Canadian Mortgage Renewal and Lenders

[ElleFiji]

Friends, a sad day is approaching. My 1.88% mortgage rate is going away. We need to renew by Aug 1.

Options - RBC - easy, dgaf that I stopped working since approving this, can probably get 5.6 on a 5 year fixed

Other big name banks - probably do gaf that I am not working and we are overextended
Other places
True North - offering 5.19, red flag deals say that if we don’t stay with them after
The term there will be a weird penalty to go to another bank?
Other smaller lenders - what do we need to know/ask/watch out for

Pertinent info
House price over a million (apparently excludes us from some promotional rates)
Mortgage - 760k
Spouse gainfully employed 140k

We are also looking to sell 100-200 000 worth of assets in the next year, RBC will let us keep some of our mortgage as the line of credit so we can pay it off, otherwise we need to
look at what we can put against the mortgage early.


So, thoughts, ideas, what you would do?

(We estimate me going back to work in 4-5 years)

[daverobev]

Do True North put a collateral charge on the property? If you have a HELOC you'll usually end up with one of those anyway.

5x140k = 700k, so yeah 760 is pushing it. Have you tried a broker?

BoC's at 4.75% so 5.6% doesn't seem *too* bad. $3k a month in interest on the other hand sounds painful :(

[ElleFiji]

Do True North put a collateral charge on the property? If you have a HELOC you'll usually end up with one of those anyway.

5x140k = 700k, so yeah 760 is pushing it. Have you tried a broker?

BoC's at 4.75% so 5.6% doesn't seem *too* bad. $3k a month in interest on the other hand sounds painful :(

I have googled and can not figure out what “collateral charge on the property” means. But it looks like yes? We have the homeline plan with RBC which is how our HELOC is calculated.

We haven’t tried a broker yet, we will probably get a callback soon.

I think the RBC rate is fair, just so painful compared with the old rate and added costs of a growing family, choosing to stay home.

[daverobev]

https://www.canadianmortgagetrends.com/2019/08/what-you-should-know-about-collateral-charge-mortgages/

[Anon-E-Mouze]

I don't have a lot to add except to say watch out for the hassle of working with a mortgage broker. When we got the mortgage for our current house in 2018, we worked with a mortgage broker recommended by our RE agent but ended up deciding to go with my bank TD (best rate). I've had a mortgage with TD before, had a 25-year banking relationship with them and substantial assets. My husband and I had also, individually or jointly, had mortgages directly from RBC in the past.

Getting the mortgage sorted out when we went through the broker was a massive PITA and the process was significantly different than when I got a mortgage directly from TD. They repeatedly asked for massive amounts of info and verification, including data that was impossible and nonsensical to provide. We almost missed our closing date because of the problems. We found out later that TD outsources the processing of mortgage loans that come via brokers to a third-party service provider, while they handle mortgages set up directly with TD in-house.

So, I'm not saying that all mortgages arranged through brokers are handled this way, but it's worth finding out whether the mortgage processing will be handled in-house or outsourced before committing to a particular arrangement.

[Freedomin5]

We're going through the pre-approval process at TD with one of their mortgage specialists, with whom we have been banking for 20+ years, and based on the information we have received, 5.6% seems pretty good. If you've been an RBC customer and have significant assets and a good history with them, then I'd recommend going with RBC.

[c-kat]

Would a 3-year rate be cheaper?  Hopefully rates will come down by then and you could get a lower rate when you renew sooner, rather than having to wait 5 years.

[ElleFiji]

Thanks all! Some really good stuff to chew on as we resume meetings this week.

@c-kat it didn’t look like 3 years are carrying a lower rate right now, I actually think it was higher and 4 was the same as 5, so we are strongly leaning towards 4.

[ElleFiji]

We're going through the pre-approval process at TD with one of their mortgage specialists, with whom we have been banking for 20+ years, and based on the information we have received, 5.6% seems pretty good. If you've been an RBC customer and have significant assets and a good history with them, then I'd recommend going with RBC.

We are currently waiting for RBC to see if head office will approve a rate adjustment to (at least closer to) the 5.19 true north was quoting.

[FLBiker]

We'll be up for renewal in a couple of years.  Depending on what the rates are then, I'm toying with the idea of doing a 5 year ARM, as I do think they'll go down, and that the Canadian government is pretty firmly opposed to them going much higher.  I'm also toying with the idea of paying down our mortgage, but we live in a much cheaper region than you (I'm guessing) as our house is only worth ~$350K and our mortgage will be ~$170K at renewal.

We have ours with CIBC, and they've been fine to deal with.  We ended up with them because they were willing to work with us as newcomers (from the US).  Tangerine had better rates when we looked, but they required a Canadian address (which we didn't have at the time).  That said, working with them on other things I've found Tangerine's customer service to be terrible.  And RBC was also helpful, but the agent we had didn't know how to use their secure messaging system and wanted all our financial docs via email, which I didn't want to do.