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Variable Rates, Banks & Brokers

rates2 Lately, non-bank lenders have had a shortage of low-priced funds to lend out on variable-rate mortgages.  As a result, we’re seeing the best variable rates at places like RBC. 

For example, if you’re in the market for a regular closed variable-rate mortgage, we’ve found RBC reps quoting prime-.85%.  As best we can tell, that’s an extra 1/10% off what you could find elsewhere, or $11 a month on a $200,000 25-year amortization. 

(Although RBC’s prepayment privileges and conversion rates are not the best–if that’s important to you.)

If you’re interested in any of the following variable rate products, however, you can still often find the best deals with mortgage planners:

  • Open variable-rate mortgages
    (good if you hate penalties for breaking a mortgage)
  • Variable rate mortgages with front-loaded discounts
    (good if you plan to lock into a fixed rate later this year)
  • Variable readvanceable mortgages
    (good if you need cheap credit for future investing or personal reasons)

Interestingly, the fact that commercial banks have an edge in closed variables is a phenomenon driven by Canada’s current liquidly shortage.  Later this year this trend could very well reverse itself, with the banks playing second fiddle to brokers again.  Only time will tell.

Of course, to most people, rate isn’t everything.  If you find yourself needing quality advice, you’ll serve your best interests by talking to an independent mortgage professional.

Mortgage planners can help you:

  • Determine the optimal mortgage for your long-term financial goals
  • Summarize the latest and best mortgage products
  • Develop strategies to save you interest
  • Decide on a fixed or variable rate
  • Arrange your current debt to qualify for a mortgage
  • One-stop shop for mortgage rates and terms
  • Best structure your mortgage application to improve your chances of approval
  • Handle all the tedious paperwork

Apart from mortgage planners, there aren’t a lot of other places to get this kind of help.  Bank reps are particularly limited in the advice they can give because they don’t have daily exposure to products from all lenders, nor do they recommend the competition.

At the end of the day, good and honest advice usually saves people money.

Quote du jour…

In giving advice seek to help, not to please.