RBC Mortgage Rates & Reviews

RBC's large presence both online and with its large branch network can be very helpful when doing business with the bank. There are over 1200 RBC branches across Canada, and the company has over 100,000 dedicated employees, which means that no matter where you need a loan or mortgage throughout the country, RBC has the resources to meet your needs. RBC's large footprint has allowed the bank to serve over 18 million customers worldwide, the majority of whom are in Canada.

This program can help you to ease your monthly payments if any unexpected expenses or job loss occurs, giving you time to rebound. If you have additional add-ons such as mortgage protection insurance or if you are paying property tax through RBC, you will still be required to make these additional payments during the periods you skip. It's also important to be aware that skipping periods will add to your interest payments that you will owe over your term, as interest still accrues. If you are planning on using this feature for a period, it's important to inform RBC as soon as possible, with requests taking up to 5 days to process.

All the big 6 banks in Canada offer their own form of mortgage protection insurance, with mortgage life insurance and critical illness insurance being offered across all 6 banks:

You may be required to pay your property taxes through the bank depending on: if you are a first time home buyer, your mortgage terms, your down payment amount, and your credit history. Even if you are not required in your mortgage to pay through RBC, you are still able to do this by contacting the bank to arrange this feature with your mortgage. The reason RBC makes this feature mandatory for some mortgages is so that home buyers do not fall behind on property tax payments, which will then act as a lien on the house. All the major Canadian banks also offer the choice to pay property taxes with them through your mortgage.

Every month, even in months where you defer your mortgage amount you will have a property tax estimate that you will pay to RBC. They are able to estimate how much your property taxes will be based on information about the property tax rate in the city, along with your appraised value and amount paid the year prior. This money you pay every month will stay with RBC until it comes time to pay the yearly amount, which RBC will then do on your behalf. If your actual yearly property tax payment is above the estimate, RBC will advance the money needed to cover the shortfall, which you will then need to pay back with interest. If the estimate is above the actual amount of property taxes, RBC will give you interest on the difference.

The biggest benefits of having RBC pay your property taxes on your behalf is how much easier it makes budgeting and paying. Instead of having to remember to pay the bill and when to pay it, RBC will do this all on your behalf. As well, it allows you to better plan in advance for how much the bill will be with it being included in your monthly mortgage payments. This prevents you from not having the amount in your bank account at the end of the year to pay.

The cons of paying property taxes through the bank is that you will miss out on interest by not holding your budgeted property tax payments in your savings account. Instead, RBC holds the money on your behalf, and you aren't able to earn interest on it. As well, it's likely that your property tax estimate paying through the bank will have a cushion built into it, meaning you will likely be making slightly higher payments than your actual property tax bill will be, which will then be used in the future for your next property tax bill. This leaves more of your money locked up for the year as you wait for your municipal assessment.

In order to get an investment property mortgage, you will need the following:

• A down payment of 20% or more,
• A good credit score and clean credit history,
• Stable and sufficient income,
• Documentation such as your most recent Notice of Assessment & T776 form, and
• Current lease agreements for the property or market rent estimates

Since most investment properties are not owner occupied, many are not eligible for high-ratio mortgage insurance. This will mean you will need to have a down payment of over 20%, a good credit score, and the financial flexibility to cover the mortgage and your living expenses. It will also mean you will pay higher interest rates on the mortgage amount, meaning you will need to budget for these higher costs when deciding if purchasing an investment property is feasible for your situation. With over 1200 branches across Canada, RBC offers the convenience and flexibility to purchase an investment property almost anywhere in Canada using a mortgage from them.

Location

One of the only things you will not be able to change about a property is where it is located. This means that finding a property in a location that is in a good neighbourhood, with good job prospects, close to amenities, and is in demand to rent may make for a good long term investment.

Costs

Some major costs to be aware of when looking to purchase a rental property and determining the attractiveness of the opportunity include:

Price

How much you pay for a property will ultimately determine your return on investment when purchasing an investment property. This makes the price you're paying very important so that you are able to get a return on your investment that is worth your risk, time, and money. Real estate properties are usually valued based on their capitalization rate, which is how much operating income they produce, divided by their purchase price. A higher capitalization rate may mean you can get a higher return on investment, but it usually will also mean a higher-risk property. A low capitalization rate could mean that a property is expensive for what you're getting, but it could be because of the high demand for properties in the area.

Time Commitment

If you decide to manage the property without the help of a property management company, you will be responsible for managing the day-to-day obligations of the property. This includes renting out the property, collecting the rent, resolving tenant issues, and organizing paperwork.

Single Unit Residential Properties

This option includes single family homes, condos and townhouses. These types of rental properties can be attractive for first time real estate investors or those looking for lower priced options to build equity. Single unit properties will usually have 1 tenant, unless each room is being rented out.

Multi-Unit Residential Properties

Typically this is for properties between 2 to 6 units where the owner owns the entire building, rather than just a unit in the building. Because it has more units, multi-unit residential properties will usually be much more expensive than single unit properties. Since there are multiple units, the owner may choose to live in one unit, while renting out the other units, or rent out all the units and live somewhere else.

Commercial Real Estate

Businesses looking for a mortgage to purchase an income-producing property would require a commercial mortgage loan from RBC instead. Commercial real estate includes the following:

• Multi-residential properties with 7 or more units,
• Office properties,
• Retail properties, and
• Industrial properties

Since these properties usually have much higher prices, you will likely need a much larger loan than a single unit or multi-unit income property. Commercial real estate is typically purchased by more experienced real estate investors with a large amount of equity.

In order to finance up to 95% of the appraised value of the vacation home, you will need mortgage insurance. If you currently have a CMHC-insured mortgage for your primary residence, you may need to use a different insurer for your vacation home mortgage.

For those looking to get a property to rent out and use in a vacation destination, an income property mortgage may also be another option to purchase with. Considering that another home to pay a mortgage on would mean higher overall housing costs and therefore higher debt service ratios, including your potential rental income and renting out your vacation home when it's not in use can help you pass mortgage stress tests and make getting a vacation home more affordable.

For those looking to purchase a vacation home outside of Canada, RBC’s presence throughout the USA can make the process of getting approved for a mortgage much easier. RBC allows Canadians who bank with them to potentially leverage their Canadian credit score in order to qualify for a mortgage in the US. This can be very helpful, considering some Canadians can struggle getting financing outside of Canada or may require a very high down payment in order to get financing. This may open up more opportunities to buy a vacation home in Florida or in states throughout the USA.

If your vacation home is not a permanent residence and you already have one home, you will be subject to capital gains tax if you sell your home in the future for more than your adjusted cost. Your adjusted cost will be your total purchase price and the money you spent on any renovations for the home, meaning it's important to keep track of these.

Another important tax implication of a vacation home is how rental income is taxed. You can deduct expenses incurred from renting the home, including maintenance, advertising, utilities, and mortgage interest. This is an important tax benefit that will make any rental income you earn from the property that much more lucrative.

The amount of money you will be able to get with a cash-back mortgage will depend on your mortgage size and term.

Depending on your home purchase price and your eligibility, you may be able to receive the following amounts in cash back when you purchase:

A cash back mortgage allows you added financial flexibility, which can help you to consolidate debts that have a higher interest rate into your mortgage, cover home closing costs, do a renovation, pad your savings, and even put money towards expenses or investments. Consolidating debts, which is very common with cash back mortgages, can especially save you money if you pay back high-interest debt, such as a credit card or auto loan, with the mortgage cash back you receive.

A cash back mortgage will sometimes mean a higher interest rate on your mortgage, as the lender looks to be compensated. Over time, this may mean you are paying more in interest than you received in cash back over your mortgage term. If you don’t keep the mortgage until the end of its term, you may also have to repay the cash back that you received.

To get a self-employed mortgage at RBC, you will need the following:

• Your most recent and past Notice of Assessments,
• Good credit history, and
• Sufficient income

In addition, it's likely that the bank will want to see other supporting documents about your self-employment status, which may include:

• Business financial statements,
• Proof of ownership,
• Contracts showing future business,
• Proof of your GST and HST being paid

Usually, if you are a Canadian looking to purchase a home in the US, you likely may not have any or very little credit history in the country, which can be a major roadblock in getting a mortgage. This makes it tough to find any financing, especially if you do not have a very large down payment and strong income. With RBC’s presence in Canada, you are able to leverage your Canadian credit history, which makes getting a mortgage in the US through them very doable, especially if you don't have much of a credit history in the US.

RBC offers Canadians the following benefits and terms when buying in the US:

• The ability to use your Canadian credit history,
• Financing in all 50 US states,
• 4 mortgage terms, including a 3-year, 4-year, 5-year, and 10-year mortgage term, all with a 30 year amortization,
• The ability to make penalty-free lump sum payments towards your mortgage amount, and
• Only a 20% down payment is needed to purchase for most people

When you are ready to get an RBC mortgage, you should speak with an RBC branch advisor or mortgage specialist. You will also likely need the following documents:

• Your T1 and most recent Notice of Assessment,
• A list of your current assets and liabilities,
• Confirmation of your down payment, which may include recent bank statements, RRSP withdrawal confirmations, or a Gift Letter,
• Documents proving current employment and income, including recent pay slips,
• Documents proving additional income if any, and
• Details about the property, including the listing (if applicable) and any associated bills and taxes (e.g. property taxes, condo fees and heating costs).

During your meeting, you will be able to establish how large of a mortgage you can afford. For a quick estimate however, check WOWA's Mortgage Affordability Calculator.

Since getting pre-approved doesn't cost anything and is a relatively quick process, there is little downside to doing it if you are planning on purchasing a home soon. Some of the benefits of getting pre-approved include:

• Knowing how much of a mortgage you can get and your budget,
• Planning for your monthly payments,
• Locking-in an interest rate,
• Being able to make an offer without a financing condition, which can make your offer more competitive, and
• Starting the home buying process

Generally it is a good idea to get pre-approved before house hunting. This is so that you will be able to have all the information to feel confident searching for a home, and to be able to make an offer without a financing condition.

Getting pre-qualified is the process of submitting your financial and personal information to a lender, who will then provide you with an assessment of how much they'd be willing to lend to you. The lender is not guaranteeing you the loan, only giving you a soft estimate of how much you might be able to spend based on the information provided. This differs from a pre-approval, considering that a pre-approval is a commitment to loan you money, while a pre-qualification is not. Getting pre-qualified is also much faster, with your lender doing only a soft credit check which will not affect your credit score and can give you information in minutes.