Real Estate

The Official Mortgage Rates Thread

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Jan 31, 2018
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stallion4life wrote:
Feb 4th, 2019 9:46 pm
Rental property vs 2nd home.
I am in the market to purchase a rental property, I have a friend telling me to get the mortgage as a 2nd home for a better rate and longer amortization. I have 2 main question....

1. Are interest rates higher on rental properties than on 2nd homes?

2. What is the max amortization on both products?

I would still register as a rental on my taxes, just trying to get the lowest rate and the longest amortization.

To answer see below

1. Are interest rates higher on rental properties than on 2nd homes?

Rental properties have much higher rates than owner occupied / 2nd homes (same rates)

You can do the 2nd home with less than 20% down vs rental min 20% downpayment

2. What is the max amortization on both products?

With 20% down on either product you can do 30 yrs if you wish but on the 2nd homes prefered rates at 25yrs

Less than 20% down on the 2nd home max 25yrs

Phil
Phil Cragg
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Mortgage Outlet Inc Broker License #12628
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Nov 24, 2015
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rateconnect wrote:
Feb 4th, 2019 10:28 pm
To answer see below

1. Are interest rates higher on rental properties than on 2nd homes?

Rental properties have much higher rates than owner occupied / 2nd homes (same rates)

You can do the 2nd home with less than 20% down vs rental min 20% downpayment

2. What is the max amortization on both products?

With 20% down on either product you can do 30 yrs if you wish but on the 2nd homes prefered rates at 25yrs

Less than 20% down on the 2nd home max 25yrs

Phil
So if I understand it correctly, although one will get a better rate if they put it as a "second home" they will still have to qualify based on their ability to carry both mortgages.

On the other hand, if they put it as a rental, depending upon the lender, some or all of the rental income may be used to qualify.

Something to consider.
Newbie
Nov 7, 2009
3 posts
Victoria, BC
Hi, I just need some advise. I have two properties that are both coming up for renewable mortgages at ScotiaBank. One property is owned by my wife and I and the mortgage will be under $100K, the second is a rental with a mortgage of $294K that I own with my daughter. We have always gone with variable we have a LOC on both properties but we have never used it. Currently we are paying 3.42% variable. 25 years is left on the rental and 9 years on the residence house when they come up for renewal in May 2019. What I want to do is increase the mortgage on the principal residence by $30K and put a rental suite in the basement. Scotia is bugging me almost on a weekly basis to renew but it looks like they are no longer competitive with the market. I am currently retired on a govt pension, CPP, OAS and have a RIF along with the income from the rental so financially we are fine.

The advice I need:

1. Should I go to a mortgage broker and see if I can get a better deal and would another company pay the transfers to move the mortgages?
2. Would I get a better deal if I no longer have a HELOC on the properties?
3. If I go to a broker does anybody have any recommendations for Victoria, BC?
4. Should I start the process now or wait a month or two when we are closer to May 2019

Many thanks for any suggestions. Cheers Dave
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Natasha321 wrote:
Feb 5th, 2019 12:26 am
So if I understand it correctly, although one will get a better rate if they put it as a "second home" they will still have to qualify based on their ability to carry both mortgages.

On the other hand, if they put it as a rental, depending upon the lender, some or all of the rental income may be used to qualify.

Something to consider.
Yes, but never is all of the rental income used. In most cases, it's only 50%. Also, if you are stating that it is a second home, then it has to make sense. It's not as simple as just indicating it's a second home and that's the end of it. Lender will want to feel comfortable with the fact that it is in fact a second home and not going to be rented out. For example, what is the purpose of the second home? Who is going to be living in the new property?
Paul Meredith
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PaulMeredith wrote:
Feb 5th, 2019 7:04 am
Yes, but never is all of the rental income used. In most cases, it's only 50%. Also, if you are stating that it is a second home, then it has to make sense. It's not as simple as just indicating it's a second home and that's the end of it. Lender will want to feel comfortable with the fact that it is in fact a second home and not going to be rented out. For example, what is the purpose of the second home? Who is going to be living in the new property?
Good to know. Thanks.
Newbie
Mar 10, 2010
3 posts
Oshawa
New to here just looking for some info before i start browsing for a new house. My wife and i are in the market for a bigger house so we're looking to sell our current place and move. We're looking in the <=450k range for the new house and we're hoping to have around 175k as a down payment from the sale of our current house. I'm currently with Meridian near the end of our first 5 year term(up in october) and im wondering what my best option is for rates whether it be with Meridian still or with another place.
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Sleekfire wrote:
Feb 5th, 2019 10:10 am
New to here just looking for some info before i start browsing for a new house. My wife and i are in the market for a bigger house so we're looking to sell our current place and move. We're looking in the <=450k range for the new house and we're hoping to have around 175k as a down payment from the sale of our current house. I'm currently with Meridian near the end of our first 5 year term(up in october) and im wondering what my best option is for rates whether it be with Meridian still or with another place.
You would be eligible for some fantastic rates once you firm up on a property

5 yr variable prime - 1.15% or 2.80%

5 yr fixed 3.29%

Reach out to any of the brokers once you have a firm offer

Phil
Phil Cragg
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Feb 4, 2019
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Hello,

New first-time owner in Ontario. My spouse and I purchased a new build home in September 2017. We gain possession of the home in June 2019, less than 120 days. What are the best rates available to us?

- What is the target purchase price? 463k
- How much is the down payment ready? 121k
- Where will the target property be located? Ottawa
- Will the property be owner-occupied or a rental? Owner occupied
- Family gross income: 125K

Thank you!
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Pickupjr wrote:
Feb 5th, 2019 10:37 am
Hello,

New first-time owner in Ontario. My spouse and I purchased a new build home in September 2017. We gain possession of the home in June 2019, less than 120 days. What are the best rates available to us?

- What is the target purchase price? 463k
- How much is the down payment ready? 121k
- Where will the target property be located? Ottawa
- Will the property be owner-occupied or a rental? Owner occupied
- Family gross income: 125K

Thank you!
Congratulations on the new home

Very best rates below

5 yr fixed 3.39% 120 day hold

5 yr variable 3% or prime - .95% 120 day hold

Many thanks

Phil
Phil Cragg
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Mortgage Outlet Inc Broker License #12628
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Pickupjr wrote:
Feb 5th, 2019 10:37 am
Hello,

New first-time owner in Ontario. My spouse and I purchased a new build home in September 2017. We gain possession of the home in June 2019, less than 120 days. What are the best rates available to us?

- What is the target purchase price? 463k
- How much is the down payment ready? 121k
- Where will the target property be located? Ottawa
- Will the property be owner-occupied or a rental? Owner occupied
- Family gross income: 125K

Thank you!
As Phil mentioned, 3.00% 5-year variable (Prime -.95%) and 3.39% 5-year fixed are the best rates. Keep in mind, you can get even lower rates if you can put 30% down.
Kevin Somnauth, CFA
Owner/Principal Broker - First Toronto Mortgage - Mortgage Architects (#13176)
Real Estate Salesperson - Century 21 Innovative
President's Club Award Winner At The Mortgage Architects
Newbie
May 8, 2015
1 posts
hi, I would appreciate if someone could shed some lights on my questions. I recently bought a new built from a builder, closing date is in April 2020. During the purchase, I was approached by a bank mortgage specialist, he offered to apply for a pre construction mortgage approval, which could lock down the rate at a bit higher for up to 18 months. Once it is approved, there is no need to worry about surprises prior to closing such as job loss, reduced income etc, and there is no requirements to provide additional proof of income before closing if it is within 18 months. I thought it is good idea and applied and got approval in about 2 weeks. My question is "whether I am obligated to do my mortgage with this bank as I need to sign the approval letter or I could still go with another bank before closing for a better rate or different terms? " Thanks very much.
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Jul 8, 2013
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Red Deer, AB
PaulMeredith wrote:
Feb 4th, 2019 2:49 pm
Not a silly question at all! No such thing. :) The assessed value is always irrelevant as it's not a good indicator of value. Appraisals are usually used to determine value, however even if the appraisal were to come in high in this case, it would not make a difference as the purchase price is what would be used to determine rate.

If you were to take a 2 year mortgage, and if the value of the property was over $1 million in 2021, then you would no longer qualify for lower rates. They home would have to have been purchased prior to November 30, 2016 for current value to be a non-issue.

When renewing a mortgage at the end of a term, be it with the same lender, or switching lenders, the maximum amortization that can be used is the remaining amortization based on years passed on the calendar. So if you started with 25 years and two years has passed, then the maximum would be 23 years. Lower remaining amortization based on additional payments made, or accelerated payments would not be an issue. It's based on calendar years passed.

You always lower your amortization but you cannot increase it.

Let me know if this answers your questions or if there is anything I can clarify for you.
Just to clarify, even if I switch lenders then I cannot increase the amortization rate back to 25?

Can I not simply get a HELOC for the full remaining balance (down payment is more than 40%) and then convert that to a 25-year mortgage shortly after?
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Nov 24, 2013
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TuxedoBlack wrote:
Feb 5th, 2019 1:16 pm
Just to clarify, even if I switch lenders then I cannot increase the amortization rate back to 25?

Can I not simply get a HELOC for the full remaining balance (down payment is more than 40%) and then convert that to a 25-year mortgage shortly after?
Extending the amortization is considered a "refinance" and not a "switch." The previous mortgage is discharged, a new one is registered, and there's extra costs that go with that.
Newbie
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Feb 4, 2019
1 posts
Scarborough, Ontario
Looking for the best rates for 5 years

-Household income: Around 90 K
-Purchase price: $600,000
-How much is the down payment? 20%
-Where it the property located? Brampton, Ontario
-When is the closing date? TBD
-Will the property be owner-occupied or a rental? Owner occupied

Thank you
Member
Dec 28, 2010
341 posts
85 upvotes
Toronto
Looking for advice from seasoned landlords. I am just starting in this.
If renewing a mortgage for rental - does it make sense to shop around for a difference of .40%
For example getting a straight renewal of 3.65% or if I do some run around, paperwork night get 3.25 with other lenders.

Have read and heard from friends in finance, that interest on rental property mrtg is a right off and so unless it's really worth shopping one should care about it.
The loan amount is 400k if that helps. thanks.

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