First Line is owned by CIBC and as of a few months ago have made the decision to stop all mortgage dealings through this channel. It still stumps me as to why, as it was the largest mortgage broker channel for a long time!
One quote, (not exact words but you can get the idea) from a head at CIBC, we want to start building a stronger relationship, in house, with our clients so we don't have to discount rates so much. BMO did this a few years ago and it has done nothing to their share of mortgages in Canada.
I have included a picture of my renewal from CIBC, which comes with about 3 weeks to renewal. If you're not pro-active you can definitely feel stranded not knowing what to do. Which in turn can make you easily sign on the dotted line. You can see from this that they try and offer rates that aren't even close to market rates that we can get as mortgage brokers.
The transition from First Line to CIBC comes with a few changes as well.
Quotes from my 20 page renewal agreement:
-For a new variable product 'The interest rate will change every time there is a change in the CIBC Prime Rate. Even though the interest rate will change from time to time, your regular payments stay the same unless you change them" "These changes will occur without you being notified"
This poses the threat of negative amortization, which when prime is at it's lowest today, will happen later on. This will make your amortization increase and in some cases, by a lot. The fact that they do not notify you is a tactic as you will in the end pay them much more than needed. I do not allow any of my clients to get involved in such a mortgage as I've seen the bad happen, a number of times. If anything changes, you are notified that day by me and we can strategize about the future.
-Annual lump sum payment changes to a measly 10% from 25% which is significant.
At least you can still do it as many times a year as you wish. Minimum $100 a time. I believe you'll have to go to a branch to do this. First Line allowed you to do this by phone and on the web which most other lenders I deal with do as well.
-IRD calculations are much more in favour for CIBC.
In a recent study done by a very respected individual in the business and a huge sampling of lenders, (banks and broker only lenders) the IRD calculations were all much higher at the banks.
-Converting your mortgage (from variable to fixed): "You must apply in person. You must pay any admin and processing fees. You must pay all legal expenses related to a conversion"
Honestly, I'm not too sure about this, however, it's written in the agreement. In the past all we would do is call in, get a piece of paper faxed, sign it and the next payment is converted. There was no costs to this at all
The reason for going to the branch all the time is so they can cross sell you in to as many other products as they can.
In the end what we must all do is not simply agree with what's there. There are SO MANY options and features that you should know about. Both good and bad.
The best way I can sum it up is this: You may do 4 maybe 5 mortgages in your lifetime. I do them day in and day out, it's my passion. I've seen people take what they believe is good from this guy over here, however, down the road it's the worst thing they could've done. Even after the advise I give them in some cases. Unfortunately, I hear stories later on. I'm completely unbiased and work for you. I'm not pushing one product as that's all that I have. There are options out there and let someone who knows them work for you! Support your mortgage brokers as if we weren't around we'd all be paying much higher rates!!!
No comments:
Post a Comment