Comparing mortgages is stressful and frustrating work. Analyzing interest rates and payment options can make the task of securing or refinancing even more of a burden.
Tangerine Bank offers a variety of mortgage choices, but are they competitive?
In this Tangerine mortgage review, I’ll give you an in-depth look at their mortgage options and you can decide if it works for you.
Low-Interest Mortgage Provider
Tangerine offers both fixed and variable rate mortgages, along with a home equity loan. They are known for their low-interest rates and flexible payment options.
- Low-interest rates
- Lump-sum payment increase up to 25% allowed once a year
- 120-day mortgage rate hold
- All customer service needs are done either over the phone or online. No face-to-face contact.
Tangerine Mortgage Basics
Tangerine is one of the most popular banks in Canada. With over two million customers, $40 billion in assets, and $5.8 billion in mortgages, this online bank features a wide array of products like chequing and savings accounts, investment funds, and mortgages.
Tangerine is a subsidiary of Scotiabank but was founded in 1997 and operated under ING Direct Canada.
Besides its everyday banking and investment services, Tangerine offers its customers a variety of mortgage options at competitive rates. Here’s an overview of their products.
Tangerine offers mortgages for first-time homebuyers, those looking to refinance, and customers that need a home equity loan. Customers can choose between two mortgage types – variable and fixed.
Currently, Tangerine offers only one variable-rate mortgage. It’s a five-year adjustable-rate that fluctuates based on the bank’s prime rate. The mortgage compounds semi-annually.
With variable-rate mortgages, your payment amount will fluctuate based on the current interest rate. These types of mortgages are enticing when rates are low but can easily creep up and become a burden if rates suddenly increase.
On the other hand, fixed loans have the same interest rate throughout the duration of the loan period. Tangerine offers mortgages for 1,2,3,4,5,7, and 10-year terms. A fixed-rate mortgage means your payment remains the same each payment period, allowing for easy budgeting and peace of mind.
It’s no surprise that when looking for a mortgage, the interest rate plays a huge part in gaining and retaining customers. Tangerine is known for its low-interest rates, making its mortgages very competitive against larger banks.
Paying additional amounts on your mortgage helps to pay it off sooner than the maturity date. Tangerine has a prepayment policy to help customers achieve this goal. You can make lump-sum prepayments up to 25% of your original mortgage amount.
You can also choose to increase your regular mortgage payments by 25% during any payment date. Both payment options are available once a year and can help cut out some interest costs while paying down your overall balance sooner.
If you see a rate you like, all you need to do to secure it for 120 days is create an account and request a Mortgage Rate Hold. This allows you to shop around but guarantees that rate if you submit an application and the agreed-upon funds within the specified time period.
Although Tangerine doesn’t have in-person banks, that doesn’t mean you can’t get your questions answered. A Mortgage Account Manager is assigned to you after you apply, making it easy to contact someone directly with any questions or concerns.
Tangerine mortgages are portable, meaning if you move, your mortgage can transfer to another house – all without penalty.
RBC is Canada’s largest bank and one of the country’s biggest mortgage lenders. That means RBC has a lot of options available to customers looking for a loan.
One of its popular options, the RBC Homeline Plan is part mortgage and part home equity loan. As you pay down your mortgage principal, you can then re-borrow those funds like a credit line.
This is advantageous if you’re looking to make upgrades to your home – there’s no need to apply for a separate line of credit or home equity loan.
RBC might have more options, but they only offer RBC mortgages, which are not always the best and most affordable options for everyone. Along with that con, RBC interest rates, while competitive, are often higher than other online banks.
With an RBC fixed loan, you can increase monthly payments up to 10% in one 12-month period. While this is a great incentive to help pay off your mortgage and decrease interest costs, it’s also one of the more restrictive prepayment options.
Tangerine offers its customers a choice to increase their monthly payments up to 25% in a 12-month period, adding to customer savings.
TD offers mortgage terms similar to Tangerine but includes a few more options (see below). Because it is one of the largest banks in Canada, its reputation pulls in customers, even if its rates are slightly higher than other financial institutions.
Often, those looking for a mortgage are already customers of TD. Because they have a wide array of products ranging from chequing accounts to investment accounts, applying for a mortgage within the same company just makes sense.
TD offers both variable and fixed-rate mortgages, but as stated earlier, their interest rates are slightly higher than Tangerine’s.
A huge advantage of a TD mortgage is access to more than 1,150 branches. Customers that have any questions can walk into any TD branch or set up a meeting to get face-to-face help.
Breaking a TD mortgage early can trigger a costly prepayment penalty known as an IRD (Interest Rate Differential). These types of penalties are typical of the bigger name banks and can cost customers big time.
So, is a Tangerine mortgage all it’s cracked up to be? Reddit users mostly had glowing reviews about the company, specifically its low-interest rates and ability to make lump-sum payments.
But not everyone had good marks for the mortgage company. The biggest complaint against securing a mortgage with Tangerine was its customer service department.
Several reviewers complained of long wait times to access a rep, and one pointed out that if you can’t find a solution to the problem online, don’t bother calling.
Others didn’t really have any complaints about the company but claimed the interest rates at Tangerine, while lower than their current mortgage provider, weren’t low enough to go through the hassle of switching.
Several reviewers claimed they had all their accounts together at one bank (chequing, savings, and investments), and that it made sense to keep a mortgage there as well.
However, the overall vibe from customers is that getting a mortgage from Tangerine means lower interest rates than big banks and more flexible payment options. Others noted that securing a mortgage where they already had bank accounts made it a more convenient choice.
Tangerine Bank is a legit company, and they are a safe institution to purchase your mortgage. Initially part of ING Direct Canada, Scotiabank acquired the bank in 2012 and rebranded it as Tangerine. Although it is still owned by Scotiabank, Tangerine operates as its own legal entity.
In addition, the bank is a member of the Canada Deposit Insurance Corporation (CDIC), meaning customer deposits are insured for up to $100,000.
You can apply for a mortgage through Tangerine’s website. Even though they’re an online bank, if you need more information before you apply, request a call from a Mortgage Specialist to go over your options.
But before you apply, consider these requirements:
- Must be a Canadian resident or applied residence status.
- Have a minimum credit score of at least 620.
- No prior bankruptcies.
- Confirm income with at least three months of full-time employment or a minimum of two years if self-employed.
- Looking to borrow $50,000 or more.
Once you submit your application, a Mortgage Account Manager will contact you and help guide you through the rest of the process, including helping with calculations or other questions you may have.
To get a mortgage preapproval, you will need to fill out the online application and provide personal and financial information. Tangerine will also do a credit check before coming back with the amount you can borrow.
Your preapproval grants you an interest rate hold for 120 days.
As an online-only bank, Tangerine’s overhead is smaller than those of big banks. This means the company can pass savings on to its customers in the form of lower interest rates.
In addition to its various term loans, Tangerine offers flexible prepayment options making it easy for customers to cut interest costs and pay down their loans early.
If you’re looking for more information about Tangerine, check out this Tangerine Bank review.