Tips, Advice, and Explanations from a Vancouver Mortgage Broker  

Posts Tagged ‘best mortgage rates vancouver’

Mythbusting Mortgages 4 – Tricky Bank Advertising Techniques

Friday, February 11th, 2011

Transcript of Video Blog:
Hi everyone. It’s Rowan Smith at the Mortgage Center. I want to address one of the most common myths that I receive questions about. That’s when a client goes into their bank and is told that they are going to be given 2.2 on a five year mortgage. So 2.2 would be the interest rate. The client comes to me, “What can you do on a five year fixed interest rate?” I say, “3.59 or 3.69.” They go, “Wow, well my bank is offering 2.2.”

Read the rest of this entry »

Mythbusting Mortgages 3 – My Bank Will Finance a Former Grow Op!

Friday, January 14th, 2011

Transcript of Video Blog:

Hey everyone! Rowan Smith at the Mortgage Centre. This week we’re doing Myth busting No. 3. This week’s myth is the old: “My bank did a former grow op property for me before so they will again.” That’s not necessarily the case. The industry hasn’t had this problem for that many years, at least not that they’ve been aware of. Properties now being branded as a former grow op in the property condition disclosure statement or in some places even on title has caused lenders to re think how their lending policies are when it comes to former grow ops. They don’t even say why, but what’s changed?

Read the rest of this entry »

Mythbusting Mortgages 2 – 35% Down? Who Needs a Job?

Tuesday, January 11th, 2011

Transcript of Video Blog:

Hi everybody! It’s Rowan Smith with the Mortgage Centre. We’re doing Myth busting #2 here and another one I want to address is the myth that if you have 35% down you don’t even need a job. That is patently incorrect!

Read the rest of this entry »

Mythbusting Mortgages 1 – I Don’t Have to Prove Income

Friday, January 7th, 2011

Transcript of Video Blog:

Hi everybody! Rowan Smith with the Mortgage Centre. We’re doing a Myth-busting series here. I’m going to do a 10 part series that I’m going to release over the following weeks. So, I’m just going to address a number of different myths within finance and real estate.

Read the rest of this entry »

New Immigrant Mortgages in Canada

Tuesday, January 4th, 2011

Transcript of Video Blog:

Hey everybody, Rowan Smith with the Mortgage Centre. I’m going to talk right now about new immigrant mortgages. There’s a lot of confusion out there because there’s really two types of programs. First type of a program is one where a person can document their income here in Canada, they have a job and they’ve established credit. They may have been here for a couple of years. Second type of person is very new to the country, who maybe doesn’t have permanent long term employment and doesn’t have a credit rating here in Canada.

Read the rest of this entry »

Non Resident Mortgages in Canada

Friday, December 31st, 2010

Transcript of Video Blog:

Hi everybody, it’s Rowan Smith with the Mortgage Centre. Today I’m going to talk about non-resident mortgages. So a non-resident is somebody who is defined as not living within Canada but trying to buy real estate here.

Read the rest of this entry »

Is It Time To Re-Do You Variable Rate Mortgage?

Wednesday, November 10th, 2010

Transcript of Video Blog:

Hey, everybody. It’s Rowan Smith with the Mortgage Centre. What I want to talk to you about today is getting out of your existing variable rate that you may have got at a higher rate than is available today, getting into today’s lower rates. Let’s look at what happened.

Read the rest of this entry »

Penalties and Mortgages and how Non-Banks Can Help

Friday, November 5th, 2010

Transcript of Video Blog:

Hi, everybody. It’s Rowan Smith with the Mortgage Centre. I want to talk today about interest rate differential penalties, mortgage penalties, and non banks. The reason I’m bringing this up is a lot of people have said to me, “Rowan, how come you don’t fund more mortgages with TD Bank or Bank of Montreal and all the big banks?”

The reason is, amongst many other things, but one of the primary ones, and the one I want to talk about today, is their penalty calculation. In my experience, the big banks have a more punitive form of interest rate differential calculation than that that we get through a non bank.

The reason being is most financial institutions, most of the big banks, will base their penalty that you’re going to pay on a fixed rate mortgage off of their posted rate, which is much higher than, say, a discounted rate. The difference right now can be the difference between 5.29 being posted and 3.49 or thereabouts being their discounted rate.

Well, if you were to add that up over five years, the difference between 5.29 and 3.49, figure out what that portion is, it can be pretty huge. So you want an institution that’s not going to use a high posted rate or not going to use a high rate on their IRD, interest rate differential, penalty calculation.

Now most non banks don’t even have posted rates, so when they’re calculating their IRD, they’re basing it off of a much lower rate. In other words, you’ll be paying a penalty between 3.79 and 3.49 for the remainder of the term versus 5.29 and 3.49. It’s a very big difference between the way those penalties are calculated.

This is all nuts and bolts stuff that goes on the back end. You won’t be aware of it until you go to pay out your mortgage and are horrified by the penalty with your big bank. So if you’ve been dealing with the same institution for many years and you’re fiercely loyal to them, understand they are in it to make a buck, and they’ll make it on you.

For the Mortgage Centre, I’m Rowan Smith.

Collateral Charges – Another Lender Gets On Board

Thursday, November 4th, 2010

Transcript of Video:

Hi, everybody. Rowan Smith with the Mortgage Centre.

I want to talk today about a change that was announced that’s been swept under the radar, and that’s that TD Bank has announced their mortgages will now be a collateral charge. Now what a collateral charge is, it differs than a traditional mortgage in that you can re-advance that mortgage back up to the amount or even beyond that you originally registered it for.

Now to a client, what does this mean? Let’s look at it from numbers. Let’s say you bought something for $500,000, you put 20 percent down under grant, and you had a mortgage for $400,000. Traditionally, as you paid down that mortgage, you could only advance it ever back up to the amount of the original mortgage, not beyond, and many institutions didn’t allow you to re-advance it at all.

However, a collateral charge allows you to register the mortgage for some fictional figure, perhaps the value of the home plus 25 percent — not the mortgage, but the value of the home plus 25 percent or more. Some institutions, such as Scotia, don’t even specify a limit.

Now, why they’re doing this is twofold. First off, for you the client, yes, it means convenience. What you’re going to be able to do is go back into the bank after a couple of years. You’ve paid your $400,000 mortgage down to $350,000, but let’s say you need $50,000 because you want to renovate. Well, rather than having to break the term and pay legal fees and all this type of stuff, you’ll be able to now just borrow back up to the $400,000, or beyond. If your home is worth more now, based on how much they registered the mortgage for.

It sounds very convenient, but the reality is it’s also a form of golden handcuffs, because once you’re into that type of charge, you can only get out of it by paying off the mortgage and moving it to another institution and paying the legal fees to do so. It’s a way of locking you up with that institution.

Now to anybody that’s had a mortgage for longer than one term, they’ll know that first offer that the bank gives you at renewal is never that great. So if you’re thinking you’re going to move your mortgage or you’re going to shop your mortgage at the end of your five-year term, if you’ve taken the new collateral charges from TD or from other institutions like that, chances are you’re not going to be able to shop it without eating some legal fees in there.

So primarily, it’s a customer retention tool as well as it does, in fact, add value through ease of use and ease of future access to your funds. Myself, I’m not a fan of them, however.

For the Mortgage Centre, I’m Rowan Smith.

Lines of Credit – An Update On A Specialized Product

Friday, October 15th, 2010

Transcript of Video Blog:

Hey everybody. Rowan Smith from The Mortgage Centre. I want to talk today about lines of credit. It’s been a while since I’ve done a post on it. I get a lot of questions on it, people not understanding when a line of credit is possible and what kind of rate they can expect. So first off, when is a line of credit possible? Well, you have to have 20% equity in the property. CMHC does not allow to have people have an interest only portion of their mortgage, so lines of credit are interest only. Typically, prime plus one is the going rate, although your institution may offer you something better if you have a very large investment portfolio or a longstanding connection with them. Prime plus one is the baseline rate by which you should be judging any particularly offers you are receiving for a line of credit. If you’ve got a $500, 000 home and you have a $350, 000 mortgage, you can only have 80% financing, that’s conventional financing, if you’re going to want a line of credit. Now, in that case, that’s $400, 000. If you’ve got 350 and the max is 400, the maximum line of credit you’re going to be able to get is 500. Now, that’s a secured line of credit and secured line of credit rates. Your institution or any other institution can offer you unsecured lines of credit all they want. How big they’ll go is generally an indication of how aggressive their policy is or how much debt they think you can service with your taxable income.

To give you an example of how this plays into it, I had somebody who was looking to qualify for a $50, 000 line of credit but they needed $80, 000 so they went to two different banks and applied for a $30, 000 line of credit and were declined at both of them because unsecured $30, 000 is very large. For secured you can have three million dollar lines of credit if you have the equity in the property, but when it comes to an unsecured line of credit the banks generally have a cap. Anything over $10, 000 and they start wanting to see a lot more net worth, a lot more fall back position, meaning vehicles, meaning cash assets, stocks, RSPs, savings, and what not.

You say, “well, if I had the savings I wouldn’t need the line of credit”, but in most cases people need a line of credit as a contingency, not as the primary source of their funding. There are secured lines of credit with your mortgage, can’t exceed 80% of the value of your home based on the appraisal, not based on list prices of other properties in your area. There are unsecured lines of credit which banks can do whatever they heck they want as long as they believe you and believe your credit rating is strong enough and that your income can service it. If you want any clarification on this, please contact me.

I’m Rowan Smith from The Mortgage Centre.