A major TV news program calls out TD Canada Trust’s collateral mortgage.  CBC Marketplace aired an episode called ‘Busting the Banks’ on January 25th.  If you want to skip to the video link, just click here and scroll to the 8:00 min mark.

During the program, CBC took a hidden camera into a TD branch….the reporter posed as a potential mortgage borrower….   Only when questioned for the 4th time did the TD banker disclose their mortgage was a collateral charge….  but they didn’t seem to explain the difference between a conventional mortgage and a collateral mortgage… The Banker only agreed that the collateral charge was a disadvantage.

The CBC reporter also produced TD mortgage documents obtained at the branch.   After a thorough search, they couldn’t find the word ‘collateral’ anywhere.   The only place they could find the word ‘collateral’ was in one document sent to the lawyer during mortgage registration.   Of course, the big problem here is that most lawyer’s get mortgage instructions from Banks around one to two weeks before closing….  A bit too late to start shopping for a new mortgage.  Leaving the consumer with no option but to proceed with the TD collateral mortgage.

WHAT’S A COLLATERAL MORTGAGE?

Collateral mortgages are more commonly used when obtaining a secured line of credit…. or a product that has revolving credit with no set amortization.  There are several other differences that affect what your current and future options will be (more on this later).  A collateral mortgage has it’s place but for the vast majority of us, I believe it’s just not the right product. The biggest problem I have is that most borrowers are unaware of what they are getting into.

Back in October 2010, TD quietly announced they would begin registering all their mortgages as collateral mortgages.   http://www.angelacalla.ca/blog_post?id=8190  the differences between collateral and conventional mortgages….  Does anyone remember this?  At the time, this was a huge story….  and yet, there was hardly no coverage…. Maybe the hundreds of millions that the BIG SIX BANKS spend in advertising each year has something to do with the lack of coverage.?

I could be wrong but my feeling is that since October 2010, the majority of TD clients have no idea their mortgage is registered as a collateral charge…..they will only find out once they go to refinance, renew or make a change with their mortgage…

I applaud CBC Marketplace for taking on the BIG SIX BANKS…..and my advice is to anyone needing a mortgage is to speak to an unbiased advisor.

TD is not the only lender doing this, they just happened to be the lender CBC showcased. It is common for the credit unions as well as sometimes with aby of the big banks HSBC, CIBC, RBC, Scotia, BMO. It’s an option for some cases without question; its just very importnat for there to be transperency in the products you select and to be aware of all the the pro’s and cons.

As always we are here to help callateam@dominionlending.ca 604-802-3983

The Bank of Canada has kept interest rates low for 3 years now and while rates are low, reading between the lines make the following the top 3 take aways

1. The forcast is downgraded. This means they intend to keep there rate low, longer.

2. The variable rate mortgage will continue to be a great option for borrowers.

3. They may consider a decrease in future, as they removed the increase warning.

To ensure you have the best possible mortgage contact the Angela Calla Mortgage Team 604-802-3983 callateam@dominionlending.ca

To read more about the Bank of Canada this week see the link http://www.theglobeandmail.com/report-on-business/economy/do-not-post/article15015655/ 

We have seen a significant number of first time homebuyers reviewing their options to purchase a home, market confidence remains high.

http://www.theglobeandmail.com/news/british-columbia/bc-housing-rally-expected-to-continue-through-2014/article14979458/

Questions on the best plan for the lowest cost of home ownership? Contact the Angela Calla Mortgage Team today 604-802-3983 callateam@dominionlending.ca

Some 65% of Canadian homeowners are planning renovations in the next 12 months and expect to spend an average of $8,992 according to the recent Scotiabank Home Renovations Poll.

 Among the provinces, homeowners in Manitoba and Saskatchewan are the most likely to renovate (74%) in the next year and plan to spend the most with an average spend of $12,920. The province least likely to renovate in the next 12 months is British Columbia (55%), with homeowners planning to spend the least at $5,700.

For those planning renovations in the next 12 months, the most popular method to pay for their project is cash savings (73%), followed by a line of credit (25%) and credit cards (16%).

Men are more likely than women to use cash savings (77% vs 68%), with home owners in Atlantic Canada (81%) and Saskatchewan and Manitoba (80%) being the highest among the provinces to choose this payment method.

Interestingly, one in four (25%) homeowners planning to renovate in the next 12 months indicate they do not have a renovation budget.

Click here to read the full Scotiabank press release.

Questions on financing your renovations?

Angela Calla

Dominion Lending Centres

callateam@dominionlending.ca 604-802-3983

Hear how The Angela Calla Mortgage Team saved Monica of Surrey BC $1100 a month by restructuring their mortgage live on CKNW Click Here to Listen!

Could there be savings in your mortgage?

Contact us directly to see if we can help you callateam@dominionlending.ca 604-802-3983

Thanks for visiting,

I am honoured to be named one of the Canadian mortgage brokering industry’s most influential women by CMP Magazine!

I truly love what I do and thoroughly enjoy ensuring my clients have the best mortgages catered to their unique needs!

This article is a great read as it boils down to:

1. Real estate now and always will be about the fundementals of affordability for your personal circumstances.

2. You can’t time the market.

3. The more you try to predict it the more complex it becomes.

Several other great points and resources from the BOC are included as well

Enjoy

The Angela Calla Mortgage Team is here to help with your mortgage 604-802-3983 callateam@dominionlending.ca

http://business.financialpost.com/2013/09/04/canada-housing-doomsayers/

When bond markets move quickly lenders scramble to offer lower terms – 1-4 years in efforts to lure clients in with lower rates that can correspond.

But, it’s important to remember that the lowest rate does not always guarantee the lowest cost for your mortgage over time!

Here’s why:

1. Ottawa says they don’t want the low fixed rates we have seen to return and various economists agree.

Poloz: “..expect that short-term interest rates, as is normal, will be above inflation” http://t.co/3l8DLVuYwM (ie. > 2%. We’re at 1% today)

2. As a result, we have already seen fixed rates increase more than 1% in a matter of weeks.

3. Why would you want to be up for renewal sooner, when that means your interest rate will increase sooner? It’s our goal to keep your payments as low as possible for as long as we can.

4. If you renew sooner and your rate increases as a result, you may have to have more income to qualify for a mortgage you have already been paying.

This is the time to go long or risk the cost of homeownership going up.

Simply put, this is not the time to go “short term” even if you think you’re moving.  It’s unlikely the date of renewal will match so, therefore, your best option is to go variable.

If your mortgage provider isn’t explaining the correlation between the bond market, government news, history of rates, or a plan to protect you from future payment shock, chances are you’re working with someone who isn’t protecting your best interests!

We’d be happy to explore your best options with you!

Angela Calla, AMP

Dominion Lending Centres-Angela Calla

Host of ” The Mortgage Show” Saturdays @ 7pm on CKNW AM980 Phone :

604-802-3983 Fax: 604-939-8795

Email: acalla@dominionlending.ca

www.angelacalla.ca

Have you been asking yourself, should I change my mortgage from the variable rate that I have?  Should I change my mortgage at all?  There is a simple answer to all this hysteria about mortgage rates going up. Don’t lock in your rate.

I know it’s almost heresy to have a floating rate in a mortgage world dictated by Finance Minister Jim Flaherty, who thinks nothing about calling up the banks and telling them their rates are too low.

But the reality is that a variable rate mortgage tied to prime can still be had for as little as 2.60% from some major institutions while the comparable five-year fixed closed rate is approximately 3.59%.

The Risk. The Bank of Canada’s key lending rate, which prime is tied to, hasn’t moved in three years and some economists maintain it won’t be moving until 2015.

“It’s a big, big change going from 2.89% to 3.79%,” says Benjamin Tal, deputy chief economist with CIBC World Markets, who expects there to be some rush from consumers to get into the market in the short-term. “There will be more and more people locking in.”

There has been a big jump in mortgage rates to match what has happened with long-term bond yield but it comes down to about 50 basis points. If half a percentage point is going to drive you out of the market, it is time you saved more money to buy a house. The sentiment that ‘the sky is falling (with interest rates) at 4% is not based on any historical reality’

But if you want a low rate and are willing to roll the dice, the variable product is out there.  I would expect it to become that much more enticing over the coming months as the interest rate gap widens.

As the yield curve flattened, it didn’t require much thought to lock in. If a financial institution will give you the same rate for five years at 3% or 2.8% (discounts on prime were lower at one point) to begin with and the chance rates will rise, the risk to save 20 basis points is not worth it.

The market showed that consumers were making the only sane choice. The Canadian Association of Accredited Mortgage Professionals (CAAMP) found in its last survey that fixed rate mortgages were 85% of new origination. That’s well above the historical average.

The narrow gap drove people away from variable rate products as much as government policy. One of Mr. Flaherty’s subtle changes to mortgage rules was to force people to qualify based on the five-year posted rate which is now 5.14%. However, if you secured a fixed rate product for five years or longer you could use the much lower rate on your contract which made it easier for those consumers to qualify and borrow more money.

But the spread is widening and today’s gap is more the historical norm, says York University Prof. Moshe Milevsky. Mr. Milevsky is the usually unnamed author behind a report that says you do better going with variable about 88% of the time. The report was done a few years ago and has not been quoted much in today’s low long-term rate environment.

Look at the premium now. There have always been periods over the past 40 years where this thing widens,” says Mr. Milevsky. “This one of the larger ones because of the steepening of the yield curve. On the short end they are holding the curve down and the Bank of Canada sees no indication they will be raising [the overnight rate]. On the long end you have the bond market. Who is going to win? The Bank of Canada or the bond market? Place your bets.”

Before you step to the betting window consider the cost of locking in. Let’s use a 25-year amortization and a $500,000 mortgage with 2.60% vs. 3.59%. Over five years, the variable rate product would cost you approximately $58,752.99 in interest. The locked in rate would mean approximately $80,943.67 in interest. That’s one expensive insurance policy. ($22,190.68)

“It’s abnormal to have the same rate on variable and fixed. We are going back to normal,” says Prof. Milevsky, who thinks the gap will widen. “Nothing has changed; you have to look at your personal balance sheet [to decide if you can handle the risk].”

The Big Banks are working hard to “scare” people to lock in. The thought is that long-term rates are going to move much further up but on the short-end the thought is that there’s going be more room to discount off of prime.

It’s important to remember that the discount you negotiate off of prime on your variable rate product is what you have to live with for the term of the contract, often five years.

There is a real opportunity if you are disciplined to take advantage of a variable rate, and with proactive mortgage management, you get to understand changes in the mortgage market real time. With a proactive plan and our inflation hedge strategy, which is designed to protect you from future payment shock, you get a strategy that protects your equity and allows you to build a better future. This is where The Angela Calla Mortgage Team is here to help you.

Feel free to call or email us to discuss your own mortgage or the mortgage needs of someone you care about!

Angela Calla, AMP, Dominion Lending Centres 604-802-3983 callateam@dominionlending.ca