We all hope for the lowest mortgage rate possible when securing a mortgage. Shopping for a rate isn’t as cut and dry as it used to be, and it varies depending on your financial situation. Often, lenders can have up to 5 different fixed rates available or potentially more!

High Ratio – The Lowest Mortgage Rates

High ratio (insured) mortgages are often found to have the lowest mortgage rates. If you happen to purchase a home and you have less than 20% down, then you will have a high ratio mortgage and will likely be able to secure the lowest current mortgage rate which will also ensure you get a lower rate at renewal time as well. 

People don’t always think that having less down payment will result in securing a rock bottom interest rate. But because you have so little interest in the property you are required to secure mortgage insurance which makes you very low risk to the lender which in turn gives you the ability to secure the lowest interest rate currently offered. The 3 commonly used insurers are CMHC, Sagan (formerly Genworth), or Canada Guaranty. Utilizing mortgage insurance not only lowers the lenders risk factor but also lowers the lenders cost of funds. They then pass on the savings to the borrower with an offer of a lucratively low interest rate.

How Much Lower Are Rates for High Ratio Mortgages?

While everyone desires a low interest rate some peoples overall decision-making balance on this factor alone. The interest rate should never be considered the most important component when it comes to your mortgage. The overall cost of borrowing is made up of several factors and all should be equally important. If you happen to be paying a large insurance premium in order to secure your low interest rate, then the point of the low interest rate is quite often lost. 

It's best to discuss your unique financial situation with a qualified experienced mortgage expert to find out exactly what would suit you and your family's future. We are here to answer any questions you might have so that you can make a plan for the future feeling educated and prepared.