Real Estate

The Official Mortgage Rates Thread

Deal Addict
Feb 9, 2013
1789 posts
675 upvotes
Mississauga
jdu0ng wrote: 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?
bump!
Jr. Member
Apr 30, 2014
171 posts
64 upvotes
Sudbury, ON
PaulMeredith wrote: Fixed moorage rates are determined by bond yields, and yes there was a big drop today. The yields are however not as low as they have been recently. When yields drop like this, it puts downward pressure on rates. This doesn't necessarily means that there will be a drop, just as a sudden increase to yields doesn't necessarily mean there will be an increase. It just means that it is putting pressure on rates in the direction the yields are going. If we continue to see yields drop, then we will likely see a rate decrease. Sometimes rates need to stay at lower levels for some time before they feel comfortable enough to drop the rate.

You can follow the bond yields yourself here: http://www.investing.com/rates-bonds/ca ... bond-yield
Excellent, thanks Paul!
Jr. Member
Dec 21, 2010
197 posts
109 upvotes
jdu0ng wrote: bump!
First you are not paying interest to mortgage broker. You are paying to the bank or credit union, which are public companies usually.

To answer your question, I personally don't see any difference if you have 20% or 35% down payment, mortgage wise. If you can get better return in investment such as stock market than the 2.x% mortgage interest you are paying after tax, i would say don't put that much money as down payment.

On the other hand, it's a guarantee 2.x% interest saving if you put more money into your down payment. Typically saving accounts only earn 0.5-0.8% interest these days and you have to pay tax on interest earned.

You may also want to consider if you have enough money as rainy day funds in case you need it.

The difference in terms of % of downpayment is that if you go lower than 20%, it opens door to high ratio mortgage where you can get even better rates. (Think of that as volume discount) but then you need to pay the chmc insurance, etc.

Hope these help
Deal Addict
User avatar
Dec 1, 2015
1966 posts
918 upvotes
Etobicoke, ON
Make sure you understand the real numbers, all things considered, before you look for a "cashback" deal. This is one of the most (potentially) misleading aspects of a mortgage. For instance, anyone getting a 2.39% and some cashrebate may actually be getting a terrible deal. Let's use the example of a $400k mortgage. The lender with cashback at 2.39% will actually cost you about $3000.00 in additional interest (compared to a 2.24% available through other lenders), so you may essentially be paying $3000.00 to get some $1500.00 or $2000.00 rebate. To make matters worse, if the lender in question is TD Bank,National Bank, Tangerine and some other lenders in some specific cases, you will get a collateral charge that will cost you another $1000.00 to $1200.00 in fees, at the end of your term, if you change lenders.

Someone getting a $1000.00 rebate but also getting a collateral charge is actually assuming a future cost of about $1000.00, so no "real" rebate is being given. It is very easy to make an offer seem attractive that way. For instance, the $400k mortgage at 2.24% (available with regular terms and conditions - actually the terms are better than the big banks and this is NOT a collateral charge) if compared to a very close rate (let's say the bank is offering 2.34%) is still saving you more money than the cash rebate being offered. The same lender at 2.24% could offer you a higher rate and a cash incentive, but in essence you would be "buying" that cash rebate.

There is no free lunch in this business, and in 99% of the cases - any cashback coming to you is actually being paid by you, through a higher interest rate. Make sure you compared the real numbers,all things considered, before accepting a cashback offer.

Cheers!
kevinssmith wrote: Nope. I just basically walked into my bank and told them I'm buying a house and that's the rate they gave. Didn't know I could get cash back.
Andre Oliveira - Mortgage Agent at Valuemortgage
2018 Top 20 National - Mortgage Intelligence
FSCO # 10428
Deal Addict
Jul 23, 2014
1113 posts
274 upvotes
Toronto, ON
CdnRealEstateGuy wrote: What are they offering you for a longer term (ie 5 years)?
Nothing offered for longer term. I guess it's because it's not at 90 days before renew yet and want me to extend for the time being?
Deal Fanatic
User avatar
Feb 2, 2014
7752 posts
2147 upvotes
Toronto
jdu0ng wrote: bump!
I have already replied to your post (see post #33997). It was identical KHKChan's reply, so the answer should be clear.
Kevin Somnauth, CFA
Principal Broker - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
Newbie
Oct 9, 2014
49 posts
18 upvotes
Vancouver, BC
For what it's worth I was offered 2.35% at Scotia with legal and appraisal covered - through a broker. This was a recent special and it may have expired. However (assuming you are talking to Scotia directly) you might want to go to a broker who deals with Scotia regularly to see if that special is still on and they can get it for you.

FWIW I just did a very similar analysis of a monoline vs Scotia for 5 yr fixed for a renewal and stayed away from Scotia exclusively because of the high IRD calculation that all of the big banks use. Even with no plans
to move, there is always a chance that you will break your mortgage sometime during the term. The IRD difference on a 400k mortgage could easily be $5,000 or more. As part of your analysis you might want to just run a couple of mortgage breaking scenarios to see what the difference could be.
Sr. Member
May 22, 2006
769 posts
23 upvotes
Guys, I was offered the lowest 5 years variable at 2.10%, with 3 month penalty. 1.98% is possible with 3% overall penalty. Should I get the 2.10? Is this the lowest at the moment? I read some of you mention 2.05%, what is the penalty rate.
Deal Addict
User avatar
Dec 1, 2015
1966 posts
918 upvotes
Etobicoke, ON
Is this a purchase? switch? conventional? high ratio? Different options will be available to different scenarios.
rongsokan wrote: Guys, I was offered the lowest 5 years variable at 2.10%, with 3 month penalty. 1.98% is possible with 3% overall penalty. Should I get the 2.10? Is this the lowest at the moment? I read some of you mention 2.05%, what is the penalty rate.
Andre Oliveira - Mortgage Agent at Valuemortgage
2018 Top 20 National - Mortgage Intelligence
FSCO # 10428
Sr. Member
May 22, 2006
769 posts
23 upvotes
I am looking for a new purchase. 2.10% is non high ratio. With 3 months penalty. With 300k mortgage. Please pm me if you can offer me
A better deal. Thanks
Deal Fanatic
May 29, 2006
9830 posts
2490 upvotes
jdu0ng wrote: 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?
I would put the 20% down, and park your money in an account that makes interest and Is easily accessible. no point tying up your cash in your house when rates are low like they are now.

for instance I own a cabin, I made the mistake of putting 50% down, I'm trying to sell it right now, and my cash is tied up in the cabin until it sells.
Deal Fanatic
Jul 20, 2006
9089 posts
2627 upvotes
If you sign up for a 2 year closed mortgage, sell your property and go mortgage free by buying something smaller 12 months into the term, do you get charged 12 months interest penalty or some additional fees too?
Deal Guru
User avatar
Aug 8, 2012
10198 posts
3983 upvotes
BC
bobcat99 wrote: If you sign up for a 2 year closed mortgage, sell your property and go mortgage free by buying something smaller 12 months into the term, do you get charged 12 months interest penalty or some additional fees too?
3 months interest or IRD penalty, whichever is higher -- not 12 months interest penalty.

Say you own a $1M property with $300k mortgage remaining and you move into a $700k place.

You could port the mortgage instead of breaking it and paying the penalty, then after the 2yr term comes up 12 months later you could pay it off with the cash you have from the sale.

Depending on penalties and what you can earn on your cash for the next 12 months this could save you money.
e.g. You could deposit $500k to Tangerine as a new client and earn 2.4% for 6 months. You will pay tax on that interest and continue to pay your $300k mortgage and interest on that ... but if the penalty is excessive (big 5 bank) you could still save.
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Sr. Member
May 22, 2006
769 posts
23 upvotes
rongsokan wrote: guys, i was offered the lowest 5 years variable at 2.10%, with 3 month penalty. 1.98% is possible with 3% overall penalty. Should i get the 2.10? Is this the lowest at the moment? I read some of you mention 2.05%, what is the penalty rate.
bump!

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