REVscene - Vancouver Automotive Forum

tool001 · 12-08-2009, 12:20 PM

Ok,
i thinking of putting an offer for a place.
i have been looking around for mortages.

thinking about going for Variable closed. at 2.25 /2.15 %

what are other mortgage costs involved. i know about PTT and insurance, lawyers , inspection.
but in terms of mortgage how should i compair different lenders
what else to look for other than Interest rate. making addition payments.

1) am i looking for any hidden costs fees?
2) open or closed mortgage...which is better?

Crowtservo · 12-08-2009, 12:34 PM

Quote:

Originally Posted by tool001

Ok,
i thinking of putting an offer for a place.
i have been looking around for mortages.

thinking about going for Variable closed. at 2.25 /2.15 %

what are other mortgage costs involved. i know about PTT and insurance, lawyers , inspection.
but in terms of mortgage how should i compair different lenders
what else to look for other than Interest rate. making addition payments.

1) am i looking for any hidden costs fees?
2) open or closed mortgage...which is better?

As someone that has never had a mortgage I can't speak to whether are "hidden" costs associated with them.

As for your second question an open mortgage is better if you plan to sell the property before the end of the term (5 years in your case) since you won't have to pay a penalty. Usually you pay ~80 basis point premium for the open option and it's up to you whether it's worth it to you. If you have a closed mortgage and you want to prepay before the end of the term you will pay a penalty (sometimes 1% or 3 months interest, it depends on the mortgage).

In choosing a lender they don't really differ very much. Look at the special offers as often they will have better terms on specific periods (since banks are always trying to match asset duration to liability duration often they need more of a certain type of mortgage on their balance sheet).

As I said I have neither held a mortgage nor do I work in the field this is based on what I've learned from real estate courses at university and working with MBSs.

johny · 12-08-2009, 05:27 PM

as for other fees you'll be paying CMHC fees if you have under 20% down but you'll be paying that anywhere.

giCe · 12-08-2009, 09:20 PM

- make sure you look through your mortgage loan agreement. all applicable fees is to be on there.
- open and close mortgage is a case by case decision. not one is always better than the other. Are you planning on selling the place within a few years? do you plan on/or expecting to pay off a good portion of your balance in the next year or two? if so, then open option might be a better option.
** But there are closed term mortgage that allows you to put down a certain amount towards the principle of your mortgage a year without penalty.
- a good number of mortgages out there also allow you to early renewal a closed term with minimal to no penalty with a year or so remaining on your mortgage term.
- There are also open term mortgages that allow you convert to a closed term fixed mortgage should you think that rates are gonna go up or you just want more stabiliy in your payment schedule.

- When it comes to mortgages, it's not so much the hidden costs you got to look for but what features/options your mortgage has. You can ask your broker/banker/mortgage specialist about it but they can only share so much in one meeting (assuming they want to tell you at all). My best advice is try to maintain a close relationship with your broker/banker. That way he/she will spend that extra little bit of effort to try and save you a few dollars.
- Shop around, or get yourself a mortgage broker to shop for you if you don't have the time. sometimes the same bank but different branches might give you different rates
- Know what your plans are at least in the near future with your property, then find a mortgage term that will suit your specific case.
- if you are planning to keep the property. It might be a good idea to switch to a fortnightly or even weekly payment as oppose to a monthly one. to reduce amortization, pay off your mortgage quicker and in the long run save you on some interest
-

Gt-R R34 · 12-09-2009, 12:07 PM

There wouldn't be any hidden fees, if you're dealing with any big bank or CU. Disclosure was all the rage 3-5 years ago, if they didn't they'd be in a whole lot of shit.

Most mortgages have a 20% yearly clause, they allow you to put 20% of your principal into your mortgage each and every year. Technically you could pay off your mortgage in 5 years without penalty.

What's been said in this forum before, just a quick search should come up with information.

Mortgage brokers are great tools, but like any professional, realtor/broker. Make sure they have you in mind.

They can find you the lowest rate from a bank in Quebec, but if you can never reach them to modify or payout your mortgage, that would be a pain in the ass.

taylor192 · 12-09-2009, 02:24 PM

Just don't get tricked into saving 0.1% for a mortgage that is not transferable or assumable.

Realistically if you sell, you've bought a new place and you'll want to take the mortgage with you.

---

Outside of that, I have no clue why you're buying now. Prices have been on a tear and housing prices are stupid high once again. Rental vacancies are up despite the Olympics being 2 months away, imagine what is going to happen afterwards.

Plus we're entering the best time to buy: after Christmas. This is when people need money, sales are slow and deals best. Imagine what will happen after the Olympic party when people have spent stupid amounts on tickets.

I'd wait, yet its up to you. If you found your dream home you want to stay in for 20+ years, then buy it! If you're going to flip in 5 years... you've been warned.

tool001 · 12-09-2009, 03:09 PM

thanks for all the info...
i know market is going to go down..but i dont see it going down to 2006 rates,, i had the funds and wanted to move outta where i am plus found something that i actually like.

taylor192 · 12-09-2009, 03:38 PM

Quote:

Originally Posted by tool001

thanks for all the info...
i know market is going to go down..but i dont see it going down to 2006 rates,, i had the funds and wanted to move outta where i am plus found something that i actually like.

NP

Since you agree prices are going to go down, yet not alot, consider this.

On a 25yr mortgage with 20% down at 2.25% you'll pay down 15% of the mortgage over 5 years. If prices go down 10%, when you sell after 5 years you'll pay 5% commission, and you've effectively wiped out all the equity you saved.
Net result: +15% - 10% - 5% = 0% gained

Lets say you put down 10%, you incur a 2% CHMC fee.
Another 2% lost

Lets say you put down 5%, you incur a 2.75% CHMC fee.
Or 2.75% lost

Lets say you sell before 5 years and incur the 1% mortgage termination fee.
Another 1% lost

Lets say rates go up 2% over 5 years, meaning you only paid down 13% not 15% of the equity.
Another 2% lost

So in theory, if you only put down 10%, rates go up 2%, you break the mortgage before 5 years, pay the 1% penalty, and you pay a 5% Realtor commission - house prices only have to go down (13 - 1 - 2 - 5) 5% before you're losing money.

And none of that considers lawyer fees, moving fees, land transfer tax, or maintenance.

Nssan · 12-09-2009, 10:46 PM

while we are on this topic..

which types of mortgage have an benefit over the other in this current state of economy

variable open

or

5- year fixed

feed me the knowledge

giCe · 12-09-2009, 11:33 PM

one additional point - should you decide to sell your property and purchase another one before your mortgage term ends, most banks allow you to port your mortgage to your new property to keep your business. Just something to keep in mind.

no idea · 12-10-2009, 11:20 AM

Variable = low rate based off of bank prime rate which will not go any lower and will probably stay steady over next few MONTHS then will likely rise quickly. Bet that your payments will go up at some point - how significantly depends on how quickly the economy grows.

x year fixed = your rate is locked in over the next x years. No change in your regular payments until the term of your mortgage expires and you roll into a new one and face the same decision then.

Most banks can offer you a mix of the two as well if you want.

Nssan · 12-10-2009, 11:42 AM

Quote:

Originally Posted by no idea

Variable = low rate based off of bank prime rate which will not go any lower and will probably stay steady over next few MONTHS then will likely rise quickly. Bet that your payments will go up at some point - how significantly depends on how quickly the economy grows.

x year fixed = your rate is locked in over the next x years. No change in your regular payments until the term of your mortgage expires and you roll into a new one and face the same decision then.

Most banks can offer you a mix of the two as well if you want.

Thanks , now .. BOC has already announced that they will keep interest steady until second quarter of 2010, so that is until June. And, I have read from a RBC economist that if it would likely to rise, and that rise would equate to 1%. So, my question is would it be benefitial to right now to lock in a 5 - year fix at for example 3.7% or, go variable, and possible face a rate of 3.25%+ in a year or two?

no idea · 12-10-2009, 01:02 PM

How far rates go up and when is tough to predict. You'll have to ask yourself whether, if you do go variable, you can afford the jump in payments when rates do rise. Ask yourself if rates rise and you end up paying more in interest than going fixed whether you can afford the house still and still be able to "enjoy" it. The way I look at it, its no fun to own a house if you're always worried about making the payments - maybe its a function of my own upbringing where it was a bit of a struggle at times. If you're going to lose sleep over it then go fixed and you know what you're gonna pay for the next x years.

But hey, if you'd still be comfortable with the mortgage payments at 5 or even 6% (not that I think they'll go that far) than enjoy the low payments while they're still available and go variable.

taylor192 · 12-10-2009, 01:11 PM

Australia has rates a few times already, to keep pace with Asian markets that are still doing well.

Canada is linked to the US, so as long as the US keeps their economy in the shitter, we have no incentive to raise rates. Actually we have less incentive, cause raising rates makes us uncompetitive to the US.

Moral of story: keep an eye on what the US economy is doing.

too_slow · 12-17-2009, 10:47 AM

I think spyker is an eff-ing retard and should be banned indefinately.

Rates will definately rise after Q2-2010. A bubble will inflate slowly if the rate is kept at rock bottom for too long.

Personally, I went with a 5Yr-Fixed with ING direct with the 15/15 option (increase my payments by 15% , and/or make a lump sum payment of up to 15% every year). During my % search (I had a mortgage broker work for me as well), the best rate provided to me was with ING.