Getting a mortgage thru a consultant versus directly thru a bank
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Quote:
Originally posted by navin2004
Quote:
Originally posted by Desi # 1
I can share my experience (and it is very recent). I went thru mortgage consultant, the individual gave me rates being best offered by different banks. Then I consulted another one and he provided me the similar rates that first one offered. So I decided to go thru the first gentleman. When my application was approved, what I got was list of conditions such as I will have to pay all credit cards bills (though I never carry balance). I need to pay my unsecured line of credit before the disbursements. I need to close my "unutilized" RRSP Catch up line of credit.
I called my bank and told them I want to go other bank for mortage. They gave me same rate plus as appreciation to get the mortgage from them, they waived my bank and safety deposit fee for five years.
MY ADVICE WILL BE: (1) If you have established relationship with your bank you should talk to them. (2) If you are planning to approach different banks to get the best rate DO NOT DO THAT" then go thru a mortgage broker.
Desi 1,
If you don't mind me asking, what was the bank you went with ? My closing is on 1st Mar next year, so I am guessing I need to have the mortgage app completed 2 weeks prior. Once mortgage consultant I talked to was ready to beat the other consultans/ING rate, if I went with another bank, but was also advising I go with a variable rate for 1 year, as he was expecting the interest rates to drop by Jan 2007. I told him that is fine, as I don't need the mortage until Jan anyway, so I can wait and see who gives me best rate at that time.
I see that negotiating and getting incentives, works well with brick and mortar banks versus virtual banks like PC Choice.
Bank of Nova Scotia. (Scotia Bank)
Location: carl sagan's universe
Posted on: 22-12-06 14:40:02
Quote:
Originally posted by navin2004
Quote:
Originally posted by investpro
All major banks give the same commission. It is only the trust cos and other B or C lenders that vary in commissions.
If your credit is good, say a beacon score of above 680, you can demand your terms within reason. My score was over 700 when I went shopping and I asked every bank if my score is over 700 what will be your terms. They of course said they will pull my bureau no matter what, but they themselves came back and said if it is over 680, we can give you this, this, this (including free locker services like one of our previous posters). I got my mortgage thru a bank with stupendous terms, 'cos when they did pull my bureau it was over 700, all R1s and also my TDSR was within the limit.
I have since become a mortgage consultant but usually do cases where clients have been refused by banks, or I know will be refused by a bank if they go directly due TDSR, R3s, low beacon score. I never pull a credit bureau but instead recommend to the client that they ask for it themselves, then coach them accordingly, though some with excellent credit end up going through me anyway, because of certain financial techniques and other value-added services I can offer. For instance, the bank never told me about taking an RRSP loan and putting in $20,000 and then withdrawing it 90 days later, the benefits of which are many.
All depends on your mind set who you want to approach really. There is a definite shift towards brokers for several reasons. The numbers speak for themselves, unless you think the numbers are cooked up.
OK, not sure what all the acronyms R1s, TDSR's mean. If you are talking about the Gross Debt Ratio, I am within the 40% limit.
I do have a beacon score of 775, which is pretty good when the max is 800. I have no credit card balances and have a good job. So I am in good seat to negotiate. The part about getting an RRSP loan, I don't get that. I already know that you can borrow upto 20k from your RRSP and return it back periodically within certain number of years. I do not have a big RRSP, so I am not thinking of doing that.
Can you suggest what are the terms that one can negotiate, apart from waiving the fee on locker(the point being I don't have one right now) etc.
BMO got close to beating ING rate, but then added conditions that I open a chequing account with them, the fee for which they will waive for 6 months, plus I move my direct deposit to them.
I currently bank with PC Choice, so I don't have much to negotiate with them, as they do not have some of the traditional services that a typical brick and mortar branch has(ex: locker)
R1 means that you are paying off all your credit card balances every month, which seems to be the case with you.So you are good on that point. Your score is phenomenal in the mortgage universe (BTW 800 is not the highest score). TDSR means Total debt service ratio. However the GDSR -Gross sevice debt ratio is also a gauge used and if that is w/in 40% you are good to go.
The RSP loan for 20K- Let us say you have RRSPs worth $5,000 and cannot drum up the extra $15,000 on your own resources to make it $20,000 which is the max each person can borrow from their RRSPs for a first time Home Buyer's Plan (HBP) without the company holding back a certain percentage.
In this case you go to a financial planner or even the bank and tell them you want a loan for $15,000 to put into your RRSPs, preferably a 90 day GIC or a money market fund and that this is for your HBP. The lending institution gives you the money to put in an RRSP and in your next tax returns, you claim the appropriate amount as a refund.
On a $20,000 RRSP ($15,000 loan and $5,000 your own), if you are in the 40% bracket you will get a refund of $8,000 which will more than take care of your closing costs, or if you have the money for that, you can use the refund to repay the $15,000, which you have to repay in 15 years (or actually 17 if you time it right), or invest it.
The reason you put the borrowed money in a 90 day GIC is because to be eligible for the HBP, said money needs to be in an RRSP account for a min of 90 days.
Also with a score of 775, you may be eligible for a no-down payment mortgage loan at exceptional rates. The big banks will probably quote you their posted rates for a no down-payment loan. Never accept that. Bargain them down.
Besides no fee banking and no locker rents, the rate you pay is negotiable and they might give you gifts in kind worth a couple of thousand.In my case it was free gas for so many litres. Also if you wish a line of credit (LOC) you can negotiate with them on the amount. My bank offered me a non-secured $15,000 LOC along with my mortgage and I negotiated to a non-secured $50,000 at prime + 1/2%- totally used for investment, not for lifestyle funding.
All clear as mud- as the saying goes? If you need more clarification, let me know.
With your profile, you should walk into any institution with your head high and start calling the shots.
BMO cannot theoretically ask you to open a chequing account with them to accord you a loan. This is known as tied-selling in the industry and is strictly forbidden- which doesn't stop the people from asking you to do so.
Also when you take a loan for your RRSP, many institutions will ask you to pay off the loan before releasing the money to you. There are however, certain institutions that will release the money and you can keep paying the loan over the intially agreed period or less.
Again as clear as mud?
I respect the opinons and views of all readers and respondents.....however I would strongly recommend anyone to shop around with your bank first.....mortgage is a huge business....and any bank would want your mortgage to land in their books....as long as you have good credit.....stable job....GDS/TDS withing guidelines......you are the king.....I have nothing against mortgage brokers.....but they really can't offer you any better rate than what your banker can do as well....unless you are not in a position to show your income....or you have some issues with your credit....other than that.....as long as you negotiate your case properly.....going directly to bank is the best option....
msg for navin2004 ....if your closing is in Mar 2007....I would suggest you to get a pre-approval from one lender....verify all terms and conditions that they offer....if it is something that is satisfactory to you....don't bother asking too many people abt rates.....wait one month before closing and then start your search again....IMHO....although rate is very imp in any mortgage....there are many things that people don't understand in fine prints that can affect the total cost of interest substantially.....for eg.....look for pre-payment options.....if bank A is offering you 0.1% less than bank B...but bank A is not offering you double up payt option....then bank B is better off for you (in a fixed rate mortgage)......another point to be considered is to go for Bi-weekly accelerated payt option.....a lot of people unknowingly sign up for Bi-weekly option which really does not help you much......
I am Account Manager with one of the major banks...as I expressed earlier....any bank would want your mortgage to land in their books....so would I....so if you want to contact me...please feel free to do so....there is no obligation....even if you end up with someone else...there are no hard feelings....
Many congratulations on your home purchase.....wish you all the best....
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Thanks you investpro and reachash, for all the tips.
I was not in any mood to accept BMO's condition to open a chequing account with them for the mortage, when they could not even beat ING's rate and even when they offered to waive the fee for 6 months. When I am getting a 5 year fixed loan, they better waive the fee for 5 years or forget it.
I actually already have a pre-approval from one mortgage consultant and from one bank, so don't want to do any more pre-approvals. Both of the pre-approval letters show interest rate little higher than what they verbally told, I was not happy about that, but since I was only shopping around, I did not care much.
I have challenged the mortgage consultant to explain to me why I should go with him and not the bank directly or another consultant, when I have a stellar credit history, am waiting for his response.
Location: carl sagan's universe
Posted on: 24-12-06 10:08:26
Hi Navin2004,
Just to let you know, there is a strong feeling that David Dodge may reduce interest rates early next year, which could mean Jan or Feb. If you are going for a fixed rate, those rates will drop. If you are going variable, they will also drop, but then you haven't locked in your rate as in a fixed rate mortgage so your monthly payment goes up and down accordeon style.
With your score and if you have 10% down you may be eligible for a Heloc (Home Equity Line Of Credit), where you pay interest only, but the rate is prime, currently at 6%. There are several options available for you with your score.
I personally do not recomment the HELOC at the outset, though I have done it for people who already have had mortgages for several years.
That's a whole different universe. If you are a new homebuyer, stick to the conventional 25 year mortgage paying both principal and interest.
Hi Investpro,
At the moment I have enough dough to cough up the 25% down payment, so will be doing that and saving some money on the CMHC insurance.
My theory is that I need to have atleast 1 year of living expenses (this should include the monthly mortgage payment) after I have paid the downpayment, so that I can plan for any contingencies.
Hi,
Paying 25% down and a good credit rating should surely get you a good bargain .
You are thinking in the right direction regarding living expenses ...well any financial advisor will advice you to have atleast 3-6 months of living expenses with you ...that is just in case something goes wrong.
What i would like to add to it is that keeping a little money aside put the rest in Cashable GIC as they are redeemable with interest from 30th day of investment anad interest is calculated on daily basis..so even though the interest rate is lower as compared to Nonredeemable Gic atleast it is better than in Chequing/savings account.
