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Updated
Tangerine Bank is one of Canada’s leading digital banks. It boasts over two million clients and $40 billion in assets.
In recent years, it has proven a formidable mortgage competitor to Canada’s big banks, often undercutting them by a wide margin for certain mortgage terms. The ironic thing is, it’s owned by a major bank.
Tangerine is a subsidiary of Scotiabank, which acquired the bank in November 2012. Prior to that, it had operated as ING Direct Canada since April 1997.
Tangerine brands itself as not your “typical bank,” given its lack of bricks and mortar branches, which it says allows it to pass savings on to clients.
Aside from its offering of mortgage products, Tangerine’s product lineup also includes high-interest savings accounts, a no-fee chequing account, a HELOC and mutual funds.
Mortgages have been a part of Tangerine ever since it operated as ING in the 1990s.
Following its acquisition by Scotiabank, the bank exited the mortgage broker market in 2013. Its rate offering then became progressively worse.
But that changed in 2019 and 2020. Tangerine made a concerted effort to win back mortgage market share by being more aggressive on rates.
For select terms, Tangerine is now a market leader (as of March 1, 2021), particularly when it comes to 3-, 7- and 10-year terms, as well as its Home Equity Line of Credit (HELOC). More on that below.
The bank offers an everyday-low pricing model, often advertising rock-bottom rates. But, in some cases mortgage shoppers can negotiate even better rates, particularly those who are well-qualified and applying for a large mortgage loan.
If you’re considering applying for a mortgage rate from Tangerine Bank, don’t be afraid to haggle and try to get a better deal. But first, make sure you check out comparable rates using RATESDOTCA to see what else is available. You can use that information as leverage.
One benefit of a Tangerine mortgage is that the bank offers pre-approvals at its best-advertised rates. By contrast, some lenders stick pre-approval customers with meaningfully higher rates.
Aside from competitive rates, Tangerine has set itself apart by offering some of the best overall features of any lender in Canada.
Here’s an overview of some of them:
We can’t emphasize the importance of that last point enough. This can result in Tangerine's fixed-rate mortgage penalties costing thousands of dollars less than those of the Big 6 banks, when interest rate differential (IRD) penalties are factored in.
One notable “con” of Tangerine’s mortgage products, is that its new mortgages are registered as collateral-charge mortgages. This makes it less expensive to refinance with Tangerine, but often up to $1,000 more expensive to switch to other lenders.
Tangerine offers a 5-year variable-rate product, which rises and falls as prime rate fluctuates.
Unique to Tangerine’s variable-rate mortgage is the fact that it resets up to three months after a change in prime rate. Most other lenders adjust their rates within days or weeks of a rate change. Tangerine’s three-month delay can benefit clients when rates are rising, but works against them in a falling-rate environment.
Another restriction worth noting is that for those converting their variable rate to a fixed rate, the new mortgage must have a term of three years or greater.
Finally, Tangerine is a fixed-payment variable rate lender. This means that even as prime rate rises or falls, your monthly payment remains the same. Instead, the amount of the monthly payment directed to paying interest vs. principal will fluctuate.
Like most lenders, Tangerine offers clients a home equity line of credit, or HELOC.
Unlike its parent Scotiabank, Tangerine’s HELOC isn’t readvanceable, meaning the amount of credit available does not increase as the mortgage principal is paid down.
However, Tangerine’s HELOC can be linked to your chequing account for easy access to funds. That’s handy for home renos, investment purposes, emergency expenses, etc. The funds can be withdrawn or repaid at any time.
You can borrow up to 65% of your home’s appraised value in a revolving line of credit, and up to another 15% in the form of a regular mortgage.
In 2019, Tangerine slashed its HELOC interest rate to prime – 0.10%. That made it a market leader, undercutting HELOC rates offered by virtually every other mortgage lender in Canada. It has continued to offer among the lowest HELOC rate on the market since then.
Tangerine sells its mortgages direct-to-consumer, generally through online applications. When a potential client applies, they are assigned a Mortgage Account Manager who then walks them through the subsequent steps of the application process.
The bank once participated in the mortgage broker channel (as ING Direct), but ended up leaving in 2013. That means if you are using the services of a mortgage broker, you likely won’t have access to Tangerine mortgage rates.
Lubna Umar is an SEO Content Manager at RATESDOTCA. She has produced a wide variety of content, including academic essays, pieces of fiction and financial literacy guides. In her free time, she can be found exploring the café culture in Toronto or any other major city.
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