According to statistics, home sales increased by more than 12% last year, despite stay-at-home orders.
One of the reasons for this was the all-time low in interest rates. Fortunately, if you weren't one of the many who took advantage of attractive mortgage rates last year—it isn't too late. With rates still low, and expected to stay that way for an extended period, now is the time to lock in savings on your mortgage.
Of course, the other factor when it comes to saving on your mortgage is finding a lender with the best rates. Tangerine Mortgage is one of the solutions out there with some of the most competitive interest rates on the mortgage market.
But are the Tangerine Mortgage products the right fit for you? Keep reading for a comprehensive review of Tangerine Mortgage and how its rates compare to big bank mortgages.
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Tangerine Bank was initially founded in 1997 as ING DIRECT Canada. It was then acquired by Scotiabank and rebranded to Tangerine Bank in 2014. Tangerine Bank is entirely digital and has no brick-and-mortar branches. Tangerine Bank operates completely online, which allows them to save significantly in operational costs.
This is advantageous for customers, as Tangerine passes these savings directly on to its clientele in the form of highly competitive interest rates.
Tangerine mortgage rates are some of the best on the Canadian market and are significantly lower than those offered by big banks with higher overheads.
TITLE
DETAILS
Company Name
Tangerine (Parent: Scotiabank)
Headquarters
3389 Steeles Ave. East, North York, Ontario, Canada, M2H 0A1
Tangerine Mortgage offers both fixed and variable rates. To get an idea of how Tangerine mortgage rates compare to other mortgage options, let's take a look at both of these in more detail.
Tangerine's fixed mortgage rates vary depending on the terms. In the summer of 2021 you were able to find a mortgage through Tangerine at 2.79% for a 1-year mortgage, and ending at 3.09% for a 10-year mortgage, these are highly competitive.
At that same time the interest rates on many 10-year fixed big bank mortgages were between 3.3% and 3.64%.
Tangerine Mortgage only offered one variable-rate option. That was for 5 years, and the interest rate was currently at 1.35%. This was far below last year's low average of 1.92%.
As of January 26, 2022, those rates, although still very competitive, have increased. Currently, the Tangerine Prime Rate is 6.70%. The chart below shows rates from 1 through 10 years.
Besides offering highly competitive interest rates, Tangerine Mortgage also has various other hallmark features that make its products attractive.
For one, Tangerine's streamlined online processes make applications and managing your mortgage fast and hassle-free. You can submit your mortgage application right from the comfort of your own home.
Once you have been approved, you will be assigned a dedicated Mortgage Account Manager. They will then guide you through the entire process, either for a new mortgage or for refinancing. This personalized level of support and service ensures that you have help with your mortgage whenever you need it.
Tangerine's dedicated Mortgage Account Managers are just one of the many ways the company supports its customers. Overall, they provide superb customer support through their online portals.
Another of the hallmark features of Tangerine Mortgage is their flexible prepayment options. Every year you can do any number of lump-sum payments, up to a total value of 25% of your initial mortgage total.
You can also increase your regular mortgage payments by up to 25%. This can be done at any payment date. This feature brings you some of the flexibility of an open mortgage, combined with the low rates of a closed one.
Another benefit of Tangerine's mortgage solutions is that they are portable. You can take your Tangerine Mortgage with you if you need to move, penalty-free, and at your current rate and terms. Alternatively, you can opt to pass it to the buyer.
Breaking one's mortgage is more common than most people think, and the penalty can often be in the five-figure range. If you need to suddenly relocate for unexpected reasons, or wish to sell your home, it's advantageous to know that you won't be hit with a hefty penalty from your mortgage lender.
Lastly, if you are pre-approved for a loan with Tangerine Mortgage, your fixed rate will be held for 120 days. Should interest rates drop during this time, you can also apply to have your pre-approved rate lowered. This provides you peace of mind knowing your rate is secured while you shop the housing market and find your ideal home.
Tangerine Mortgage Drawbacks
One potential drawback to Tangerine Mortgage is its fully digital process might feel prohibitive for some consumers. While it can be an advantage for many, however, if you are uncomfortable with managing your finances digitally, then Tangerine's structure could be a possible stumbling block.
Range of Mortgage Options
Another potential con could be the range of mortgage options available through Tangerine. Tangerine Mortgage focuses on simple, straightforward solutions. Therefore, they do not offer a wide variety of mortgage types.
For instance, when it comes to variable rates, Tangerine Mortgage only provides their 5-year term option. Therefore, if you are seeking a variable rate mortgage with shorter or longer terms you will have to look for one from another provider.
Collateral Mortgages
Another potential drawback to Tangerine Mortgage is their products are collateral mortgages. This means they are subject to penalty if you try to renew them with a new provider.
This is because collateral mortgages function differently from regular mortgages. With a collateral mortgage, the lender has a charge with the land registry office against the whole value of your home, instead of just the mortgage value.
However, collateral mortgages have their own set of advantages. For instance, if you want to refinance your home, it can be a lot cheaper to do as your lender won't have to discharge the existing charge and register a new charge. These actions require a lawyer and incur legal costs, which can drive up the total cost of refinancing.
Possibility of Marginally Lower Rates With Other Providers
Lastly, although Tangerine Mortgage offers some of the best rates on the market, there is a possibility that you could secure a cheaper rate with an alternative lender. For instance, if you are looking for a 5-year fixed mortgage, you might be able to scout a lower interest rate from lenders such as First National or motusbank.
However, you will need to weigh interest savings against other factors, such as:
Portability of mortgages
The lender's reputation
The option to make lump sum payments
For example, First National's mortgage breakage penalty is roughly a third of that of big banks. However, the portability of Tangerine Mortgages makes them a better option for protecting yourself from penalties should you have to move or sell.
When stacked up against motusbank, the advantages of having a Tangerine's personal account manager at your service can outweigh minor differences in interest rates.
What Is the Tangerine Mortgage Application Process?
If you want to apply for any of the Tangerine Mortgage options you will need to do so online via their website.
Before you invest the time into the application, you should gauge whether or not you meet their eligibility requirements.
To be eligible for Tangerine Mortgage products you need to:
Be a Canadian citizen (or have applied for citizenship)
Have a minimum credit score of 620 with no derogatory history
Be able to prove 3 months of full-time income employment or 2 years if self-employed
Have no more than one unpaid collection, which has to be small and from a non-major financial institution
Tangerine Mortgage also requires that you don't have any prior bankruptcies.
To complete your application with Tangerine Mortgage you will need to supply:
Your personal information
Your employment and income information
Information on your assets such as investment values, account balances, vehicle value, etc.
Information on your liabilities such as loans, credit cards, child support payments, etc.
Information on the property you are looking to purchase
Besides this, you will also need to specify what type of mortgage solution you want, as well as its value and your down payment.
To streamline the process, gather your documents together beforehand. Then you can head to the Tangerine site, create an account, and begin your mortgage application.
Take note that you can also apply for a rate hold prior to applying for a mortgage. This will lock in the current rate for you for 30 days. To apply for this all you need to do is create a client account at Tangerine and set up an access PIN.
Still Deciding?
Picking a mortgage solution is an important decision, and you deserve to have all the information you need to compare options and choose the one that best suits your needs.
Here at Insurdinary, we have a wealth of resources to help you make smart financial decisions. Besides checking out the rest of our blog, you can also head to our mortgage comparison page for an overview of some of the best insurance rates and providers, including Tangerine Mortgage and others of similar caliber.
