Notes on TD Canada Trust
TD Mortgage Rates
TD routinely jockeys with RBC for the title of Canada’s biggest bank (by market capitalization). It now has more than 10 million customers across the country.
TD is also one of the largest Canadian mortgage providers. It sells mortgages mainly through its mortgage specialists and branches. But TD is also a major participant in the broker channel with roughly 10% of market share among the broker lenders.
The bank’s mortgage rates are generally fairly competitive (for a major bank). Its rate deals are made possible by ultra-low funding costs thanks to its sheer scale.
TD Posted Rates
TD, along with the other Big 6 banks, maintains three variations of rates: posted rates, special offer rates and discretionary rates.
Almost nobody pays TD’s posted rates. They are inflated, non-discounted rates that are mostly used as a reference point for calculating rate discounts and as a method of determining prepayment penalties.
Special offer rates are typically limited-time offers that TD makes available from time to time.
The best bank mortgage rates are generally discretionary rates. These are reserved for well-qualified borrowers and usually require some degree of negotiation with the bank.
TD offers an array of standard mortgage products similar to those of the other big banks. These include the most common fixed and variable rate terms, as well as convertible, open and cash back mortgages, and HELOCs.
TD’s 5-year fixed mortgage is its most popular term, followed by the 5-year variable. TD is among the lenders that offer fixed-payment variable rates, which means your monthly mortgage payment generally doesn’t change — even when prime rate rises. Instead, as rates rise, the interest portion of the payment also rises while you pay down less principal, and vice versa.
The majority of TD’s mortgage rates include a standard 120-day rate hold and flexible 15% lump sum and 100% payment increase prepayment features. Note that prepaying more than the allowed amount will involve a penalty. Paying out a closed TD mortgage before maturity also entails a discharge/assignment fee in most provinces (e.g., $260 in Ontario and $75 in B.C.).
Like most big banks, TD’s rates are based on a standard 25-year amortization. Thirty-year amortizations are available on uninsured mortgages, usually at a 10-basis-point rate premium.
TD mortgage clients have the following payment frequency options: monthly, rapid semi-monthly, semi-monthly, rapid bi-weekly, bi-weekly, rapid weekly and weekly payments.
TD Home Equity FlexLine
For those needing to tap into their home equity, TD offers its Home Equity FlexLine. It’s one of the bank’s most popular products and has been a huge source of growth for TD’s Canadian business.
FlexLine is essentially a readvanceable mortgage. It allows homeowners to access up to 80% of the value of their home.
Up to 65% of your property’s value can be borrowed via the revolving portion, meaning that as you pay down your balance, your available credit increases (up to your established credit limit). Repayment is made at your own pace–as little as interest only or up to the entire outstanding balance.
You can also choose to place some of your outstanding balance in a closed-term portion. This part of the FlexLine is paid back through regular payments at a fixed or variable interest rate with a closed or open prepayment term. Using the term portion, homeowners can access a full 80% of their home’s equity.
Readvanceable mortgages like the FlexLine are used for a variety of reasons, including funds for home improvements/renovations, funding a business, paying for educational expenses or for making investments. Because the funds are always available, 24/7, the FlexLine makes a convenient emergency fund as well.
As of this writing, the FlexLine is currently available only through TD mortgage specialists and branches. There are rumours that TD is planning to make it available through mortgage brokers in the future.
How to Get a TD Mortgage
TD Bank sells its mortgages through its branches, mortgage specialists, call centre and through the mortgage broker channel.
If you’re up for renewal at TD, you generally have to call the bank to negotiate your renewal rate.
Using a TD Mortgage Specialist
The majority of TD’s mortgages are sold through the bank’s mortgage specialists, who are essentially commissioned representatives. Like a mortgage broker, they have the ability to “buy down” your interest rate. This means they can forego some of their commission in order to offer you a lower rate. Remember this during your rate negotiations.
A few other notes:
- Mortgage specialists typically only serve new bank customers and not existing homeowners whose mortgages are up for renewal.
- If you need a TD mortgage specialist contact, feel free to email us.
TD Mortgage Brokers
TD is one of only two Big 6 banks that participates in the mortgage broker channel. It currently has about 10% market share of the broker market.
Generally speaking, TD branch reps and mortgage specialists can offer similar rates to brokers, but brokers sometimes buy down the rates a bit more. So it pays to shop the bank against a good TD-approved broker if you’re interested in a TD mortgage.
For those looking for a pre-approval, TD’s process is a bit more involved compared to some of the other banks, as it typically involves a face-to-face meeting. You can start the process online but you still need to speak with someone at the bank.
How to Get the Best TD Mortgage Rate
Like almost all rates, TD’s mortgage rates can be negotiated. Mortgage shoppers should never simply accept the first rate offered by TD or any other bank.
To be in a better position for negotiating, be sure to compare mortgage rates at other providers for other comparable terms, features and conditions.
Remember that bank specialists and their employers want your business, and are usually willing to come down on rate in order to secure it. (That assumes you’re well qualified, of course.)
If your TD banker refuses to budge, find another one. Different bank reps often quote different rates. If all else fails, tell them you’re inclined to move your mortgage to a new lender and give them a deadline for when to get back to you with their best and final offer.
Renewing a TD Mortgage
Most big banks’ discretionary pricing isn’t offered to existing clients who are renewing a mortgage, at least not upfront. Unfortunately, your loyalty is often rewarded with the bank’s higher “special” rates, or in some rare cases even the bank’s posted rates.
Mortgage renewals should be negotiated to a rate you find fair (and realistic based on a comparison search of similar terms and features). Be prepared to pay slightly more to avoid the effort of switching lenders. Most importantly, never leave your TD mortgage renewal until the last minute. You should start the process at least 60-120 days in advance in case you need to shop around and lock in a rate.
These are some of the benefits of getting a mortgage with TD:
- Reputation: TD is among the most reputable lenders in the country and has rigorous controls and processes in place to protect its clients.
- Full service: One of the big advantages to doing business with a Big 6 bank is the access it gives you to a wide range of other products that they offer. This can include additional banking accounts, investment products, other secured loans or insurance.
- Rate Discretion: TD is able to negotiate on a case-by-case basis, and can generally be more flexible with clients who do a large amount of business with the bank or those with a large mortgage.
- Branch Access: With more than 1,150+ branches (as of January 2018) across Canada, scheduling an in-person meeting is easy no matter where you are.
- Convenience: A TD mortgage is great for those who value face-to-face meetings. Most TD mortgage specialists will be happy to meet you at a location of your choosing. And if you prefer the convenience of managing your mortgage from home 24/7, most TD products come with handy online access.
Here are some of the potential disadvantages of getting a mortgage from TD:
- Potentially Higher Rates: Like its fellow banking giants, TD isn’t known for having the lowest mortgage rates in Canada. Even its “special rates” aren’t particularly competitive compared to rates available through other monoline or non-bank lenders.
- Fixed Penalties Can be Higher: Breaking your TD mortgage early typically triggers a prepayment charge known as an IRD (Interest Rate Differential) Penalty. IRD penalties charged by the big banks are notoriously high since they are based on the bank’s posted rates.
- Less Choice: TD Bank only sells its own branded mortgages. This means you are limited to the features that come with a standard TD mortgage. In TD’s case, its rate features are pretty decent (e.g. 120-day rate hold, 15% lump sum payments and 100% payment increase privileges). But if you require greater flexibility or other unique features, you may need to search elsewhere.
- Limited Advice: A TD mortgage specialist’s job is to sell you a TD mortgage product. It’s not in their interest to tell you what superior products may be available through other lenders, at least not in an objective and comprehensive way. Keep this in mind when shopping directly from a bank, and remember that, unlike us here at the Spy, they may not necessarily be advising you with your best interest or needs in mind.
- Restrictive Mortgage Insurance: TD’s mortgage life insurance cannot be ported to a new lender in the event that you choose to switch. This is standard for all big bank mortgages. If you are switching lenders strictly for rate savings, you’ll need to buy new mortgage insurance. In that case, be aware that your premiums may increase and potentially negate a portion of your rate savings. Also be aware that bank mortgage specialists are incentivized to push creditor life insurance, which may not always be your best insurance option. So if you get a hard sell, be prepared for it.
TD Mortgage Calculators
Similar to its peers, TD offers a selection of mortgage calculators that let you calculate mortgage payments, mortgage payment features, mortgage affordability, prepayment charges and down payment size.
One of the things that’s handy about TD’s mortgage calculator is that it tabulates your amortization and ending balances with prepayments. That way you can compute how much extra you need to pay to reach your mortgage payoff goals.
Another tool TD has is a Mortgage Selector. Essentially, you enters some basic data and it recommends a term. If you use this function, keep in mind that it computes a recommended term without considering options from other lenders or comparing rates.
You can find TD’s mortgage calculators here.
What is TD’s Prime Rate?
TD Bank and the other Big 6 banks together set the country’s benchmark prime rate.
Prime rate changes when the Bank of Canada’s overnight rate is raised or lowered.
TD’s prime rate is generally the same as the other Big 6 banks. TD uses this rate to price its HELOCs.
For mortgages, however, TD maintains a separate “mortgage prime rate.” As of this writing, its mortgage prime is 15 bps higher than the rest of the mega banks. In what was an unpopular move at the time, TD hiked its mortgage prime rate independent of the Bank of Canada in November 2016. This arbitrary move caused its existing variable-rate borrowers to pay more relative to the other Big 6 banks.
Misc. TD Stats
- Mortgage Portfolio: The bank’s mortgage portfolio includes more than $190.4 billion in residential loans (as of Q24 2018).
- Branches: 1,150
- Provinces Served: All (TD also has more than 1,300 branches in the U.S.)
Source: Provider Website