How Interest Rates Affect Monthly Mortgage Payments

With recent interest rate hikes from the Bank of Canada, many potential homebuyers are wondering how new, higher rates may affect them. Let us help you navigate the ways that rising interest rates may affect your mortgage, both in the short and long term, by answering some of the most common questions we receive.

How Do Interest Rates Affect Mortgage Rates?

How interest rates affect your mortgage depends on what rate you’re approved for and what kind of mortgage you have.

When you apply for a mortgage, your lender sets your rate based on the Bank of Canada overnight rate, your credit rating, your choice of fixed or variable rate mortgage, and the length of your mortgage term.

From there, changing interest rates affect your mortgage if you have a variable rate mortgage, or if your mortgage is up for renewal and interest rates have changed during your term.

What Are the Differences Between Fixed and Variable Mortgage Rates?

Having a fixed rate mortgage means that the interest rate you’re approved for is applied to your mortgage for your entire term. Your mortgage payments remain the same in terms of how much is paying down your principal loan vs interest.

With variable mortgages, your interest rate varies depending on the current rate set by the Bank of Canada. As interest rates change, the portion of interest you’re paying each month also changes.

How May a Rate Hike Affect Me?

For a variable rate mortgage, a rate hike means that more of your payment is paying down interest. The higher the rate, the more interest you’ll be paying with each mortgage payment. If rates climb high enough, you may reach the “trigger rate”, which is when your mortgage payments are no longer paying down the principal loan.

For a fixed rate mortgage, a rate hike won’t affect you during your term. However, if interest rates have risen when you renew, your mortgage payments may increase.

Pros and Cons of Variable vs Fixed Rates

Depending on the economic outlook and your circumstances, either mortgage type may be right for you.

Pros of a Fixed Rate Mortgage

  • Your monthly payments are predictable. 
  • You won’t be vulnerable to rising rates.

Cons of a Fixed Rate Mortgage

  • You may pay more if interest rates fall.
  • If interest rates fall, you can’t take advantage of lower rates.

Pros of a Variable Rate Mortgage

  • You can benefit from falling interest rates.
  • You may pay less interest over time.

Cons of a Variable Rate Mortgage

  • You’re vulnerable to rate fluctuations and may pay more.
  • It may take longer to pay off your mortgage.

Set Yourself Up for Homebuying Success with JAAG Properties

If you’re struggling to qualify for a mortgage, you aren’t alone. Our Rent to Home Solution allows you to live in your dream home while saving for a down payment and building positive credit. Contact us today to learn more about how we can help you on your path to homeownership!

Can Newcomers To Canada Get A Mortgage?

Newcomers to Canada can face many challenges while trying to establish their new lives in an unfamiliar environment. Language barriers, cultural differences, and social norms can make it difficult to accomplish even the simplest of tasks. Of course, one of the biggest concerns for new arrivals can be finding secure housing, a place to live and call their own.

Acquiring the necessary financing to purchase a home in Canada can sometimes be a struggle for newcomers. They may have difficulties meeting the requirements of traditional lenders under typical mortgage programs, due to their lack of employment history, financial instability, and unestablished credit in Canada. While some who are new to the country may have sufficient finances to begin the homebuying process, others may need support to meet mortgage requirements.

There are solutions available for newcomers hoping to become homeowners. Several financial institutions, including many of the big banks, offer mortgage programs for new immigrants. But it’s important to note that there are certain criteria that will need to be met in order for newcomers to use these services. There are also rent-to-own housing options available to assist potential home buyers in purchasing their new home. Services, like JAAG’s Rent to Home Solution, are designed to help get newcomers who are struggling to meet mortgage requirements into homes sooner.

In most cases, in order to qualify for newcomer mortgages, new immigrants will need to be able to prove they have immigrated within the last 5 years. As well, they will need to be in Canada as either a permanent resident, a landed immigrant (in the process of getting permanent status), or on a valid working visa. Newcomers will, in most cases, also need to show proof of employment, typically with a minimum of 3 months on the job. Some exceptions for this may include prior arrangements for housing through an employer.

Of course, if new Canadian immigrants wish to utilize these types of mortgage programs, they will also need to meet the minimum down payment and qualification requirements set by the lenders. Some minimum down payment requirements can be as low as 5%. While others can be as high as 35%, especially if newcomers to the country don’t have a Canadian credit history or don’t qualify for an insured mortgage. Lenders will also look at other aspects, such as your debt to service ratio (which could include debt outside of Canada), and apply a mortgage stress test to ensure your eligibility.


As an alternative to using a newcomers mortgage program through one of the major financial institutions, potential homeowners can apply for a rent-to-own housing solution. For example, JAAG’s Rent to Home Solution provides newcomers who qualify an opportunity to find and live in their home now while they save and build credit for the future purchase. Typically, a rent-to-own contract, like JAAG’s, would have the client lease the home for 3 years with the goal of purchasing the home at the end for an agreed upon predetermined price.

During the lease period, part of the monthly payment is set aside to establish the down payment needed to qualify for the mortgage. Clients are encouraged to use the lease period to save money and establish a good credit score, to improve their chances of getting the best rates possible. Clients are also offered guidance and education through credit coaching and financial services to help them develop financial stability. At the end of the 3 year lease period, successful clients have the option to purchase the home for the predetermined price.

There are solutions available for newcomers to Canada who wish to become homeowners. For those who can meet the criteria set out by traditional lenders and big banks, mortgage options for new immigrants are a viable option. However, for those who are grappling with lender requirements, there are alternatives available, such as a rent-to-own housing model. Trusted and recognized rent-to-own companies, like JAAG Properties, offer simple financing solutions to experience homeownership while working toward financial readiness.

Unintended Credit Problems: They’re More Common Than You Think

If you’ve ever had problems with your credit score, you know all too well how frustrating it can be. Whether you’ve been denied for a line of credit or you’ve had difficulty getting approved for a mortgage, life can get complicated as a result of credit issues.

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There are a variety of reason why someone might run into credit problems. Most are unexpected! Unforeseen circumstances, such as job loss, divorce, or property damage, can quickly strain finances, leading to missed payments and increased debt amounts.

Credit problems can happen to anyone, and they’re more common than most people want to let on. In some cases, inexperience and a lack of credit education can contribute to credit issues early in life. In other instances, credit issues can arise well into adulthood, stemming from a variety of unpredictable circumstances.

It’s important to know that credit issues are solvable. With education, budgeting, and time, it is possible to rebuild your credit, get your finances in order, and even get approved for loans and mortgages.

JAAG’s Rent to Home Solution includes a Credit Education Service that helps you build financial stability through consistent and flexible monthly payments. And we offer a Credit and Education Service tailored to your specific situation.

How’s the next generation ever going to buy a home?

Have you ever considered how the next generation will afford to buy a home?

For many young adults, the dream of future homeownership may seem completely out of reach. They face an unstable housing market, with record high prices and limited affordable inventory. As well, there is the threat of rising interest rates and inflation, which makes ever purchasing a home seem even more unlikely.

Not to mention, by the time they’re wanting to step into homeownership…

  • Most will have struggled to save enough for a down payment
  • Many will have acquired too much debt
  • Some will have had difficulty generating sufficient household income

All of which could prevent them from qualifying for traditional financing and getting approved for a mortgage.

So, what’s the solution?

Options seem few and far between, and the results can be detrimental.

  • The bank of mom and dad
  • Rent and pray
  • Never leave home

For those struggling to get a mortgage, the options appear to be limited and loathsome. No one wants to tap into their parents’ retirement savings to get started. Few people ever get out of the rent cycle after they’re in it. And, who really wants to live in their parent’s basement forever?

These aren’t solutions!

The solution needs to be comprehensive.

It needs to include a plan that gets future home buyers into a house today, helps them build their credit score and save for a down payment, and sets them up to qualify for traditional financing.

The next generation shouldn’t have to give up on their dreams of homeownership. The future of home buying may seem uncertain, but that doesn’t mean it’s impossible.

Despite having few reasonable options available to them, JAAG’s Rent to Home Solution provides today’s young adults with a safe and reliable method of purchasing a home.

Over 200 future homeowners have discovered their true homebuying potential through JAAG’s Rent to Home Solution — A Simple 4 Step Framework that gives newcomers to the housing market a chance to experience homeownership immediately

Check out JAAG’s Rent to Home Solution

By utilizing JAAG’s Rent to Home Solution, future homebuyers can make their goal of homeownership a reality.

They can experience the stability and freedom to live, decorate, and renovate the way they want. They can enjoy the peace of mind and happiness that comes with homeownership. And they can secure financial freedom while investing in their own home.

The next generation doesn’t have to let traditional financing prevent them from becoming a homeowner.

They can put an end to the rejections with JAAG’s Rent to Home Solution. By utilizing the Simple 4 Step Plan, they can get on the path to homeownership today and start enjoying the benefits of owning their own home immediately.

What is Rent-to-Own Housing?

In real estate, the term rent-to-own (RTO) typically refers to an innovative homeownership solution, wherein a potential homebuyer enters into a lease-purchase agreement.  The process usually consists of four main parts:

  1. Finding and moving into a home today.
  2. Renting for a predetermined period of time (typically 36 to 48 months).
  3. Strengthening credit and finances to qualify for a mortgage.
  4. Purchasing the home at the end of the contract for a predetermined amount.

Rent-to-own agreements are designed to help get people get into homeownership sooner by offering an alternative financing solution. Someone who is struggling to qualify for a mortgage can enter into a lease-purchase contract with a trusted rent-to-own company, like JAAG Properties, enabling them to move into their future home today. [*]

Potential homeowners have the option to enter into a rent-to-own lease agreement for a set period of time (typically 36 to 48 months), with the option to purchase the home at the end for a predetermined price — (The final purchase price is agreed upon at the beginning of the contract. And the house will be sold at the agreed upon price, regardless of fluctuations in the market by the end of the deal). [*]

During the lease period of the rent-to-own contract, the “tenant” is required to make monthly payments. A portion of the monthly payment is credited towards the future down payment on the home, while the remainder is collected as monthly rental fees. [*]

Potential homeowners are expected to use the lease period of the rent-to-own contract to improve their chances to qualify for a mortgage at the end of the agreement. This could mean working with credit teams to improve finances and address credit issues. [*]

A successful rent-to-own contract results in the tenant having enough funds for the down payment, getting approved for a mortgage, and purchasing the home at the end of the predetermined time period. [*]

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Learn more about JAAG’s Rent to Home Solution at JAAGPROPERTIES.COM.

To get started, call us at 1-866-JAAG-NOW (that’s 1-866-522-4669).

Have a question? Email us at INFO@JAAGPROPERTIES.COM.