if this program makes sense for you, feel free to reach out. I can help you walk through the details and explore your options.
