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Variable Rate Comparison

Variable Rate Comparison. See for yourself, who has the “BEST” Variable Rate Mortgage. INTRODUCTION. Every lender claims to have the best deal going. This seminar is going to eliminate the mystery of which Variable Rate Mortgage is the best. INTRODUCTION.

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Variable Rate Comparison

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  1. Variable Rate Comparison See for yourself, who has the “BEST” Variable Rate Mortgage

  2. INTRODUCTION • Every lender claims to have the best deal going. • This seminar is going to eliminate the mystery of which Variable Rate Mortgage is the best.

  3. INTRODUCTION • It has never been more confusing trying to decide which mortgage is the best deal for you. • In the past, there were only fixed rate mortgages, and you haggled with the lenders to get the best rate.

  4. INTRODUCTION ARE YOU A LITTLE CONFUSED? DEEP DISCOUNTS TEASER RATES CASH BACK

  5. Let’s back things up a little, and explain the basics about variable rate mortgages

  6. What is a VRM ? • A variable rate mortgage, more commonly known as a VRM, is a mortgage financing product that is based on the lenders “PRIME LENDING RATE”. • It fluctuates as the prime rate changes.

  7. What is a VRM ? • There are many different components to a VRM. #1 THE TERM. This represents how long you are committed to staying with the lender. Most are between 3 and 6 years.

  8. What is a VRM ? #2 THE RATE. This is where things get really interesting. Some lenders offer, a significant discount below prime, others offer an initial teaser rate, then reduce the discount below prime, others offer cash back.

  9. What is a VRM ? #3 CONVERTABILITY This is what allows you to stop your mortgage rate from floating and lock into a fixed rate. However, there are significant differences with each lender with regards to this.

  10. What is a VRM ? #3 CONVERTABILITY (cont) All lenders say you can “Lock-in” to a fixed rate mortgage without paying a penalty, however each lender has different policies which restrict to which terms, and at what rate. Be very careful with this part, many lenders like to be vague with what the conversion rate is, because your mortgage is a closed mortgage, and to leave will cost you a penalty.

  11. What is a VRM ? #4 Mortgage Penalties This too is an area where many lenders differ. Because most variables are closed, there is a penalty to leave before the maturity date. Most are 3 months, some 2 months, and some become open after 3 years.

  12. What is a VRM ? • These can be excellent products in a stable interest rate environment or when interest rates are trending downward.

  13. What is a VRM ? • The Variable Rate Mortgage (VRM) has, over the last 2 years become extremely popular. • Over the last 2 years more than 80% of my clients have been going into variable rate mortgages, and saving significant amounts of money.

  14. Variable vs. Fixed Rates • There is an enormous potential savings converting your mortgage to a variable rate mortgage. You could literally save $1000’s above and beyond any penalty to break your mortgage. • My own personal mortgage is in a variable rate mortgage, and I am saving $1000’s.

  15. Variable vs. Fixed Rates • Fixed rate mortgages are tied to the Canadian Bond Market and rates are constantly changing. We have seen as many as 4 changes to the 5 year mortgage rate in one week alone. • The variable rate mortgage only changes as the prime rate changes, and there are actual scheduled dates each year.

  16. Variable vs. Fixed Rates • Now let me show you how much money you could save, comparing my best variable rate mortgage to the best current 5 year mortgage. • Now keep in mind that these calculations are assuming prime does not change for the full 5 years. Not a likely scenario, however as of today, prime actually looks like it could go down ¼% next week, which would increase the savings.

  17. Variable vs. Fixed Rates • Mortgage Amount $200,000, payments for both mortgages are $1200.00 per month. • My Best 5 year Fixed Rate is currently 5.00% • My Best Variable Rate Mortgage is the BMO 6 Year flex below prime mortgage with 1.00% cash back. To show maximum benefit of the cash back, we have applied the cash back as a lump sum payment to the principal of the mortgage. The initial rate for BMO, is 2.25% for the first 3 months, it then floats at prime -.375 for the remainder of the term. This mortgage becomes fully open after 3 years. • I think you will be truly surprised at the potential savings a variable rate mortgage can offer.

  18. Variable vs. Fixed Rates • A staggering $12,187.38 in five years. • Now keep in mind, should prime go up during the term, it would reduce the total savings, however the longer prime stays down the more money you are saving. • You can also lock in your variable rate mortgage to a fixed rate term at anytime, but rates could go up and then shortly after that go back down again, so locking in after a rate increase may not be the correct response. • I have been in my variable rate mortgage for the last 15 months.

  19. Variable vs. Fixed Rates • Now you can clearly see the variable rate mortgage is currently giving you the best potential savings with your mortgage. • There are over 20 different variations of variable rate mortgages available today, so how do you know who has the best deal ? • I will show you what the other lenders don’t want you to know…..!!!!!

  20. What is a VRM ? • Enough with the definition, let’s look at each lenders product. • These are listed in alphabetical order, not to indicate which is best at this point.

  21. Disclaimer • The following information was obtained on January 7, 2004 but is subject to change. • The Prime rate on Jan 7, 2004 was 4.50% and assumes the prime rate does not change as I cannot predict the future changes of prime. • All calculations were based on a $200,000 mortgage, with a monthly payment of $1200 per month.

  22. PRODUCT NAME: Flexible Below Prime Mortgage • TERM: 6 Years, but fully open after 3 years. • CASH BACK: 1.00% of mortgage amount, paid on closing. • TEASER RATE: Prime – 2.25% for 3 months. • FLOAT RATE: Prime - .375% • CONVERSION: To the 3rd anniversary or longer. • PRE PAYMENT PRIVILAGE : 20/20 (Lump sum/Increase Pmt) • AIRMILES: up to 450 AIRMILES • MAXIMUM MORTGAGE: Up to 90% LTV • PENALTY: only 2 months penalty if before 3 year anniversary, fully open after 3 years. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  23. PRODUCT NAME: Better Than Prime Mortgage • TERM: 5 Years • CASH BACK: N/A • TEASER RATE: 1.01% Below Prime for 9 months • FLOAT RATE: Prime - .25% • CONVERSION: 3 year term or longer, at the posted rate. • PRE PAYMENT PRIVILAGE : 15/100% (Lump sum/Increase Pmt) • AIRMILES: NA • MAXIMUM MORTGAGE: Up to 95% LTV • PENALTY: 3 months penalty. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly, Semi Monthly

  24. PRODUCT NAME: The Maximizer Mortgage • TERM: 5 Years, fully open after 3 years. • CASH BACK: N/A • TEASER RATE: Prime - 2.51 for the first 3 months. • FLOAT RATE: Prime - .40% • CONVERSION: 3 year term or longer. • PRE PAYMENT PRIVILAGE : 15/Double Up (Lump sum/Increase Pmt) • AIRMILES: NA • MAXIMUM MORTGAGE: Up to 95% LTV • PENALTY: 3 months in the 1st year, 2 months in the 2nd year, and 1 month in 3rd year. Fully open after the 3rd year. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly, Semi Monthly

  25. PRODUCT NAME: Variable Rate Mortgage • TERM: 5 Years. • CASH BACK: N/A • TEASER RATE: N/A • FLOAT RATE: Prime - .60% • CONVERSION: To 3 Year term or longer. • PRE PAYMENT PRIVILAGE : 25/25 (Lump sum/Increase Pmt) • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 95% LTV • PENALTY:3 Months Interest • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  26. PRODUCT NAME: Variable Rate Mortgage • TERM: 5 Years. • CASH BACK: NA • TEASER RATE: NA • FLOAT RATE: Prime - .50% • CONVERSION: To the Balance of the 5 year term or longer at special VRM Conversion Rates. • PRE PAYMENT PRIVILAGE : 15/15 (Lump sum/Increase Pmt) • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 90% LTV • PENALTY: 3 months penalty. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  27. PRODUCT NAME:EconoPlus Mortgage • This is not a prime based variable rate but is very similar • TERM: 5 Years. • CASH BACK: NA • TEASER RATE: 3% off posted 6 Month Conv Rate • FLOAT RATE: Posted 6 Month Conv Rate - .50% • CONVERSION: To the Balance of the 5 year term or longer at special VRM Conversion Rates. • PRE PAYMENT PRIVILAGE : 15/15 (Lump sum/Increase Pmt) • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 90% LTV • PENALTY: 3 months penalty. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  28. PRODUCT NAME: Presidential Adjustable Rate Mortgage • TERM: 5 Years, fully open after 3 years. • CASH BACK: NA • TEASER RATE: 1.05% below prime for 6 months. • FLOAT RATE: Prime -.50%, Changes every 3 months. • CONVERSION: To 3rd anniversary or longer. • PRE PAYMENT PRIVILAGE : 15/15 (Lump sum/Increase Pmt) • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 95% LTV • PENALTY: 3 months penalty. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  29. MCAP • PRODUCT NAME: VIP Mortgage • TERM: 5 Years, fully open after 3 years. • CASH BACK: NA • TEASER RATE: 2.51% below prime for 3 months. • FLOAT RATE: Prime -.40% • CONVERSION: To 3rd anniversary or longer. • PRE PAYMENT PRIVILAGE : 15/15 (Lump sum/Increase Pmt) • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 95% LTV • PENALTY: 2 months penalty. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  30. PRODUCT NAME: The Smart Mortgage (Product 1) • TERM: 5 Years. • CASH BACK: NA • TEASER RATE: NA • FLOAT RATE: Prime - .70% • CONVERSION: To the Balance of the 5 year term or longer at special VRM Conversion Rates. • PRE PAYMENT PRIVILAGE : 20/20 (Lump sum/Increase Pmt) • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 95% LTV • PENALTY: 3 months penalty. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  31. NOTE: National only passed BMO on the Last Payment of the mortgage. If you convert to a fixed rate at any time other then maturity, the BMO Balance would be less.

  32. PRODUCT NAME: The Smart Mortgage (Product 2) • CASH BACK: 1.00% of Mortgage Amount • TEASER RATE: NA • FLOAT RATE: Prime - .40% • CONVERSION: To the Balance of the 5 year term or longer at special VRM Conversion Rates. • PRE PAYMENT PRIVILAGE : 20/20 (Lump sum/Increase Pmt) • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 95% LTV • PENALTY: 3 months penalty. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  33. PRODUCT NAME: Holiday Special – Variable Rate Mortgage (Product 1) • TERM: 5 Years. • CASH BACK:$250.00 per $100,000 in free groceries. • TEASER RATE: NA • FLOAT RATE: Prime - .55% • CONVERSION: To 3 year term or longer. • PRE PAYMENT PRIVILAGE : 20% plus increase payment to any amount as long as amortization > 5 years remaining. • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 95% LTV • PENALTY: 3 months penalty. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  34. PRODUCT NAME: Variable Rate Mortgage (Product 2) • TERM: 5 Years. • CASH BACK:$250.00 per $100,000 in free groceries. • TEASER RATE: 1.30% below Prime for first 3 months • FLOAT RATE: Prime - .30% • CONVERSION: To 3 year term or longer. • PRE PAYMENT PRIVILAGE : 20% plus increase payment to any amount as long as amortization > 5 years remaining. • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 90% LTV • PENALTY: 3 months penalty. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  35. PRODUCT NAME: 1 and 2 year open Variable • TERM: 1 and 2 years. • CASH BACK:N/A • TEASER RATE: N/A • The Online Site and the Banking by phone, would not confirm a rate below prime without a full mortgage application. But many RBC Variable rate mortgages have been funded at Prime -.50%. • CONVERSION: Fully open. • PRE PAYMENT PRIVILAGE :Fully Open • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 90% LTV • PENALTY: Fully Open. • PAYMENT FREQUENCY: Monthly, Weekly, Biweekly

  36. PRODUCT NAME: 3 Year Capped Variable • TERM: 3 Years. • CASH BACK:1.50% of Mortgage Balance • TEASER RATE: N/A • FLOAT RATE: At Prime. Changes every 3 months. • CONVERSION: To 3 year term or longer. • PRE PAYMENT PRIVILAGE : 15/15% Lump Sum/ Increase Payment. • AIRMILES: N/A • MAXIMUM MORTGAGE: Up to 95% LTV • PENALTY: 3 months penalty. • PAYMENT FREQUENCY: Monthly

  37. Since this Scotia Bank Mortgage is only a 3 year term and the BMO Variable is fully open after 3 years, we only did the comparison over 3 years for this one.

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