# Mortage: TD vs B Lender (First National Financial)



## andrewrmunro (Mar 27, 2013)

For a closed 5 year fixed term mortgage of $260,000 on a $500,000 property in Regina SK:

*Should I go with TD or First National Financial?*

First National has offered a 2.69% rate, TD says their rate is 2.79% but may be able to match the 2.69%. So who should I go with, assuming the interest rates are the same for both.

*First Financial:*
Annual Lump Sum Prepayment = 15%
Annual Payment increase = 15%
Double up payments (On any regular payment date, you can “double-up” on your payment of principal and interest)
Prepayment penalty = The greater of 3 months interest or the IRD

*TD:*
Annual Lump Sum Prepayment = 15%
Annual Payment increase = 100%
Prepayment penalty = The greater of 3 months interest or the IRD


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## Just a Guy (Mar 27, 2012)

Depends on what the property is for (home or investment), how likely you are to make any of those changes (most people never prepay or increase their payments) and where you currently bank.

My bet is TD will match a .1% rate difference.


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## Butters (Apr 20, 2012)

Double up is great!!!!

I do my mortgage biweekly, and I can add either $100 extra, up to 100% of the biweekly payment ($476)

If you ever plan on adding a few hundred dollars here or there its a good option


On paper first national financial looks better ... however assuming the same rate, just do whatevers easier  whatever you're more comfortable


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## dougboswell (Oct 25, 2010)

1) TD saying they may be able to match FN's rate and actually doing it is another thing. I would want to see TD's rate on paper in a commitment first.
2) If there is any possibility that you might have to refinance during the mortgage term you need to be very clear on how the IRD is calculated in case it is used. Is the institution using their posted rate or their discounted rate to do the calculation? There could very well be a difference of $1000s between the 2 calculations.


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## SkyFall (Jun 19, 2012)

Double payments and 100% payment increase... aren't you talking about the same thing?

As you said, with TD you can:

- Annual lump sum of 15%
- Double the payments (to me same as 100% payment increase)
- Rapid payments

You can combine all 3 options


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## andrewrmunro (Mar 27, 2013)

I am 33 and my wife and I are planning on having a second child next year. We can probably pay off the mortgage in 7 years, but will get a 10 year amortization and use the prepayment options available just so that if needed we can reduce our payments if our expenses increase or my wife's income stays lower than planned for some reason.

I think the difference with "Double Up" payment and "100% payment increase" is double up can be done on any scheduled payment date, where as the TD offered 100% payment increase can only be requested once a year. 

So the Double Up appears more flexible but requires constant attention. 

I would appreciate your feedback on the below IRD example


Let’s assume TD's posted rate is 4.79% but I can get a 2.69%, 5 year fixed closed mortgage for $260,000 in July 2015. 
In July 2017 the balance will be $180,000 with 3 years left and I have to payoff the mortgage for some reason. 
At that time the mortgage rate for a 3 year fixed closed mortgage is 2%

Option 1 – TD Mortgage

Interest Rate = 2.69%
Rate Discount = 4.79% – 2.69% = 1.1% 
Interest Rate Difference = 2.69 + 1.1 – 2 = 1.79% [this is the part I am not clear on, is it '+' or '-' the 1.1%]

Interest Rate Differential:
180,000 (balance) x 1.79 (interest rate difference) x 3 (years remaining) = $9,666

Option 2 – First National Financial Mortgage

Interest Rate = 2.69%
Interest Rate Difference = 2.69 – 2 = 0.69%

Interest Rate Differential:
180,000 (balance) x 0.69 (interest rate difference) x 3 (years remaining) = $3,726


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## Oldroe (Sep 18, 2009)

I stuck with TD in my mortgage.

What you can do is move your amortization period. So sign a 25 mortgage and before the 1st payment move it to a 10year. If a little OT came a long you move 8 year. If your wife's income goes down after baby put it up to 20 year's. If job loss move to 25 year.

My contact at TD told me several times I was one of the few to use this.


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## Xoron (Jun 22, 2010)

Be careful with TD. Not all mortgages are the same:

http://www.canadianmortgagetrends.c...-takes-heat-for-its-collateral-mortgages.html


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## andrewrmunro (Mar 27, 2013)

If I sign a 25 year mortgage does that affect the annual 100% payment amount available? 

25 year = $590 bi-weekly accelerated 
10 year = $1,230 bi-weekly accelerated 

So does this limit the 100% payment increase amount to $1,180?


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## larry81 (Nov 22, 2010)

Go with TD and pay weekly-accelerated.


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## Emjay85 (Nov 9, 2014)

We have a mortgage with first national through a mortgage broker. Easy to deal with (probably because of the mortgage broker) and their online platform is fairly use friendly. Easy to add the extra payments and see your balance. However if you bank with TD it may be more convenient to go with TD as you can take care of all your accounts with their app and (I assume) make extra payments with a simple transfer whenever you feel like.


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## MRT (Apr 8, 2013)

keep in mind that VERY few borrowers make full use of the prepayment options...so, ask yourself how much the differences matter for you.

more importantly, read the link posted earlier re: collateral mortgages...


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## CrashTestSnoopy (Jan 21, 2015)

I used to put in extra payments and pay my mortgage weekly, until I realized the rate I have is basically free money. There is no point to pay it down at these rates unless you don't don't know what else to do with the money and afraid of spending it. It all comes down to self control and investing where it counts.


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## Letran (Apr 7, 2014)

Assuming the rate is the same stick with the main bank. Not everything has to do with the .01 difference in rate or pre-payment. (i'll be the last guy to tell you to prepay a 2.69 mortgage loan anyway)

Think. Convenience (bank hours, renewal, transfer equity, helocs), Relationship (branch manager, push comes to shove situations) , Multi-Products, (business banking, US banking etc)

1. What else in the near future would you need a bank for? (Second property mortgage, line of credit, investment trading account)
2. Do I establish with a relationship with this bank now? (Who am I dealing with)


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## PharmD (Dec 21, 2011)

I have actually had mortgages with both TD and First National (twice!) and have not really had problems with either. The biggest advantage, and the reason I would suggest going with First National, is that their IRD calculation is much more generous to you than TD will be. You may not think that you will need to worry about it, but you might be surprised where life will take you and $6000 is a decent bit of a difference between the two. Otherwise I really think it is a wash between these two. If you are planning on getting a home equity line of credit TD may be better as their mortgages are registering as collateral charges and if not First National might be preferred.

The biggest thing I would say is don't be concerned that First National is somehow not reputable or not easy to deal with or in any way second rate as that it not really the case.


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## Butters (Apr 20, 2012)

andrewrmunro said:


> If I sign a 25 year mortgage does that affect the annual 100% payment amount available?
> 
> 25 year = $590 bi-weekly accelerated
> 10 year = $1,230 bi-weekly accelerated
> ...


That is correct...
With more years, you pay more interest so it makes sense the payment is higher as you are paying less principle 


So it would be logically to go somewhere in the middle...


You can do a 15 year, and top up just $100-$300 dollars at a time, you don't have to necessarily double up


Dave Ramsey (the king of debt-free) suggests no one should go higher than 15 years.
https://www.daveramsey.com/home-buying-tips/get-finances-in-order/


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## andrewrmunro (Mar 27, 2013)

My wife and I finished our basement this summer. We live in a 1300 sq-ft bungalow, so adding the basement has really increased our living space which is much needed for our growing family, we have a 1 yr old and plan to have a second child next year.

We used our TFSA's to finance the basement, we now have $39,000 of available contribution room in our TFSA's.

I figure we can contribute about $2,000 biweekly to our mortgage or TFSA. So going with a 10 year amortization ($1,230 biweekly) will allow for $770 to be contributed to the TFSA biweekly. Once the TFSA is topped up we can increase the mortgage payments accordingly.


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## Oldroe (Sep 18, 2009)

The value is the ability to move your amortization around. So if life gets in the way you make your payment less. If you get exacter money you move the amortization period down.

When I worked we had seasonal overtime lasting 4 to 10 weeks. At TD I just phoned them up add a couple hundred, when the OT died back up. I never went in and put a lump down.

Understand that the sooner you get the money on your mortgage the harder it works for you.


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## Spudd (Oct 11, 2011)

15% lump sum ability on either is really a lot of money. I don't know how it works with FN, but with TD whenever we had spare money we just lumped it onto the mortgage, which was great. Had we ever actually maxed out the 15% lump then we could have increased the regular payments at that time, but it never happened. We found for us, it was very convenient being able to just apply money to the lump as it came available. To modify payments I think you need to go to the branch, but you can lump online. 

I understand some banks limit your lump to once per year so you may want to check if that's the case with FN.


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## andrewrmunro (Mar 27, 2013)

I am starting to lean towards First National and away from TD.

The IRD penalty is higher for TD because they take into account any rate discount that was provided. So even if they do give me a 2.69% rate, it will include a 2.05% rate discount (4.74 posted rate - 2.69 = 2.05%) that would increase the penalty by quite a lot. 

I do not plan to move in the next 5 years, but one never knows what life will bring so I prefer to keep my options open. 

I checked and FN allows for multiple lump sum payments throughout the year, as long as it is cumulatively below the 15% limit.

Let me know if you think I am missing something in my logic.


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## Xoron (Jun 22, 2010)

andrewrmunro said:


> Let me know if you think I am missing something in my logic.


As I posted earlier, TD mortgages aren't conventional mortgages. And when renewals come up, it makes it harder, and more expensive, to move to a new lender. I would out and out avoid TD for that reason alone.


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## Spudd (Oct 11, 2011)

FN sounds good then, given those factors. I don't see anything you're missing.


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## valuemortgage (Mar 4, 2015)

Xoron said:


> As I posted earlier, TD mortgages aren't conventional mortgages. And when renewals come up, it makes it harder, and more expensive, to move to a new lender. I would out and out avoid TD for that reason alone.


They are not harder to move out. The only difference is that you need to pay legal fees and a discharge fee, around $1000.00 in total. Depending on the mortgage amount and rate, it may make sense to get a collateral charge. All things equal, I would choose Fn in this case.. great lender, great policies, great service.


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## Xoron (Jun 22, 2010)

valuemortgage said:


> They are not harder to move out. The only difference is that you need to pay legal fees and a discharge fee, around $1000.00 in total.


I'd argue: This makes it harder than conventional mortgages. Plus, when the mortgage is fully paid, you would still have a lien on the house from the collateral mortgage, but not the conventional.


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## valuemortgage (Mar 4, 2015)

Xoron said:


> I'd argue: This makes it harder than conventional mortgages. Plus, when the mortgage is fully paid, you would still have a lien on the house from the collateral mortgage, but not the conventional.


My point is that it is not harder to move out, since you only need to pay an extra fee (and properly factor the cost in the calculations). About the fact the property will eventually be paid off, it makes no difference. You can leave a charge registered against your property for as long as you want, and it costs you nothing and causes no pain. If anything, it prevents someone from fraudulently trying to register a mortgage and steal equity from your house, as there is less room to register a new charge.


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