How Banks Make Money? Banks borrow money at a slightly higher rate than the rate posted by the Bank of Canada. They in turn, lend money for a higher interest rate via mortgages and loans. The difference between the interest rate at which the bank borrows money and the amount they receive via client mortgage payments is profit. Bank of Canada Key lending "interest" rate (aka bank rate, overnight rate): is the interest rate at which major financial institutions borrow and lend one-day (or... [read more]

In response to our current pandemic reality the Bank of Canada has lowered its key lending rate to .25%. And, the big banks have dropped their prime lending rates by 1.5% affecting variable rate mortgages.  Bond yields have lowered as well, however fixed rate mortgages have not been affected yet. (as of May 6, 2020) How will this affect the interest rate available if you are looking to renew your mortgage? And, what are your options in the days of... [read more]

A mortgage pre-approval certificate states the maximum amount of money a lender is willing to loan you, based on your current income and credit history. It will specify a term, interest rate and mortgage amount. The pre-approval will be valid for a period of time and may have conditions that must be met. Why get pre-approved? It will save you time in the long-run; you will only look at the homes you can afford. You will have a reference point to decide on an offer for a house. You... [read more]

A Heloc is a home equity line of credit. You can borrow money whenever you want, up to the credit limit using regular banking methods. This line of credit is secured by your home. You can apply for a HELOC at most banks or credit unions. You are required to pay the minimum interest payment on the amount withdrawn every month. The interest rate is variable based on the lender’s prime interest rate plus a percentage. Ex: a home equity line of credit can have an interest... [read more]

Today, the Bank of Canada raised the target for their overnight rate. This means that interest payments on products like variable rate mortgages and lines of credit could now be higher than they were last month.   What is a variable rate with Cap Rate Protection? A variable rate mortgage with Cap Rate Protection has fixed payments for the term of the mortgage that are calculated based on a cap rate rather than the current variable rate; as rates rise more of your payments would go... [read more]