Real Estate

Tangerine 7 yr mortgage 3.59%, 10 yr 3.79%

  • Last Updated:
  • Feb 2nd, 2018 2:30 pm
[OP]
Newbie
Jan 31, 2018
12 posts
4 upvotes

Tangerine 7 yr mortgage 3.59%, 10 yr 3.79%

With talks of rising interest rates I'm seriously considering locking-in long term. These were the lowest rates I could find for these terms. BMO also has a 7 yr at 3.59% but their prepayment options don't match Tangerine's. Are there better rates out there? Am I nuts for wanting to lock-in beyond 5 yrs?

https://www.tangerine.ca/en/products/bo ... e-mortgage
18 replies
Deal Fanatic
Nov 22, 2015
5685 posts
5087 upvotes
DKR1091 wrote: With talks of rising interest rates I'm seriously considering locking-in long term. These were the lowest rates I could find for these terms. BMO also has a 7 yr at 3.59% but their prepayment options don't match Tangerine's. Are there better rates out there? Am I nuts for wanting to lock-in beyond 5 yrs?

https://www.tangerine.ca/en/products/bo ... e-mortgage
Seems high.

Why not a flexible variable rate around 2.4%? You'd need 4-5 rate hikes before you get to 3.59%+
Deal Addict
Sep 14, 2005
1408 posts
103 upvotes
superfresh89 wrote: Seems high.

Why not a flexible variable rate around 2.4%? You'd need 4-5 rate hikes before you get to 3.59%+
seems like there will be another 2-3 this year already tho?
Sr. Member
Feb 21, 2010
878 posts
252 upvotes
Scarborough
please consider penalties to break the mortgage. Get sample penalty calculation for breaking in like 2 years into mortgage, four years and six to get some perspective.
Deal Fanatic
Nov 24, 2013
6148 posts
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Kingston, ON
romeocanada wrote: please consider penalties to break the mortgage. Get sample penalty calculation for breaking in like 2 years into mortgage, four years and six to get some perspective.
I believe Canadian mortgage regulations are such that you can cancel 5 years into a 6, 7, 10 year mortgage term without IRD penalty. Some of the mortgage brokers on the Real Estate forum could comment.
Last edited by Mike15 on Feb 1st, 2018 2:34 pm, edited 1 time in total.
Member
Apr 28, 2014
226 posts
93 upvotes
Waterloo, ON
The IRD penalty doesn't apply after five years, but three months' interest penalty will.
Deal Addict
User avatar
Mar 9, 2012
3295 posts
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Kitchener
SouthOnt wrote: The IRD penalty doesn't apply after five years, but three months' interest penalty will.
Which nowadays isn't much. 2.5% on $500,000 is $3,125. I guess worth if you really want the security of knowing how much you'll be paying for the next 10 years.
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[OP]
Newbie
Jan 31, 2018
12 posts
4 upvotes
edvc520 wrote: seems like there will be another 2-3 this year already tho?
Exactly, and most 5 yr rates that I've come across are in the 3.2 to 3.4 range so a 7 yr at 3.59 seems like a good deal - if you're expecting higher future rates - which I am. Has anyone come across better rates for longer terms? Please share rate and lender. Thanks
Deal Addict
Aug 20, 2007
1911 posts
683 upvotes
Kitchener
I just locked in at 3.19 with BMO for 5 yr term... luckly had them lock this in from October and held out as long as I could before breaking my mortgage on the cottage and transferring it over with my house mortgage. Right now I think the best 5 year rate I have seen is 3.29 and with bond yields going higher this past week I could see another 10-20 basis points before we even get close to another BOC rate increase in march or april. I think by May we could be seeing 3.49-3.59% for a 5 year fixed rate
Deal Addict
Apr 21, 2014
2197 posts
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Alberta
Mike15 wrote: I believe Canadian mortgage regulations are such that you can cancel 5 years into a 6, 7, 10 year mortgage term without penalty. Some of the mortgage brokers on the Real Estate forum could comment.
That is sort of correct. With fixed rate mortgages the penalty is the higher of the IRD (Interest Rate Differential) or 3 months interest. For mortgages greater than 5 years, after 5 years, the penalty is just 3 months interest not the greater of.
Member
Apr 28, 2014
226 posts
93 upvotes
Waterloo, ON
jeff1970 wrote: Which nowadays isn't much. 2.5% on $500,000 is $3,125. I guess worth if you really want the security of knowing how much you'll be paying for the next 10 years.
Yes, you're right, IRD is usually not significant nowadays. He's looking at rates closer to 4%, though, so $5,000 on your example principal. In the grand scheme of things, still maybe not much, but it needs to be a consideration.
Sr. Member
Feb 21, 2010
878 posts
252 upvotes
Scarborough
Not sure how IRD is coming out to be so low. In my case, have a mortgage with National Bank, outstanding amount is 240K. Term left is 2.5 years out of 5. Penalty is coming to be more than 13K. The interest rate for me is 2.49 fixed but their posted rate i think is 4.69. So difference of 2.2% for 2.5 years.

SouthOnt wrote: Yes, you're right, IRD is usually not significant nowadays. He's looking at rates closer to 4%, though, so $5,000 on your example principal. In the grand scheme of things, still maybe not much, but it needs to be a consideration.
Member
Apr 27, 2014
363 posts
108 upvotes
Mississauga, ON
You are definitely nuts for considering this.

York University’s Dr. Moshe Milevsky found based on data from 1950 to 2007, the average Canadian could expect to save interest 90.1% of the time by choosing a variable-rate mortgage instead of a fixed. The average savings was $20,630 over 15 years per $100,000 borrowed. This doesn't even account for the extreme difference in penalties between fixed and variable terms.
Deal Fanatic
Feb 22, 2011
7324 posts
7832 upvotes
Toronto
superfresh89 wrote: Seems high.

Why not a flexible variable rate around 2.4%? You'd need 4-5 rate hikes before you get to 3.59%+
Even more once you factor in the time you were paying less and saving.

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