Mortgage Help

[wimbly11]

Hi Everyone

We are currently looking at houses and are finding ourselves getting more and more confused over our options.

We initially went to a mortgage broker to get pre-approved. Now I have a friend tell me that there are "hidden" fees associated with using a broker and that they will tell us that the service is free to us, but that it actually isn't. Anyone have any experience with this?

Also, what is the best option? Fixed rates or a variable mortgage? BF has never gone through this process before and when I did before, my ex took care of these details so I'm really unsure.

Any help or advice would be greatly appreciated.

Thanks

[harbie]

You would probably get more info/advice in the personal/finance section. I know MortageQueen has all the info

[xlxo]

Yes brokers has fees. Then again, if you want to save the legwork in visiting each bank/credit union to haggle. Let the broker do the research. Make sure you know what the fees are first.

In addition to the broker, it may be worth visiting your current bank/credit union to see what they have to offer you compared to the broker's recommendations. As an incentive, banks will want you to transfer your services to them (savings, chequing accounts, credit cards?).... however going through the hassles of transfer may or may not be worth it. Do your research ahead of time.

Talk to friends and families to what broker they used and recommend.

Some say when rates are below 6%... variable is preferred. However make sure you can afford the payments if the payments suddenly SPIKE. One strategy is the sign up for a variable, but then put aside money in a separate contingency account for that spike. If no spike comes after each 6 or 12 months. Pay down the mortage or slam it into an RRSP. If you want to go fixed because interest rates go high (do people remember the 20% interest rates of the 80's?) you can always renegotiate for a fixed mortgage.

In choosing for a home.... some look for mortgage helpers

• can you put in a suite? How many?
• does the suite have a separate entrance?
• is there enough parking for additional suites?
• do by-laws allow for legal suites? Removal later can be expensive.
• some cities are now allowing for "laneway housing" where you can have suites above the garage.
• keep it safe and legal..... grow-ops don't normally count as a mortgage helper

[wimbly11]

My question then is why does our broker tell us there is no fee. That he gets paid from the bank?


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[wimbly11]

Hi Everyone



We are currently looking at houses and are finding ourselves getting more and more confused over our options.



We initially went to a mortgage broker to get pre-approved. Now I have a friend tell me that there are "hidden"fees associated with using a broker and that they will tell us that the service is free to us, but that it actually isn't. Anyone have any experience with this?



Also, what is the best option? Fixed rates or a variable mortgage? BF has never gone through this process before and when I did before, my ex took care of these details so I'm really unsure.



Any help or advice would be greatly appreciated.



Thanks


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[wimbly11]

Reposting in finance section


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[Zonny]

We have a variable rate mortgage, have for quite awhile. We went with a fixed rate the first time (this was our first home, that was more comfortable for DH), but went variable for two renewals after that. To my knowledge, this was the way to go in the years we've gone that way. Variable was almost always lower than fixed for us. The payment does not fluctuate, we have it set at an amount that can absorb some increases. When the rate is lower, more goes toward the principal.

We've gone through a mortgage broker from the start; my understanding is that any fees are paid by the banks. If there was a fee involved over the past ten years, we certainly didn't see it. For each renewal, we used a broker each time (the same one). Even if there were a fee, I think that the lower rate we got would be worth it (depending on how much the fee was of course). We would never have found the mortgage provider we ended up with the first two times, and our 'home' bank (RBC) has never been willing to touch the rate we got from these other lenders.

As someone else mentioned, MortgageQueen will be able to tell you more!

[tjthemanto]

Check ratehub.ca for comparision shopping , you can get a 5 year variable rate for as low as 2.35 % , if you want to stick with the Big banks Scotia has a variable rate for as low as 2.60 %

http://www.ratehub.ca/best-mortgage-...-year/variable

Go with these rates to your broker or bank and see if they can match it or come close to it , depending on your credit history , downpayment , salary etc.

If the broker is honest , he won't charge you anything & will get his commission/fee from the bank and will work without any conflict of interest and will shop around for you & try to get you the best deal possible .

They often have better negotiating skills than you & more clout than you & more connections as they bring repeat business for banks , so they might be able to get you a better deal than you can secure yourself

Mortgagequeen might be able to help you out on that

I would go with a variable rate right now , the way the economy is going , I don't see rates increasing anytime soon ..and if you feel the rates are creeping up , you can always lock into a fixed rate at anytime ..depending on the prevailing fixed rate at that time.

Also look at the prepayment options available ( without penalty ) , so that you can pay it off faster if the need arises

[MortgageQueen]

Hi Wimbly,

For a regular mortgage that doesn't have issues attached to it (like really bad credit) a broker's services are indeed free. Furthermore you will at some point sign a "disclosure" statement that will show ALL of your expenses coming out of YOUR pocket. The Lender does indeed pay the broker. There are exceptions, but your broker can (and should have?) explain these. Highly unlikely they apply to you.

If you go through this finance section history you will find TONS of info on mortgages.

As much as I highly respect tjthemanto's opinion, I would refrain from over-doing the rate shopping. Those super low rates DO have stated and hidden fees. Big Banks are the worst for expensive prepayment penalty and, not to sound like a broken record to everyone, but aprox 60% of Canadian mortgage holders end up breaking their mortgage before the maturity date. BIG HIT if you have the wrong mortgage.
Whether you get variable or fixed is something your broker should be helping you with. I like to get to know my clients and both their current and future goals and circumstances to help them determine their best choice.

[FLA]

RBC offers very good rates and they have branch everywhere. You can talk to an RBC mortgage specialist to check the best available rate.

[Zonny]

RBC offers very good rates and they have branch everywhere. You can talk to an RBC mortgage specialist to check the best available rate.

For me, a branch being nearby was the least important factor. I've never had to enter a bank to do anything about my mortgage. The lawyer's office being handy was a more important factor, I spent more time in there!

[tjthemanto]

Be careful with the Mortgage Insurance Product they try to sell to you , it might not be be for you ..Life Insurance or Term insurance is much better.

http://www.thestar.com/life/homes/20...fe_policy.html

They also try to get you into LOC or HELOC sometimes , if you don't need it , don't go for it .

[FLA]

For me, a branch being nearby was the least important factor. I've never had to enter a bank to do anything about my mortgage. The lawyer's office being handy was a more important factor, I spent more time in there!

Yeah, rate is more important than that for sure.

[wimbly11]

I agree with the comments about rate. Our broker is giving us a much better rate than what we've been able to find ourselves. And he has told us that as line as a LOC fits into our debt ratio than we can do a down payment that way.

[Freestuffrighthere]

Be careful with the Mortgage Insurance Product they try to sell to you , it might not be be for you ..Life Insurance or Term insurance is much better.

http://www.thestar.com/life/homes/20...fe_policy.html

They also try to get you into LOC or HELOC sometimes , if you don't need it , don't go for it .

That is true