Personal Finance

Mortgage rate? Which one would you go with?

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  • Jun 23rd, 2005 1:16 pm
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Newbie
May 30, 2005
13 posts
gman wrote:No, he got the bank in for two more years. It is open. He can walk if he wants to.
True. But I've heard of people getting 1.0% below prime. Has anyone got this kind of mortgage? What about 0.9%?
Member
Nov 26, 2003
269 posts
5 upvotes
Poco wrote:Does anyone know anything about a mortgage/account I have recently heard of? It is like a checking account and line of credit in one. You borrow your morgage principle as a line of credit and use that same account as a normal checking account. Any money you put in is taken off of the amount you owe and any money you take out is added on. This means that the money you would otherwise have sitting idle in your checking account is reducing your mortgage interest. This sounds very intriguing as it also means if you need some extra cash it just gets added to your line of credit at your mortgage rate. ...
Manulife offers a mortgage that matches your description. More information here.

I think it's a very interesting concept, and was very tempted to go that route when I purchased my home 2 years ago. In the end, I was scared off by their slightly higher interest rate, $15 monthly fee, and the uncomfortable feeling of "being in debt" that seemed to go along with the plan.

However, looking back, I would have come out ahead with my mortgage interest payments so far. I'll strongly consider this again when my current term is over.
Deal Addict
User avatar
Nov 22, 2002
2687 posts
468 upvotes
MrMiyagi wrote:I just got -.85 off prime just now by showing the BMO offer to CIBC. They matched it: 5 year, open, variable, 3.40% (right now)
I don't know how big of a deal this is, but BMO mortgage's interest is calculated MONTHLY as opposed to semi-annually (every 6 months).

PC Banking also offered to match BMO's for 5 years, but I was quoted on a "closed" variable rate... bastards.
Newbie
Apr 14, 2005
88 posts
SurrealEvolution wrote:Hi all,

Need some help deciding which mortage rate to go for. Here's the scenario:

$100 000 mortgage

Which of the following would you choose and why?

a) Prime minus 0.75% open variable - basically you can lock into any rate down the road or even pay off your mortgage without penalty. There is no rate capper.

b) 3 year closed at 4.1%

c) 5 year closed at 4.6%

I need to make some decisions in the next few days so anyone's input would be greatly appreciated. Thanks.

Get some info on mortgages here
http://www.canadian-mortgages.com/cgi-b ... i?a=309895
Newbie
May 30, 2005
13 posts
The only thing about Open mortgates, I've found, is that CMHC will charge you .25% more for their High Ration Premium.

So in a way, that kind of tempers the savings you would get from a closed mortgage. FYI. At least that's what CIBC told me.
Deal Expert
User avatar
Jun 14, 2003
23140 posts
183 upvotes
MrMiyagi wrote:The only thing about Open mortgates, I've found, is that CMHC will charge you .25% more for their High Ration Premium.

So in a way, that kind of tempers the savings you would get from a closed mortgage. FYI. At least that's what CIBC told me.
CMHC is not meaningful for everybody.
Newbie
Jan 18, 2005
94 posts
16 upvotes
s.m.c wrote:Manulife offers a mortgage that matches your description. More information here.

I think it's a very interesting concept, and was very tempted to go that route when I purchased my home 2 years ago. In the end, I was scared off by their slightly higher interest rate, $15 monthly fee, and the uncomfortable feeling of "being in debt" that seemed to go along with the plan.

However, looking back, I would have come out ahead with my mortgage interest payments so far. I'll strongly consider this again when my current term is over.
Sweet, that's exactly what I was asking about. The only thing I don't like is the fee - I prefer not to pay any fees when it comes to banking. It looks like the fee is now only $14, but still a fee. I'm sure it is worth it, but I have to get myself past the fee thing. Maybe if I ask nice... I really like the "Sub-accounts" so you can keep track of investment borrowing (and makes it much more straight forward)... have money... put money in bank... take money out of sub-account to buy investment... deduct interest from taxes. Really gives it that "tax deductible mortgage interest" feel.

Thanks for the link
Jr. Member
Dec 8, 2002
129 posts
MrMiyagi wrote:The only thing about Open mortgates, I've found, is that CMHC will charge you .25% more for their High Ration Premium.

So in a way, that kind of tempers the savings you would get from a closed mortgage. FYI. At least that's what CIBC told me.

i heard that too - that BMO charges another .25% for CMHC... (my broker's steering me toward Firstline). But I called them yesterday, and the person over the phone had no idea what I was talking about. CMHC is the same.

Not sure who is wrong on that one.
Deal Addict
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Apr 26, 2001
2702 posts
19 upvotes
dont forget the administration fee for each renewal, calculate that in as well

not sure what they do for floating, never had one

no mortgage now, all on LOC
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Newbie
Jan 18, 2005
94 posts
16 upvotes
Poco wrote:Sweet, that's exactly what I was asking about. The only thing I don't like is the fee - I prefer not to pay any fees when it comes to banking. It looks like the fee is now only $14, but still a fee...
Now that I think about it, that $14 fee is pretty significant. I like the idea of this account but at their current rate of 4.25% you would have to maintain an average balance (in you existing checking account) of almost $4000 just to save $14 per month. And that is a high rate. If there was no monthly fee then the rate difference would be excusable because of the savings due to not having a separate checking account balance. Ah well, perhaps not.
Deal Addict
User avatar
May 19, 2005
3268 posts
343 upvotes
Markham
I've been offered 4.25% fixed for 5 years and 4.15 fixed for 4 yrs.
My other option is 3.45% open variabel for 2 yrs.

Right now I'm leaning towards the 4 yrs, but I've enjoyed the low variable rates. Juts not sure how high and how soon it'll go up.
Jr. Member
Mar 14, 2004
188 posts
labenge wrote:i heard that too - that BMO charges another .25% for CMHC... (my broker's steering me toward Firstline). But I called them yesterday, and the person over the phone had no idea what I was talking about. CMHC is the same.

Not sure who is wrong on that one.
The .25% isn't because it is an open mortgage, rather because it is a variable rate mortgage. It doesn't matter if it's open or closed. It's CMHC that charges the premium, not BMO. The premium would be charged on a CMHC insured variable rate mortgage regardless of who the lender is. Some lenders get around the premium by setting up the mortgage as an adjustable rate mortgage, which has slightly different rules but isn't subject to the extra premium.

Firstline has a points program for Brokers, kinda like a frequent flyer program. Also, some Brokers are owned by CIBC, so there might be a bit of an obligation to steer business to CIBC (Firstline) whenever possible.
Newbie
Jun 8, 2005
80 posts
Vancouver
FYI, my company, Freedom 55 Financial, is having a mortgage rate promotion for clients, and friends and family of clients. The rate is 4.2% for a 5 year fixed rate. I was stunned when I saw that rate. I've spoken to my mortgage broker friends, and to my knowledge, no other institution is willing to match. Feel free to use this as leverage, or PM me if you would like to know more.

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