# Lesser known mortgage brokers/ lenders (Canwise/ Mortgagepal)



## 5Lgreenback (Mar 21, 2015)

So buying my first house in BC and after a couple questionable experiences with some local brokers I've done some looking around at other potential lenders.

I've noticed some brokers I found at Ratehub.ca. More specifically Canwise Financial and Mortgagepal are offering some good rates. Has anyone had experience with these specific brokers? I'm looking for a 5 year uninsured mortgage with hopefully up to 20% prepayment options per year. If their penalties for not completing the 5 year term aren't excessive, I was thinking of trying them out.

Any experiences or warnings I should know about?

Thanks


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## 5Lgreenback (Mar 21, 2015)

Nobody? Well if I'm the first to venture into the unknown Ill be sure to report back.


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## dougbos (Jun 4, 2012)

5Lgreenback said:


> So buying my first house in BC and after a couple questionable experiences with some local brokers I've done some looking around at other potential lenders.
> 
> I've noticed some brokers I found at Ratehub.ca. More specifically Canwise Financial and Mortgagepal are offering some good rates. Has anyone had experience with these specific brokers? I'm looking for a 5 year uninsured mortgage with hopefully up to 20% prepayment options per year. If their penalties for not completing the 5 year term aren't excessive, I was thinking of trying them out.
> 
> ...


In most cases the lowest rates that you are seeing are for CMHC insured mortgages. The two that you mentioned are not lenders but mortgage brokers. The government recently changed the rules and so rates for conventional mortgages (more than 20% down payment) are higher than insured mortgages. A lot of lenders offer 15% or 20% prepayments so that should not be a problem. You need to ask before signing for a mortgage how the penalty is calculated to break the mortgage during the term. Banks tend to have large penalties based on them using posted rates. Monoline lenders tend to have more reasonable penalties.


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## Mortgage u/w (Feb 6, 2014)

Don't fall for marketed rates. Seek a reputable mortgage broker and have him/her get you the best product for your needs. Don't be a 'rate shopper'. Lowest rate does not necessarily mean best product. My advise is to stick with a Monoline lender such as First National, Mcap, Merix. They offer great products, rates and benefits. First National is the largest in Canada. Penalty conditions with monolines are by far better than the banks - like 3/4 cheaper. If you stick with variable rates, the penalty is 3 mths which is standard across all lenders, including banks. My advice is to stick with a variable or a 1-2 year fixed term. I would stay away from 5 year fixed terms.


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## 5Lgreenback (Mar 21, 2015)

dougbos said:


> In most cases the lowest rates that you are seeing are for CMHC insured mortgages. The two that you mentioned are not lenders but mortgage brokers. The government recently changed the rules and so rates for conventional mortgages (more than 20% down payment) are higher than insured mortgages. A lot of lenders offer 15% or 20% prepayments so that should not be a problem. You need to ask before signing for a mortgage how the penalty is calculated to break the mortgage during the term. Banks tend to have large penalties based on them using posted rates. Monoline lenders tend to have more reasonable penalties.


Thanks, I had a feeling that rate might be the "insured" option, which seems awfully backwards to me. I'll pay higher interest rate because I've been saving for a downpayment for years and trying to make smart decisions with money. Sounds about right.


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## 5Lgreenback (Mar 21, 2015)

Mortgage u/w said:


> Don't fall for marketed rates. Seek a reputable mortgage broker and have him/her get you the best product for your needs. Don't be a 'rate shopper'. Lowest rate does not necessarily mean best product. My advise is to stick with a Monoline lender such as First National, Mcap, Merix. They offer great products, rates and benefits. First National is the largest in Canada. Penalty conditions with monolines are by far better than the banks - like 3/4 cheaper. If you stick with variable rates, the penalty is 3 mths which is standard across all lenders, including banks. My advice is to stick with a variable or a 1-2 year fixed term. I would stay away from 5 year fixed terms.


Thanks for the advice. I imagine you feel interest rates aren't going to rise very much in the next few years?


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## Mortgage u/w (Feb 6, 2014)

5Lgreenback said:


> Thanks for the advice. I imagine you feel interest rates aren't going to rise very much in the next few years?


They probably will - no one has a crystal ball. But the variable has almost always out performed its fixed counterpart throughout history. If there is a hike, you'll get hit sooner or later. You cannot time it. Lower term and variable rates have always been lower than the longer term rates. So even if you weather one or several hikes in a long term, you get to benefit from the discount on the short term. It'll take strong hikes to offset your savings.

And to answer your question about conventional loans being more expensive than insured: basically, the government wants to limit their exposure which is why they no longer insure refinances. Since lenders cannot have their conventional loans insured, they cannot sell the debt on the open market as easily, making it more expensive to raise funds to fund it. A consumer can distinguish between an insured and conventional loan - but for the lender, they would want them all to be insured. The loans which are conventional to you are bulk insured by the lender behind the scenes. Now that insuring has been limited, the conventional loans remain conventional and cannot be sold through securitized channels.


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## 5Lgreenback (Mar 21, 2015)

Cheers thanks Mortgagee u/w good to know.


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