Real Estate

The Official Mortgage Rates Thread

Sr. Member
May 9, 2012
793 posts
195 upvotes
Montreal
PaulMeredith wrote: Thanks for the info. With a 20% down payment, the lowest 5 year fixed rate would be 1.79%.

Great question as well! There is a lot more to a mortgage than just rate, and choosing a mortgage based on rate alone can be a costly mistake.

I suggest speaking with both a bank and a broker. Get a feel for the way each operate and get pricing quotes from each. Just keep in mind you should never have to fill out an application and do a credit check just to receive a mortgage rate quote. There is no need to fill out multiple applications with different banks and brokers. Do your shopping first, make a selection, then fill out your application with that person.

Here are some key things to keep in mind when making your final choice. 

When dealing with a bank, they can only talk about their products and their services. They are not going to tell you if there is another option available through a different lender that may be better suited to you. Brokers deal with non-bank lenders as well as major banks, so they can tell you specifics about each lender and what makes one better than another. In a sense, a broker is more of a one stop shop. You can shop many lenders with just a single credit check. 

Having access to so many different lenders allows us to get lenders competing for your business. I you walk into BMO for example, they aren't going to tell you if Scotiabank has a lower rate than they do. Why would they? Brokers can take you to the lenders that have the lowest rates, right from the beginning, which is what the regular posting brokers on RFD specialize in (not every broker does this... yet they all say they do). 

With a broker, the entire process can usually be done by phone, fax and email. 99% of the time, there is no need to even have a face to face meeting. 

Some advantages to banks are that they have branches on every corner, but with today's technology, it's becoming less and less important to more and more people. Millennials in particular. If you have your other accounts with them, you can view them all on the same page. 

Lastly, they have a recognizable brand name, which really doesn't do anything for you at all.

For many brokers, it's not just our job. It's a career. And it's even more than just that. For many of us, it's our calling. It's what we are passionate about, and this passion will not go unnoticed by you. This is why so many of us can be reached evenings and weekends and we're usually pretty quick to answer your questions. 


LENDER DIFFERENCES
Now that we've covered the differences between dealing with a bank directly vs. dealing with a broker, let's take a look at some of the key things to look for in choosing which lender to deal with. Here is a list of common restrictions found with common mortgage lenders, and which lenders carry these restrictions: 

- Bonafide sale clause. This is where you can only break the mortgage before the end of the 5 year term if you sell your home. (some products with MCAP, CMLS and BMO). 

- Higher than normal penalties to break the mortgage early (Industrial Alliance, and some products with Merix and RMG. Plus, all of the big banks on fixed rate mortgages (penalties to break a mortgage with the big banks can be as much as 500% higher than most non-bank lenders).

- Limited prepayment privileges (Industrial Alliance, RBC, and some products with BMO. Most banks will also limit you to making lump sum payments only once per year)

- Higher than industry prime rate (TD). 

- Collateral mortgages (TD, Tangerine, National Bank, and often HSBC. Plus, a mortgage from any lender that contains a HELOC or second component of any kind). 

- Variable rate mortgage that is compounded monthly as opposed to semi-annually (TD, RBC, BMO, CIBC, National Bank, Merix/Lendwise, and CMLS). 

-Lack of bridge financing (Equitable Bank)

The above covers just about everything. Aside from that, most mortgages are fairly similar. Keep in mind this is a heavily regulated industry. There are many myths about non-bank lenders (most likely 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. 

I mentioned above that big banks have much harsher penalty formulas if you found yourself in a situation where you needed to break your mortgage early (fixed rates only). Here are some articles: 

https://www.theglobeandmail.com/investi ... r-penalty/

https://www.ratespy.com/fair-penalty-le ... s-05109252

https://www.theglobeandmail.com/investi ... l_U05HPbp0

http://www.theglobeandmail.com/…/the-hi ... e15774375/

http://www.cbc.ca/…/customer-fee-to-pay ... age-double

http://canadamortgagenews.ca/…/mortgage ... s-exposed-…/

http://www.cbc.ca/…/td-bank-client-deva ... 17-000-mor

http://www.canadianmortgagetrends.com/… ... ion-lawsui



CHOOSING A MORTGAGE PROFESSIONAL
There is a lot more to getting a mortgage than just rate. The lender you choose is important, and the person you choose to handle your mortgage for you can be equally as important. Purchasing a home is the biggest purchase you will ever make, so it's important choose the right person to handle your mortgage for you. You can have a great experience with your mortgage, or you can have a nightmare. 

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 a couple of years. If they have been doing it less than that, then you may want to ask a few more questions to ensure they are working closely with someone who has experience. You can also ask how many mortgages they have closed, which is more important than time. This will give you an idea of how active they have been. You could speak with someone that tells you they have been doing it for 10 years, but may only do 2 or 3 deals a year. Doesn't exactly make them a seasoned mortgage expert. 

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. (this question really applies to brokers. Unlikely a bank mortgage person will have any testimonials). 

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? 
This is a good one to ask everyone. 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, which is the key influencer of fixed rates.) 

Hope you find this helpful! :)

Paul
Great insight! Thanks for the helpful tips!
Sr. Member
May 9, 2012
793 posts
195 upvotes
Montreal
Can someone explain collateral mortgage? And which banks have/don’t have them?
-is it something to watch out for? How would I know if it in my mortgage agreement?
Newbie
Sep 21, 2020
4 posts
For a mortgage transfer/renewal:

-How much is the mortgage owing?

about 225,000.00 CAD

-Roughly, what is the current market value of the property?

250,000.00 CAD

-Which city is the property located in?

Sylvan Lake, Alberta

-Is the property owner-occupied or a rental?

Owner occupied

-Who is your current lender?

Lendwise

-Do you have a HELOC tied to the mortgage?

No

-Is the mortgage CMHC insured?

Yes

-When did you buy the property?

20/11/2015

-When is your renewal date?

20/11/2020

Thank you very much!!!
Newbie
Sep 21, 2020
4 posts
For a mortgage transfer/renewal:

-How much is the mortgage owing?

about 225,000.00 CAD

-Roughly, what is the current market value of the property?

250,000.00 CAD

-Which city is the property located in?

Sylvan Lake, Alberta

-Is the property owner-occupied or a rental?

Owner occupied

-Who is your current lender?

Lendwise

-Do you have a HELOC tied to the mortgage?

No

-Is the mortgage CMHC insured?

Yes

-When did you buy the property?

20/11/2015

-When is your renewal date?

20/11/2020

Thank you very much!!!
Member
Mar 14, 2018
419 posts
297 upvotes
PaulMeredith wrote: Thanks for the info! Lots of questions here, so i'll do my best to address them all for you.

Yes, your calculation is correct for determining your HELOC limit. You can go up to 80% of the property value (less mortgage amount owing) providing that the HELOC itself does not exceed 65% of the value.

If you add a HELOC with a different lender, you would need to re-apply to increase your limit. This would result in additional legal and appraisal fees. I generally suggest using Simplii Financial for this. Their fees are quite low, and they may not require an appraisal. They are also usually good to go in behind a mortgage from just about any lender.

HELOC rates are generally prime +0.50% (2.95%). There is really no range here. If you were to apply with a bank, it's possible that they could offer you a little lower, but that is not a likely scenario. In 2nd position (meaning you are getting a HELOC from a different lender than your mortgage), the rate will be prime +0.50%. Nothing lower. Simplii is your best bet here, as mentioned.

You're correct that the penalty to break a fixed rate mortgage with a major bank can be significantly higher than most other lenders. In fact, they can be as much as 900% higher. There are some non-bank lenders who offer HELOCs, but options are more limited. The lowest 5 year fixed for a readvanceable mortgage up to 80% of the value would be 1.99%. If you kept the HELOC and mortgage combination to 65% of the property value, the rate would drop to 1.79%. HELOC limit would then auto increase as the mortgage is paid down.

If you were to get a mortgage without the HELOC, then the lowest 5 year fixed rate would be 1.64%. Pretty big difference, which is why I usually suggest adding the HELOC afterwards, as long as you are okay without having the limit auto increase as the mortgage is paid down. This will save you the most money if this works for you.

As you're aware, whenever you add a HELOC to your mortgage, it will get registered as a collateral charge mortgage. The biggest drawback to a collateral charge mortgage is that if you want to switch to a different lender at the end of your term, there are additional 3rd party fees involved such as legal (approximately $600 in Alberta) and appraisal (approximately $300). With a standard charge mortgage, which is what most lenders offer, these fees are covered by the lender. These days however, most lenders have collateral switch programs where these fees can be covered for you, however the rate is often 0.05% higher.

The benefit to a collateral mortgage is that it can give you the option to register the mortgage for up to 125% of the mortgage amount. This way, if you wanted to refinance at any time during the term, the mortgage is already registered at a higher amount to accommodate the refinance, which means a new mortgage would not need to be registered. This saves you on the legal fee. I had one client in the past who registered their mortgage for the full amount, but ran into some personal issues and their credit took a beating. Their bank then turned them down for the additional financing. They were not able to pursue any other second mortgage options as their bank was occupying all their equity. A fairly rare situation, but it can happen. If you feel comfortable with the lender occupying your equity, then there is nothing wrong with registering the mortgage for a higher amount. You may use it, or you may not. If you don't, no harm done.

First National's policy is to automatically put you into an open mortgage if you don't return the renewal documents to them. This is the case with most lenders, but not all. If it looks like you are going to miss your maturity date, then ALWAYS double check with your current lender to ensure that they put you into an open mortgage (meaning no penalty to break). Some lenders (including some banks) will automatically renew you into a closed mortgage, which would end up being costly. Note that you will not get a choice of rate here. The lender will choose it for you, so always make sure you check on this.

Hope you find this helpful. Let me know if there is anything that I can clarify for you or if you have further questions. :)

Paul
Thanks for this response, I'm the same situation, thinking of adding a HELOC. Just to confirm, you're suggesting to refinance first and get the best rate possible and then add the HELOC?
Sr. Member
User avatar
Jun 24, 2020
890 posts
163 upvotes
DenisF69395 wrote: For a mortgage transfer/renewal:

-How much is the mortgage owing?

about 225,000.00 CAD

-Roughly, what is the current market value of the property?

250,000.00 CAD

-Which city is the property located in?

Sylvan Lake, Alberta

-Is the property owner-occupied or a rental?

Owner occupied

-Who is your current lender?

Lendwise

-Do you have a HELOC tied to the mortgage?

No

-Is the mortgage CMHC insured?

Yes

-When did you buy the property?

20/11/2015

-When is your renewal date?

20/11/2020

Thank you very much!!!

Thanks for the info. You do have 1.64% five year fixed available for an insured switch, or 1.60% five year variable.
Newbie
Jun 14, 2020
17 posts
4 upvotes
Getting offered 1.67% 5 year variable with 2k cash back and appraisal and legal fees covered, Uninsured mortgage with CIBC. Loan size 520k in Ottawa. 30 year amortization, heloc built in. For a rental property. Anyone doing better, or should I accept this. Any advice is appreciated. Thanks!
Newbie
Sep 21, 2020
4 posts
Thank you for your reply and offer.
Is it conventional or collateral mortgage?
What do I need to get started the process with you?
Can I ask for your Lic # and website?

Thank you
Newbie
Sep 8, 2013
77 posts
33 upvotes
Windsor
Did I fill this out wrong?
nathand wrote: Interested in seeing the rate:

-What is the purchase price? $235,000
-How much is the down payment? $47,000 (20%)
-Where it the property located? Camrose Alberta
-When is the closing date? Oct 2020
-Will the property be owner-occupied or a rental? Owner-Occupied
-Amortization: 25 yrs

What rates I can qualify for ?
Newbie
Dec 19, 2011
48 posts
24 upvotes
MONTR
Question for the brokers out there. Just talked to my mortgage agent at BMO, my renewal is up in 4 months. I plan on selling my house in the next 18 months, so I asked what is the best way to go in that situation. Next house will have a similar or higher mortgage.

He told me to take a 5y variable closed, since there is no fee to switch to a fixed (or keep the variable) once I switch houses. If I was to take a 5y fixed I would have fees built in the new rate if I were to have a higher mortgage.

Does that make sense?
Newbie
Dec 24, 2009
11 posts
4 upvotes
Hello, wondering if its worth it to break my mortgage and sign elsewhere. I am currently in a 3 yr fixed @ 2.52 signed in April 2020.

How much is the mortgage owing? $197,00
-Roughly, what is the current market value of the property? bc assessment 815,000
-Which city is the property located in? Surrey BC
-Is the property owner-occupied or a rental? rental
-Who is your current lender?
-Do you have a HELOC tied to the mortgage? no
-Is the mortgage CMHC insured? No
-When did you buy the property? 2012
-original amortization: 30 years
-When is your renewal date? may 2023
Break is $1831 as of a few days ago.

I am interested in switching to a variable but would like to know fixed also.

Thanks
Last edited by 1mangoo on Oct 26th, 2020 3:06 am, edited 1 time in total.
Sr. Member
User avatar
Jun 24, 2020
890 posts
163 upvotes
nathand wrote: Did I fill this out wrong?
1.79% five year fixed or 1.75% five year variable available
Sr. Member
User avatar
Jun 24, 2020
890 posts
163 upvotes
gabrieltp wrote: Question for the brokers out there. Just talked to my mortgage agent at BMO, my renewal is up in 4 months. I plan on selling my house in the next 18 months, so I asked what is the best way to go in that situation. Next house will have a similar or higher mortgage.

He told me to take a 5y variable closed, since there is no fee to switch to a fixed (or keep the variable) once I switch houses. If I was to take a 5y fixed I would have fees built in the new rate if I were to have a higher mortgage.

Does that make sense?

He’s not wrong. The variable would have the cheapest penalty to break, however do note that both the fixed and variable are portable if you need to use that in this instance so you don’t have to pay the penalty.
Newbie
Oct 9, 2007
88 posts
3 upvotes
Hi there, also wondering if its worth it to break my mortgage and sign elsewhere. I am currently in a 5 yr fixed @ 2.39.

For a mortgage transfer/renewal:

-How much is the mortgage owing? $295,000
-Roughly, what is the current market value of the property? $600,000
-Which city is the property located in? Vancouver
-Is the property owner-occupied or a rental? owner-occupied
-Who is your current lender? RMG
-Do you have a HELOC tied to the mortgage? no
-Is the mortgage CMHC insured? no
-When did you buy the property? Oct 2016
-When is your renewal date? Oct 2021
Quoted penalty for early termination is $1800 as of today.

Thanks very much!
Deal Addict
User avatar
Jan 31, 2018
3027 posts
560 upvotes
1mangoo wrote: Hello, wondering if its worth it to break my mortgage and sign elsewhere. I am currently in a 3 yr fixed @ 2.52 signed in April 2020.

How much is the mortgage owing? $197,00
-Roughly, what is the current market value of the property? bc assessment 815,000
-Which city is the property located in? Surrey BC
-Is the property owner-occupied or a rental? rental
-Who is your current lender? TD
-Do you have a HELOC tied to the mortgage? no
-Is the mortgage CMHC insured? No
-When did you buy the property? 2012
-original amortization: 30 years
-When is your renewal date? may 2023
Break is $1831 as of a few days ago.

I am interested in switching to a variable but would like to know fixed also.

Thanks
You can get the following rates with your costs covered to get out of the collateral charge

5 yr fixed 174% & 170% variable

You can get 160% but will need to cover legals

Phil
Phil Cragg
Mortgage Agent
Mortgage Outlet Inc Broker License #12628

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