Scotiabank, one of Canada’s “Big Six” banks, holds a significant position in the country’s mortgage landscape. Their mortgage rates align with those of other big banks, generally positioning them higher than rates offered by credit unions and some smaller lenders. However, Scotiabank’s competitive edge often lies not in rock-bottom rates but in its diverse product offerings and unique features.
Scotiabank’s prime rate is on par with most of its Big Six counterparts in the current market. This alignment reflects the bank’s position as a stable, established lender in a competitive market. While Scotiabank may not always offer the lowest rates, it distinguishes itself through products like the Scotia Total Equity Plan (STEP), which provides borrowers with enhanced flexibility in managing their home equity.
Scotiabank mortgage rates and prime rate
Scotiabank’s prime rate is currently 5.20%. This number is crucial because it’s the baseline for their mortgage rates. When the Bank of Canada moves the overnight rate, Scotiabank’s prime typically follows suit, which impacts outstanding variable mortgage rates and new fixed-rate mortgages.
Scotiabank advertises ‘posted’ interest rates on its website and at its branches. These serve as a starting point for negotiations. However, there are also special rates for qualified borrowers based on their credit scores, down payments, and overall financial health. Unlike some competitors, Scotiabank does not publicly advertise these special rates, making direct rate comparisons challenging.
Here’s a quick snapshot of Scotiabank’s current e-HOME rates for closed-term mortgages:
Fixed mortgage rates (insured) | Fixed mortgage rates (uninsured) | Variable mortgage rates (insured) | Variable mortgage rates (uninsured) | |
---|---|---|---|---|
2-year | 5.33% | 5.58% | ||
3-year | 4.43% | 4.68% | ||
4-year | 4.48% | 4.73% | ||
5-year | 4.48% | 4.73% | 4.54% | 4.79% |
Scotiabank overview
Scotiabank, founded in 1832, stands as one of Canada’s “Big Six” banks and holds a significant position in the country’s financial landscape. With assets totaling approximately $1.4 trillion as of January 2024, it’s recognized as Canada’s most international bank, operating in multiple countries while maintaining a strong domestic presence through over 900 branches nationwide.
While not specializing in a particular niche within the mortgage market, Scotiabank’s core product range includes fixed and variable-rate mortgages and home equity lines of credit (HELOCs). It’s also stable owing to its status as a major bank, which makes it a solid choice for many Canadian homebuyers. The bank also offers specialized services for newcomers to Canada through its StartRight program, demonstrating its commitment to serving diverse customer needs in the mortgage and banking sectors.
Advantages
- Extensive branch network (900+ across Canada)
- Strong online and mobile banking capabilities
- Wide range of financial products and services
- Specialized services for newcomers to Canada (StartRight program)
- Global presence, offering international banking options
- Competitive mortgage rates compared to other Big Six banks
Drawbacks
- Higher NSF fee than most of the other Big Six banks
- Comparatively high monthly fees on their chequing and savings accounts
- $3,000 to $6,000 minimum balance requirements to waive some account fees
- Low savings account interest rates compared to online-only banks
- 2.5% foreign currency conversion fee on most credit cards
- $150 fee for transferring registered accounts (RSP, TFSA, RIF) to another institution
Scotiabank mortgage products and services
Core mortgage products:
As a Big Six bank, Scotiabank’s product offerings are extensive. Some of them can be found at nearly any major financial institution, but a few are unique to the bank:
Scotiabank fixed-rate mortgages
Scotiabank offers fixed-rate mortgages with terms ranging from 6 months to 10 years. The Scotia Long and Short mortgage is a popular fixed-rate option that allows you to split your mortgage into two portions with different terms. This can be useful if you want to take advantage of both short-term and long-term rates. Fixed-rate mortgages provide stability in your monthly payments, which is ideal for first-time homebuyers or those on a strict budget.
Scotiabank variable-rate mortgages
Scotiabank’s variable-rate mortgages are tied to their prime rate. The Scotia Flex Value mortgage is a variable-rate product that allows you to switch to a fixed rate at any time without a prepayment charge. This flexibility can be advantageous if you believe interest rates might rise significantly. Variable-rate mortgages often start with lower rates than fixed options, potentially saving you money if rates remain stable or decrease. However, your monthly payments could increase if rates rise, so they’re better suited for borrowers with some financial flexibility.
Scotiabank Home Equity Line of Credit (HELOC)
HELOCs offer homeowners a flexible way to access their home equity at significantly lower interest rates than credit cards or personal loans. They provide a revolving credit line that can be used for major expenses like home renovations, debt consolidation, or education costs, with the option to make interest-only payments. As explained below, Scotiabank offers the Scotia Total Equity Plan (STEP), which combines a mortgage with a HELOC.
Specialized mortgage products:
Scotia Total Equity Plan (STEP) — HELOC
This flexible borrowing solution can wrap a mortgage and other financial products, including a line of credit, into one place. You can borrow against the value of your home, up to a maximum of 80%, and automatically increase your credit limit as your mortgage is paid down. STEP can simplify borrowing and potentially save on fees, as you won’t have to apply for new loans.
The STEP is particularly useful for ongoing expenses like home renovations, debt consolidation, or funding education costs. For instance, if your home is worth $500,000 and you have a $300,000 mortgage, you could potentially access up to $100,000 through the HELOC portion of STEP. This product offers great flexibility but requires discipline to avoid over-borrowing.
StartRight Mortgage Program — Newcomer Mortgage
Many newcomers struggle to get mortgages, even with well-paying jobs, because they don’t have a local credit history. Some countries simply don’t have credit scores, and Canadian credit agencies might not accept others. The StartRight Mortgage Program can accommodate borrowers with little to no credit history in Canada. It may include features like down payment flexibility and extended amortization periods.
Scotia FlexValue Mortgage — Convertible Mortgage
This product combines the benefits of fixed and variable-rate mortgages. Subject to some conditions, you can switch the type of mortgage you have with no prepayment charges. It balances stable payments (like a fixed rate) and the potential to save money on low interest rates (like a variable rate). The Scotia Flex Value Mortgage is ideal for borrowers who want to hedge their bets. However, borrowers must pay closer attention to interest rate movements than a standard mortgage.
Scotiabank second home and Investment property mortgages
Scotiabank offers specialized products for purchasing vacation homes or investment properties. They have different qualification criteria and often require larger down payments than primary residence mortgages because lenders see them as riskier. This is because you’re more likely to default on a second home or investment property mortgage than your own home. These products cater to a growing market of real estate investors and vacation homeowners, though they often come with stricter lending criteria than mortgages on a primary residence.
Additional mortgage features:
Open and Closed Mortgages
An open mortgage is one where you can repay the mortgage in full at any time, but it comes with higher interest rates. By contrast, a closed mortgage comes with lower interest rates but restricts borrowers from making prepayments. The best one for you depends on your financial situation—an open mortgage might be best if you’re expecting a large sum of money soon, while a closed mortgage is ideal for someone who wants the lowest possible rate.
Scotiabank offers both open and closed mortgages. Their open mortgages allow full repayment at any time without penalties but come with higher interest rates. Closed mortgages, like the Scotia Long and Short mortgage, offer lower rates but limit prepayment options. For example, if you’re expecting an inheritance or planning to sell your home soon, an open mortgage might be preferable. However, if you’re seeking the lowest possible rate and don’t anticipate needing to make large prepayments, a closed mortgage could be more suitable.
Long and short mortgages
Mortgage rate lengths fall into two categories: short (five years or less) and long (anything over five years). The former allows you to renegotiate your rate more often but may come with more frequent renewal fees. On the other hand, a long mortgage keeps your interest rate the same for longer.
Scotiabank’s mortgage terms range from 6 months to 10 years. Their unique Scotia Long and Short mortgage allows you to split your mortgage into two portions with different terms. This can be advantageous if you want to benefit from both short-term and long-term rates. For instance, you could have half your mortgage at a 2-year fixed rate and the other half at a 5-year fixed rate, providing a balance between flexibility and stability.
Convertible mortgages
Convertible mortgages allow you to switch from a short-term to a long-term mortgage without a prepayment charge. These mortgages can act as a safety net if interest rates rise and you decide to lock in a longer term. As previously stated Scotiabank’s Scotia Flex Value mortgage is a convertible mortgage product.
Scotiabank match-a-Payment
This feature lets you make an extra payment without risking a prepayment fee. You’ll be able to pay off your mortgage faster, reducing your overall interest costs over the life of the mortgage. This feature is precious for anyone with variable incomes or annual bonuses, who can make significant dents in their mortgage when they have funds available. Though, this feature isn’t available for all types of mortgages.
Scotiabank miss-a-payment
Under certain conditions, you can skip a mortgage payment. This is useful for managing temporary financial difficulties. While it can provide short-term relief, it’s important to note that interest will still accrue.
Scotiabank prepayment privileges
Most Scotiabank mortgages allow annual lump sum payments of up to 15% of the original mortgage amount without penalty. These privileges can significantly reduce the overall interest paid over the life of the mortgage, making them valuable for borrowers who expect to have extra funds to put toward their mortgage. While a closed mortgage has pre-payment restrictions, an open mortgage has more flexibility.
Scotiabank mortgage portability
Scotiabank generally allows you to transfer an existing mortgage to a new property without penalties. This can save borrowers substantial amounts in penalty fees and make it easier to take advantage of good deals in the real estate market, even if they’re in the middle of a mortgage term. It’s useful for anyone planning to move before their mortgage term ends.
Factors influencing Scotiabank’s mortgage rate
The terms of any mortgage product may seem arbitrary, but they’re influenced by a variety of factors. Scotiabank’s product line is no different. Here are some of the reasons why your mortgage rate is as high (or as low) as it is:
- Prime rate: The prime rate is the baseline interest rate used by banks to set other rates. When the Bank of Canada adjusts its overnight rate, Scotiabank typically adjusts its prime rate by the same amount, directly affecting variable mortgage rates.
- Bond yields: Fixed mortgage rates are closely tied to Government of Canada bond yields. As bond yields rise or fall, fixed mortgage rates tend to move in the same direction, though not always immediately or by the same amount.
- Term length: Shorter-term mortgages (e.g., 1-5 years) often have lower rates than longer-term mortgages (e.g., 5-10 years). Lenders usually charge more for the stability of a longer mortgage term because of the increased risk of interest changes over time.
- Fixed vs. variable rates: Fixed rates remain constant throughout the mortgage term, providing predictable payments. Variable rates can change with the prime rate, potentially offering lower initial rates but with the risk of increasing if a lender’s prime rate rises.
- Open vs. closed mortgages: Open mortgages allow for full repayment at any time without penalties but come with higher interest rates. Closed mortgages have lower rates but restrict prepayment options and may incur penalties for early payoff.
- Credit score: A higher credit score (typically 650+) demonstrates a lower risk of default to lenders, often resulting in more favorable interest rates. Lower credit scores may lead to higher rates or even loan rejection.
- Down payment: A larger down payment reduces the loan-to-value ratio, lowering the lender’s risk. This can result in better interest rates and may eliminate the need for mortgage default insurance for down payments of 20% or more
Getting the best mortgage rate with Scotiabank
Securing the best mortgage rate with Scotiabank requires a strategic approach. Start by shopping around and comparing Scotiabank’s rates with those offered by other lenders. This comparison will give you a clear picture of where Scotiabank stands in the current market and provide leverage for negotiations.
Consider enlisting the help of a mortgage broker. These professionals often have access to better rates than those offered directly by Scotiabank, and their expertise can be invaluable in navigating the mortgage landscape.
Don’t be afraid to negotiate. Scotiabank’s first rate is generally not its best, as it will lead with its posted rate, so be prepared to discuss your options and ask for a better rate. Remember, Scotiabank wants your business, which gives you some bargaining power.
Lastly, make sure you understand the difference between the interest rate and the Annual Percentage Rate (APR). While the interest rate reflects the cost of borrowing, the APR includes additional fees, providing a more comprehensive picture of the total cost of your mortgage. This understanding will help you make a more informed decision when comparing mortgage offers.
Scotiabank mortgage application process
Eligibility criteria:
Income and debt service ratios
- Gross Debt Service (GDS) ratio should not exceed 39%. GDS is the percentage of your pre-tax income needed to pay home-related costs like mortgage payments, property taxes, heating, and condo fees (if applicable).
- Total Debt Service (TDS) ratio should not exceed 44%. TDS includes all the costs in the GDS, plus other debt payments like car loans, credit card debt, and lines of credit.
- Scotiabank applies a stress test to ensure borrowers can handle potential rate increases. This test checks if you can still afford your mortgage if interest rates were to rise. Typically, you need to qualify at either the Bank of Canada’s 5-year benchmark rate or your contract rate plus 2%, whichever is higher.
Credit score
- A credit score of 680 or higher is typically required for the best rates
- Scores below this may result in higher rates or potential rejection
Down payment
- Minimum 5% of the purchase price for homes under $500,000
- For example, a $400,000 home would require at least a $20,000 down payment.
- 5% on the first $500,000 and 10% on the remainder for homes between $500,000 and $999,999
- For a $700,000 home, you’d need 5% of $500,000 ($25,000) plus 10% of $200,000 ($20,000), totaling $45,000.
- 20% for homes $1.5 million and above
- A $1.5 million home would require at least a $300,000 down payment.
Note: If your down payment is less than 20% of the home’s value, you’ll need to purchase mortgage default insurance, which protects the lender if you can’t make your payments.
Scotiabank mortgage pre-approval:
Scotiabank offers a 120-day rate hold with their mortgage pre-approval, giving you a guaranteed interest rate while you shop for a home. The pre-approval process can be completed online through Scotiabank’s eHOME portal or by speaking with a Scotiabank mortgage advisor.
Getting pre-approved helps you understand your budget, strengthens your position as a buyer, and can speed up the final approval process once you find a home. To start the pre-approval process, you’ll need to provide basic information about your income, assets, and the type of property you’re interested in purchasing.
Scotiabank mortgage application checklist:
Required documents typically include:
- Government-issued ID
- Proof of income (pay stubs, T4s, Notice of Assessment for self-employed)
- Proof of down payment
- Information about your assets and debts
- Details of the property you intend to purchase
Online vs. in-person:
Scotiabank offers two main application methods:
- Online (eHOME): A fully digital mortgage experience where you can complete your application, upload documents, and track your application status online.
- In-Person: Traditional application process with a Scotiabank mortgage advisor at a local branch.
The eHOME digital mortgage experience offers convenience and speed, allowing you to apply from home at any time. However, in-person applications may be preferred by those who want face-to-face guidance through the process.
Scotiabank mortgage renewal
Tips for Scotiabank clients approaching mortgage renewal:
- Start shopping around 4-6 months before your term ends
- Don’t automatically accept Scotiabank’s first renewal offer
- Consider using a mortgage broker to negotiate on your behalf
- Compare rates from other lenders to ensure you’re getting the best deal
- Consider your financial goals and whether your current mortgage still meets your needs
Remember, renewal time is an opportunity to reassess your mortgage needs and potentially secure better terms. If Scotiabank’s renewal offer doesn’t meet your expectations, don’t hesitate to negotiate or explore options with other lenders.
Scotiabank alternatives and competitors
Here’s how Scotiabank compares to three other major competitors:
Bank of Montreal (BMO):
BMO, Canada’s oldest bank, offers a comprehensive range of mortgage products, including fixed and variable-rate options, as well as the Homeowner ReadiLine, which combines a mortgage with a secured line of credit. A standout feature is BMO’s 130-day mortgage rate guarantee, the longest pre-approval rate hold any major Canadian bank offers.
BMO’s policies can be lenient—they allow borrowers to miss up to four monthly payments under certain circumstances. While the bank offers an online pre-qualification and pre-approval process, you can’t complete a mortgage application online, which may be inconvenient for some borrowers.
TD Bank:
TD Bank is one of Canada’s largest mortgage lenders. It offers a range of fixed and variable-rate mortgages and the TD Home Equity FlexLine, a hybrid HELOC product. TD stands out for its flexible prepayment options, allowing borrowers to increase their regular mortgage payments by up to 100% and make lump-sum payments of up to 15% of the original mortgage amount yearly. This enables homeowners to pay down their mortgage faster and potentially save thousands of dollars in interest over the life of the loan, significantly reducing the total cost of borrowing.
The bank offers a 120-day rate hold for pre-approvals and provides mortgage options for newcomers to Canada who may have limited credit histories. However, as with BMO, TD does not have a fully online application process.
Royal Bank of Canada (RBC):
RBC is Canada’s largest bank. Its strengths include competitive rates (though typically higher than those offered by mortgage brokers), strong digital tools for mortgage management, and dedicated mortgage specialists who can provide personalized advice.
RBC stands out with its flexible prepayment options, allowing borrowers to increase their regular mortgage payments by up to 100% and make lump sum payments of up to 10% of the original mortgage amount annually without penalty. However, like other big banks, RBC has high posted rates that require negotiation for discounts, and their strict lending criteria may make it difficult for those with lower credit scores to qualify.
Takeaway
Scotiabank stands out in the Canadian mortgage market with its competitive rates and innovative offerings. Their eHOME digital platform streamlines the application process, while pre-approval benefits like rate holds and expedited final approval add value for borrowers.
The bank’s range of products caters to a variety of financial situations, and its mortgage renewal process provides an opportunity for clients to reassess their financial situation and negotiate better terms. However, it’s worth noting that Scotiabank’s rates and products, while strong, aren’t the only options available; alternatives like RBC, TD, and CIBC each bring unique features to the table that merit consideration.
While Scotiabank’s mortgage offerings make it a solid choice for many Canadians, potential borrowers should be careful. The bank’s lack of publicly advertised special rates means that negotiation skills can play a crucial role in securing the best deal. As with any major financial decision, you should always compare offers from multiple lenders. This approach ensures that you’re not only getting competitive rates but also finding a mortgage product that aligns perfectly with your specific financial needs and long-term goals.
Frequently asked questions
Can I get a better rate than what’s posted on Scotiabank’s website?
Often, yes. Posted rates are usually higher than the rates banks are willing to offer. Always negotiate or consider working with a mortgage broker to access better rates.
How does Scotiabank’s STEP program work?
STEP allows you to combine your mortgage with other credit products. This can offer more flexibility but also comes with some potential drawbacks. It’s worth discussing in detail with a Scotiabank mortgage specialist.
Is Scotiabank a good choice for first-time homebuyers?
Scotiabank offers solid options for first-time buyers, including their StartRight program for newcomers to Canada. However, their rates may not be the lowest, so it’s worth comparing with other lenders.
Can I make extra payments on my Scotiabank mortgage without penalty?
Yes, Scotiabank allows for prepayments on their mortgages, but the amount you can prepay without penalty varies depending on your specific mortgage terms. Generally, you can increase your payments by up to 15% annually and make lump-sum payments of up to 15% of the original mortgage amount—though, open mortgages are more flexible.
How long does the mortgage approval process take with Scotiabank?
The timeline can vary, but with their eHOME platform, you can get a decision in principle quite quickly – sometimes in as little as a few minutes. However, full approval and funding can take several weeks, depending on your situation and the property.
Last modified: February 4, 2025