Mortgage Specialist - Ask me any question

[Kristi Hyson]

I am a sponsor on Calgary Puck and work closely with Travis Munroe Calgary Puck sponsored Realtor.

Current Mortgage Rates (effective June 14, 2012)

1 Year Closed 2.89%
3 Year Closed 3.19%
5 Year Closed 3.19% **call for details on promotional 5 year rate

2 year closed @ 2.69% (closing must be by September 30th, 2012)

Special Mortgage Programs:

New to Canada, wondering if you qualify for a mortgage? Scotiabank has a mortgage program for temporary and permanent residents in Canada. Follow the link below to check out Scotiabank's StartRight Program for Newcomers.

http://www.scotiabank.com/startright/landing-page.html

Are you self-employed? Scotiabank offers home financing with as little as 10% down. Follow the link below.

http://www.scotiabank.com/ca/en/0,,3208,00.html

Useful Links:

Mortgage Tools

http://www.scotiabank.com/ca/en/0,,32,00.html

Mortgage Centre

http://www.scotiabank.com/ca/en/0,,25,00.html

Canada Mortgage Housing Corporation (CMHC)

http://www.cmhc-schl.gc.ca/

Information about me:

http://mdm.scotiabank.com/khyson

Feel free to ask me any questions regarding mortgages and qualifying criteria. If your question is private or very specific you can send me a confidential email or private message.

[Travis Munroe]

Good to see you get set up Kristi. I am sure you will benefit the CP community!

[albertGQ]

There is a mortgage broker on CP that raves about the advantages of going with a broker over a bank's mortgage specialists.

Maybe you can provide a rebuttal to the CP community as to the advantages of going with a bank's mortgage specialist over a broker who has access to dozens of different lenders.

Thanks!

[ranchlandsselling]

There is a mortgage broker on CP that raves about the advantages of going with a broker over a bank's mortgage specialists.

Maybe you can provide a rebuttal to the CP community as to the advantages of going with a bank's mortgage specialist over a broker who has access to dozens of different lenders.

Thanks!

Edit: Welcome Kristi! (thanks for reminding me Trout)

Yeah - this thread might be asking for trouble.

My thoughts:

Against banks: the banks will never offer you their best rate off the bat whereas a broker will because they're competing against said banks.

Against broker: some brokers will have a bias to switch clients at renewal or out of their current lender mid term for another lender as then they get a commission. Granted the rates are usually lower so there's double incentive.

A good broker will most of the time get you a rate better than what the bank offers you off the bat.

The biggest thing is renewal. I just dealt with a client whose bank sent the renewal letter out at 4.35%. Pretty much stated "4.35% is our best rate, x.xx% below our posted rate". Client came to me and I have found them at least 3.29%. No legal, no appraisal.

Some banks are better/worse than others. Right now in my opinion of the big banks Scotia is the best lender. Compared to RBC, BMO, TD etc. and that's because they want to be so they're pushing hard with decent rates compared to the other 3 (less that 2.99% sale that ended awhile ago).

Now the banks don't do this because they're bad people. They just do it because most people say "okay" and the bank gets a tidy little profit. The brokers don't always help you because they're all nice people and the bank people aren't. The brokers just want to get paid and often that works in the best interest of the client.

The banks will tout that they're there to take care of you throughout the whole process and during your mortgage. A good broker will do the same. The banks will offer you additional products, accounts and investment advising services. They'd do that for anyone, has nothing to do with your mortgage. Additionally (and this is just from my experience, I'm sure there's some good sales people out there) the average bank employee offering investment advise is completely out to lunch. They're just peddling mutual funds or GIC's that their bank sells. But that's their job and what they're paid for. Nothing wrong with it, just isn't all it's cracked up to be.

Disclaimer: I work both sides of these types of transactions - so I think I'm generally unbiased.

I've sent quite a few borrowers back to their bank for an early renewal to blend their rate down when I could just have easily pushed them to a new lender, for a slightly lower rate that would have been a wash or slightly worse after their out of pocket switch expense. Not all brokers would do that. Additionally I've shown clients the difference between a smaller mortgage and shown them the paydown on different amortizations and loan amounts vs. the most cash and longest amortization that I've seen both brokers and bankers do, thus giving the banker the biggest loan/credit and the broker the biggest commission. Just because at 30 year amortization and today's current rates you can just squeeze by, doesn't mean you should. That said - for some people they should/can.

My advice would be check with your bank and check with a broker. But once you've put the broker to work don't keep running back and forth until you've squeezed the last bit of rate out of the bank until they're the same and go with the bank. You're just wasting someones time who isn't getting paid for doing the work. Make them do the work - but reward them in the end if they do a good job.

[albertGQ]

^^^
Yeah, I can't really think of many advantages of going with a bank's mortgage specialist over a broker but I thought I would give Kristi a chance to let us know if there is. Maybe there is something I've never thought of before.

[troutman]

Welcome Kristi!

[Kristi Hyson]

Both mortgage specialists who work exclusively for a bank and brokers serve a valuable purpose in the mortgage industry. Brokers have more options available to customers who have credit issues, other application challenges or for customers who prefer to have access to a variety of lenders.

The advantage of dealing with a mortgage specialist is that they have access to the full suite of products and resources available through the financial institution. The products can be used to restructure debt to increase monthly cash flow to make having a mortgage more affordable, as well; the products can also be used to restructure debt to qualify if the debt servicing is too high.

As a mobile mortgage specialist I work the same hours as brokers and realtors to meet with customers on their time. I am in direct competition with brokers and the rates I offer are competitive to what brokers can offer. I feel it is up to the individual making the decision on whether a mortgage specialist is the right option or a broker. If a customer is simply rate shopping then a broker maybe their best option. If a customer wants the service and availability of products tailored to meet their needs then going with a mobile mortgage specialist who works for a bank would be the best option.

[onetwo_threefour]

Welcome, more perspectives and education about the industry is always a good thing IMO. This is the great thing about Travis' sub-forum, the industry professionals posting have insight and experience and it's a non-threatening atmosphere for questions.

[genesis0403]

Hi I was wondering if you can give me some info for new home buyers or recent permanent resident status home buyers.

[Bagor]

Against banks: the banks will never offer you their best rate off the bat whereas a broker will because they're competing against said banks.

Now the banks don't do this because they're bad people. They just do it because most people say "okay" and the bank gets a tidy little profit. The brokers don't always help you because they're all nice people and the bank people aren't. The brokers just want to get paid and often that works in the best interest of the client.

Additionally (and this is just from my experience, I'm sure there's some good sales people out there) the average bank employee offering investment advise is completely out to lunch. They're just peddling mutual funds or GIC's that their bank sells.
Good post and thank you. Would be interesting if the mortgage specialist could respond to the snipped parts. My thoughts ...

Good? Bad? I find them blatantly dishonest when they'll sit there and tell you that what they're offering you is the absolute best rate available and the best that they can do only to turn around with an improved rate 20 minutes later after being informed that there are better figures elsewhere. No excuse ... just blatant dishonesty. I would be curious why they can't just "offer the best rate off the bat" instead of attempting to make me poorer than I think.:whistle: So yes, when someone sits there and tries to sell me a rate telling me that it is the best available when they are aware that it isn't then IMO they are a bad person.

Discuss.

[Slava]

Good post and thank you. Would be interesting if the mortgage specialist could respond to the snipped parts. My thoughts ...

Good? Bad? I find them blatantly dishonest when they'll sit there and tell you that what they're offering you is the absolute best rate available and the best that they can do only to turn around with an improved rate 20 minutes later after being informed that there are better figures elsewhere. No excuse ... just blatant dishonesty. I would be curious why they can't just "offer the best rate off the bat" instead of attempting to make me poorer than I think.:whistle: So yes, when someone sits there and tries to sell me a rate telling me that it is the best available when they are aware that it isn't then IMO they are a bad person.

Discuss.

On the one snipped part about the investment advice I'm inclined to agree. It's the way the system is set up.

[Phanuthier]

Q for you, bit of an odd question... I'm looking to buy a home in the USA (California) but in some cases, I'm 20k-50k short of my pre-approved loan. My parents said they can help me, out, do you offer service where lets say I buy a $620k house and get a $420k loan, if I get a 400k loan in the USA, can my parents gets a 2nd mortgage loan from Canada of $20k ontop to help me out?

[MarchHare]

My mortgage is up for renewal later this year. My wife and I recently spoke to our mortgage broker from when we bought our home five years ago and requested she look into getting us the best possible rate for renewal. Our current mortgage happens to be with our bank where we have accounts for chequing, savings, RRSP, TFSA, credit cards, etc.; should we also go to the bank and see what they can do for us?

If the bank comes back with a better rate than the broker found for us, is it considered a dick move to have had the broker waste her time searching for us if we don't go with her in the end, or is that a common practice?

[ranchlandsselling]

Q for you, bit of an odd question... I'm looking to buy a home in the USA (California) but in some cases, I'm 20k-50k short of my pre-approved loan. My parents said they can help me, out, do you offer service where lets say I buy a $620k house and get a $420k loan, if I get a 400k loan in the USA, can my parents gets a 2nd mortgage loan from Canada of $20k ontop to help me out?

Do your parents want a second mortgage on their house to help you out or your new house you're looking at purchasing?

Tough to think about when the above question is outstanding.

Either way -My first guess would be to suggest the above option I questioned. If your parents have equity in their Canadian home and want to help you buy a house in the states I'd suggest they take the money out of their Canadian house. The dollar is at par and your parents likely earn CAN money. That way if they're paying off a portion of your house (ie having a mortgage on US house or Canadian house) at least if they do it by way of Canadian mortgage there's no foreign exchange exposure. They know what their payments are going to be for whatever term they take. Additionally if something bad happens to them, you're safe and if something bad happens to you they're safe.

[ranchlandsselling]

My mortgage is up for renewal later this year. My wife and I recently spoke to our mortgage broker from when we bought our home five years ago and requested she look into getting us the best possible rate for renewal. Our current mortgage happens to be with our bank where we have accounts for chequing, savings, RRSP, TFSA, credit cards, etc.; should we also go to the bank and see what they can do for us?

If the bank comes back with a better rate than the broker found for us, is it considered a dick move to have had the broker waste her time searching for us if we don't go with her in the end, or is that a common practice?

Talk to your broker.

See what the bank offers you. Tell your broker that's what they offered you and see who comes back with the best rate. The broker should understand. That said, if the bank comes back with one rate your broker beats it, then your bank matches it - maybe reward your broker, who was honest with you from the get go. Often mortgages (priced at their lowest to win customers) are loss items. Or make banks even money. They make the money of all your other accounts. If you take your mortgage elsewhere the bank isn't going to punish your other products that they make a lot of money off of.

[Phanuthier]

Do your parents want a second mortgage on their house to help you out or your new house you're looking at purchasing?

Tough to think about when the above question is outstanding.

Either way -My first guess would be to suggest the above option I questioned. If your parents have equity in their Canadian home and want to help you buy a house in the states I'd suggest they take the money out of their Canadian house. The dollar is at par and your parents likely earn CAN money. That way if they're paying off a portion of your house (ie having a mortgage on US house or Canadian house) at least if they do it by way of Canadian mortgage there's no foreign exchange exposure. They know what their payments are going to be for whatever term they take. Additionally if something bad happens to them, you're safe and if something bad happens to you they're safe.
Oh interesting thought... though it is a loan, not a gift, so the deal I have with my parents is I'd pay them back on monthly installments (i.e. $500 a month over 6 years) so the dollar doesn't help me in the short term. My parents do own (mortgage paid off).... I don't know if they've ever explored that.

Are interest rates good right now relative to over the last 10 years? I know in Cali, its at a all time low.

[Kristi Hyson]

Hi I was wondering if you can give me some info for new home buyers or recent permanent resident status home buyers.

Thank you for the question. If you are a permanent or temporary resident Scotiabank has a program that is called the Scotiabank Startright Program for Newcomers, this product is designed to help newcomers to Canada obtain a mortgage.
The requirements are:
-5% down payment from own resources
-minimum 3 months employment
-if credit is not established a requirement would be a letter from your landlord confirming rent was paid on time, copy of utility bill & payments confirming payment on time (other methods of proving payments can be accepted).

This program allows a newcomer to obtain a mortgage without having established credit.

Below is a link to the program, please let me know if you have additional questions.

http://www.scotiabank.com/startright/landing-page.html

[Kristi Hyson]

Do your parents want a second mortgage on their house to help you out or your new house you're looking at purchasing?

Tough to think about when the above question is outstanding.

Either way -My first guess would be to suggest the above option I questioned. If your parents have equity in their Canadian home and want to help you buy a house in the states I'd suggest they take the money out of their Canadian house. The dollar is at par and your parents likely earn CAN money. That way if they're paying off a portion of your house (ie having a mortgage on US house or Canadian house) at least if they do it by way of Canadian mortgage there's no foreign exchange exposure. They know what their payments are going to be for whatever term they take. Additionally if something bad happens to them, you're safe and if something bad happens to you they're safe.

Thank you for your question, due to legislation that banks are regulated by a mortgage can not be issued in Canada for a house in the US. If your parents have the available equity in their residence in Canada to help facilitate the loan that would be a good option. If not, you would need to talk with a broker about private lending as the home you are using as security is outside of Canada and the law is if the loan goes into default a Canadian lender can not collect on their security outside of Canada. Hope this helps, if you have more questions please let me know.

[Kristi Hyson]

Talk to your broker.

See what the bank offers you. Tell your broker that's what they offered you and see who comes back with the best rate. The broker should understand. That said, if the bank comes back with one rate your broker beats it, then your bank matches it - maybe reward your broker, who was honest with you from the get go. Often mortgages (priced at their lowest to win customers) are loss items. Or make banks even money. They make the money of all your other accounts. If you take your mortgage elsewhere the bank isn't going to punish your other products that they make a lot of money off of.

I would recommend going to your bank to discuss rates, most financial institutions will match the rate the broker is offering, especially when you are a full service customer. If you transfer your mortgage from your current financial institution you will be subject to another application and the condition requirements to obtain a new mortgage. If your mortgage is insured you can do a straight switch to another institution for the exact dollar amount, amortization and your premiums can be ported. If it is a brand new mortgage and not a switch you will be paying premiums again if your loan to value is greater than 80%.

[Kristi Hyson]

My mortgage is up for renewal later this year. My wife and I recently spoke to our mortgage broker from when we bought our home five years ago and requested she look into getting us the best possible rate for renewal. Our current mortgage happens to be with our bank where we have accounts for chequing, savings, RRSP, TFSA, credit cards, etc.; should we also go to the bank and see what they can do for us?

If the bank comes back with a better rate than the broker found for us, is it considered a dick move to have had the broker waste her time searching for us if we don't go with her in the end, or is that a common practice?

I would recommend going to your bank to discuss rates, most financial institutions will match the rate the broker is offering, especially when you are a full service customer. If you transfer your mortgage from your current financial institution you will be subject to another application and the condition requirements to obtain a new mortgage. If your mortgage is insured you can do a straight switch to another institution for the exact dollar amount, amortization and your premiums can be ported. If it is a brand new mortgage and not a switch you will be paying premiums again if your loan to value is greater than 80%.

[ranchlandsselling]

Oh interesting thought... though it is a loan, not a gift, so the deal I have with my parents is I'd pay them back on monthly installments (i.e. $500 a month over 6 years) so the dollar doesn't help me in the short term. My parents do own (mortgage paid off).... I don't know if they've ever explored that.

Are interest rates good right now relative to over the last 10 years? I know in Cali, its at a all time low.

Interest rates in Canada are near all time lows too.

If it is a loan then they could take equity out of their house at 3.29% and have you pay it down. You just send them the cash. But then they're subject to you earning in USD and their debt in CDN.

I'm sure there's many creative ways to look at this. Others should have some good ideas like Kristi.

I'm not sure if a US bank would take your parents on as a client to top up the mortgage to a higher amount then what you qualify at. ie they just come on as a guarantor and co-borrower and you pay the whole mortgage. Go to your bank or find a broker (in the US they're often called correspondants).

My opinion if I was doing this. I'd just get my parents to borrow against their house. It gives them/you the best rate (Canadian) available and a constant payment. Amortize the loan over 5-10 years, 10 year rate is 3.99% right now and have you pay them the mortgage payments.

[ranchlandsselling]

Hi I was wondering if you can give me some info for new home buyers or recent permanent resident status home buyers.

Missed this post - but Kristi seems to have answered you well. Scotia is a good lender so I'm sure she could help you a ton. I don't yet have a lot of experience with these types of deals.

[8sPOT]

Having worked in the banking industry for a long time up until recently. I understand that banks never offer the best rates right away, however, I always did. Customers are too educated nowadays. I would pull all my rates with the branch's max discretionary discounts. This had very little impact on myself, until recently. They started saying that certain products will essentially be worth more as far as sales go, so fee based VISA's, insurance, and less discounts has a bigger impact on the banker. Needless to say I was not a fan of this, it goes against the philosophy that we are making recommendations that are best suited for that individual client.

If you go to your bank and say I googled the special rates and I'm looking for a 3 year mortgage at x %, it will come down to your long term potential. Your income, how many products you have at that bank, are you a problem customer, etc. Banks will give good rates but only to customers they feel are worth hanging on to.

[Slava]

Having worked in the banking industry for a long time up until recently. I understand that banks never offer the best rates right away, however, I always did. Customers are too educated nowadays. I would pull all my rates with the branch's max discretionary discounts. This had very little impact on myself, until recently. They started saying that certain products will essentially be worth more as far as sales go, so fee based VISA's, insurance, and less discounts has a bigger impact on the banker. Needless to say I was not a fan of this, it goes against the philosophy that we are making recommendations that are best suited for that individual client.

If you go to your bank and say I googled the special rates and I'm looking for a 3 year mortgage at x %, it will come down to your long term potential. Your income, how many products you have at that bank, are you a problem customer, etc. Banks will give good rates but only to customers they feel are worth hanging on to.

I know this is how the banks operate, but the tied selling is not right. Saying that you need to have RRSPs, TFSAs and insurance with the bank for a loan or mortgage is just wrong IMO. I'm biased for sure, but you can get the same rates through a broker without those requirements. I want to say that tied-selling is illegal, and I think it is, but I hear about it so often that I could be wrong.

[albertGQ]

Tied selling is illegal. I've been in the banking industry for over a decade.
You can get in very big trouble if you would only approve someones mortgage if they brought more business over

[albertGQ]

Also. I don't know why people get so pissed when banks don't offer their best rate right away. Why would they?
You don't see car salesman give you the lowest price right away. Jewelers or even the Future Shop sales guys never give you the best deal. You have to bargain for it.

I think banks get a bad rap sometimes. They're a business. They have to maximize profits for their shareholders.

[Slava]

Tied selling is illegal. I've been in the banking industry for over a decade.
You can get in very big trouble if you would only approve someones mortgage if they brought more business over

You should hear the things clients tell me. Yesterday in fact a very good client told me his bank wouldn't give him the mortgage without buying an insurance policy. Could be that he misunderstood, and surely that would be the banks position, but its just wrong.

[Deegee]

You should hear the things clients tell me. Yesterday in fact a very good client told me his bank wouldn't give him the mortgage without buying an insurance policy. Could be that he misunderstood, and surely that would be the banks position, but its just wrong.

They might have made a condition that the client is required to obtain life insurance in the amount equal to the loan prior to funding, not necessarily their own product. It is just more convenient for them to be able to sell their own product when they issue that condition on a borrower.

[Slava]

They might have made a condition that the client is required to obtain life insurance in the amount equal to the loan prior to funding, not necessarily their own product. It is just more convenient for them to be able to sell their own product when they issue that condition on a borrower.

In this particular case they said he had to take their policy and then they wouldn't approve him for the insurance, but gave him the loan anyway.

[Cecil Terwilliger]

Tied selling is illegal. I've been in the banking industry for over a decade.
You can get in very big trouble if you would only approve someones mortgage if they brought more business over

Giving discounts for business is common but it can't be a condition. The more business the easier to offer a rate discount. Often there are specific parameters based on the level of business. But they can't be forced to bring over more business to get approved (unless required if it is cash secured by a GIC or something).

You should hear the things clients tell me. Yesterday in fact a very good client told me his bank wouldn't give him the mortgage without buying an insurance policy. Could be that he misunderstood, and surely that would be the banks position, but its just wrong.

If a rep from an FI told a client that they would only get approved if they bought the credit insurance then that is the definition of tied selling and is illegal.

It is even too common where a loan officer will include the insurance in the deal and paperwork and not even mention it to the consumer that it is not required. When the client balks at the insurance then that's when you'll see the truth come out that they can waive it if they want. It's sleazy but that's what happens when sales targets determine your pay grade.

[Slava]

Giving discounts for business is common but it can't be a condition. The more business the easier to offer a rate discount. Often there are specific parameters based on the level of business. But they can't be forced to bring over more business to get approved (unless required if it is cash secured by a GIC or something).



If a rep from an FI told a client that they would only get approved if they bought the credit insurance then that is the definition of tied selling and is illegal.

It is even too common where a loan officer will include the insurance in the deal and paperwork and not even mention it to the consumer that it is not required. When the client balks at the insurance then that's when you'll see the truth come out that they can waive it if they want. It's sleazy but that's what happens when sales targets determine your pay grade.

I don't disagree, but its impossible to prove. Its easy for the bank rep to say " I didn't mean you had to buy it, I just meant you have to insure it because you're crazy not to" or that sort of thing. I just know it happens and I've had clients who have bought because they at least felt they had no choice, whether they did or not.

[Bagor]

Also. I don't know why people get so pissed when banks don't offer their best rate right away. Why would they?
You don't see car salesman give you the lowest price right away. Jewelers or even the Future Shop sales guys never give you the best deal. You have to bargain for it.

I think banks get a bad rap sometimes. They're a business. They have to maximize profits for their shareholders.

It's not so much a matter of getting pissed off as exposing that it happens. As has been mentioned too many people buy the bs, go ok and sign on.

As you correctly point out through your analogies they are simply mortgage salesmen trying to sell a product at the highest price.

It's nice to just call it what it is.

[Kristi Hyson]

Good article in the Calgary Herald regarding the possibility the Bank of Canada may increase the prime lending rate ahead of schedule.

http://www.calgaryherald.com/news/Bank+Canada+says+have+hike+rates/6471676/story.html

[onetwo_threefour]

You should hear the things clients tell me. Yesterday in fact a very good client told me his bank wouldn't give him the mortgage without buying an insurance policy. Could be that he misunderstood, and surely that would be the banks position, but its just wrong.


I've had clients tell me the same thing on occasion and I tell them it's simply not true. But then again, I've also had dozens of clients that think that CMHC is life insurance, so I suspect that at least some of the time the client is confused about the requirement for an insured mortgage vs. the option of purchasing life insurance on a mortgage.

However it's happened enough times that I'm sure at least a couple of times that they were told life insurance is mandatory. The commissions on those policies can be huge. I've had quite a few clients get very annoyed upon being advised that the bank cannot require to to life insure your mortgage with them.

[Kristi Hyson]

I've had clients tell me the same thing on occasion and I tell them it's simply not true. But then again, I've also had dozens of clients that think that CMHC is life insurance, so I suspect that at least some of the time the client is confused about the requirement for an insured mortgage vs. the option of purchasing life insurance on a mortgage.

However it's happened enough times that I'm sure at least a couple of times that they were told life insurance is mandatory. The commissions on those policies can be huge. I've had quite a few clients get very annoyed upon being advised that the bank cannot require to to life insure your mortgage with them.

Mortgage insurance should never be offered as a condition to obtain a mortgage. If a customer is caught in a situation where mortgage insurance is a condition of obtaining the mortgage I would recommend escalating through the financial institutions escalation process. Mortgage insurance (not default insurance through CMHC) should never be a condition when dealing with a major financial institution.

Mortgage insurance is a valuable option to anyone who has a mortgage. There are various types of coverage such as loss of life, health crisis protection and disability. Purchasing a home is one of the biggest investments people will make and ensuring you are protected not only protects the mortgage holder in the event of something unfortunate it also provides security for the family.

[Slava]

Mortgage insurance should never be offered as a condition to obtain a mortgage. If a customer is caught in a situation where mortgage insurance is a condition of obtaining the mortgage I would recommend escalating through the financial institutions escalation process. Mortgage insurance (not default insurance through CMHC) should never be a condition when dealing with a major financial institution.

Mortgage insurance is a valuable option to anyone who has a mortgage. There are various types of coverage such as loss of life, health crisis protection and disability. Purchasing a home is one of the biggest investments people will make and ensuring you are protected not only protects the mortgage holder in the event of something unfortunate it also provides security for the family.


I'll partially agree here. Having protection for yourself in terms of life insurance, critical illness and disability is important. I wouldn't (for a number of very important reasons) suggest that buying insurance from the bank/mortgage issuer is anywhere near that efficacy though. It doesn't offer the same security and bluntly the party that receives the protection in those cases is the financial institution.

People should have coverage, but they should speak with a fully licensed advisor to get it.

[bizaro86]

and blunty the party?

Must be a party full of squares.

[bizaro86]

People should have coverage, but they should speak with a fully licensed advisor to get it.

...find the cheapest term life insurance they can

[You Need a Thneed]

My mortgage is up for renewal. I am coming up on 5 years into a 25 year mortgage, and currently with TD. TD is offering me 5 years fixed at 3.49%.

Also, I am looking to consolidate some other debt into the mortgage/house somehow, to get a lower interest rate, making it easier to pay off. It seems to me that the best way to do this is to get a separate HELOC.

Can I get a better rate than the 3.49% anywhere? And it the HELOC idea the best idea? Is it better to get a HELOC from the same institution, or should I go elsewhere?

[albertGQ]

My mortgage is up for renewal. I am coming up on 5 years into a 25 year mortgage, and currently with TD. TD is offering me 5 years fixed at 3.49%.

Also, I am looking to consolidate some other debt into the mortgage/house somehow, to get a lower interest rate, making it easier to pay off. It seems to me that the best way to do this is to get a separate HELOC.

Can I get a better rate than the 3.49% anywhere? And it the HELOC idea the best idea? Is it better to get a HELOC from the same institution, or should I go elsewhere?

I've seen five year rates at 3.29%. Not sure if there are better rates out there or not. You just missed the boat on BMO's 2.99% promo.

How much equity do you have in your home? I've never been a big fan of HELOCs & much prefer just lumping it in the mortgage, but that's just me.

[You Need a Thneed]

How much equity do you have in your home? I've never been a big fan of HELOCs & much prefer just lumping it in the mortgage, but that's just me.

The outstanding mortgage amount is 209k, and the house is assessed at 265 (100k less than the price I purchased the home for), however, the city doesn't know about the suite (which is exceptionally nice), and other improvements I've made.

The issue that I have in my situation, is that my brother and I share the mortgage payments (he live in the basement with his wife), but the HELOC would solely be for myself. Plus, putting it into the mortgage means that the debt is still there until 20 years from now, when the mortgage is up.

[albertGQ]

The outstanding mortgage amount is 209k, and the house is assessed at 265 (100k less than the price I purchased the home for), however, the city doesn't know about the suite (which is exceptionally nice), and other improvements I've made.

The issue that I have in my situation, is that my brother and I share the mortgage payments (he live in the basement with his wife), but the HELOC would solely be for myself. Plus, putting it into the mortgage means that the debt is still there until 20 years from now, when the mortgage is up.

Then you don't even have enough equity for a HELOC. 209/265=78.87%.

I'm not 100% sure, but I don't think you can get a HELOC under just your name if the title is under both you and your brother's name.

I've never underwritten a HELOC application before so maybe someone else can help you with that

[You Need a Thneed]

Then you don't even have enough equity for a HELOC. 209/265=78.87%.

I'm not 100% sure, but I don't think you can get a HELOC under just your name if the title is under both you and your brother's name.

I've never underwritten a HELOC application before so maybe someone else can help you with that

The house is certainly worth more than $265 though. Like I said, the assessment value is off on my house.

The title is solely in my name.

[albertGQ]

The house is certainly worth more than $265 though. Like I said, the assessment value is off on my house.

The title is solely in my name.

Okay. Then you can get an appraisal done and a HELOC is an option as long as you have sufficient equity in it.

[bizaro86]

ATB currently has a HELOC at prime - 0.5 (or 2.5% at current rates) for the first year. Might be worth looking into, especially if you're planning on paying it off relatively quickly.

http://www.atb.com/personal-banking/borrow/Pages/home-equity-line-of-credit.aspx

[Cecil Terwilliger]

I've seen five year rates at 3.29%. Not sure if there are better rates out there or not. You just missed the boat on BMO's 2.99% promo.

How much equity do you have in your home? I've never been a big fan of HELOCs & much prefer just lumping it in the mortgage, but that's just me.

All I'll say is that at least one FI is still offering a 2.99% until the end of the month with none of the restrictions that BMO had. I won't hijack or hawk my services in this thread as that would be offside but if you want to know the FI just PM me.

[bizaro86]

All I'll say is that at least one FI is still offering a 2.99% until the end of the month with none of the restrictions that BMO had. I won't hijack or hawk my services in this thread as that would be offside but if you want to know the FI just PM me.

For a 4 year term though, right?

[Slava]

and blunty the party?

Well there are two parties to a contract....so I was using it in that sense of the word? Not sure what you're getting at here though?

...find the cheapest term life insurance they can

Sure, find the cheapest term you can get, if that's appropriate. Its not for every single situation though, and those options can and should be reviewed with a licensed advisor as opposed to someone who just sells this as an aside.

[bizaro86]

Well there are two parties to a contract....so I was using it in that sense of the word? Not sure what you're getting at here though?


The word you were trying to use is "bluntly"

[Cecil Terwilliger]

For a 4 year term though, right?


No. 5 year term, up to 30 year amort.

[Slava]

The word you were trying to use is "bluntly"

:bag:

[8sPOT]

The legalities around tied selling are stupid. If I tell someone they cannot get a mortgage without taking insurance, that is tied selling. If I tell someone they cannot get a certain rate on that mortgage without taking insurance thats fine.

If you aren't being denied a product it isn't tied selling.

The moral of the story is, buy shares in banks.

[Slava]

The legalities around tied selling are stupid. If I tell someone they cannot get a mortgage without taking insurance, that is tied selling. If I tell someone they cannot get a certain rate on that mortgage without taking insurance thats fine.

If you aren't being denied a product it isn't tied selling.

The moral of the story is, buy shares in banks.

Interesting. What if I already have insurance? Is that still OK to make my buying insurance a condition of getting the best rate?

[8sPOT]

Interesting. What if I already have insurance? Is that still OK to make my buying insurance a condition of getting the best rate?

There's so many grey areas, I don't there is a definitive answer to that. In my experience it came down to the banker. If they felt that you had long term potential, or even just liked dealing with you there are steps they can take to get whatever rate to be competitive. They just need to have an argument as to why that individual is entitled to that rate.

For example, if a customer that has no dealings with my bank comes in looking to switch their mortgage, and is asking for a rate that ATB is currently offering I would look at their networth, income, credit rating, long term goals and determine if they're worth fighting for.

I always started with the special rates and determined quickly how prepared the client was, if they knew the markets and whatnot.

[Slava]

There's so many grey areas, I don't there is a definitive answer to that. In my experience it came down to the banker. If they felt that you had long term potential, or even just liked dealing with you there are steps they can take to get whatever rate to be competitive. They just need to have an argument as to why that individual is entitled to that rate.

For example, if a customer that has no dealings with my bank comes in looking to switch their mortgage, and is asking for a rate that ATB is currently offering I would look at their networth, income, credit rating, long term goals and determine if they're worth fighting for.

I always started with the special rates and determined quickly how prepared the client was, if they knew the markets and whatnot.

Right, some of which is fine and some of which leads to tied selling. The banks can decide on what basis they want to provide what rates, except that they can't force you to buy other products. That seems rational to me.

[Wormius]

Up for renewal with FN, they're offering a 1 year fixed for 2.94% Not sure if its worth bothering to try to get anything better with only $16k left.

[albertGQ]

Up for renewal with FN, they're offering a 1 year fixed for 2.94% Not sure if its worth bothering to try to get anything better with only $16k left.

What's your remaining ammortization? Probably a year or two?
Saving 1% on $16k works out to $160/year or $13.33/month.
2.94% is a good rate. I'd probably just take it. Their two year is 3.15%. Both really low rates.

[Wormius]

What's your remaining ammortization? Probably a year or two?
Saving 1% on $16k works out to $160/year or $13.33/month.
2.94% is a good rate. I'd probably just take it. Their two year is 3.15%. Both really low rates.

Thanks. We will have about 8 months left after the renewal. It's probably not worth the hassle to change lenders for such a small amount anyway.

[Kristi Hyson]

I'll partially agree here. Having protection for yourself in terms of life insurance, critical illness and disability is important. I wouldn't (for a number of very important reasons) suggest that buying insurance from the bank/mortgage issuer is anywhere near that efficacy though. It doesn't offer the same security and bluntly the party that receives the protection in those cases is the financial institution.

People should have coverage, but they should speak with a fully licensed advisor to get it.

Hi,

I agree mortgage holders require insurance, however, I disagree with the information posted "It doesn't offer the same security and bluntly the party that receives the protection in those cases is the financial institution."

Clarification, life insurance offered by financial institutions is not in the financial institutions best interest, the insurance is in the mortgage holder’s best interest. The only insurance requirement the financial institution is concerned about is fire insurance. The property in which the mortgage is registered is the security, if the home is not insured against loss of life, health crisis & disability the property can be foreclosed on in the event of a death or an accident.

Mortgage insurance offered by financial institutions cover the entire mortgage including the penalty. If you take a policy with a third party insurance company for the mortgage amount and do not include provisions for the penalty (in the event of an early payout) the policy will not cover the mortgage in full and will leave an outstanding balance. With the financial institutions policies the mortgage is paid in full inclusive of the penalty.

It is best to review all options and choose the insurance product that best fits and meets the needs of the borrower.

[Kristi Hyson]

Hi,

I have read through all the posts regarding your mortgage. Scotiabank offers a Scotia Total Equity Plan that will assist with what you are looking to accomplish. If your current mortgage is $209K and your house value is $265K, then your loan to value is 78% allowing you to turn your mortgage into a conventional mortgage and start acruing equity to use towards paying off debt at a lower rate.

Scotiabank's current 5 year rate is 3.29%, below is a link to the Scotiabank Total Equity Plan.

http://www.scotiabank.com/ca/en/0,,28,00.html

Please let me know if you have any additional questions.

[Slava]

Hi,

I agree mortgage holders require insurance, however, I disagree with the information posted "It doesn't offer the same security and bluntly the party that receives the protection in those cases is the financial institution."

Clarification, life insurance offered by financial institutions is not in the financial institutions best interest, the insurance is in the mortgage holder’s best interest. The only insurance requirement the financial institution is concerned about is fire insurance. The property in which the mortgage is registered is the security, if the home is not insured against loss of life, health crisis & disability the property can be foreclosed on in the event of a death or an accident.

Mortgage insurance offered by financial institutions cover the entire mortgage including the penalty. If you take a policy with a third party insurance company for the mortgage amount and do not include provisions for the penalty (in the event of an early payout) the policy will not cover the mortgage in full and will leave an outstanding balance. With the financial institutions policies the mortgage is paid in full inclusive of the penalty.

It is best to review all options and choose the insurance product that best fits and meets the needs of the borrower.


I do agree that reviewing all of the options is the most important, and clearly the point is what is best for the borrower. Here are the reasons that buying a separate insurance policy makes more sense for the vast majority of people:

- The policy is not contingent on staying with one lender. When your term is up you can move your mortgage without needing to requalify for insurance, and won't be affected by medical changes.

- The policy pays the face amount, regardless of the value of your mortgage. This means that if you buy coverage for $500k you get a cheque for $500k to do with as you please. You can pay out the mortgage if you decide to. You don't have to though, and some people don't. A normal mortgage insurance policy pays out the mortgage and thats that.

- Your stand-alone policy is underwritten before you get a policy. A lot of mortgage insurance is underwritten at the time of a claim. What that means is that you know where you stand as far as coverage before you start paying for a policy, whereas with a lot of mortgage insurance you find out at the time of a claim whether the coverage will be paid; hardly a preference for most people and a huge risk that can be avoided.

- Because you determine a face amount for the coverage of a stand-alone policy you also factor other things in such as final expenses, income for a surviving spouse, donations to charity, school or wedding expenses for children, etc. Its a much more comprehensive coverage in that sense.

- The vast majority of people buy a policy each (for a couple) that covers them in the event of a death. This means that they're both insured, and if one does pass away the other still has a policy in force. Mortgage insurance pays the mortgage and its done.

This is all for life insurance, but there are also the same considerations for disability and critical illness coverage. Yes, the mortgage insurance can be useful for some people, but those cases are few and far between. The better route for most people is to get their own policy/policies and then decline the mortgage coverage.

[Cecil Terwilliger]

Hi,


Clarification, life insurance offered by financial institutions is not in the financial institutions best interest, the insurance is in the mortgage holder’s best interest. The only insurance requirement the financial institution is concerned about is fire insurance. The property in which the mortgage is registered is the security, if the home is not insured against loss of life, health crisis & disability the property can be foreclosed on in the event of a death or an accident.



Isn't it though?

For example, if a married couple has a mortgage and the breadwinner dies it is conceivable that they could go delinquent and eventually the bank might have to foreclose if the surviving spouse can't make ends meet financially.

If the mortgage was paid out with life insurance, even though the bank loses that mortgage on their books, at least they don't have to deal with the cost of foreclosing.

That scenario even works if it is just disability or something like cancer and they are both still living, especially in cases of people who bought right before the housing market went south and selling isn't an option because their mortgage is higher than their property value.

[onetwo_threefour]

^ Maybe banks are supporting the 'pay your mortgage by dying in an "accident"' theory by selling life insurance in a volatile market... How's that for cynicism?

[Kristi Hyson]

Below is a great link to Housing Market Information on Canada Mortgage and Housing Corporation (CMHC) website. CMHC updates their reports quarterly to give a reflection of the Canadian housing market and provides insight on the housing industry. The reports are a worthwhile read.

http://www.cmhc-schl.gc.ca/en/hoficlincl/homain/index.cfm

[troutman]

^ Maybe banks are supporting the 'pay your mortgage by dying in an "accident"' theory by selling life insurance in a volatile market... How's that for cynicism?

When did the banks make real estate lawyers their insurance salesmen? I find it odd that these products are sometimes down-loaded on us to present the clients. This is awkward in terms of us representing both sides, and not being in a conflict of interest.

[bizaro86]

When did the banks make real estate lawyers their insurance salesmen? I find it odd that these products are sometimes down-loaded on us to present the clients. This is awkward in terms of us representing both sides, and not being in a conflict of interest.

I've often signed a waiver saying my lawyer was representing both me and the bank to close the transaction.

I've always understood that was a way for the total mortgage transaction to cost less (1 lawyer instead of two) and an application of the golden rule. (He who is giving out the money makes the other guy pay the fees)

[onetwo_threefour]

^ That's why the first thing I tell people when I pull out the lender's life insurance form is that I am not a salesman, that I am not about to sell them anything, and that I will need a signature waiving the insurance or applying for it in order to get their mortgage funded, but I have no interest one way or the other in which they do. If they have already decided at that point I let them sign (apply or waive), if they ask my opinion, I let them know that I am not an expert, but will give them my understanding of the pros and cons. I tell them that if they want to do their homework, the best option is to take the life insurance, then shop around as soon as possible and cancel if they find something better. My justification for saying that is that if they refuse teh insurance with me, there is no guarantee that they will be able to apply again through the lender later, so they are better off getting the underwriting decision from the insurer before being refused somewhere else.

It adds a couple of minutes to my appointments, and yes I do resent it, but since I am certainly not paid to sell it, I don't really feel a conflict in presenting the form to the client as above. If they flat out ask me if I would take it I say no, but that is based on my own insurance arrangements that I have in place and that shouldn't influence their decision. IMO the most important thing to avoid any conflict of interest is full disclosure and honesty. I don't feel that I'm violating any duty to the lender, because the lender has hired me to prepare and perfect their security. Life insurance is not part of that job IMO. I'm sure it is security for the bank if a borrower takes the insurance, but if I was ever instructed that the mortgage couldn't be funded unless the borrower applied for life insurance when meeting with me I would certainly refuse to act for the Lender.

[Kristi Hyson]

This morning, the Federal Finance Minister announced further changes to Canada's mortgage insurance rules. Four measures were announced, effective July 9, 2012

1. Amortizations reduced to 25 years
2. Refinancing limited to 80%
3. Properties purchased at over $1 million no longer eligible for mortgage insurance
4. GDS and TDS set at 39% and 44%

What do all of these changes mean in the grand scheme of things? It can mean many different things to many different people. If you are looking to buy a home it may mean the difference between qualifying for a lower mortgage amount based on a 25 year amortization instead of a higher amount a 30 year amortization.

Some items to consider prior to the effective date:

· A pre-approval will not hold the amortization period, only the interest rate. A firm purchase agreement will be required to obtain a mortgage insurer approval. Closing can be in the future past July 9th, however no changes to the mortgage in terms of increase can occur past July 9th if a 30 year amortization is required.
· If you are building a new home with a completion mortgage and to qualify you require a 30 year amortization, a final purchase price will need to be completed with the builder and submitted to the lender for approval prior to July 9th to maintain a 30 year amortization.
· If you were considering on refinancing your home and required the funds from your home up to 85% loan to value and 30 year amortization an approval will be required prior to July 9th when the maximum equity take out changes to 80% and the amortization is reduced to 25 years.

Below are excellent links to view the articles surrounding the new regulations and the link to contact Minister Flaherty and your local MP.

To review this morning's Globe and Mail article

http://www.theglobeandmail.com/report-on-business/economy/housing/ottawa-tightening-mortgage-rules-no-more-30-year-amortizations/article4358876/ (http://www.theglobeandmail.com/report-on-business/economy/housing/ottawa-tightening-mortgage-rules-no-more-30-year-amortizations/article4358876/)

To review the government press release and backgrounders

http://www.fin.gc.ca/n12/12-070-eng.asp (http://www.fin.gc.ca/n12/12-070-eng.asp)

To contact Minister Flaherty or your local MP

http://www.parl.gc.ca/Parlinfo/Compilations/HouseOfCommons/MemberByPostalCode.aspx?Menu=HOC (http://www.parl.gc.ca/Parlinfo/Compilations/HouseOfCommons/MemberByPostalCode.aspx?Menu=HOC)

[Travis Munroe]

To further on to what Kristi said, CMHC is apparantly pretty backed up because of this change. Simply writing an offer 3 days before the deadline in anticipation of everything being approved in a timely manner is not the way to move forward if you are one of the people looking to buy before the change.

[albertGQ]

^^^
CMHC is taking forever to underwrite deals. Just send them to Genworth or CG instead.

[ranchlandsselling]

So are you an In Branch specialist? I'm looking to send some clients back to Scotia but they're not keen on their "in branh person". Can you be that person?

[Kristi Hyson]

Hi,

My apologies for the late reply, I was on holidays. I am a mobile mortgage specialist with Scotiabank and would be more than happy and capable of assisting the customers. Please let me know if you have any additional questions.

[Kristi Hyson]

I have been having excellent success with CG if the deal is good.

^^^
CMHC is taking forever to underwrite deals. Just send them to Genworth or CG instead.

[ranchlandsselling]

Hi,

My apologies for the late reply, I was on holidays. I am a mobile mortgage specialist with Scotiabank and would be more than happy and capable of assisting the customers. Please let me know if you have any additional questions.

Just wanted to comment on some excellent service provided by Kristi. While I'm not always complementary on the service from various levels of Bank Branches there are plenty of people who are good at their jobs and provide excellent service. Kristi is one of them.

Thanks!

[Travis Munroe]

Just wanted to comment on some excellent service provided by Kristi. While I'm not always complementary on the service from various levels of Bank Branches there are plenty of people who are good at their jobs and provide excellent service. Kristi is one of them.

Thanks!

X2 - She became my go to mortgage specialist for numerous reasons....
My mortgage was done through Kristi. Her knowledge mixed with people skills mixed with a passion for the industry was more than I could ask for. Not to mention having her come to you to look at your finances and give suggestions on furthering yourself was just a bonus.

[bizaro86]

Can you modify existing scotia mortgages? Ie. blend and extends.

What are your current best 5/10 year fixed rates?

[Table 5]

I know it's a crystal ball situation, but for those who are in the know (and I'm clearly not one of them) would you advise going into a 5 or 10 year mortgage at the moment? I was offered 5 at 3.09% and 10 at 3.99%, 25 year amortization period.

Everyone keeps talking of rates going up eventually, but how far do you think they will go? and how long will it take?

Also, are those fairly decent rates at the moment?

[Cecil Terwilliger]

I know it's a crystal ball situation, but for those who are in the know (and I'm clearly not one of them) would you advise going into a 5 or 10 year mortgage at the moment? I was offered 5 at 3.09% and 10 at 3.99%, 25 year amortization period.

Everyone keeps talking of rates going up eventually, but how far do you think they will go? and how long will it take?

Also, are those fairly decent rates at the moment?


Depending on other factors like prepayment options I'd say those are good rates.

Thing about the 10 year is how many people stay for 10 years? I've heard numerous times that the average length of a term is something like 36 months. Meaming most people end up paying the penalty.

Personally I'd go with the 10 year because it provides a lot of stability, that's a personal preference based on my own situation though. Based on what I know about you (you are likely more financially stable than me) I might look at a variable rate mortgage.

If you're reasonably sure this is your last house ever, again I'd take the 10 year. If there's any chance you'll move 5 year is probably better.

Just my 2 cents.

[Table 5]

There's actually a very strong chance I will only live in this place for about 2-3 years, and then use it as a rental/income property while we move to something a little more spacious.

Btw, what penalty are you talking about? Sorry, I'm still new to all this stuff, so trying to learn.

[albertGQ]

I like that 5 year term. 3.09% is sweet!

The thing with the 10 year term is that after 5 years, if you do decide to move to another lender (or refinance or just break your contract or whatever), according to the Bank Act, your payout penalty is only 3 months interest. You won't have to worry abot IRD. That will soften the blow significantly if you ever wanted to break your mortgage.

[fundmark19]

If you are keeping it as a rental and don't plan on selling I would lock into the 10 year. So you know what you need each month as your bottom line

[Table 5]

Hmm, so basically if I ever decide to sell the place, there is a mortgage penalty to pay? What if I took the 10 year term, and sold before 5 years?

[albertGQ]

Hmm, so basically if I ever decide to sell the place, there is a mortgage penalty to pay? What if I took the 10 year term, and sold before 5 years?

Big penalty!

The penalty depends on your mortgage rate, the current mortgage rate and the outstanding mortgage balance, but just to give you an idea of how much a payout penalty can be, my last three quotes were $18k, $12k and then finally $9k. If I had 3 months interest at the time, it would've been only roughly $4k in all three scenarios

[albertGQ]

Oh, if you sell and buy another property, you can port your mortgage if you stay with the same lender.

[Table 5]

Huh, interesting. I was unaware of this little quirk! I don't think it changes my situation too much for the moment, but definitely good to know.

Does this mean that basically everyone who sells their property at some point (and doesn't port it over) will pay some sort of penalty? Is there a point in time where you don't pay any penalties when you sell? What about people who flip houses? Maybe they pay in cash, but it seems like they would be facing some pretty big penalties every time they sold a place.

[albertGQ]

Variable rates are always only 3 months interest
there's only penalties on closed mortgages. There are open mortgages as well.
Some may have a HELOC which has no penalties either.
Some probably port their mortgage too

[albertGQ]

Oh the IRD calculation also takes into account the remaining term as well. Almost forgot about that

[Table 5]

Thanks for the help. All good things to consider when talking to the broker....he didnt mention whether this was open or closed. Definitely would prefer open, as at some point Id like to add in some lump sump payments if possible.

[Slava]

Albert's right and knows what he's talking about here. The one thing I would note is that IRD is unlikely going forward for some time. Rates are low and (eventually) will go up. The IRD is the difference between what the bank is getting from you and what they would give a guy walking in off the street...if rates rise they aren't going to cut you a cheque, right?

[bizaro86]

Thanks for the help. All good things to consider when talking to the broker....he didnt mention whether this was open or closed. Definitely would prefer open, as at some point Id like to add in some lump sump payments if possible.


You can usually make a specific amount of prepayments with no penalty, mine vary from 10 to 20 percent of the original principal amount per year. If that's the only reason you want open, you should go closed, as open will be way more expensive.

[Kristi Hyson]

Hi,

The 5 year and 10 year rates quoted are excellent rates and match what Scotiabank could offer. The choice between the 5 year and 10 year really comes down to what will your life look like in 5 years, are you staying in the house you mortgaged or are you moving. If you choose a 10 year mortgage (rate is excellent, good budgeting strategy), you need to ensure you have pre-payment options and the ability to port your mortgage or blend & extend. The reason being, the rates could change, moving, refinance etc. and you need flexibility. Alternatively the 5 year is an excellent option and the term should weather the storm of rates. Scotiabank’s mortgages are completely flexible and we do not restrict pre-payments, porting and blending and extending to ensure our customers maintain flexibility with their mortgage as their needs change.

[Kristi Hyson]

A good rule of thumb on closed mortgage penalties:
- when interest rates are high, penalties are low (3 months interest)
- when interest rates are low, penalties are high (IRD)

Right now, interest rates are historically low and penalties on fixed rate mortgages are IRD, unless you have a variable, which remains at 3 months interest.
Variable rates are always only 3 months interest
there's only penalties on closed mortgages. There are open mortgages as well.
Some may have a HELOC which has no penalties either.
Some probably port their mortgage too

[Kristi Hyson]

Albert's right and knows what he's talking about here. The one thing I would note is that IRD is unlikely going forward for some time. Rates are low and (eventually) will go up. The IRD is the difference between what the bank is getting from you and what they would give a guy walking in off the street...if rates rise they aren't going to cut you a cheque, right?
Fixed mortgage rates are based on the bond market, as investor confidence increases the bond market will raise, thus directly effecting interest rates. The spreads will become tighter and interest rates will follow suit by increasing. The banks have no choice but to increase rates as the bond market strengthens, basically the banks are reactive to the change in the bond market and the consumer ultimately pays the higher interest rate as the economy grows stronger. Enjoy the low rates now...

[bizaro86]

Thanks for the help. All good things to consider when talking to the broker....he didnt mention whether this was open or closed. Definitely would prefer open, as at some point Id like to add in some lump sump payments if possible.

I had a few more comments here.

1) If you're planning to buy a new personal residence and make this a rental in 3 years, you may be better off NOT paying down your mortgage. Mortgage interest on your rental property would be tax deductible, whereas mortgage interest on your new residence isn't. You may be better off saving the money you'd use to pay down your current mortgage towards a larger down payment on your next house.

2) You can sell/payoff your mortgage at the end of the term with no penalty. You can always pay off a variable with only a 3 month interest penalty. An open mortgage is always pre-payable, but very expensive. Rule of thumb: Selling in <6 months, get an open, selling in a few years, get a variable, not selling, consider fixed at current low rates.

[bizaro86]

Hi,

The 5 year and 10 year rates quoted are excellent rates and match what Scotiabank could offer. The choice between the 5 year and 10 year really comes down to what will your life look like in 5 years, are you staying in the house you mortgaged or are you moving. If you choose a 10 year mortgage (rate is excellent, good budgeting strategy), you need to ensure you have pre-payment options and the ability to port your mortgage or blend & extend. The reason being, the rates could change, moving, refinance etc. and you need flexibility. Alternatively the 5 year is an excellent option and the term should weather the storm of rates. Scotiabank’s mortgages are completely flexible and we do not restrict pre-payments, porting and blending and extending to ensure our customers maintain flexibility with their mortgage as their needs change.

Scotia has considerably more flexibility than other banks (eg Royal) or the non-bank companies (First National, Street, etc). If you're considering a change, they're a good choice. That's saved me money in the past.

Kristi, are you able to do blend and extends, or do I need to go into the branch? (My old mobile mortgage specialist left Scotia)

[Table 5]

Thanks everyone, some really good stuff in here.

Currently waiting to hear back about approvals.....apparently being self employed AND new to the country is pretty frowned upon at the moment, even if you have the income to back it up.

[PegCityFlamesFan]

I'm in the middle of a split with my common law partner and have a question. We put 5% down on a 236k house. We've been in it for a year. I know my next step is to get an appraiser to value the home but I am guessing between 240-250. I want to buy her out and figure it would be half our deposit and half the equity. Would a mortgage refinance make sense or just a loan to pay her the amount. Im also confused with the 80% rule.

Thanks.

[Olao32]

A friend of mine asked me a question the other day and I wasn't sure what to tell him.

He and his wife signed into a 30 or 35 year mortgage (I can't recall) which is up for renewal in approximately 6 months. I was 99% sure that if they renewed their mortgage with the same lender they could keep the term as is (i.e. not be forced to reduce the term to 25 years in conjunction with the revised rules). However, apparently they have their mortgage through a subsidiary of CIBC, who is shutting down and no longer financing mortgages. Best I understand it, by default their mortgage transfers directly to CIBC upon renewal.

So, when they renew are they forced to go with CIBC with the revised 25 year term? Or since their original term was 30-35 years could they keep that?

Following this, if they decided to go with another lender all together could they qualify somehow to keep their 35 year term, or would they be forced to requalify under the 25 year period?

[Table 5]

Honestly, I'm starting to wonder how anyone in this country gets a mortgage.

I'm trying to get a loan for a condo that is totally reasonable and not anywhere close to over-reaching (our monthly payment would be less then what we pay in rent right now), putting 25% down, having really good credit, showing assets that total to more than what the condo is worth.....and still getting resistance and them asking for more. It seems like if you're self-employed and relatively new to the country, you might as well pay in cash or GTFO.

I knew getting a mortgage here was a lot tougher than in the US, but I didn't realize it was this bad. I'm starting to see why there wasn't a banking crisis in this country. You don't have one when you simply don't give out loans to anyone but the wealthy.

Funny thing is, almost a decade ago when I was still in college, making crap $, had maybe 10k to my name, and was looking to buy something in the same price range....I was approved.

[albertGQ]

^^^
why are you having problems?
Confirming income?
Lack of Canadian credit?

What "more" arethey asking for?

[Table 5]

Don't want to talk numbers in the open, so I sent you a PM.

[Travis Munroe]

Have you tried talking with Kristi? I have numerous clients whom she has gone to bat for when the standard answer is "no". Sometimes painting a more detailed picture helps.

[albertGQ]

FYI: Looks like the 5 year fixed mortgage rate of 2.99% will be back on Monday. I think TD, ING, & First National will be offering this on 07/30/12.
This is just rumours so it may or may not be true. I would bet that it is though

[Mr.Coffee]

A friend of mine asked me a question the other day and I wasn't sure what to tell him.

He and his wife signed into a 30 or 35 year mortgage (I can't recall) which is up for renewal in approximately 6 months. I was 99% sure that if they renewed their mortgage with the same lender they could keep the term as is (i.e. not be forced to reduce the term to 25 years in conjunction with the revised rules). However, apparently they have their mortgage through a subsidiary of CIBC, who is shutting down and no longer financing mortgages. Best I understand it, by default their mortgage transfers directly to CIBC upon renewal.

So, when they renew are they forced to go with CIBC with the revised 25 year term? Or since their original term was 30-35 years could they keep that?

Following this, if they decided to go with another lender all together could they qualify somehow to keep their 35 year term, or would they be forced to requalify under the 25 year period?


I'm somewhat in this situation too, Firstline mortgages (subsidiary of CIBC) just sent me a letter saying they'd honour our mortgage but that they aren't issuing new ones anymore.

Our original mortgage broker wasn't very good and I need good advice. Anybody able to recommend a good one?

[albertGQ]

Contact Mike Oxlong. He's fantastic

[Champion]

I went to a broker to get my first mortgage 2 weeks ago. It took one quick day and I got pre-approved. Checked our credit, income, and we had 20% down. It was so fast I couldn't believe it. Our budget is 450K-500K and we are also renting right now for $1500/month.

[Kristi Hyson]

Hi,

My apologies for the absence and not replying. If your friends have a mortgage that is in insured and they need to preserve their longer amortization they can do a straight switch to another lender (mortgage amount & amortization remain), the only change will be the new interest rate. If your friends break the current mortgage they will be subject on an insured mortgaged to a 25 year amortization. If the mortgage is conventional the amortization can be 30 years.

[Kristi Hyson]

Current Mortgage Rates (effective June 14, 2012)

1 Year Closed 2.89%
3 Year Closed 3.19%
5 Year Closed 3.19% **call for details on promotional 5 year rate

2 year closed @ 2.69% (closing must be by September 30th, 2012)


Scotiabank Special Mortgage Programs:

New to Canada, wondering if you qualify for a mortgage? Scotiabank has a mortgage program for temporary and permanent residents in Canada. Follow the link below to check out Scotiabank's StartRight Program for Newcomers.

http://www.scotiabank.com/startright/landing-page.html (http://www.scotiabank.com/startright/landing-page.html)

Are you self-employed? Scotiabank offers home financing with as little as 10% down. Follow the link below.

http://www.scotiabank.com/ca/en/0,,3208,00.html (http://www.scotiabank.com/ca/en/0,,3208,00.html)

[8sPOT]

Kristi,

Are you bound by the same rules and policies for income verification? I'm doing a release of covenant, but I've only been contracting since February of this year. I know standard policy is to have 2 years NOA's.

[kn]

I currently have a mortgage with ING. Today I had an almost two hour appointment with a mortgage specialist at my CIBC branch. I was surprised to see the amount of time she spent to go over my options. The "best" offer for a 5-year fixed mortgage was 3.14%, saving me about $160/month. Of course, I'll have to pay a penalty for renewing early.

But then I do a quick Google search for "Calgary mortgage broker" and get overwhelmed with the sheer number of brokers out there, and many of them are offering 5-year fixed rates as low as 2.99%.

How do you distinguish one independent mortgage broker from another when so many of them offer the same rate? Seeing this rate out there, should I just go back to my branch and say what's up? Or should I start the ball rolling with one of these independents and then approach the bank for a better rate?

Perhaps a better question is why would I go for a 3.14% rate with CIBC when there are posted rates of 2.99%?

:confused:

[Travis Munroe]

"Fine Print"
The lowest rates typically offer no flexibility while rates that are a bit higher will give you flexibility. Read the fine print and understand the mortgage.

[LAHAL]

Can people still assume a mortgage?

I currently own a townhouse that I have rented out. The value of the property is lower then the mortgage, so I can't sell it.

I want to buy a bigger house and don't want my townhouse to effect me qualifying for what I want.

So, can someone still assume a mortgage?

Thanks.

Sent from the future
using a Galaxy Nexus and Tapatalk 2

[metallicat]

Sorry if this question has been asked millions of times, but...what is the minimum down payment required to get a mortgage? Is it more complicated than just a simple percentage? And how does one figure out if closed or variable is the right option?

[Travis Munroe]

5% down. A couple of banks were offering cash back mortgages however it is my understanding that was gone about a month ago.
You will also want 1% of the purchase price for closing costs (the bank will want to see it) however this can be flexible.

closed rate gives the peace of mind knowing your payment for the duration you lock it into.
variable will be a lower rate but you take a chance of a rate hike which could come in higher than what your fixed rate would have been.

[Deegee]

Can people still assume a mortgage?

I currently own a townhouse that I have rented out. The value of the property is lower then the mortgage, so I can't sell it.

I want to buy a bigger house and don't want my townhouse to effect me qualifying for what I want.

So, can someone still assume a mortgage?

Thanks.

Sent from the future
using a Galaxy Nexus and Tapatalk 2

Is the townhouse deal a CMHC insured Mortgage? You can still be sued is the person that assumes defaults...

[tvp2003]

Can people still assume a mortgage?

I currently own a townhouse that I have rented out. The value of the property is lower then the mortgage, so I can't sell it.

I want to buy a bigger house and don't want my townhouse to effect me qualifying for what I want.

So, can someone still assume a mortgage?

Thanks.

Sent from the future
using a Galaxy Nexus and Tapatalk 2

If you've entered into a lease, I believe the rental payments can be used offset whatever your liabilities are (mortgage, taxes, condo fees) to determine what you can afford. Still may reduce the amount you qualify for, but that's not necessarily a bad thing :whistle:

[metallicat]

5% down. A couple of banks were offering cash back mortgages however it is my understanding that was gone about a month ago.
You will also want 1% of the purchase price for closing costs (the bank will want to see it) however this can be flexible.

closed rate gives the peace of mind knowing your payment for the duration you lock it into.
variable will be a lower rate but you take a chance of a rate hike which could come in higher than what your fixed rate would have been.

If you get a variable rate, can you lock it into a fixed at any time at the current variable rate?

[I-Hate-Hulse]

So I'm on a variable with First National right now at a 2.35 variable rate... Is this still available at this or other institutions? Posted rate for FN on their website is 2.8%.

Is this the old "come talk to us for the real rates" thing again?

[albertGQ]

So I'm on a variable with First National right now at a 2.35 variable rate... Is this still available at this or other institutions? Posted rate for FN on their website is 2.8%.

Is this the old "come talk to us for the real rates" thing again?

I don't know of any place you can get P-0.65%. The best I know of is P-0.40% right now.

[Deegee]

If you get a variable rate, can you lock it into a fixed at any time at the current variable rate?

Typically you can lock into a fixed term from a variable rate without penalty if:

1. The fixed interest rate is higher then the variable rate.
2. The term of the fixed rate is equal to or longer then the remaining on the variable.

You don't get to lock it at what the current variable rate you have is, though.

Most places don't explain how you can lock in your variable rate mortgage if things start to head north.

Every lending institution is different and I would encourage you to ask good questions before signing anything.

[onetwo_threefour]

Yes, I always try to explain to people that a convertible mortgage doesn't mean you get to lock in at the rate you have, it means you can convert the remainder of your term or sign up for a longer term at the posted fixed rate for the term you are signing up for. I'm not a big fan of selling people on the convertibility option, because the client really doesn't have any leverage to negotiate rates at the time of conversion. If you don't understand that, you might not realize that when you convert the rate might not be as good as you think.

This is exactly the kind of stuff where I have clients come back years later and tell me the bank is unfair,or the mortgage broker was unethical because this wasn't explained. Unfortunately, all we can tell people at that point is that is was a term of the financing they agreed to.

[temple5]

I have heard that for most if not all Variable mortgages the payout penalty is 3 months interest - is this true?

Thanks

[pseudoreality]

You sound like a good mortgage broker. When I first bought my house in 2007 I dealt with an idiot of a mortgage broker. He didn't shop at all, gave me one option, which I had beat by talking directly to a bank already. Then the guy left town when things were closing. It really gave me a bad taste when it comes to mortgage brokers. When I renewed I talked directly to the bank.

[onetwo_threefour]

You sound like a good mortgage broker. When I first bought my house in 2007 I dealt with an idiot of a mortgage broker. He didn't shop at all, gave me one option, which I had beat by talking directly to a bank already. Then the guy left town when things were closing. It really gave me a bad taste when it comes to mortgage brokers. When I renewed I talked directly to the bank.

Not sure if you were talking to me, but I realized my post might sound like I'm a mortgage broker. I'm not. I'm a real estate lawyer, so I'm more talking about the aftermath when I say I'm not a fan of selling people on convertibility as an option. Just to clear things up.... :no:

[pseudoreality]

Sorry, I know there's a couple mortgage brokers on here and I must have got confused.

Sent from my Galaxy Nexus using Tapatalk 2

[Deegee]

I have heard that for most if not all Variable mortgages the payout penalty is 3 months interest - is this true?

Thanks

Most of the ones I have seen have had the 3 months penalty.

I know I have seen some mortgages with 6 month penalties and IRD, and specifically with MRS Trust I have seen it where you cannot prepay at all unless you sell the property, mind you those were both fixed situations.

[temple5]

Anyone know what the 5 and 10 yr rates are these days? Thanks.

[Mike Oxlong]

Anyone know what the 5 and 10 yr rates are these days? Thanks.

I don't want to hijack her thread but I have just updated rates in my Mortgage broker thread in the CP power ring.