Personal Finance

Odd situation with ING Direct mortgage

  • Last Updated:
  • Jul 30th, 2009 8:02 pm
[OP]
Sr. Member
Jul 1, 2003
835 posts
88 upvotes
Airdrie, AB

Odd situation with ING Direct mortgage

Hey all,

I appreciate the advice you have given others in the past and I'm afraid it is my turn to reach out for assistance. I have had a mortgage with ING Direct for 2.5 and we have now decided to sell our existing home and build a new one. To my shock, ING Direct do not provide mortgages for 'new' homes, only homes that are 97% complete. They have stated they will not make exceptions and they will not assist in covering the costs to break my mortgage with them ($5400). I have read through all the documentation we received from them and have reviewed all information on their website and they do not mention this anywhere. Had I known this 2.5 years ago, I would have chosen another lender. Does anyone know if there is anything else I can do to have ING Direct absorb the costs (or at least a portion thereof) of breaking the mortgage so I can actually begin a new mortgage with a real lender?

Thanks!
-Some people hear their own voices with great clearness and they live by what they hear. Such people become crazy or they become Legend.-
17 replies
Deal Expert
User avatar
Aug 18, 2005
18685 posts
3305 upvotes
GTA West
If the new home meets a number of conditions and you are moving to it for work or school, breaking the mortgage might count as a moving expense, so you could write the fee off on your tax return.

But make sure you read carefully about the T1-M form because MANY conditions have to be satisfied before you can legally use it. Otherwise I suggest you just save up the money and pay the expense. (This is why I have an open mortgage.)
What if there were no hypothetical questions?
Member
Nov 13, 2008
390 posts
51 upvotes
Kitchener
I'm a little bit confused on the issue here...Are you looking at self-building something or a custom home where you have to pay for it in installments?
[OP]
Sr. Member
Jul 1, 2003
835 posts
88 upvotes
Airdrie, AB
jheath wrote:
Jul 28th, 2009 11:29 pm
I'm a little bit confused on the issue here...Are you looking at self-building something or a custom home where you have to pay for it in installments?
Just a house built by a professional builder with an 8 month build time.
-Some people hear their own voices with great clearness and they live by what they hear. Such people become crazy or they become Legend.-
Deal Expert
May 17, 2008
15134 posts
158 upvotes
I may be way off here, but why would the bank help you pay the cost of breaking the mortgage, and why would they accept a house that doesn't exist as collateral for a loan? What are they going to foreclose on if the house never gets built and you don't pay up?

You agreed to a mortgage with them for a fixed term. It hurts them if you break the mortgage and move to another lender, so why would they assist in this?
[OP]
Sr. Member
Jul 1, 2003
835 posts
88 upvotes
Airdrie, AB
I just wanted to port the existing mortgage with ING from our existing home to the one being built but as they do not provide mortgages for new builds I am unable to do so and am stuck paying the fee and finding a lender who will loan for the new build. I will be remaining in this house and paying my mortgage until I can take possession of the new house with maybe one or two months in between, however the builder needs a firm approval not just a pre-approval which ING will not provide unless the house being mortgaged is 97% complete.
-Some people hear their own voices with great clearness and they live by what they hear. Such people become crazy or they become Legend.-
Member
Feb 25, 2009
298 posts
7 upvotes
Mirabel
That reallly sucks. I guess their "unmortgage" product is just what it it is! How long is your term with ING?

Maybe your only option is to hope the buyer of your existing home wants to assume our mortgage (Assumable Mortgage: "A mortgage that can be taken over by another person who buys your home. ING DIRECT mortgages are assumable, as long as the person taking over the loan meets our usual credit criteria.")

Have you considered what banks refer to as a "bridge loan"? You may want to research your options, and see if ING or your new potnetial lender is willing to do this.
http://www.professionalreferrals.ca/200 ... idge-loan/
http://www.build-yourown-home.com/home- ... loans.html

Check this thread out :http://www.redflagdeals.com/forums/show ... ight=HELOC

If all else fails, here's a CRA link to help you calculate penalty fees:
http://www.fcac-acfc.gc.ca/eng/publicat ... es-eng.asp

Good luck!
Deal Expert
Mar 23, 2009
16987 posts
3848 upvotes
Toronto
AFAIK, that's true for a lot of banks, including the biggest Canadian bank chains. As BornRuff says, banks don't like providing mortgages for homes that don't exist, for obvious reasons.

What some people have done is to find a builder that can afford to put up the money for the build, and then buy the home off the builder once it's built. Obviously a premium gets built into the price there, but them's the breaks if you can't put up the cash yourself up front.
Deal Addict
User avatar
Dec 28, 2004
1894 posts
347 upvotes
Burlington
How are you paying for the house? A little at a time? Or a down payment and than all at once?

If you are paying a little at a time you probably need a construction loan. Once that house is done you get a regular mortgage and pay off the construction loan.
Newbie
Sep 8, 2006
59 posts
7 upvotes
Ajax Ontario
I did get an ING mortgage through a broker for the new house we bought 2.5 years ago. They did the assessment and it was not 90% complete but they came two days before the closing and it was approved.
Deal Expert
Mar 23, 2009
16987 posts
3848 upvotes
Toronto
peacestar wrote:
Jul 29th, 2009 9:37 am
I did get an ING mortgage through a broker for the new house we bought 2.5 years ago. They did the assessment and it was not 90% complete but they came two days before the closing and it was approved.
Well, even if they somewhat did make an except for you, that's nowhere near the same situation as the original poster. It seems like his house is 0% complete.
Sr. Member
Dec 22, 2005
751 posts
5 upvotes
Dundas
You could possibly take out a loan to cover the construction (higher interest rate of course), then once the house is almost complete take out a mortage on the house to pay of the loan. Definitely, more complicated.
Deal Fanatic
Apr 23, 2009
5153 posts
679 upvotes
South of Ottawa
Un4GivN wrote:
Jul 29th, 2009 12:03 am
I just wanted to port the existing mortgage with ING from our existing home to the one being built but as they do not provide mortgages for new builds I am unable to do so and am stuck paying the fee and finding a lender who will loan for the new build. I will be remaining in this house and paying my mortgage until I can take possession of the new house with maybe one or two months in between, however the builder needs a firm approval not just a pre-approval which ING will not provide unless the house being mortgaged is 97% complete.

I would imagine they will likely give you a mortgage, they just won't give you a firm answer now because it isn't even a hole in the ground. I doubt that any bank would give you a firm approval on a mortgage for a house not built yet.
Deal Addict
Oct 30, 2008
2120 posts
58 upvotes
Toronto
Un4GivN wrote:
Jul 28th, 2009 10:37 pm
Hey all,

I appreciate the advice you have given others in the past and I'm afraid it is my turn to reach out for assistance. I have had a mortgage with ING Direct for 2.5 and we have now decided to sell our existing home and build a new one. To my shock, ING Direct do not provide mortgages for 'new' homes, only homes that are 97% complete. They have stated they will not make exceptions and they will not assist in covering the costs to break my mortgage with them ($5400). I have read through all the documentation we received from them and have reviewed all information on their website and they do not mention this anywhere. Had I known this 2.5 years ago, I would have chosen another lender. Does anyone know if there is anything else I can do to have ING Direct absorb the costs (or at least a portion thereof) of breaking the mortgage so I can actually begin a new mortgage with a real lender?

Thanks!
A "real" lender? Hmmm.. ING Group is only one of the largest financial institutions in the world. Sounds to me like you're obviously upset because you're not getting your way, but you should have thought about the custom home when you signed up for your existing mortgage.

Taking a mortgage on a newly constructed home is not really the issue as there are lenders who would do it. Just out of curiosity, how much equity do you have in your current home?
Lior Hershkovitz
Broker at Mortgage Edge, specializes in construction financing and private lending
Construction rates start p+2.5%, 2nd mortgage start 5.99%, private financing start 7% max. 95% LTV
[OP]
Sr. Member
Jul 1, 2003
835 posts
88 upvotes
Airdrie, AB
liorsyncro wrote:
Jul 29th, 2009 1:09 pm
A "real" lender? Hmmm.. ING Group is only one of the largest financial institutions in the world. Sounds to me like you're obviously upset because you're not getting your way, but you should have thought about the custom home when you signed up for your existing mortgage.

Taking a mortgage on a newly constructed home is not really the issue as there are lenders who would do it. Just out of curiosity, how much equity do you have in your current home?
It's not a matter of 'getting my way' ... I don't want to break the mortgage or anything, I just want it ported to my new house. It amazed me that they have never come across a customer with an existing mortgage who then wanted to purchase a brand new home. I did manage to speak with a manager at ING Direct and they said they are able to accommodate me. Thanks for all the replies...seems much more difficult than it should be.
-Some people hear their own voices with great clearness and they live by what they hear. Such people become crazy or they become Legend.-

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