Get a free, no obligation personal loan quote with rates as low as 9.99%
Get Started You can apply with no impact to your credit score

Purchasing any type of real-estate, whether it’s your first home, your fifth home, or your forever home, is always going to be a challenging process. There are countless details to take care of, paperwork to go over and sign, and meetings to attend.

One of the major details that people often forget about or are confused about, is shopping around for the best possible interest rate. It can be easy to forget that not everyone will be offered the same interest rates or can qualify for the same rates. Let’s take a look at why interest rates vary from lender to lender so that you can be as equipped as possible to shop around for a rate and mortgage that works for you.

Lenders and Banks are Businesses

Something that people often forget is that lenders and banks are businesses, businesses that provide a much-needed service but are also looking to make a profit on that service and compete with other similar businesses. This means they’re looking to get prospective home buyers to apply for a mortgage with them and not all the other lenders in the same location. To achieve this, lenders will more often than not advertise the best possible interest rate they can provide a borrower with. This does not mean that every borrower that applies for or gets approved for a mortgage will be eligible for this low interest rate.

Why is my Interest Rate Different Than my Friend’s?

There are two main reasons why your mortgage interest rate is different from your parents’, or your neighbour’s or your friend’s. You are the first reason and your lender is the second reason.

The Borrower

Who you are as a borrower greatly affects the interest rate you’ll qualify for. Do you have good credit? Are you currently employed? Are your job and income stable? How much of a down payment have you been able to save? If you’re in the process of looking for a mortgage and you’re confused about the types of interest rates you’re being offered, you should ask yourself the above questions.

Mortgage interest rates depend on a lot of variables because all borrowers are different. It would be next to impossible to offer every single prospective home buyer the exact same interest rate, as they are not all the same type of borrower. When shopping around for a mortgage, keep in mind that your interest rate will be affected by the following variables:

  • The type of mortgage do you want. Fixed or variable? Closed or open?
  • Your credit score
  • What house you want to buy
  • How large of a loan you need
  • How much other debt you currently have

While we understand that it can be very tempting to compare your interest rate to the interest rate your neighbours or friends have, it will likely only cause you more stress. As we explained above, there is no one interest rate that is perfect for every borrower. If a friend of yours applied for their mortgage several years before or after yours, it’s very likely that they will have a different interest rate than you because of this. It’s also likely that a neighbour of yours could have a lower interest rate than you even if you purchased your homes around the same time.

buying a house in Canada

Click here to check out our infographic on the cost of buying a house in Canada.

The Lender

The second main reason why your interest rate is likely different from the majority of homeowners you know is because of the variety of different lenders you all received your mortgages from. If you applied for a mortgage from an established bank, your friend applied for a mortgage from a credit union, and your neighbour applied for their mortgage from a smaller bank, you all probably have different rates. This is because most lenders have different strategies when it comes to offering competitive interest rates. Lenders, banks, and credit unions typically all have:

  • Different profit goals
  • Different levels of competition
  • Different marketing strategies

Simply put, if you’re looking to get a mortgage from a big bank because you like their reputable nature, whose main goal is profit, your interest rate is going to be higher than someone who got their mortgage from a credit union whose main goal is taking on new clients.

All of this is why the majority of financial experts, and probably your parents too, suggest you shop around for a mortgage. Interest rates vary so if you’re interested in saving as much money as possible you need to get a few quotes and compare your options.

Caitlin Wood, BA avatar on Loans Canada
Caitlin Wood, BA

Caitlin Wood is the Editor-in-Chief at Loans Canada and specializes in personal finance. She is a graduate of Dawson College and Concordia University and has been working in the personal finance industry for over eight years. Caitlin has covered various subjects such as debt, credit, and loans. Her work has been published on Zoocasa, GoDaddy, and deBanked. She believes that education and knowledge are the two most important factors in the creation of healthy financial habits. She also believes that openly discussing money and credit, and the responsibilities that come with them can lead to better decisions and a greater sense of financial security.

More From This Author

Special Offers

More From Our Experts

https://loanscanada.ca/wp-content/uploads/2021/07/Average-Home-Prices-in-Newfoundland-1.png
Average House Price In Newfoundland & Labrador 2025

By Lisa Rennie
Updated on March 3, 2025

Let's take a look at the current average house price in Newfoundland & Labrador, as well as what you should do to avoid becoming house poor.

https://loanscanada.ca/wp-content/uploads/2021/07/Average-Home-Prices-in-Prince-Edward-Island-1.png
Average House Prices In Prince Edward Island 2025

By Lisa Rennie
Updated on March 3, 2025

Planning on buying a home in PEI? Be sure to do your research and find out what the average PEI house prices are going for before you do.

https://loanscanada.ca/wp-content/uploads/2021/05/Average-Home-Prices-In-Manitoba.png
What Is The Average House Price In Manitoba 2025?

By Lisa Rennie
Updated on February 28, 2025

Buying a house in Manitoba? Find out how much the average house price in Manitoba compares to the nation-wide average.

https://loanscanada.ca/wp-content/uploads/2021/05/Average-Home-Prices-In-Saskatchewan.png
Average House Price In Saskatchewan 2025

By Lisa Rennie
Updated on February 28, 2025

Check out the average house price in Saskatchewan and learn about what affects the price and whether you can afford one.

https://loanscanada.ca/wp-content/uploads/2021/07/Average-Home-Prices-In-Vancouver-2021-1.png
Average House Price In Vancouver 2025

By Lisa Rennie
Updated on February 25, 2025

Before you buy a home in Vancouver, it would be helpful to do a little homework on prices and take some time to save for a big down payment.

https://loanscanada.ca/wp-content/uploads/2021/07/Average-Home-Prices-In-Montreal-2021-1.png
What’s The Average House Price In Montreal 2025?

By Lisa Rennie
Updated on February 25, 2025

Montreal is a fabulous place to call home, and it's relatively affordable compared to other busy cities across Canada.

https://loanscanada.ca/wp-content/uploads/2021/07/Average-Home-Prices-In-Halifax-2021-1.png
Average House Price In Halifax 2025

By Lisa Rennie
Updated on February 25, 2025

Let's take a look at what the average house price is in Halifax, and what you can do to make sure you spend within your budget.

https://loanscanada.ca/wp-content/uploads/2022/02/What-Is-A-Cash-Out-Refinance-Car-Loan.png
What Is A Cash-Out Refinance Car Loan?

By Lisa Rennie
Updated on February 6, 2025

Do you have positive equity in your car? The you may qualify for a cash-out refinance on a car loan. Find out how much money you can access.

Recognized As One Of Canada's Top Growing Companies

Why choose Loans Canada?

Apply Once &
Get Multiple Offers
Save Time
And Money
Get Your Free
Credit Score
Free
Service
Expert Tips
And Advice
Exclusive
Offers