Mortgage renewal time (NF)

[icefisherman]

Well,

it is getting close to the time I need to renew my mortgage.

The way market is/going right now seems variable rate is the way to go.

Anyone have some inside info on grate rates/lenders/mortgage brokers that can refer me to?

I've started doing my home work and have couple more months but thought maybe others are in the same boat (ha ha ha;-)) so we better share info.

 

Cheers,

Ice Fisherman

[fisher]

I deal with the Bank of Nova Scotia Branch at Highway 400 and Major Mackenzie in Vaughan. They are newly open and I think for that reason their rates are the best when shopped - trying to drum up a base of business.

 

Try them out.

 

Call the Manager directly - Cora - 905-303-8250.

 

Frank

[fishinggeek]

I'd go with a broker who is an active member of whatever their association is called. I'd even go with 2 different ones to cast a wide net to make sure you get the best rate in town. In any event, I wouldn't accept one that isn't at least better than ING or PC Financial.

[JohnF]

I'd go with a broker who is an active member of whatever their association is called. I'd even go with 2 different ones to cast a wide net to make sure you get the best rate in town. In any event, I wouldn't accept one that isn't at least better than ING or PC Financial.

 

There's more to a mortgage than just the rate, not that the rate isn't important. You need to consider prepayment terms, penalties, and portability to name a few things. Ask if a different lender will absorb your fees as an incentive if you move your mortgage when it's due.

 

Given the competitiveness of today's market I'd go out and get a guaranteed quote (rate locked in for a reasonable period of time prior to locking in) from one of the bargain type lenders and then go back to my current mortgagee and show them what you can get. Let them sharpen their pencil. Then you can weigh the options, but don't forget about the things i mentioned above. They may get really important to you if you decide to move for any reason.

 

I think the best deal is still generally to go flexible rate as long as you know how to watch the market fluctuations and can decide, or at least get some good advice, on when to lock in and for how long.

 

My experience (and I have a bit) with lenders is that in today's market the major players know they have to be competitive and about all I need to do is suggest to my clients that they mention the possibility of shopping around, even when it's just a renewal coming due. The really smart brokers (even the ones who work directly with the major institutions) hardly need to be pushed at all to be competitive.

 

When the cards are on the table then you decide which is the best deal considering all the factors (rate, terms, percs, etc) and then commit.

 

Sometimes this is one of those deals where you're best off to get referred personally by someone you know and trust to someone they know and trust in the business. Referral business is valuable when it grows incrementally and the more they get the better they tend to treat the people being referred because they want you to be a happy client who also gets them referrals.

 

JF

[perodimi]

We just renewed ours for prime minus .80% open for five years with Scotiabank Yonge north of Major Mack. Able to lock in anytime should the rates take off but no cap.

 

Cousin's also a broker and said that this was the best she could get anywhere as well.

 

Good luck!

[icefisherman]

Thanks guys.

Let me add to my original post.

John I am aware of those important "details" ...

I've got few offers on Prime - 0.9% so far.

The new lender covers all related expenses with moving the mortgage to them.

Told my current bank about the offers I have - still waiting on response from them.

I've been talking to different mortgage brokers.....some that work for certain bank, some that deal with more than one lender.

All the offers I have allow payment of larger amount during the life of the mortgage with no penalty (within certain limits).

The one tricky point when talking to those guys is I am trying to ensure that down the road...say 2-3 years from now should I decide to switch to fixed rate I'll be given by the lender is not just Posted - 1% or so, but their "best available fixed rate at the time"....How common is to be able to put this in the contract I am signing now as future protection for me should I need it down the road?

 

Cheers,

Ice Fisherman

[Headhunter]

Hats off the John again for providing such good advice! Emil, as we have talked about over the last little while, those who ask tend to get... those who wait, tend to pay!

I don't think you will be able to get a simple black or white answer to your question Emil. I think your going to have to haggle to get what ever it is you desire... but make sure you have written quotes from many lenders before you leverage them against each other... the hungry lenders will do what they can to secure your business.

HH

[JohnF]

The one tricky point when talking to those guys is I am trying to ensure that down the road...say 2-3 years from now should I decide to switch to fixed rate I'll be given by the lender is not just Posted - 1% or so, but their "best available fixed rate at the time"....How common is to be able to put this in the contract I am signing now as future protection for me should I need it down the road?

 

I doubt you'll get anyone to guarantee anything better than their posted rate at whatever terms you choose at some future time. That's why it's important to have a good handle on the changing money market and use the flexibility of short term to put pressure on the lender at that time to put up or shut up. With any kind of luck you'll be close enough to an renewal date to swap an extension in time for an advantageous rate when you lock in. It's not unreasonable to think that if you see long term advantages to locking in a rate there will also be advantages to going for a longer term as well. Does that make sense?

 

Regardless, it's almost impossible to have it all. You cover as many contingencies as you can and hope for the best with the rest.

 

JF

[JohnF]

Hats off the John again for providing such good advice!

 

We've all gotta be good for something in life.

 

JF

[Headhunter]

HH

[The Urban Fisherman]

Closing my first mortgage this coming week. We locked outselves in @ just under 5.5% for 5 years with CIBC. My fiance is still in school for another 3 years so knowing exactly how much money we'd have each month for the next few years is huge for us. And 5.5 is a good enough rate for me. On the + side CIBC is having a promotion right now so we're getting a free dishwasher out of the deal, along with I believe 3. something or other % for the first 9 months. Pretty stoked to be a homeowner. They have a mortgage right now that I believe is called "better than prime" which is 1 and a half or so less than prime, and you can lock in at any time if you feel like it's rising to high....we thought about that one...

 

Anyways, I'm a rookie but good luck which ever way you go!

 

Cheers,

UF

[Casey123]

We used beacon Mortgages in Port Dalhousie. Barry was great, got us exactly what we wanted. 1.25% below what TD and RBC offered. Very flexible payment - weekly acclerated is what we choose.

Also god pre-payment - increase payments by up to 15% per year, lump sum prepayment of up to 20%/year and option to double up payments.

Shop around till you find a broker that you are comfortable with. Also a ggod real estate lawyer or real estate saleperson should be able to reffer you to some of the more reputable brokers in your area.

[irishfield]

Talking to the right realtor may find you a private individual that will give you a first mortgage. Many people out there that would be glad to have a guaranteed 5% on their money right now!

[robinwood]

re-mortaging is a great time to get a (or a new) boat or toys , if you hve equity , use some!

 

seeing lots of older relatives - with tonnes of equity -but physically incapable of doing anything fun with it.

 

within reason play now! before you cannot.

 

just some thoughts

[Clampet]

There's more to a mortgage than just the rate, not that the rate isn't important. You need to consider prepayment terms, penalties, and portability to name a few things. Ask if a different lender will absorb your fees as an incentive if you move your mortgage when it's due.

 

Given the competitiveness of today's market I'd go out and get a guaranteed quote (rate locked in for a reasonable period of time prior to locking in) from one of the bargain type lenders and then go back to my current mortgagee and show them what you can get. Let them sharpen their pencil. Then you can weigh the options, but don't forget about the things i mentioned above. They may get really important to you if you decide to move for any reason.

 

I think the best deal is still generally to go flexible rate as long as you know how to watch the market fluctuations and can decide, or at least get some good advice, on when to lock in and for how long.

 

My experience (and I have a bit) with lenders is that in today's market the major players know they have to be competitive and about all I need to do is suggest to my clients that they mention the possibility of shopping around, even when it's just a renewal coming due. The really smart brokers (even the ones who work directly with the major institutions) hardly need to be pushed at all to be competitive.

 

When the cards are on the table then you decide which is the best deal considering all the factors (rate, terms, percs, etc) and then commit.

 

Sometimes this is one of those deals where you're best off to get referred personally by someone you know and trust to someone they know and trust in the business. Referral business is valuable when it grows incrementally and the more they get the better they tend to treat the people being referred because they want you to be a happy client who also gets them referrals.JF

 

Thanks, John, that is some real good advise!

You are an indispensable asset to this board and its members.

[JohnF]

Thanks, John, that is some real good advise!

You are an indispensable asset to this board and its members.

 

Yeah. Now, if I could only learn as much about fishing as I know about lobbying, real estate and mortgages I'd be all set.

 

JF

[fishinggeek]

There's more to a mortgage than just the rate, not that the rate isn't important. You need to consider prepayment terms, penalties, and portability to name a few things. Ask if a different lender will absorb your fees as an incentive if you move your mortgage when it's due.

 

Given the competitiveness of today's market I'd go out and get a guaranteed quote (rate locked in for a reasonable period of time prior to locking in) from one of the bargain type lenders and then go back to my current mortgagee and show them what you can get. Let them sharpen their pencil. Then you can weigh the options, but don't forget about the things i mentioned above. They may get really important to you if you decide to move for any reason.

 

I think the best deal is still generally to go flexible rate as long as you know how to watch the market fluctuations and can decide, or at least get some good advice, on when to lock in and for how long.

 

My experience (and I have a bit) with lenders is that in today's market the major players know they have to be competitive and about all I need to do is suggest to my clients that they mention the possibility of shopping around, even when it's just a renewal coming due. The really smart brokers (even the ones who work directly with the major institutions) hardly need to be pushed at all to be competitive.

 

When the cards are on the table then you decide which is the best deal considering all the factors (rate, terms, percs, etc) and then commit.

 

Sometimes this is one of those deals where you're best off to get referred personally by someone you know and trust to someone they know and trust in the business. Referral business is valuable when it grows incrementally and the more they get the better they tend to treat the people being referred because they want you to be a happy client who also gets them referrals.

 

JF

 

True, but many customers ever use these features, and banks use them to aggressively (and artificially) differentiate their product. Most I have seen have prepayment and porting features of differing degrees. I think if the features are generally in line with expectations (e.g. if one can expect to paydown the entire amount early than get an open mortgage), then what the mortgage choice REALLY boills down to is cost of borrowing and risk tolerance. Since I had no idea of the risk tolerance (e.g. asset exposure, covariance of other assets, duration, interest rate sensitivity), I only commented on the cost of borrowing, which is the interest rate plus whatever fees the bank charges, and this is what I meant by rate shopping.

 

Make no mistake about it, IMO banks intentionally put these bells and whistles to get some price sensitive customers to choose a higher priced mortgage than they would have otherwise. I believe so because I once developed bank products in a previously life.

Edited April 30, 2008 by fishinggeek

[JohnF]

True, but many customers ever use these features, and banks use them to aggressively (and artificially) differentiate their product. Most I have seen have prepayment and porting features of differing degrees. I think if the features are generally in line with expectations (e.g. if one can expect to paydown the entire amount early than get an open mortgage), then what the mortgage choice REALLY boills down to is cost of borrowing and risk tolerance. Since I had no idea of the risk tolerance (e.g. asset exposure, covariance of other assets, duration, interest rate sensitivity), I only commented on the cost of borrowing, which is the interest rate plus whatever fees the bank charges, and this is what I meant by rate shopping.

 

Make no mistake about it, IMO banks intentionally put these bells and whistles to get some price sensitive customers to choose a higher priced mortgage than they would have otherwise. I believe so because I once developed bank products in a previously life.

 

I'm thinking like a property seller. It's pretty discouraging for folks who decide it's time for a bigger place to find out that they can't get out of their bargain mortgage without a huge penalty and perhaps rate adjustment that more than offsets the savings they've been enjoying. In my experience the mainstream banks and trust companies tend to offer the best combination of rate discounts and features for the average home buyer. If you're absolutely certain you'll never move, never want to sell, and will never be able to pay down the principal with a lump sum, then by all means go for the rate only.

 

Selling property is my business and I see it all the time where folks are mousetrapped because they got no advice, or worse, bad advice going in. My son almost fell for the rate bait the first time he tried mortgage shopping on his own. I caught it in time. He really appreciated it less than a year later when he was ready to sell that place, and he's been cognisant of it ever since. Consequently he's always been able to port, blend and/or simply discharge to suit the circumstances of the moment, and he's never overpaid on interest in the longer run. At worst he has to plan a few months ahead to make his move.

 

There are some pretty good people working at the local level of mortgage lending. All you have to do is find them. Any good realtor knows who they are. That's not a criticism of independent brokers. I use several of them as well as lenders who work directly with major banks. Typically they often end up taking the good covenants to the mainstream lenders anyway because the terms are the best for the consumer.

 

The banks have come a long way in their mortgage lending practices since the late 70's. The trust companies showed them how, but they were willing to learn. There was a time I steered everyone to the big trust companies. Not so any more. And I don't accept finders fees from lenders. They know I only expect good and conscientious service for my clients.

 

JF

[fishinggeek]

I'm thinking like a property seller. It's pretty discouraging for folks who decide it's time for a bigger place to find out that they can't get out of their bargain mortgage without a huge penalty and perhaps rate adjustment that more than offsets the savings they've been enjoying. In my experience the mainstream banks and trust companies tend to offer the best combination of rate discounts and features for the average home buyer. If you're absolutely certain you'll never move, never want to sell, and will never be able to pay down the principal with a lump sum, then by all means go for the rate only.

 

Selling property is my business and I see it all the time where folks are mousetrapped because they got no advice, or worse, bad advice going in. My son almost fell for the rate bait the first time he tried mortgage shopping on his own. I caught it in time. He really appreciated it less than a year later when he was ready to sell that place, and he's been cognisant of it ever since. Consequently he's always been able to port, blend and/or simply discharge to suit the circumstances of the moment, and he's never overpaid on interest in the longer run. At worst he has to plan a few months ahead to make his move.

 

There are some pretty good people working at the local level of mortgage lending. All you have to do is find them. Any good realtor knows who they are. That's not a criticism of independent brokers. I use several of them as well as lenders who work directly with major banks. Typically they often end up taking the good covenants to the mainstream lenders anyway because the terms are the best for the consumer.

 

The banks have come a long way in their mortgage lending practices since the late 70's. The trust companies showed them how, but they were willing to learn. There was a time I steered everyone to the big trust companies. Not so any more. And I don't accept finders fees from lenders. They know I only expect good and conscientious service for my clients.

 

JF

 

Well said! Like you, I just hope our fellow OFC member gets the best mortgage for himself. Sit down with a calculator, mortgage documents, and some elbow grease. If the discounted penalty to synthesize your own features (i.e. just paying the penalty to port, payout, etc.) is larger than the discounted incremental interest payments of a higher rate, than by all means do not use the interest rate as the gauge for choosing your mortgage. But if the discounted penalty is less than the discounted interest, or even equivalent as the interest will be charged with certainty, than rate shopping will always be economically rational.

 

It's tough because there have been people close to me that are lay people in terms of finance, and I know they have made the wrong decision by a slick account manager who has some revenue trailer target, because usually what's best for the bank is what's worst for the customer in terms of borrowing. With so much experience selling property, you probaby have similar experiences.

[icefisherman]

If you're absolutely certain you'll never move, never want to sell, and will never be able to pay down the principal with a lump sum, then by all means go for the rate only.

 

 

JF

 

 

OK John,

 

so let's make this more specific then.....I will not be selling over the next 5 years, will not move over the next 5 years and will probably not pay any lump sums over the next 5 years...but would like to pay from time to time some extra money against the principal (when extra cash is available)...I'd like the new lender to cover ALL fees associated with moving my mortgage to them...and would like their written assurance than down the road...say 2-3 years from now should I decide to switch to fixed rate (it may never happen) then I'll be given their best available fixed rate for that moment.

 

Now under those specific conditions can you:

1) Variable is the best way to go right now

2) Prime - 0.9% is the best rate I could find?

3) Refer me to a mortgage broker that can get me Prime - 1% ?

 

Thanks again for all your good advice.

 

Cheers,

Ice Fisherman

[JohnF]

Well said! Like you, I just hope our fellow OFC member gets the best mortgage for himself. Sit down with a calculator, mortgage documents, and some elbow grease. If the discounted penalty to synthesize your own features (i.e. just paying the penalty to port, payout, etc.) is larger than the discounted incremental interest payments of a higher rate, than by all means do not use the interest rate as the gauge for choosing your mortgage. But if the discounted penalty is less than the discounted interest, or even equivalent as the interest will be charged with certainty, than rate shopping will always be economically rational.

 

It's tough because there have been people close to me that are lay people in terms of finance, and I know they have made the wrong decision by a slick account manager who has some revenue trailer target, because usually what's best for the bank is what's worst for the customer in terms of borrowing. With so much experience selling property, you probaby have similar experiences.

 

The people you're describing tend to only see my clients once. I'm not saying I can influence all of their potential clientel, but I can sure get to a few of them. In a small town like I work in the lenders need my good will more than I need theirs, and the smart ones tend to know it. I'll start to get concerned when I run out of mortgage lenders who agree with me.

 

Frankly, I don't find the busiest mortgage officers and brokers have to be watched around here. They tend to do a good job without any pressure. They seem to get the fact that a lot of repeat and referral business is easier, better and probably safer from a lender risk standpoint than having to shop for new suckers all the time. And it's not that the good brokers are starving here. In fact, some of the most obliging ones do very nicely for a small town.

 

The market conditions may be entirely different in your area. I like the way it works here. I will say that it can be kinda frustrating when a newcomer to town wants to deal with their old familiar branch way off in the Big Smoke or otherwheres and some twerp with a nifty suit, shiny hair and cosmopolitan attitude tries to impose peculiar requirements that the locals don't need or want, like a Phase I environmental on a simple residential property. Typically I've noticed that dealing with a lender from the big city tends to complicate things locally and as often as not the mortgagor ends up with more expense and fewer benefits than had they dealt with the same bank locally. YMMV

 

To give you an idea how it works in a small town - way back when Scotiabank was still called V&G around here a client of mine was getting hassled about mortgaging a service station. This was pre-environmental assessment days. He was told that despite his good covenant the company had a "no gas station" policy. I made a single phone call to the then President of V&G who happened to have been one of my paper route customers when I was a kid, and also a bridge buddy of my folks. He asked some questions and said I'd be hearing back. The next morning I got a phone call from the commercial lending dept informing me that the bank policy had been changed and to tell the prospective mortgagor that he was good to go. I realize that's less likely to happen in Toronto. In fact, now that Scotiabank has taken over, it likely wouldn't happen here either. Besides, I have no idea who the President is any more. I'm nobody's ex-paperboy any more.

 

JF

[Headhunter]

One thing I don't think has been discussed is relationship building with your bank. One bank has the vast majority of my business, multiple products, and I found that leveraging that "customer loyalty" against my rate and other sundry items relating to the mortgage, put me in a fantastic negotiating position.

If you have a history of moving your stuff from one institution to another, just to save 0.1% off the rate, you've effectively eliminated one of your leverage points.

Don't know if that will help you Emil, but it might be food for thought for others considering buying a house or investment property.

HH

[icefisherman]

Very reasonable point Joe...ALL my accounts, mortgage, investments, loans, RRSP's, everything is with mybank...so I plan to use that leverage with them...should they not give me best mortgage rate though they may kiss good bye my mortgage ;-)

 

Cheers,

Ice Fisherman