A variable rate mortgage means your interest rate changes along with movements in the prime rate — and your interest costs and mortgage payments along with it. Usually offered in a 5-year term, variable rates are often lower than 5-year fixed rates because the consumer takes on the risks from the Bank of Canada's interest rate decisions.

A fixed rate mortgage has a determined rate set from the beginning of your term (5-year length is the most common), and your payments stay the same until it's time to renew. Often higher than a variable rate, a fixed rate will provide both interest and payment stability over your term. Here the bank takes on the risks from the interest rate fluctuations stemming from the Bank of Canada's policy decisions, and gives the borrower a consistent payment amount.

Variable Rate Mortgage

PROS

• Likely save more on interest over your mortgage term compared to a (higher) fixed rate

• If rates go down, you'll pay less interest for a budget break

• If rates go up, you may still save more over a fixed rate

• Lower penalties for breaking or switching (3 months interest vs Interest Rate Differential with fixed rate)

• Historically, variable rates tend to outperform fixed rates for savings

CONS

• If rates go up, your payment can increase, affecting your monthly budget

• If rates go up, you'll pay more interest

• Some variable rate products aren't portable (transferable from a current property to a new one) if you sell the home during your term

• You may worry more about rates rising during your term

Fixed Rate Mortgage

PROS

• Rate is set for the duration of your mortgage term

• Payments and interest won't change, making it easier to budget

• If rates go up during your term, you're protected

• Fixed-rate terms are usually portable (can go from current property to a new property)

• You may feel more peace of mind if rates rise during your term

CONS

• Higher penalties for breaking or switching (Interest Rate Differential or 3 months interest, whichever is greater)

• Historically, fixed rates are higher than variable rates, which may cost you more

• If rates go down during your term, you'll need to refinance or wait for your renewal to take advantage

BC Property Transfer Tax

BC Property Transfer Tax
The general property transfer tax applies for all taxable transactions. The general property transfer tax rate is determined by calculating:
1% of the fair market value up to and including $200,000
2% of the fair market value greater than $200,000 and up to and including $2,000,000
3% of the fair market value greater than $2,000,000

Further 2% on residential property over $3,000,000
If the property has residential property worth over $3,000,000, a further 2% tax will be applied to the residential property value greater than $3,000,000.
If the property is mixed class (such as residential and commercial), you pay the further 2% tax on only the residential portion of the property.
If the property includes land classed as farm only because it is used for an owner’s or farmer’s dwelling, up to 0.5 hectares will be treated as residential property.

Additional property transfer tax
If you’re a foreign national, foreign corporation or taxable trustee, you must also pay the additional property transfer tax on the fair market value of the residential portion of the property if the property is within a specified area of B.C.

BC Mortgage payment

If you're thinking about buying a home, there are a number of costs you'll need to put cash aside for in addition to your down payment. These costs depend on a number of factors including things like what kind of home you are buying (i.e. house vs. condo) and where the home is located.

Pre-Qualified vs Pre-Approved

A mortgage pre-qualify is a great start BEFORE you go house-hunting. It gives you:

• The opportunity to connect with a mortgage broker and learn how mortgages work and the financial details you'll need to have readily available.

• A ballpark idea of what house price and in what neighborhood you could buy
  Which lender and mortgage products may be best for your situation

• A sense of the rate-type and term that may work for your budget (e.g. how to get lower mortgage payments?)

• The ability to review or adjust your current finances, including getting your down payment together, or improving your credit score

A mortgage pre-approval is an essential step for WHEN you start house-hunting. You'll get:

• A more accurate idea of the size of mortgage you can afford (you'll provide more financial information than for a pre-qualify)

• The lender and mortgage type that is best for your situation
  The ability to hold an interest rate for up to 120 days (a credit check is done by the lender to ensure eligibility)

• The financial pieces in place to be taken seriously by realtors and sellers

• A quicker and easier close on your mortgage application, as you've already been pre-checked by a lender

BC CMHC insurance

What is CMHC Insurance?
Canadian Mortgage and Housing Corporation (CMHC) mortgage insurance is typically required by lenders when homebuyers make a down payment of less than 20% of the purchase price. CMHC mortgage insurance helps protect lenders against mortgage default, and enables consumers to purchase homes with a minimum down payment starting at 5%* — with interest rates comparable to those offered with a larger down payment. To obtain CMHC mortgage insurance, lenders pay an insurance premium. Typically, your lender will pass this cost on to you. The premium is based on the loan-to-value ratio (mortgage loan amount divided by the purchase price). The premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.

How much is CMHC?
The following table provides you with a general idea of the premiums charged by CMHC. The exact premium will be calculated when you apply for a mortgage and provincial sales tax may apply.

*The minimum down payment requirement for CMHC mortgage insurance depends on the purchase price of the home. For a purchase price of $500,000 or less, the minimum down payment is 5%.
When the purchase price is above $500,000, the minimum down payment is 5% for the first $500,000 and 10% for the remaining portion. CMHC mortgage loan insurance is available only for properties with a purchase price or as-improved/renovated value below $1,000,000.