mortgage info

B

Bill the Pirate

powdermaniac
Nov 26, 2002
819
2
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It's been many years since I had a mortgage but I am about to get into one. who can give me the coles notes version of what to do. It's not that I don;t trust my banker but I don't trust my bank.

fixed. open, variable what's the smart thing to do. I am only looking for about 200,000
 
depends on your appetite for risk and ability to pay- variable isn't for everyone though it can save you money over the loan
 
If you go variable, make sure it is an open term. Right now most banks are charging Prime + 1.00% for variable...you don't want to be locked-in at this rate, and you can't negotiate this lower due to the current financial situation.

You can likely get a 5 year fixed rate between 5.00 and 5.50%, whichi if you exclude the last 10 years or so, is really a pretty good rate, and will give you peace of mind knowing what your payments will be for the next 5 years.

If you are willing to gamble, go variable but make sure you keep it open and stay on top of what is happening in the interest rate environment!
 
hoser1970 said:
If you go variable, make sure it is an open term. Right now most banks are charging Prime + 1.00% for variable...you don't want to be locked-in at this rate, and you can't negotiate this lower due to the current financial situation.

You can likely get a 5 year fixed rate between 5.00 and 5.50%, whichi if you exclude the last 10 years or so, is really a pretty good rate, and will give you peace of mind knowing what your payments will be for the next 5 years.

If you are willing to gamble, go variable but make sure you keep it open and stay on top of what is happening in the interest rate environment!
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Prime + 1.0 is for a line of Credit

Variable Mortgages can be had for Prime +0.00

Used to be you get Prime - 0.75 on a variable mortgage, however, that went out the window 2 weeks ago.

Bank prime right now is 4.25%.

Expect another drop from the Bank of Canada in the order of 0.50 at their next meeting which should take bank prime down to 3.75%.
 
Arrange for bi-weekly payments rather than monthly. It will save you tens of thousands of dollars of interest over the years and have only a minor impact on how much your payments are. You end up making the equivalent of 14 monthly payments per year.
 
bank of Canada meets tomorrow (today now)

expect half a point cut

discounted vrm you wont see for another 18-24 months

if you have any question feel free to ask
 
Variable is now at prime plus 1. Six months ago it was at prime minus .75.
DO NOT go variable at this time.

Consult with a mortgage broker. They are free to you, and will find you a better rate than your bank. A starting point might be Invis.ca
 
Hurricane Hank said:
Variable is now at prime plus 1. Six months ago it was at prime minus .75
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I didn't believe you, and then I checked. That is fucked up.

Six months or so I renewed my mortgage at prime minus 0.9% and that rate, even prime minus 1% (but with less flexible terms) was commonly available from PC Financial, ING Direct, etc., and could be negotiated with most major banks (esp. if you showed them the PCF/ING posted rate). Now the posted variable rates are indeed all higher than prime. That is NUTS.

Now the lowest rate I can see is the one from ING Direct, for a one year mortgage you can get 5.14% today. Hopefully drop tommorow if the Bank of Canada cuts prime.

A good resource for posted rates is:

http://www.canadianbusiness.com/my_money/rates/closed_mortgage/index.jsp

(You have to go check whether the rates there are real by looking on the corresponding websites, they are sometimes wrong or misleading.)
 
The banks (and most other mortgage lenders) have increased their margin by 1.5 to 2% on variable rate mortgages over the last 45 days.
It is yet to be seen whether they will pass on today's .25% reduction in the central bank rate by reducing bank prime accordingly. (note that after the last 50 point drop, the banks were reluctant to drop their prime accordingly.
This is not a great time to go variable. You can get a 5 year fixed rate at about the same cost, and rates will start to increase some time next year when the economy starts to pick up again.
 
HafDun said:
The banks (and most other mortgage lenders) have increased their margin by 1.5 to 2% on variable rate mortgages over the last 45 days.
It is yet to be seen whether they will pass on today's .25% reduction in the central bank rate by reducing bank prime accordingly. (note that after the last 50 point drop, the banks were reluctant to drop their prime accordingly.
This is not a great time to go variable. You can get a 5 year fixed rate at about the same cost, and rates will start to increase some time next year when the economy starts to pick up again.
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The BEST the Royal will do on a 5 year is 6.14%.

http://www.rbcroyalbank.com/RBC:SP5b9471JsYAB@Bu6-Y/products/mortgages/fixed-rate-mortgages.html

A variable can be had at Prime + 0.00 if you have enough equity in your house (20% of the worth of the house) (before you could have it at Prime -0.75 - which is gone now.)

Bank Prime at RBC is 4.25% as of yesterday.

That's 2.1% less if you go with a variable. On 300,000.00 mortgage, that's $6,600.00 less per year in interest.

Variable is better.

Intrest rates will not be rising anytime sooner.

It remains to be seen if the Chartered banks will lower by 0.25% in light of today's lowering by BOC. I believe they will.

Two weeks ago, the BOC lowered by 0.50. Initially RBC lowered to 4.5 (as did the others) stating that it was getting too hard to borrow money. Subsequently, the Federal Gov't ponied up 25 billion and low and behold, the banks all lowered to 4.25% in line with the BOC. My guess is the feds said, "you want the 25 B, you'd better fall in line with the BOC. The BOC lowering and the banks not following suit is kind of pointless for the average consumer.
 
Most of the banks dropped prime to 4.0% today. Anyone with a variable mortgage below prime, rejoice and enjoy.

Talk to a mortgage broker. Personally, I'd go for a one year closed at 5% over a prime + 1 for five years situation.
 
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james t kirk said:
The BEST the Royal will do on a 5 year is 6.14%.
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I bet if you show them PC Financial's posted rate of 5.79% they will change their tune. If not, why wouldn't you switch to PCF?

Variable is better.
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Define "better".

Let's say someone finds that the variable rate payment is 40% of their salary, and the fixed rate is 50% of their salary. Is variable still better? What if rates triple?

In one of those cases they face the risk of losing their home if rates shoot up. In the other case they have locked in a payment they know they can afford until the end of the five year term--by which point presumably even if rates have shot up they can afford the payments at variable.

Variable is only better if you can know you can withstand your payment doubling or tripling without losing your home, in which case yes it is almost always better than fixed.

Yes, rare that it would triple, but we are talking about a chance of losing your home and suffering serious financial harm in the process. A lot of people aren't that risk loving.

I am variable, but that is because I know I won't lose my home if the payment quadruples. I'll just spend less on SP's in that case :)
 
james t kirk: I have searched many sites and cannot find any variable offer of prime plus zero as you stated. Please link me to such a site.
I would love to have this, but don't think it exists. BTW, I owe 150,000 on a home valued at 400,000.
 
Hurricane Hank said:
james t kirk: I have searched many sites and cannot find any variable offer of prime plus zero as you stated. Please link me to such a site.
I would love to have this, but don't think it exists. BTW, I owe 150,000 on a home valued at 400,000.
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First of all thanks to everyone..... my source at the BOM tells me that In His Humble Opinion an open variable right now will be the way to go, but within 2 years rates will be unstable which he says is a fall out from bailing out the financial institutions.

Hurricane .... www.ratesupermarket.ca worked for me and when I put in my info it came back with a 4.25 from True North.
 
Hurricane Hank said:
james t kirk: I have searched many sites and cannot find any variable offer of prime plus zero as you stated. Please link me to such a site.
I would love to have this, but don't think it exists. BTW, I owe 150,000 on a home valued at 400,000.
Click to expand...


A week or two ago National bank had a SLOC @ prime but they did not at that time match the prime of the other banks and were @4.5%

b d
 
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