Real Estate

The Official Mortgage Rates Thread

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Sep 13, 2011
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Hellfire wrote: The Scotia step guy cracks me up. If they were comparing apples to apples they would see how wrong they are. Someone post the prepayment allowed on the P-0.9% variable rate mortgage so he can do his math correctly.
Prepayment on the 2.10% is 20%, so on a $400K mortgage, you can pay $80,000 per year over and above your scheduled payments. With this product, you can increase your payments by 20% as well... over and above the $80K lump sum... and there is no limit to how many times you can make the lump sum payments (as long as they don't exceed the 20%... or $80K in this case).
Paul Meredith
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michty6 wrote: Haha this is quite amazing. I really don't think it's that complicated. Ok let me expand the example and fully talk through the situation and product so everyone is crystal clear.

Someone needs $400k of funding. That is, they need to borrow $400k. Lets say they are buying a $500k house and are putting a downpayment of $100k. So they need $400k from a lender.

Option 1 = Standard mortgage at 2.1% for the full $400k for a 5 year term
Option 2 = Scotiabank STEP which lets you split this into a standard mortgage at 2.3% for $320k and a HELOC for $80k (which is obviously maxed out to begin with) at 3%
I am pretty good at math, but I dont get your concept. In option 2, if you make periodic payments towards both mortgage and HELOC, then the effective rate should be 2.44% (weighted avg of both rates).

Initially, I thought you are trying to describe the Smith Manoeuvre. There are multiple ways to use STEP, but one way to reduce the effective HELOC rate is Smith Manoeuvre. (you need to invest but lets skip that part for now). The trick there is that you get tax deduction from CRA and the tax break actually reduces your HELOC rate. The effective rate is HELOC rate X (1 - marginal tax rate).

Even this strategy has to have some trick (cash back, tax break or something else) so that the effective rate is less than the actual rate. I dont clearly see that trick here.
Newbie
Dec 24, 2005
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Hi Brokers,

I am looking for mortgage for a rental property, I will be putting down 20% on this property. The mortgage amount is $410,000. Please PM to discuss.

Thank you,
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Nov 14, 2005
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Guppy wrote: Hi Brokers,

I am looking for mortgage for a rental property, I will be putting down 20% on this property. The mortgage amount is $410,000. Please PM to discuss.

Thank you,
Many lenders require 25% down on rental properties, thus to get the best rental rate you should consider increasing your downpayment if possible.
_______________
Shawn Stillman, CA, CPA Mortgage Broker
Mortgage Outlet Inc. 12628 (FSCO - Ontario), X300374 (FICOM - BC), MW-1411078 (RECA - Alberta)
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GSRee wrote: Someone already mentioned it was $80,000. (Sorry for not crediting, but I'm too lazy to scroll back up!)
PaulMeredith wrote: Prepayment on the 2.10% is 20%, so on a $400K mortgage, you can pay $80,000 per year over and above your scheduled payments. With this product, you can increase your payments by 20% as well... over and above the $80K lump sum... and there is no limit to how many times you can make the lump sum payments (as long as they don't exceed the 20%... or $80K in this case).
20% prepayment privileges? Nice... might have to jump on the rate myself for an upcoming renewal for a TO property I have.
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Mar 10, 2009
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Need advise. I'm from TO and my mortgage is coming up for renewal this month, but we're planning on selling the house within 6 months and won't require a mortgage until late 2016. Should we get a 6 month term? Currently, we're with Scotia. What would be the best route? Thanks!
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Jul 23, 2014
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Triple675 wrote: Need advise. I'm from TO and my mortgage is coming up for renewal this month, but we're planning on selling the house within 6 months and won't require a mortgage until late 2016. Should we get a 6 month term? Currently, we're with Scotia. What would be the best route? Thanks!
6 month term would be a high interest rate and not to mention what if you don't sell within the time frame?

How about an OPEN variable x-term mortgage? Maybe an expert can chime in on the details :)
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Mar 4, 2013
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Kingston
Triple675 wrote: Need advise. I'm from TO and my mortgage is coming up for renewal this month, but we're planning on selling the house within 6 months and won't require a mortgage until late 2016. Should we get a 6 month term? Currently, we're with Scotia. What would be the best route? Thanks!
Line of Credit is your best bet. Payout without fee. Alternatively, you can get a open term for 6 months, but at higher rate, likely 6.5%. Variable would be subject to 3 months interest. It's key to know balance to determine the most cost effect method. Also, another thing to consider is what happens if you can't sell in 6, and in turns into 8 or 9 months.
Brandon Lowi - Mortgage Agent - The Mortgage Professionals - Lic.#10280
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RFD6482 wrote: 6 month term would be a high interest rate and not to mention what if you don't sell within the time frame?

How about an OPEN variable x-term mortgage? Maybe an expert can chime in on the details :)
6 Month term will at 4.00-4.55% depending on the bank for $300K. It's a Flexible term so I can renew early, but if we can't sell within the time frame then Line of Credit might be an option.
BrandonLowi wrote: Line of Credit is your best bet. Payout without fee. Alternatively, you can get a open term for 6 months, but at higher rate, likely 6.5%. Variable would be subject to 3 months interest. It's key to know balance to determine the most cost effect method. Also, another thing to consider is what happens if you can't sell in 6, and in turns into 8 or 9 months.
You're correct, open term would be around 6.5% and will end up paying more initially compare to say 1 year fixed with penalty fee of 3 months interest. So, what would be the best way to deal with this scenario?
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Jul 23, 2014
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Triple675 wrote: 6 Month term will at 4.00-4.55% depending on the bank for $300K. It's a Flexible term so I can renew early, but if we can't sell within the time frame then Line of Credit might be an option.



You're correct, open term would be around 6.5% and will end up paying more initially compare to say 1 year fixed with penalty fee of 3 months interest. So, what would be the best way to deal with this scenario?
I guess another option would be to just get a regular term mortgage and when you sell your house, you can port it over? If your new house is more than your current mortgage, you can apply for a secondary mortgage for the remaining balance.

Unless you intend to rent/move instead... then this option doesnt work
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Triple675 wrote: 6 Month term will at 4.00-4.55% depending on the bank for $300K. It's a Flexible term so I can renew early, but if we can't sell within the time frame then Line of Credit might be an option.



You're correct, open term would be around 6.5% and will end up paying more initially compare to say 1 year fixed with penalty fee of 3 months interest. So, what would be the best way to deal with this scenario?
Let's take a close look at your options:

- 1 year fixed @ 2.89- you will pay the higher of 3 months interest or the IRD when you break.
- An open mortgage will carry a ridiculous interest rate.
- Line of credit at 3.50%
- 5 year variable at 2.10%

The first two options are out, leaving us with the LOC and variable as our options. The LOC will cost over $4K in additional interest for 6 months over a 5 year variable at 2.10%. The variable at this rate is fully closed, but since you are selling your home, it doesn't matter, and you will be able to break it with just 3 months interest penalty. The cost to you with the variable will be less than half what the line of credit will cost.
Paul Meredith
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(lic. 10532)
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Jan 5, 2015
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Hey guys. What the heck? I am reading this thread . Your back east? Why are you getting ripped off? Our banks and credit unions are offering 5 year opens for as low as 2.35 and fixed 5 year for 3.75
Deal Guru
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Feb 2, 2014
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Shawn, this guy is a fellow CA....are you not going to back him up on this???
callmethecat wrote: Death, Taxes and Sslinn's mortgage math

3 things I don't question.
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
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callmethecat wrote: Death, Taxes and Sslinn's mortgage math

3 things I don't question.
CdnRealEstateGuy wrote: Shawn, this guy is a fellow CA....are you not going to back him up on this???
Sorry I'm as confused as the rest of you.
_______________
Shawn Stillman, CA, CPA Mortgage Broker
Mortgage Outlet Inc. 12628 (FSCO - Ontario), X300374 (FICOM - BC), MW-1411078 (RECA - Alberta)
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Branches actually give pretty decent open mortgage rates....I think you will be surprised what you can get from them. Not too long ago, I got Prime -25bps through RBC (a contact there as they don't work with brokers) for a client.
PaulMeredith wrote: Let's take a close look at your options:

- 1 year fixed @ 2.89- you will pay the higher of 3 months interest or the IRD when you break.
- An open mortgage will carry a ridiculous interest rate.
- Line of credit at 3.50%
- 5 year variable at 2.10%

The first two options are out, leaving us with the LOC and variable as our options. The LOC will cost over $4K in additional interest for 6 months over a 5 year variable at 2.10%. The variable at this rate is fully closed, but since you are selling your home, it doesn't matter, and you will be able to break it with just 3 months interest penalty. The cost to you with the variable will be less than half what the line of credit will cost.
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
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Ummm, we are offering 2.10% 5-year variable and 2.69% 5-year fixed. What are you referring to?
dollarinmypocket wrote: Hey guys. What the heck? I am reading this thread . Your back east? Why are you getting ripped off? Our banks and credit unions are offering 5 year opens for as low as 2.35 and fixed 5 year for 3.75
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
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He is going to sell his house in 6 months and buy in 2016....can't port, too long of a gap.
RFD6482 wrote: I guess another option would be to just get a regular term mortgage and when you sell your house, you can port it over? If your new house is more than your current mortgage, you can apply for a secondary mortgage for the remaining balance.

Unless you intend to rent/move instead... then this option doesnt work
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
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6.5%!!! I guess that's what Paul was referring to when he said an open mortgage is out of the question! You can do much better than that! I would talk to them again.
Triple675 wrote: 6 Month term will at 4.00-4.55% depending on the bank for $300K. It's a Flexible term so I can renew early, but if we can't sell within the time frame then Line of Credit might be an option.



You're correct, open term would be around 6.5% and will end up paying more initially compare to say 1 year fixed with penalty fee of 3 months interest. So, what would be the best way to deal with this scenario?
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
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Oct 1, 2006
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PaulMeredith wrote: Prepayment on the 2.10% is 20%, so on a $400K mortgage, you can pay $80,000 per year over and above your scheduled payments. With this product, you can increase your payments by 20% as well... over and above the $80K lump sum... and there is no limit to how many times you can make the lump sum payments (as long as they don't exceed the 20%... or $80K in this case).
Just to clarify. Does this mean that I once I got this mortgage I could make for example each month a lump sum payment of 6.7K ($80k/12). Thanks.
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Feb 2, 2014
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Trust me, Laptop, Paul, Sean, Sslin, and myself understand simple math and what an effective rate is.

I think what you are trying to reference is the Smith Maneuver....I know Dominion Lending pushes this product. There are several of posts about that here and also a very lengthy thread on this site about it. Having said that, you explanation of the Smith Maneuver is way off.

michty6 wrote: I don't know how else to explain this other than showing you numbers and breaking it down even further...
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative

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