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Variable Rate (Prime-0.60%) Mortgage for MDJ Readers and Links
The last time Robert of My Virtual Mortgage Broker (blogger behind Canadian Mortgage Trends) contacted me, they offered a ground breaking variable rate mortgage exclusively to Million Dollar Journey readers. At the time, they offered a discounted variable rate when no others would.
For the readers who are in the market for a mortgage, My Virtual Mortgage Broker is back with another great offer. This time around they are offering Canada’s lowest rate of Prime – 0.60% exclusively for MDJ readers. With prime currently at 2.25%, it equates to a mortgage rate of 1.65%. I never thought that steeply discounted variable rates would come back so quickly!
Here are more details:
Overview:
- Canada’s lowest variable rate (as far as we know!)
- From the country’s most reputable lenders
- 25% lump-sum pre-payment option (best in industry)
- Optionally increase payments up to 25%
- Lock into a fully discounted fixed rate at any time without cost
- Up to 95% loan-to-value (LTV) on purchases; 90% on refinances
- Available readvanceable line of credit (80% LTV max.) for 0.10% more
This is a limited time offer which expires April 14, 2010. If you are in the market for a mortgage, you can read about the details here.
Disclaimer: Canadian Mortgage Trends/My Virtual Mortgage Broker has purchased banner space on MDJ to promote this offer.
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The Secret to Falling In Love With Your Home All Over Again @ Frugal Dad
26 Comments, Comment or Ping
1. used tires
That’s a great offer! So glad to be a MJD reader. :)
Till then,
Jean
April 3rd, 2010 at 9:54 am
2. Jerry Hung
just 2 things to add
- is it ONE lender only, or could be various lenders?
- does the property have to close within X days?
April 3rd, 2010 at 11:06 am
3. FrugalTrader
Jerry, best to email Rob @ my virtual mortgage broker.
April 3rd, 2010 at 11:47 am
4. Matt
MDJ, In the interest of full disclosure, can you confirm if you receive any kickback from this mortgage broker?
April 3rd, 2010 at 12:09 pm
5. Trev
I wouldn’t take this deal as attractive as it is. Once the interest rates rise, which is soon, you’re screwed with a variable interest rate.
April 3rd, 2010 at 2:05 pm
6. FrugalTrader
Matt, along with Canadian Mortgage Trends being a blogger colleague, they have purchased banner space (on the top right hand corner) to promote the exclusive offer for MDJ readers.
Note however that they have not paid MDJ for the post. (ie. not a sponsored post).
April 3rd, 2010 at 2:12 pm
7. Sailor Guy
Trev it depends how much interest rates rise.
In the last 20 years prime rate hasn’t gone up that much during rate hike cycles. On average it has probably risen 3% or so, and then prime has come right back down. A fixed rate would have cost you more a large majority of the time.
April 3rd, 2010 at 11:20 pm
8. Ed Rempel
Hi Trev,
I doubt you will be screwed by taking a variable rate. Where you get screwed is by taking a 5-year fixed mortgage. Variable rates have beaten long term fixed rates very consistently – 89% of the time since 1950, according to Moshe Milevsky. Even in 1980-85 when rates leaped 9%, having a variable mortgage would have saved money over a 5-year fixed.
Ed
April 4th, 2010 at 3:39 pm
9. jesse
So I need to close a purchase by April 14 or can I merely get pre-approved?
It’s so nice to have such a generous and exclusive deal being presented. I’ll have to compare to the other exclusive deals I keep hearing about from others.
April 4th, 2010 at 3:43 pm
10. Ed Rempel
Hi FT,
That’s a great rate, but personally I would not take it. That will be on a 5-year closed mortgage, and we think you will end up regretting getting that small of a discount for 5 years.
Rates are normalizing quickly, as the economy recovers. We were getting prime -.85% (or better) for years before this crisis, so we are expecting that rate to be back soon.
We are recommending to stick with a 1-year fixed or float with an open mortgage (perhaps a secured credit line at prime +.5%) and wait until you can get a discount from prime of at least .8%.
Ed
April 4th, 2010 at 3:45 pm
11. NorthernAlex
Ed, I always appreciate your posts here. Today I have a question for you:
What is a -0.85% worth if the prime goes up higher than the rebate you can get?
April 4th, 2010 at 5:10 pm
12. Ed Rempel
Hi Northern Alex,
Thanks for your comments. I don’t understand your question, though. What rebate are you referring to?
Ed
April 5th, 2010 at 12:48 am
13. Ed Rempel
Hi Northern Alex,
I find that long term fixed mortgages sometimes seem like they would be worth it until you do the math. If the rebate you are referring to is part of an offer with a 5-year fixed, if you let me know the details, we can do the math.
In general, though, I think that rates will rise, but not by the huge amount some people are thinking.
Ed
April 5th, 2010 at 1:32 am
14. Canadian Mortgage
Hope everyone had a terrific Easter weekend.
A few thoughts in case they help…
Consider the following scenarios. Both assume a 25 year amortization and a 1.5% increase in prime over the next year:
Scenario 1: A Prime – .60% closed variable beats an open variable at prime + .50% for one year, and prime – .85% thereafter
Scenario 2: A one-year fixed at 2.49% (for example), followed by prime – .85% in years 2-5, beats prime – .60%.
The question with Scenario 2 is whether prime – .85% will be available at renewal time. It is definitely possible but by no means guaranteed.
One could choose a 1-year fixed today and find that discounts are better, the same, or worse at renewal time.
While we did see prime – .85% and better a few years ago, these rates were not “common” over extended period of time. Those promotions came and went as lending spreads fluctuated.
The current spread over bankers’ acceptance [BA] yields (i.e. the “cost” of variable rate money) is about one point on the “prime – .60%” promotion. That spread is already below average.
Going forward no one knows if we’ll see:
* Prime – BA spread compression (which would temper further variable-rate discounts)
* Banks “giving back” the 1/4% they withheld when the Bank of Canada cut its overnight rate by 1/2 percentage points in October 2008
* Further economic shocks, which could drive up BA yields and impact variable-rate discounts
Long story short: Predicting rates a year out is somewhat of a crapshoot. In late 2008 we saw variables sell for prime + 1.50%. Almost anything is possible.
Cheers,
Rob
April 5th, 2010 at 2:31 am
15. youngandthrifty
Great offer, thanks.
Good to note that this offer seems to only be valid for purchases, preapprovals are not applicable.
April 5th, 2010 at 2:34 am
16. CiscoKid
jesse, I suggest you go to the website offering the deal, I was also interested, but this won’t work for me, they don’t do pre-approvals & 2ndly they don’t give mortgages to some provinces such as QC, SK, NS…
Good Luck!
April 6th, 2010 at 3:17 am
17. Future Money-Bags
This is a good deal, as the best I have been able to find from brokers is prime-0.4%. But I am hearing you can’t get pre-approved, and that it expires in 10 or so days.
These new RE rules came at a bad time for me,but maybe it will be good in the long run. They either force you to buy a place ASAP, or to wait until you are in a better position.
April 6th, 2010 at 7:31 am
18. CiscoKid
Future Money-Bags, if you can’t find better than prime -0.4% you’d better sign up with ING, their variable is listed @ 1.75% which is -0.5%
Good luck
April 6th, 2010 at 10:07 am
19. Ice cream on a stick
I spoke with one of their associates, and realized that the statement “Available readvanceable line of credit (80% LTV max.) for 0.10% more” is not exactly correct. I read it as “prime minus 0.6% plus 0.1%”. That is not true. They do not offer secured lines of credit below prime. They promised to correct the wording in their ad with MDJ
April 6th, 2010 at 2:06 pm
20. interested
@icecream
Does that mean:
“Available readvanceable line of credit (80% LTV max.) for 0.10% more” is not exactly correct. I read it as “prime minus 0.6% plus 0.1%”. That is not true. They do not offer secured lines of credit below prime.”
LOC’s are available at prime?
April 6th, 2010 at 2:14 pm
21. FrugalTrader
ice cream, the way I interpreted was that the installment portion of the readvanceable mortgage would be prime – 0.50%. I don’t think anyone offers a HELOC for under prime. In fact, I’d be surprised to see any new heloc’s AT prime.
April 6th, 2010 at 2:30 pm
22. Trevor
For those looking for a Shorter Term Variable Mortgage Astrum Financial has a 3 Year Variable at Prime – 90.
April 6th, 2010 at 2:32 pm
23. Ice cream on a stick
I was explained that the best rate for HELOC will be 2.85%, and it cannot be a pure HELOC. It should be a combination of a mortgage and a HELOC, i.e. 2-part reabvanceable mortgage (certain portion MUST be as a mortgage, not 100% HELOC). The original ad sounded to me like it was less than that
April 6th, 2010 at 2:49 pm
24. Ice cream on a stick
I have additional info now and I stand corrected. It appears that they have two lenders. With one lender you can have a mortgage only (prime – 0.6 = 1.65%); with another – the mortgage (1.9%) and/or the HELOC (2.85%). The statement “Available readvanceable line of credit for 0.10% more” is not clear to me though. 0.10% more than what?
April 6th, 2010 at 3:03 pm
25. Canadian Mortgage
Hi Ice cream on a stick,
I must admit, your name is making me hungry.
Thanks for the note because it helped clarify some wording. The 0.10% extra applies to the variable-rate mortgage portion of a readvanceable mortgage. The readvanceable feature is purely optional.
As you probably know, a readvanceable mortgage has a “locked-in” portion and a line of credit (LOC) portion. The locked in portion in this case would consist of a variable-rate mortgage at prime – 0.50%. The LOC is at prime + 0.60% to prime + 1% depending on lender and LOC amount. (All based on approved credit of course…)
Cheers for now,
Rob :-)
April 6th, 2010 at 3:25 pm
26. Robert
Am I right that Astrum’s P-90 deal is for purchases only, and only if you use their affiliated real estate agents?
What is the nature of the Realtor’s and Astrum’s relationship? Is there some kind of kickback arrangement between Astrum and the Realtors it uses?
April 12th, 2010 at 2:39 am
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