Jan
17

The end of ING (for now?)

It’s a sad day when a lender leaves the broker channel. We represent about 20-28% of mortgage originations in Canada, a number that’s far too low in my opinion. I understand the allure of having “everything under the same roof” but the problem with that thinking is you don’t open yourself up to other financial opportunities or offers that may end up saving you loads of money. Yes, free banking for a year may seem like a great deal, “Hey Honey! We just saved $16 a month at the bank because we took our mortgage there!”, but wait until you get your IRD payout from that bank and the conversation will go more like “Hey Babe! We can’t afford that furniture for our new house because we are paying $17,000 to break a $220,000 mortgage! But we got free banking!”

But I digress..

Back to my original point. When a lender leaves the market it’s never a good thing. Earlier when Scotiabank bought ING Direct, everyone was told it would be business as usual and Scotia would run the brand separately. Well, obviously things changed very quickly and a lender that gets over 80% of its customers from the broker channel decided that it doesn’t jive with the parent company’s strategy and would rather get those customers via the internet and call centre banking. Good luck, I say.

First off, I have heard many painful stories of how a call centre (usually untrained or undertrained employee) would offer a product that that lender cannot actually close on. They boost your hopes only to let you down when it matters. Do you want to see whether you qualify for a $500,000 mortgage on the phone? Or would you rather have a coffee, a sit-down and chat about your plans goals and…

Jan
11

Difference Between Bankruptcy And Consumer Proposal

I’ve been fortunate where I have never had to know the difference of these two from a consumer standpoint. However I certainly understand life and how unpredictable it can be. I just wanted to take a moment to explain the difference between consumer proposal and bankruptcy in the eyes of the lenders in case any of my readers are thinking about doing this and planning their future real estate purchases.

There is no difference. None. Zero. Zilch.

CMHC and Genworth will only insure both ex-bankrupt clients and ex-consumer proposal clients once 2 years have been lapsed since discharge, and 2 active trade lines have been established for those 2 years. Usually then it takes more than 2 years to be considered an “A” client after discharge. Also, not a single missed payment can be made as those will certainly affect CMHC’s decision if whether to insure you or not.

If you do not have the above, you’re looking at “B” lenders such as Home Trust, Equitable Trust and Equity Financial. Although one may scoff at the rates they charge, in reality they are as good as rates were 3-4 years ago on the “A” side. So paying 4.49 to 4.99% for short-term isn’t as bad as 6.99+ like we used to have. As such, this offers a short-term solution for a borrower to get their credit in gear and then refinance to an “A” lender.

If a buyer is in current bankruptcy or consumer proposal, a few lenders will even consider these lenders but again, at higher rates than above usually +1%. So 5.49 to 5.99% would be a good range. Almost all of “B” lenders charge fees froM $500 to 1% of the mortgage amount as well. Furthermore to get into the game with “B” lenders you must…

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