RBC Mortgage Payout Penalties Skyrocket in 2025
Source: MortgageLogic.news, Mar 14, 2025 4:34 PM ET:Details of the recent actions RBC has taken to INCREASE THE PAYOUT PENALTY for their own customers.It shows that Big-6 Banks are not your best -mortgage- friend. Brokers Are!Mortgage Mark Herman, Top Calgary Alberta mortgage broker
If you’re seeking a textbook case of banks giving consumers the short end of the stick, look no further.
The nation’s biggest mortgage lender, RBC, just slashed its posted rates.
“RBC’s move is the biggest move to increase penalties (IRDs) since its posted rates peaked on September 20, 2023,” says Matt Imhoff, founder of Prepayment Penalty Mentor.
Bank of Canada Lowers Consumer Prime to 4.95%
The Bank of Canada lowers its benchmark interest rate to 2.75%
In the face of significant geopolitical tensions, the Bank of Canada announced today that it has lowered its policy interest rate by 25 basis points. This marks the seventh reduction since June of 2024.
Mortgage renewal: Now switch lenders without re-taking the stress test
Great news as a few leading banks, soon to be followed by the rest of the pack, have DITCHED THE STRESS TEST for RENEWALS.
This means if you have extra debts or a debt level higher than when you got your mortgage, some banks can now overlook that and still get you the best rates.
Canada’s New Capital Gains Tax Rules and Mortgages
Next pressing issue after 25% tariffs is the Canadian Federal Government’s decision to delay the implementation of its new capital gains tax rules until 2026.
In the 2024 budget Ottawa was set to increase the capital gains inclusion rate – the portion of gains that is taxable – from 50% to 66.7% for individuals earning over $250,000 in annual capital gains, as well as for corporations and most types of trusts.
Bank of Canada lowers benchmark interest rate to 3%
The Bank of Canada opened its monetary policy playbook for 2025 with a 0.25% reduction in its overnight rate. The 6th since June of last year.
In issuing its January Monetary Policy Report, the Bank also noted that its projections are subject to “more-than-usual uncertainty” because of the rapidly evolving policy landscape, particularly the threat of trade tariffs by the new administration in the United States.
Summary of Mortgage Rule Changes
Key Mortgage Rule Updates
30-year amortization for insured mortgages
Starting December 15, 2024, 30-year amortizations will be available for insured mortgages. This option is open to first-time homebuyers and those purchasing newly built homes, including condos.
New Housing Rules for 1st First-Time Buyers and New Builds
If you’re a first-time home buyer or looking to purchase a new build, this affects you.
Here’s a quick summary of the changes coming in December 2024:
What’s New?
30-Year Amortizations Now Available for First-Time Buyers and New Build Purchases
Variable Rate Beats BOTH 3-year & 5-year Fixed Terms
The Variable is the best way to go right now and this blue link has all the details in PDF: VARIABLE RATE beats both 3-year fixed & 5-year fixed terms
Data point 1: Variable rates should be coming down 2% in the next 13.5 months, with a “jumbo reduction” of 0.5% (1/2%) expected on Wednesday, Oct 23rd – by 5 of the 6 Big Banks.
New Canadian Mortgage Rules; Sept 2024
Typical income documentation requirements – Canadian mortgage
Below are the typical income documentation requirements for each type of income.
Salaried employees & commission income
Salaried
Salaried and hourly employees may need to supply:
- A job letter and a recent pay stub to show consistent salary
If your hours aren’t guaranteed or if there is a lot of overtime, you may also be asked for a 2-year income history.
Commissioned
Commissioned salespeople typically need the same documents as a salaried employee except they may also need to provide:
- 2 years of T1 Generals with corresponding NOA’s – Notice of Assessments to establish a 2-year income average.
Self-employed: Incorporated & Sole Proprietor
Incorporated
Self-employed clients who are incorporated and can provide traditional income verification may need to supply:
- Most current T1 General including statements of business activities. To establish a stable income, but also so a lender can see your sources of income.
- Confirmation of no taxes owed
- Accountant prepared company financials supported by business bank statements. To establish your company is in good financial standing and to compare the income level being pulled out of the company is sustainable.
- Current corporate search to confirm business ownership.
Sole Proprietor
Self-employed clients who are sole proprietors and can provide traditional income verification may need to supply:
- Most current T1 General including statements of business activities. To establish a stable income, and so a lender can see their sources of income.
- Confirmation no taxes owed
- One of the following: Business license/registration, trade license, or GST registrations/returns to prove business ownership/partnership
Alternative provable income & other documentation
Alternative provable income verification
This is a proprietary, specialized approach using gross-ups and add-backs available.
Alternative verification of income can be provided via the following documents:
Sole proprietor/partnership
- Most current T1 General
- Confirmation no taxes owed
- Recent financial statements or statement of business activities to indicate a level of income
- One of the following: business license/registration, trade license, or GST registrations/returns to prove business ownership/partnership
Incorporated or limited company
- Most current accountant prepared financials or corporate T2s
- Most current T1 General and confirmation no taxes owed
- Corporate search/articles of incorporation – for business ownership
- Six months of bank statements
Gross-ups and add-backs approach is considered in this instance.
Other documentation
There are other income sources that can help your client’s application get approved.
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- Canada Child Benefit (CCB)
- Alimony/child support
- Government and/or private pension
- Rental property income
- EI benefit for maternity leave
Buying a Rental property — this is the income documentation needed.
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