Are variable mortgages negotiable?

[Kevin86]

Hi Everyone,

My advisor at the bank told me that the variable (both closed and open) rate mortgages are not negotiable and are offering me Prime for Closed variable. I was wondering if they are supposed to match the rate from any major bank.

I know banks match the rates on fixed/closed mortgages and was just curious as to why they don't do for the variable.

 

[Tacoma]

Hi Everyone,

My advisor at the bank told me that the variable (both closed and open) rate mortgages are not negotiable and are offering me Prime for Closed variable. I was wondering if they are supposed to match the rate from any major bank.

I know banks match the rates on fixed/closed mortgages and was just curious as to why they don't do for the variable.

Don't know what bank you're talking about but it should be negotiable. There is only one way to find out. You need leverage. Go and try and negotiate a better rate elsewhere and ask them to match. If they don't even after you threaten to leave, then you invoke your leverage and leave!

 

[Kevin86]

Yes, I did get a rate which prime - 0.15 but my bank didn't match it. But my bank is offering AeroPlan miles. So I'm thinking if I should go for prime minus rate or go for miles.

 

[nfitz]

I've had no problem negotiating with banks before for variable. You have to be hard-ass though sometimes ... threaten to pull all your accounts; Visa Cards, mutal funds, RRSPs, investment accounts ... then the start to negotiate. They have to know you mean business.

Aeroplan miles? That seems bizarre. I guess the question is how many. 0.15% will cost you an extra $150 a year for a $100,000 mortgate. So assume a $300,000 morgage for 5 years, and your looking at $2,250. How many points do they give you, and what are they worth? I'd guess $2,250 would be worth about 120,000 or so miles.

 

[Kevin86]

I understand that they give aeroplan miles on total interest paid over the life of mortgage. so it will be about 125k miles over 25 years.

Every month they will credit my MILES account as per the interest paid in that month.

 

[ABuyer]

I work for a FI and I can tell you that we can not, under any circumstances negotiate any variable terms. I have personally lost a couple of clients because of that. There are some smaller banks that are offering prime-0.15 right now, but ours is at prime. I still don't think you are getting a good value with variables right now, sure the rates are tempting, but in couple years when you want to lock-in, because rates are going up, there is no way you be getting the long term rates that are available today. Personally I would wait until the adjusting factor is lower to maybe around -0.50 before committing to a variable.

 

[Torontotony]

I've had no problem negotiating with banks before for variable. You have to be hard-ass though sometimes ... threaten to pull all your accounts; Visa Cards, mutal funds, RRSPs, investment accounts ... then the start to negotiate. They have to know you mean business.

Um yeah, good luck with that.


Kevin, Abuyer is giving you the correct info. Variables are typically non-negotiable. FYI, the correct lowest Variable rate is set at Prime - .25% and it's not with a bank.