24 Jun

4 Essential Mortgage Features To Ask for …


Posted by: Brad Lockey

I like to call it “future-proofing” your mortgage; and it’s something that most brokers, and definitely banks, don’t advise you of:

Hunting for the best interest rate on your mortgage? Congratulations – by shopping around you’re already ahead of the home-buyer pack, and likely to score a great deal.

It’s proven that exploring your mortgage options equal better savings in the long run – and those who are unquestionably loyal to their financial institutions (called positive bank bias), end up paying more than those who look for a better rate. A Bank of Canada study found that those who don’t compare their mortgage rate pay a premium of between $759 and $1,617 on their home financing.

It’s a fact we know resonates with our own customers; in a recent poll we conducted on mortgage rate motivation, 50.8 per cent identified the lowest rate as the best mortgage feature available.

While shaving even a few basis points off your rate can save thousands over the long run (check out this eye-opening savings breakdown!), it shouldn’t be the only motivational factor for homebuyers. The best mortgage rate is one that fits your specific buying and homeownership needs.

 Here are four essential questions to ask when comparing the market:

1: Can I Pay My Mortgage Off Sooner?

The tricky thing about paying the interest on your mortgage: because you’re charged interest on an annual basis, the longer your mortgage lasts, the more you’ll shell out. It’s a great idea to ramp up the frequency of your payments or make occasional lump sum payments in order to shorten your amortization. In fact, doing a combo of both has thepotential to save you over $15,000 over your mortgage!

However, not every mortgage product allows the flexibility to make extra payments, and some may even penalize homeowners for paying off their mortgage early. Look for details regarding prepayment privileges when comparing your mortgage rate, which specify how much more you can pay on a monthly and annual basis on your mortgage.

2: Can I Break Or Move My Mortgage?

Let’s say you’ve found a great starter home and have settled into a mortgage with a fixed five-year term… but three years in, you realize your family is in for a growth spurt and that quaint one bedroom/one bath just won’t cut it. An ideal solution would be to sell and simply bring your existing mortgage along to your new home, especially if the rate you locked in at is lower than current market offerings. This feature is called a portable mortgage – but not all lenders offer this option.

Without the ability to port your mortgage, you’ll be forced to break your agreement instead – and incur the full associated penalties. The penalty for breaking your mortgage is three month’s worth of interest for variable rate holders, and the Interest Rate Differential for fixed rate owners (the difference between the original interest rate, and the current interest charged by the lender for the remainder of the term).

Pro Tip: Not sure how much you’d pay? Crunch your mortgage costs with our Mortgage Penalty Calculator>

3. Does It Offer a Great Rate Hold?

Getting preapproved for a mortgage is a smart first step for buyers; doing so establishes your range of affordability, and provides peace of mind during the home buying process. Apre-approved mortgage rate will be available to the buyer for a limited amount of time – some products offer up to 120 days. By comparison, some rate holds may last as little as 30 days, putting buyers on a very constrained timeline. Savvy buyers should confirm that a rate hold will work with their buying plan, and will indeed still be available by the time they’re ready to close on their home purchase.

4: Are There Restrictions For First Time Buyers?

Buying your first home? Chances are you’ll fall into the high-ratio category, meaning you plan to pay less than 20 per cent up front on your home purchase. In fact, in today’s steep housing market, many newbie buyers struggle to swing more than the five per cent minimum.

This paints them as higher risk in the eyes of the bank, as they’re likelier to default on their mortgage payments. To counter this, high-ratio buyers are required to take out default insurance (either through the CMHC or a private insurer like Genworth) – and some lenders may deign to offer this group access to their best rates. If combing the market based on low rates alone, ensure you qualify based on your financial situation.


By: Penelope Graham, Editor, RateSupermarket.ca


17 Jun

What do mortgages and The World Cup have in common?


Posted by: Brad Lockey

Not much.
But no one likes asking questions about their mortgage.
And, no one likes asking questions about who’s playing who and when, during The World Cup.

Luckily for you, I’m here to answer all of your questions about your mortgage.
And, in addition, I’ve attached a scheudle of games during The World Cup as well.

Enjoy, and contact me any time:

Brad Lockey


10 Jun

My Get Out Of Debt Success Story – $70,000 In Four Years !!!


Posted by: Brad Lockey


The title of the site mentions gaining freedom through personal finance, so it is about time that I share some of our journey. The family’s finances are now on auto pilot, but that is only after 4 years of blood, sweat, and tears. The idea is to not only share the overview of the last 4 years, but also highlight the key concepts that we encountered while paying off over $70,000 in debt.

One would think that defaulting on a Sears credit card freshman year in college, and then having to get an 8% deferred interest student load to finish sophomore year would have changed my life. Well it didn’t. What it did do was set the stage nicely for my vengeance against debt. The chains started to loosen during my two year engagement as we started preparing for marriage. Take a look at the post on the book that started most of our great conversations during that time. What happened was that we began to evaluate our thoughts, philosophies, and relationship towards money. This evaluation started to give us power and was our first step to financial freedom.

Evaluate Your Relationship with Money – During many long conversations, we explored what we learned in our family of origins about money, how we currently operated, and what we thought money would look like when we were married. Our eyes were opened and we felt like we could have power over money and not let our finances control us. With my brief sordid history with debt and my wife’s loathing of credit cards, we were encouraging each other to despise debt(Step 2)

Despise Debt – Shortly after we were married in October of 2002(paid with $10,000 CASH), we had about $72,000 in debt. 70% school loans and about 30% in cars. We rented a reasonable apartment for a year, but were still feeling the bondage of the debt on our life and relationship. Frustrated, we started randomly attacking our debt with extra payments. This is where I came across Dave Ramsey, and was inspired to learn as much as possible to help us out.(Step 3).

Get Knowledgeable – Dave Ramsey’s book launched me into the world of personal finance. I checked out arm loads of books from the library, and devoured anything and everything I could find on the subject. I eventually returned to the Ramsey Snowball method. It suited me and I enjoyed the motivation his free streaming radio show provided. The best part was the simplicity of the plan and the ease at which my wife to climbed on board. With the new found plan, and all of the other information I was soaking up we began to take control of our finances(Step 4).

Take Control of Your Finances – We were renting DINKS(Dual Income No Kids) armed with a pretty shovel to dig out of debt. We watched our spending, trimmed our expenses, and put every extra penny towards debt. We learned how to plan, save, and spend CASH on larger items. We set up Microsoft money, created a budget, and communicated about how we were spending our money. The growth of control bred more motivation and energy. We sold our junk on eBay, and were able to put a $1,000+ towards debt each month. The debts began to fall, and with each one we became more focused. We even saved for a small down payment on a condo. An amazing thing happened when we got down to under $30,000 in debt…a world of options started to open up. We could envision a great future, and it seemed attainable. Things like working for myself, pursuing jobs we wanted, and having a family were definitely things that were within our grasp. Now that we were in control, we could have perspective on our life(Step 5).

Gain Perspective – In about three years, we were debt free; $24,000 a year towards debt!! As our money became our own and not the banks, we talked a lot about were we wanted to go in our lives. It was a wonderful feeling to realize that we could seek things that we truly valued in life. We saved $10,000 for the adoption of our son, increased our giving, and started building an emergency fund. In about 4 years our lives, finances, and marriage had been transformed. What an amazing ride it was, and journey is just beginning. As Dave Ramsey says : “We changed our family tree”. Our lives and the lives of our children will feel the effects of the last few years for a long time.

3 Jun

Breaking a closed mortgage can be costly. Ask a Mortgage Broker for their professional opinion and shop for YOUR right mortgage.


Posted by: Brad Lockey

You can get a low mortgage rate by signing up for a five-year term. But you could be penalized for an early exit if your plans change.


Brian Hyytiainen bought a house and took out a five-year mortgage in 2011. Things have changed in his life, forcing him to put the house up for sale.

“I’m unable to continue to afford the house on my own,” he says. “I’d heard there would be a prepayment fee, but I had no idea the bank would take advantage of an already difficult situation and charge $13,000.”

He was dealing with RBC, Canada’s largest bank, which charged him an interest rate of 3.79 per cent. That was what he saw on the first page of his mortgage agreement.

Only on the third page – in fine print – did he find out that he had received a rate discount of 1.55 per cent.

“Pretty sneaky if you ask me,” he says. “Everyone is given a rate discount. No one would take a closed mortgage at five per cent when rates have been lower for several years.”

Most of the Big Five banks start with a high posted rate and offer discounts to customers who ask for one. It’s a game that has gone on for many years. However, the high posted rate can come back to haunt customers who decide to break a closed mortgage at a time when rates are falling.

Hyytiainen learned how much the inflated rate hurt him after speaking to a client care manager at the branch.

“We calculated the breakage without a discount and it was about $5,000, which is much more reasonable. I tried to challenge the amount.”

RBC client care said there was nothing that could be done. Though he was selling the house because of financial setbacks, he still had to pay the $13,000 penalty when his deal closed.

His appeal to the RBC ombudsman didn’t help. He then filed a complaint with ADR Chambers Banking Ombuds Office (ADRBO), which reviews decisions of participating banks when customers are dissatisfied.

“This has been a frustrating situation,” he says. “I will likely withdraw all my accounts from RBC and tell others about my experience in the hopes they may go elsewhere.”

Mortgage brokers help clients get the best rates from a variety of lenders. Many prefer to use smaller banks that post their best rates and don’t offer discounted rates.

“If you’re going for a fixed-rate mortgage, I’d suggest using a Big Five bank as a last resort,” says Calum Ross, a Toronto mortgage broker.

“As long as the big banks play the rate discount game, consumers will never have fair mortgage lending.”

Luckily, you can find more disclosure than before. Federally regulated banks must show customers how they calculate their mortgage prepayment charges – including rate discounts – using examples that can be easily understood.

However, the banks’ calculators include lots of numbers and technical terms – and don’t always provide a definitive answer.

“Note: This example is based on a formula for estimating the cost of prepaying a mortgage before the end of the term,” says RBC’s website.

“RBC Royal Bank uses a more complex calculation that will result in a lower charge than the estimate. You will have to contact us for your exact prepayment charge.”

How can you avoid getting hit with a mortgage prepayment charge that eats up your home equity when you sell?

Here are some tips:

  • Did you receive a rate discount? You may not see it shown prominently on your mortgage documents. Ask the bank how much the discount was and how it will be used in the calculation.
  • Have you used your prepayment privileges? The bank should deduct the prepayments you are allowed to make each year from the balance on which the penalty is calculated. Speak up if this is not done.
  • Do you need help figuring out the penalty or negotiating a lower one? Consult a mortgage broker with the Accredited Mortgage Professional (AMP) credential. Mortgage brokers can run the numbers at no cost and help you find a way to cut the cost.

Ellen Roseman writes about personal finance and consumer issues. You can reach her at eroseman@thestar.ca or www.ellenroseman.com