Real Estate

Renegotiate fixed mortgage possible now that my income changed?

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  • Sep 6th, 2016 8:16 am
[OP]
Jr. Member
Oct 7, 2007
163 posts
56 upvotes
Ontario

Renegotiate fixed mortgage possible now that my income changed?

I'm three year into a five year fixed mortgage term with TD. At the time, the TD guy told me the rate they give out depends on the income/liability ratio. I changed job last year and now my yearly salary is about 37% more than what I had before, without much increase in liability. I'm wondering is it possible to renegotiate a better rate even though I'm on a fixed mortgage term?

Thanks!
13 replies
Deal Addict
Feb 17, 2012
1356 posts
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ORLEANS
I dont think they will. Ur already locked in. Y give u a lower rate they will make less off u
Deal Expert
Aug 22, 2011
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Center of Universe
With TD you pay 3 months in interests as a penalty if you want to break early.
Do your calculation and see if you're still ahead changing now, instead of waiting until renewal.
Deal Fanatic
Apr 20, 2011
7747 posts
2700 upvotes
ON
The realquestion is, how much of a better rate would it be?
Not worth the penalty for 10 points.
But a full percent, might be.
Deal Addict
Jan 6, 2015
2860 posts
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Toronto, ON
Like the above poster anything will be negotiable but they'll be a penalty
Deal Addict
Dec 12, 2009
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Toronto
jchiu1106 wrote: I changed job last year and now my yearly salary is about 37% more than what I had before, without much increase in liability. I'm wondering is it possible to renegotiate a better rate even though I'm on a fixed mortgage term?
Does your fixed term have any prepayment or increased payment options?
Paying down more reduces the amount of interest in the long run.
Social Distancing means staying apart 2 meters or 6 feet, the depth of a grave.
Get closer and you might have one foot in the grave. (Pass it on)
Deal Expert
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Aug 2, 2010
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Here 'n There
jchiu1106 wrote: I'm three year into a five year fixed mortgage term with TD. At the time, the TD guy told me the rate they give out depends on the income/liability ratio. I changed job last year and now my yearly salary is about 37% more than what I had before, without much increase in liability. I'm wondering is it possible to renegotiate a better rate even though I'm on a fixed mortgage term?

Thanks!
You signed an agreement with the bank to pay them a certain interest rate. What makes you think now they are going to be magnanimous and let you pay less without charging you a penalty?
Sr. Member
Mar 3, 2009
838 posts
310 upvotes
Ottawa, ON
vkizzle wrote: With TD you pay 3 months in interests as a penalty if you want to break early.
Do your calculation and see if you're still ahead changing now, instead of waiting until renewal.
On a fixed rate, are you sure? Usually fixed rate has an IRD calculation where variable rate is 3 months.

It will specify in your mortgage agreement though.
[OP]
Jr. Member
Oct 7, 2007
163 posts
56 upvotes
Ontario
eonibm wrote:
jchiu1106 wrote: I'm three year into a five year fixed mortgage term with TD. At the time, the TD guy told me the rate they give out depends on the income/liability ratio. I changed job last year and now my yearly salary is about 37% more than what I had before, without much increase in liability. I'm wondering is it possible to renegotiate a better rate even though I'm on a fixed mortgage term?

Thanks!

You signed an agreement with the bank to pay them a certain interest rate. What makes you think now they are going to be magnanimous and let you pay less without charging you a penalty?
ok Einstein, did I say I want them to "to be magnanimous and let you pay less without charging you a penalty"? All I did was asking a question. Please don't answer it with a smart-ass question. Thanks for nothing.
Deal Guru
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Aug 8, 2012
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BC
TD has registered all of their mortgages as collateral charges since longer than the 3 years from the start of your mortgage so unfortunately they have you over a bit of a barrel even if it were the end of your term and you wanted to change lenders.

You CAN use this to your advantage though, telling them you know this and it's going to cost you to leave in 2 years anyways, so if they are unwilling to negotiate with you just be ready to pay the IRD and jump ship.

Whether this is actually worth it or not depends on your current rate and the balance on your mortgage.

Check the "official mortgage rates thread" here where many mortgage brokers reply to questions and can help with getting the best rate from other lenders (most often big non-bank lenders you may have never heard of before, but that do billions in mortgages for better rates than the big 5 do).

official-mortgage-rates-thread-351105/
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Deal Guru
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Aug 8, 2012
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jchiu1106 wrote:I'm three year into a five year fixed mortgage term with TD. At the time, the TD guy told me the rate they give out depends on the income/liability ratio. I changed job last year and now my yearly salary is about 37% more than what I had before, without much increase in liability. I'm wondering is it possible to renegotiate a better rate even though I'm on a fixed mortgage term?

Thanks!
eonibm wrote:
jchiu1106 wrote: I'm three year into a five year fixed mortgage term with TD. At the time, the TD guy told me the rate they give out depends on the income/liability ratio. I changed job last year and now my yearly salary is about 37% more than what I had before, without much increase in liability. I'm wondering is it possible to renegotiate a better rate even though I'm on a fixed mortgage term?

Thanks!
You signed an agreement with the bank to pay them a certain interest rate. What makes you think now they are going to be magnanimous and let you pay less without charging you a penalty?
LOL.

What makes you think that HE thinks they are going to be magnanimous? He asked if it was possible to renegotiate.

If they believe they will lose your business and they care not to, they can do things like waiving penalties to do an early renewal and get a better rate.

And if not, and the math makes sense, he can jump ship.
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Deal Addict
Feb 7, 2006
2731 posts
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Was with BMO and our mortgage was 2 years into 5 year variable rate mortgage. Roughly 2.92% at the time. TD offered me 2.62 and would pay all costs to switch. Went to BMO and called the mortgage guys. Offered me 2.62 and said no costs to switch the mortgage if I stayed with BMO. Next day into see the local BMO manager (friend of mine) who screamed at me. "no goddamn way am I giving you 2.62%"!! Offered me 2.75 fixed to stay and I took it. End result was some paper work at the bank, and a pissed off bank manager as it costs a chunk to redo the paperwork. I saved roughly $400.00 for a call and signing some paperwork.
I lump the banks in with Telus/Rogers. Every few months its a good idea to call and ask for a discount. And always remind them your the customer. BMO seems to forget that concept.
Deal Expert
Aug 22, 2011
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dr_torch wrote:
vkizzle wrote: With TD you pay 3 months in interests as a penalty if you want to break early.
Do your calculation and see if you're still ahead changing now, instead of waiting until renewal.
On a fixed rate, are you sure? Usually fixed rate has an IRD calculation where variable rate is 3 months.

It will specify in your mortgage agreement though.
That's right...the penalty is the greater of either 3 months interests or IRD amount closest to the remainder of the term.
Deal Fanatic
Nov 22, 2015
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jchiu1106 wrote: I'm three year into a five year fixed mortgage term with TD. At the time, the TD guy told me the rate they give out depends on the income/liability ratio. I changed job last year and now my yearly salary is about 37% more than what I had before, without much increase in liability. I'm wondering is it possible to renegotiate a better rate even though I'm on a fixed mortgage term?

Thanks!
You can use TD's prepayment calculator to figure out what the penalty to break your current mortgage is. https://tools.td.com/mortgage-prepaymen ... arted.html

On a $250k mortgage at 2.99%, with 2 years remaining, it looks like there is >$11K penalty.

Based on the penalty amount, it's highly unlikely for your FI to renegotiate your rate because the branch manager would likely have to use up the branch's revenue to cover the penalty amount for you (one of the other posters said he had success renegotiating on a variable, which would have cost the branch just a couple hundred bucks). As well, they know they have you trapped and you can't go to another FI without paying the penalty plus discharge fee.

Finally, lots of officers at FIs literally just BS about the rate. I worked for Big 5 for last 3 years and have NEVER given a better rate based on income. Banks use your debt-income ratios to determine eligibility, not the rate. Mortgages are also not risk-rated like PLC or loans, meaning all that qualify are eligible for the best rate.

Sounds like your banker gave you a higher rate to increase his commission/bonus and made up some excuse as to not give you the best rate at the time. Don't compare to current rates though, as those have come down over the last couple years.

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