The  following  ten  secrets  will  reveal  some  nasty  truths  about  banks  and  mortgages.    Our  intent  is  to  help  educate  you  so  that  you  have  the  power  to  make  knowledgeable  decisions  about  your  mortgage.      

Your  home  and  how  you  finance   it   is   likely  one  of   the  biggest  financial  decisions  you  will  make-­‐so  knowledge  is  power!      

Unlike  a  bank,  Mortgage  ConnecCon  is  an  independent  advisor  that  has  your  interests  in  mind.    For  over  20  years  our  business  has  been  building  custom   tailored  mortgage   strategies   that   suit   a   client’s   needs,   not   the  banks.        

Our   saCsfied   customers   and   their   referrals   tell   us   that   our   service   is  offering  a  value  that  they  cannot  find  elsewhere.    Our  goal   is  to  do  the  same  for  you.        

1.   The  Bank  is  only  compeCCve  when  they  have  to  be  

2.   The  mortgage  is  the  “IN”  the  bank  looks  for  to  sell  other  products  

3.   A  Mortgage  Specialist  is  not  a  Broker  

4.   A  Home  Equity  Line  of  Credit  is  a  mortgage  

5.   Banks  rarely  waive  penalCes  

6.   What  IRD  is  and  how  it  is  calculated  

7.   That  compounding  ma]ers  and  closed  doesn’t  mean  fixed  

8.   What  a  Collateral  Loan  is  

9.   Property  tax  collecCon  benefits  the  bank  

10.   Lock-­‐in  rates  are  not  guaranteed  

This  is  the  bank  model  and  employees  of  the  bank  are  trained  to  sell  products  at  the  greatest  profit  for  the  bank.    Discounted  prices  may  be  offered,  but  only  if  the  bank  needs  to  do  this  to  maintain  business.      

Mortgage  ConnecCon  has  a  completely  different  model.    We  are  paid  by  the  lender  based  on  the  loan  size,  not  the  price  of  the  product  sold.    Furthermore,  we  are  not  employed  by  the  lender.        

As   a   result,   you   get   unbiased   advice   on   product   offerings   and   the   fully  discounted   price   is   provided   without   you   having   to   negoCate   as   Mortgage  ConnecCon  has  already  done  this  on  your  behalf.    

 The  Bank  is  only  compeCCve  when  they  have  to  be  

The   mortgage   is   the   best   chance   for   a   bank   employee   to   cross   sell  products  to  consumers.    So,  even  if  you  get  a  good  product  and  price  on  the  mortgage,  you  will  be  hit  with  other  products  that  likely  do  not  meet  your  needs  and  are  overpriced.  

Every   bank   employee   has   a  mandate   to   sell   between   2-­‐3   products   per  customer.     Acer   the   mortgage   you   are   likely   to   be   pushed   to   buy  insurance,  and  open  addiConal  bank  accounts  and  borrowing  vehicles.    

In  most  cases  the  bank  offered  products  are  not  the  best  in  the  market.      

The  mortgage  is  the  “IN”  the  bank  looks  for  to  sell  other  products    

All   the   banks   have   road   warriors-­‐mortgage   specialists   that   are   ocen  confused  as  brokers.     If  you  are  dealing  with  someone  that  has  a  bank  name  on   their   business   card,   you  are  dealing  with   an  employee  of   the  bank.      

You   are   only   being   offered   one   product   line   and   your   future   lender   is  employing   the   person   helping   you   make   very   important   financial  decisions.      

Mortgage  ConnecCon   is   truly   independent  without  any  hidden  agenda.    Our  business  is  built  on  saCsfied  repeat  clients  and  their  referrals.  

A  Mortgage  Specialist  is  not  a  Broker  

Banks   will   sell   the   benefits   of   a   line   of   credit   as   a   tool   to   pay   off   a  mortgage.    In  reality  a  line  of  credit  is  a  mortgage.    It  is  an  interest  only  loan  secured  against  a  fixed  asset  (your  home),  that  can  be  re-­‐advanced  as  principal  is  paid  back.      

Banks  sell  that  it  is  less  expensive  because  the  minimum  payment  looks  lower  (but  it  is  just  interest).      A  line  of  credit  is  a  huge  money  maker  for  banks,  because  ocen  consumers  only  pay  the  minimum  and  never  a]ack  the  principal.    

If  you  have  a  home  equity  line  of  credit  with  monies  drawn  on  it,  you  are  not  in  the  best  priced  borrowing  vehicle  and  you  are  not  mortgage  free!        

A  Home  Equity  Line  of  Credit  is  a  Mortgage  

When  a  bank   says   “they  will   cover   the  penalty   cost”   they  normally   do  one  of  two  things.    Either  the  penalty  is  rolled  into  the  loan  amount,  or  it  is  applied  to  the  interest  rate  offered.      

Banks  are  some  of  the  most  profitable  companies  in  Canada  and  they  do  not  give  money  away!  

Banks  rarely  waive  penalCes  

Interest   Rate   DifferenCal   (IRD)   is   the   penalty   that  may   be   charged   if   a  fixed  rate  mortgage  is  broken  prior  to  maturity.    In  theory  it  is  the  cost  for  the   lender  to  re-­‐invest  the  monies.    So,   it  will  apply   if  current  rates  are  lower  than  the  contract  rate  on  a  mortgage  being  discharged.    

Unfortunately,   most   banks   are   not   fair   in   the   rates   they   use   for   the  comparison  and  the  result  is  extremely  high  penalCes  that  do  not  reflect  the  actual  cost  to  re-­‐invest.      

Mortgage  ConnecCon  makes   sure   it   suggests   lenders   that   calculate   IRD  fairly.     If   you  do  not  know   the   terms  of  what  you  are   signing  up   for,   a  good  rate  upfront  may  cost  thousands  later.  

What  IRD  is  and  how  it  is  calculated  

At  face  value  the  price  on  a  rate  might  look  really  good  unCl  you  realize  how  ocen  the  interest  is  compounded.      

Standard   mortgages   are   compounded   semi-­‐annually,   but   many   bank  offered  variable  rate  mortgages  are  compounded  monthly  or  more.      

What  does  this  mean?      

The  more  ocen   interest   is  compounded  the  higher   the  effecCve  rate  of  interest.      Also,   banks  ocen  adverCse   really   low   closed   rates,   but   that  doesn’t  mean  they  are  fixed.    Bo]om  line-­‐the  rate  may  not  be  as  good  as  adverCsed.  

That  compounding  ma]ers  and  closed  doesn’t  mean  fixed  

Many  banks  are  now  registering  mortgages  as  collateral  loans.    The  idea  is   they   will   register   a   higher   amount   on   Ctle   than   what   you   are  borrowing  so  that  you  can  borrow  more  down  the  road  without  having  to  re-­‐register  (assuming  the  value  on  the  home  is  there).      

However,  what  they  do  not  tell  you  is  that  by  doing  this  it  becomes  more  expensive  to  move  your  mortgage  to  another  lender.    Mortgages  can  be  transferred  without  a  new  legal  expense,  but  if  registered  as  a  collateral  loan  this  is  not  the  case.      

Now  you  have  to  pay  a  lawyer  for  new  registraCon  come  renewal  if  you  want   a   product   from   another   lender.     This   is   another   fence   the   bank  wants  to  put  around  you!  

What  a  Collateral  Loan  is  

Property   taxes   are   due   annually   and   do   not   need   to   be   collected  with  your  mortgage  payment.    Banks   like   to  collect   taxes   to  gain   interest  on  the  monies  unCl  they  have  to  pay  the  appropriate  municipality.    

Do  yourself  a  favour  and  pay  the  city  directly.  

Property  tax  collecCon  benefits  the  bank  

In  such  a   low  interest  rate  environment  many  consumers  are  going  into  variable  rate  mortgages,  but  what  if  you  what  to  convert  to  a  fixed  down  the  road?  

Most  banks  do  not  guarantee  what  sort  of  rates  will  be  offered.      

Whenever  working  with   a   client   that   is   taking   a   variable   rate   product,  Mortgage  ConnecCon  makes  sure  the  lender  they  choose  will  guarantee  a  fully  discounted  rate  on  lock-­‐in.      

You  never  want  to  have  to  negoCate  a  price  once  the  bank  already  has  you  as  a  client,  because  you  have  no  power  in  the  negoCaCon.  

Lock-­‐in  rates  are  not  guaranteed  

Please   feel   free   to   pass   this   booklet   on   and   as   an   added   bonus   we  encourage   you   to   schedule   a   one   hour   complimentary   mortgage  consulta8on  ($200  value).      

This   is   great   for   experienced   mortgage   holders,   or   poten8al   first   8me  buyers.     To   book   your   consulta8on   please   call   403.229.3390   or   email  admin@mortgageconnec8on.ca.