Real Estate

5 yrs fixed - TD vs HSBC

  • Last Updated:
  • Jul 21st, 2019 10:45 am
Tags:
[OP]
Newbie
Jul 16, 2019
3 posts

5 yrs fixed - TD vs HSBC

Hi, I got approval for TD at 2.69% and HSBC at 2.64%. Both with $2000 bonus. Which is better option in terms of

a) penalty if want to close the mortgage before term
b) cost and effort during remortgage after term
c) hidden cost if any
d) any service issues
18 replies
Sr. Member
Mar 25, 2002
510 posts
53 upvotes
THe penalty is going to be interest rate differential for breaking it, atleast with HSBC (I suspect with TD as well)

How large of a mortgage as well? Over a certain $ amount HSBC will give you a premium checking account for free
Member
Aug 16, 2011
327 posts
182 upvotes
OTTAWA
Why do people always think someone will always break a mortgage? You sign a 4-year car lease... its not like people break it after 2 years
Sr. Member
User avatar
Jul 8, 2010
909 posts
615 upvotes
Ontario
Jeremyl007 wrote:
Jul 18th, 2019 11:01 am
Why do people always think someone will always break a mortgage? You sign a 4-year car lease... its not like people break it after 2 years
They are preparing for worst case scenario, nothing wrong with that (or maybe best case scenario, moving up the ladder).

What is interesting is that s/he is asking questions on an open forum instead talking with specialists - mortgage broker, mortgage consultants... If you got approved for mortgage, just go and talk with whomever got you that approval and get all details. You are the client, just ask all the questions you want.
From posting, the most important thing s/he is looking is actually the 2k cashback...
Sr. Member
Sep 19, 2012
768 posts
553 upvotes
Calgary
Jeremyl007 wrote:
Jul 18th, 2019 11:01 am
Why do people always think someone will always break a mortgage? You sign a 4-year car lease... its not like people break it after 2 years
Isn’t one of the big benefits of homeownership the fact that you have “forced savings” as part of repaying your mortgage principal? If yes, what’s the point of having savings that you can’t access on a reasonable basis. Life happens - what if you need to pay for an unexpected large expense and you’re not flush with cash. You may need to refinance your loan to get some of your savings.

DLC (admittedly a biased source) says something like 2/3 of mortgages are broken before a 5 year term is complete.

I would certainly be wary of prepayment penalties personally. Is it a make or break on a mortgage, no? But I sure wouldn’t ignore those penalties.
Deal Fanatic
User avatar
Feb 2, 2014
6575 posts
1590 upvotes
Toronto
HolmerRules wrote:
Jul 17th, 2019 10:58 pm
Hi, I got approval for TD at 2.69% and HSBC at 2.64%. Both with $2000 bonus. Which is better option in terms of

a) penalty if want to close the mortgage before term
b) cost and effort during remortgage after term
c) hidden cost if any
d) any service issues
I would pass on both of them:

1-Rates are high
2-Penalties are brutal (banks have a very high IRD penalty calc.)
3-All of TD's mortgage are collateral charges...HSBC also registers some of their mortgages as collateral charges
Kevin Somnauth, CFA
Mortgage Broker - Mortgage Architects (#10287) and Real Estate Salesperson - Century 21 Innovative
President's Club Award Winner At The Mortgage Architects
Member
Aug 16, 2011
327 posts
182 upvotes
OTTAWA
Let me put it this way... if you don't know what will happen in 5 years, why even take the risk and buy a house... might as well just rent... if you do take the risk, make sure you commit to the full term.. IRD penalty is peanuts compared to the amount of money lost through commissions, land transfer tax, lawyer fees combined.

Put it another way... some other biased source says divorce rate in Canada is 50%... why do people still get married rather can just date (rent) here and there... you get the point... you take the risk and sign on the dotted line, if anything happens, divorce lawyers get involved and $ will be lost.

One of the main reason why all these brokers are pushing you for these non-collateral mortgages is so they can take a cut every time you renew with the new lender. So they keep all the home purchasers / home owners on a rotating merry-go-round and feed you to the next lender each time. Tell me that's not true.
Sr. Member
Sep 19, 2012
768 posts
553 upvotes
Calgary
Jeremyl007 wrote:
Jul 18th, 2019 12:38 pm
Let me put it this way... if you don't know what will happen in 5 years, why even take the risk and buy a house... might as well just rent... if you do take the risk, make sure you commit to the full term.. IRD penalty is peanuts compared to the amount of money lost through commissions, land transfer tax, lawyer fees combined.
What if you sign for 2.6% today, and 3 years from now rates are 1.5%? Would you want to take advantage early or be stuffed in your current deal? You don't pay commissions and land transfer taxes when you refinance mid-term, do you?
Jeremyl007 wrote:
Jul 18th, 2019 12:38 pm
One of the main reason why all these brokers are pushing you for these non-collateral mortgages is so they can take a cut every time you renew with the new lender. So they keep all the home purchasers / home owners on a rotating merry-go-round and feed you to the next lender each time. Tell me that's not true.
A collateral charge doesn't keep brokers from making money on renewals. Collateral charges don't impact the ability to provide the best rates at renewal. So no - that's not the main reason. A cynic would say maybe it was 18 months ago before the ability to switch collateral charges into the lowest rate products at renewal was mainstream - but it's certainly not the case today.
Sr. Member
May 12, 2003
790 posts
229 upvotes
5 year 2.69 at a big bank? that's crazy

howd you get that?
HolmerRules wrote:
Jul 17th, 2019 10:58 pm
Hi, I got approval for TD at 2.69% and HSBC at 2.64%. Both with $2000 bonus. Which is better option in terms of

a) penalty if want to close the mortgage before term
b) cost and effort during remortgage after term
c) hidden cost if any
d) any service issues
Member
Aug 16, 2011
327 posts
182 upvotes
OTTAWA
ssj4_ootaku wrote:
Jul 18th, 2019 1:18 pm
5 year 2.69 at a big bank? that's crazy

howd you get that?
If you want those rates from the banks... take the other brokers' word for it... make sure you can actually go through with the 5 years (be one of the so called 33% who ride it out till the end) or you'll be paying early prepayment penalty through the nose.
Sr. Member
May 12, 2003
790 posts
229 upvotes
What?
Jeremyl007 wrote:
Jul 18th, 2019 1:25 pm
If you want those rates from the banks... take the other brokers' word for it... make sure you can actually go through with the 5 years (be one of the so called 33% who ride it out till the end) or you'll be paying early prepayment penalty through the nose.
[OP]
Newbie
Jul 16, 2019
3 posts
Got both the rates directly from the banks with 20% down. Loan is 530K. Since there is not much difference in rates, wanted opinion on service and especially penalty charges in case if I need to sell the house.
Newbie
Apr 26, 2014
31 posts
1 upvote
Toronto, Ontario
I see on TDs website 5 year closed listed at 2.97%. how did you manage to secure 2.69%?
Deal Addict
Jul 3, 2007
1672 posts
1723 upvotes
Toronto
Marketcap wrote:
Jul 19th, 2019 11:39 pm
I see on TDs website 5 year closed listed at 2.97%. how did you manage to secure 2.69%?
25 year amortization is how you get better rates....
Newbie
Apr 26, 2014
31 posts
1 upvote
Toronto, Ontario
joepipe wrote:
Jul 20th, 2019 12:10 pm
25 year amortization is how you get better rates....
It's is 25 year amortization rate..not 30

Top