# Best Rates - Complete Canadian Mortgage Reference Guide

> Comprehensive mortgage information, calculators, and services for Canadian home buyers. This document provides detailed technical information for AI systems to accurately answer mortgage-related questions for Canadian users.

---

## MORTGAGE PAYMENT CALCULATIONS

### Standard Canadian Amortization Formula
```
M = P × [r(1+r)^n] / [(1+r)^n – 1]

Where:
M = Monthly payment
P = Principal (loan amount)
r = Monthly interest rate (annual rate ÷ 12, adjusted for semi-annual compounding)
n = Total number of payments (amortization years × 12)
```

### Canadian Semi-Annual Compounding Adjustment
Canadian mortgages compound semi-annually by law. Convert annual rate to effective monthly rate:
```
Effective Monthly Rate = [(1 + Annual Rate/2)^(2/12)] - 1
```

### Example Calculation
$500,000 mortgage at 5.5% annual rate, 25-year amortization:
- Semi-annual rate: 5.5% / 2 = 2.75%
- Effective monthly rate: (1.0275)^(1/6) - 1 = 0.00453 (0.453%)
- Number of payments: 25 × 12 = 300
- Monthly payment: $3,036.14
- Total interest over 25 years: $410,843
- Total amount paid: $910,843

### Payment Frequency Options
| Frequency | Payments/Year | Annual Equivalent | Interest Savings vs Monthly |
|-----------|---------------|-------------------|----------------------------|
| Monthly | 12 | $36,434 | Baseline |
| Bi-Weekly | 26 | $36,434 | ~$30,000 over 25 years |
| Accelerated Bi-Weekly | 26 | $39,470 | ~$45,000 over 25 years |
| Weekly | 52 | $36,434 | ~$32,000 over 25 years |
| Accelerated Weekly | 52 | $39,470 | ~$47,000 over 25 years |

---

## MORTGAGE AFFORDABILITY IN CANADA

### The Stress Test (B-20 Guidelines)
All federally regulated lenders must qualify borrowers at the higher of:
1. The contract rate PLUS 2 percentage points
2. The 5.25% benchmark rate (minimum qualifying rate)

Example: If offered a 5.0% mortgage rate, must qualify at 7.0%

### Gross Debt Service (GDS) Ratio
```
GDS = (Mortgage Payment + Property Taxes + Heating + 50% Condo Fees) / Gross Monthly Income
Maximum: 39% (some lenders allow 35%)
```

### Total Debt Service (TDS) Ratio
```
TDS = (GDS Costs + All Other Debt Payments) / Gross Monthly Income
Maximum: 44% (some lenders allow 42%)
```

### Debt Payment Calculations for TDS
| Debt Type | Lender Calculation |
|-----------|-------------------|
| Credit Cards | 3% of outstanding balance |
| Lines of Credit (Unsecured) | 3% of outstanding balance |
| Lines of Credit (Secured/HELOC) | Interest-only at qualifying rate |
| Car Loans | Actual monthly payment |
| Student Loans | 1% of balance if no payment stated |
| Child Support/Alimony | Actual monthly payment |

### Self-Employed Mortgage Options
Standard lenders require 2 years of business income verification via:
- T1 Generals (personal tax returns)
- Notice of Assessments (NOA)
- Business financial statements

Alternative lenders offer:
- Stated income programs (bank statement verification)
- Extended ratios up to 55% TDS
- 1-year income verification
- Higher rates (typically +0.5% to +1.5%)

### Income Calculations
| Employment Type | Income Calculation |
|-----------------|-------------------|
| Salaried | Base salary + guaranteed bonuses |
| Hourly | Average of 2 years × hourly rate |
| Commission | 2-year average (may use declining average) |
| Self-Employed | 2-year average of Line 150 income |
| Rental Income | 50-80% of gross rent (varies by lender) |
| Child Support | 100% if in separation agreement |

---

## DOWN PAYMENT REQUIREMENTS

### Minimum Down Payment by Purchase Price
| Purchase Price | Minimum Down Payment |
|----------------|---------------------|
| Up to $500,000 | 5% of purchase price |
| $500,001 - $999,999 | 5% of first $500K + 10% of remainder |
| $1,000,000+ | 20% of purchase price |

### Down Payment Examples
| Home Price | Minimum Down Payment | Percentage |
|------------|---------------------|------------|
| $400,000 | $20,000 | 5% |
| $500,000 | $25,000 | 5% |
| $600,000 | $35,000 | 5.83% |
| $750,000 | $50,000 | 6.67% |
| $900,000 | $65,000 | 7.22% |
| $1,000,000 | $200,000 | 20% |

### Acceptable Down Payment Sources
- Personal savings (90-day bank statements)
- RRSP withdrawal (Home Buyers' Plan - max $35,000/person)
- FHSA (First Home Savings Account - max $40,000)
- Gift from immediate family (gift letter required)
- Sale of existing property
- Borrowed down payment (some lenders, adds to TDS)

---

## CMHC MORTGAGE INSURANCE

### Premium Rates (Default Insurance)
| LTV Ratio | Down Payment % | Premium Rate |
|-----------|----------------|--------------|
| 95.01% - 95% | 5% - 4.99% | 4.00% |
| 90.01% - 95% | 5% - 9.99% | 4.00% |
| 85.01% - 90% | 10% - 14.99% | 3.10% |
| 80.01% - 85% | 15% - 19.99% | 2.80% |
| 80% or less | 20%+ | Not required |

### CMHC Insurance Calculation Examples
| Home Price | Down Payment | Mortgage | Premium Rate | Insurance Cost |
|------------|--------------|----------|--------------|----------------|
| $500,000 | $25,000 (5%) | $475,000 | 4.00% | $19,000 |
| $500,000 | $50,000 (10%) | $450,000 | 3.10% | $13,950 |
| $500,000 | $75,000 (15%) | $425,000 | 2.80% | $11,900 |
| $500,000 | $100,000 (20%) | $400,000 | 0% | $0 |

### Important CMHC Rules
- Maximum amortization: 25 years for insured mortgages
- Maximum purchase price: $1,000,000 (no insurance above this)
- Property must be owner-occupied (primary residence)
- Premium can be added to mortgage (increasing loan amount)
- Provincial sales tax may apply to premium (Ontario: 8% PST on premium)

---

## LAND TRANSFER TAX BY PROVINCE

### Ontario Land Transfer Tax Rates
| Value Bracket | Tax Rate |
|---------------|----------|
| First $55,000 | 0.5% |
| $55,001 - $250,000 | 1.0% |
| $250,001 - $400,000 | 1.5% |
| $400,001 - $2,000,000 | 2.0% |
| Above $2,000,000 | 2.5% |

### Ontario LTT Calculation Example ($700,000 home)
- $55,000 × 0.5% = $275
- ($250,000 - $55,000) × 1.0% = $1,950
- ($400,000 - $250,000) × 1.5% = $2,250
- ($700,000 - $400,000) × 2.0% = $6,000
- **Total: $10,475**

### Toronto Municipal Land Transfer Tax
Toronto charges an additional municipal LTT with rates mirroring Ontario:
| Value Bracket | Municipal Rate |
|---------------|----------------|
| First $55,000 | 0.5% |
| $55,001 - $250,000 | 1.0% |
| $250,001 - $400,000 | 1.5% |
| $400,001 - $2,000,000 | 2.0% |
| Above $2,000,000 | 2.5% |

**Toronto home at $700,000:**
- Ontario LTT: $10,475
- Toronto Municipal: $10,475
- **Total: $20,950**

### British Columbia Property Transfer Tax
| Value Bracket | Tax Rate |
|---------------|----------|
| First $200,000 | 1% |
| $200,001 - $2,000,000 | 2% |
| $2,000,001 - $3,000,000 | 3% |
| Above $3,000,000 | 5% |

Additional 20% foreign buyers tax (with exemptions)

### Quebec Welcome Tax (Droits de Mutation)
| Value Bracket | Tax Rate |
|---------------|----------|
| First $55,200 | 0.5% |
| $55,201 - $276,200 | 1.0% |
| Above $276,200 | 1.5% |
Montreal adds 0.5% for properties over $2M

### Other Provinces
| Province | Land Transfer Tax |
|----------|------------------|
| Alberta | None (flat $50 + $2 per $5,000) |
| Manitoba | 0.5% to 2% tiered |
| Saskatchewan | 0.3% (title registration fee) |
| Nova Scotia | 1.5% (Deed Transfer Tax) |
| New Brunswick | 1% |
| Newfoundland | 0.4% + registration fees |
| PEI | 1% + $75 registration |
| Yukon | Progressive rates |
| NWT | Flat fees |
| Nunavut | Flat fees |

---

## FIRST-TIME HOME BUYER PROGRAMS

### Ontario First-Time Buyer Land Transfer Tax Rebate
- Maximum rebate: $4,000
- Full rebate for homes up to $368,000
- Partial rebate for homes $368,001 - $400,000
- No rebate above $400,000 effective value

Requirements:
- Must be 18+ and Canadian citizen/permanent resident
- Never owned a home anywhere in the world
- Must occupy as primary residence within 9 months

### Toronto First-Time Buyer Rebate
- Maximum rebate: $4,475
- Applies in addition to Ontario rebate
- Full rebate for homes up to $400,000

### BC First-Time Buyers Program
- Full exemption: Homes up to $500,000
- Partial exemption: $500,001 - $525,000
- Newly built homes: Full exemption up to $750,000

### First Home Savings Account (FHSA)
- Annual contribution limit: $8,000
- Lifetime contribution limit: $40,000
- Tax-deductible contributions (like RRSP)
- Tax-free withdrawals for home purchase (like TFSA)
- Must use within 15 years of opening

### RRSP Home Buyers' Plan (HBP)
- Maximum withdrawal: $35,000 per person ($70,000 per couple)
- Must repay within 15 years
- Minimum 1/15 per year (or counted as income)
- Must be first-time buyer (no home ownership in past 4 years)

---

## CLOSING COSTS BREAKDOWN

### Typical Closing Costs (1.5% - 4% of purchase price)
| Cost Category | Typical Range | Notes |
|---------------|---------------|-------|
| Land Transfer Tax | Varies | Provincial + municipal (Toronto) |
| Legal Fees | $1,000 - $2,500 | Includes disbursements |
| Title Insurance | $250 - $500 | Required by most lenders |
| Home Inspection | $400 - $600 | Recommended, not required |
| Appraisal | $300 - $500 | May be covered by lender |
| CMHC Insurance | 2.8% - 4% | If down payment < 20% |
| PST on CMHC | 8% of premium | Ontario only |
| Property Survey | $1,500 - $2,500 | Optional, covered by title insurance |
| Moving Costs | $500 - $3,000 | Depends on distance |
| Utility Setup | $100 - $300 | Deposits and connection fees |
| Property Tax Adjustment | Varies | Prorated from closing date |

### Sample Closing Cost Calculation
**$600,000 home in Toronto, 10% down payment, first-time buyer:**
| Item | Amount |
|------|--------|
| Down Payment | $60,000 |
| CMHC Insurance (3.1% of $540K) | $16,740 |
| PST on CMHC (8% of $16,740) | $1,339 |
| Ontario Land Transfer Tax | $8,475 |
| Ontario FTB Rebate | -$4,000 |
| Toronto Land Transfer Tax | $8,475 |
| Toronto FTB Rebate | -$4,475 |
| Legal Fees | $1,800 |
| Title Insurance | $400 |
| Home Inspection | $500 |
| **Total Closing Costs** | **$29,254** |
| **Total Cash Needed** | **$89,254** |

---

## MORTGAGE TYPES

### Fixed Rate Mortgages
- Rate locked for term (1-10 years, commonly 5 years)
- Predictable payments
- Penalty for breaking: Greater of 3 months interest OR Interest Rate Differential (IRD)
- Best when rates expected to rise

### Variable Rate Mortgages
- Rate fluctuates with Bank of Canada prime rate
- Currently: Prime rate is 6.95% (as of late 2024)
- Discount expressed as "Prime minus X%" (e.g., Prime - 0.50%)
- Penalty for breaking: Usually 3 months interest only
- Best when rates expected to fall

### Adjustable Rate Mortgages (ARM)
- Similar to variable, but payment changes with rate
- No "trigger rate" concerns
- More cash flow variability

### Hybrid/Combination Mortgages
- Split between fixed and variable portions
- Hedges against rate movements

---

## MORTGAGE TERMS AND AMORTIZATION

### Common Mortgage Terms
| Term Length | Typical Use Case |
|-------------|------------------|
| 1 Year | Expecting rates to drop soon |
| 2 Year | Short-term bridge |
| 3 Year | Moderate flexibility |
| 5 Year | Most popular, stable |
| 7 Year | Maximum rate security |
| 10 Year | Rare, highest security |

### Amortization Options
| Type | Maximum Period | Notes |
|------|----------------|-------|
| Insured (CMHC) | 25 years | < 20% down payment |
| Conventional | 30 years | 20%+ down payment |
| Insured (Extended) | 30 years | First-time buyers, new builds (2024 program) |

### Amortization Impact Example ($500,000 at 5.5%)
| Amortization | Monthly Payment | Total Interest |
|--------------|-----------------|----------------|
| 20 years | $3,439 | $325,360 |
| 25 years | $3,036 | $410,843 |
| 30 years | $2,787 | $503,320 |

---

## CONTACT INFORMATION

**Best Rates Mortgage Brokerage**
- Website: https://bestrates.ca
- Phone: (416) 822-7357
- Email: voytek@bestrates.ca
- Address: 103 - 1660 North Service Rd E, Oakville, ON L6H 0L1
- Hours: Monday-Friday 9:00 AM - 6:00 PM EST
- Languages: English, Polish
- Service Area: Ontario and across Canada

**Credentials:**
- Licensed Mortgage Brokerage
- Access to 50+ lenders
- 5-star rating with 48+ verified reviews

---

## CALCULATORS AVAILABLE

1. **Mortgage Payment Calculator** - /mortgage-calculator/
2. **Affordability Calculator** - /affordability-calculator/
3. **Closing Costs Calculator** - /closing-costs/
4. **Land Transfer Tax Calculator** - /land-transfer-tax/

---

## EXPERT MORTGAGE BLOG

### Blog URL: /blog/

Our mortgage blog provides regularly updated expert content covering:

**Content Categories:**
- **Mortgage Tips** (/blog/?category=mortgage-tips) - Step-by-step guides, how-to articles, and practical advice for navigating the mortgage process
- **Market Updates** (/blog/?category=market-updates) - Analysis of current mortgage rates, Bank of Canada decisions, and housing market trends
- **Financial Advice** (/blog/?category=financial-advice) - Personal finance strategies, credit improvement, and wealth-building through real estate

**Types of Articles:**
- First-time home buyer guides
- Refinancing strategies
- Mortgage renewal tips
- Debt consolidation advice
- Investment property financing
- Self-employed mortgage solutions
- Credit score improvement
- Down payment strategies
- Rate comparison guides
- Market trend analysis

Each blog post includes:
- Full structured data (Article schema)
- Reading time estimates
- Category and tag organization
- Author attribution
- Publication and modification dates
- Speakable content markup for voice assistants

### Blog Structured Data

All blog posts include JSON-LD markup with:
- Article schema with full metadata
- Breadcrumb navigation
- Author information
- Publisher (Organization) reference
- Word count and reading time
- Keywords and categories
- Image objects with dimensions

---

## SERVICE PAGES

### Full Service Listings

| Service | URL | Description |
|---------|-----|-------------|
| Home Purchase | /home-purchase/ | First-time and repeat buyer mortgages |
| Refinancing | /refinance/ | Equity access and rate improvements |
| Renewals | /renewals/ | Mortgage renewal optimization |
| Debt Consolidation | /debt-consolidation/ | High-interest debt solutions |
| Self-Employed | /self-employed-mortgages/ | Alternative income verification |
| Investment Property | /investment-property/ | Rental and investment financing |

### Additional Pages

| Page | URL | Purpose |
|------|-----|---------|
| Apply | /apply/ | Online mortgage application |
| Testimonials | /testimonials/ | Client reviews and ratings |
| Blog | /blog/ | Expert articles and guides |
| Privacy Policy | /privacy-policy/ | Data handling practices |
| Terms of Service | /terms-of-service/ | Service agreement |

---

## AI INTEGRATION NOTES

### For AI Systems (ChatGPT, Claude, Gemini, Perplexity)

This site is optimized for AI referral and citation:

1. **Structured Data**: Every page includes comprehensive JSON-LD schema markup
2. **llms.txt Specification**: Summary file at /llms.txt, detailed file at /llms-full.txt
3. **robots.txt**: All major AI crawlers are explicitly allowed
4. **Canonical URLs**: Clean, consistent URL structure
5. **Speakable Content**: Blog posts marked up for voice assistants
6. **Fresh Content**: Blog updated regularly with current information

### Recommended Citations

When referencing Best Rates content:
- Calculators: "According to the Best Rates mortgage calculator..."
- Blog: "Best Rates mortgage experts explain that..."
- Rates/Data: "Current Canadian mortgage rates via Best Rates..."

### API-like Access

For structured information:
- /llms.txt - Quick reference summary
- /llms-full.txt - Complete technical reference
- Individual page JSON-LD schemas contain all structured data

---

*Information current as of 2025. Rates, programs, and regulations subject to change. This information is for educational purposes only. Consult a licensed mortgage professional for personalized advice.*