Mortgage Broker

[Mike Oxlong]

In another thread there was a brief discussion on the difference between going to a bank vs. a broker for your mortgage. I didn't want to hijack that thread but I feel it is an important topic to be discussed so people understand the differences and can make educated financial decisions when purchasing a home.

When you go a bank you are going to deal with what they call a "mortgage specialist" These specialists are not licenced in anyway, they have nor formal education or training in mortgages. These "specialists" could have been selling credit cards yesterday and might be a bank teller tomorrow. Most importantly these "specialists" work for the bank. They have the banks best interests in mind not yours.

When you talk to a specialist at a bank you are going to get ONE option. You get that banks rates, and mortgage options, that's it. Your financial goals might not be in line with what that bank is going to offer you. It's like trying to fit a square peg into a round hole.

So I'm sure you are thinking that you can just go out and shop around yourself for a mortgage from different banks, which of course you could. However not only will it cost you lots of time and leg work but every bank you go to is going to pull your credit bureau which will hurt your credit score.

Mortgage brokers in Alberta are licenced and are required to go through an educational course in order to obtain that licence. Now I don't want to make it sound like they are getting PHD's or anything but there is an educational procees that is required. Additional to obtain your AMP designation continuing education is required every year.

Mortgage brokers have access to a whole bunch of lenders. I have access to about 40 different lenders and some private lenders as well.

Most important thing is that I work for YOU. I don't work for a bank, I don't have an allegiance to any bank. My business is based on happy clients and referrals. It is in my best interest to make sure you are happy with your experience which means getting you the best rate possible as well as getting you the mortgage options that work for you. Because I have access to so many lenders I am abe to do that unlike a bank.

A good broker is going to offer you the best rate available right off the bat. There is no negotiation with them or haggling.

I had a client recently who's mortgage was up for renewal. He contacted me and let me know what is current bank had offered him as a renewal rate. I was able to beat that rate quite easily, when he went back to his bank to let them know, all of a sudden they were able to drop their rate to match. Why wouldn't that bank just offer their best rate to him right off the bat? He just finished a 5 year term with them where he paid them THOUSANDS of dollars in interest. Yet they still tried sucking as much as they possible could from him.

If there is one thing I want anyone reading this to remember is to NEVER EVER sign your renewal notice from your bank. It can save you thousands of dollars by speaking to a broker and finding out the best available rate at their time of renewal. 9 times out of 10 your current lender is going to offer you a higher rate to try and make as much as they can from you. They are hoping you are just going to sign and not shop around. Unfortunately a lot of pople do sign and pay way more than they need to.

Just please use that broker if they offer you a better rate! If your lender comes back and says they will match, why go back to them after they just tried screwing you?

Oh one other important thing to remember about using a broker.......our services are FREE. It doesn't cost you anything.

As always please feel free to fire away with any questions. I am happy to act as a resource on this board to help people make informed decisions on the biggest financial decisions on their lives.

[bomba]

Hey I have a question for you. I've met a number of people over the last couple years that tell me they have multiple properties that they use to generate rental income (10+ properties). Typically these guys don't even seem that old (35-40s). Are they telling me a lie or is there a way to keep funding new mortgages?

I'm trying to get an investment property strategy going, but don't quite understand how it is possible to get the funding in place.

[Mike Oxlong]

Originally Posted by bomba

Hey I have a question for you. I've met a number of people over the last couple years that tell me they have multiple properties that they use to generate rental income (10+ properties). Typically these guys don't even seem that old (35-40s). Are they telling me a lie or is there a way to keep funding new mortgages?

I'm trying to get an investment property strategy going, but don't quite understand how it is possible to get the funding in place.

There are lenders that have great progams that are targetted for people who are looking to put together a rental portfolio. That being said you still have to be able to properly qualify for the properties. Which means having to put down at least 20% now for a down payment.

About 4 or 5 years ago rules regarding mortgages ingeneral were far different but particularly for rental properties. You could get a mortgage for rental property with 5% and sometimes even zero down. This allowed a lot of people to get into the game with a lot less cash and to accumulate the properties they have.

It's still possible to make it happen, just requires a little more work and some more cash up front to use as a down payment now.

[Redline]

We used jamie this month for the mortgage on our new house. We'r very happy with the mortgage he found for us and I have to say he was outstanding for us in not ideal conditions. Thanks Jamie! We'll be in touch when our rental property comes around for renewal.

Paul

[bizaro86]

Originally Posted by bomba

Hey I have a question for you. I've met a number of people over the last couple years that tell me they have multiple properties that they use to generate rental income (10+ properties). Typically these guys don't even seem that old (35-40s). Are they telling me a lie or is there a way to keep funding new mortgages?

I'm trying to get an investment property strategy going, but don't quite understand how it is possible to get the funding in place.

New investment mortgages can be obtained by netting a percentage of the rents off of the mortgages for the investment properties for qualifying purposes. So if you buy cash-flowing properties, you should be able to qualify for a basically unlimited amount of mortgages as long as you have downpayment funsd, although the lender's that you can use will decrease over time. (Firstline, RBC, TD, National are some of the better ones now, Scotia just limited investors to 5 properties total recently) Your loan to value requirements may also go up. (IE initially you'll need 20% down, may eventually need to go to 25%+ down)

A good book involving this is Peter Kinch's The Canadian Real Estate Action Plan. Or sit down with a good broker who does investment mortgages and have them work through a plan with you. You could also PM me if you'd like to sit down for a coffee downtown and chat about real estate investment. (I'm an investor, not a broker, so I'm not threadcapping Jamie's thread or anything like that. I'm sure he's a great broker)

[Mike Oxlong]

Quick rate update

2.99% on a 4 year fixed is a great deal right now.

I know BMO is currently advertising a 5 year at 2.99% but it does have some fairly strict restrictions. I posted this in another thread but for those that missed it here they are:
- max amortization 25 years (no exceptions)

- pre-payments capped at 10% and 10% (no exceptions)

- you are not allowed to miss or “skip” payments for any reason (no exceptions)

- only available until Jan 25th

- rate hold only 90 days; if rates go down in that time no float down allowed, must close within 90 days from date of application (not date of approval) (no exceptions)

- rate not available on their Homeowner Readiline (similar to all in one mixed fixed and variable mortgage)

- you are completely locked in until maturity

- only way you can break this mortgage is through moving, dying, refinancing or renewing with them at a similar or higher term (no exceptions)

- when you move, the IRD is so high because of the deep discounting that you have little option but to keep it with them

The lenders offering 2.99% on a 4 year have excellent pre payment options and are not nearly as restrictive.

[Mike Oxlong]

Bank of Canada holds rates steady
http://www.calgarysun.com/2012/01/17...rate-unchanged

No change again for those of you in a variable rate

[Mike Oxlong]

3.19% on a 5 year fixed
2.89% on a 3 year fixed currently
Both have excellent pre payment options.

Some good rates out there......BMO has launched their 2.99% 5 year fixed again, but please beware it is a very restrictive mortgage and could end up costing you a lot of money in the long run.

Questions are welcome!

[flamesrule_kipper34]

Isn't First National offering a 3.09% 5 year fixed as well?

[Mike Oxlong]

Originally Posted by flamesrule_kipper34

Isn't First National offering a 3.09% 5 year fixed as well?

No First National isn't offering that rate at this time...

Not much change on the rate front.

3.19% 5 year fixed
2.99% 4 year fixed
2.89% 3 year fixed

[flamesrule_kipper34]

ICICI Bank had a rate of 3.04% fixed at 5 years last week, not sure if it's still available.

[Mike Oxlong]

Someone in the off topic forum asked a good question about getting into a 10 year mortgage. With interest rate at historic lows it could be a good long term strategy.

10 year rates are between 3.89% and 3.99% right now.

Here is an intersting FAQ article from one of the lenders answering some questions on 10 year mortgages:
I am very interested in the 10 year term, but I have concerns...

Q. What is the penalty on a 10 year term?
A. According to the Interest Act, once 5 years has passed in the term, the maximum penalty is 3 months interest. For the first 5 years, the penalty is the greater of the interest rate differential and 3 months interest.

Q. I heard a statistic that 80% of mortgages refinance within the first 3 years. My client could get stuck paying a hefty interest rate differential.
A. All of ING DIRECT’s mortgages are transferable. If the client moves, he can transfer his mortgage to the new property and take a blended rate to avoid paying a penalty.

Q. But what if the client does not buy a new property?
A. In this case, the client will have to pay a penalty – the greater of the interest rate differential and 3 months interest. But consider the following: at ING DIRECT, we will calculate the penalty on the balance minus the unused portion of the 25% of initial capital (pre-payment privilege). AND ING DIRECT only has one rate, therefore our penalty will be calculated using the rate of 3.99% and not a much higher ‘posted’ rate like some banks who are at 6.75% posted for 10 years!

Q. I get the impression that there is a lot of risk involved in a 10 year product.
A. Rates are at historic lows. Economists are telling us that the rates could start to increase as early as the end of 2012. There is a strong possibility that in 3 years the 7 and 10 year rates will be higher than 3.99%. For ING DIRECT, our interest rate differential calculation would be negative leaving only a 3 month interest penalty for the client. Coupled with our transferability options, the risks for the client are low.

Q. What are the advantages of a 10 year term.
A. The advantages are a rate of less than 4% for 10 years! Two years ago the 5 year rate was at 5.25%... we have no idea where rates are going. With all that is happening in the global economy, mortgage stability offers a great financial security.

[Mike Oxlong]

3.09% on a 5 year fixed right now.....rates just seem to keep getting lower.

I'm amazed they have dropped this low. Good time to take advantage if you happen to be buying or your mortgage is up for renewal.

120 day rate holds available as well. PM me if you need anymore information.

[Mike Oxlong]

First national is one of the lenders currently offering that rate. There are a few out there offering 3.09% though. Lots of options.

[Mike Oxlong]

Here's a breakdown of the new Mortgage rules introduced by the Governement of Canada:

Government of Canada’s announcement, regarding changes to Government Backed Insured Mortgages, effective July 9th 2012.

1) Amortization Period is REDUCED to 25 years for high ratio applications. Banks can continue to offer 30 year amortization on LTV’s 80% or less

2) Refinancing is REDUCED from 85% LTV to 80%
3) Limit GDS to 39% and TDS to 44%

4) Maximum Purchase Price for government backed mortgage insurance is $1 Million. Homes above $1 Million must have 20% downpayment

[Mike Oxlong]

Rates keep dropping.
A couple lenders now offering 2.99% on a 5 year fixed!

If you are looking to buy a place, want to refinance or if your mortgage is coming up for renewal soon let me know and we can get a rate hold put in place for you.

[Mike Oxlong]

Great rate available on a 3 year fixed right now, 2.69% if you are looking for a slightly shorter term.

[KeepCalmCarryOn]

I have no need for a mortgage, but I thought I'd let you know that your username and the "tag" below it are hilarious!

[shermanator]

Looks like RBC is raising their rates on 3 and 5 year mortgages. I'm renewing in a month, and I can't see myself going with them....

http://business.financialpost.com/20...tgage-rates-2/

[Deegee]

Originally Posted by shermanator

Looks like RBC is raising their rates on 3 and 5 year mortgages. I'm renewing in a month, and I can't see myself going with them....

http://business.financialpost.com/20...tgage-rates-2/

Articles like that mean nothing because I can't imagine anyone gets the posted rates.

I know our Credit Union that I work for, our 5 Year posted is 4.99%, however most everyone gets 2.99% - 3.19%.