Scotiabank to buy ING….how will this affect you?

Earlier this month, ING Groep, the Dutch financial services giant, announced they were looking to sell their Canadian and UK operations in order to raise cash.   ING received a $10billion euro bailout from the Dutch govt during the 2008 Financial crisis and they want to start paying it back.

It didn’t take long to find a buyer for the Canadian operations.  Scotiabank will buy the Canadian division of ING for around $3billion.   The press release hinted at some good news for the Canadian public.  Scotiabank will continue to run ING as a separate entity.  For mortgage clients, this is mainly good news…. but we do have some concerns…

1- THE COLLATERAL MORTGAGE CHARGE.   ING decided to register all their mortgages as collateral charges starting December 2011.  Just like TD Bank did, a year earlier.   Something we are completely against as it weakens your ability to negotiate rates in the future… Will Scotiabank take ING and TD’s lead and start registering their mortgages as collateral charges too?    Let’s hope not… I’ll be watching and reporting…   (here’s a tip… if you have an ING mortgage and it’s coming up for renewal, you will have to take the collateral mortgage….so think twice about signing up with ING… you better know the facts before you sign).

2- POSSIBLE CHANGES AT RENEWAL TIME.   Speaking of renewal time….When a mortgage comes up for renewal, it  means the mortgage is Open.  You can pay it down or off without penalty… you can transfer it to another Lender without penalty.   You can even renew the mortgage with your current Lender…  BUT it also means your current Lender can change the terms of your mortgage.. they can change the prepayment privileges and the they can change the PREPAYMENT PENALTY FORMULA.

If Scotiabank makes changes to the ING mortgage terms at renewal time (and I suspect they will), let’s hope they don’t touch the prepayment penalty calculation…  Scotiabank’s prepayment penalty calculation is not my favorite… here’s an example of a $30,000 penalty and another one that cost this client $4,000 on a $109,000 mortgage.   One thing I do like about ING is their prepayment penalty formula… They don’t gouge you with the same BIG SIX BANK formula…. thumbs up to ING for that….  (here’s another tip…..ING isn’t the only Lender with a fair prepayment penalty calculation… there are other great Lenders that are not as well known…..with rates that are the same but usually better, AND they DON’T make you sign a collateral mortgage charge…. ).

If you have an ING or Scotiabank mortgage and need more info… feel free to contact me for an unbiased opinion.   I will be reporting on any and all changes as they become available.   Subscribe to this site or follow me on Twitter.

I can be reached at 416 224 0114 or steve@mortgagenow.ca

Steve Garganis