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Originally posted by san-hugo

thanks for the reply.

It seems Prime - (0.50 ~ .75) is the going rate these days for variable. My broker promised me 0.75 when I spoke to him first but within weeks time when he went to bank he discovered it is changed to 0.6 :-( . am I missing something here? will it be rationale to settle on variable 2.4% interest on a loan.

My another qn is - Does paying 5% only of total home cost and having only one year credit history (new immigrant) impact this rate ? I also realised I cannot shop around much because other lenders ask either to pay atleast 10% of home cost at outset or have a good credit score , or limit the loan to certain amount.

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If the credit history is around 1 year and the score is good with at least 2 trade lines and you qualify based on the verifiable income, you should still be able to get a better rate than being offered. At least it should be prime -0.70% or better.

The banks would love to give better rates to people putting 5% then to people putting more than 20% as down payment. The reason being now a days in order for the bank to securitize the mortgage to sell in the market they have to insure it. Now if you are paying less than 20% down payment, you bear the cost of insurance but if the down payment is more than 20% then banks have to shell out the insurance costs from their own pocket and it may prompt them to load this in the mortgage rate.

Your broker should be able to do the shop around for you and if the credit and income is good, you should be able to get the best rates on 5% down payment.