Rates are an important factor in securing a mortgage, but other considerations should be made to ensure that your loan meets your long-term needs.
Posted Rates Vs. Special Rates
The posted rate is the rate that a lender openly advertises and is generally considered the starting rate for a mortgage rate negotiation. It is typically the uppermost rate that a bank will give you.
Special rates, also known as discounted rates, are advertised discounts off posted rates.
Tangerine does not post any special or discounted mortgage rates.
Fixed Vs. Variable Mortgage Rate
With a fixed-rate mortgage, you make the same payment over the entire term. Your mortgage rate and payment are not affected by changes to the Bank of Canada’s (BoC) overnight rate.
However, if you have a variable-rate mortgage, your mortgage payments change in sync with the overnight rate; your mortgage payment also rises as rates increase. Conversely, when the prime rate drops, so will your variable-rate mortgage.
Assuming a $300,000 insured mortgage with a 25-year amortization, here’s how the payments compare using current Tangerine mortgage posted rates as of October 1, 2024:
Related: Should I Choose a Fixed-Rate Or Variable-Rate Mortgage?
Shorter Vs. Longer Mortgage Term Lengths
Your mortgage term is the amount of time you are contractually obligated to pay your mortgage at a stipulated rate. With a five-year fixed-rate mortgage, for example, you’ll pay the same amount each payment at a given interest rate for five years. With a five-year variable-rate mortgage, your rate will vary in sync with the prime rate in relation to the rate you are offered when you start your mortgage for five years.
A long-term mortgage is typically one with a term longer than three years. Tangerine advertises the following long-term mortgages:
- 4-year fixed-rate
- 5-year fixed-rate
- 5-year variable-rate
- 7-year fixed-rate
- 10-year fixed-rate
A short-term mortgage has a term of three years or less. Tangerine offers the following short-term mortgages:
- 1-year fixed-rate
- 2-year fixed-rate
- 3-year fixed-rate
If you want the consistency of a fixed-rate mortgage but think rates may go down in the future, you can choose a shorter term with the hope that rates will be lower at renewal time. However, you might choose a longer-term mortgage if you prefer budgeting a set mortgage payment for a longer period.
Open Vs. Closed Mortgages
An open mortgage gives you more flexibility to pay off your mortgage or break your mortgage contract than a closed mortgage. For example, with an open mortgage, you can convert it to another term at any time without a prepayment penalty. However, an open mortgage typically has a higher interest rate in exchange for this flexibility.
An open fixed-rate mortgage may be a good option if you want flexible prepayment options, plan to sell your home in the near future, or would like the option of early renewal to a longer term without any costs.
Tangerine does not advertise any open mortgages.
Convertible Mortgages
With a convertible mortgage, you can convert your mortgage from a shorter (typically six-month) closed term to a longer fixed-rate closed term of one year or more without prepayment penalties.
Tangerine does not advertise any convertible mortgages.
Prime Rate
Tangerine’s prime rate is currently 6.45%.
Rate Vs. APR
The posted interest rate is the rate that a lender advertises openly. The APR, or annual percentage rate, includes other borrowing costs, such as fees.
Tangerine does not publish its APR.