• Last Updated:
  • Feb 25th, 2018 4:57 pm
[OP]
Newbie
Jul 7, 2007
26 posts
winnipeg

mortgage advice

hello,

I currently have a mortgage with RBC currently at 2.4% fixed. My renewal date is april 2019. Would it be wise to break my current term and sign up with a 3.8% mortgage? I assume by next april it would be higher than 6%. Also if I did this, would I be able to ask for a 15k loan to pay off debt?

or should I stay the course?
11 replies
Deal Addict
Jan 15, 2017
4118 posts
3623 upvotes
What makes you think that mortgage interest rates will be higher than 6% next year? That's a formidable increase in rates. 5-yr discounted rates are currently around 3%.
Deal Fanatic
Nov 22, 2015
5789 posts
5299 upvotes
shitbrick wrote: hello,

I currently have a mortgage with RBC currently at 2.4% fixed. My renewal date is april 2019. Would it be wise to break my current term and sign up with a 3.8% mortgage? I assume by next april it would be higher than 6%. Also if I did this, would I be able to ask for a 15k loan to pay off debt?

or should I stay the course?
That seems like a crazy rate hike.

It doesn't seem like a good idea no matter which way you look at it...;
Deal Addict
Apr 27, 2004
1015 posts
47 upvotes
You'll take a big penalty breaking your mortgage this far away especially if it's fixed rate.
Deal Fanatic
Nov 22, 2015
5789 posts
5299 upvotes
g_goo_goo wrote: You'll take a big penalty breaking your mortgage this far away especially if it's fixed rate.
This.

It'll be at least a few thousand dollars in pre-payment charges/penalty to break the existing mortgage.
[OP]
Newbie
Jul 7, 2007
26 posts
winnipeg
skeet50 wrote: What makes you think that mortgage interest rates will be higher than 6% next year? That's a formidable increase in rates. 5-yr discounted rates are currently around 3%.
superfresh89 wrote: That seems like a crazy rate hike.

It doesn't seem like a good idea no matter which way you look at it...;
Thank you for both your reply, ratehub has 5 year for 5.89% from rbc. I admit I dont really pay attention to the new rules/news so I was also speculating. If it's still hovering under %4 by next april ill be happy.
Deal Addict
Dec 12, 2009
4776 posts
2370 upvotes
Toronto
shitbrick wrote: If it's still hovering under %4 by next april ill be happy.
Talk to your bank about when you can go in and renew under your contract. Some have a 150-180 day before expiry type clause. That may give you 5-6 months of wiggle room if you are watching rate trends.
Deal Guru
Feb 22, 2011
10460 posts
12985 upvotes
Toronto
shitbrick wrote: Thank you for both your reply, ratehub has 5 year for 5.89% from rbc. I admit I dont really pay attention to the new rules/news so I was also speculating. If it's still hovering under %4 by next april ill be happy.
Ratehub has half a dozen offers for 5 year fixed from 3.44-3.69% including TD & Scotia;

https://www.ratehub.ca/best-mortgage-ra ... =refinance
Deal Addict
Jan 15, 2017
4118 posts
3623 upvotes
shitbrick wrote: Thank you for both your reply, ratehub has 5 year for 5.89% from rbc. I admit I dont really pay attention to the new rules/news so I was also speculating. If it's still hovering under %4 by next april ill be happy.
I suggest that you go to RBC's site and check out rates instead. RBC's posted 5-yr fixed rate on its site is currently 5.14%. No one pays the posted rate as nearly everyone gets a discounted rate. The 5yr fixed discounted rate is 3.54%.

Always go to the source and never a 3rd party site for information.
Newbie
Oct 20, 2017
31 posts
12 upvotes
Ontario
If mortgage rates reaches 6% next year, it would be nearly double from what the rates are today. It would be such a significant jump that many of us would get in trouble come renewal time.

You're currently paying well below the current market rate for another year which is great. I wouldn't recommend breaking your mortgage early due to the penalties you'd incur and because the chances of such a significant jump in mortgage rates is likely very slim.

Keep an eye out for that RBC renewal letter about 4 months before your maturity. If RBC's rates aren't competitive when it comes time for you to renew, you always have the option to switch to a different lender.
Deal Fanatic
User avatar
Feb 2, 2014
8965 posts
2568 upvotes
Toronto
shitbrick wrote: hello,

I currently have a mortgage with RBC currently at 2.4% fixed. My renewal date is april 2019. Would it be wise to break my current term and sign up with a 3.8% mortgage? I assume by next april it would be higher than 6%. Also if I did this, would I be able to ask for a 15k loan to pay off debt?

or should I stay the course?
What is the penalty to break? Without refinancing, best rates start at 2.99% 5-year fixed. But why pay a massive penalty an extra 59bps? Check the penalty and let us know.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative

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