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RBC breaking variable mortgage for a lower rate?

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  • Feb 17th, 2021 8:19 am
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Feb 16th, 2021 2:20 pm
lolbeast [OP]
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Feb 16th, 2021 2:20 pm

RBC breaking variable mortgage for a lower rate?

I currently get 1.8% on a 5 year variable. We signed this in like dec.

Now apparently we can get 1.5% for the same 5 year, but it will cost $5000 to break the contract to get the lower rate.

Is this legit? If our rate is already variable why are we paying a 3 month break fee to get a lower interest rate?

I feel like we got sharked during the mortgage process because how can the rate drop 0.3% from mid dec to now?
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Feb 16th, 2021 2:27 pm
lolbeast [OP]
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Feb 16th, 2021 2:27 pm

Yes, RBC to still RBC. Its the same contact helping me out.

" Please see attached picture for your reference. Your penalty payment will be $5,023.59. If you would like to break your term and renew to 5 years variable rate at 1.5%, I can help you with that."
Feb 16th, 2021 2:35 pm
lolbeast [OP]
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Feb 16th, 2021 2:35 pm

west wrote: ↑ How much is the mortgage amount? Based on the math if it’s more than 950k it sounds about right.
We have 1m + remaining

The 5k penalty is in line with the 3 month interest charge.

But my question is why are we being charged this break fee? Since our mortgage is already variable, when there is a lower rate shouldn't it be automatically passed on to us?
Last edited by lolbeast on Feb 16th, 2021 2:58 pm, edited 1 time in total.
Feb 16th, 2021 2:40 pm
west
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Jan 17, 2006
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Feb 16th, 2021 2:40 pm

Because your variable rate is based on prime rate. Prime rate didn’t drop in the last 2 months. The rate you got was prime -.65

Variable rate has gone down, banks are offer prime -.85 for example would give you a rate of 1.6

Check out the mortgage thread, tons of info there.
CLICK for more info>>> Shoppers Drug Mart - Invite A Friend Event Thanks everyone for participating!
+2
Feb 16th, 2021 2:41 pm
lolbeast [OP]
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Feb 16th, 2021 2:41 pm

west wrote: ↑ Because your variable rate is based on prime rate. Prime rate didn’t drop in the last 2 months. The rate you got was prime -.65

Variable rate has gone down, banks are offer prime -.85 for example would give you a rate of 1.6

Check out the mortgage thread, tons of info there.
Ah so the bank lowered the spread on new mortgages but prime didnt change.... Wow pretty clever
Feb 16th, 2021 2:42 pm
ozzie16
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Feb 16th, 2021 2:42 pm

Banks have been increasing the discount factor to prime progressively over the last few months. That is a fixed number you agreed to in your mortgage, only number that changes is Prime.

The initial approval I got from a bank in November was Prime minus 0.65% and the discount has just been getting better and better since then with some shopping and shrewd negotiation.

You probably can get much better than 1.5%. More like 1.3X% right now according to the broker thread. CIBC is doing 1.28% promotion right now. My final rate is 1.1X% for 30 year amortization.
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Feb 16th, 2021 2:44 pm
lolbeast [OP]
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Feb 16th, 2021 2:44 pm

ozzie16 wrote: ↑ Banks have been increasing the discount factor to prime progressively over the last few months. That is a fixed number you agreed to in your mortgage, only number that changes is Prime.

The initial approval I got from a bank in November was Prime minus 0.65% and the discount has just been getting better and better since then with some shopping and shrewd negotiation.

You probably can get much better than 1.5%. More like 1.3X% right now according to the broker thread. CIBC is doing 1.28% promotion right now. My final rate is 1.1X% for 30 year amortization.
Thanks for letting me know, this is very good info!
Feb 16th, 2021 2:46 pm
ozzie16
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Oct 27, 2012
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Feb 16th, 2021 2:46 pm

lolbeast wrote: ↑ Thanks for letting me know, this is very good info!
Speak to one of the brokers - TD has very good rates right now. Can also hook you up with my BMO and CIBC contacts who were great and entered into a bidding war for my mortgage.
+2
Feb 16th, 2021 2:51 pm
AddictRC
Member
Sep 29, 2013
278 posts
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Feb 16th, 2021 2:51 pm

ozzie16 wrote: ↑ Banks have been increasing the discount factor to prime progressively over the last few months. That is a fixed number you agreed to in your mortgage, only number that changes is Prime.

The initial approval I got from a bank in November was Prime minus 0.65% and the discount has just been getting better and better since then with some shopping and shrewd negotiation.

You probably can get much better than 1.5%. More like 1.3X% right now according to the broker thread. CIBC is doing 1.28% promotion right now. My final rate is 1.1X% for 30 year amortization.
I had to show my NBC guy an email from CIBC offering 1.49% back on black friday. Dang these are good rates! I am always confused bybthe mtg rate thread cause the brokers rarely say who the lender is. Those brokers are very responsive though. Good on them!
+2
Feb 17th, 2021 8:19 am
mstefa
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Apr 15, 2009
217 posts
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toronto

Feb 17th, 2021 8:19 am

ozzie16 wrote: ↑My final rate is 1.1X% for 30 year amortization.
Is this refinance or new mortgage? If refinance did you pay any expenses to change lender?
If it’s not a problem, can you pm me not to pollute the thread here?

Thank you!

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