Below are answers to the most common questions asked about mortgages at RBC Royal Bank®. Don't see your question? Call 1-800-769-2511 to talk with a mortgage specialist.
The key to choosing the right mortgage is to understand the range of features and options available to you, as well as your budget, circumstances and goals. The more you know, the more comfortable you will be choosing the best options for you and your family.
While there is a lot to consider, such as fixed or variable rate, short– or long–term, open or closed, we’re here to offer advice on the various features and options, some of which may help you to save thousands of dollars in interest over the life of your mortgage.
Our “Which type of mortgage is right for me? ” tool can help you make your selection. By answering a few simple questions about your financial goals and preferences we'll be able to recommend the RBC Royal Bank mortgage options that meet your needs.
If you're buying your first home or another property and need guidance, one of our mortgage specialists can also help you decide. He or she will ask you about your short- and long-term financial goals and plans for your home. Your mortgage specialist will then explain the types of mortgages available to you, the terms, and the rates to help you select a mortgage that fits your lifestyle and potentially cuts years off your mortgage.
Buying a home will most likely be the largest purchase of your life—so you need to be sure that you own a home that's compatible with your financial situation.
The simplest way to determine how much home you can afford is to compare your gross income to your total debt.
Use our “How much home can I afford? ” calculator to figure out the amount you can afford to borrow. It factors in your total earnings and debts to give you a maximum affordable monthly housing cost, including mortgage payment, property taxes, heating costs and condo fees if applicable.
Yes, you should! Getting pre-approved for a mortgage is FREE and puts you under no obligation. Best of all, when you start looking at properties you'll know what you can afford
After we receive your final offer to purchase, your mortgage can be quickly processed, subject to a satisfactory property appraisal and credit review.
Our safe and secure online pre-approval is 3 simple steps and can be completed in 5 minutes.
An RBC mortgage specialist is here to guide you through your entire purchase. Whether you are buying your first home or have bought a property before, he or she will look at your situation from every angle to help you choose the best mortgage for your financial situation and goals.
Mortgage specialists are available to discuss your mortgage needs anywhere you want—24 hours a day, 7 days a week.
RBC mortgage specialists work for RBC Royal Bank and are here to provide you with personal one-on-one service. They provide free, no-obligation financial advice and information about RBC home financing options and will help guide you through the entire purchase process. Because our mortgage specialists work with a team of banking professionals, they can also give you access to experts who can help meet your other financial needs, if desired.
A mortgage broker shops a list of several banks and alternative lenders to find a mortgage for his or her clients. Some bank financing solutions (including RBC products) are not available through a broker.
Your mortgage down payment is the portion of your home purchase price that you pay upfront yourself. The amount of your down payment (which represents your financial stake or the equity in your new home) should be determined before you start house-hunting.
The larger your down payment, the less your home will cost you in the long run. With a smaller mortgage, your interest costs will be lower and over time this will add up to significant savings.
See how a homeowner can save over $25,000 in interest costs on a $100,000 home by making a down payment of 25% versus a down payment of 5%.
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Here are some common strategies for raising money towards a down payment:
For purchase prices below $1 million, if you have less than a 20% down payment, you will need a low down payment insured mortgage. Low down payment mortgages provide insurance to cover potential default of payment; as a result, their carrying costs are higher than a conventional mortgage because they include the insurance premium.
Many first-time home buyers use their RRSP savings to help finance a down payment. With the federal government's Home Buyer's Plan, you can use up to $25,000 in RRSP savings ($50,000 for a couple) to help make the down payment on your first home. You then have 15 years to repay your RRSP.
To qualify, the RRSP funds you're using must be on deposit for at least 90 days. You'll also need a signed agreement to buy a qualifying home.
Even if you have already saved for your down payment, it could make sense to access your savings through the Home Buyer's Plan. For example, if you had already saved $25,000 for a down payment—and assuming you still had enough “contribution room” in your RRSP for a contribution of that amount, you could move your savings into a registered investment at least 90 days before your closing date. Then, simply withdraw the money through the Home Buyer's Plan.
The advantage? Your $25,000 RRSP contribution will count as a tax deduction this year. Use any tax refund you receive to repay the RRSP or other expenses related to buying your home.
While using your RRSP for a down payment may help you buy a home sooner, it can also mean missing out on some tax-sheltered investment growth. Be sure to ask your financial planner whether this strategy makes sense based on your personal financial situation.
For more information, visit Canada Revenue Agency Website
A fixed rate mortgage is a mortgage with a fixed interest rate for a specific term. This type of mortgage gives you the security of locking in your interest rate for the full term of your mortgage, so that you don't have to think about interest rate fluctuations.
That means you'll know exactly what to expect, including:
You can get a fixed rate mortgage with a closed, open or convertible term.
Unlike a fixed rate term mortgage, a variable rate mortgage does not provide a rate guarantee for a specific period. With a variable rate mortgage the interest you pay fluctuates based on the RBC Prime Rate; however, a variable rate mortgage generally offers the lowest interest rate available. Depending on the direction of the RBC Prime Rate, a variable rate mortgage could help you save in interest costs over the life of your mortgage.
With a variable rate mortgage your payment amount stays fixed for the term. If the RBC Prime Rate goes down, more of your payment will go towards paying off your principal; if the RBC Prime Rate goes up, more of your payment will go towards interest costs.
A closed term mortgage may be ideal if you're not planning to pay off your mortgage in the short term. Interest rates for closed term mortgages are generally lower than for open term mortgages. Closed term mortgages offer you the ability to save on interest costs and pay off your mortgage faster. You will pay a prepayment charge if you wish to renegotiate your interest rate or pay off your mortgage balance prior to the end of its term.
A convertible mortgage gives you the same benefits as a closed mortgage, but can be converted to a longer, closed term at any time without prepayment charges.
Open term mortgages may be appealing if you are planning to pay off your mortgage in the near future. They can be repaid either in part or in full at any time without prepayment charges. Open mortgages can be converted to any other term, at any time, without a prepayment charge. Interest rates for open mortgages are generally higher than for closed mortgages because of the added pre-payment flexibility.
When buying a home, you can expect to encounter the following costs:
Tip: The RBC® Cash Back Mortgage can help you cover many of these costs.
First and foremost, you should consider how much money you have for a down payment—the portion of the purchase price that you furnish yourself.
To qualify for a conventional mortgage you will need a down payment of 20% or more. However, you can qualify for a low down payment insured mortgage with a down payment as low as 5% depending on the purchase price.
You will also need money for closing costs, which are costs that are payable when you finalize your home purchase. Below are some of the closing costs you may need to pay:
Depending on the province where you are buying a home, HST may apply on the purchase. Ask your lawyer or notary if it applies in your case.
Below is a list of common monthly expenses you can expect as a homeowner. Some of them, like taxes, may not be billed monthly, so you may wish to do the calculations to break them down into monthly costs.
What you pay each month for your mortgage will depend on the amount you borrow, the interest rate, your mortgage term and your payment schedule.
Use our simple mortgage payment calculator to determine your mortgage payment.
The amortization period refers to the number of years it will take to pay off your entire mortgage. At RBC Royal Bank, you can select an amortization period up to 25 years for government insured mortgages and 30 years if you have a down payment of at least 20%. Your amortization is made up of a number of mortgage terms.
Your mortgage term is the length of time you have agreed to a certain interest rate type (for example, fixed or variable) and a specified payment schedule. When the term expires, the balance of the principal is either repaid in full or the mortgage is renegotiated at then-current market rates and conditions.
The longer your amortization period, the lower your monthly payment will be. However, longer amortizations increase the amount of interest you pay. Total interest costs are significantly increased if your amortization exceeds 25 years. An RBC mortgage specialist can help you decide what’s best for you.
Mortgage terms vary widely—from six months right up to 25 years. As a rule, the shorter the term, the lower the interest rate, and the longer the term, the higher the rate.
Our mortgages come with features that can help you reduce the number of years it takes to pay down your loan. If you use all of our mortgage features to their fullest, you could pay down as much as 20% or more of your original mortgage balance each year.
These five features are designed to help you build your home equity faster and save money over the life of your mortgage:
In June 2012, the Department of Finance announced changes to the rules for government insured (default insured) mortgages, reducing the maximum amortization period for new government insured (default insured) mortgages.
The maximum amortization for all new default insured mortgages is 25 years, as compared to conventional mortgages, which have a maximum of 30 years. The shorter amortization helps reduce total borrowing costs for those consumers who have to finance more of their home purchase. This helps them to build up equity more quickly by paying off their mortgage sooner.
Yes! You can take advantage of our 120-day early renewal option, which allows you to renew early without any penalties (some restrictions apply). This could save you in interest costs if rates rise before your regular renewal date.
If you choose a shorter amortization period, you can save a lot of money and live mortgage-free sooner.
Take a look at how much you would save on your total interest costs on an $80,000 mortgage amortized over 15 years versus the same mortgage amortized over 25 years.
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You can also accelerate your payment frequency, increase the amount of your mortgage payments, make principal prepayments or make Double–Up payments to further reduce your amortization period.
There is no limit on how many times you can refinance. However, you must qualify each time you apply. For more information, contact a credit specialist.
Remember, you can also use the mortgage add-on option to borrow up to 80% of the appraised value of your home, minus the amount of your outstanding mortgage.
You could save a substantial amount of money by consolidating your outstanding high interest loan and credit card balances using our mortgage add-on option. Take a look:
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Plus, you'll also enjoy the added convenience of having all your debt in one place.
Before you renegotiate your current fixed rate mortgage to take advantage of lower interest rates, there are several things to keep in mind—the most important one being how much will it cost you to break your fixed rate mortgage.
In order to lend you money at a fixed rate for a set period of time, RBC borrowed the funds needed in the market and entered into a fixed term contract. When you break your mortgage term, RBC is charged a breakage cost as that contract will not be fulfilled. Mortgage pre-payment charges are collected from you to partially offset the costs that RBC is charged.
The best way to know whether you can still save money in the long run after paying the mortgage pre-payment charge is to visit your RBC branch and talk with us.
Our Mortgage Prepayment Charge Calculator can also help you determine how much it could cost to break your mortgage and what interest rate you would need to get in order to "break even."
Our mortgage portability option lets you transfer the terms and conditions of your current RBC Royal Bank mortgage to your new home, subject to a credit review and property appraisal when you make the new home purchase. You may also qualify to add-on to the mortgage if you require a larger mortgage amount.
Please note: the mortgage portability option cannot be used in combination with the assumable mortgage option.
You can use our assumable mortgage option to let a home buyer assume your mortgage if he or she qualifies. If your current mortgage is a low-interest, longer-term mortgage, offering a potential purchaser the opportunity to assume your mortgage may be a good tactic in a buyer's market, especially when mortgage rates are rising.