About Royal Bank of Canada
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. It has provided mortgages to Canadian homeowners since 1864 and is headquartered in Toronto. RBC provides a full suite of banking and financial services both in Canada and internationally.
Some 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.
RBC’s stability from over 150 years of operation and status as one of Canada’s most prominent financial institutions make it a frequently considered option for Canadians seeking a new mortgage or refinancing their home.
RBC Mortgage Products
RBC offers a variety of mortgage options suitable for all types of borrowers and home financing situations:
RBC Fixed-Rate Mortgages
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 Mortgages
Variable-rate mortgages are based on RBC’s 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.
Read more: Fixed vs Variable-rate Mortgages in Canada
RBC Homeline Plan
This unique mortgage product 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’s 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 cost-effectively.
RBC Cashback Mortgage
The RBC cashback mortgage is tailored specifically 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, to be used for expenses related to purchasing the home.
While attractive, borrowing a higher mortgage amount 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 Mortgage for Self-Employed
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 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.
RBC also offers home equity lines of credit (HELOCs) and advanceable mortgages to access home equity.
RBC Mortgage Rates for 2024
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:
| Term | Discounted Rate | Posted Rate |
|---|---|---|
| 1-year fixed | 6.39% | 7.64% |
| 2-year fixed | 5.89% | 7.14% |
| 3-year fixed | 5.09% | 6.75% |
| 4-year fixed | 4.99% | 6.54% |
| 5-year fixed | 4.94% | 6.59% |
| 5-year variable | 6.10% | 6.70% |
RBC’s mortgage rates are competitive with those of the other Big Six banks, such as TD, Scotiabank, and BMO. Discounted rates may be negotiated lower depending on individual qualifications and down payments.
RBC also offers special bundled mortgage and line of credit products like its Homeline Plan, which features discounted interest rates at 2.49%.
Those with solid credit scores, higher down payments, and an existing relationship with RBC may qualify for the best mortgage rates and flexible options.
How RBC Mortgage Rates compare to Other Lenders?
It’s always smart to compare mortgage rates from different financial institutions to find the best deal. Here’s an overview of how RBC’s discounted rates stack up against other top lenders in Canada as of August 2024:
| Lender | 5-Year Fixed Rate | 5-Year Variable Rate |
|---|---|---|
| RBC | 4.94% | 6.10% |
| TD Bank | 4.84% | 6.15% |
| Scotiabank | 4.79% | 5.85% |
| BMO | 4.79% | 5.75% |
| CIBC | 4.99% | 5.95% |
| National Bank | 4.99% | 5.95% |
Tips for Getting the Best RBC Mortgage Rate
While RBC offers plenty of mortgage flexibility, their 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 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.
Key Features of RBC Mortgages
Payment Frequency
- Choose between weekly, bi-weekly, semi-monthly or monthly payment installments.
- Bi-weekly and weekly frequencies save thousands in interest over the term vs monthly.
- Matches payments to your specific cash flow needs.
Prepayment Privileges
- Prepay up to 10% of the original principal annually without penalty.
- Make lump sum payments anytime to pay the mortgage down faster.
- Increase regular payment amounts.
- Saves thousands by retiring principals faster than scheduled.
Portability
- Transfer existing RBC mortgage to a new property when moving.
- Must meet conditions like being insured and 12 months into existing term.
- Saves discharge and setup fees associated with getting a new mortgage.
Early Renewal
- Start renewal six months before the existing term expires.
- Lock in lower fixed rates even if rates rise substantially before maturity.
- Exercise any rate guarantee well in advance of maturity.
Mortgage Deferral Program
- Option to defer payments for up to 6 months if facing financial hardship.
- Must apply and be approved based on personal circumstances.
- Provides temporary relief and avoids being forced to sell.
Access to Specialists
- Mortgage specialists guide purchasing, managing, refinancing, and renewal.
- Advisors assist with navigating options and choosing the optimal mortgage product.
- Ongoing support throughout all stages of homeownership.
Insurance Options
- Mortgage life, critical illness and disability insurance are available as add-ons.
- Coverage continues paying down the mortgage if unable to make payments.
- Added financial protection and peace of mind.
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.
Pros and Cons of RBC Mortgage
Pros:
– Extensive variety of mortgage products for different needs
– Competitive interest rates relative to other major lenders
– Special discounted rates and promotions are offered frequently.
– Convenience of over 1,200 RBC branches across Canada.
– Online calculators and tools to estimate payments.
– Low minimum down payment requirements.
– Option for flexible bundled lending through Homeline.
– Protections like insurance and deferral programs are available
Cons:
– 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 term early
Applying for an RBC Mortgage
There are several 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 some 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 with RBC
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.
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.
- Online Banks, with advanced digital application processes, tools and resources, can offer lower overhead costs that are passed as savings to borrowers.
Discover our Best Banks for Mortgages in Canada:
- TD Mortgage Rates and Reviews 2024
- CIBC Mortgage Rates and Reviews 2024
- Scotiabank Mortgage Rates and Reviews 2024
- Equitable Mortgage Rates and Reviews 2024
- Desjardins Mortgage Rates and Reviews 2024
Credit Unions
- Competitive rates thanks to lower overhead costs
- Personalized customer service and local expertise
- Specific products to attract new members
Alternative/Private Lenders
- Specialize in unique borrowing situations
- Higher rates and fees but provide access to financing when turned down elsewhere.
- Options for bad credit, low income, unconventional employment
Comparing options across lender categories provides the best chance of finding the optimal mortgage solution. An experienced broker simplifies the process.
Mortgage Brokers
- 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 no cost to borrowers
Keys takeaway: Making the Best Mortgage Decision with RBC
Choosing a mortgage is complex. Here are five tips when evaluating RBC vs. alternatives:
1. Understand the Real Rates: Posted rates are a starting point. Focus on the discounted rates you’re offered. Stress test rates don’t consider discounts either.
2. Compare Multiple Scenarios: Review many amortization periods, terms, and fixed vs. variable options. Models show the big-picture payments and costs.
3. Think Long Term: Consider future plans. Will you sell before renewal or live there for decades? Variable rates seem attractive now, but can they withstand hikes?
4. Evaluate All Lender Fees: Some charge high prepayment penalties or restrictive default insurance. Read the fine print!
5. Get Unbiased Professional Help: Brokers assess your situation and highlight the mortgage products best suited for your needs, regardless of where they come from.
Doing due diligence leads to long-term savings and ideal mortgage financing.
Conclusion
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. At Best Mortgage Online, our mortgage experts can provide massive value in this process.
By understanding different lenders’ mortgages and alternatives, buyers and homeowners can make informed decisions and maximize savings when financing a home.
FAQs
What types of mortgages does RBC offer?
RBC offers various mortgage products, including fixed and variable rate mortgages, specialty offerings like the Homeline Plan and cashback mortgage, and niche mortgages for self-employed borrowers, vacation homes, and refinancing.
How do I apply for an RBC mortgage?
You can apply at RBC branches, online, or by phone. You'll need to provide income, down payment, credit, and property documents and agree to a credit check.
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.
How do I renew my RBC mortgage?
You can start the renewal process up to 6 months before your term expires. RBC mortgage advisors can help you navigate rate offers and renew the mortgage.
Does RBC offer mortgages for self-employed borrowers?
Yes, RBC has a specialized mortgage designed for entrepreneurs and self-employed borrowers with flexible qualifying criteria.