5 Mortgage Myths That Could Be Holding You Back

Mortgage Tips Cedric Pelletier 14 Oct

There’s no shortage of mortgage advice out there. From online forums to coffee shop conversations, everyone seems to have an opinion. Some of it’s helpful. A lot of it? Not so much.

The truth is, the mortgage world has changed—especially in Canada. Rules, products, and opportunities evolve, but a lot of the advice being passed around hasn’t kept up.

So let’s slow it down and clear up five of the most common myths heard from homeowners and buyers alike—because sometimes, knowing what’s not true can be just as powerful as knowing what is.

Myth #1: You Need 20% Down to Buy a Home

This one stops a lot of buyers before they even get started.

Yes, putting 20% down eliminates the need for mortgage default insurance, but it’s not a requirement—especially for first-time buyers. In Canada, if the home is under $500,000, you can get in with just 5% down. For homes between $500,000 and $1,499,999, the minimum down payment is tiered: 5% on the first $500K, and 10% on the remainder.

The result? You don’t need to hit that 20% mark to make homeownership a reality. And while you will pay mortgage insurance with less than 20% down, it’s often a worthwhile trade-off if it means entering the market sooner or keeping cash on hand for emergencies, renovations, or investments.

Myth #2: Your Bank Is the Best Place to Get a Mortgage

It might feel easier to “just go with your bank,” especially if that’s who you’ve always dealt with. But here’s the thing: your bank can only offer their rates, terms, and products. That’s it.

A mortgage broker isn’t tied to one institution. They work with multiple lenders—including banks, credit unions, and independent mortgage companies—to find the product that fits your specific goals and circumstances. That matters a lot if you’re self-employed, have less-than-perfect credit, or just want a better deal.

More options = more negotiating power, better structure, and a greater chance of finding a mortgage that actually aligns with your life.

Myth #3: The Lowest Rate Is Always the Best Deal

We’ve all seen the ads. “Lowest mortgage rate in Canada!” Sounds great—until you read the fine print.

Some of the lowest-rate mortgages out there come with significant limitations: strict penalties if you break the term early, zero prepayment privileges, or clauses that make it difficult to move or refinance. And in real life, those things matter.

What if you need to break your mortgage to access equity? Or sell unexpectedly? Or refinance to consolidate debt?

The best mortgage isn’t just about the rate—it’s about flexibility, protection, and long-term cost. A slightly higher rate on a mortgage that fits your life could save you far more in the end than a “no-frills” option with hidden landmines.

Myth #4: You Have to Wait Until Your Term Is Up to Refinance

Many people think they’re locked in until their term ends. That’s not true.

You can refinance a mortgage before the term is over. Yes, there may be a penalty—but in some cases, it’s more than worth it. For example, if you’re carrying high-interest debt, funding a major renovation, or need to tap into your home equity for a business or investment, the potential savings or returns may easily outweigh the cost of breaking the mortgage.

The key is running the numbers. A good mortgage advisor will help you calculate whether it makes sense now—or if it’s better to wait.

Myth #5: Renewing with Your Current Lender Is the Easiest—and Smartest—Move

When your mortgage comes up for renewal, it’s tempting to take the path of least resistance. Your current lender sends a renewal notice, and all you have to do is sign.

But here’s what many people don’t realize: lenders often reserve their best rates and promotions for new customers, not existing ones. In fact, renewing without shopping around could mean paying more than you need to—sometimes for the next five years.

Renewal time is a golden opportunity to review your situation, compare options, and even adjust your mortgage strategy. You’ve got leverage, and you should use it.

The Bottom Line

There’s a lot of noise out there. And while mortgage advice might be well-intentioned, it’s not always accurate—or right for your situation.

Getting clarity means asking better questions, exploring your options, and working with someone who looks beyond just rate. Whether you’re buying your first home, refinancing to unlock equity, or preparing for renewal, having the right information (and the right support) can make a huge difference in your financial future.

Because in the mortgage world, the right strategy is worth more than the right guess.

Written by the team at BBM

Fixed vs. variable: Why variable-rate mortgages are making a comeback

Mortgage Tips Cedric Pelletier 12 Feb

After the Bank of Canada’s latest rate reduction 5-year variable mortgage rates are now on par with their fixed-rate counterparts, raising the question: Is now the time to go variable?

With additional Bank of Canada rate cuts expected, variable-rate mortgages are becoming an increasingly attractive option.

But choosing flexibility comes with its challenges—borrowers must weigh potential savings against heightened market volatility and the growing uncertainty surrounding a possible trade war with the U.S.

Ron Butler of Butler Mortgages told Canadian Mortgage Trends that this is the most volatile time he’s seen in the bond market “in forever.”

“It’s literally like 2008, during the Global Financial Crisis, it’s so wild,” he said.

Butler notes that the Canadian 5-year bond yield, which typically leads fixed-mortgage rate pricing, fell from a high of 3.85% in April to 2.64% last week, a significant change in such a short period of time. As a result, following six consecutive Bank of Canada rate cuts, 5-year variable rates are now nearly on par with fixed equivalents for the first time since November.

Clients opting for variable rates in droves

Look past the volatility—and the threat of devastating U.S. tariffs —and variable rates present a compelling case.

Markets are still pricing in at least two more quarter-point Bank of Canada cuts this year, which could push variable mortgage rates down at least another 50 basis points.

Some forecast even more aggressive rate-cut action will be required to counter the ecnoomic shock of a trade war with the U.S.

“I don’t think it’s a stretch to believe that the Bank will reduce its policy rate from its current level of 3.00% down to at least 2% during the current rate cycle,” David Larock of Integrated Mortgage Planners in a recent blog.

However, he cautions that there is also the risk that rate hikes come back into play should inflationary pressures re-emerge.

“While I expect variable rates to outperform today’s fixed-rate options, I caution anyone choosing a 5-year variable rate today to do so only if they are prepared for a rate rise at some point over their term,” Larock added. “Five years is long enough for the next rate cycle to begin, and for variable rates to rise from wherever they bottom out over the near term.”

Still, it’s a risk more and more borrowers are willing to take. Data from the Bank of Canada shows that as of November, nearly a quarter of new mortgages were variable-rate, up from less than 10% earlier in the year.

Butler says this trend has only accelerated in recent months, noting that the share of variable mortgages he’s originating has surged from 7% last year to 40% now.

“We advise clients to take variable because we now have actual reporting from marketplace analysts that it will go down,” he says. “The fee benefit of variable is a guaranteed penalty amount; you just don’t know what penalty you’re really going to get with fixed.”

Unlike fixed-rate mortgages, which often come with interest rate differential (IRD) penalties that can amount to tens of thousands of dollars, variable-rate mortgages typically carry a much smaller penalty—just three months’ interest—making them a more flexible option for borrowers who may need to break their mortgage early.

Butler argues that if tariffs are imposed, their impact on the mortgage market won’t be immediate, as inflation would primarily rise due to retaliatory counter-tariffs. This lag, he says, could give variable-rate borrowers a window to switch to a fixed rate before higher inflation forces the Bank of Canada to reverse course and hike rates.

“This kind of trade war means that in the beginning, the economy deteriorates, and interest rates go down; it takes nine months or a year for the inflation to really lock into a point where the Bank has to raise rates,” he says. “The inflation spiral takes time. The Bank of Canada will cut long before costs start to increase.”

Tracy Valko of Valko Financial, however, suggests that in such a trade war inflation becomes secondary to more immediate economic indicators, like unemployment. That, she warns, could skyrocket following a tariff announcement as companies brace for impact.

“‘Inflation’ was the word last year; this year I think it will be ‘employment,’ because tariffs will drive unemployment, and people won’t be able to afford housing, which will put a lot of pressure on the government infrastructure,” she says. “I don’t think it will be like inflation, which is a lagging indicator, because businesses will have to adjust quite quickly, and we could see massive unemployment in certain sectors.”

Even Trump’s latest tariff threat on aluminum and steel imports could have devastating impacts on Canadians workers in those industries within days.

Valko adds that high unemployment would potentially drive interest rates down faster—potentially even triggering an emergency rate cut, as National Bank had suggested—to blunt the effects of high tariffs. That potential scenario, Valko says, adds to the variable rate argument, but also adds to the widespread feeling of uncertainty in the market.

“A lot of people are really pessimistic right now on the future; we’ve had clients and homeowners that have had a lot of shocks in the mortgage market and the real estate market, and are not interested in having any more instability,” she says. “People are more educated than they’ve ever been before, so they are really looking at their financing — which is great to see — but people are very cautious, so to take variable, it has to be a very risk-tolerant client.”

Rate options for the more risk-averse borrowers

Valko notes that borrowers wary of economic uncertainty are increasingly choosing shorter-term fixed rates, offering stability without locking in for the long haul.

“Three-year fixed has been probably the most popular because it’s not taking that higher rate for the traditional five-year fixed rate term,” she says. “They’re hoping in three years we’ll see a more normalized and balanced market.”

For more cautious borrowers, hybrid mortgage—which split the loan between fixed and variable rates—are another option and are currently available through most major financial institutions.

“There are some people that are in the middle of that risk tolerance, and if they could put a portion in fixed and a portion and variable—and to be able to adjust it quickly—I think it would be a really good option,” Valko says.

Butler, however, disagrees.

“A hybrid mortgage means you are always half wrong about mortgage rates,” he says. “If the balance of probability clearly indicates variable is the correct short-term answer, take variable and carefully monitor the movement of fixed rates.”

Written by Jared Lindzon. Mortgage Industry News

February 11, 2025

Planning For A Mortgage – Understanding Your Credit Score

Mortgage Tips Cedric Pelletier 31 Jan

One of the important factors in home ownership is understanding things like your credit score. Some people don’t pay much attention to this metric until they begin the mortgage discussion! However, you will find that your credit score is one of the most important factors when it comes to qualifying for a mortgage at the best rate – and with the most purchasing power.

Whether you qualify for a mortgage through a bank, credit union or other financial institution, you should be aiming for a credit score of 680 for at least one borrower (or guarantor), especially if you are putting under 20% down. If you are able to make a larger down payment of 20% or more, then a score of 680 is not required.

If you are not sure what your current credit score is, you can find out through Canada’s two credit-reporting agencies: Equifax Canada and TransUnion Canada. Once you have your credit score, always double check that there are no mistakes and ensure you dispute any problems if applicable.

What If I Don’t Meet the Minimum Credit Score?

If your credit score is accurate, but does not meet the minimum requirements, you will want to look at your current debt. Home ownership is an incredible investment, but it is also costly. Fortunately, there are a number of things you can do to improve your credit score as well as your future financial success, including:

Paying your bills in full and on time. If you cannot afford the full amount, try paying at least the minimum required as shown on your monthly statement.
Pay off your debts (such as loans, credit cards, lines of credit, etc.) as quickly as possible. Work on paying the ones with the smallest amount owing first and work your way towards the larger amounts.
Stay within the limit on your credit cards and try to keep your balances as low as possible.
Keep all your Credit under 30% of its limit. This will boost your score quickly.
Reduce the number of credit card or loan applications you submit.

There is also the option of going with an Alternative Lender (or B Lender) if you are struggling with credit issues. As a Mortgage Professional, I can help review your credit score and provide you with options for your mortgage needs.

Written by my DLC Marketing team

Mortgage Renewal Benefits.

Mortgage Tips Cedric Pelletier 21 Jan

Is your mortgage coming up for renewal? Do you know about all the incredible options renewing your mortgage can afford you? If not, we have all the details here on how to make your mortgage renewal work for you as we start to think about 2025.

Get a Better Rate

Are you aware that when you receive notice that your mortgage is coming up for renewal, this is the best time to shop around for a more favourable interest rate? At renewal time, it is easy to shop around or switch lenders for a preferable interest rate as it doesn’t break your mortgage. With interest rates expected to come down as we move into the New Year, taking some time to reach out to me and shopping the market could help save you money!

Consolidate Debt

Renewal time is also a great time to take a look at your existing debt and determine whether or not you want to consolidate it onto your mortgage. For some, this means consolidating your holiday credit card debt into your mortgage, for others it could be car loans, education, etc. Regardless of the type of debt, consolidating into your mortgage allows for one easy payment instead of juggling multiple loans. Plus, in most cases, the interest rate on your mortgage is less than you would be charged with credit card companies.

Start on that Reno

Do you have projects around the house you’ve been dying to get started on? Renewal time is a great opportunity for you to look at utilizing some of your home equity to help with home renovations so you can finally have that dream kitchen, updated bathroom, OR you can even utilize it to purchase a vacation property!

Change Your Mortgage Product

Are you not happy with your existing mortgage product? Perhaps you’re finding that your variable-rate or adjustable-rate mortgages are fluctuating too much and you want to lock in! Alternatively, maybe you want to switch to variable as interest rates start to level out. You can also utilize your renewal time to take advantage of a different payment or amortization schedule to help pay off your mortgage faster!

Change Your Lender

Not happy with your current lender? Perhaps a different bank has a lower rate or a mortgage product with terms that better suit your needs. A mortgage renewal is a great time to switch to a different bank or credit union to ensure that you are getting the value you want out of your mortgage if you are finding that your needs are not currently being met.

Regardless of how you feel about your current mortgage and what changes you may want to make, if your mortgage is coming up for renewal or is ready for renewal, please don’t hesitate to reach out to a DLC Mortgage Expert today! We’d be happy to discuss your situation and review any changes that would be beneficial for you to reach your goals; from shopping for new rates or utilizing that equity! Plus, we can help you find the best option for where you are at in your life now and help you to ensure future financial success.

Written by my DLC marketing team

First-Time Homebuyer Benefits 2024

General Cedric Pelletier 17 Dec

Buying your first home is a significant milestone! While you’re thinking about your affordability and what type of home you want to own, we have some exciting updates around first-time homebuyer benefits:

New or Pre-Construction Homes: Did you know? First-time buyers looking to purchase a new build or pre-construction home are eligible for 30-year amortization. This mortgage commitment can allow you to have smaller monthly payments, versus a standard 25-year amortization.

Mortgage Default Insurance: The CMHC has recently made it so mortgage default insurance will cover up to $1.5 million homes (increased from $1 million), helping more Canadians qualify for insured mortgages.

The Home Buyers’ Plan (HBP): The Canadian government has a program known as the Home Buyers’ Plan (HBP), which is designed to allow first-time homeowners to withdraw up to $60,000 from RRSP to buy a home!

Purchasing with your spouse? You can access a total of $120,000 from your RRSP’s.

First Home Savings Account (FHSA): The First Home Savings Account (FHSA) is specifically designed to help first-time homebuyers save for their down payment without paying taxes on the interest earned on their savings. The maximum is $8,000 annually that you can add into this account to save, with a maximum of $40,000 lifetime contributions.

Writtent by my DLC Marketing Team