By Tracy Luciani Price
If we save one homeowner from this dangerous practice, we have done our job. No one should paying their mortgage weekly. We can`t believe the number of new clients who tell us the bank told them to increase the frequency of the mortgage, so they will pay their mortgage down quicker. That’s a load of hoeey! Now read this again. WEEKY PAYMENTS DO NOT PAY YOUR MORTAGE DOWN FASTER! Unfortunately, it’s more smoke and mirrors by the banks to let you think you are doing something magical to your mortgage. But you are not. The bank is simply interested in controlling your paycheque. If you don`t believe us, go on the internet and look at both a monthly and weekly amortization schedule. Both will pay exactly the same principal and interest by the rest of the term and there is absolutely no difference.
So it’s danger , danger when it comes to paying weekly. Why...because of a number of reasons. But biggest and most important reason, is any bank can go power of sale on your home after three missed payments. It`s in the fine print. Three missed payments. That includes, weekly, bi-weekly or monthly. You never, ever want to give control over to the bank. And if anyone has ever missed a payment knows, it is nightmarish to try to catch up. Besides all the extra fees for NSFs, you have now been red flagged by the bank. By paying four times a month you have increased your chances of having a problem by 200 times over a 5 year term.
Now the bank is making higher banking fees when there are four transactions just for your mortgage payments in a month. We had a client who was always a day late on their mortgage. They never thought it was a big deal because the money was there, the following day. But when we asked for a mortgage history when doing a new mortgage for them, we discovered the client had been late 27 times and paid $2,000 in NSF fees. While this is an extreme example of what can happen, it shows that it can.
And as of the late, mortgage payments are now appearing on credit bureaus. This never happened before this year. Now creditors can see plain and simple what your payment history has been over the past six years. And if you have had some misses in the past, it will be more difficult for you to get a mortgage, even if you already have one now.
We have given you a few of reasons for not paying weekly, but here is another question to think about. It`s hard enough to remember to make your monthly VISA payment on time, so why on earth would you want to be forced into a payment weekly when it does nothing to pay your mortgage down quicker.
New client tell us they like the convenience of paying weekly because that`s how they get paid by their employer. We say budget weekly but pay monthly. It`s is not worth the risk period. If you want real strategies for paying your mortgage off quicker, that your bank won`t tell you, give us a call or better yet stop in, to our `Don Cherry House’.
Month: August 2014
Nothing beats The Personal Touch
As of late, we have been asking clients why they decided to deal with us. We thought people would
answer things like well you got us the best rate which, of course, we always do. But the answers even
surprised us. New clients told us, they liked the, ’personal touch’. That got us thinking about that.
Our society is now so far removed from people who know and care about you providing us service. For
instance, I hate pumping gas. So I drive my car to fill up at Blinkhorn’s. I want the personal touch, plus
I like giving my business to a ‘family owned business’ in town AND I DON’T WANT TO PUMP MY OWN
GAS. I enjoy a good meal in town and we eat at all the local establishments, dropping a few bucks here
and there weekly. We could simply drive thru the fast food outlets and do on occasion but in reality, we
much prefer to really savour the experience of sitting down and being served. ‘Why?’ Again, it’s the
personal touch. When a couple of people came selling memberships to Costco a month ago. I turned
them away. The reason was mostly because we like small better than huge and like to deal with local
Somehow in the banks’ drive for insane profits, they have lost the personal touch. I am old enough to
remember the bank calling and telling you that they were holding a cheque for a day , protecting your
good name by not sending it back NSF. Now the bank puts holds on your deposit cheques ïŠ and they
bounce a cheque in favour of their ridiculous fees.
I also remember the days when we all knew the bank tellers and the bank managers personally and had
great relationships with them. The fact that you were a member of the community in good standing
and paid your bills, meant if you needed a loan, the bank manager had clout and would get it for you, on
just a handshake. Now it’s all done centrally by a person or computer who doesn’t know you, deciding
whether you are credit worthy or not.
We pride ourselves in knowing all of our clients, on a personal basis. How can you truly serve people if
you haven’t taken the time to get to know them? It’s a refreshing difference, as so many clients have
told us. Our Don Cherry doors are always open because that’s the kind of people we are. If you are
looking for a change and want the personal touch for your next mortgage why not give us a call or better
yet stop in and experience the difference for yourself.
CREDIT IS KING NOW!
Never before has credit been so important. With the new government rules for a 600 beacon score, people applying for mortgages now need to extra vigilant about their credit. This is especially true if you are thinking of downsizing due to debt load. Lenders, who at one time couldn’t really care less how much debt you were carrying are now looking closely at your credit utilization. If you are maxed on all credit, you may have difficulty getting a new mortgage now.
We have had a few cases where people who have good credit, but missed one payment , scores dropped below 600 and then found out the hard way that they could not get a prime bank mortgage. And even if you have been pre-approved for a mortgage does not mean you will necessarily get a new mortgage. Especially with bank pre-approvals, the pre-approvals are only a rate hold. The banks often have not pulled your credit or even reviewed your credit. So it’s ‘surprise, surprise’ when homeowners find out from the bank they were approved at, were not really approved. As mortgage professionals we do a much more thorough pre-approval by reviewing credit and income. If there are issues, we address them during the pre-approval process rather than having your mortgage declined after you put an offer in.
There’s been a trend lately for lending institutions to expect more on how much credit you have opened. The optimum is two credit facilities, one loan and one credit card or two credit cards with limits of at least 1,000.. We had an instance lately, where a new lawyer with only one credit card but had several loans and credit cards closed and paid off ,had some difficulty getting a mortgage. We thought this is crazy. The lawyer was responsible and paid off his debts. The lending institutions saw it differently. They felt he didn’t have enough credit open. So there is a lot of damn if you do and damned if you don’t going on in the mortgage business now.
We don’t make the rules, as ridiculous as some of them are. But we are in your corner battling and orchestrating through the mortgage minefield process. Get the best professional mortgage advice by calling us first before you put an offer in or even thinking about doing something with your financial situation. We always have your best interests at heart.
Amanda and Jerry wanted to buy their first home. They had been turned down at the bank and told their credit score was not acceptable without any further explanation. They came to us to see if we could help.
We went over their credit report with them in detail and discovered that there was a delinquent item that was not even theirs. We advised them how to get it fixed, which took a few months. Apparently the bank prior to looking at their credit told them they could afford a $350,000 property with 5% down. They were thrilled when we told them they could easily qualify and afford a $400,00 home, actually $450,000 but suggested they buy at the lower end.
We also showed them how our full service 'One Stop Shop' home buying service package worked along with a complete explanation of the entire home buying process. When they realized that they were going to save a lot of money and that we would arrange and coordinate everything for from start to finish, they jumped at it.
Ironically enough after they bought and the bank found out they were working with a mortgage broker, the bank asked them to come back and offered them a rate of 3.04 per cent 5 year fixed We had already got them a 2.89 per cent fixed and a 2.40 per cent variable and gave them a choice. They also saved over $750 in closing costs with no legal fees through us.
They told us they told the bank to basically go take a hike as our service and solution was vastly superior. We also explained the stable interest rate forecast and showed them how they could pay down the mortgage faster by going variable but making the equivalent fixed rate payments. They loved the idea. In addition we showed them how much higher any potential fixed rate mortgage penalty would be versus variable and we assured them they can lock in at our guaranteed lowest rate at any time, a Win/Win. The banks do not offer such a guarantee.
We later followed up with them to see how their move went and asked how they enjoyed our service. Amanda said "Everything went so smoothly. It was a dream experience for us.” They couldn’t us enough and told us they will highly recommend us."
We love helping first time buyers. In fact we love helping all home buyers realize the dream of ownership.
If you are thinking of buying or selling, please contact us first to see what we can do for you. Check us out at PriceTeamMortgages.ca and our HomeHubCanada.ca solution today.
All 2014 clients qualify win a Free HHC service to be won on Dec 15th. *Certain conditions apply.
FIXED RATE MORTGAGE PENALTIES: How the Big Banks Have You Hook, Line and Sinker
For most homeowners, figuring out your mortgage penalty can be like solving a Rubik’s Cube. Mortgage penalties are written with so much ‘legalese’, they are totally confusing. The sad fact is that you don’t realize how costly it can be to break your mortgage until you have to, are forced to, or if you decide to refinance or sell your property and from what we see, while you may be told in the beginning any penalty will likely be 3 months interest, this rarely applies any more. Most bank penalties are IRD’S or Interest Rate Differentials which is a whole other game.
Most don’t ever think they will ‘Break’ their mortgage when in fact over half end of doing so during the term. Life happens, changes occur and when they do your mortgage penalty from the banks cannot just be overwhelming, they can be (and usually are) shocking.
Unfortunately the banks play games. They use the ‘Posted’ rate to calculate your penalty when in reality posted rate has nothing to do with your mortgage. This allows them to get more money from you.
Please do not be fooled on any long term ‘Relationship’ or perceived comfort you may feel you have with your bank because any value from it is illusory. The Banks want you to choose a fixed rate over variable so they can charge you a (usually punitive) penalty if you have to break your mortgage. You see, you can only be charged a maximum of 3 months interest on a variable mortgage so please do not fall into the trap without knowing all the facts.
You may feel more comfortable choosing a fixed rate with fixed payments and in dealing with a local branch versus a mortgage broker, but it can end up costing you a bundle for such misplaced trust. The problem is in doing so you do not receive professional advice and counsel we provide in your best interests.
Don’t get me wrong, we are not advocating variable over fixed, it’s just that you may not be aware of several other important benefits to go variable. We also want you to know that any penalty from a mortgage we arrange for you is not only fully spelled out to you, but we will show you that our penalties are much much lower than any of the banks’ penalties which are sometimes as much as triple ours.
Folks experts in our industry are starting to speak out to expose such practices and recently have even stated that bank mortgage penalties are bordering on criminal. See the Criminal Code sections 380.1 and 380.1 (1). Yes it’s that serious.
Please do not leave yourself exposed to such a potential negative consequence. Look out for the fine print or better yet call us first for your next mortgage need.
We are your WATCHDOG when it comes to mortgages.