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TD Prime Rate Formula:
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TD Prime Rate is the benchmark interest rate that Toronto-Dominion Bank uses to set interest rates for various lending products, including variable-rate mortgages, lines of credit, and other loans.
The TD Prime Rate is calculated using the following formula:
Where:
Explanation: This formula represents TD Bank's standard practice of setting their prime rate 2.20 percentage points above the Bank of Canada's target for the overnight rate.
Details: The TD Prime Rate serves as a key benchmark for determining interest rates on various consumer and business loans. Changes in the prime rate directly affect borrowing costs for mortgages, lines of credit, and other variable-rate products.
Tips: Enter the current Bank of Canada Rate in percentage format (e.g., 4.75 for 4.75%). The calculator will automatically add the 2.20% margin to calculate the corresponding TD Prime Rate.
Q1: How often does TD Prime Rate change?
A: TD Prime Rate typically changes when the Bank of Canada adjusts its overnight rate, though banks may occasionally change their prime rates independently.
Q2: Is the 2.20% margin fixed?
A: While 2.20% has been TD's standard margin, banks can adjust this spread based on market conditions and business considerations.
Q3: What products are tied to TD Prime Rate?
A: Variable-rate mortgages, home equity lines of credit (HELOCs), personal lines of credit, and some business loans are typically priced at TD Prime plus/minus a margin.
Q4: How does TD Prime compare to other banks' prime rates?
A: Most major Canadian banks maintain similar prime rates, though small differences may occur temporarily when banks adjust rates at different times.
Q5: Can I negotiate a better rate than TD Prime?
A: For certain products and qualified customers, it may be possible to negotiate a discount off the prime rate, particularly for mortgages and substantial credit facilities.