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发表于 2014-5-27 07:27
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Investors Group roiled the Canadian mortgage market this week when it announced it was cutting its 36-month variable mortgage rate to 1.99 percent, the lowest rate offered to borrowers in more than two years. The move stunned many economists and prompted talk of a price war among lenders this summer. With all the buzz surrounding this mortgage product, we decided to dig a little deeper to make sure borrowers don’t get any surprises if they decide to sign up with Investors Group.
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Great Rate, But Some Restrictions Apply
! z9 O( ^" D; bEpic, historic, bargain basement – whatever qualifier you want to use, the Investors Group three year variable rate mortgage at 1.99% is unquestionably a great deal. In fact, it’s currently 25 basis points below the next closest competitor!4 B1 a' G6 I: P. P! G& a* }. S+ {
A closer look at this mortgage promotion shows that it’s not for everyone, though – there are definitely some odd-ball restrictions that should flash caution signs for many borrowers.
, c2 u( F: s! b5 w: f2 dHere are three that really stand out:
, s$ T! T8 l+ a(1) No Early Breakage. With this mortgage, you are truly locked in – Investors Group only releases you from the loan if you sell your house, and even then, you’ll still have to pay a penalty. Forget about refinancing or switching lenders.$ M' ~7 e' d8 f6 q/ g
(2) A Lame Lock-In Option. IG says borrowers can lock in a fixed rate at any time – but they will only commit to converting borrowers to a “posted” fixed rate. Guess what: IG’s posted fixed rates are quite high and not even close to being market competitive. Most lenders offer discounted rates if you convert from variable to fixed. That pledge is conspicuously absent with this Investors Group promotion.% L* K; F u! z3 T3 c. s
(3) The Promotion is Only Available Through an IG Mortgage Specialist. This rate only seems to be available to clients of IG who go through IG mortgage people. It’s not offered through mortgage brokerages, so Canadians won’t have the same kind of access to the rate as they would if it had come from a conventional lender. We’ve also heard that borrowers who do take the mortgage will be exposed to aggressive cross-selling. IG is best known for selling mutual funds and other investment products, so borrowers should be prepared to hear all about them if they decide to take the loan.: }' r9 z0 J& O+ M8 H S) W
Pleasant Surprises, Too- j# u/ f" R% W3 S7 {7 H
While these restrictions will give many buy borrowers pause, some of the details of the Investors Group 1.99 percent variable rate mortgage are actually quite favourable. These include:
1 t0 b$ s0 U! g" ^6 u(1) Decent Prepayment Options. IG allows you to put down a 15 percent lump-sum annually, as well as a 15 percent annual payment increase and a double-up payment.
& C" G# ~9 `; O. T6 q8 z9 z/ d4 P(2) A Sizable Monthly Payment Cushion. Even though borrowers get the 1.99 percent variable rate, the payments they make will be the same as if the loan was offered at a fixed rate of 3.75 percent. That means that if the prime rate does rise during the loan term, borrowers won’t get immediately swamped by increased payments. Of course, the flipside is that borrowers who want lower monthly payments for cash-flow purposes will be disappointed with this mortgage.
+ {! W3 ?" s/ u! d& x' e( S: `(3) It’s Portable. Yes, you CAN take this mortgage and port it to another property if you sell your existing home. Several hastily put-together stories in the press said the IG mortgage isn’t portable, when in fact it is.
) J( C, Z+ e+ c/ E% Q t2 a- ?The Bottom Line$ ^$ O2 E. F9 p# T8 |9 P1 g
This new Investors Group promotion is great for borrowers who are absolutely certain they won’t need to touch their mortgage for three years and who want the all-out lowest rate on the market. It’s no so great for those who may want to change up their mortgage or who are nervous about rates rising in the future. This is the kind of mortgage where you set it and forget it – at least, that is, until renewal time.2 t) M8 b9 I# p9 u& ?5 s- K! A
5 x, t' W& C" @( Y) D- K) }9 \The Investors Group penalty on its new variable is not the norm
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w8 D0 H A% y8 B: i$ D“What happens if all of the sudden prime starts going up or [long-term] rates start going up, you want to be able to convert,” said Ms. Roberts, noting most contracts don’t specify the rate at which can you convert a variable deal.
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# J8 v7 h# L; f4 b- I* pEssentially, you can find yourself at the mercy of your financial institution if you want to convert to a fixed rate.+ D& R2 @ |& Y+ U7 g8 u: y- t* V# o
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“The big banks start at the posted rate and work their way down on the discount,” says the broker. “Your only option [if you don't like the rate] is to leave and you have a penalty.”- N: G6 G, K5 I6 p1 ]5 D- i
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Ms. Roberts said the ability to port a mortgage to a new home can also save you money on break fees. For example, if you sell your house and have say a $250,000 mortgage on it, you can take that balance and apply it to your new loan at your existing rate for the rest of your old term. Any extra balance would become part of a new loan.
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6 H- @4 Z! L/ u+ F总算找到个完美的解释了 |
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