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[intellimortgage] intelliMortgage/1.58% 5-year fixed uninsured mortgage (25 year term)

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  • Oct 8th, 2020 3:17 pm
[OP]
Deal Addict
Jun 6, 2013
3421 posts
4010 upvotes

intelliMortgage/1.58% 5-year fixed uninsured mortgage (25 year term)

Deal Link:
Retailer:
intellimortgage
edit: keep in mind that mortgage rates change ALL THE TIME depending on when you close, the 1.58% 5-year fixed rate has a closing around start of november.

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I recently bought a condo and I used https://intellimortgage.com/

my closing was Sept 21st (yesterday) and the 25-year term, 5-year fixed, uninsured rate I got was 1.89%, after a 0.01% buy-down (i.e., cashback from intellI itself), my effective rate was 1.88%.

Keep in mind that my rate would have been slightly lower (0.03%ish lower) if the first lender did not reject my application (due to personal reasons, which I will not elaborate here)

I think I most likely could have gotten a slightly better effective rate if I shopped around and went with a major bank that offers a large cashback (for example, I know one bank that offers $1000 if your mortgage payments come out of your account with that same bank)

but I will list why intellimortgage is a good way to get a mortgage for those who do not want to bother with shopping around:

1, there is a one-time "American" rate-drop option/guarantee expiring 12 business days before closing , i.e., the rate drop option could be exercised anytime between your mortgage initial approval (when you get your first rate in writing) and 12 business days before closing. the intelliMortgage broker you work with will decide when to exercise the rate drop option based on their expertise according to my own experience, my rate drop was from 2.04% to 1.88% (both quoted as effective).

2, they have access to lenders who have to offer a good rate to be able to even compete in Canada with the major local players (banks, their subsidiaries and credit unions), for example, my mortgage is offered by a company called "Computershare" through MCAP. (sometimes these are referred to as B-lenders, more on this later)

3, they have low overhead cost for being an online mortgage broker, same idea with all the insuretech and fintech startups.

The disadvantages of intelliMortgage I can think of are the following:

1, being online focused means that besides the initial conversation, they rely more on emails which is sometimes not as effective as phone calls, you can call your intelliMortgage broker but it will almost always go to voicemail, they will call you back after hearing the message you have left, if needed

2, they are not able to offers mortgages at below cost, which major banks sometimes do for corporate synergy and market share related reasons

one thing i'd like to mention is, with these B-lender mortgage, you might get charged a higher lawyer fee because of all the extra work required for the final fund injection, in my case, the extra lawyer fee of $195 plus tax is pretty much equal to the cashback itself, making my effective rate 1.89% instead.

regarding the cashback itself, here is the rule of thumb, for a 25 year 5-year fixed mortgage, each 0.01% of rate differential is equivalent to around 0.04%~0.06% of your principal (the amount you are borrowing), so for example, if you get a cashback of $1,500 from a major bank for a $500,000 mortgage, that would be equivalent to around $1,500/$500,000/0.05% = ~6 bps, i.e., it is worth 0.06% (in terms of your final rate, in other words, 1.80% without cashback is comparable to 1.86% with cashback), keep in mind that this is napkin math, but the idea is that the marginal dollar equivalent for each 0.01% in rate accounts for the monthly payment, as well as the amount of principal you pay over the 5 years (which mortgage brokers in general do not tell you about), I will demonstrate this at the end of this post.

another thing i'd like to mention is, when you buy a condo, make sure you go through the mortgage instruction (sent to the lawyer) yourself (request for a copy from your lawyer) to take a look at all the requirements. indeed your lawyer is supposed to review it but lawyers almost always leave it until a couple of business days before closing and they may struggle with meeting the deadline (i.e., get the money injected into their trust on closing day).

in my case, I had to act quickly (4pm on Tuesday) to get the following (as per my incompetent lawyer's request) for a Monday closing:

1, certificate of insurance for the condo building (only the seller can request that from the building manager)

2, status certificate for the condo building as well as the condo unit (anyone can request that, but it takes up to 10 business days)

I was lucky that:

1, I had direct access to the seller myself so I told her to request the certificate of insurance, which was sent over the very next morning.

2, the express status certificate (cost me over $200) I requested fortunately came at the end of day Thursday even though the description said 5-business day turnaround. here is another fun fact, when I requested for the status certificate (at https://www.statuscertificate.com/, I realized that the "unit and level" on the signed offer was incorrect (each suite has a different unit and level number, for example, Suite 620 might be level 4 unit 14), I was able to inform my lawyer and get that corrected in time.

finally, I want to touch on insured mortgage (when your downpayment is less than 20% of the total purchase price) vs. uninsured mortgage (when you downpayment is more than 20% of the total purchase price)

the rate you get on insured mortgage will be lower, however, that is offset by the extra inusrance premium you will pay to CMHC.

Although, sometimes your best option is to go with uninsured mortgage. The amount you can borrow is roughly 4.8 times your household average annual gross income over the past 2 years. Therefore if you are single and make $110,000 a year, and you want to buy a $650,000 condo, you can borrow upto $528,000 which leaves you paying 122,000 of downpayment, which is ~19% of the purchase price, because you are so close to 20%, you might as well put down ~$8,000 more to push yourself over the 20% threshold. if your income was lower, then likely you HAVE to put down 20% as the amount you can borrow will be lower too.

Thank you for reading through my long winded post, but I hope you find it helpful, and if not at least an interesting read.

Here is the promised calculation of marginal value of each 0.01%, the website that I use for my numbers is this

https://itools-ioutils.fcac-acfc.gc.ca/ ... c-eng.aspx

example, $500,000 25-year term 5-year fixed monthly mortgage, 1.75% vs 1.76%,

you pay $2059.80 - $2057.43 = ~$2.5 more per month for 60 months over 5 years, that is $150.

but you would also have paid $83375.45 - $83285.66 = ~$90 less principal at the end of the 5 years, that is $150 + $90 = $240 in total. $240/$500,000 = 0.048% which lines up with my rule of thumb of 0.04%~0.06% per 0.01% rate differential above.

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Last edited by Glancealot on Oct 6th, 2020 9:16 pm, edited 5 times in total.
Bitcoin will crash hard.
33 replies
Newbie
Aug 24, 2019
21 posts
99 upvotes
I got 1.63% variable with scotia, they were also offering 1.80 5 year fixed
Newbie
Oct 25, 2017
34 posts
10 upvotes
Do we think rates will be flat or continue to fall in the next few years? Trying to figure out what type of mortgage to get. I have never been through this process before so I am learning as I go.
Newbie
Mar 6, 2018
31 posts
18 upvotes
Robocop5 wrote: Do we think rates will be flat or continue to fall in the next few years? Trying to figure out what type of mortgage to get. I have never been through this process before so I am learning as I go.
If you plan on keeping the house for 5 years, fixed will be your best bet as the rates are pretty close to the bottom. However, if you plan on selling the house in the next year or so variable would be better as lower penalties and the rates won't increase much over the next year or so.
Newbie
Oct 25, 2017
34 posts
10 upvotes
Dealgains wrote: If you plan on keeping the house for 5 years, fixed will be your best bet as the rates are pretty close to the bottom. However, if you plan on selling the house in the next year or so variable would be better as lower penalties and the rates won't increase much over the next year or so.
I'm reading mixed opinions on this being the lowest to be honest. I'm also reading that rates will stay like this for a few years but who really knows.
Member
Apr 29, 2013
324 posts
375 upvotes
Candiac
Just got 1,79% with CIBC at noon today. 5 Years fixed renew / refinance
Newbie
Oct 4, 2019
14 posts
1 upvote
Dealgains wrote: I was initially able to get 1.79% 5 years fixed with $3000 cashback (tiered based on mortgage amount) through my BMO contact for uninsured (20% down) 30 year amortization. Just received a call from him this morning and he was able to get it lowered to 1.75% for me. A couple of people I have referred from RFD were also able to get 1.75% through him for 5 year fixed uninsured with 25 year amortization. The cashback is only available until Oct 31st I believe (application needs to be approved by then, closing can be later).
The 1.75% you got, was that for a 30-year amortization still? I got the same rate as you initially, with the same cash back but I am wondering if I should ask to lower it even more. I don't have much of a leg to stand on though because closing is next week and paperwork is good to go already...
Jr. Member
User avatar
Jan 1, 2009
121 posts
6 upvotes
Toronto
I am with Scotia on 5 yr variable. They have the option to convert to fixed any time (with a term equal to or greater than the remaining term). I am staying with variable until the prime rate picks up again, then I can convert over to fixed.
Newbie
Jul 12, 2020
8 posts
3 upvotes
I was lied to by intellimortgage advisor. Thank freaking god I read the contract before deciding to not sign.
Newbie
Mar 6, 2018
31 posts
18 upvotes
diamondsRconfusing wrote: The 1.75% you got, was that for a 30-year amortization still? I got the same rate as you initially, with the same cash back but I am wondering if I should ask to lower it even more. I don't have much of a leg to stand on though because closing is next week and paperwork is good to go already...
Yes, for 30 years but might be too late now .
Jr. Member
Apr 29, 2015
173 posts
180 upvotes
Kanata, ON
Catcatdog wrote: I was lied to by intellimortgage advisor. Thank freaking god I read the contract before deciding to not sign.
Thanks for providing no detail whatsoever.
Newbie
Jul 12, 2020
8 posts
3 upvotes
insightcreative wrote: Thanks for providing no detail whatsoever.
I specifically asked for no bonafide contract in writing and the agent gave me bonafide contract. I ended up with someone else +0.05% higher but yeah if anyone wants to go with them that happened to me at least.
Sr. Member
May 5, 2007
763 posts
163 upvotes
North York
The same people said 5 years ago. I would ONLY go variable as there is likely chance they will go lower than higher. Plus you can enjoy lower rates and with lower penalties (if life changes) and then lock in later if you are ready.
Deal Addict
Aug 4, 2006
2965 posts
1523 upvotes
Toronto
Catcatdog wrote: I was lied to by intellimortgage advisor. Thank freaking god I read the contract before deciding to not sign.
What did they lie to you about? May be useful for others looking

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