Posted on: 08-01-03 11:55:42
Friends,
I just bought pre-owned house and now looking for mortgages - does anyone guide me on following?
What is better fixed or variable?
What is better open or closed?
Are non-banking institutes OK?
Currently who is giving best rates?
Is it worth to get services of Mortgage brokers?
Thanks.
-----------------------------------------------------------------
A Proud Indian Canadian
Hi Garvo,
I know now it is too late to answer your questions as you have already secured a mortgage.
I am a new member to this site and I thought if I answer your questions now, it would certainly help some other person(s) in future.
What is better ? a fixed or variable mortgage?
The answer to this question is not easy. Every body's situation is different. Every body has different priorities. Some are aggressive while others are conservative. Some are in business and have good income at times but may feel slow business at oter times. Some are in service and fixed income group.
The mortgage rates are lowest in 40-50 years history and according to an individual's priority the mortgage product must be chosen. However, historically people with variable mortgages have come out to be a winner in most of the cases. However, as I said earlier, this is a personal choice and some people would like to have the certainty of the fixed mortgage payments and for them "fixed term" mortgage is the answer. And, you certainly pay a premium for this insurance (mental security).
What is better ? Open or closed?
This again depends on each case and the security one would like to have. Open mortgages are high in rates and these offer you choice of paying off the mortgage completely without any penalty. On the other hand, the fixed term closed mortgages offer lower rates and if you have to pay them completely, you have to pay a penalty, which could be 3 months simple interest on the remaining balance or I.R.D (Interest Rate Differential) whichever is more.
Are non-banking institutes OK?
Yes, of course if they offer you good rates and good prepayment privileges.
Currently who is giving best rates?
Every bank and lending institution have different products and policies and keep on offering different rates at different times. You can not pin point that a particular bank would always be offering the best rates. It depends on the bond market and their (lenders) exposure to them and the supply of funds they have to their disposals for various terms. Hence, a bank can offer a very good 5 year term rate but a very bad 3 or 4 year term rate.
Is it worth to get services of Mortgage brokers?
Yes, I will fully agree with this. Not because I my self a mortgage broker but there are some technical points for this which I will explain as under.
A mortgage broker is a highly trained licensed professional who understands the market and the various products being offered by various banks and lending institutions, which a general buyer can not have access to. Think of a mortgage broker as your insurance broker. Like the insurance brokers, he does not charge you (to qualified buyers) any fees, but gets you the best possible product repeat product according to your needs. Its not always the best rate that counts. The broker would listen and understand your priorites like, wheter you want better pre-payment privileges for becoming mortgage free sooner than later, or you want to skip some payments in an year because of some illness in the family or job loss etc.
As different banks offer different variable products like some with a teaser rate initially but a higher rate for the rest of the term, some banks compound the interest monthly instead of semi-annually on their variable products, some banks do not offer weekly or bi-weekly payments which can take off years away from your mortgage and then of course the pre-payment privileges. Hence, only a qualified mortgage broker can work out the numbers with you and show you which product is better for you. He does not sell you a product from any particular bank, rather he matches the products being offered by more than 30 lenders according to your needs and priorities.
Last but not the least, the most important thing is the credit rating. As you go shopping around for the mortgage, every bank pulls up your credit report and that brings your credit score a little down and then you go to the other bank and that bank also pulls up your credit. Not only this brings the score down, the other bank also comes to know how many banks you have been prior to coming to them. Now, it can mean 2 things, either you are shopping for the best rate or you are refused by earlier banks. While, in the case of a mortgage broker, he would pull your credit only once and the same report would be sent to a number of banks for shopping for the rates and the products that suit you. The benefit, your credit score does not come down, the banks would not know if this application has been sent to any other bank or not. More over, broker as a whole give billions of dollars of business to the lenders, most of the times they get a better rate than you can get on your own.
I hope I have clarified most of the points and am willing to answer any of the questions of my fellow Canadian Desi's who are looking for a new mortage, renewal or debt consolidation or refinancing for home renovation or starting a business, I can certainly help them in achieving their goals.
Thanks
Pramod Chopra
The Mortgage Alliance Company of Canada
416-560-6951
email:
website : http://www.pramodchopra.com" rel="nofollow">LINK
Thanks.
-----------------------------------------------------------------
Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
I got my original mortgage from a mortgage broker and I agree that it is indeed a good idea to go with one for the reasons mentioned in the earlier post.
I've since then changed my mortgage company and moved from fixed to variable rates (the current variable rates were too much of a temptation).
-----------------------------------------------------------------
Recommended Services- Servicedomino.com
http://www.servicedomino.com
bump
what kind of mortgage options does a new immigrant have?
how much down payment would be required?
i read a thread which said that 5-10% would not do but nothing about how much would.
thanks in advance.
Quote:
Orginally posted by punjabi kudi
what kind of mortgage options does a new immigrant have?
how much down payment would be required?
i read a thread which said that 5-10% would not do but nothing about how much would.
thanks in advance.
Generally for a new immigrant a down payment of any where between 25% to 35% is required. However, every case is different and can be discussed and considered on its merit. You can PM me with your details and then I shall be in a position to answer your specific queries.
-----------------------------------------------------------------
Pramod Chopra
Senior Mortgage Consultant
Mortgage Alliance Company of Canada
dear mr. chopra,
we are new immigrants and want to get mortage for condo.
how is it here? is it like india where the builder helps u with loans?
and i hear we wld not be able to secure mortgage as we dont have a credit history.
do we approach a condo builder first or a mortgage company first?
and what can we do to ensure that we get a mortgage without having to pay 20 or something percent downpayment. and also without having to pay anything to a broker.
excuse me if i sound very uneducated but i think i am on these amtters.
ur help wld be appreciated
jammy
Quote:
Orginally posted by Pramod Chopra
Quote:
Orginally posted by punjabi kudi
what kind of mortgage options does a new immigrant have?
how much down payment would be required?
i read a thread which said that 5-10% would not do but nothing about how much would.
thanks in advance.
Generally for a new immigrant a down payment of any where between 25% to 35% is required. However, every case is different and can be discussed and considered on its merit. You can PM me with your details and then I shall be in a position to answer your specific queries.
