Real Estate

The Official Mortgage Rates Thread

  • Last Updated:
  • Oct 20th, 2017 2:07 pm
Member
May 1, 2017
470 posts
109 upvotes
Petralemoisson wrote:
Aug 11th, 2017 9:44 pm
Hi there,

To all mortgage brookers,

À résident from Quebec looking for a morgage for a Duplex with offer accepted at 423K. I am looking for a 5 year fixe with 5% cash back and minimum down payement (5%).

Here is my current situation

Have a mortgage on a triplex with RBC, 2.89% until may 2018.
Mortgage balance is about 292K and the associated heloc balance is about 9k. Triplex value is about 500k
Living in one the appartement and renting the two other, rent is about 22.2k/year
Will keep my triplex, rent the third apartment and moved in the main apartment of the duplex
Gross salary is about 100k/year
No debt other than current mortgage & heloc

Bank ok Montreal is offering 2.79% for 5 year fixed or 4.44% for 5 year fixed with 5% cash back. What is the Brest rate l can have ? Closing date is August 24th.

Any advise Will be appreciated
Hello,

The offer you have currently is fairly strong as far as "cash-back" offers go. You could get a better rate with 3% cash back given your circumstances, but it depends on what your goals/motivations are with the mortgage as to whether this would be beneficial to you.

Regards,

Connor
_________________________________
Connor Green
Mortgage Agent
Concierge Mortgage Group
#12179
Deal Addict
Feb 2, 2014
3956 posts
766 upvotes
Toronto
maverick6677 wrote:
Aug 11th, 2017 11:44 am
Hi guys ,

i have a question to all the pros here , i have to renew 570K mortgage in OCT 2nd week , i have 2 yr fixed rate locked in at 1.98 (after cashback ) actual rate is 2.19 . But do you guys
think i should go for 5 year fixed rate since rate might start to increase. please help guys.

thanks
It depends on the mortgage details. For example, if it's a transferable, insured mortgage, the best rate is 2.54% 5-year fixed. If not, the rate will be higher.

Obviously the lower the rate, the more you would want to take the 5-year over the 1-year.
Kevin Somnauth, CFA
Mortgage Agent and Real Estate Sales Representative
Newbie
Aug 10, 2017
2 posts
Montreal
CdnRealEstateGuy wrote:
Aug 12th, 2017 4:23 pm
It depends on the mortgage details. For example, if it's a transferable, insured mortgage, the best rate is 2.54% 5-year fixed. If not, the rate will be higher.

Obviously the lower the rate, the more you would want to take the 5-year over the 1-year.
Is this rate of 2.54% 5 year fixed available for resident of Quebec ?
Deal Addict
Feb 2, 2014
3956 posts
766 upvotes
Toronto
Petralemoisson wrote:
Aug 12th, 2017 4:35 pm
Is this rate of 2.54% 5 year fixed available for resident of Quebec ?
Yes.
Kevin Somnauth, CFA
Mortgage Agent and Real Estate Sales Representative
Newbie
Aug 3, 2017
4 posts
Vancouver, BC
PaulMeredith wrote:
Aug 11th, 2017 12:04 pm
I'm not factoring in the cash back here since we have no way of knowing if the effective rate of 1.98% was even calculated property, which very often it is not.
Hi Paul,
Can you summarize the proper way to calculate a cash back deal, or point to an example?

Many thanks.
Deal Addict
Sep 13, 2011
3296 posts
1061 upvotes
Toronto
fasbo2017 wrote:
Aug 12th, 2017 11:54 pm
Hi Paul,
Can you summarize the proper way to calculate a cash back deal, or point to an example?

Many thanks.
Here's a calculator you can use to ensure you're being given the right numbers: http://www.mortgagecalculatortoolkit.co ... alculator/

Good luck! :)
Paul Meredith
Mortgage Broker
CityCan Financial Corp (lic. 10532)
Deal Addict
User avatar
Dec 1, 2015
1208 posts
706 upvotes
Etobicoke, ON
There is no "official" way to calculate this, as those "effective rates" dont really exist on paper. But the problem is exactly that the lack of a standard way to calculate it (and even worse - failure to disclose how any calculation was made) leads to some cases of gross misrepresentation. An "oversimplified" way to do the calculation would take in consideration at least the difference in interest between the 2 terms. For example, let's assume a $500k mortgage and 2 offers, both on a 5y fixed rate term, one at 2.75% and one at 2.50%. By calculating the difference in interest (2.75% - 2.50% = 0.25% difference per year) and multiplying it by the number of years in the term (5 in this case) the difference in interest would be 0.25% * 5 = 1.25%. On a $500k mortgage, that amounts to $6250.00.
To get the most accurate numbers, one must take in consideration the amortization (25y, 26y, 27y...30y.. etc), payment frequency (weekly, bi weekly, monthly, etc) but using the simplified method above gives you a fairly accurate number.

The problem with this is that I often see people advertising "effective rates" after a cash rebate, and instead of doing the calculation above, they simply (either by ignorance or ill intent) "pick a number" and tell the client "this is what the effective rate is..". I have seen cases where the promised rate was nowhere remotely near what it should be. Cases like someone being offered $500.00 rebate to make an rate "effectively equivalent to X%" when in reality proper calculation indicated the amount should be $2800.00. As people dont know how this is calculated, some folks just assume it was done correctly.
No, to make matters even worse, there are a multitude of other considerations to be had too - and some of them are quite difficult to figure out. For instance, 2 very similar offers with almost the same rate, maybe 2.59% and the other 2.54%, on a small $100k mortgage. The difference in interest is only $250.00 in this case, however the 2.59% offer comes with a rebate on the appraisal, while the "lower rate" of 2.54% does not. As the appraisal will cost some $300.00, the higher interest rate would actually end up saving money to the client, when you factor the appraisal costs. This is just a simple example...
Another serious consideration is about collateral charges - often, I see offers of a cash rebate... but at the end of the term, the client will almost certainly be subject to higher rates to transfer to another institution (as these transfers are treated as refinances, not as switches) and on top of that there are legal fees, appraisal fees, etc. So, that "cashback" of $800.00 today may cost you $3000.00 at the end of the term.

When you pick a mortgage professional, you should ask lots of questions... and make sure the person can clearly explain ALL details about their offer. If they mention "cashback" or "effective rate", ask how it was calculated, ask for an amortization schedule based on your mortgage amount, payment frequency, etc... ask how that person determined the difference. And you might as well ask for a second opinion.
fasbo2017 wrote:
Aug 12th, 2017 11:54 pm
Hi Paul,
Can you summarize the proper way to calculate a cash back deal, or point to an example?

Many thanks.
Andre Oliveira - Mortgage Agent
FSCO # 10428 - Mortgage Intelligence
.
BTW = I'm the former "Laptop-tech" member here. Just changed the username.
Member
Nov 23, 2012
346 posts
84 upvotes
Toronto
So I got 2.2% floating 5 years at one bank vs 2.39% 4 years fixed at another bank, which one do you think I should take? Thanks.
Newbie
Nov 23, 2011
12 posts
3 upvotes
PETAWAWA
Need some help from Pros. Thanks in Advance.

I am buying a house @ $257000 assuming to put atleast 20% downpayment with my family income @ 45000. My offer expires on 18th Aug. What best rate should I be looking at Variable Closed as well as Fixed for 5 years.

I have no other debts as well as good credit ratings.
Member
May 1, 2017
470 posts
109 upvotes
rliuthu wrote:
Aug 13th, 2017 5:33 pm
So I got 2.2% floating 5 years at one bank vs 2.39% 4 years fixed at another bank, which one do you think I should take? Thanks.
Hi there,

Both are fairly solid rates depending on the circumstances of your qualifying. 1.95% is the lowest variable you can expect to see, and around 2.64% is the best fixed currently for 5 years - these rates are dependant an certain aspects of your qualifying. Whether you should take the variable or fixed product depends on your risk tolerance to each product. If you are not comfortable with the inherent risk of rising rates associated with variable rates, then you should take the fixed product. If you are comfortable with the interest rate risk, and can afford the payments if rates were to rise during your term, then perhaps it is better for you to take the variable rate.

It all comes down to your level of comfort. For what it's worth, many expect another rate hike come October, so that variable rate may be 2.45% in 3 months. Of course nobody can predict interest rate activity with a high level of certainty, but many economists forecast a hike.

Regards,

Connor
_________________________________
Connor Green
Mortgage Agent
Concierge Mortgage Group
#12179
Member
May 1, 2017
470 posts
109 upvotes
anandgnr wrote:
Aug 13th, 2017 5:33 pm
Need some help from Pros. Thanks in Advance.

I am buying a house @ $257000 assuming to put atleast 20% downpayment with my family income @ 45000. My offer expires on 18th Aug. What best rate should I be looking at Variable Closed as well as Fixed for 5 years.

I have no other debts as well as good credit ratings.
Hello,

The best rates available right now are around 2% variable and around 2.64% fixed. Rates these days are highly dependant on the specifics of your qualifying (income, down payment, debts, credit, location, etc), so without more information it's hard to say exactly.

From the information you've provided, you would be teetering on the edge of an "insurable mortgage" and "uninsurable mortgage." If you qualify for the insurable bracket, you can expect anywhere from around 2% variable to 2.64-2.74% fixed. If not, anywhere between 2.40% variable and 2.94% fixed.

Regards,

Connor
_________________________________
Connor Green
Mortgage Agent
Concierge Mortgage Group
#12179
Newbie
Jul 29, 2017
7 posts
@valuemortgage and others. Thanks for the work you guys do here. As a new PR with employment income still abroad, what's the best scenario for a mortgage on a $400k property. Looking to work with a broker here.
Newbie
Nov 23, 2011
12 posts
3 upvotes
PETAWAWA
GreenMortgages wrote:
Aug 13th, 2017 6:08 pm
Hello,

The best rates available right now are around 2% variable and around 2.64% fixed. Rates these days are highly dependant on the specifics of your qualifying (income, down payment, debts, credit, location, etc), so without more information it's hard to say exactly.

From the information you've provided, you would be teetering on the edge of an "insurable mortgage" and "uninsurable mortgage." If you qualify for the insurable bracket, you can expect anywhere from around 2% variable to 2.64-2.74% fixed. If not, anywhere between 2.40% variable and 2.94% fixed.

Regards,

Connor
Very helpful. Thanks a lot.

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