# Mortgage advice and rate advice needed!



## Steve19 (Jun 29, 2009)

Hey guys,

I'm looking at a house right now and am considering making an offer. I have not yet been pre-approved, however, I do not believe I will have any issues with this purchase. I will have a down payment of 65k, which is 25% of the home value (house is worth 265k), which means I will avoid the CMHC fees. I have a combined annual income of 140k. I plan on paying off the home in 7-8 years. 

Although I plan to pay off the house in 7-8 years, I would still like to have an amortization period of 25 years (just in case something happens and can't make payments). ING offers their "unmortgage" plan, which allows me to take out a 25 year amortization period and make an extra 25% lump sum payment annually and/or an extra 25% payment per month. Do other banks offer this type of flexible mortgage? I figured this method would be best I could accellerate my payments and pay off the house in 7-8 years. Any advice/comments about this? 

Also, ING currently offers a 5 year locked in rate at 3.79%. I figured I'd just stick with them because I don't want the hassles of having to negotiate with other big banks (RY, CIBC, TD), however, I just want to know if the process is easy as they state it is on their website? Anything I should know as a new home buyer with ING? Should I consider another bank?

Any advice about mortgages in general would be great.

Thank you.
-Steve


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## Potato (Apr 3, 2009)

Well, what's your risk tolerance? You're laying out some very conservative plans; if you are indeed very risk averse, then you're probably on the right track.

If you do have more risk tolerance, then two things:

First, a variable rate mortgage usually ends up being cheaper than a fixed rate, and it looks like you've got lots of leeway in your budget to stay on top of the mortgage if rates rise unexpectedly quickly. For the time that they are lower, you'll pay down the principal even faster.

Second, if you have lots more risk tolerance, you may want to examine whether you _want _to aggressively pay down the mortgage (and get a guaranteed return of ~4% there), or whether you want to start accumulating other assets (e.g., equities). Those usually carry more risk, but can offer better long-term returns, and diversifies you away from having all your assets in your house.


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## FrugalTrader (Oct 13, 2008)

Steve, are there any discounted open variable rate mortgages available these days? That's what we had, and took full advantage of the "open" option. If you do go fixed, it's not uncommon to have the option to double your payment + 20% prepayment (of original balance) per year.


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## Four Pillars (Apr 5, 2009)

I'm pretty sure every mortgage company has some sort of pre-payment option. I think 20% per year is common.

As for the pre-approval - you really should get one done before making an offer.


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## the-royal-mail (Dec 11, 2009)

Four Pillars said:


> As for the pre-approval - you really should get one done before making an offer.


I completely agree. Buyers who didn't have their financing pre-arranged wasted a LOT of my time when I was selling my condo. I had SEVERAL deals fall through because of buyers who offered first, financed later. Huge waste of my time.

As a buyer, pre-approval also benefits you because then you know exactly how much the bank will lend you. It might not be as much as you think.


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## Dana (Nov 17, 2009)

Prepayment options vary from institution to institution. Several offer 20% annual prepayment combined with 20% increase in payment.

The bank we are currently with offers 10% annual prepayment and up to 100% increase in payment. 

I have also dealt with FIs that offer 25 and 25. 

If prepayment options are really important to you , you may want to consider a variable open, as one commenter already suggested.

If you believe interest rates will go up and you want a fixed rate for piece of mind, you can also consider a split mortgage and focus on paying down one split at a time. I believe BNS and TD both offer splits. Other FIs probably do as well.

Either way, it's always a good idea to get pre-approved. You don't have to commit to a mortgage term at the pre-approval.


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## Oldroe (Sep 18, 2009)

Td lets you adjust your amortization anytime (or they did). And they will negotiate your mortgage rate.

Expect to get .5% off posted rates our match any other rates out there. The best I did was .93 off posted rates.

Really worked well with seasonal overtime just drop the amortization period down and let it roll.

Google mortgage rates and you will get a list of every rate available.


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## Jon_Snow (May 20, 2009)

Wow, a house for 265k... I can only dream of such things...


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## dogcom (May 23, 2009)

I was thinking the same thing. I would have to buy in the worst crime infested area far outside of Vancouver to purchase a home at 256k.


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## osc (Oct 17, 2009)

Is that a real house for $265k? Where is it? Where I live, one could barely buy a one bedroom apartment for that money.
You could apply with a mortgage broker, like canequity.com.


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## dougboswell (Oct 25, 2010)

*Mortgage rates*

Do not necessarily restrict yourself to quotes from the banks. Consider checking a mortgage agent out. They have access to many different lenders: banks. trust companies and schedule B and C banks. Ing and the others are offering you points off their posted rates. Mortgage agents, because of the volume of business they send a lender will offer discounted rates, up to 1-1 1/2 % off the bank's posted rate. A 5 year fixed mortgage with a 20% prepayment option could have been had for 3.59% this past week, even lower than Ing's rate. Just as you may shop around for the best car and home insurance rates to save money the same should be true when you are looking for a mortgage. Why pad the bank's bottom line with your hard earned money?


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## Steve19 (Jun 29, 2009)

Thanks for the replies everyone.

I ended up going with ING direct - 3.69% for a 5 year fixed term. I could have opted for the variable rate, however, I will sleep peacefully at night with this rate and still be able to pay off the home within 5-7 years as I initially planned with ING's 'unmortgage'. I'm aware I could probably save a few thousand dollars by going variable considering I will pay off the home relatively quickly, however, I felt this locked in rate was too low to pass up. The ING unmortgage is quite flexible and allows me to make upwards of 25%, or 67k, of additional payments per year at my own discretion. The major banks would not offer this flexibility. ING's service was great - the pre-approval went smoothly, the CSR was very helpful, and the final approval is in the works but has been easy to complete. I'd recommend them to anyone who wants a smooth transaction and no haggling!

-Steve


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## Steve19 (Jun 29, 2009)

osc said:


> Is that a real house for $265k? Where is it? Where I live, one could barely buy a one bedroom apartment for that money.
> You could apply with a mortgage broker, like canequity.com.


Yes, it is a real house. I live in a small community within the NWT. Housing prices up here went through the roof 2-3 years ago, but have been on the decline for the past 12-18 months (10-15%+).


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## Lephturn (Aug 31, 2009)

I've ended up using Firstline (owned by CIBC) in the past. Normally you only deal with them through a broker but now that I have done one I can deal with them directly.

http://www.firstline.com/


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