FSRA# 13047 Valko Financial Ltd.

State of the Rate – 5.19%


In order to find out how the current rate impacts you, we must first identify if you are an insured or uninsured borrower.

Do you have less than 20% down?

Securing an insured mortgage (otherwise known as a high-ratio mortgage) means you have less than 20% down, and your mortgage will be backed by the Canada Mortgage Housing Corporation (CMHC), Genworth or Canada Guaranty. The insurance premium is a one-time amount added to your final mortgage balance. A mortgage with less than 20% down is required to have insurance. This insurance is also referred to as default insurance which protects the mortgage lender in case there is a loss in principal balance as a result of a mortgage foreclosure. Both the lender and the insurer need to approve your application. The maximum home price allowed on an insured mortgage is $999,999. The maximum amortization for an insured mortgage is 25 years.


Qualifying with less than 20% down:

All insured mortgages need to qualify using the Bank of Canada’s Conventional 5 year fixed posted rate (also referred to as the Benchmark Rate) the current rate is 5.19%. When you qualify, we will then start to shop the market for you to get you the best financing options. Once we find the right fit, and you agree to the mortgage terms, the rate presented to you is called your Contract Rate, and is what your mortgage payments are based upon. Since you are considered a high-ratio/insured buyer, in most cases, the default insurance premium is added to your mortgage balance so you are not out of pocket. However in doing so, this means that you are charged the mortgage interest rate on the insurance premium amount. Default insurance protects the lender, which greatly reduces their risk and why mortgage rates are typically lower for insured transactions.

In order to find out how the current rate impacts you, we must first identify if you are an insured or uninsured borrower.

Do you have more than 20% down?

Securing an uninsured mortgage (otherwise known as a low-ratio/conventional mortgage) means you are applying for a mortgage that meets one of the following criteria:

  • It is a purchase of $1 million or more
  • You have a minimum down payment of 20%
  • You are purchasing a non-owner occupied singleunit rental;
  • Or you are refinancing (i.e. replacing your current
    mortgage loan with an increased mortgage size)

Qualifying with more than 20% down:

Your uninsured mortgage is mandatory to qualify using the higher of two rates; your contract rate + 2% OR the Bank of Canada’s 5.19% qualifying rate. Only one level of approval is required, from the actual mortgage lenders. These mortgages can have 30 year amortizations and have a home value of any size. Conventional mortgages are higher risk for lenders without the protection of default insurance, hence the rates tend to be slightly higher for a conventional deal.



The drop from 5.34% to 5.19% now means you can borrow on average $10,000 more than you could previously!

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Tracy and her team are here to help. Apply online or contact us today and allow us to help you along your journey in life. We will always provide sound financial advice on the best options for your mortgage.