Frequently Asked Questions About Mortgages in Ontario
Do I qualify for a mortgage in Ontario?
Qualifying for a mortgage in Ontario is a matter of finding a lender who will work with your particular financial circumstances. Several factors determine your eligibility for a mortgage and the size and type of mortgage you can get:
- Your income
- Your credit score
- The size of your downpayment
- Your existing debts
- Your savings or other assets
You will need to be able to provide documentation on all of these factors, as well as ID and proof of address when you apply. Each lender will then have their own criteria for deciding whether you pass their approvals process.
Who are the available mortgage lenders in Ontario?
As Canada's biggest province, and the most expensive in which to buy a house, Ontario has a huge mortgage market. Lenders fall into several categories: traditional lenders (such as banks and credit unions), mortgage companies, other financial providers, and niche lenders. This last category includes private lenders, bad credit lenders, mortgages for new construction, reverse mortgages, and so on.
What's the average interest rate on a mortgage in Ontario?
Interest rates in Ontario are the lowest in the country. The exact interest rate you qualify for will depend on your personal circumstances - your income, credit score, downpayment, and so on - but generally rates range from 2% to 5%, with the average sitting at 3%. Both variable rates and fixed rates are widely available.
How much do I need for a downpayment on an Ontario mortgage?
The Government of Canada has stipulations on the size of downpayment property buyers must have, which correspond to the value of the property being purchased. Homes worth under $500,000 need a downpayment of at least 5%. Homes worth more than this need at least a 10% downpayment - even more for properties worth over $1 million. The average property price in Ontario is $594,000, so the average required downpayment is $59,400.
What fees and taxes do I need to pay when purchasing property in Ontario?
Buying a property always comes with a slew of fees and taxes. In general, the closing cost when buying a house in Ontario is about 1.5-4% of the sale price of the home, and this amount consists of: home inspection fees, mortgage lender fees, title insurance, legal fees, mortgage insurance, broker fees, Land Transfer Tax, and so on. If you buy a newly constructed home, you will also have to pay 15% HST.
I'm a first-time buyer. What extra help can I get in Ontario?
The Canadian government has several programs to help first-time buyers get a foot on the property ladder, all of which apply to Ontario residents. The
First-Time Home Buyer Incentive allows eligible buyers to finance a portion of their purchase through the government. The
Home Buyer's Plan allows you to withdraw up to $35,000 from an RRSP to assist with your purchase. There are also tax incentives: the Home Buyer's Amount provides up to $5000 in tax credits, and buyers of new properties worth less than $350,000 are eligible for HST rebates.
