With Canadian housing prices reaching record highs in recent years, choosing the right mortgage lender and product has never been more important.
The Royal Bank of Canada (RBC) is one of the Big Six Banks and the largest financial institution in the country by market capitalization. RBC provides a full suite of banking and financial services both in Canada and internationally. It is also the top bank for mortgages in Canada, which has provided mortgages to Canadian homeowners since 1864.
Key facts about RBC:
- Founded in 1864 in Halifax, Nova Scotia
- Employs over 9,700 people
- Serves over 17 million clients
- Has over 1,200 bank branches across Canada
- Offers personal, business, and commercial banking globally
Today, RBC provides a wide range of financial products and services to individuals, businesses, and commercial clients. These include chequing/savings accounts, digital banking, investing, insurance, commercial lending, investment banking, and consumer mortgage lending.
Current RBC Mortgage Rates
Mortgage interest rates fluctuate frequently depending on market conditions. RBC provides special discounted rates for new mortgages and posted rates for reference.
Here is an overview of RBC’s current mortgage rates, with the prime rate at 4.95%.
| Term | Discounted Rate | Posted Rate |
|---|---|---|
| 6-month convertible | – | 6.09% |
| 6-month open | – | 9.95% |
| 1-year fixed open | – | 9.95% |
| 1-year fixed closed | 5.49% | 6.09% |
| 2-year fixed closed | 4.79% | 5.39% |
| 3-year fixed closed | 4.29% | 6.05% |
| 4-year fixed closed | 4.34% | 5.99% |
| 5-year fixed closed | 4.29% | 6.09% |
| 7-year fixed closed | 5.00% | 6.40% |
| 10-year fixed closed | – | 6.80% |
| 10-year fixed closed | – | 12.00% |
| 5-year variable closed | 4.55% (RBC Prime Rate – 0.40%) | 4.95% (RBC Prime Rate + 0.000%) |
| 5-year variable open | – | 8.25% (RBC Prime Rate + 3.300%) |
RBC’s mortgage rates are competitive with those of the other Big Six banks. Discounted rates may be negotiated lower depending on individual qualifications and down payments. RBC also offers special bundled mortgage and line of credit products, which will be detailed in the next section.
RBC Mortgage Options
RBC offers a variety of mortgage options suitable for all types of borrowers and home financing situations:
RBC Fixed-Rate Mortgage
Fixed-rate mortgages come with an interest rate for the entire mortgage term, usually 1-5 years. This allows borrowers to enjoy predictable, set monthly payments over the full term before renewal.
RBC offers fixed-rate mortgages with terms from 6 months to 10 years. Their most popular options are 2-year, 3-year, 5-year, and 7-year fixed-rate mortgages.
Longer-term fixed mortgages beyond five years give borrowers financial stability by locking in low rates for an extended period. However, prepayment flexibility is reduced compared to shorter terms.
RBC Variable-Rate Mortgage
Variable-rate mortgages are based on the prime lending rate, which can fluctuate multiple times per year. Monthly payments stay the same, but the portion going toward interest versus principal will shift based on rate changes.
Low starting variable rates make this an appealing option when rates are expected to decline. However, payments can rise swiftly if the prime rate is hiked. RBC offers competitive 5-year variable-rate closed mortgages.
RBC Homeline Plan
RBC Homeline Plan combines a traditional mortgage component with the flexibility of a home equity line of credit (HELOC). Homeowners have the stability of fixed or variable rate mortgage payments while having approved access to additional funds up to 65% of their home value.
The funds can be used for anything from consolidating high-interest debts under one low-cost loan to financing home renovations or unexpected expenses that may arise. The combined benefits make the RBC Homeline Plan appropriate for borrowers who want an affordable mortgage option and the flexibility to access extra home equity as needed.
RBC Cashback Mortgage
The RBC cashback mortgage is explicitly tailored for first-time home buyers looking to enter the real estate market. It provides an upfront cash payout of up to 7% of the mortgage amount, up to a maximum of $20,000, to be used for expenses related to purchasing the home. (Source)
While attractive, borrowing a higher mortgage to receive the cashback incentive means paying interest on these additional funds. However, the cashback mortgage can be an appealing option for first-time buyers focused on overcoming the initial barriers to home ownership.
RBC Self-Employed Mortgage
For entrepreneurs, contractors, gig workers, freelancers and other borrowers with non-traditional sources of income, RBC offers its specialized mortgage for the self-employed.
This mortgage aims to provide more flexible qualification criteria tailored to the needs of self-employed borrowers. It can accommodate varied income sources and documentation like financial statements, contracts, notices of assessment, and bank statements.
While interest rates and down payment requirements may be higher relative to salaried borrowers, the mortgage for self-employed individuals opens access to financing that these applicants may struggle to obtain from mainstream mortgage lenders.
Additional RBC Mortgage Options
RBC also provides specialty mortgage offerings like:
- Vacation home financing – mortgages for secondary properties.
- Low-ratio mortgages – reduced insurance premiums for 20%+ down payments.
- Progress draw mortgages, specialized financing for builders.
What are the Key Features of RBC Mortgages?
RBC aims to provide advantages and flexibility suitable for each borrower’s situation and phase of homeownership. Their wide range of mortgage products and features accommodates diverse needs and goals.
RBC Double-Up Payments
RBC’s Double-Up payments feature allows borrowers to make additional mortgage payments on top of their regular payment amount. You can double up and pay up to 100% of your regular mortgage payment value in extra payments each month. This can significantly accelerate principal repayment and reduce total interest costs over the mortgage’s lifespan.
RBC Payment Frequency
RBC lets you choose from weekly, bi-weekly, semi-monthly, or monthly payment frequencies to match your unique cash flow and budgeting needs. More frequent installments, like weekly or bi-weekly payments, can significantly impact a mortgage’s lifetime, resulting in thousands of dollars in interest savings because the principal is paid down faster.
RBC Mortgage Prepayment
RBC mortgages permit prepaying up to 10% of the original mortgage principal annually without penalty. This enables borrowers to make lump sum payments as soon as they have extra cash available to pay down the mortgage faster.
RBC Early Renewal
RBC enables borrowers to start the mortgage renewal process 180 days before the end of their existing term to secure current interest rates, even if fixed mortgage rates rise substantially in the months leading up to the renewal date. The early renewal option provides peace of mind and flexibility to exercise rate guarantees well in advance if rates trend upwards approaching renewal.
RBC Skip a Payment
If a borrower encounters financial hardship or temporary cash flow issues, RBC offers the option to apply to defer or pause mortgage payments for up to 6 months. Qualifying for the deferral program is based on an assessment of individual circumstances. It provides stressed borrowers time to get back on their feet and avoid being forced to sell their homes.
RBC HomeProtector Insurance
Borrowers can purchase optional creditor insurance products from RBC, including mortgage life, critical illness, and disability coverage. This provides added financial protection in case of an illness, injury, or death that leaves one unable to work and make mortgage payments.
The insurance continues making payments or paying the mortgage principal until the policyholder can resume payments. Having access to knowledgeable specialists and optional creditor insurance provides peace of mind.
Now, let’s summarize the pros and cons of RBC Mortgage:
| Pros of RBC Mortgage | Cons of RBC Mortgage |
|---|---|
| – Extensive variety of mortgage products for different needs – Competitive interest rates relative to other major lenders. Special discounted rates and promotions are frequently offered. – Convenience of over 1,200 RBC branches across Canada. – Option for flexible bundled lending through Homeline. – Protections like insurance and deferral programs are available | – Strict qualification criteria compared to smaller lenders – Limited specialized options for bad credit or low-income borrowers – Higher interest rates for specialty products like cashback mortgage – Penalty interest rates charged for breaking the term early |
How to Apply for an RBC Mortgage
There are three ways Canadians can submit a mortgage application with RBC:
- In person at any RBC branch across Canada
- Online via RBC’s website
- By phone through an RBC mortgage specialist
The mortgage application process includes submitting documents to verify income, down payment funds, employment status, assets/liabilities, and debts. RBC also performs a credit check.
Here are the typical documents required:
- Income verification (pay stub, Notice of Assessment, etc.)
- Down payment deposit records
- Debts and liabilities
- Credit report
- Property details and purchase agreement
Getting pre-approved for an RBC mortgage solidifies the maximum amount you can borrow. Pre-approvals can be obtained through RBC’s website, over the phone, or by booking an appointment at a branch.
The pre-approval verification process checks income, debts, credit score, and down payment funds and includes a credit check. It results in a firm conditional approval, which lets you know the mortgage amount and rates.
Tips for Getting the Best RBC Mortgage Rate
While RBC offers plenty of mortgage flexibility, its posted rates may not always be the most competitive. Here are tips to negotiate the lowest possible rate:
- Improve your credit: Review credit reports and resolve any negative issues or discrepancies. Pay all bills on time and reduce credit utilization for maximum scores.
- Make a large down payment: A minimum 5% down is required, but 20%+ avoids expensive mortgage loan insurance premiums added to the rate.
- Lower your debt ratios: Pay down debts like car loans and credit cards to reduce your ratios and risk profile.
- Compare rates and shop around: Use online tools to compare RBC to other major bank rates and promotions. Highlight competitors’ offers when negotiating to motivate RBC to sweeten the deal.
- Ask RBC to price match or beat offers: Provide evidence of lower rates elsewhere and request an RBC match or beat them. Make it clear you are willing to move your business if they can’t provide competitive value.
- Leverage any existing relationship discounts: Long-time RBC clients may access special unadvertised mortgage discounts and preferred rates. Remind your RBC advisor of all your active accounts when negotiating.
With savvy rate shopping and negotiation, borrowers can secure significant mortgage savings from RBC.
Alternatives to Consider Beyond RBC Mortgage
RBC is just one option that home buyers and homeowners should consider when searching for the best mortgage lender.
Other Banks
All Big Six banks (RBC, TD, Scotiabank, BMO, CIBC, National Bank) offer similar mortgage packages and competitive rates. With advanced digital application processes, tools, and resources, online banks can offer lower overhead costs passed on to borrowers as savings.
Credit Unions
Credit unions offer competitive rates thanks to lower overhead costs, provide personalized customer service and local expertise, and offer specific products to attract new members.
Alternative/Private Lenders
Private lenders specialize in unique borrowing situations, offering financial solutions to individuals who may struggle to secure traditional loans, such as individuals with bad credit, low income, or unconventional employment. While their rates and fees may be higher, they provide access to funding when other lenders have declined applications.
Mortgage Brokers
Comparing options across lender categories provides the best chance of finding the optimal mortgage solution. An experienced broker simplifies the process.
- Access to cheaper rates from over 50+ lenders
- Customized product suggestions tailored to each borrower
- Can navigate unique situations like bad credit, self-employed
- Often, there is no cost to borrowers
Discover BestMO’s best banks for mortgages in Canada
FAQs about RBC Mortgages
How can I get pre-approved for an RBC mortgage?
Pre-approvals verify your financial details upfront and require the same documents as applications. You can get pre-approved online, by phone, or in person at any RBC branch.
What are RBC's mortgage qualification requirements?
RBC typically requires a minimum credit score 680, a down payment of at least 5%, and maximum debt service ratios of 39% GDS and 44% TDS.
What mortgage terms does RBC offer?
RBC offers fixed-rate mortgage terms ranging from 6 months to 10 years. Their most popular terms are 2, 3, 5, and 7 years.
Can I customize my RBC mortgage payments?
Yes, RBC allows you to customize your payment schedule to weekly, bi-weekly, semi-monthly, or monthly installments.
How do I refinance my mortgage with RBC?
Connecting with an RBC mortgage specialist is the best way to explore refinancing an existing RBC mortgage. New terms and rates and modifying your outstanding mortgage balance can be discussed.
What are RBC's prepayment options?
RBC permits prepaying up to 10% of your original mortgage principal annually without penalty. You can also make lump sum payments anytime.
Key takeaways: Making the Best Mortgage Decision with RBC
RBC is one of Canada’s largest and most recognized financial institutions. Its comprehensive mortgage selection, convenience of its national branch network, and competitive rates will continue to appeal to many Canadian borrowers.
The best advice remains to compare all options across multiple lenders to identify the most suitable mortgage product, lender, and interest rate for your financial needs.
Our mortgage brokers at Best Mortgage Online can provide massive value in this process. Contact us today to make informed decisions and maximize savings when financing a home.
