# Mortgage Renewal Advice



## rl1983 (Jun 17, 2015)

Hi All,

I've got the renewal notice in my online banking that my mortgage is 120 days away from renewal and RBC wants to early renewal. What's the advantage here? My variable interest rate is very high at 2.15% percent with 2.95% on the HELOC. Should I shop around? I like everything all in one place. Maybe that's why the interest rate is higher than it should be.


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## Money172375 (Jun 29, 2018)

Shop around but it’s a bit of a pain...but you could save thousands.
renewing early offers protection in case rates are higher in 120 days. You could get today’s rates.


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## Mukhang pera (Feb 26, 2016)

I never thought I'd see the day when mortgage interest of 2.15% would be regarded as "very high". 

Canada needs new usury laws. There must be tough laws put in place to protect the poor, downtrodden citizenry from such harsh, oppressive, yea unconscionable, lending practices! 

2.15%. Tsk, tsk. I am going to take to my bed with a sick headache.


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## fplan (Feb 20, 2014)

rl1983 said:


> Hi All,
> 
> I've got the renewal notice in my online banking that my mortgage is 120 days away from renewal and RBC wants to early renewal. What's the advantage here? My variable interest rate is very high at 2.15% percent with 2.95% on the HELOC. Should I shop around? I like everything all in one place. Maybe that's why the interest rate is higher than it should be.



one friend recently (1 week back) renewed with BMO - 4y fixed @ 1.45, 30yrs amortization.
Another friend locked the rate with CIBC - 4yr fixed @ 1.49, 30yrs amortization.

both in Ontario.


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## balexis (Apr 4, 2009)

I'm in a similar situation in Quebec.I got an early renewal offer from my current lender (+/- 120 days before term), 5yr fixed @ 1.73%. It is not a competitive rate at all, and I believe a penalty is baked into that rate (despite the agent telling me their early renewal does not include any fees or penalty). Right now i'm looking at MCAP, offering their Value Flex at 1.49% (rate lock for 90 days) or their regular product at 1.59% (rate lock for 120 days). The only frustrating thing is that I have a collateral mortgage right now, so i expect to pay some legal fees to jump ship (still worth it though).

My advice is to shop around to see if you are really getting a good deal from your current lender.


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## Money172375 (Jun 29, 2018)

balexis said:


> I'm in a similar situation in Quebec.I got an early renewal offer from my current lender (+/- 120 days before term), 5yr fixed @ 1.73%. It is not a competitive rate at all, and I believe a penalty is baked into that rate (despite the agent telling me their early renewal does not include any fees or penalty). Right now i'm looking at MCAP, offering their Value Flex at 1.49% (rate lock for 90 days) or their regular product at 1.59% (rate lock for 120 days). The only frustrating thing is that I have a collateral mortgage right now, so i expect to pay some legal fees to jump ship (still worth it though).
> 
> My advice is to shop around to see if you are really getting a good deal from your current lender.


I’d be asking for all legal fees/appraisals to be waived if I was switching institutions. Most of them have unadvertised Promos to that effect.

there is generally no penalty named into an early renewal......it’s just that they are not offering their “floor” rate.


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## off.by.10 (Mar 16, 2014)

balexis said:


> Right now i'm looking at MCAP,


Beware of them, there's a good reason they're cheaper. They have crappy service and predatory behavior. Cost me a lot of money and wasted time last year for what would have been a non-issue with most other lenders.


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## ian (Jun 18, 2016)

I’d be asking for all legal fees/appraisals to be waived if I was switching institutions. Most of them have unadvertised Promos to that effect.

there is generally no penalty named into an early renewal......it’s just that they are not offering their “floor” rate. 


Excellent advice. And...when you sit in front of the mortgage lender and they purposely say nothing for a minute or so do not be dissuaded. They either have the authority to waive those ridiculous fees or they can have a very quick discussion with someone who can and will. IF you plan to pay down your mortgage at a faster rate do not be shy to ask for a change in their T's and C's. Our experience is that if the request is reasonable the lender will agree to it. The bank is essentially a rental shop. Instead of renting you a tool, they are renting you some money. Absolutely no reason to feel intimidated by them or reluctant to push for a better deal or waive of fees.


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## rl1983 (Jun 17, 2015)

Mukhang pera said:


> I never thought I'd see the day when mortgage interest of 2.15% would be regarded as "very high".
> 
> Canada needs new usury laws. There must be tough laws put in place to protect the poor, downtrodden citizenry from such harsh, oppressive, yea unconscionable, lending practices!
> 
> 2.15%. Tsk, tsk. I am going to take to my bed with a sick headache.


Haha, I remember my realtor ( an older gentleman ) telling me 10 years ago when I bought the place that he'd advise anything under 8% was a " deal ". By expensive, RBC's rates are higher than others including Scotiabank. These aren't 5 and dime outfits offering these rates.


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## rl1983 (Jun 17, 2015)

ian said:


> Excellent advice. And...when you sit in front of the mortgage lender and they purposely say nothing for a minute or so do not be dissuaded. They either have the authority to waive those ridiculous fees or they can have a very quick discussion with someone who can and will. IF you plan to pay down your mortgage at a faster rate do not be shy to ask for a change in their T's and C's. Our experience is that if the request is reasonable the lender will agree to it. The bank is essentially a rental shop. Instead of renting you a tool, they are renting you some money. Absolutely no reason to feel intimidated by them or reluctant to push for a better deal or waive of fees.


I have to go in to negotiate a better rate? I can't do this over the phone?


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## Money172375 (Jun 29, 2018)

rl1983 said:


> I have to go in to negotiate a better rate? I can't do this over the phone?


You should be able to negotiate a rate over the phone with your existing lender. If you’re switching, you’re likely going to need to meet someone face to face......unless you deal with a broker who doesn’t care about genuinely authenticating you and any other owners.


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## ian (Jun 18, 2016)

The banks will attempt to wring every last dollar from you. The last home we bought in Vancouver was bought with 50 plus percent cash. The bank actually tried to tack on an appraisal fee. They gave me some nonsense about it being policy. Policy to rip customers off more like.

Needless to say that was not a go with us and the bank quickly backed down. Don't let them pile on their cost of doing business admin costs to you. They just assume that customers are patsies and will accept any old nonsense thrown their way by a lending officer. Bottom line is that these lending types have dollar lending quotas to reach..they need your business.


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## Money172375 (Jun 29, 2018)

ian said:


> The banks will attempt to wring every last dollar from you. The last home we bought in Vancouver was bought with 50 plus percent cash. The bank actually tried to tack on an appraisal fee. They gave me some nonsense about it being policy. Policy to rip customers off more like.
> 
> Needless to say that was not a go with us and the bank quickly backed down. Don't let them pile on their cost of doing business admin costs to you. They just assume that customers are patsies and will accept any old nonsense thrown their way by a lending officer. Bottom line is that these lending types have dollar lending quotas to reach..they need your business.


They have lending quotas but they also have appraisal budgets. Agree, most people shouldn’t pay for an appraisal. But if you’re borrowing less Than 200k (in A major market), then you should expect to pay. At some point...especially for brokers, who are absorbing the costs themselves, it simply doesn’t make sense to waive the fee. Ex. On a 200,000 mortgage with a floor rate, you might make $700...if you need to waive a $300 appraisal fee, the deal becomes almost worthless to a broker. They’d rather spend the time finding someone who wants to borrow $500k. 

for a lot of people, eating $300 is better than shopping the deal around multiple lenders. 

spring is the best to shop around,...that’s typically when the offers (advertised and not) are best. Although, during my last few years of lending, there was always some offer on he table.


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## balexis (Apr 4, 2009)

Money172375 said:


> there is generally no penalty named into an early renewal......it’s just that they are not offering their “floor” rate.


Exactly. We can call that a penalty or not, but at the end of the day, there is a cost to early renewal that's hidden in an inflated rate. Just like these "0% financing or 200$ cash discount" have an actual cost.

That's the part I'm mad about: the bank should have been up front with me and tell me that directly.


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## Money172375 (Jun 29, 2018)

balexis said:


> Exactly. We can call that a penalty or not, but at the end of the day, there is a cost to early renewal that's hidden in an inflated rate. Just like these "0% financing or 200$ cash discount" have an actual cost.
> 
> That's the part I'm mad about: the bank should have been up front with me and tell me that directly.


I should have been clearer. There usually is a penalty but it’s being waived. This is done since the bank holding the mortgage knows you can shop elsewhere and lock in a rate 120 before maturity. This allows the bank holding the mortgage to offer similar protection in a rising rate environment. The fact that the floor rate is not being offered is just a negotiating tactic by the advisor. Finding out the floor rate is not hard given all the info online. If there are ”special” rates offered by one bank or another, it can usually be matched by other banks. Assuming the mortgage is a decent size for the given market.


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## balexis (Apr 4, 2009)

Money172375 said:


> The fact that the floor rate is not being offered is just a negotiating tactic by the advisor. Finding out the floor rate is not hard given all the info online. If there are ”special” rates offered by one bank or another, it can usually be matched by other banks. Assuming the mortgage is a decent size for the given market.


Ah I understand what you mean. That 1.73% rate I got was actually the result of some back and forth and supposedly the best he can offer, even after "consulting with his director", maybe I was too quick to assume this was the real floor he was willing to offer me.
I just replied to him with the details of the current offering i have in front of me, let's see if it changes anything...


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## Mortgage u/w (Feb 6, 2014)

Please ensure you compare apples with apples. A lot of hearsay on this thread of extremely low rates. 

Its not what it used to be and there is no longer 1 rate that applies to all loans. In general, extremely low rates apply to Insured loans which are only possible in a purchase scenario where borrower puts less than 20% down. 

When talking about a conventional loan, refinance or renewal as is the case here, the rates are higher in general.

My advice for the OP is to simply contact the current lender and negotiate if you can prove other lenders are offering a better rate on a REFINANCE .

In general, its always most cost effective to simply negotiate and renew with existing lender - especially if considering a variable rate. You may find slightly lower elsewhere, and I stress the word "slightly" but this gain will be quickly offset by the cost of solicitor fees who will need to discharge and re-register a new loan.


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## Money172375 (Jun 29, 2018)

Mortgage u/w said:


> Please ensure you compare apples with apples. A lot of hearsay on this thread of extremely low rates.
> 
> Its not what it used to be and there is no longer 1 rate that applies to all loans. In general, extremely low rates apply to Insured loans which are only possible in a purchase scenario where borrower puts less than 20% down.
> 
> ...


Getting rate shoppers to look beyond rate (term, conditions, prepayment options, etc etc) is like...........well you get the point. They‘ll get some advice from a bank advisor to consider different apples and oranges, and then complain that they‘re being ripped off because some guy On a forum who hasn’t stepped foot in a bank or mortgage broker office in 5 years says so.


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## rl1983 (Jun 17, 2015)

Mortgage u/w said:


> Please ensure you compare apples with apples. A lot of hearsay on this thread of extremely low rates.
> 
> Its not what it used to be and there is no longer 1 rate that applies to all loans. In general, extremely low rates apply to Insured loans which are only possible in a purchase scenario where borrower puts less than 20% down.
> 
> ...


That's why I'm curious to know if my high rate is because I have a HELOC. I will call in and negotiate. I'd rather not give up the HELOC and all my banking in one spot. It really is convenient.


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## Mortgage u/w (Feb 6, 2014)

rl1983 said:


> That's why I'm curious to know if my high rate is because I have a HELOC. I will call in and negotiate. I'd rather not give up the HELOC and all my banking in one spot. It really is convenient.


A HELOC is indeed a higher rate, especially if your whole mortgage is a LOC.

Consider a blend with a portion of your mortgage in a fixed term and the balance in a LOC. You benefit from the lowest rate available on the fixed portion and the flexibility to re-borrower with the LOC but with a slightly higher rate.


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## balexis (Apr 4, 2009)

Mortgage u/w said:


> Please ensure you compare apples with apples. A lot of hearsay on this thread of extremely low rates.


Hearsay? In my specific case, as far as I know, I'm comparing the same situation (refinance on a conventional loan) and equivalent products terms and conditions-wise.



Mortgage u/w said:


> Consider a blend with a portion of your mortgage in a fixed term and the balance in a LOC. You benefit from the lowest rate available on the fixed portion and the flexibility to re-borrower with the LOC but with a slightly higher rate.


That's a very good idea, I have no LOC at the moment but I like the idea of having it established in the way you mention at the same time as my renewal. What would be the downside of doing so? I would assume limited flexibility / increase fees for at renewal and discharge time? Or...?


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## Plugging Along (Jan 3, 2011)

I usually use these two techniques when I have renew a mortgage. I call Tangerine and my regular and ask them what the best rate I can get is. I call my mortgage broker and ask him if the rates I was just quoted are good or not. Then I call my bank that has my mortgage and I tell ask them what they can do, I tell them the best rate I have found and ask them what they can do. Have done this with multiple banks that had our mortgages, seemed to have done fine. Always on the phone, even before COVID


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## Mortgage u/w (Feb 6, 2014)

balexis said:


> ...That's a very good idea, I have no LOC at the moment but I like the idea of having it established in the way you mention at the same time as my renewal. What would be the downside of doing so? I would assume limited flexibility / increase fees for at renewal and discharge time? Or...?


There is no downside, really. If your current mortgage is not already registered as a collateral mortgage or more specifically a HELOC, then I guess a possible downside would be solicitor fees to register a new lien.

One limitation is that you can only get a LOC up to a max of 65% of your property value. So the strategy is to start with the fixed portion mortgage and then top up with the LOC. The advantage of a HELOC in this scenario is as you pay down the mortgage, you increase your available credit which can either be deployed as a revolving LOC (again, up to max 65%) or reborrowed as a loan. 
If you can share your property market value and mortgage balance, I would be able to provide a better example and possible options.


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## rl1983 (Jun 17, 2015)

Mortgage u/w said:


> If you can share your property market value and mortgage balance, I would be able to provide a better example and possible options.


Can I take you up on this?


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## Mortgage u/w (Feb 6, 2014)

rl1983 said:


> Can I take you up on this?


Absolutely!


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