Mortgage rates in Ontario: current trends & strategies

Mortgage rates in Ontario are shifting again, and the “best move” is far less obvious than people think. With rates fluctuating, aspiring and current homeowners are caught between the fear of rising costs and the opportunity to secure favourable terms.

The decisions you make about your mortgage today can impact your financial health for years to come. This comprehensive guide will help you:

• Understand current mortgage rate trends and what's driving them in Ontario
• Compare fixed and variable options to determine which best suits your situation
• Discover strategies to secure better rates, even with challenging credit or income situations

P.S. — If you’re a homeowner and the bank is making this feel binary, it isn’t. Options like Lotly’s secured home loans can use your existing equity to consolidate high-interest debt or access cash without needing a pristine credit score or perfectly “clean” income, which can matter a lot when renewal math gets tight. Book a free consultation to see if it’s right for you.

TL;DR

• Current rates matter. As of January 2026, Ontario's best insured 5-year fixed rates hover around 3.84%, while variable rates sit at approximately 3.35-3.60%.
• Your financial profile affects your rate. Credit score, income stability, and debt ratios significantly impact the offers you'll receive.
• Fixed vs. variable is personal. Fixed rates (currently ~3.99% for 5-year terms) provide stability but come at a premium over variable rates (currently ~3.60%), which offer potential savings but carry uncertainty.

Current mortgage rates in Ontario (2026)

Ontario's mortgage market in early 2026 is relatively stable, with some upward pressure on fixed rates. Understanding today's rates provides the foundation for making informed financing decisions.

Fixed mortgage rates (January 2026)

Fixed mortgage rates in Ontario currently range from competitive offers to higher rates at major banks:

1-Year Fixed

• Competitive rate: 4.69–4.74%
• Big bank average: 4.89%
• Credit union average: 4.79%

2-Year Fixed

• Competitive rate: 3.99%
• Big bank average: 4.29%
• Credit union average: 4.19%

3-Year Fixed

• Competitive rate: 3.89%
• Big bank average: 4.09%
• Credit union average: 3.99%

4-Year Fixed

• Competitive rate: 4.14%
• Big bank average: 4.34%
• Credit union average: 4.24%

5-Year Fixed

• Competitive rate: 3.84–3.99%
• Big bank average: 4.19%
• Credit union average: 3.99%

Rates as of Jan 2026.

The most competitive 5-year fixed rate currently available is 3.84%, offered exclusively through certain mortgage brokers.

Variable mortgage rates (January 2026)

Variable rates continue to offer a discount compared to fixed options:

5-Year Variable

• Current rate: 3.35–3.60%
• Formula: Prime − 0.85% to Prime − 1.10%
• Prime rate: 4.45%

3-Year Variable

• Current rate: 3.40–3.65%
• Formula: Prime − 0.80% to Prime − 1.05%
• Prime rate: 4.45%

The Bank of Canada's overnight rate is currently 2.25%, while the prime rate is approximately 4.45%. The central bank maintained this rate at its December 10, 2025, meeting, with the next interest rate announcement scheduled for January 28, 2026.

Recent rate trends

Fixed mortgage rates have increased by about 20 basis points over the past few months, driven by rising yields on 5-year Government of Canada bonds. This uptick follows robust economic data, including strong job growth and GDP figures.

Variable rates, meanwhile, have trended lower since mid-2024 due to previous rate cuts, maintaining a pricing advantage over fixed rates. This spread between fixed and variable rates (currently 0.25% to 1.0%) is a key consideration for borrowers weighing their options.

Understanding mortgage rate types

Before diving into strategies to secure the best rate, it's essential to understand the fundamental options available and how each type works. Your choice between fixed and variable rates will significantly impact your financial flexibility and peace of mind.

Fixed-rate mortgages

A fixed-rate mortgage locks in your interest rate for the entire term, typically ranging from 1 to 10 years, with 5-year terms being most common in Ontario.

How fixed-rate mortgages work

With a fixed-rate mortgage, your interest rate and payment amount remain constant throughout the term, regardless of market fluctuations. This predictability makes budgeting straightforward and eliminates the stress of potential rate increases.

Fixed rates are determined primarily by bond yields. When 5-year Government of Canada bond yields rise, fixed mortgage rates typically follow suit. Currently, these bonds are yielding around 2.75-2.90%, which influences the 5-year fixed mortgage rates of 3.84-4.19% we're seeing in the market.

Pros of fixed-rate mortgages

• Payment stability: Your mortgage payment remains unchanged throughout the term
• Protection from rate increases: Even if market rates rise significantly, your rate stays locked
• Simplified budgeting: Knowing exactly what you'll pay each month makes financial planning easier
• Peace of mind: Eliminates the stress of monitoring rate fluctuations

Cons of fixed-rate mortgages

• Higher starting rates: You pay a premium for stability (currently about 0.25-1.0% higher than variable rates)
• Potentially higher overall cost: If rates decrease or remain stable, you could pay more interest over time
• Steeper penalties for breaking early: Fixed-rate mortgages can have higher break penalties because lenders may charge the greater of 3 months’ interest or Interest Rate Differential (IRD).

When to choose fixed rates

Fixed rates make the most sense when:

• You value payment certainty over potential savings
• You're a first-time homebuyer managing tight monthly budgets
• Current fixed rates are historically low
• The spread between fixed and variable rates is narrow
• Economic indicators suggest rates may rise significantly

Variable-rate mortgages

Variable-rate mortgages have an interest rate that fluctuates with the prime rate, which is influenced by the Bank of Canada's overnight rate.

How variable-rate mortgages work

A variable-rate mortgage is typically expressed as "prime plus/minus a percentage." For example, a rate might be "prime minus 0.85%." With the current prime rate at 4.45%, the variable rate would be 3.60%.

When the Bank of Canada adjusts its overnight rate, banks typically adjust their prime rates accordingly, which directly affects your variable mortgage rate. Your monthly payment may either remain the same (with the amortization period adjusting) or change with the rate, depending on your mortgage structure.

Pros of variable-rate mortgages

• Lower initial rates: Variable rates typically start 0.25-1.0% lower than fixed rates
• Potential savings: If rates remain stable or decrease, you'll pay less interest overall
• Smaller penalties: Breaking a variable mortgage usually costs just three months' interest
• Flexibility to convert: Many variable mortgages allow you to lock into a fixed rate without penalty

Cons of variable-rate mortgages

• Payment uncertainty: Your payments may increase if the prime rate rises
• Budgeting challenges: Fluctuating payments can complicate financial planning
• Stress factor: Some borrowers find the uncertainty of variable rates anxiety-inducing
• Risk of significant increases: Economic volatility could lead to rapid rate hikes

When to choose variable rates

Variable rates are typically advantageous when:

• You can financially handle potential payment increases
• The spread between fixed and variable rates is significant (currently 0.25-1.0%)
• Economic forecasts suggest stable or decreasing rates
• You might need to break your mortgage before the term ends
• You want to benefit from potential rate decreases

Open vs. closed mortgages

Beyond the fixed vs. variable decision, you'll also need to choose between open and closed mortgage structures.

Key differences

Closed mortgages restrict your ability to make additional payments or pay off your mortgage entirely before the term ends. While they typically offer lower interest rates, they come with penalties for exceeding prepayment privileges.

Open mortgages provide complete flexibility to make additional payments or pay off your mortgage in full at any time without penalties. This flexibility comes at a cost—open mortgages typically have interest rates 1-2% higher than comparable closed mortgages.

Penalty structures

• Closed fixed-rate mortgages: Penalties are typically the greater of three months' interest or the Interest Rate Differential (IRD)
• Closed variable-rate mortgages: Penalties are usually three months' interest
• Open mortgages: No penalties for prepayment or early payoff

Flexibility considerations

When deciding between open and closed mortgages, consider:

• Anticipated windfalls: If you expect to receive a large sum of money (inheritance, bonus, etc.) that could be applied to your mortgage
• Selling timeline: If you might sell your home before the mortgage term ends
• Refinancing plans: If you anticipate wanting to refinance to take advantage of lower rates or access equity

For many Ontario homeowners, a closed mortgage with generous prepayment privileges (typically 15-20% of the original principal annually) offers the best balance of lower rates and reasonable flexibility.

Factors affecting Ontario mortgage rates

Understanding what drives mortgage rates can help you anticipate changes and time your mortgage decisions more effectively. Multiple economic and personal factors influence the rates available to Ontario homeowners.

Bank of Canada policy decisions

The Bank of Canada's overnight rate serves as the foundation for variable mortgage rates and indirectly influences fixed rates. Currently at 2.25%, this rate is adjusted based on economic conditions, particularly inflation.

The Bank of Canada aims to keep inflation near its 2% target. When inflation rises above this target, the Bank typically raises rates to cool the economy. When inflation falls below target, or economic growth slows, the Bank may lower rates to stimulate activity.

Recent policy has maintained the overnight rate at 2.25%, with forecasts suggesting it will remain stable through most of 2026, potentially rising to around 2.75% by late 2027.

Bond market performance

Fixed mortgage rates are primarily influenced by Government of Canada bond yields, particularly the 5-year bond for 5-year fixed mortgages. When bond yields rise, fixed mortgage rates typically follow.

Rates rose ~20bps in late 2025 amid earlier bond yield moves and strong economic data, though 5-year GoC yields have stabilized near 2.9% in January 2026.

Inflation trends

Inflation directly impacts the Bank of Canada's rate decisions and influences bond yields. Current inflation data shows it hovering near the Bank's 2% target, which has allowed for a relatively stable rate environment.

Persistent inflation in the food, shelter, and services sectors could put upward pressure on rates if it consistently exceeds targets.

Housing market conditions

Ontario’s housing market is expected to gradually stabilize and recover through 2026–2027, following a period of subdued activity. Most credible forecasts point to moderate growth rather than a sharp rebound:

• Home sales are expected to improve modestly as borrowing conditions stabilize and pent-up demand returns, though activity is likely to remain below prior cycle peaks.
• Home prices are projected to transition from mild declines in 2025 to low single-digit growth in 2026 and 2027.

As market conditions normalize, this gradual recovery could support increased mortgage demand and encourage greater competition among lenders, potentially influencing the range of rates and incentives available to borrowers.

Economic outlook

Ontario's economic outlook includes:

• Ontario’s Ministry of Finance projects real GDP growth around ~0.9–1.0% in 2026 and ~1.8–1.9% in 2027.
• Stable but persistent core inflation
• Ongoing trade uncertainties, particularly related to the upcoming CUSMA review

These factors contribute to the cautious approach in maintaining policy rates at current levels, with only modest adjustments anticipated.

Lender competition

Competition among lenders can significantly impact available rates. Factors influencing competition include:

• Market share goals
• Funding costs
• Risk appetite
• Seasonal promotions
• Target customer segments

This competition explains why rates can vary by 0.25-0.50% between lenders for the same mortgage product and term.

How to get the best mortgage rates in Ontario

Securing the most favourable mortgage rate requires a strategic approach that goes beyond simply shopping around. By optimizing your financial profile, comparing multiple lenders, and considering alternative options, you can potentially save thousands over your mortgage term.

Improve your financial profile

Lenders offer their best rates to borrowers they consider low-risk. Here's how to position yourself as an ideal candidate:

Credit score optimization

Your credit score significantly impacts the rates you're offered. In Ontario:

• Scores above 740 typically qualify for the best rates
• Scores between 680-739 may see slightly higher rates
• Scores below 680 often face rate premiums or may be limited to certain lenders

Action steps:

• Check your credit report at least 3-6 months before applying for a mortgage
• Dispute any errors with the credit bureaus (Equifax and TransUnion)
• Pay down credit card balances to below 30% of available credit
• Avoid applying for new credit in the months before your mortgage application
• Make all payments on time, even for small bills

Debt-to-income ratio management

Lenders evaluate your Gross Debt Service (GDS) ratio and Total Debt Service (TDS) ratio:

• Gross Debt Service (GDS): your housing costs (mortgage principal + interest, property taxes, heating, and applicable fees) as a share of gross income. For insured/insurable mortgages, a common benchmark is GDS ≤ 39%.
• Total Debt Service (TDS): your housing costs plus other debt payments as a share of gross income. For insured/insurable mortgages, a common benchmark is TDS ≤ 44%.

Some lenders (or financial planners) may recommend more conservative targets, such as ~32% GDS and ~40% TDS, as budgeting guidelines, but these are not the standard insured qualification caps. 

Action steps:

• Pay down high-interest debts before applying for a mortgage
• Avoid taking on new debt prior to your application
• Consider consolidating existing debts to improve your ratios

Employment stability considerations

Lenders prefer borrowers with stable, predictable income:

• Salaried employees with 2+ years at the same employer are ideal
• Self-employed individuals typically need 2-3 years of consistent income
• Commission-based earners may need to show income averaging over 2-3 years

Action steps:

• Maintain employment stability before and during the mortgage application process
• Document all income sources thoroughly
• Prepare business financial statements if self-employed

By the way, if you're self-employed or have income from multiple sources, you might find traditional lenders hesitant to offer their best rates. Lotly's flexible secured home loan options consider all income types—including self-employment, side gigs, and benefits—when evaluating your application, potentially opening doors that traditional mortgage lenders might close.

Down payment strategies

Larger down payments typically result in better rates:

• 5-7.99% down: Requires mortgage default insurance, often resulting in slightly higher rates
• 8-19.99% down: Still requires insurance but may qualify for better rates
• 20%+ down: Avoids insurance requirement and typically qualifies for the best rates
• 25%+ down: May unlock even better rates with some lenders

Action steps:

• Save aggressively for a larger down payment
• Consider using RRSPs through the Home Buyers' Plan (up to $60,000)
• Explore family gifts as a down payment source (with proper documentation)

Compare multiple lenders

Different lenders target different customer segments and have varying risk appetites, resulting in rate differences of 0.25-0.50% for identical mortgage products.

Banks vs. credit unions vs. alternative lenders

Each lender type offers distinct advantages:

Banks:

• Typically offer competitive rates for conventional borrowers
• May provide relationship discounts for existing customers
• Often have stricter qualification criteria

Credit unions:

• Sometimes offer lower rates than major banks
• May have more flexible qualification criteria
• Often focus on serving local communities

Alternative lenders:

• Specialize in helping borrowers who don't fit conventional criteria
• May accommodate self-employed individuals, recent immigrants, or those with credit challenges
• Typically charge higher rates to offset increased risk

Online rate comparison tools

Online rate comparison tools can help you quickly survey the market:

• Ratehub.ca: Compares rates from multiple lenders and brokers
• WOWA.ca: Provides rate comparisons and mortgage calculators
• Nerdwallet.ca: Offers rate comparisons and educational resources

Action steps:

• Compare rates weekly as they can change frequently
• Look beyond the headline rate to understand the full offer
• Use comparison tools as a starting point for negotiations

Reading the fine print on offers

The lowest rate isn't always the best deal. Consider these factors:

• Prepayment privileges: The ability to make extra payments without penalties
• Portability: The option to transfer your mortgage to a new property
• Payment frequency options: Flexibility in how often you make payments
• Penalties for breaking the mortgage: Can vary significantly between lenders

Action steps:

• Request a full mortgage commitment letter to review all terms
• Ask specifically about prepayment penalties and how they're calculated
• Compare the total cost over your expected time in the mortgage, not just the rate

Negotiation strategies

Lenders often have room to improve their initial offers:

• Use competing offers as leverage
• Highlight your strong financial profile
• Consider your overall banking relationship as a negotiation point
• Time your application during competitive periods (spring and fall)

Action steps:

• Get multiple offers in writing before beginning negotiations
• Be prepared to walk away if a lender won't match a better offer
• Ask specifically for rate discounts based on your financial strength

Consider working with a mortgage broker

Mortgage brokers can access rates from multiple lenders and may find options you wouldn't discover on your own.

Benefits of broker services

Working with a broker offers several advantages:

• Access to multiple lenders through one application
• Expertise in matching borrowers with appropriate lenders
• Potential access to exclusive rates not advertised publicly
• Guidance through the application process
• No direct cost to borrowers in most cases (brokers are paid by lenders)

How brokers access different rates

Brokers can often secure better rates because:

• They have volume-based relationships with lenders
• They know which lenders are aggressively seeking specific borrower profiles
• They can negotiate based on their overall business relationship with lenders

Questions to ask potential brokers

When selecting a broker, consider asking:

• "How many lenders do you work with regularly?"
• "What is your experience with borrowers in my situation?"
• "How do you get compensated for different products?"
• "Can you provide references from recent clients?"
• "What is your process for finding the best rate and product for my needs?"

When direct lender relationships might be better

Working directly with a lender may be preferable when:

• You have an established relationship that offers preferential rates
• You have a complex financial situation that requires specialized understanding
• You prefer having a single point of contact throughout the process
• The lender offers unique products not available through brokers

Mortgage rate forecast for Ontario (2026-2027)

Understanding where rates might be heading can help you make more informed decisions about your mortgage strategy. While no forecast is guaranteed, expert projections provide valuable insights into potential rate movements.

Expert predictions for rate trends

Based on current economic indicators and expert analysis, here's what we can expect for mortgage rates in Ontario:

Fixed mortgage rates:

• Short-term outlook (Early-Mid 2026): 5-year fixed rates are expected to remain relatively stable between 3.74-4.24%
• Mid-term outlook (Late 2026): Potential increases to 4.0-4.5% as bond yields gradually rise
• Long-term outlook (2027): Projected to reach 4.16-4.24% by mid-2027, potentially rising to 4.5-5.0% by the end of 2027

Variable mortgage rates:

• Short-term outlook (Early-Mid 2026): Expected to hold near current levels of 3.35-3.60%
• Mid-term outlook (Late 2026): Potential modest increases if the Bank of Canada begins raising rates
• Long-term outlook (2027): Projected to follow the Bank of Canada's policy rate, which is forecast to rise gradually to around 2.75% by late 2027

Economic factors to watch

Several key economic indicators will influence the direction of mortgage rates:

Inflation:

• Currently near the Bank of Canada's 2% target
• Persistent core inflation in food, shelter, and services sectors could prompt rate increases
• Cost-push inflation from tariffs and trade uncertainties may create upward pressure

GDP growth:

• Moderate growth of around 1.4% expected in 2026-2027
• Subdued growth due to structural challenges and the ongoing economic slowdown
• Housing market recovery could provide some economic stimulus

Bond yields:

• 5-year Government of Canada bond yields currently around 2.90%
• Expected to gradually increase, putting upward pressure on fixed mortgage rates
• Influenced by global economic conditions and investor sentiment

Trade relations:

• The upcoming CUSMA review in 2026 is creating uncertainty
• Potential tariff impacts on Canadian imports affecting economic outlook
• Efforts to diversify trade relationships (e.g., easing Canada-China restrictions)

Best timing for securing a mortgage

Based on current forecasts, here are strategic considerations for timing your mortgage:

For new purchases:

• Early 2026: Potentially advantageous for securing rates before projected increases
• Mid-2026: Monitor for potential rate stability before late-year increases
• Late 2026 into 2027: May face gradually increasing rates, suggesting earlier action is preferable

For renewals:

• If renewing in early 2026: Consider locking in a competitive fixed rate before projected increases
• If renewing in mid-2026: Compare the savings of a variable rate against the security of a fixed rate
• If renewing in late 2026 or 2027: Consider securing a rate hold 120-180 days before renewal

Strategies for different rate environments

Adapting your approach based on the rate environment can help optimize your mortgage:

In a rising rate environment:

• Lock in a fixed rate before increases take effect
• Consider a shorter term (2-3 years) to maintain flexibility
• Maximize prepayments while rates are lower
• Explore blend-and-extend options if renewing early

In a stable rate environment:

• Compare the spread between fixed and variable rates
• Consider a 5-year term for long-term stability
• Focus on mortgage features beyond just the rate
• Negotiate aggressively as lenders compete for business

In a declining rate environment:

• Consider a variable rate to benefit from decreases
• Choose a mortgage with favourable conversion options
• Look for fair prepayment penalty calculations
• Consider a shorter term to renegotiate sooner

Alternative financing options for Ontario homeowners

Traditional mortgages aren't the only path to homeownership or accessing home equity. Alternative financing options can provide solutions for those facing challenges with conventional approval processes or needing more flexible terms.

Secured home loans for homeowners with equity

Secured home loans leverage your existing home equity to fund various needs, offering an alternative to traditional mortgage refinancing.

How secured home loans work:

• Use your home's equity as collateral for a loan
• Receive a lump sum payment
• Make regular payments over a set term
• Maintain your existing first mortgage

Lotly's secured home loans have helped many Ontario homeowners access the funds they need by leveraging their existing home equity. Unlike traditional mortgages that often require pristine credit and conventional income verification, these loans consider your overall financial situation and home value.

Key benefits:

• Flexible approval criteria: Available for all credit scores and income types
• Faster processing: Typically funded within about two weeks
• Loan amounts from $10,000 to $1,000,000: Based on available equity
• Multiple uses: Debt consolidation, renovations, major expenses, etc.

When to consider:

• When you need funds but don't want to refinance your entire mortgage
• When traditional lenders have declined your application
• When you need funding quickly
• When you have sufficient equity but challenging credit or income documentation

Private mortgage options

Private mortgages are issued by individual investors or private lending companies rather than traditional financial institutions.

How private mortgages work:

• Funded by individual investors or private lending companies
• Typically have higher interest rates (10-18%)
• Often have shorter terms (1-3 years)
• Focus more on property value than borrower qualifications

Key benefits:

• Flexible qualification criteria: Less emphasis on credit scores and income
• Faster approval process: Often approved within days
• Bridge financing: Useful for short-term needs
• Creative structuring: Can accommodate unique situations

When to consider:

• When conventional financing isn't available
• When you need very quick funding
• When you have a clear exit strategy (e.g., selling, refinancing, etc.).
• When the higher cost is offset by the opportunity (e.g., purchasing an undervalued property)

Vendor take-back mortgages

A vendor take-back mortgage (VTB) occurs when the seller of a property provides financing to the buyer.

How VTBs work:

• Seller acts as the lender for a portion of the purchase price
• Terms are negotiated directly between buyer and seller
• Often used as a second mortgage behind traditional financing
• Typically have shorter terms (1-5 years)

Key benefits:

• Flexible terms: Negotiated directly with the seller
• Potentially lower qualifying requirements: Seller may be more flexible than traditional lenders
• Reduced closing costs: Fewer lender fees
• Creative purchase solutions: Can help overcome financing gaps

When to consider:

• When the seller is motivated and doesn't need all the cash immediately
• When traditional financing falls short of the purchase price
• When market conditions favour buyers
• When the property might not qualify for traditional financing

Rent-to-own arrangements

Rent-to-own programs allow potential buyers to rent a home with the option to purchase it later.

How rent-to-own works:

• Sign an agreement to rent with an option to purchase
• Pay a premium above market rent, with a portion applied to the future purchase
• Agree on a future purchase price or formula
• Exercise your option to buy within a specified timeframe

Key benefits:

• Path to ownership: Build equity while renting
• Lock in purchase price: Protection against rising market values
• Time to improve credit: Opportunity to address financial issues
• Try before you buy: Experience the home and neighbourhood

When to consider:

• When you need time to improve your credit or save for a down payment
• When you want to secure a home in a rising market
• When you're not certain about long-term commitment to a property
• When traditional financing isn't immediately available

Debt consolidation through home equity

Leveraging home equity to consolidate high-interest debt can significantly improve cash flow and reduce overall interest costs.

How debt consolidation works:

• Use a secured home loan or refinance to pay off high-interest debts
• Replace multiple payments with a single, often lower, payment
• Potentially reduce overall interest rates
• Improve monthly cash flow

Facing renewal at a significantly higher rate? Consider a strategic approach that combines your mortgage with debt consolidation. Lotly's secured home loan solutions have helped Ontario homeowners consolidate high-interest debts alongside their mortgage renewal, potentially reducing total monthly payments despite higher mortgage rates. 

When to consider:

• When carrying high-interest debt (credit cards, personal loans, etc.)
• When multiple payment due dates are causing financial stress
• When you have sufficient equity to consolidate debts
• When the interest savings outweigh any costs of obtaining the new financing

Mortgage renewal strategies for Ontario homeowners

Mortgage renewal presents a critical opportunity to reassess your financial situation and potentially secure better terms. Strategic planning can save thousands of dollars over your next term.

Timing your renewal for the best rates

Proper timing can significantly impact the rates available at renewal:

Start early:

• Begin researching rates 4-6 months before renewal
• Request a rate hold from multiple lenders (typically 90-120 days)
• Track rate trends to identify optimal timing

Consider economic cycles:

• Monitor Bank of Canada announcements and economic indicators
• Be aware of seasonal patterns in mortgage pricing
• Consider the current position in the rate cycle (rising, falling, or stable)

Action steps:

• Set a calendar reminder 6 months before your renewal date
• Subscribe to rate alerts from comparison websites
• Consult with a mortgage broker about timing strategies
• Request a rate hold when you see favourable offers

Negotiating with your current lender

Your existing lender has a strong incentive to keep your business:

Leverage your history:

• Highlight your perfect payment record
• Mention your overall relationship with the institution
• Remind them of the cost to acquire new customers

Know their renewal process:

• Understand that initial renewal offers are rarely their best rates
• Be aware that loyalty is often not rewarded with the best pricing
• Recognize that different departments may offer different rates

Action steps:

• Contact your lender directly rather than accepting the renewal letter
• Ask specifically for their best rate, not just the renewal offer
• Mention competitor rates you've been offered
• Speak with retention departments who have more pricing flexibility

Shopping around for better offers

Despite the convenience of renewing with your current lender, shopping around often yields better results:

Cast a wide net:

• Check rates from at least 3-5 different lender types
• Include banks, credit unions, and mortgage brokers in your search
• Consider online-only lenders who may offer more competitive rates

Prepare your documentation:

• Update your financial information
• Gather recent property tax assessments
• Have current mortgage statements ready
• Prepare income and employment verification

Action steps:

• Create a comparison spreadsheet of offers and terms
• Consider the full package, not just the rate
• Calculate the total cost over the expected term
• Use competing offers as leverage in negotiations

Considering refinancing options

Renewal is an ideal time to consider whether refinancing makes more sense than a simple renewal:

Reasons to refinance:

• Access equity for renovations, investments, or debt consolidation
• Restructure your amortization period
• Combine first and second mortgages
• Switch from a variable to fixed rate or vice versa

Cost-benefit analysis:

• Calculate the costs of refinancing (legal fees, appraisal, etc.)
• Determine the break-even point for any rate savings
• Consider the long-term impact on total interest paid
• Evaluate the effect on monthly cash flow

Action steps:

• Determine your current home value through comparable sales or an appraisal
• Calculate your available equity (typically up to 80% of home value minus existing mortgage)
• Compare refinancing costs against potential benefits
• Consider the impact on your overall financial plan

Using home equity for debt consolidation or renovations

Mortgage renewal provides an opportunity to leverage your home equity strategically:

Debt consolidation benefits:

• Replace high-interest debts with lower-rate mortgage financing
• Simplify multiple payments into one
• Potentially improve monthly cash flow
• Reduce overall interest costs

If refinancing isn’t available right now (rate premium, income verification issues, credit, etc.), a secured home loan can still help you stabilize the rest of your balance sheet — especially if credit cards or loans are eating your monthly cash flow. Lotly is often used as a short- to mid-term bridge: consolidate, breathe, improve your profile, then refinance later when the numbers look better.

Renovation Financing:

• Increase your home's value through strategic improvements
• Address necessary repairs or updates
• Improve energy efficiency for long-term savings
• Enhance your living space to meet changing needs

Ready for better mortgage options? Lotly can help

Navigating Ontario's mortgage landscape doesn't have to be overwhelming. With the right information and strategies, you can secure terms that work for your unique financial situation.

Secured home loans offer a flexible alternative when traditional mortgages don't fit your needs or circumstances. By leveraging your existing home equity, you can access funds for debt consolidation, renovations, or major expenses—regardless of your credit score or income type.

Key takeaways to remember:

• Compare multiple options before making decisions about your mortgage or home financing. The difference between lenders can save you thousands over the course of your term.
• Consider your entire financial picture, not just the mortgage rate itself. Sometimes, a slightly higher rate with the right features or flexibility can be more beneficial in the long run.
• Leverage your home equity strategically through secured home loans to consolidate high-interest debt, fund renovations, or cover major expenses—especially when traditional mortgage options are limited.
• Don't let credit challenges or non-traditional income prevent you from accessing the funds you need. Lotly's secured home loans consider your overall financial situation and home value, not just your credit score.

Lotly helps Ontario homeowners access secured home loans using their equity (even with imperfect credit or non-traditional income) for consolidation, renovations, or major expenses. If you want to skip the rate-chasing and see what’s actually doable in your situation, book a free consultation to explore your options.

FAQs about Ontario Mortgage Rates

How often do mortgage rates change?

Mortgage rates can change daily based on bond market movements and lender policies. Fixed mortgage rates are primarily influenced by Government of Canada bond yields, while variable rates change when the Bank of Canada adjusts its overnight rate (typically 8 scheduled times per year).

Most lenders update their posted rates weekly, but can make changes more frequently during volatile periods. Rate holds (typically 60-120 days) protect borrowers from rate increases during the application and approval process.

Can I get a mortgage with bad credit in Ontario?

Yes, mortgages are available for borrowers with bad credit in Ontario, though with certain limitations:

• Traditional lenders (major banks) typically require scores of 680+ for their best rates
• B-lenders (trust companies, credit unions) may accept scores of 600-680 with higher rates
• Private lenders focus more on property value than credit scores, but charge significantly higher rates (10-18%)
• Alternative options, like secured home loans, consider factors beyond credit scores

If you have bad credit, improving your application by offering a larger down payment, adding a co-signer, or working with a mortgage broker specializing in challenging credit can increase your chances of approval.

If traditional lenders have turned you down due to credit challenges, Lotly's secured home loans have helped many Ontario homeowners access the funds they need by leveraging their existing home equity. Unlike traditional mortgages that often require pristine credit, these loans consider your overall financial situation and home value.

Should I choose fixed or variable in the current market?

The fixed vs. variable decision depends on your personal circumstances and risk tolerance:

Consider fixed rates if:

• You value payment certainty and predictable budgeting
• You're concerned about potential rate increases
• The spread between fixed and variable rates is narrow (currently 0.25-1.0%)
• You're a first-time homebuyer or have tight monthly finances
• Economic indicators suggest rates may rise significantly

Consider variable rates if:

• You can financially handle potential payment increases
• You want to benefit from current lower variable rates
• The spread between fixed and variable rates is significant
• You might need to break your mortgage before the term ends
• Economic forecasts suggest stable or decreasing rates

In the current Ontario market (January 2026), with fixed rates around 3.84-4.19% and variable rates at 3.35-3.60%, the decision hinges on whether the approximately 0.25-1.0% savings on variable rates justifies the risk of potential increases.

How do mortgage pre-approvals affect my rate?

Mortgage pre-approvals provide several rate-related benefits:

• Rate holds (typically 60-120 days) protect you from rate increases while house hunting
• Budget clarity helps you shop within your approved price range
• Stronger negotiating position with sellers who value financing certainty
• Faster closing once you find a property

However, pre-approvals have limitations:

• The final approval still depends on the specific property
• Some lenders offer better rates on actual applications than pre-approvals
• Pre-approval rates may be slightly higher than their best available rates
• Not all mortgage features may be included in the pre-approval

To maximize the value of a pre-approval, get it when you're seriously beginning your home search, compare offers from multiple lenders, and understand exactly what conditions must be met for final approval.

What documents do I need when applying for a mortgage?

Preparing your documentation in advance can streamline the mortgage application process. Typically, you'll need:

Identification and Personal Information:

• Government-issued photo ID
• Social Insurance Number
• Contact information
• Current address and history

Income Verification:

• T4 slips and notices of assessment for the past two years
• Recent pay stubs (last 30 days)
• Letter of employment confirming position, salary, and length of employment
• If self-employed: business financial statements, business tax returns, and personal tax returns for 2-3 years

Financial Information:

• Bank statements (last 90 days)
• Investment account statements
• Retirement account statements
• Debt statements (loans, credit cards, etc.)
• Proof of down payment and closing costs

Property Information (for purchases):

• Purchase agreement
• MLS listing
• Property tax assessment
• Condo fees (if applicable)

Additional Documents (situation-dependent):

• Separation agreement or divorce papers
• Gift letters for down payment gifts
• Rental income documentation
• Previous mortgage statements (for refinancing)

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