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Mortgage Renewal Time

I doubt they're open, that usually adds 3-5% on top of closed rates.

Tangerine allows paying up to 20% of principal a year with no penalty. I am at prime -.85 variable. It's not often that you have that much money to throw at the mortgage, so it's open enough for me.
 
Bank of Canada next announcement for prime rate adjustment is July.

No one knows for sure but, the financial industry and corporations are still anticipating a couple of more bumps before the end of the year.

Relatively speaking, money is still cheap. The question to ask yourself is, how quickly do you want to pay off your mortgage and really how important is it for you?

Once you pay off the house, what’s the plan? Use it to purchase something else that will appreciate in value better than the current one? Maybe Reno it to prop up the value more.

My suggestion is to get a variable that can be converted to a fixed rate. Rates wont jump like crazy in the short term but, they will rise. And 0.25% over 25 0r 30 years can added up or 0.50% can increase your payments significantly depending on the balance you are starting out at.

Fixed for 5 years, when renewal comes around, you might be looking at a market with a much different outlook for cost of borrowing.

Personally, Ive seen the rates at 19.9% back in the early 80s and pretty much stay at 4% or lower since the middle 90s.

I believe we have hit the bottom and swinging back up. Not by huge swing upwards but, up non the less.

If you want to accelerate your payments to get mortgage fee sooner, there is no magic trick. Simply amortize the mortgage for a shorter period. So, it’s not just the rate that is important. Brokers and banks will offer nice low rates and then encourage 30 years to pay off. So the payment looks nice. The rate looks nice but, it’s a slow climb to pay it off.

And that might not be a bad thing.

Our plan, if you can call it one is, to have the house paid off before rates climb too high. By then, we can evaluate the marketplace for value of the property. Hopefully, it’s appreciated nicely and we can do a reverse mortgage in addition to our pension to live comfortably.

If you want to go no brainer, just lock in a 5 years, keep the same payment and have peace of mind. Some folks worry on variable rates when they hear they are increasing.

Personally, variable rates a good for the tail end. When you don’t owe a lot. Have decent equity. The payments aren’t killing you. You can go monthly. But, the advantages of variable rates over the fixed in the last year haven’t been great for anyone.




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If you want to go no brainer, just lock in a 5 years, keep the same payment and have peace of mind. Some folks worry on variable rates when they hear they are increasing.

Personally, variable rates a good for the tail end. When you don’t owe a lot. Have decent equity. The payments aren’t killing you. You can go monthly. But, the advantages of variable rates over the fixed in the last year haven’t been great for anyone.

Unless you are finishing paying off your mortgage in the next 5 years, I don't think it's that simple. Taking the fixed rate means you will pay off substantially less principal over the 5 years. When it is time to renew, rates will be whatever they are. If they are 2% higher (probably the highest increase I could see) at renewal, your available fixed and variable rates will both be roughly 2% higher. Going with fixed for the first term now means you have more principal at the higher rate and therefore lower affordability.

Now if you go with Brian P's excellent suggestion of using the variable rate product but paying the fixed rate monthly price, you have the best of both worlds (assuming there is not a shocking rate increase, but I can't see that happening as the fallout would be horrendous).
 
Variable... currently paying 2.25%. I can call and switch it to a term immediately... if I wanted to.

I would question why someone would want to pay down their mortgage when rates are so low... Most will have some other debt that costs more than their mortgage that they should concentrate on getting rid of first... Or park the extra cash in something that is earning more than the mortgage costs, but is still easily accessible if needed.

I only have a mortgage because it's so cheap... If need be... I could pay it off in a days notice.
 
Thanks for all the info.

On the variable rates we were offered, there are pre-payement options with no penalty 1x a year if we wanted to throw up to 20%, but we aren't interested in that. Our investments currently make much more gains than the cost of borrowing.

I think our house is supposed to be paid off in 16 years at our current pace and we plan to live here about this long.

Since we already know that we can well afford the 3.19% we have been paying for the last 5 years, it seems to make the most sense to go with variable and either bank the savings into a slush fund should rates rise, or just keep the monthly payments the same to pay it off slightly quicker.

We also own a rental condo that will be paid off in 6/7 years, so maybe we will throw more money at the house once the condo turns into monthly income.

On a side note, the prices for average rent in the city are getting pretty crazy now too.
 
After submitting a mountain of documents and financial information, our Broker just sent us the paperwork to sign.
We were a little surprised that the rate originally offered to us was not what was on our paperwork.
Instead of getting Prime -1%, we are getting Prime -1.1%.
That seems pretty sweet in today's market.
 
I feel for the people (and there are more than you'd think) that have a 1 , 1.2 million dollar mortgage on a property. A jump from 1.9% to 2.25% is a huge percentage and a big bag of cash per month.
I'd guess if we see the bump in sept and possibly dec they are talking about there will be some for sale signs on properties. Too many folks live close to the 'edge'
 
After submitting a mountain of documents and financial information, our Broker just sent us the paperwork to sign.
We were a little surprised that the rate originally offered to us was not what was on our paperwork.
Instead of getting Prime -1%, we are getting Prime -1.1%.
That seems pretty sweet in today's market.

Hey Shane, do you mind PMing me your broker info? Mortgage is up for renewal soon.
 
I feel for the people (and there are more than you'd think) that have a 1 , 1.2 million dollar mortgage on a property. A jump from 1.9% to 2.25% is a huge percentage and a big bag of cash per month.
I'd guess if we see the bump in sept and possibly dec they are talking about there will be some for sale signs on properties. Too many folks live close to the 'edge'

I'm in the market for buying, and feel that a lot of houses are going up for sale because of the rate increase/their renewal. Even for Sub-1mill houses.
The days of putting 5% down and riding out the inflation of real estate is coming to an end as renewals come around.
 
After submitting a mountain of documents and financial information, our Broker just sent us the paperwork to sign.
We were a little surprised that the rate originally offered to us was not what was on our paperwork.
Instead of getting Prime -1%, we are getting Prime -1.1%.
That seems pretty sweet in today's market.
Double check your great deal. What do they quote as prime AND are you fixed of variable?

If they gave you yesterday's bank prime of 2.45-1% you will pay about $204/mo interest for every $100K of mortgage.
If they gave you today's rate of bank prime 2.7%-1.1%, you'll be paying about $216/mo - or about 6% more interest than yesterday.

I wouldn't put it past a broker to offer you an additional discount so you take your eye off the bigger number.
 
Hey Shane, do you mind PMing me your broker info? Mortgage is up for renewal soon.
PM sent.

Double check your great deal. What do they quote as prime AND are you fixed of variable?

If they gave you yesterday's bank prime of 2.45-1% you will pay about $204/mo interest for every $100K of mortgage.
If they gave you today's rate of bank prime 2.7%-1.1%, you'll be paying about $216/mo - or about 6% more interest than yesterday.

I wouldn't put it past a broker to offer you an additional discount so you take your eye off the bigger number.
Thanks. We are on a variable. Prime was quoted at the rate that just increased. I can look him in the eye and shake his hand and know he is looking at me as a long term customer and wouldn't do anything dishonest to jeopardize that. It's now my 3rd mortgage with him.... and I know his family and where he lives:)
17 years til this house is paid off!!

If the Canadian economy ends up taking a significant hit due to US trade issues, would something like that typically raise or lower rates?
 
Predicting the direction of interest rates requires a crystal ball much clearer than anything I own.

An economic slowdown would result in less inflationary pressure and lead to downward pressure on interest rates.

Everyone has been predicting that interest rates would go up because they're at historic lows. (Upward bias)
The economy has been strong by many measures. Low unemployment. (Upward bias)
Low unemployment would be expected to induce companies to pay more to attract workers. (Inflationary - Upward bias)
But the economy has been going up for so long (bottomed in 2009) that sooner or later something has to give. (Downward bias)
Auto sales in particular have been so strong for so long that one would think it would taper off at some point. (Downward bias)
The Trump tariffs if implemented as described will result in an immediate increase in prices and an immediate slowdown. (Downward bias) - note that the stock market does not have appeared to price in this possibility, what's priced in is more-or-less business as usual
Everyone knows that a big increase in interest rates would bankrupt lots of indebted consumers. (Even-keel bias)

No one knows.

My thinking is that any increases in interest rates will be modest and possibly short-term, if the Trump tariffs go through.

The bigger thing to watch out for is if Republicans win the mid-term elections in the USA late this year - which would influence congress and senate to follow Trump and all his shenanigans. Right now, everyone is operating "business as usual until we can't" with respect to whatever Trump does, with the presumption that this, too, shall pass. If Trump gets another term in office, and continues on the path of isolationism, then things get really interesting ... and not in a good way.
 
Once interest rates get to the bottom (which I believe we have seen) , there is really no place to go but UP. Slowly as a fast pace turns over the boat, which we have also seen.
If every second financial expert being interviewed says Canadian household debt is at an all time high and needs to be reigned in , because rates cant stay low forever, I tend to believe stuff like that.

(i'm somewhat biased, not paying a mortgage, just collecting other folks interest, bring on the increases please)
 
Problem is that housing prices increase to the limit of affordability no matter what else is done. If the government does something to "improve affordability" all it means is that prices will go up to the limit of affordability again. Toronto is at the limit of affordability. (Vancouver is beyond it.) An increase in interest rates will reduce the size of mortgages that people can afford, which will reduce demand for housing ... which could crash the housing market.

Doesn't affect me directly, either. Only thing I owe is a car loan ... which is locked in at 0% until it's paid off in another four years. I could pay it off now, but why should I?
 
Problem is that housing prices increase to the limit of affordability no matter what else is done. If the government does something to "improve affordability" all it means is that prices will go up to the limit of affordability again. Toronto is at the limit of affordability. (Vancouver is beyond it.) An increase in interest rates will reduce the size of mortgages that people can afford, which will reduce demand for housing ... which could crash the housing market.

Doesn't affect me directly, either. Only thing I owe is a car loan ... which is locked in at 0% until it's paid off in another four years. I could pay it off now, but why should I?
I wouldn't bet Toronto is at the limit of affordability - there are plenty of cities that are way more expensive... when supply runs out, prices go up! I wouldn't be surprised to see Toronto housing prices take a tun upward again in the next 6 months.
 
I wouldn't bet Toronto is at the limit of affordability - there are plenty of cities that are way more expensive... when supply runs out, prices go up! I wouldn't be surprised to see Toronto housing prices take a tun upward again in the next 6 months.

My take is Toronto and Vancouver (and now by extension surrounding areas) are nowhere near the limit of affordability. Sure the people living and working here can't afford to buy (unless they have ridden the wave up), but there are many people around the world that want a safe place to park their money (and compared to many major cities, we are still disgustingly cheap).

I call huge BS every time the government or realtor bureaucracy say that foreign buyers are a tiny percentage of sales. I know at least one entire subdivision where almost every sale goes to a "student". These houses are over 2 million. The stats are just spun to try to keep the dream of home ownership alive.
 
The small part of Oakville called Bronte has 800-1000sq ft 1920's frame houses that are nothing but 'knockdowns' selling for 1 , 1.2 million , ok size lots so they get McMansions. If you put 1 mil into the building lot and 7-800k into the build , what are they carrying in debt. And there are hundreds of them , just there. Spread that around the GTA and holy cow.
 
The small part of Oakville called Bronte has 800-1000sq ft 1920's frame houses that are nothing but 'knockdowns' selling for 1 , 1.2 million , ok size lots so they get McMansions. If you put 1 mil into the building lot and 7-800k into the build , what are they carrying in debt. And there are hundreds of them , just there. Spread that around the GTA and holy cow.

Have a friend that retired recently in Bronte on a 60x240 lot. Figures he can sell and buy a same size place in the Falls with a mill in the bank once the dust settles (minus his original $46k outlay back in 1990).
 
Update: First payment withdrawn.
Previous biweekly amount was $1293
Current biweekly amount is now at $977
Approximate reduction per month is $600.
So that works out to an additional $7k we can throw into the house per year.
= no complaints.
 
I have several friends that have gone the mortgage broker route
1. its all they do, they arent selling RESP's and LOC.
2. they have some interesting access to funding
3. Its in their best interest to out perform the banks otherwise they aren't relevent.
4. Bankers are not your friend
 

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