There's two other reasons that this mortgage at BMO may not be a part of your strategy.
One being, that you can not register their line of credit product in behind it. Making you search else where for it or making you take an unsecured line of credit at much higher rates.
The other is that the register their mortgages as collaterall mortgages. Read here and here on why these mortgages may not be for you.
Don't get me wrong. This product may be for some. You must allow us a chance to sit down and see if it is or not!
Another small story on the collaterall charge mortgages. I just recently finished one up with a client who needed a private mortgage to finish some renovations on his house. Since his big bank mortgage was registered as a collaterall charge with a very high global limit, we were unable to do anything until the client refinanced his existing mortgage going from a deep discount off of prime to just prime on the variable. He paid a full penalty too!
As a mortgage planner and educator, I have to make sure I know and understand every product out there. You have to trust that I am on your side and do what it takes to make sure you have the lowest cost of home ownership....not just the lowest rate.
Tuesday, January 17, 2012
Thursday, January 12, 2012
Read the fine print - May not be as good as it looks!
Today BMO came out with a five year fixed rate promotion of 2.99%. This may sound good, however, don't be too fooled as this comes with many restrictions.
-You can only discharge this mortgage with a bona fide sale of your home
-You can refinance into a new BMO product down the road, however, no guarantee you'll receive best rates at the time
-Maximum amortization is 25 years. Which is not bad, however, as a cash flow strategy having the higher amortization could be a better strategy
-Lower pre-payment priviledges
-No skip a payment option
-Only once per year can you make a lump sum payment. You should be able to as often as you want
In the end, you can not determine your mortgage simply based on pricing. If it's too good to be true, it usually is. With these limitations savings of interest can be hard.
Here's a post from an industry blog that sums it up:
"I don't see what's so insane about this offer...What concerns me are the myriad of restrictions that are attached to the offer. The homeowner is essentially shackled to BMO for 5 years. You can't even discharge this mortgage unless an arm's length sale of the property takes place or you refinance into another BMO product. Suppose you have to refinance two years down the road, would BMO put in writing that you'll receive their best rate at the time? With lenders like ING, MCAP, LBC I know I'm getting best rates. Can the same be said for BMO?
Not saying this offer doesn't have its merits because the pricing is quite attractive but when you look at all the strings that are attached, and considering that it is a time-limited offer, I think it's more about breaking the psychological 3% level (well, by .01%) rather than offering anything of significant value. Low rates are great but what people need are strategies. Unfortunately there's not much strategy that can be done with such a restrictive mortgage. It may indeed work for some but clearly not everyone..."
-You can only discharge this mortgage with a bona fide sale of your home
-You can refinance into a new BMO product down the road, however, no guarantee you'll receive best rates at the time
-Maximum amortization is 25 years. Which is not bad, however, as a cash flow strategy having the higher amortization could be a better strategy
-Lower pre-payment priviledges
-No skip a payment option
-Only once per year can you make a lump sum payment. You should be able to as often as you want
In the end, you can not determine your mortgage simply based on pricing. If it's too good to be true, it usually is. With these limitations savings of interest can be hard.
Here's a post from an industry blog that sums it up:
"I don't see what's so insane about this offer...What concerns me are the myriad of restrictions that are attached to the offer. The homeowner is essentially shackled to BMO for 5 years. You can't even discharge this mortgage unless an arm's length sale of the property takes place or you refinance into another BMO product. Suppose you have to refinance two years down the road, would BMO put in writing that you'll receive their best rate at the time? With lenders like ING, MCAP, LBC I know I'm getting best rates. Can the same be said for BMO?
Not saying this offer doesn't have its merits because the pricing is quite attractive but when you look at all the strings that are attached, and considering that it is a time-limited offer, I think it's more about breaking the psychological 3% level (well, by .01%) rather than offering anything of significant value. Low rates are great but what people need are strategies. Unfortunately there's not much strategy that can be done with such a restrictive mortgage. It may indeed work for some but clearly not everyone..."
Monday, December 12, 2011
Maximizing good neighbour behaviour!
Essentially, being a good neighbour means being considerate of how your behaviou affects your fellow residents. Here are some tips to keep in mind!
Keep up with garden chores
If you have a yard, keep your lawn mowed, your trees and bushes trimmed and your weeds under control. (I wish that some of my neighbours would read this!!) A well kept yard is welcoming to neighbours, and could encourage pride in their homes and neighbourhood!
Be conscientious about noise
Mowing your lawn in the early morning or during dinner can be intrusive, especillay in warmer weather when neighbours are enjoying dining outdoors. The same consideration should be taken with snow blowers and other loud equipment.
This rule applies to parties too. Give neighbours advance notice of the day you plan to have a party, the start time and when you expect it to end. Let them know that if the nouse gets too loud, they are welcome to call you.
Keep your dog under control
Always keep your dog on a leash during walks and never let it run free in the neighbourhood. Anyone with a fewar of dogs could be afraid to exit their own home. Keep barking to a minimum. For someone relaxing in their backyard, it can become an annoyance quickly. And, of course, always clean up after your dog.
Welcome new neighbours
A friendly welcome to new neighbours can immediately provide them with a sense of belonging. Let them know garbage and recycling days, where to find the local grocery store and post office, and offer to be their go-to person for questions about the community.
Keep up with garden chores
If you have a yard, keep your lawn mowed, your trees and bushes trimmed and your weeds under control. (I wish that some of my neighbours would read this!!) A well kept yard is welcoming to neighbours, and could encourage pride in their homes and neighbourhood!
Be conscientious about noise
Mowing your lawn in the early morning or during dinner can be intrusive, especillay in warmer weather when neighbours are enjoying dining outdoors. The same consideration should be taken with snow blowers and other loud equipment.
This rule applies to parties too. Give neighbours advance notice of the day you plan to have a party, the start time and when you expect it to end. Let them know that if the nouse gets too loud, they are welcome to call you.
Keep your dog under control
Always keep your dog on a leash during walks and never let it run free in the neighbourhood. Anyone with a fewar of dogs could be afraid to exit their own home. Keep barking to a minimum. For someone relaxing in their backyard, it can become an annoyance quickly. And, of course, always clean up after your dog.
Welcome new neighbours
A friendly welcome to new neighbours can immediately provide them with a sense of belonging. Let them know garbage and recycling days, where to find the local grocery store and post office, and offer to be their go-to person for questions about the community.
Thursday, December 8, 2011
Consumer debt is the problem.
I came across an article today that I've been try to stress for a couple of years now. (more so when the federal government starting changing mortgage rules)
The debt problem brewing in Canada is NOT due to mortgages. The problem is due to all the un-secured debt; line of credits, visas etc. which the banks almost force on people to take.
The article is here and I truly beleive that something has to be done.
The end all is that we must be responsible for our own actions and not take on the unecessary debt. However, if a family situation takes place, sometimes you need to fall back on the equity in your home. With all the rules that have pretty much killed the refinance business and with more and more banks registering mortgages as collateral mortgages not allowing you to take out a second, I guarantee you that we will start to see more foreclosures, consumer proposals and bankruptcy's.
Time will tell...
The debt problem brewing in Canada is NOT due to mortgages. The problem is due to all the un-secured debt; line of credits, visas etc. which the banks almost force on people to take.
The article is here and I truly beleive that something has to be done.
The end all is that we must be responsible for our own actions and not take on the unecessary debt. However, if a family situation takes place, sometimes you need to fall back on the equity in your home. With all the rules that have pretty much killed the refinance business and with more and more banks registering mortgages as collateral mortgages not allowing you to take out a second, I guarantee you that we will start to see more foreclosures, consumer proposals and bankruptcy's.
Time will tell...
Friday, December 2, 2011
I can't beleive this can happen.
Yesterday a fellow co-worker went through an exact situation that I've been through twice in the past and I feel very compelled to write about it today.
A client of hers needed to redeem his GIC from a major banking institution and went into the branch yesterday to do so. He needed these extra funds for his down payment and he knew that pulling the money out early meant he didn't receive any interest that he would have earned on this money.
However, when this fellow went into the branch to redeem his money the bank told him that there was no way he could UNLESS they did the mortgage. WHAT?????? This is complete black mail and is brutally unfair.
"Don't worry," they told him, "we'll give you free banking as well". What a joke as the rate he is getting was slightly higher than the one she was obtaining and they knew that. So the $5/m he saves in "free banking" will actually end up costing him more in the end as he's in with a slightly higher rate and doesn't have the expertise of an experienced mortgage broker monitoring his mortgage through it's life.
He felt very stuck and like he had no other option. Which I don't blame him for.
I'm not too sure if there's a moral to this story or not, however, it makes me very frustrated and upset that we continue to be taken by the big banks and others. This type of business is WRONG.
A client of hers needed to redeem his GIC from a major banking institution and went into the branch yesterday to do so. He needed these extra funds for his down payment and he knew that pulling the money out early meant he didn't receive any interest that he would have earned on this money.
However, when this fellow went into the branch to redeem his money the bank told him that there was no way he could UNLESS they did the mortgage. WHAT?????? This is complete black mail and is brutally unfair.
"Don't worry," they told him, "we'll give you free banking as well". What a joke as the rate he is getting was slightly higher than the one she was obtaining and they knew that. So the $5/m he saves in "free banking" will actually end up costing him more in the end as he's in with a slightly higher rate and doesn't have the expertise of an experienced mortgage broker monitoring his mortgage through it's life.
He felt very stuck and like he had no other option. Which I don't blame him for.
I'm not too sure if there's a moral to this story or not, however, it makes me very frustrated and upset that we continue to be taken by the big banks and others. This type of business is WRONG.
Wednesday, November 23, 2011
Why is Christmas soley about spending money?
Why do so many people beleive that Christmas is solely about the money we spend?
I've been saying this for years as do many people in the comments of this article. http://bit.ly/sFVEIX
Why isn't it about being close to family and friends and enjoying each others company? It's virtually the only time of year that we really stop what we're doing and make this happen as we're always "too busy".
Don't get me wrong it's nice to open up a gift or two and more importantly watching the children's eyes light up when they open their gifts! However, I would really like to see it go back to even when I was a kid. I did look forward to the presents, more importantly I looked forward to the big party in the evenings where we all got together and played as kids!
I guess I can keep dreaming and do my best to make sure my two little girls understand the true meaning :)
On a side note:
I particularly enjoy reading when big banks talk about this sort of thing. And quite honestly, I feel bad for the not so smart people who beleive what the banks say and beleive they have more money and spend more...all on the banks credit etc. More interest money for them!
I've been saying this for years as do many people in the comments of this article. http://bit.ly/sFVEIX
Why isn't it about being close to family and friends and enjoying each others company? It's virtually the only time of year that we really stop what we're doing and make this happen as we're always "too busy".
Don't get me wrong it's nice to open up a gift or two and more importantly watching the children's eyes light up when they open their gifts! However, I would really like to see it go back to even when I was a kid. I did look forward to the presents, more importantly I looked forward to the big party in the evenings where we all got together and played as kids!
I guess I can keep dreaming and do my best to make sure my two little girls understand the true meaning :)
On a side note:
I particularly enjoy reading when big banks talk about this sort of thing. And quite honestly, I feel bad for the not so smart people who beleive what the banks say and beleive they have more money and spend more...all on the banks credit etc. More interest money for them!
Friday, October 7, 2011
How much more can we take?
Today I'm writing as I'm getting to that boiling point where many of you are as well.
There's one thing in life that I really can't stand and that's being taken advantage of. And especially being taken advantage of from our government and big corporations. Good on the people on Wall Street for taking a stand.
I wont get into the whole oil and gas spiel as I know I share the same views as almost everyone who depends on their car.
As well I wont get into the proposed 2c a litre gas tax being voted on today and the increase in property taxes to pay for a transit system that will NEVER work. Especially for us in the burbs.
My main focus is on banks and lending insitutions. In the last week we're seeing lenders dramatically reduce the discounts off of prime. They say due to liquidity issues. This is utterly wrong. In my opinion and I've been told by lenders themselve, the reason why the don't like variables is they don't make as much money off of them. So their reducing the discounts to bring them closer in line to the fixed rates so people lock in instead of float.
Oh and by the way, one lender just emailed me right now saying the discounts are pretty much gone as of Monday afternoon and will most likely be surpluses. Thanks for the heads up going into a long weekend!
Just today RBC announced rate cuts on their fixed rates. Conveniently only on the shorter 2 and 3 year terms. You may say this is good. No it's not! Why? Becuase anyone that bought into a fixed rate a few years ago are sitting in the high 4 to mid 5% range. If you wanted to take advantage of reducing your rate to lower your payments and pay less interest costs, you would have to pay an IRD (interest rate differential) on your current rate and the current 2 or 3 year fixed term. See where I'm going with this? I heard of one persons IRD go UP $4,000 in a matter of two days because of this. Absolutely NOT FAIR.
These big corporations are doing nothin more than taking advantage of us consumers by taking every last dime out of our pockets to put into theirs. Having a CEO making less than $10 million a year is just unheard of.
Anyways, theres my rant for the day and beleive me, I could go on for much longer!
Have a great long weekend.
There's one thing in life that I really can't stand and that's being taken advantage of. And especially being taken advantage of from our government and big corporations. Good on the people on Wall Street for taking a stand.
I wont get into the whole oil and gas spiel as I know I share the same views as almost everyone who depends on their car.
As well I wont get into the proposed 2c a litre gas tax being voted on today and the increase in property taxes to pay for a transit system that will NEVER work. Especially for us in the burbs.
My main focus is on banks and lending insitutions. In the last week we're seeing lenders dramatically reduce the discounts off of prime. They say due to liquidity issues. This is utterly wrong. In my opinion and I've been told by lenders themselve, the reason why the don't like variables is they don't make as much money off of them. So their reducing the discounts to bring them closer in line to the fixed rates so people lock in instead of float.
Oh and by the way, one lender just emailed me right now saying the discounts are pretty much gone as of Monday afternoon and will most likely be surpluses. Thanks for the heads up going into a long weekend!
Just today RBC announced rate cuts on their fixed rates. Conveniently only on the shorter 2 and 3 year terms. You may say this is good. No it's not! Why? Becuase anyone that bought into a fixed rate a few years ago are sitting in the high 4 to mid 5% range. If you wanted to take advantage of reducing your rate to lower your payments and pay less interest costs, you would have to pay an IRD (interest rate differential) on your current rate and the current 2 or 3 year fixed term. See where I'm going with this? I heard of one persons IRD go UP $4,000 in a matter of two days because of this. Absolutely NOT FAIR.
These big corporations are doing nothin more than taking advantage of us consumers by taking every last dime out of our pockets to put into theirs. Having a CEO making less than $10 million a year is just unheard of.
Anyways, theres my rant for the day and beleive me, I could go on for much longer!
Have a great long weekend.
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