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Another example of BIG SIX BANK inflated penalty calculation.. $13,634.00! Wow!

big-six-banks1 If you still think your local BANK is your best friend, think again.  Last week, one of my client’s discovered it would cost them $13,634 to exit their mortgage early.  Compared with only $2736 if they had chosen a BETTER mortgage Lender.

Here’s the details..  The clients had a $395,000 mortgage balance remaining.  Renewal date was October 2018.  Original term was 5 yrs and their rate was 2.77%.  The rate is competitive, but not any better than what I could have offered at that time.  There had to pay the mortgage out.

Penalty quote is $13,634.  That’s equal to over 14 months interest!!  Wow!  Incredible.   $13,634 compared to $2736.

I’ve shared many examples similar to this in the past.  It’s really simple.  DON’T FOCUS ON THE RATE!.   There is so much more to choosing a mortgage than just rate.  The average Canadian changes their mortgage ever 3 years.  And there are many reason this happens.. change of job, marital status, family issues, health issues, etc.

And if you are expecting your Banker to show you other products to compare, well, that’s just not gonna happen.  It’s like expecting Ford to send you to Toyota for a new car.  Not gonna happen. Do yourself a favour and speak with an unbiased, neutral professional. Speak with an experienced Mortgage Broker that deals with dozens of Lenders.  You’ll be glad you did.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Mortgage brief… New Liberal govt mortgage rule changes..and what it means.

Bill Morneauthumbs down Yesterday, Federal Minister of Finance, Bill Morneau, announced tighter lending rules.  The big focus is on the new ‘stress test’. To sum it up, here’s what’s gonna happen and how it will affect you.

First, let me say this..   IT’S NOT THAT BAD… It will affect those with tighter budgets, but not the vast majority of buyers.

NEW RULE:

-As of October 17, everyone must qualify using the Bank posted 5 year fixed rate.  Today, that’s 4.64% (well over the discounted 5 yr, which is averaging around 2.59%..lower with most Brokers).

-borrowing less than 80% of the value of your home allows you to extend your amortization to 30 years…. but not any longer..it now be capped at 25 years.

There were some other changes, but these are the ones that will affect us most.  So here’s some other facts the media may not be telling you:

-You remember I said it wasn’t that bad?  It’s true.  Over 90% of my clients are qualifying already, using the Bank 5 yr posted fixed rates.  I suspect that most homebuyers can qualify just as well on October 17, as they can today.

-I’ll repeat…Most homebuyers can qualify easily with a 25 year amortization, but choose to extend that to a 30 year amortization as a fail safe or preventative measure, just in case their incomes are affected in the future … job loss, family illness, child school fees, other financial crisis.

-The govt wants to stop house prices from rising in Toronto, Vancouver and other major urban hotspots.   But if you are an investor, earning good income, or have a good down payment, this won’t affect you.   Yes, some homebuyers will no longer qualify under traditional lending policies….

-But watch out for the secondary lenders.  Secondary lenders AREN’T offering loan shark rates, contrary to what the media might have you believe.  They will gain market share as traditional lenders can’t help these borrowers.  I’m talking about financial institutions that specialize in that gray market where borrowers don’t quite qualify but can still afford it.  They will pay 4% or 5%  on their mortgage.  (wasn’t that long ago that 4% was a fully discounted AAA rate).

More on this follow..   stay tuned.

Your best interest is my only interest.   I reply to all questions and I welcome your comments.  Like this article?  Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Attn: Firstline mortgage clients… beware CIBC brand renewal offer!

FirstlinecibcIn June 2012, CIBC announced they would close Firstline Mortgages. All existing Firstline mortgage clients would be offered a CIBC brand mortgage renewal.

Hey, did anybody catch that?  “…..offered a CIBC brand mortgage renewal.”   This means your Firstline mortgage CANNOT be renewed into a Firstline brand because the brand is being discontinued.

In fact, in 2015, CIBC was sending all upcoming renewals a ‘Special CIBC Early Renewal Rate Offer’.  My first piece of advice…If you get this, don’t sign it without reviewing with your Mortgage Broker.   Continue reading “Attn: Firstline mortgage clients… beware CIBC brand renewal offer!”

BIG SIX BANKs report obscene RECORD $34billion in profits for 2015…and still complaining!

greedy banker It’s that time of the year again..  The Banks have to report their annual profits.. And no surprise, the BIG SIX BANKS are at it again..

RBC reported a $10billion annual profit for 2015.  This is the first time a Canadian company reported an annual $10billion profit.  Yet, at the same time, they are crying the blues and warning of troubled times ahead. (uh, that’s the same speech they’ve made for the past 10 years.. here’s a 2013 headline).  GIVE ME A BREAK!!!  Canadians aren’t buying it anymore..

Check out the obscene profits pulled in by the rest of the BIG SIX BANKS..

Continue reading “BIG SIX BANKs report obscene RECORD $34billion in profits for 2015…and still complaining!”

BIG SIX BANKS aren’t passing along the Bank of Canada rate cut to consumers?

banksters monopolyToday, the actual BANK PRIME rate should be 2.50%, not 2.70%.   What am I talking about?… follow me on this and let’s see if this makes sense.

It’s been a few weeks since the Bank of Canada cut the rate.  I’ve been waiting to see how this would play out… First, let’s get the terminology clear.    Bank of Canada overnight rate, or Key rate as it’s referred to, directly affects the Retail Bank Prime rate and Variable rate mortgages.   This does not have a direct impact on fixed rate mortgages.

Last January, the Bank of Canada Governor, Stephen Poloz, surprised most economists and financial experts when he cut the rate by 0.25% (well, not all experts, I called for a rate cut just a week earlier).
Continue reading “BIG SIX BANKS aren’t passing along the Bank of Canada rate cut to consumers?”

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