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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.

Weekend Reading

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Carnival of Personal Finance – Blogthority.com Relaunch Edition! Make More Money Blogging @ Four Pillars

Four Hour Work Week by Tim Ferriss Reviewed @ Lazy Man and Money

5 Tips to Make Your Home Seem Bigger @ The Sun’s Financial Diary

the 5 o’clock test @ Brip Blap

Quitting Your Job On Good Terms Can Pay Off @ Money Smart Life

Asset Allocation Update to Include More International Exposure @ My Dollar Plan

The Secret to Falling In Love With Your Home All Over Again @ Frugal Dad

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FrugalTrader About the author: FrugalTrader is the founder and editor of Million Dollar Journey (est. 2006). Through various financial strategies outlined on this site, he grew his net worth from $200,000 in 2006 to $1,000,000 by 2014. You can read more about him here.

{ 26 comments… add one }

  • used tires April 3, 2010, 9:54 am

    That’s a great offer! So glad to be a MJD reader. :)

    Till then,

    Jean

  • Jerry Hung April 3, 2010, 11:06 am

    just 2 things to add

    – is it ONE lender only, or could be various lenders?

    – does the property have to close within X days?

  • Matt April 3, 2010, 12:09 pm

    MDJ, In the interest of full disclosure, can you confirm if you receive any kickback from this mortgage broker?

    • FrugalTrader FrugalTrader April 3, 2010, 2:12 pm

      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).

  • Trev April 3, 2010, 2:05 pm

    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.

  • Sailor Guy April 3, 2010, 11:20 pm

    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.

  • Ed Rempel April 4, 2010, 3:39 pm

    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

  • jesse April 4, 2010, 3:43 pm

    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.

  • Ed Rempel April 4, 2010, 3:45 pm

    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

  • NorthernAlex April 4, 2010, 5:10 pm

    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?

  • Ed Rempel April 5, 2010, 12:48 am

    Hi Northern Alex,

    Thanks for your comments. I don’t understand your question, though. What rebate are you referring to?

    Ed

  • Ed Rempel April 5, 2010, 1:32 am

    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

  • Canadian Mortgage April 5, 2010, 2:31 am

    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

  • youngandthrifty April 5, 2010, 2:34 am

    Great offer, thanks.

    Good to note that this offer seems to only be valid for purchases, preapprovals are not applicable.

  • CiscoKid April 6, 2010, 3:17 am

    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!

  • Future Money-Bags April 6, 2010, 7:31 am

    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.

  • CiscoKid April 6, 2010, 10:07 am

    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

  • Ice cream on a stick April 6, 2010, 2:06 pm

    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

  • interested April 6, 2010, 2:14 pm

    @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?

  • FrugalTrader FrugalTrader April 6, 2010, 2:30 pm

    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.

  • Trevor April 6, 2010, 2:32 pm

    For those looking for a Shorter Term Variable Mortgage Astrum Financial has a 3 Year Variable at Prime – 90.

  • Ice cream on a stick April 6, 2010, 2:49 pm

    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

  • Ice cream on a stick April 6, 2010, 3:03 pm

    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?

  • Canadian Mortgage April 6, 2010, 3:25 pm

    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 :-)

  • Robert April 12, 2010, 2:39 am

    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?

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