The Official Mortgage Rates Thread

[Dreadnok]

My mortgage is up on March 1st 2012. I have 2 rates locked from HSBC. One is 5 year fixed at 2.89% and the other is 5 year variable at prime minus 0.75 (2.25%). I am coming of a 5 year fixed of 5.24% and missed the variable boat last time. How do you calculate how long I would have to go before rates go up to be ahead with the variable mortgage vs the fixed mortgage?

[laptop-tech]

That calculation is (for the most part) futile as it involves 110% speculation to "create" the numbers. You are trying to compare 2 completely different products that serve 2 different purposes, targeted to 2 different types of clients, so it is really difficult to create a parameter and figure out the "winner". There is no formula to really determine which one is better, because :

1 - no one can predict or control the variable rate
2 - if you want to get it and lock when the rates go up, it will be at the worst possible moment to do so. A variable mortgage is ideal for someone who likes the idea of being compensated (with a lower rate) for their exposure to market fluctuations, and wants to stick to the plan.

I had a variable for a few years and saw prime climb up 1.5% over a period of time, and decrease by more than that, and it was sad to watch the rate go up several times during the term but the goal was to ride the storm and save later, which worked in the end. In today's market, this incentive does not exist anymore, so what 's left is purely how you feel about how long you want to lock your rates. Short term will compensate you now, longer term will cost you more but give you stability. Variable will give you neither, as you can get a fixed rate on a short term almost comparable to the (excellent) variable option you have now.

[setell]

Hi Guys,

I got a question as I'm considering purchasing. The property I want to purchase will have a legit rental suite. I found a place that I can easily rent out to cover ~50% of my mortgage payments. I understand the cost of owning vs renting. The numbers to having a rental suite really help offset the costs of owning. My question is, how will a mortgage work in this case with a rental suite? Will it be considered an investment? Or is it still a regular principal residence as I will be living in it too. I plan on coughing up 20% downpayment to bypass additional CMHC fees. Thanks for the help.

[JMcGeachie]

Hi Guys,

I got a question as I'm considering purchasing. The property I want to purchase will have a legit rental suite. I found a place that I can easily rent out to cover ~50% of my mortgage payments. I understand the cost of owning vs renting. The numbers to having a rental suite really help offset the costs of owning. My question is, how will a mortgage work in this case with a rental suite? Will it be considered an investment? Or is it still a regular principal residence as I will be living in it too. I plan on coughing up 20% downpayment to bypass additional CMHC fees. Thanks for the help.

It would be considered an owner-occupied property (with rental), so there is no difference in terms of applying for a mortgage. And from you question,
it will be considered your primary residence as you will be living in the home too.

Thanks.

[mekong]

What are your thoughts on a 10 year fixed mortgage at 3.89 % ?

Furthermore and aside, I am considering an accelerated, weekly payment plan, increasing my payments at 5 % a year until the end of the 10 year term.

[webworm]

i have a fixed rate with 5.39 and it's about 1 year and 4 months left till the end of the term, the IRD based amount is ridiculosely high

what do you think can i sell this house and move up to another house(i can afford) adding another 200-300 K to my 300 K mortgage and get penalties waived by the bank and therefore get a good rate now ?

They will not waive your penalty but they will build the penalty into a blended rate.

[angiek]

What are your thoughts on a 10 year fixed mortgage at 3.89 % ?

Furthermore and aside, I am considering an accelerated, weekly payment plan, increasing my payments at 5 % a year until the end of the 10 year term.

I think most people think that a 10 year rate is too long. But, at that rate why would you not go for it.

Nobody knows where the rates will be in 5 years and it would be sad if you were to renew your mortgage and could not afford the payments.
At least with 10 years of payments, you would have equity in your house. Plus in 10 years the value of your house should have increased.

[deal_king]

I have a 4.97% rate mortgage with ING till May 2014. Remaining balance is $220000. Penalty for early break is $9300.
ING offers:
4years: 2.99% with $6800 penalty
5 years: 3.25% with $6800 penalty
4.07% no penalty
I want to refinance and add additional $20000 to mortgage. If I stay with ING I have to pay additional $1000 for lawyers and other fees. So I need new mortgage for $250000, to cover all expenses, with a rate to be better after 5 years than ING.

Any suggestions?

You need to reduce your penalty. To my recollection, ING has a 25% annual prepayment allowance, along with the right to double your payments. Borrow money temporarily (1-2 weeks) from family and friends, or low interest credit cards, and pay off that 25%. Then arrange your refinance date to be the day after you pay off the 25%. So now the penalty is calculated on $165k instead of $220K.

The most ideal is to refinance in the first week of January. So you can pay 25% on Dec. 31st and another 25% on Jan. 1, and thereby cut your penalty in half.

[callmethecat]

The most ideal is to refinance in the first week of January. So you can pay 25% on Dec. 31st and another 25% on Jan. 1, and thereby cut your penalty in half.

with 99% of lenders (including ING) it's based on your anniversary date, not calender year.

[guigz]

with 99% of lenders (including ING) it's based on your anniversary date, not calender year.

I was with BMO last year and it was calendar year. Same with NBC now. Are you sure about your stats?

[PaulMeredith]

You need to reduce your penalty. To my recollection, ING has a 25% annual prepayment allowance, along with the right to double your payments. Borrow money temporarily (1-2 weeks) from family and friends, or low interest credit cards, and pay off that 25%. Then arrange your refinance date to be the day after you pay off the 25%. So now the penalty is calculated on $165k instead of $220K.

The most ideal is to refinance in the first week of January. So you can pay 25% on Dec. 31st and another 25% on Jan. 1, and thereby cut your penalty in half.

There shouldn't be any need to borrow money as the prepayment amount can typically be done at closing with the proceeds from the new loan. Talk to ING and find out if the $9,300 penalty already has the 25% applied, as it may, or may not have already been done. If not, ask if it can be applied and what the new penalty would be. You can also discuss this with your lawyer.

[callmethecat]

I was with BMO last year and it was calendar year. Same with NBC now. Are you sure about your stats?

Yes sorry, all the major banks that I know of (Scotia, TD and National) are based on the calendar year. It seems that all other everyone else is on the anniversary date.

[jandumm]

2 questions:

1) Renewal (with RBC is up in May - RBC offered us 2.99 for 4 years a few weeks ago for early renewal but wouldn't hold it for us. Went in on Saturday and they changed it to 3.19 - I had put it the 2.99% on hold with another bank but will have to wait til May now (dumb move on my part for waiting - is it typical for banks not to hold rates offered @ early renewal?

2) Broker said that 2.99 for 4 years is still available for high ratio mortgages only - just curious why it would still be available for high ratio mortgages but not conventional ones?

[Wonderdollar]

2 questions:

1) Renewal (with RBC is up in May - RBC offered us 2.99 for 4 years a few weeks ago for early renewal but wouldn't hold it for us. Went in on Saturday and they changed it to 3.19 - I had put it the 2.99% on hold with another bank but will have to wait til May now (dumb move on my part for waiting - is it typical for banks not to hold rates offered @ early renewal?

2) Broker said that 2.99 for 4 years is still available for high ratio mortgages only - just curious why it would still be available for high ratio mortgages but not conventional ones?

Everybody knows that If the mortgage is high ratio then it has to be insured for default and the borrower pays the premium and if the mortgage is conventional (meaning the borrower has paid 20% or more in down payment) then the borrower does not pay CMHC premium. However, after the sub prime fiasco, now a days the banks have to bulk insure most of the mortgages for securitization purposes and banks have to pay the premium themselves from their own pocket, hence they are unwilling to offer lower rates on conventional mortgages.

Having said that if your original mortgage was CMHC insured and still is even if the equity in it may be more than 20% making it look like a conventional mortgage for switching purposes and you have never refinanced it as a conventional mortgage, then your broker may be able to get you the high ratio rate.

[PaulMeredith]

2 questions:

1) Renewal (with RBC is up in May - RBC offered us 2.99 for 4 years a few weeks ago for early renewal but wouldn't hold it for us. Went in on Saturday and they changed it to 3.19 - I had put it the 2.99% on hold with another bank but will have to wait til May now (dumb move on my part for waiting - is it typical for banks not to hold rates offered @ early renewal?

2) Broker said that 2.99 for 4 years is still available for high ratio mortgages only - just curious why it would still be available for high ratio mortgages but not conventional ones?

Question 1 - Yes, it is typical, is the 2.99% was a rate 'special', and therefore lower than their current 4 year rate. Rate specials are very seldom held unless you are prepared to proceed with a commitment.

Question 2 - This is a common question, as to the general consumer, it really doesn't make any sense at all. The logic is that some lenders will insure ALL their mortgages through CMHC regardless of the down payment in order to minimize their risk. With down payments of 20% or greater, they swallow these fees themselves, therefore cutting into their profit on the mortgage. Therefore, they may not be able to offer the special rate on a non-CMHC insured mortgages.

Also, 2.99% on a 4 year fixed mortgage is still high. You can do quite a bit better through the right broker.