Mortgage & Rate Question for Brokers and Lenders

[Draug]

I am just about finished the mortgage process for a revenue property. The process started a couple of weeks ago. On Friday, I have an appointment to sign the bank's documents. Of course, the prime rate dropped on Monday.

The fixed mortgage rates dont drop immediately, but it seems that in a matter of time they generally seem to follow the prime rate. Will this be the case this time?

My question is this: Can I negiotiate a new rate with the bank on Friday when I go in to sign the existing documents? Or, will new documents need to be issued? Will they insist on waiting until the bank drops the posted rate before negotiating a new lower rate with me?

The mortgage details are 35% down on a $515K purchase, leaving a $335K 5 yr fixed mortgage currently at 5.99%.

If worse came to worse, I could pay cash for the new prop, then mortgage it later to replinish my investment capital. That would buy time for the .25% to get reflected in the fixed mortgage rates.

[fredr123]

Does the Bank of Canada rate affect fixed mortgage rates? I thought that only variable rate mortgages were affected by the BoC rate and fixed mortgages are based on some US long term bond or something...

[Draug]

Originally Posted by fredr123

Does the Bank of Canada rate affect fixed mortgage rates? I thought that only variable rate mortgages were affected by the BoC rate and fixed mortgages are based on some US long term bond or something...

The BoC rate only directly effects the variable rate, but it seems that the fixed rate most often reflects the BoC rate after a time delay. Not always, but generally, I think.

[ken0042]

I would say with 35% down on a mortgage the bank would be more than happy to hear how you want tomorrow's rate today.

[Incinerator]

Call your lender now and ask, if they need to print new documents it'll give them ample time to do so. In any case, it's really up to your lender to decide if they want to give you a lower rate right now ahead of the posted rate drop. Although I don't imagine you'd have too much trouble getting what you want considering your situation.

[Draug]

I went through a mortgage broker for this mortgage. 5.99% was OK, even with 35% down, given that Scotia's 'posted rate' was 7.39% for the 5 yr fixed.

My broker is suggesting to take a variable rate mortgage with Scotia, and then lock in later if in fact the Fixed rates drop. She claims, at this point, it is totally unknown if the Fixed Rates will drop or not. I am still in discussion with her...

Maybe I should just take the variable mortgage. Historically speaking, they provide better ROI than a fixed mortgage. But, I was looking for the 5 yr stability in this purchase.

[ken0042]

ING currently has a 5 year fixed @ 5.99% and 5 year variable @ 5.40%.

Still a decent deal you got, but keep in mind they aren't the only game in town.

[Incinerator]

Originally Posted by Draug

I went through a mortgage broker for this mortgage. 5.99% was OK, even with 35% down, given that Scotia's 'posted rate' was 7.39% for the 5 yr fixed.

My broker is suggesting to take a variable rate mortgage with Scotia, and then lock in later if in fact the Fixed rates drop. She claims, at this point, it is totally unknown if the Fixed Rates will drop or not. I am still in discussion with her...

Maybe I should just take the variable mortgage. Historically speaking, they provide better ROI than a fixed mortgage. But, I was looking for the 5 yr stability in this purchase.

My broker has had 5.89% for the last couple months now, not that it's a major difference but still money is money...

I agree with the variable vs. fixed...for a lot of people the stability and peace of mind just works better with their regular paycheques, but I think in your situation you can take the risk of the variable rate.

[Slava]

The variable rate works out cheaper in the long run....espeically if inflation is under control in the new year and the rates are cut again!