Real Estate

The Official Mortgage Rates Thread

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  • Jul 21st, 2018 5:04 pm
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mosaic99 wrote:
Dec 7th, 2017 7:40 pm
Hi,
Looking for some opinions and suggestions.
I'm currently on 5 year variable 2.40% and still have 3 more years left. Property is in BC, purchase price is 750k, current mortgage is 470K. Should I break the term and switch to a better rate or stay with the current one? What better rate could I get if switch? fix and variable. 3 and 5 year.

Thanks a lot
MH
mosaic99 wrote:
Dec 8th, 2017 6:29 pm
Thanks.
So variable is still recommended than 3 or 5 year fix? I mean for my situation
It's really hard to say no to variable these days considering how large the spreads are. Your lowest rate would be prime -1.19% (2.01%) if you were to make the switch. Your penalty would be about $3,400 (including discharge fee of an estimated $300). Factoring in this about, you would still save around $2,000 for the remaining 3 years of your mortgage. So switching does make sense.
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ramiissa wrote:
Dec 8th, 2017 7:53 pm
I have a mortgage with a HELOC at RBC. The bank confirmed that this was a collateral mortgage, but when I asked them if there were fees associated with switching lenders at the end of the term, their answer was no. Is it possible that the rules are different in Quebec from the rest of Canada?
You're not getting the full picture from RBC. First of all, they will charge you a discharge fee when you switch lenders, which is around $300. This is the case regardless of whether it's a collateral or standard charge mortgage. Often what banks will tell people is 'the only charge is the discharge fee of $300'. In this case, they aren't even being up front with you about that. What they don't say is that switching out of a collateral mortgage also requires a legal fee of approximately $800 and an appraisal of approximately $300. As these are not charges from the bank, they often don't mention them, which of course is not giving their client the full story.

As mentioned in my post above, rates are often higher for refinances, which is typically what is required to get out of a collateral charge. Fortunately there are some lenders now offering switches out of collateral mortgages at lowest rates. Depending on the lender, you may still have to pay at least the legal fee however, which is around $800. Some lenders will cover all the costs for you, but the rates are often quite a bit higher.
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PaulMeredith wrote:
Dec 8th, 2017 7:48 pm
5 year fixed rates can vary from 2.69% to 3.49%. HUGE range, depending on your situation. The 2.69% would be available to those either purchasing with LESS than 20% down payment, or those switching a previously insured mortgage. So if you put down less than 20% when you originally bought the home, you would qualify for the 2.69%. If you have at least 35% equity in the home, and the value of the home is under $1 million, lowest 5 year fixed would be 2.79%. If it was a rental property, rate would be 3.49%.

To actively quote you, we would need to now the following:

- market value of home
- mortgage amount ($250,000 in this case)
- was the original mortgage insured? (meaning, did you pay CMHC insurance when you originally bought the home).
- is this your primary residence?

If you are thinking about moving in 2-3 years, then I would suggest either a 3 year term (as that is the minimum for switches), or a variable (as it has a lower penalty to break). Of course, you could always take a longer fixed term and then port the mortgage over, but that is not always the best strategy. Sometimes it's better to take an option with a lower penalty such as a variable in order to keep your options open when you purchase the new home.

Another thing to take note of... since you are with TD, you are likely in a collateral mortgage. TD registers ALL their mortgages as collateral charges (as does National Bank and Tangerine). Normally at the end of your term, you can submit to another lender at no cost to you. This isn’t the case with a collateral mortgage and changing lenders at the end of the term would typically require a refinance (as opposed to a simple switch). To change lenders at the end of your term, you would need to pay legal fees (approximately $800), appraisal (approximately $300) as well as discharge fee (also around $300). These are all 3rd party costs. On top of that, refinances often come with higher rates than purchases.

Fortunately, there are some lenders now who are offering switches from a collateral charge mortgage which would allow you to still get lowest rates. However, depending on the lender and product, you still may be required to pay the legal fee (around $800). There still may be opportunity to save you quite a bit over what TD is offering you at maturity. If you provide the information requested above, we can quote you some rates.
i have pm'd you with the details Thanks for the info!
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Thornhill
Hi all,

I want to ask you guys about my situation.
Purchased a pre-con condo, $362800, will have total 25% down payment at occupancy.
Occupancy date is Aug 2018. What would be the best rate if going with the big banks?
RBC said if I apply before end of the year, they can hold the rate for 36 months (im assuming it's one of those crappy rates)

Also, I went to RBC for pre-approval letter 2 years ago, and at that time, the mortgage specialist told me to borrow 290 000 but i actually just need 272 100.
I am guessing... from reading above post about collateral charge, that they're trying to tie me down with a collateral charge mortgage so it's harder for me to change lender in the future?

I am still deciding which to go with... 5 year fixed or 3 yr variable. Plan is to live in the condo, but down the road might change if I get married, etc (currently single)

Thanks in adance
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Hi all - does anyone currently have better terms (i.e. flexibility and rate) with 20% down for a variable rate mortgage than HSBC @ 2.34%?

Thanks!
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Raela wrote:
Dec 8th, 2017 11:45 pm
Hi all,

I want to ask you guys about my situation.
Purchased a pre-con condo, $362800, will have total 25% down payment at occupancy.
Occupancy date is Aug 2018. What would be the best rate if going with the big banks?
RBC said if I apply before end of the year, they can hold the rate for 36 months (im assuming it's one of those crappy rates)

Also, I went to RBC for pre-approval letter 2 years ago, and at that time, the mortgage specialist told me to borrow 290 000 but i actually just need 272 100.
I am guessing... from reading above post about collateral charge, that they're trying to tie me down with a collateral charge mortgage so it's harder for me to change lender in the future?

I am still deciding which to go with... 5 year fixed or 3 yr variable. Plan is to live in the condo, but down the road might change if I get married, etc (currently single)

Thanks in adance
Still pretty early to be shopping for rates on this. The maximum rate hold for decent rates (with banks or non-bank lenders) is 120 days. You mentioned your occupancy is August 2018, however you would not get a mortgage at occupancy. With new build condos, there are two closing dates. Occupancy and final closing. Occupancy is the date you take possession of the unit. Final closing date takes place when the building gets registered and that is when you take ownership. It's only that this time when you can put a mortgage on the property. Finally closing can take anywhere from a few weeks (rare) to over a year (also rare) after occupancy. I find in most cases, final closing takes place between 5 -9 months after occupancy.

Pinning down a lender to give you an estimated final closing date is next to impossible. When they try to predict, they are usually way off. I've heard a builder tell a client final closing would take place in 3 weeks, however it ended up being 9 months before it actually took place. So it's quite likely, you'll be getting your mortgage sometime in 2019. Unfortunately, builders usually only give you about 3 weeks notice.

Just get something locked in with a bank right now. You can ask a few what their best rate will be for a longer rate hold, at least 18 months, but 2 years would be safer. Some banks might tell you to come back closer to closing date, while others might tell you they can hold the rate for 3 years, as RBC has mentioned to you. Take the lowest rate, but know that you will definitely be shopping around. A good time to start shopping is when you get occupancy. And who knows? Maybe you'll be one of the lucky few who experience final closing shortly after occupancy. Just don't count on it.
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Nukey wrote:
Dec 9th, 2017 7:49 am
Hi all - does anyone currently have better terms (i.e. flexibility and rate) with 20% down for a variable rate mortgage than HSBC @ 2.34%?

Thanks!
Yes, you can get prime -0.90% (2.30%) through any regular posting broker on this board. Lots of bad publicity on HSBC as well:

https://www.consumeraffairs.com/finance ... tgage.html
https://www.yelp.ca/biz/hsbc-bank-canada-vancouver-16
official-mortgage-rates-thread-351105/2657/#p28285811
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Does anyone know what are the variable rates being offered by big banks currently for insured and non-insured mortgages?
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Bigjaye47 wrote:
Dec 9th, 2017 9:06 am
Does anyone know what are the variable rates being offered by big banks currently for insured and non-insured mortgages?
Lowest variable with a big bank would be prime -0.60% - prime -0.55% (2.60% - 2.65%), insured or uninsured, doesn't matter. Lowest variable outside of the big banks would be prime -1.25% (1.95%) for an insured mortgage to prime -0.90% (2.30%) and everything in between (depending on equity amount), providing home is valued at under $1 million.

Is there a reason why you are asking about big banks specifically?
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PaulMeredith wrote:
Dec 9th, 2017 9:18 am
Lowest variable with a big bank would be prime -0.60% - prime -0.55% (2.60% - 2.65%), insured or uninsured, doesn't matter. Lowest variable outside of the big banks would be prime -1.25% (1.95%) for an insured mortgage to prime -0.90% (2.30%) and everything in between (depending on equity amount), providing home is valued at under $1 million.

Is there a reason why you are asking about big banks specifically?
Thanks for the quick and detailed response. Looking at various options for big bank vs outside.

What effect does the home valued more than a million have?

And what are the current 2 yr fixed rates from a bank vs outside?
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I'm very well versed in this subject and commend you for your well written summary. Very good explanation.


valuemortgage wrote:
Dec 8th, 2017 5:28 pm
Just want to add a bit of information on the subject of "collateral" and "charge", as those words often come up here and there is endless confusion regarding those terms.

First we need to understand what "mortgage" and "charge" are, and that they are 2 completely different things. A mortgage is just a loan, similar to a car loan or any personal loan. You ask a lender for X amount of money, and sign a document attesting you will pay it back. In order to offer low rates on mortgage loans, lenders need to have that loan secured by a collateral, so that in the event the loan is not paid back, the lender has rights registered against the property. To register their interest on the property, the lenders use what is called a "charge", which is just like any other lien. The key difference here is that when the lender asks the lawyer to register that lien, they can use one of these 2 types of charge : a "standard mortgage charge" or a "collateral charge".
Why are they different? Because with a regular standard charge, the lender registers the lien in the exact same amount as the mortgage loan. So, if you buy a $500k property and have 200k downpayment, the mortgage amount will be 300k, and the lender will register a 300k lien (the charge) against it, to "secure" that loan. If you need to borrow more money later on, as years go by and the property value increases, the lender cannot simply release more money to you. They must remove that "charge", or as we often say - it must be "discharged", and register a new lien. Using the numbers above, if the property is now worth 600k and the client wants to get 100k back and refinance that mortgage, the lender would have to discharge that mortgage and register a new one, with a higher amount (matching the new amount required). As the market evolved, more products were created to suit different needs of clients in different situations, so some lenders started offering mortgages that would now be secured by a "collateral charge" (instead of a standard mortgage charge), simply because a collateral charge allows the lender to register X amount against the property and the amount could be higher than the mortgage amount being disbursed. In the example I used above, the lender could ask the lawyer to register a collateral charge against the property in the amount of $500k, even though they were only releasing to the client 300k. The potential advantage to the client is that if he needs 100k later on, the current charge registered ALREADY covers up to 500k, so they can adjust the loan without the need to remove the charge and register a new one.
Now the potential downside of a collateral charge - it cannot be moved from lender A to lender B without the assistance of a lawyer or a title company. What this means is that at the end of your term, should you decide to change lenders because you see a better offer with a different lender, even if you have no intention of cashing out any equity, this transfer from lender A to B would be treated as a refinance, and you would be required to pay a lawyer or a title company some fees, around $1000.00 or so. If you only had a simple standard mortgage charge, you could move from A to B without any legal fees, as standard mortgage charges can be transferred without legal services required.
The thing to remember is that a collateral charge will give you some flexibility ONLY if you need to borrow more against the property value, down the road. A standard mortgage charge would not give you that flexibility without extra costs, however if you dont need to borrow more against the equity, it saves you money as you have more freedom to change lenders without legal fees.

About the word "conventional" - It only means a mortgage scenario where the client has 20% downpayment (if purchasing) or 20% equity (in transfers or refinances). Because the lenders do not need to buy mortgage insurance, this loan is called "conventional". In situations where the down payment/equity is less than 20%, you are required to have the loan insured by CMHC/Genworth, and this loan is NOT called "conventional" - this is what we call a "high ratio" or "insured" mortgage. It still has NOTHING to do with the type of charge, as the charge is simply the lien that will be registered against the property, not the type of loan.

Lenders such as TD bank and NBC use only collateral charges. So, the scenarios below are possible :

A - Client is buying a 500k property with 5% down payment - this is not a "conventional" mortgage because it needs to be insured. This will be a "high ratio" or "insured" mortgage, but TD will tell the lawyer to register a collateral charge to secure the loan. As a result, you will have an insured (or high ratio) mortgage attached to a collateral charge.
B - Client is buying a 500k property with 30% down payment - this does not require insurance, so it will be a "conventional" mortgage, and TD will tell the lawyer to register a collateral charge to secure the loan, just like the scenario above. As a result, you will have a conventional mortgage attached to a collateral charge.

If the lender is First National, Industrial Alliance, Mcap, ICICI Bank, Paradigm, and pretty much all other lenders on the broker channel :

A - Client is buying a 500k property with 5% down payment - this is not a "conventional" mortgage because it needs to be insured. This will be a "high ratio" or "insured" mortgage, but these lenders will tell the lawyer to register a standard mortgage charge to secure the loan. As a result, you will have an insured mortgage attached to a standard mortgage charge.
B - A - Client is buying a 500k property with 30% down payment - this is a conventional loan, as it does not require insurance. This will be a "conventional" mortgage and these lenders will tell the lawyer to register a standard mortgage charge to secure the loan. As a result, you will have an conventional mortgage attached to a standard mortgage charge.
-ZdpZ... ;)
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Bigjaye47 wrote:
Dec 9th, 2017 9:46 am
Thanks for the quick and detailed response. Looking at various options for big bank vs outside.

What effect does the home valued more than a million have?

And what are the current 2 yr fixed rates from a bank vs outside?
Lowest 5 year fixed priced over a million would be 3.14% vs. the 2.69% - 2.94% if under a million.

2 year fixed products are not really competitive with non-bank lenders right now. Lowest 2 year would be 2.84%, which would be with a big bank and can be obtained through any regular posting broker on this board.
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My mortgage is coming up for renewal in April 2018. Would like to know what are the best rates available. Details below

House value 1 million
Renewal amount: $315,000
LOC: $350,000
Drawn $180k from LOC.

Current mortgage @2.69 fixed with TD.
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darshitm wrote:
Dec 9th, 2017 12:00 pm
My mortgage is coming up for renewal in April 2018. Would like to know what are the best rates available. Details below

House value 1 million
Renewal amount: $315,000
LOC: $350,000
Drawn $180k from LOC.

Current mortgage @2.69 fixed with TD.
Maximum rate hold for a switch is 90 days, so we are still a little outside of the the maximum rate hold period. As of right now, lowest 5 year fixed for properties valued at $1 million and over would be 3.14%. If the home was valued at under $1 million, it would drop to 2.79%. Note that the value would be confirmed by appraisal, so we can't just say the value is $999,999 to get the lowest rate. If you were to provide me with the address (obviously not publicly on this board), I can see if I can get an idea of where the appraisal might come in at.
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Thornhill
Thanks for the detailed info, appreciate it.
Yeah, i know about the time between occ and closing date, also have to pay a phantom rent for that time period :/ but i guess that's part of the package with new build.

I'm just wondering what kind of rate should i be expecting to get from rbc that they're willing to lock in for 36 months, if you have some insights to those rates?

Thanks



PaulMeredith wrote:
Dec 9th, 2017 8:38 am
Still pretty early to be shopping for rates on this. The maximum rate hold for decent rates (with banks or non-bank lenders) is 120 days. You mentioned your occupancy is August 2018, however you would not get a mortgage at occupancy. With new build condos, there are two closing dates. Occupancy and final closing. Occupancy is the date you take possession of the unit. Final closing date takes place when the building gets registered and that is when you take ownership. It's only that this time when you can put a mortgage on the property. Finally closing can take anywhere from a few weeks (rare) to over a year (also rare) after occupancy. I find in most cases, final closing takes place between 5 -9 months after occupancy.

Pinning down a lender to give you an estimated final closing date is next to impossible. When they try to predict, they are usually way off. I've heard a builder tell a client final closing would take place in 3 weeks, however it ended up being 9 months before it actually took place. So it's quite likely, you'll be getting your mortgage sometime in 2019. Unfortunately, builders usually only give you about 3 weeks notice.

Just get something locked in with a bank right now. You can ask a few what their best rate will be for a longer rate hold, at least 18 months, but 2 years would be safer. Some banks might tell you to come back closer to closing date, while others might tell you they can hold the rate for 3 years, as RBC has mentioned to you. Take the lowest rate, but know that you will definitely be shopping around. A good time to start shopping is when you get occupancy. And who knows? Maybe you'll be one of the lucky few who experience final closing shortly after occupancy. Just don't count on it.

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