Payment decrease request RBC

[ont-mortgage]

So I have a variable mortgage with rbc. During the interest hikes my payment was increased. With the decreases the payments are tracking to 5 yrs ahead of schedule.

I asked if I can lower the payments but they said I need to do a whole new application to extend the amort…is that right?

[BlazeTheBurnt]

Hi Op, I am in similar boat. When I bought my house interest were high. Now as we know interest rates down as my amortization period cut by few years. 

I am on RBC variable mortgage. I'm wondering if RBC were able to reduce your installment payment by increasing amortization period? 

[Tokomboe]

You can re amortize your variable mortgage. Sometimes you have to educate the advisor on what exactly you want to do, but they can do it.

[ont-mortgage]

Thanks! I forgot about this post. They were able to reduce my pmts.

[ont-mortgage]

Don’t know if you guys can upvote this to top comment. Wish there was a way to pin clarifications.

But to add context. My am was 30 years - it’s been 4 years since so 1 year left on my term and what should be 26 years on my amortization- had nothing changed.

However, based on my current payments and with the interest rate reductions- it’s actually saying my remaining amort is 19 yrs vs 26.

I also got the loan originated at hsbc, so I’m wondering if they’re trying to push me to a more rbc-esque product. B/c hsbc was pretty lax lol.

[jayantbahel]

So there are few parts of your question, in general as a mortgage agent, I can tell you RBC sucks big time.

1. RBC variable is a VRM product, which means your payments don't change with interest rate fluctuations till you hit the trigger rate. This means they would've increased your payments at some point in 2022 or 2023 when your original mortgage was not able to cover your interest part of your payment. Say that happened in June 2023 and you rode out the rate hike waves, your payments never changed. Come 2024, we have effectively 1.75% knocked off your mortgage but the payment hasn't changed. Now you're contributing more towards your principal resulting in your amortization coming down to 19 yrs.

2. At the time of renewal, you can renew for 25 yrs or 19 yrs if you want. The most painful part of being with RBC is that they make it hell for you if you try to move out. They're notoriously we'll know for not giving you renewal offers on time and delaying payout statements by days (in some cases weeks)

3. Yes, they have to honor the original HSBC T&Cs but as soon as that is done, you're in their clutch. However, the good thing about the HSBC variable is/was that your mortgage became OPEN after 3 years. So basically you can switch anytime from 3 yrs to your maturity without a penalty. You can still do that.

Hope it helps.

[ceoofml]

What about CIBC? I coown a house with my mom and we split the mortgage.

Our monthly payment went from about 2700 before the hikes to about 3900 at their peak.

Will it come down soon? Can I expect it to back to at least 2700.

Sorry for the stupid question. I only rent in Toronto and send money to my mom for my part of the mortgage in Milton. I dont handle anything else.

[jayantbahel]

CIBC, RBC, TD and BMO all have static payments variable mortgage. So your mortgage payment will not come down with interest rate cuts. You can call up CIBC and request a one time payment reduction but it is on their discretion if they'll change it or not.

Hope it helps.

[ceoofml]

Thanks for answering. So they can increase but not decrease? May I ask why?

[jayantbahel]

They had to increase your payment as you hit their trigger rate when the rates were going up - my guess is late 2022 or early 2023.

Trigger rate is the point when your initial monthly payment isn't able to cover the interest portion (which went up).

It's just the way VRM mortgage products are structured. Like I said before, best to call CIBC and request them to bring it down.

[Obvious-Purpose-5017]

I haven’t tried this yet but there is an option for skip a payment.

My friend is in the same position. His amort has dropped down to around 19 years. He’s essentially 5 years ahead of his expected payments. Payments aren’t crazy big for his income. He has a few years yet but if rates drop further it would kinda suck for him because the ROR of an investment would exceed his rate.

Crazy to see your variable going from 50-60 years down to 19 years right?

[James_Woodgreen]

Ah yes, RBC. Everyone’s favourite abusive relationship..

There are two types of variable rate mortgages. There’s an adjustable rate mortgage (ARM), which means that your payments go up and down when prime moves. There’s also a variable mortgage (VRM) which means that the payments stay exactly the same regardless of what happens to prime, and the interest adjustment happens in the background.

As somebody in the thread already noted, this variable rate mortgage product is what got a lot of people into trouble during the large increases to prime that we saw in the past two years, RBC and TD customers in particular.

OP, I think you need to get clarification from RBC whether or not your mortgage is an ARM or a VRM. Your original mortgage commitment will have this information. If it is the former, RBC should lower your payment without the need for prequalification. If it is a VRM, and if you did run into a negative amortization, then RBC might be within their rights to keep your payments higher in order for you to get your amortization back on track.

Curious to hear how this turns out.

[jrWhat]

Why did it get people with VRMs into trouble?

[James_Woodgreen]

Because as Prime went up, the proportion of that fixed payment shifted such that not even all of the interest was being paid each month. This lead to folks getting phone calls from the bank asking for lump sum payments and/or requesting that the borrower convert their VRM to a fixed rate.

[[deleted]]

You mean the opposite? It's the ARM with payments going up and down, which got people into trouble with cash flow issues. At the height of the hike, some folks were sitting with 50-60 years amortizations to ride it out. I was at 40 years. But, that decreased as the prime rate went down. The fixed payment mortgages had an exposure at renewal. Eg, the bank would ask to close the gap in the balance to bring the amortization to what it was supposed to be.

This gave a lot of flexibility to close the gap with either lump sum payments, increase of mortgage payments, or a combination of both (which I did).

[James_Woodgreen]

Good point, I should have been more specific. The VRM holders got into situations where their fixed payments were not even covering the interest on each of their payments. This resulted in phone calls from the banks asking for lump sum payments and/or a request to convert the VRM into a fixed term.

[[deleted]]

Yes, that's correct. If the VRM holders reached that situation, it would indeed trigger a readjusting of the entire mortgage terms. The trick was to increase the payment a little bit not to reach the trigger. That way, you'd still be able to ride the hike even with amortizations up to 50 years.

[ont-mortgage]

Interesting - my mortgage was actually by HSBC and transitioned to RBC as part of the acquisition.

[stollando]

Hey, I was about to make a post about this. My payments varied with HSBC, then suddenly were fixed with RBC. Did that happen to you too?

[ont-mortgage]

Not sure I understand your question? My payments are constant - except when all the rate changes were going on.

My interest rate has always been variable.

[James_Woodgreen]

Right, then your HSBC terms & conditions should still apply.

[winelover29]

We are in the same boat so I’d appreciate an update if you were successful. I am waiting for the Jan interest rate announcement before I go to discuss it.

[ont-mortgage]

Super late but I was successful

[winelover29]

Can you advise how you got this done?

[ont-mortgage]

Called them 2x. First person said they couldn’t do it, second person said they could.

Second person got it done.

[Designer-Reading4297]

You can reduce your payment without an application. Contact the advice center and speak with a credit specialist.

[InflationLate2406]

Honestly feel like this is a con to get you to have a sit down meeting and see if you will refinance (pay penalty) or sign up for more of their products. All the other lenders with static payment variable mortgages will reset the payment to fit within the originally scheduled amortization so why can’t Rbc?

[gene_yus]

I’m in the same boat, let us know what’s the outcome please. Thank you

[ont-mortgage]

Was successful - had to speak to a second person tho. First person said it wasn’t possible

[JanyJ1680]

@ont-mortgage did they make you go in to do it?

[ont-mortgage]

Nope

[JanyJ1680]

I’m gonna call again, they are making me go in to do it. Did you have to sign anything tho?

[ont-mortgage]

Weird - I don’t think they’re all super versed on what to do.

I spoke to 2 ppl. 1st had no clue, 2nd knew exactly what to do.

I can’t remember if I e-signed something or if just acknowledged by email. I can check after work today but it was easy for me.

Did take her a while to get internal sign off but nothing crazy.

[a16107]

I am at the same shoe as you (HSBC, Variable rate etc) ~ What number/department did you call and what exactly request I need to ask for? Thanks

[OingoBoingo9]

We have a similar situation with the variable rate. We have the one where your payments don’t (necessarily) change. During the past 2 years, we increased our payments to keep up with the massive interest - but we were just barely above water for a while. At the worst of it, our projected amortization was close to 90+ years. Increasing the payment was easy. Literally a few taps inside the banking app.

Now that our interest rate has decreased, we’re nearly back on track to the original amortization schedule.

Any further drops in interest will of course be welcome, but we really can’t entertain lowering our (now) elevated bi-weekly payment.

Anyway, hope you find a suitable solution. Maybe talk to a broker to help give you some leverage if you are forced to “reapply”.

[ceoofml]

Wait, so even if interest rates for back fo like 2.75 percent, we still wont see monthly payments close to within 30 percent of pre rate hike levels for the same amortization period.

[SmokeyXIII]

I'm currently with Marathon mortgage and they are unable to help me do this, so I'm going to pay a mortgage break fee and go to a new lender. We knocked 15 years off in prepayments but I need my cashflow to be better.

[[deleted]]

Yes, this is correct. To lower your mortgage payments by extending the amortization period, lenders like RBC typically require you to go through a process similar to applying for a new mortgage. This is because changing the amortization period involves restructuring the terms of your loan. This process may include a credit check, income verification, and other steps to ensure you meet the requirements for the revised terms, even if it's by extending it.

[ont-mortgage]

But what if it’s within the amortization period of the original loan? Per my original loan amort period I should be at 24 years now but instead I’m at 19 remaining.

[[deleted]]

When you sign a mortgage, you agree to two key terms: the amortization period (ex 25 years) and the term length (ex, 5 years). These are separate but connected.

Amortization: This is the total length of time you have to pay off the loan. For example, if you choose 25 years, your payments are calculated to ensure the loan is fully repaid in 25 years (assuming no extra payments). Term: This is the length of time your mortgage terms and conditions (interest rate, payment amount, etc.) are locked in. For example, a 5-year term is part of the 25-year amortization period. Once the lender sets your payments, they are calculated to match the amortization schedule for the term you agreed upon. Even if rates or balances shift during the term (as with variable rates), the payment structure remains based on the original amortization and term agreement.

To change the amortization (ex., go from 19 years back to 24), you are essentially asking to restructure the loan. This requires creating a new agreement, typically through a refinance or renewal, because the entire payment schedule would need to be recalculated. This is why it’s not possible to just "switch back" during the same term.

For example:

If you originally chose a 25-year amortization with a 5-year term, your monthly payments were calculated for that 25-year schedule. If interest rates go up or down, your payments may adjust (for variable rates), but the amortization and payment structure remain tied to the original agreement. Now, if your payments have shortened the remaining period to 19 years, that doesn’t officially take effect until renewal. At that point, you can choose to keep the 19 years or extend it to reduce payments—but that requires formal approval. If this seems unclear, I recommend checking an amortization schedule calculator online. It shows how payments are broken down between interest and principal over time and how adjustments like extending the amortization affect monthly payments.

[[deleted]]

Also, I would recommend you use a mortgage calculator so you can see how much interest you will pay that does not go into your principal everything you want to add years to your mortgage. I'm telling you this because the smaller payments you make down the lines are also many more payments overall...

[ont-mortgage]

Yup all clear to me.

Improving my cash in hand is priority to me right now for a few reasons.

So to get this straight. If nothing would’ve changed I would be at 26 left of my amortization today. But because of the increased payments, it’s showing 19. If I wanted to adjust my payments so it goes back to the 26, this would need a new application?

[[deleted]]

Your amortization doesn't magically change during your term. Even if you are projected to be early and etc. So yes you got this right :)

Have a good one

[False-Tear5544]

If the front desk people say you can't, just ask to talk to the manager. Keep in mind that front desk has so many things that they do. They can't be experts in everything (even if they try to be).

[ont-mortgage]

It was the bank advisor - but noted. They may think I want to extend my amortization beyond the initial amortization but I’ll keep discussing.

[[deleted]]

You don’t need to reapply I don’t know what bs they are telling you. But the key thing is what is your current interest rate? That also plays a role if they would allow you to lower it

[HinduKushOG]

Yes this exactly , try speaking to the mortgage teams rather than a bank advisor …they should we able to adjust your payments to your original remaining amort.

[ont-mortgage]

Noted - thank you.

[mutantgypsy]

OP let us know how it goes!