morgage rates

[Giseledta]

I need to renew....
y bank called, and said right now is a good time, as the rates are really low..... is this right.....

[MortgageQueen]

It's possible they might drop slightly in the very new future based on the bond market. I think your bank is simply using a sales tactic. Sorry.

The question you have to answer, is what's the right time for YOU? There are lots of things to consider in a mortgage. The rate is just one of those things. The 5 yr. rate is aprox. 3.09%, but variable is 2.4% WHich one is best for you depends on your individual circumstances.

[Giseledta]

I like 5 yr fixed. I am not fond of variable.we are thinking of holding off a bit, as we have the time.
thank you.

[MortgageQueen]

Just keep in mind with a fixed rate, depending on what Lender you use, the penalty can be thousands of dollars if you break the mortgage early (which statistically around 60% of Canadians do)
Not that fixed rates are bad. It's just wise to think ahead.

[SAM2BOYZ]

Up for renewal now with my mortgage. Doing some homework and fixed 5yr rates are low but they are with companies I've never heard of. Are these safe? Should I stick with my bank?

[super807]

Just keep in mind with a fixed rate, depending on what Lender you use, the penalty can be thousands of dollars if you break the mortgage early (which statistically around 60% of Canadians do)

True about the penalties, but if the reason someone is breaking mortgage early is because they are selling house and buying a new one, the option to port the mortgage to new house exists. If new house that one is buying has a bigger mortgage than existing one, one does end up with a blended rate, but at least it is an option. One can then weigh the better choice between penalty or blended rate.

[super807]

Up for renewal now with my mortgage. Doing some homework and fixed 5yr rates are low but they are with companies I've never heard of. Are these safe? Should I stick with my bank?

If you trust your bank and would prefer to go with them, you can always ask them to give you the same rate you are finding elsewhere. We did that last spring, and got that rate within two days of making the request.

That said, the first house we purchased back in 2006, we used a mortgage broker and we ended up going with First Line (now defunct, absorbed by CIBC). Although we had never heard of First Line, they were a reputable company and we had no problems at all. You could do some research into the companies you are seeing with those better rates. But make sure that you are comparing apples to apples, that is that the terms and conditions are the same, like around how much/how often you can make extra lump sum payments, ability to increase regular payments penalty free, penalty amounts, etc. These types of things come into play if you are planning to pay down your mortgage faster and/or you think you might sell your house before the mortgage period is up.

[MortgageQueen]

Up for renewal now with my mortgage. Doing some homework and fixed 5yr rates are low but they are with companies I've never heard of. Are these safe? Should I stick with my bank?

Hi Sam2Boyz,

You could try to negotiate with your existing bank for the best rate, or talk to a mortgage broker. They're free and they look out for your interests first. There are many other Lenders out there besides Banks. Many of them are great, especially when it comes to calculate a penalty, and not hidden fees or collateral charges.
YOu can PM me if you have a question about any lenders. I deal with just about all of them.

[MortgageQueen]

True about the penalties, but if the reason someone is breaking mortgage early is because they are selling house and buying a new one, the option to port the mortgage to new house exists. If new house that one is buying has a bigger mortgage than existing one, one does end up with a blended rate, but at least it is an option. One can then weigh the better choice between penalty or blended rate.

Actually, that's not the only reason one breaks a mortgage, but if it was, there are many Lenders that will NOT port a mortgage. A couple examples are if you were to move to a less populated area or out of province. There may be extra administration fees too.
The best idea would be to be prepared for the unexpected and choose a Lender that gives you the best options all away around.

[Zonny]

If you trust your bank and would prefer to go with them, you can always ask them to give you the same rate you are finding elsewhere. We did that last spring, and got that rate within two days of making the request.

That said, the first house we purchased back in 2006, we used a mortgage broker and we ended up going with First Line (now defunct, absorbed by CIBC). Although we had never heard of First Line, they were a reputable company and we had no problems at all. You could do some research into the companies you are seeing with those better rates. But make sure that you are comparing apples to apples, that is that the terms and conditions are the same, like around how much/how often you can make extra lump sum payments, ability to increase regular payments penalty free, penalty amounts, etc. These types of things come into play if you are planning to pay down your mortgage faster and/or you think you might sell your house before the mortgage period is up.

We too used Firstline for our first mortgage (went through a broker), and renewed with them five years later (going the broker route again). When we took that rate to our 'home' bank where we've done business for many years, they couldn't touch it. So although we do all our banking with RBC, our mortgage is elsewhere. We're on a variable rate now, and I think it's saved us a fair bit in the last five or so years.

[acosta]

We bought a new house and closing is mid April.
With a broker, we have our rate; however, if the rate drops (for even a second), we get that rate (up to two days before closing).
It dropped two days ago. We're saving just under $20 a month with that drop.
We're hoping for another drop before closing.... but we aren't counting on it!

I trust brokers over banks.
That's my personal opinion and perhaps it has just worked out for us this way.

[super807]

Actually, that's not the only reason one breaks a mortgage, but if it was, there are many Lenders that will NOT port a mortgage. A couple examples are if you were to move to a less populated area or out of province. There may be extra administration fees too.
The best idea would be to be prepared for the unexpected and choose a Lender that gives you the best options all away around.

Thanks for the info about porting mortgages. I had not realized some lenders don't offer that options. We ported when we moved to Ottawa six years ago, because is was the better of the two options between penalties or that, and in the end, was very glad we did, because we had a variable rate, and the blended rate we ended up with was better than any rate available at the time, and interest rates just kept dropping and dropping in the first two years of that mortgage. And yes, we were using a mortgage broker, who helped us to understand our options.

[Freestuffrighthere]

I think variable for 3 years would be safe. I don't see the economy going back up too much for the next 3 years or so. Also, usually with variable, the rate is so much lower than fix, so if the rate does go up a little bit for the next 2 years after the first year, your overall average for the 3 years would still be lower than a fixed rate.

[MortgageQueen]

Just an FYI. 5 year "FIXED" rate is offered at 2.99% right now by a few lenders.