Hi,
I just got a pre-approval from TD. Around $200,000 they are giving me at 3.85% per annum, calculated semi-annually not in advance (don't know what that means!!)
Term is 4 years and amortization is 35 years.
I think this is a raw deal. The mortage advisor didnt walk me through
all the mortage options like 'open', etc to give me the options of what I thought would work out for me.
What do you think?
My second question is does the preapproval just consist of (one) page detailing the sum or should it also contain how much payment goes towards the principal, how much goes to interest and other details etc
Can the experts shed "lots of light" here?
Location: carl sagan's universe
Posted on: 02-08-09 14:55:48
Hi Rakesh,
That's a normal mortgage term- interest calculated semi-annually not in advance means it is calculated on a semi annual basis as it is more beneficial to the lender( the act says you can calculate annually or semi-annually - so obviously semi-annually being more beneficial all lenders use this). Not in advance refers to the fact that the inteest is not calculated in advnace but after the payment is made (the act forbids calculations in advance).
3.85 for a 4 yr term ain't so hot- CIBC right off the bat gives you 3.84 and you might get better than that if you pressurize a bit.
3 yr terms are even better -rate wise- so you might wanna chk that option out.
There are also variables as low as as P+ .25% or 2.5%.
All are closed- in other words should you wish to break you have to pay a penalty.
Open usually refers to a variable but the rate would be higher as an open mortgage allows you to convert or break with zero or minimum pennalty like $250, depending upon the terms laid out at the outset.
That's it in a nutshell. If you need further clarification- please do ask
A raw deal or not is your perception.
Pre-approvals are usually 1 - 2 pages. Just to give you an idea how much u can afford. $200,000 might get you a condo say for instance in Lisa Street, Brampton- many other places I imagine as well, just gave one example.
Hi Investtpro,
Thanks for your great reply.
A few questions:
> why is the mortgage term not calculated monthly or biweekly since that's how we are paying the interest and principal i.e why is it semi-annually or annually?
>Should the person not have walked be through other options - or do you think this is normal to just give the client (one) option?
> Thanks for your help (again)
Rakesh
Quote:
Originally posted by investpro
Hi Rakesh,
That's a normal mortgage term- interest calculated semi-annually not in advance means it is calculated on a semi annual basis as it is more beneficial to the lender( the act says you can calculate annually or semi-annually - so obviously semi-annually being more beneficial all lenders use this). Not in advance refers to the fact that the inteest is not calculated in advnace but after the payment is made (the act forbids calculations in advance).
3.85 for a 4 yr term ain't so hot- CIBC right off the bat gives you 3.84 and you might get better than that if you pressurize a bit.
3 yr terms are even better -rate wise- so you might wanna chk that option out.
There are also variables as low as as P+ .25% or 2.5%.
All are closed- in other words should you wish to break you have to pay a penalty.
Open usually refers to a variable but the rate would be higher as an open mortgage allows you to convert or break with zero or minimum pennalty like $250, depending upon the terms laid out at the outset.
That's it in a nutshell. If you need further clarification- please do ask
A raw deal or not is your perception.
Location: carl sagan's universe
Posted on: 03-08-09 17:03:53
1. If the interest rate is calculated bi-weekly or monthly, the payments will be higher than calculated semi annually.
For a $200,000 mortgage- the payment calc on a semi-annual basis will be $864 and on a monthly basis it is $868.
On an annual basis it is $860.
You can use a mortgage calculator readily availble on the CMHC site
Since the mortgage act clearly staes the interest payment can only be calc semi-annually or annually- you can well see that all lenders will prefer to calculate semi-annually as that fetches them more revenue.
If there was no such provision, they would calculate daily and the payment would be much higher.
Maybe they would calculate continuously using integrals (from calculus) and screw us even more royally every breathing moment of our lives.
2. The mortgage rep at the bank should've given you all the options possible.
There is also a one yr option at 2.75% and a 42 month option (3 1/1 yr) etc etc.
At one sitting , from experience, it is mind boggling for the home buyer to digest all the options, but definitely at least 3 should have been presented to you and then been told there are more options.
Anyway, each person has their own way of working- but one option in my opinion is not a 'good' thing to be doing.
please ask national bank of canada mortgage manager mr. arjun basra for second opinion. he will guide you in sincere and right way. his mobile no. 4165693317. We got better rate then TD 1 month back from them.
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The best way to find yourself is to lose yourself in the service of others.”
Mahatma Gandhi
Thanks for taking the time to reply with so much information.
Much appreciated.
Quote:
Originally posted by investpro
1. If the interest rate is calculated bi-weekly or monthly, the payments will be higher than calculated semi annually.
For a $200,000 mortgage- the payment calc on a semi-annual basis will be $864 and on a monthly basis it is $868.
On an annual basis it is $860.
You can use a mortgage calculator readily availble on the CMHC site
Since the mortgage act clearly staes the interest payment can only be calc semi-annually or annually- you can well see that all lenders will prefer to calculate semi-annually as that fetches them more revenue.
If there was no such provision, they would calculate daily and the payment would be much higher.
Maybe they would calculate continuously using integrals (from calculus) and screw us even more royally every breathing moment of our lives.
2. The mortgage rep at the bank should've given you all the options possible.
There is also a one yr option at 2.75% and a 42 month option (3 1/1 yr) etc etc.
At one sitting , from experience, it is mind boggling for the home buyer to digest all the options, but definitely at least 3 should have been presented to you and then been told there are more options.
Anyway, each person has their own way of working- but one option in my opinion is not a 'good' thing to be doing.
