Future Fit and You are The Boss Mortgages is very innovative mortgage product offered by VanCity. “Canadian credit unions are become exceptionally creative to attract lion’s share of Canadian mortgages” says Navtaj Chandhoke, founder, Professional Real Estate Investors Group (PREIG) Canada. “They intend to understand their needs much better than larger lending institutions. Their mortgage product has lot more features and flexibility. They are also competing among each other”
Future Fit and You are The Boss Mortgages
Future Fit and You are The Boss Mortgages, Financing your home purchase raises so many choices: down payments, terms, interest rates. But it’s important to structure your mortgage so that it works for you now and in the future. Future Fit mortgage feature does just that. It gives you the flexibility to meet your financial goals and lifestyle as they change and evolve.
Features and benefits
* diversify your interest-rate risk by splitting your mortgage to include Home prime variable and fixed-rate components
* manage your interest-rate risk by having portions of your mortgage mature at different times
* switch your Home prime variable rate portion to a fixed rate during the term of your mortgage*
* use part of your mortgage as a line of credit to fund home renovations, debt consolidation or an investment property
* reduce your mortgage and interest cost with 20/20 lump-sum payments:
Or prepay up to 20% of your original mortgage amount once a year without penalty Increase your payments up to 20% once a year without penalty
* enjoy other standard Van city mortgage features: flexible payment options, portability and assumability. And great rates.
Van city has 400,000 members with $14.5 billion of their assets, making them Canada’s largest Credit Union.
Future Fit and You are The Boss Mortgages is full of flexible features designed to put you in charge. Because saying hello to a mortgage shouldn’t mean saying goodbye to life as you know it.
Management at Coast isn’t content with being the second largest credit union in Canada. They want to be the first. So, the BC-based company has been challenging big banks head on.
Its strategy has primarily been two-pronged:
a) Advertise some of the most competitive mortgage rates in BC; and,
b) Develop innovative products.
The you’re the Boss mortgage comes with:
* 30% lump-sum pre-payment privileges
The most of any closed mortgage in Canada (Here’s how Coasts pre-payments compare to the banks.)
* A Save and Take feature
This lets people re-borrow the money they’ve used to pre-pay their mortgage (subject to a $500 minimum)
Customers can check their available re-borrowing limit online
Clients can make a withdrawal by phoning Coasts call center. The money is put in the customer’s account the next business day.
O BMO has something similar called the Mortgage Cash Account but BMOs minimum re-borrowing amount is $2500 vs. Coast Capitals $500
* A Half & Half rate option
o This sets the rate at the mid-point between the current variable and fixed rates, thus reducing risk compared to a straight variable mortgage
o Coast says this feature appeals to the 47% of borrowers who are unsure about whether to purchase a fixed or variable rate.
o Customers can instead opt for a regular 5-year fixed or variable rate if they choose
* 100% payment top-up privileges
o Allows customers to make up to double their regular payments
o Clients must phone in to make these extra payments (it can’t be done online).
Big pre-payment allowances are swell, but remember that only 12% of people actually made lump-sum pre-payments last year, according to CAAMP.
Save-and-Take-Payments Coasts new save and Take feature works sort of like a re advanceable mortgage. The difference is that re advanceable mortgages let you re-borrow all of your principal payments. The Save and Take feature only lets you re-borrow principal that has been pre-paid over and above normal scheduled payments.
In researching this product Coast found that 40% of local mortgage holders set aside funds for emergencies rather than using that money to pay down their mortgage. Allowing re-borrowing keeps people liquid and makes pre-payments more appealing.
Other notables of the You’re the Boss mortgage:
* Maximum loan-to-value: 80%
* Property Types: Owner-occupied residences only
* Term: 5-year fixed, 5-year variable, or Half & Half (part fixed/part variable)
* Where to get it: Coast branches, Coast mortgage specialists and approved brokers
Not all lenders can offer this kind of mortgage. The re-borrowing feature makes it very hard to securitize and more complicated to fund. For those reasons, mortgages like this generally have to be kept on a lenders balance sheet (which Coast does). That makes it harder for non-deposit-taking lenders to compete with this kind of product, apart from competing on price.
Coast Capital serves British Columbia and has 425,000 members, 50 branches, and $12.9 billion in assets.
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