Real Estate

Moving NBC (National Bank) all-in-one (collateral mortgage) to other institution.

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  • Oct 29th, 2015 3:01 pm
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Sep 20, 2015
256 posts
309 upvotes
Ottawa, ON

Moving NBC (National Bank) all-in-one (collateral mortgage) to other institution.

First time poster so please be considerate.

I have National Bank 'all in one' mortgage with the following particulars
Mortgage 1 ($140000.00): Up for renewal next month (November 2015)
Mortgage 2 (88000.00): Renewal in February 2017
HELOC (23000.00 and growing -used for cash daming) used for rental property.

I would like to switch it to other lender when the right time comes and more importantly I want to keep the account structure as is. What would be proper way to do it?
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Jul 16, 2003
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Toronto
You cannot move a single portion (mortgage 1, or 2, or the Heloc) while keeping the others. As a collateral charge, you must discharge it entirely (which means all amounts combined must be paid out) by a new mortgage. To keep the same structure, you would need a new collateral charge (easier) or at least a collateral charge with a separate charge for the Heloc.
What is the reason you want to move out of NBC? By wanting to keep the same structure in the future mortgage solution, you are likely to face the same challenges you may be facing now. These transfers will always be treated as refinances and will cost you legal fees around $1100.00.
Andre Oliveira - Mortgage Agent
Mortgage Intelligence - FSCO# 10428
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Sep 20, 2015
256 posts
309 upvotes
Ottawa, ON
Yes I will be moving it entirely (All accounts) when the right time comes since penalty to break mortgage 2 is $1869. I will keep the mortgage 1 open for now so that it is easy to switch later.
Reason to move: There is a fee for all in one and the renewal rates are not that competitive. (They offered 5 year variable at 2.30%).
What are other options to avoid the legal fees in the future. I need readvanceable HELOC.
Deal Addict
Oct 3, 2005
1262 posts
73 upvotes
NBC has never been competitive in the long term rates.

In the last 6years all I have been doing is 1 an 2 year rates and its been okay. They kind of can compete with the short term rates, either by matching competitors or if you have a few other products like a GIC and something then they can sometimes knock something off.

The thing I like about NBC is that they offer prime + 0% to certain professionals so that is why I am relunctant to change.

Another thing that they did that pissed me off is that they charge $6 per month for each sub account and even the primary HELOC account is no longer free.
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Sep 20, 2015
256 posts
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Ottawa, ON
If you really calculate based on this new fee(s) associated with NBC's all-in-one along with the requirement to must have Master Card (fee: 125.00), HELOC is no longer at prime. That is the reason I am planning to switch. These fees are there regardless if you use your HELOC or not. Surprisingly even for one year fixed I was offered 2.81%. I decided to convert the mortgage to HELOC and keep it that way.
Member
Sep 12, 2013
326 posts
192 upvotes
Mississauga
Check with IntelliMortgage
I was able to switch my whole mortgage (similar to yours) - but no HELOC - to MCAP via RMG. They will even give cash back to cover the penalty. Only downside your mortgage value is much lower than mine.

Now im enjoying 1.85% for 5yrs variable.
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Sep 20, 2015
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Ottawa, ON
HELOC is important to me. I am planning to buy one more (have one already) rental property in the near future.
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Jul 16, 2003
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By keepping a similar structure, you will have the same issues in the next mortgage at renewal time. Your new lender will also use a collateral charge, if you want a mortgage + Heloc integrated. The best solution, provided you have enough equity in the property, would be to move the mortgage to pretty much any lender with the best solution (rates and features considered) and get a Heloc from a separate lender such as CIBC, Scotia, TD, etc. That way, you would be able to transfer the mortgage in the future without legal fees, while keeping the Heloc.

My own case : I have a mortgage with Mcap, and just opened a Heloc with CIBC. Of course this is not integrated, so as I pay down the mortgage balance, the limit available in my Heloc will NOT increase, however I have more than enough limit in the Heloc as it is now. As a result, I have access to funds to use for investment purposes (through the Heloc with CIBC) while I keep my interest rate very low on the mortgage with Mcap.
OttawaGuy2 wrote: HELOC is important to me. I am planning to buy one more (have one already) rental property in the near future.
Andre Oliveira - Mortgage Agent
Mortgage Intelligence - FSCO# 10428
Member
User avatar
Sep 20, 2015
256 posts
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Ottawa, ON
This structure is important mainly for two reasons:
1) Cash daming. Cash daming is a strategy to convert non-deductible debt (such as residential Mortgage/HELOC) to deductible debt (such as Mortgage/HELOC for rental properties). Idea is that you pay business (Rental property) expenses from HELOC (set just for business) and use business income (Rent from rental property) to pay the non-deductible debt i.e. mortgage.
2) Using equity to buy more real estate. As you pay down your mortgage you build more equity, you can borrow again to buy more rental properties. You setup separate HELOCs for each business. It is easy to track and close if you sell the business i.e. rental properties.

So what I am looking for is an institution that is little bit more competitive at renewal time. This is little ironic that banks don't treat their existing customers with same respect and dignity compared to their new prospects. May be this philosophy is originating from the fact that most customers would not care or bother to switch even when they don't like their bank. I am not really sure though.
Deal Guru
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Feb 2, 2014
11231 posts
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laptop-tech wrote: By keepping a similar structure, you will have the same issues in the next mortgage at renewal time. Your new lender will also use a collateral charge, if you want a mortgage + Heloc integrated. The best solution, provided you have enough equity in the property, would be to move the mortgage to pretty much any lender with the best solution (rates and features considered) and get a Heloc from a separate lender such as CIBC, Scotia, TD, etc. That way, you would be able to transfer the mortgage in the future without legal fees, while keeping the Heloc.

My own case : I have a mortgage with Mcap, and just opened a Heloc with CIBC. Of course this is not integrated, so as I pay down the mortgage balance, the limit available in my Heloc will NOT increase, however I have more than enough limit in the Heloc as it is now. As a result, I have access to funds to use for investment purposes (through the Heloc with CIBC) while I keep my interest rate very low on the mortgage with Mcap.
If you don't mind me asking, what is the HELOC rate with CIBC???
Kevin Somnauth, CFA
Principal Broker/Owner - First Toronto Mortgage - MA (Ontario #13176, BC #X301007)
Real Estate Salesperson - Century 21 Innovative
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Jul 16, 2003
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cdnrealestateguy wrote: if you don't mind me asking, what is the heloc rate with cibc???
It is P+0.50%
Andre Oliveira - Mortgage Agent
Mortgage Intelligence - FSCO# 10428

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