The Big banks are pushing their hybrid products and their popularity has grown immensely over the years.  This is the mortgage and line of credit products or straight line of credit product.  But these mortgages should come with huge warning labels.  The problem is that most consumers are unaware of what they are signing and the impact it can have on future borrowing.  Basically what the banks are doing is putting a collateral first mortgage on the entire value of your property.  So even if you are borrowing less than that, the mortgage is registered on title for the value of your home.  We see this as anti competitive  and not in the favour of the consumer. 

We recently ran into this when a client purchase another property.  They owed $200,000 on their mortgage statement and their current property was worth $400,000.  They wanted to tap into the equity on their present property in order to purchase the new one.  When the lawyer was doing the title search he found a mortgage registered for $400,000.  The bank refused to allow any mortgage behind their existing mortgage and there was no equity left.  The client was enraged when he found out the dirty trick the bank had pulled on his and he had no idea a mortgage for twice the value which had borrowed was attached to his home. 

Many of these hybrid mortgages are singed up the bank branches and so clients have no idea that their properties have been encumbered for their full value.  We think full disclosure should take place prior to mortgages being put on property.  Often that disclosure comes later in a 30 prage documents called, The Standard Terms and it has a lot of legal jargon which the common person would never understand let alone take time to read.  And we think it is anti competitive it its nature. It forces a client to back to their original bank for any new borrowing ie car loans.  So shop around for the best rate..forget about it…You’ve got one choice.  As well, this practive affects the total amount of debt the client is carrying which can negatively impact future borrowing.  The equity you have built up in your property should be yours not the banks.  That’s why you need us, trusted mortgage professionals who have served this area for ten years.  We take the time to explain what are signing.  We deal with 47 different lenders including all the major banks and we look out for your interests.