Real Estate

The Official Mortgage Rates Thread

Newbie
Apr 27, 2007
68 posts
1 upvote
Rosa1234 wrote: Hi everyone

We are first time home buyers near Montreal looking to finance a 275K mortgage (after 20% downpayment) with a 5 year fixed term for payment stability. BMO is offering us their Smart Fixed product with a 2.39% for 5 years. All their standard product options apply with the 10% extra and 10% per year lump sum. The RBC has offered us 2.49% for 5 years, with double-up payments and 10% yearly lump sum. After negotiating with them a bit, they offered 500$ cash as well. We refused the HELOC so it isn't their homeline product, it's a conventional mortgage.

Any advice?
+1. Montreal area, 20% down, 450k, closing date end-November.
I was able to get 2.34 with 1000$ cash back with BMO and their smart mortgage. But I realised later that I can not break the mortgage unless I sell the house. And the penalty that goes with it is significant. So we moved away from BMO smart mortgage.
I shopped around to see if we can find a decent rate with a low/decent breaking penalty (low IRD). The best I could find was First National (@2.49%+no collateral charge+15%/15%+double-up paym. but no cash back).

If anyone has something better with similar or better conditions as above, please PM me.

TIA
GL.
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Feb 6, 2006
156 posts
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Toronto
vepashka wrote: I'm looking to renew my mortgage and wanted to see if any brokers in this thread are able to assist in finding a good rate. My current lender has made a lousy offer, so I'm looking to switch. Here is my situation:

Maturity date: August 24, 2016
House purchase price (in 2011): $300,000
Remaining mortgage amount: $240,000
Location: Ottawa, Ontario
Current lender: ICICI Bank Canada, 5 year variable Prime-0.85%

I prefer short term fixed mortgage (2yr or 3yr). However, I would also entertain the longer term mortgage, provided that rate is good.

Thanks.
I'm in a similar boat... same rate as yours, renewing. I'm heartbroken that the mortgage game isn't churning out the same rate at the moment, despite the weakened economy. I just know that I'll sign and rates will bottom out again.

Anyone getting close to 1.85% 5-yr variable quotes at the moment?
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Feb 6, 2006
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Toronto
CdnRealEstateGuy wrote: Just wanted to let everyone know that I am headed to Mexico tomorrow and will return on July 18th. Best rates in the market are still 2.19% 5-year fixed and 2.00% 5-year variable.
What bank is offering those rates?
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Sep 13, 2011
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jdu0ng wrote: Hi,

I'm very new to mortgage and just purchased my new home.
What is the difference between lower tier mortgage vs. going to the big banks?

I spoke to a colleague, he said National Bank and CIBC typically offered them lower rates. So I plan to check out those banks this weekend.

What are the type of questions I should be asking? What is considered a good rate now?
There are many myths about non-bank lenders (most created by the big banks) such as extra fees, miss a payment and the lender will take your house, brokers charge fees, or if the smaller lender goes out of business then you will be facing a big headache and have to pay all sorts of fees to get out of it.

Nothing of course could be further from the truth. If the small lender happens to go out of business, their mortgage portfolio would just get taken over by another lender. All the same terms and conditions would remain in place and the only difference to you is that the logo on your mortgage statement changes. This can happen with lenders big or small. It happened with ING late 2013 when they were in rough shape and sold out to Scotiabank.

Also, some of these small lenders are also quite large. Industrial Alliance is a publicly traded company that has been around for over 133 years and has over 5,000 employees across Canada. They currently have over $150 billion in assets under their management. RMG Mortgages is owned by the much larger MCAP who is owned by BMO. MCAP currently has $53 billion in assets under their management. First National has a larger mortgage portfolio than National Bank and is a little less than BMO with over $90 billion in assets under administration.

Banks can also have much higher penalties than most non-bank lenders which considering a fixed mortgage rate, which is something that should always be taken into consideration.

http://www.theglobeandmail.com/globe-in ... e15774375/
http://www.cbc.ca/news/customer-fee-to- ... -1.1055127
http://canadamortgagenews.ca/2011/01/04 ... penalties/
http://www.cbc.ca/news/canada/edmonton/ ... -1.2790108
http://www.canadianmortgagetrends.com/c ... lties.html

That being said... spending thousands of dollars more to go with a major bank doesn't make a lot of sense financially. The only real benefit to you is that you can have all your accounts with the same institution and can view them all on the screen together. Not much more.... other than recognizing the logo on your mortgage statement.

What IS more important than the institution you deal with is the person you hire to handle your mortgage for you. There are good and bad on both the bank side and the broker side, so make sure you ask a lot of questions. You can have a great experience dealing with your mortgage or you can have a nightmare, which is why it is never a good idea to choose on rate alone. Choosing the wrong person to handling your mortgage for you, be it on the bank or on the broker side, can end up being a decision you regret later.

Here is a list of good questions to ask:

1. How long have you been doing this for?

I would look for someone who has been in the business full-time for at least three years. If they have been doing it less than that, then you may want to ask a few more questions. You can also ask how many mortgages they have closed. If it is less than 100, I would look for alternatives.

2. Do you do this full or part time?

Don’t deal with anyone who is in the business part time. You want to ensure the person you are working with is committed to their profession and their mind is on YOU, and not on their primary income source. It is also very unlikely that a part-timer would have that much experience. They also may not be as available as you would like them to be.

3. Do you have any references or testimonials?

It is always good to know that the professional you choose has a history of satisfied clients. If they have done a good job for their clients in the past, there is a better chance that they will do a great job for you as well. A Google search on the person or brokerage certainly doesn't hurt either.

4. What kind of education or licensing do you have?

Some professionals will have more education or training than others. Find out how well the person you are dealing with is trained before proceeding.

5. How easy are you to get a hold of? How quickly do you return calls or emails?

There are going to be times when you have questions, and you are going to want to have them answered quickly.

6. What hours are you available?

It can be helpful to know that the person you are dealing with is can be flexible and is willing to work with YOUR schedule, not theirs.

7. How do you get most of your business?

Ideally, most of their business should come from referrals. You want to know that their past clients are happy enough with their services that they are referring them to their friends and family.

8. How are fixed mortgage rates determined?

This is simply a question to gauge their competence level and is something that any quality mortgage professional will know right away. If they can’t answer this, or if they have to ‘get back to you’, then I would move on to the next person. (The answer is bond yields.)

With the exception of #3 and #7, these are all good questions to ask the mortgage specialist at the bank as well.
Hope you find this helpful.
Paul Meredith
Mortgage Broker, Author
CityCan Financial Corp (lic. 10532)
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Feb 2, 2014
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jdu0ng wrote: Hi,

I'm very new to mortgage and just purchased my new home.
What is the difference between lower tier mortgage vs. going to the big banks?

I spoke to a colleague, he said National Bank and CIBC typically offered them lower rates. So I plan to check out those banks this weekend.

What are the type of questions I should be asking? What is considered a good rate now?
Paul gave you questions about choosing a good mortgage broker. I believe your question was about the lender. Here are some considerations:

-Can I break the mortgage early (within the term) and under what circumstances (ie the BMO Smart Plan only allows you to break the mortgage if you sell the property)?
-What is the penalty calculation in case I break early?
-What are the prepayment privileges (20/20 is standard)?
-Is it a collateral or non-collateral charge mortgage (TD, National Bank and Tangerine are all collateral charges)?
-Do you have an online portal for my account?
-Do you offer HELOCs?
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
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Sep 13, 2011
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CdnRealEstateGuy wrote: Paul gave you questions about choosing a good mortgage broker. I believe your question was about the lender. Here are some considerations:

-Can I break the mortgage early (within the term) and under what circumstances (ie the BMO Smart Plan only allows you to break the mortgage if you sell the property)?
-What is the penalty calculation in case I break early?
-What are the prepayment privileges (20/20 is standard)?
-Is it a collateral or non-collateral charge mortgage (TD, National Bank and Tangerine are all collateral charges)?
-Do you have an online portal for my account?
-Do you offer HELOCs?
With the exception of #3 and #7, the other questions would apply equally for applying to a bank as well. I'll update the post so it is a bit more clear. Thanks!

These are also some good questions. When asking about the penalty calculation, always ask how their penalty calculation compares with other lenders. If they try to tell you that they are all the same, then they are either not being truthful with you, or they don't understand that their are differences, which is an indication of lack of experience.
Paul Meredith
Mortgage Broker, Author
CityCan Financial Corp (lic. 10532)
Newbie
May 26, 2011
92 posts
43 upvotes
Toronto
brutus99 wrote: Yes it's for renewals only and those who have 85 bpts or higher currently and needs to be signed 31 days or more before renewal date. That's what I was told and there's also $250 cashback with this offer or higher if larger mortgage amount.
I received a call about 1.99% offer as well but nothing about cashback. Do you know how large mortgage amount qualifies for the cashback?
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Jul 20, 2006
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Any disadvantages to having a high secured line of credit. I have borrowed out of the existing secured line and would like to roll into the mortgage, but according to the bank the mortgage has to be refinanced to waive any related fees the line of credit has to be increased.
Member
Jul 28, 2002
364 posts
Alliston
Any of the experts have any thoughts on going with a 2y fixed 1.99 vs 5y variable at prIme -.7
CreamX
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Feb 2, 2014
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bobcat99 wrote: Any disadvantages to having a high secured line of credit. I have borrowed out of the existing secured line and would like to roll into the mortgage, but according to the bank the mortgage has to be refinanced to waive any related fees the line of credit has to be increased.
Since you are increasing the mortgage amount, it is a refinance as a new charge has to be registered.

Just a note, if you do keep the HELOC when you refinance, you will likely have a collateral charge mortgage (you can't switch for free).
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
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Feb 9, 2013
1801 posts
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Mississauga
With the low interest rates for mortgage now, is it wise to put min. 20% to avoid CHMC insurance? This means borrowing 80% which the mortgage broker will love.
Or should I put as much as I can, say 35% then I don't need to borrow as much, in return not having to pay as much interest to mortgage broker?
Jr. Member
Apr 4, 2013
159 posts
61 upvotes
Hi Everyone,

Could someone please kindly write about a few important questions to ask any lenders to understand whether their IRD charges (penalty) is in a low end or high end?

I did some research and found the link below but there are too many here wondering if someone can shorten OR add some on top of it?

http://www.theglobeandmail.com/real-est ... le4545693/

Thank you in advance
Member
Dec 21, 2010
202 posts
112 upvotes
gs1905 wrote: Hi Everyone,

Could someone please kindly write about a few important questions to ask any lenders to understand whether their IRD charges (penalty) is in a low end or high end?

I did some research and found the link below but there are too many here wondering if someone can shorten OR add some on top of it?

http://www.theglobeandmail.com/real-est ... le4545693/

Thank you in advance
I doubt if you can directly get an answer from front line agents about IRD.

I have mortgage with TD and I need to call in their mortgage call center to get an exact figure of IRD with me providing proposed settlement date (the date I want to break my mortgage). With interest rates changes, remaining term on your mortgage change daily and your mortgage balance changes every day, it's pretty darn hard to get an exact figure.

TD has an online estimator here: https://tools.td.com/mortgage-prepaymen ... arted.html but my exact figure and estimated figure differ by about $1000 (with my exact figure is less).

I believe all banks is now required to provide an IRD estimator online.

Generally speaking, if posted rates of your bank is lower, you will get a lower IRD. Another variable is the discount you receive when you start your mortgage. The lower the discount the better IRD. If you pay more frequently (weekly instead of monthly, you will get a lower IRD).

Another way to avoid is to do a shorter term fixed mortgage or go variable.
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Sep 13, 2011
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gs1905 wrote: Hi Everyone,

Could someone please kindly write about a few important questions to ask any lenders to understand whether their IRD charges (penalty) is in a low end or high end?

I did some research and found the link below but there are too many here wondering if someone can shorten OR add some on top of it?

http://www.theglobeandmail.com/real-est ... le4545693/

Thank you in advance
You just need to ask if how they calculate the IRD penalty. There are three ways of doing this:


1. Based on the contract rate (the rate you are paying on your mortgage). This is the best and most fair way for a lender to calculate IRD penalty.

2. Using a re-investment rate. Using this method, you'll likely end up paying an inflated IRD penalty if bond yields are particularly low compared to the rate you are paying.

3. Based on the posted rate. This is the method that ALL the big banks use. Because they are basing their IRD penalty on a much higher rate, the result will be an inflated penalty. On top of this, they tack on the discount you were given as well to drive the penalty up even further.

The lenders with the harshest penalties are:

- National Bank
- BMO
- RBC
- CIBC
- TD
- Scotiabank
- Industrial Alliance

The lenders with more mid-range penalties are:

- Alterna Savings
- ICICI Bank

The lenders with the lowest penalties are:

- First National
- Street Capital
- Merix/Lendwise
- MCAP
- Canadiana Financial (depending on product)
....among others
Paul Meredith
Mortgage Broker, Author
CityCan Financial Corp (lic. 10532)
Newbie
Oct 9, 2014
49 posts
18 upvotes
Vancouver, BC
I have a question about insurance.

I live in BC so overall property value and mortgage value is way more than value of the house (either by insurance estimate or BC assessment).

So one lender was trying to get me to insure my house for 2X its replacement value to match the mortgage value. I don't know if that's even really possible on the insurance side.

Does this make sense? It hasn't come up with other lenders.

Thanks in advance...

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