Looking for ways to save on your mortgage?
With an RBC Royal Bank® variable rate mortgage, your payment amount stays fixed for the term; however, the interest rate will fluctuate with any changes in the RBC® prime interest rate*.
This means that your monthly payments will remain the same, but if our prime rate goes down, more of your payment will go toward your principal. And if our prime rate goes up, more of the payment will go toward the interest.
The variable rate advantage
Examining Canadian mortgage rate data from 1950 to 2000, Dr. Moshe Milevsky, Associate Professor of Finance at York University, found:
> Choosing a variable rate mortgage would have saved Canadians $22,000 in interest payments over 15 years (based on a $100,000 mortgage); and
> Canadians would have been better off borrowing at a prime rate (variable) compared to a five-year fixed rate 88% of the time.*
As you can see, a variable rate mortgage offers the possibility of greater longterm interest savings.
Comparing your variable rate mortgage options
5-Year Variable Rate Closed Mortgage
> Offers the freedom to switch any time to a fixed rate mortgage with a term that’s at least as long as the one remaining on your mortgage
> Lets you make a Double-Up® payment any time up to a maximum of your regular monthly payment plus interest
> Allows you to increase your payments up to 10% per year without penalty
5-Year RateCapper® Mortgage
> Has an interest rate that varies according to RBC prime rate but never exceeds the capped rate, no matter how high interest rates rise (interest rate = RBC prime interest rate)
> Lets you make a Double-Up® payment any time up to a maximum of your regular monthly payment plus interest
5-Year Variable Rate Open Mortgage
> Is the most flexible RBC Royal Bank mortgage available
> Offers the flexibility to convert to any mortgage type and term at any time
> Includes no prepayment restrictions; you can choose to pay down your mortgage faster — even pay it off in full — without penalty
Why choose a variable rate mortgage?
You’ll benefit from a variable rate mortgage if:
> You are comfortable with rate fluctuations to gain possible long-term interest savings;
> You have the financial flexibility to accept possible increases in your amortization should the interestrate increase; and
> You prefer the ease of having regular mortgage payments set for the term, and the interest rates fluctuate during that time.
Still undecided about a variable rate mortgage?
With the RBC Homeline Plan®, you can get both a variable and fixed rate! It’s an easy way to split your mortgage and manage your interest costs. By dividing your mortgage into two parts, each with its own rate, term and mortgage type, you will have a fixed rate for security and a variable rate for interest rate savings. With a fixed and variable rate mortgage, you’re getting the best of both worlds.
Ask about your mortgage options today
For more information on finding the best mortgage option that suits your needs, call Bruna Anacleto, your mortgage specialist, today at 416.508.6324. You may also email her at bruna.anacleto@rbc.com
All residential mortgages and lending products are offered byRoyal Bank of Canada and are subject to its standard lending criteria.
1* RBC prime rate is the rate on interest amount announced by the
Royal Bank of Canada from time to time as its prime rate.
2* Dr. Moshe Milevsky, Associate Professor of Finance, Schulich School of Business, York University, “Mortgage Financing: Floating your way to prosperity,” 2001. Report available in English only.
