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TagBig Six Banks

Posted Money saving tips

But it came in a beautiful box?!

canadian-money-giftIf I gave the option of choosing between 2 cell phones, which would you choose?   Both phones had similar specs and were identical in almost every way… except PHONE 1 came in a nicely gift wrapped box with a bow on it.   PHONE 2 came in brown paper bag but was less expensive and also had slightly better options.

Most of us would choose PHONE 2 right?  Wrong!   When it comes to mortgages, most of us are focusing too much on the beautiful gift box and not paying enough attention to the contents.  They say around 47% of all mortgages go through a BANK and 39% go through a Mortgage Broker.   Broker share is up, but not enough in my opinion.

When it comes to mortgages, the BIG SIX BANKS have been charging higher rates than what can be had from MORTGAGE BROKERS (see Bank of Canada study ‘competition in the Canadian mortgage market).   And their inflated prepayment penalty calculations are now infamous (typical BIG SIX BANK penalties are around 4 times higher than other lenders).
Continue reading “But it came in a beautiful box?!”

Posted 3 Comments on A 2nd mortgage? Yes, this option can save you money. Consumer Debt

A 2nd mortgage? Yes, this option can save you money.

 

loan sharkQuick, what’s the first thing that comes to mind when you think of “second mortgages”?   For some it could be that shady looking character in a smoke-filled pool hall… guys with gold chains and a baseball bat nearby.   Maybe you’re thinking of someone in financial trouble. Or maybe it’s just someone who doesn’t want to pay outrageous costs and penalties to refinance their existing mortgage.

The mere mention of 2nd mortgages conjures up all sort of images.  Most of them, negative.  For many, a 2nd mortgage can be a last resort solution during a financial crisis.   For several others, it can be an opportunity to save money.   That’s right, to save money.

Sure, 2nd mortgages carry a higher interest rate than 1st mortgages but, they can also serve a purpose.    One of those purposes can be to save you money.  Yup, I said it again.  There are some new trends emerging with today’s new mortgage products that are forcing consumers to seek other options.  Two of these trends are INFLATED PREPAYMENT PENALTIES and NO FRILLS MORTGAGES! Continue reading “A 2nd mortgage? Yes, this option can save you money.”

Posted Consumer Debt

TD car loan rates at 25%!! Over 4000 comments!

cbc news

Last week, CBC’s Kathy Tomlinson made national headlines with her breaking story about TD charging car loan interest rates of 25%.  Wow!   Are you kidding me?  The reaction was incredible and went viral.  Over 4000 comments in just a few days.

Now, this doesn’t have anything to do directly with mortgages, but it’s relevant news given that TD is one of the largest BANKs in Canada.   It also shows our Federal Govt’s lack of focus when it comes to different types of consumer debt.    This should serve as a reminder that a BANK is a business.  They aren’t your best friend.    They want to maximize profits and are accountable to its shareholders.

The article reports that TD has approximately $14.3billion of indirect loans on its books brokered by dealers.   With an estimated 25% of these loans being priced at subprime rates (subprime means higher rates for riskier borrowers), that would work out to around $500million in interest costs being collected by TD each and every year! Continue reading “TD car loan rates at 25%!! Over 4000 comments!”

Posted 1 Comment on Long term is almost always more expensive. Mortgage News

Long term is almost always more expensive.

long term contractsEver wanted to change cell phone providers?  How about internet providers?  Move your investments or rrsps?  Cancel that hydro or gas contract because you moved?

And how about mortgages?  When interest rates started heading down about 4 years ago, thousand of borrowers in fixed rate mortgages wanted to get out of their higher rates and start benefiting from the record low interest rates.

But borrowers were shocked to hear of unbelievably high early prepayment penalties…   Penalties of $15,000, $20,000, $30,000.    One recent situation had CIBC charging a $33,000 penalty on a $500,000 mortgage.  I’ve seen dozens and dozens of situations like this.   Almost all of these high penalties were from one of the BIG SIX BANKS…    Continue reading “Long term is almost always more expensive.”

Posted 2 Comments on Banks maximizing mortgage penalties again… but there’s a bright side.. Interest rates

Banks maximizing mortgage penalties again… but there’s a bright side..

BankstersIn case you haven’t heard, Fixed rates are up around 0.50% over the last 3 weeks.  But the Banks haven’t increased their posted rates…  How can that be?? And how does that affect you?

The BIG SIX BANKS have played the rate guessing game for as long as I can remember..  This time, they’ve added another twist to ensure you will be paying those inflated penalties even longer..   By not increasing the posted rates, they ensure themselves any existing BANK customer will pay the same inflated penalties.

Look back to 5 years ago when fixed rate discounts we around 1.10% off Bank posted rates..  Now fast forward to May 2013.  Rate discounts reached an all-time high of 2.25%.  And whether it was by design or not, this inflated your penalty by the same margin.  (I’ll let you decide if this is just good old BANK luck… yeah, right.) Continue reading “Banks maximizing mortgage penalties again… but there’s a bright side..”