izomax
New Member
I was wondering if there's a way to waive the 30-year amortization premium surcharge by paying more down payment?
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Is there a way to waive amortiation premium?
- Thread starter izomax
- Start date
Kevin86
New Member
My understanding is that if you make 20% down then there is no CMHC premiums. Another option (in which case you get 10% of the premium refund) is if you get an Energy Start certified home.
izomax
New Member
My understanding is that if you make 20% down then there is no CMHC premiums. Another option (in which case you get 10% of the premium refund) is if you get an Energy Start certified home.
I believe the 20% down is only for the loan portion only, not sure about the amortization part...
dpylyp
Active Member
Terms
Some lenders with advance a credit line (HELOC) of the additional downpayment you need, of say 5% to make the 20 % downpayment program and save you the cmhc premium. So you would have a 1st Mortgage and a secured line of credit.
Amortization is the length calculated to pay back the full amount
Term is the length of interest rate commitment. Varable or fixed, open 6 months - five years.
BeMO is the only lender I am aware of that offers 10 year fixed financing.
Hope that helps
David Pylyp
Living in Toronto
Some lenders with advance a credit line (HELOC) of the additional downpayment you need, of say 5% to make the 20 % downpayment program and save you the cmhc premium. So you would have a 1st Mortgage and a secured line of credit.
Amortization is the length calculated to pay back the full amount
Term is the length of interest rate commitment. Varable or fixed, open 6 months - five years.
BeMO is the only lender I am aware of that offers 10 year fixed financing.
Hope that helps
David Pylyp
Living in Toronto
Last edited:
Torontotony
New Member
Outside of putting a 20% downpayment, there is only one way of reducing the insurance premium on a mortgage. I deal with a lender who offers "A" rates, but is self-insuring its mortgages. The net benefit to the borrower with a 15% downpayment, is a reduction in premium of 1.15% for fully qualified mortgages and 2.30% for self-employed applicants who cannot prove income. This applies to all resales listed on MLS, and all new construction.
I'm not a big fan of using unsecured lines of credits to facilitate your downpayment, as the monthly carrying costs are prohibitive, as compared to a mortgage for the same amount.
Hope this helps
Tony
I'm not a big fan of using unsecured lines of credits to facilitate your downpayment, as the monthly carrying costs are prohibitive, as compared to a mortgage for the same amount.
Hope this helps
Tony
Kevin86
New Member
I was just wondering if I go for a variable closed interest rate, will I have an option to convert to fixed in the future (e.g. a year from now). Will I get the same discount off the posted rate as I have been offered now by TorontoTony.
Torontotony
New Member
Hello Kevin86,
The discount on premium is unrelated to the term and interest rate option you prefer. The only variable rate mortgages worth having are convertible to a fixed rate at any time during the term. The amount of discount on the fixed rate, however, is totally related to the interest rate market at the time of conversion. As a courtesy to my clients, and everyone should ask this of their banker and mortgage broker, I maintain a list of clients who are in variable rate terms and contact every one of them if I believe locking into a fixed rate should be considered. It's part of our "value added" service.
For the record, IMHO variable rates today are not very attractive for a couple reasons:
1. the premium lenders are charging on variables (currently Prime + 0% to Prime + .35%) is still on the high side, and will be falling over the next several months;
2. current 5 year fixed terms are very innexpensive and while higher than variable rate mortgages, today's 5 year rates will become very attractive in 12-18 months, as fixed rates start to increase.
Tony
The discount on premium is unrelated to the term and interest rate option you prefer. The only variable rate mortgages worth having are convertible to a fixed rate at any time during the term. The amount of discount on the fixed rate, however, is totally related to the interest rate market at the time of conversion. As a courtesy to my clients, and everyone should ask this of their banker and mortgage broker, I maintain a list of clients who are in variable rate terms and contact every one of them if I believe locking into a fixed rate should be considered. It's part of our "value added" service.
For the record, IMHO variable rates today are not very attractive for a couple reasons:
1. the premium lenders are charging on variables (currently Prime + 0% to Prime + .35%) is still on the high side, and will be falling over the next several months;
2. current 5 year fixed terms are very innexpensive and while higher than variable rate mortgages, today's 5 year rates will become very attractive in 12-18 months, as fixed rates start to increase.
Tony
Kevin86
New Member
Yes, i meant to refer to the discount that banks provide on posted rates. E.g. 5yr posted rate is 5.49% with a 1.75% discount (net 3.74%). So my question is that if I get variable now and sometime in future I decide to convert to fixed, will I still get 1.75% discount on the posted rate at that time or will I be stuck with the posted rates?
Torontotony
New Member
Generally speaking, the rate discount you receive today may not translate over when you decide to renew. As a best practice, however, good mortgage brokers will try dealing primarily with lenders who offer a "best Broker Rate" guarantee at date of renewal. It's important to note, not all banks and lenders provide this written guarantee.
cdr108
Senior Member
Yes, i meant to refer to the discount that banks provide on posted rates. E.g. 5yr posted rate is 5.49% with a 1.75% discount (net 3.74%). So my question is that if I get variable now and sometime in future I decide to convert to fixed, will I still get 1.75% discount on the posted rate at that time or will I be stuck with the posted rates?
i would like to know which FI you're dealing with that is providing 1.75% discount !?!
cdr108
Senior Member
I was wondering if there's a way to waive the 30-year amortization premium surcharge by paying more down payment?
what surcharge is that ???
the $10,000s of interest you'd be paying by extending the amortization from the old standard of 25 years to 30-year?
Kevin86
New Member
i would like to know which FI you're dealing with that is providing 1.75% discount !?!
TorontoTony is offering 3.74% for 5 yr closed. Please see his post#10 under the thread "Are there certain banks with amazing incentives for mortgages? "
Kevin86
New Member
Generally speaking, the rate discount you receive today may not translate over when you decide to renew. As a best practice, however, good mortgage brokers will try dealing primarily with lenders who offer a "best Broker Rate" guarantee at date of renewal. It's important to note, not all banks and lenders provide this written guarantee.
Is this guarantee supposed to be in writing?
Torontotony
New Member
Is this guarantee supposed to be in writing?
I don't know of any lenders who won't promise you the "best rate" on renewal, but the fact is only a hand full actually put it in writing. In my practice, I get it in writing whenever possible, in order to protect my client's interests (no pun intended) down the road.