Broker floor: 5.10% · Bank average: 5.50% · Stress test qualifying rate: 7.10%. For poor credit (below 620) borrowers doing a renewal in Ontario.
Paid report options after the free check: Rate Fairness Report CA$24 · Full Renewal Decision Report CA$49. No broker calls. No data sold.
Variable rate mortgages float with the Bank of Canada prime rate (currently 4.45%). The broker floor reflects prime minus 0.85%, adjusted for credit tier. The bank average reflects prime minus 0.45%. For poor credit borrowers, an additional 150 basis points applies above the excellent-credit baseline.
The result for a 1-Year variable mortgage with poor credit is a broker floor of 5.10% and a bank average of 5.50%. These are the two anchors used to evaluate any offer. On a $500,000 mortgage, the benchmark payment is approximately $2,641/month and this combination's rate produces approximately $2,937/month — $296 more than the 5-year fixed excellent-credit benchmark.
Rates are illustrative based on Bank of Canada benchmark data and do not constitute a lender quote. Verify current rates with your lender.
| Rate anchor | Rate | What it means |
|---|---|---|
| Broker floor | 5.10% | Lowest rate available through the broker channel for this profile |
| Bank average | 5.50% | Typical rate at major bank retail branches |
| Posted ceiling | 5.99% | Bank's starting-point rate before discounting — never pay this without negotiating |
| Stress test qualifying rate | 7.10% | Rate used to calculate maximum qualifying mortgage (contract rate + 2%, min 5.25%) |
Ontario charges a provincial Land Transfer Tax (LTT). Toronto buyers also pay a Municipal Land Transfer Tax at identical rates — doubling the LTT cost.
First-time buyer rebate: Ontario first-time buyers receive a provincial LTT rebate up to $4,000. Toronto adds a municipal rebate up to $4,475. Rebates apply automatically at closing through your lawyer.
Toronto Municipal LTT applies at the same brackets on top of provincial LTT. On a $700,000 Toronto purchase, combined LTT is approximately $22,950.
Mortgages in Ontario are regulated by the Financial Services Regulatory Authority of Ontario (FSRA). Straight renewals at the same Ontario lender are exempt from stress test re-qualification. Switching lenders at renewal requires full requalification at the qualifying rate.
| Value threshold | Tax rate |
|---|---|
| Up to $55,000 | 0.5% |
| Up to $250,000 | 1.0% |
| Up to $400,000 | 1.5% |
| Up to $2,000,000 | 2.0% |
| Above prior bracket | 2.5% |
Poor credit (below 620 credit score) severely restricts your mortgage options. Most prime lenders will not lend at this tier. B-lenders and private lenders are common alternatives, typically at substantially higher rates and with additional fees.
Poor credit borrowers typically pay approximately 150 basis points above excellent credit borrowers. On a $500K mortgage, this is approximately $296/month or $3,552/year in estimated additional cost — a very significant financial impact over a 5-year term.
Improving your credit tier: Improving from poor to excellent credit could reduce your rate by approximately 1.50%, saving an estimated $296/month on a $500K mortgage or $17,760 over 5 years. Working with a credit counselor to improve your credit before applying is strongly recommended.
To improve from poor credit: address all derogatory items (collections, delinquencies), make all current payments on time for 24+ months, reduce debt aggressively, and avoid new credit. Consider whether your situation warrants formal credit counseling or a debt management plan before applying for a mortgage.
A 1-year fixed term provides maximum flexibility. Borrowers who expect rates to fall within 12 months or who anticipate selling, refinancing, or having major life changes in the near term benefit most from the shorter lock-in period.
Typical borrower profile: Typical 1-year fixed borrowers include those expecting rate declines, sellers within 12 months, or borrowers waiting to qualify for a larger mortgage. The break penalty is the smallest of any fixed term.
Rate vs 5-year benchmark: 1-year fixed rates currently sit approximately +1.50% versus the 5-year fixed broker floor. Shorter terms can carry a premium when the market prices in future rate declines or when lenders price renewal risk into the shorter commitment.
Tradeoff vs 5-year fixed: Choosing 1-year over 5-year means renewing five times in a decade versus twice. Each renewal is an opportunity to benefit from lower rates — or a risk of higher rates. The net outcome depends on the rate path, which is impossible to predict with certainty.
A straight renewal with the same lender in Ontario does not require you to requalify at the stress test rate. You renew your existing balance at current rates without income re-verification, provided you are staying with the same lender.
Stress test: Straight renewals at the same lender are exempt from stress test re-qualification (since January 2023). If you switch lenders at renewal — even on maturity — you must requalify at 7.10% with the new lender. This limits switching for some borrowers, which is why comparing your renewal offer against the current benchmark before responding is important.
CMHC insurance: Your mortgage's insured or conventional status remains unchanged at renewal. If originally CMHC-insured, the insurance persists through renewal without new premiums. If you increase your mortgage balance at renewal, CMHC rules for refinances apply.
Special considerations: For Ontario renewals: start shopping 90–120 days before maturity. Your lender must provide a renewal offer at least 21 days before maturity. Compare the offer against the current benchmark before accepting — first offers are rarely the best available.
For a 1-Year variable mortgage at a contract rate of 5.10%, the federal stress test qualifying rate is 7.10% (the contract rate plus 2%, minimum 5.25%).
On a $500,000 mortgage at the qualifying rate of 7.10% over a 25-year amortization, the monthly payment would be approximately $3,533/month. Lenders apply a 32% Gross Debt Service (GDS) ratio to determine the qualifying income, meaning total housing costs — principal, interest, property tax, and heat — cannot exceed 32% of your gross income.
Stress test calculations are for illustrative purposes only. Your lender will apply the qualifying rate to your specific balance, amortization, and income documentation.
Based on current Bank of Canada benchmark data, 1-Year variable mortgage rates for poor credit borrowers (below 620 credit score) in Ontario range from approximately 5.10% (broker floor) to 5.50% (bank average). The posted ceiling is 5.99%. These are illustrative rates based on BoC fallback data — actual rates vary by lender, insured status, and individual profile. Always verify with your lender.
Straight renewals at the same lender are exempt from stress test re-qualification (since January 2023). If you switch lenders at renewal — even on maturity — you must requalify at 7.10% with the new lender. This limits switching for some borrowers, which is why comparing your renewal offer against the current benchmark before responding is important.
With a 1-Year variable mortgage at 7.10% (stress test qualifying rate), a $500,000 mortgage on a 25-year amortization requires approximately $131,388 in gross annual income to qualify at a 32% GDS ratio. Poor credit borrowers in Ontario should work with a broker to confirm their specific qualifying income.
Choosing 1-year over 5-year means renewing five times in a decade versus twice. Each renewal is an opportunity to benefit from lower rates — or a risk of higher rates. The net outcome depends on the rate path, which is impossible to predict with certainty.