Why does your bank require registering your Homeline mortgage at Prime Rate plus 7%?

Many of our clients have asked for clarification regarding the interest rate stated in the collateral mortgage registered against their property to secure their loans under the RBC Homeline Plan.

Under your RBC Homeline Plan you can have a number of loans all at different rates. Because your mortgage secures several loans at different interest rates, including both fixed and floating interest rates, the interest rate in the mortgage is set at Royal Bank Prime plus 7% per annum. This is the maximum interest rate that can be charged under your mortgage.

The interest rate under your mortgage is set at Royal Bank Prime Rate plus 7% because at any time you may have loans at widely varying rates so the mortgage cannot reflect the interest rates of the various loans under your RBC Homeline Plan. However, as the Bank states in Section 3 of the Definitions and Other Terms and Conditions section of your Agreement, the interest rates the Bank charges are the rates applicable to your various loans. If the bank enforces the mortgage, the interest payable would be the interest payable on the various loans under your RBC Homeline Plan.

If you prefer to have the interest rate of the mortgage match the loan rate, then your option is to use a mortgage that secures the specific loan only in place of your RBC Homeline Plan.