14 Oct

Is It Worth Signing Up to Get the Teaser Rate?

Mortgage Tips

Posted by: Kim Seifert

Is It Worth Signing Up to Get the Teaser Rate?

Teaser Rate: You’ve probably seen a local gym offering a promotion along the following lines: sign up now and your first two months are only $10! Naturally, you have to sign a contract to get this rate, and after the two months are up, you’ll be paying far more than $10 a month.

This kind of offer is known as a teaser rate and it’s not limited to gyms. Banks in Canada are currently advertising teaser rates for mortgages, GICs and high-interest savings accounts.

Why do banks use teaser rates? Simple. It’s a way of attracting new customers (or, in some cases, of retaining current ones). Everyone likes a bargain, and the prospect of a better rate is difficult to turn down. Psychologically, consumers may also pay more attention to the initial rate (the teaser) than the rate that governs the majority of the product’s term.

Teaser rates always seem like a good deal. But are they really worth it? Let’s take a look at three offers currently available and do the math to see how much you actually save.

1. The Special Mortgage Offer from CIBC

CIBC had a 4-year fixed mortgage promotion with a teaser rate of 1.99% for the first 9 months, followed by 2.83% for the rest of the term. Assume you’re buying a $400,000 home with 20% down ($80,000), which leaves you with a $320,000 mortgage loan.

At 1.99%, your payments for the first 9 months would be $1,354/month. Subsequent months, when the rate jumps to 2.83%, would be $1,487. The teaser rate is a discount of $133 on the normal payment.

How does this look over the course of the 4-year term?

You would pay 9 months x $1,354 = $12,186
Followed by 39 months x $1,487 = $57,993
$12,186 + $57,993 = $70,179

What if, rather than going for the teaser rate, you just got a 4-year fixed mortgage for 2.49%, which was the best mortgage rate on at that time. In this case, based on the same $400,000 house and $320,000 mortgage, your monthly payment would be $1,432.

48 months x $1,432 = $68,736

That’s a savings of $1,443 ($70,179 – $68,736) over 4 years compared to the CIBC offer described above.

You shouldn’t just look at the numbers when comparing mortgages, however. Another key part of your decision rests on the terms and conditions of each offer. One aspect in particular you should find out is whether there are any unusual restrictions on your ability to make prepayments towards your principal. CIBC says its promotional offer comes with no unusual restrictions, aside from its standard charges for paying off your mortgage early. (We broke down CIBC’s prepayment charge calculations in a blog post, last year.)

2. The Tangerine Savings Account Teaser

Last year, Tangerine offered 2.50% on all new deposits from April 8th to July 31st, to a maximum of $250,000. After the special offer period was over, savings accounts earned interest at a rate of 1.30%. Interest was calculated daily.

Let’s say you had $10,000 at another bank earning 1.30% in early April 2014 and you planned to leave it there for an entire year. How much more interest would you have earned if you switched to Tangerine to take advantage of their special offer?

First, let’s look at what you would earn at your existing bank.

Principal x Daily Interest Rate (Annual Interest Rate ÷ Days Per Year) = Total Daily Interest
$10,000 x (0.0130 ÷ 365) = $0.356 per day

To find out the annual interest, we then just multiply this figure by 365 days.

$0.356 x 365 days = $130

Total interest (non-compounded) earned at your existing bank would be $130.

For the Tangerine offer, there were 23 days in April that paid the special rate, followed by the entire months of May (31 days), June (30 days) and July (31 days). That’s a total of 115 days at 2.50%.

Here’s how much interest you would earn if you had moved your money over.

Principal x Daily Interest Rate (Annual Interest Rate ÷ Days Per Year) = Total Daily Interest
$10,000 x (0.0250 ÷ 365) = $0.684 per day
$0.684 x 115 days = $78.66

And that’s just for the promotional period. Tack on the 1.30% interest rate you’d earn for the other 250 days in the year.

Principal x Daily Interest Rate (Annual Interest Rate ÷ Days Per Year) = Total Daily Interest
$10,000 x (0.0130 ÷ 365) = $0.356 per day
$0.356 x 250 = $89.04

$78.66 + $89 = $167.66

Your grand total in interest would be $167.66, or, expressed as an annual percentage, 1.677%. That means you would’ve earned an additional $37.66 compared to what you would’ve received from your existing bank. It’s not nothing, but it may not have been worth the hassle of switching bank accounts either. (Imagine how much smaller that difference would be on $1,000 or $2,000.)

The conclusion?

We’re not the only ones who are wary of these offers. Both Rob Carrick and Ellen Roseman have written extensively about whether or not Canadians should sign-up for financial products based on promotional interest rates, especially if there are transfer fees involved (common with TFSAs). If you’re paying $45-150 to transfer from one bank to another, that’ll likely eat up all the additional savings the promotion should’ve brought you.

Banks want your business and they’ll dangle all sorts of short-term promotions to get it. Before signing on the dotted line, or its electronic equivalent, make sure it’s actually a deal worth doing. It only takes a few simple calculations to figure out if it’s worth taking advantage of a teaser rate.

Source Article by:

Alyssa Furtado
Alyssa Furtado
28 Aug

DLC Leasing and Financing

Mortgage Tips

Posted by: Kim Seifert

About DLC Leasing

There are many benefits for a business to choose to finance, rather than purchase equipment. It helps them conserve valuable capital, realize tax advantages and immediately obtain the equipment needed to grow. DLC Leasing originates and services a full range of financing for businesses and professionals. Our unique expertise and experienced support systems give you the ability to tailor financial solutions that suit any and all business requirements.

We have extensive and unique expertise in offering a wide range of leasing products and terms to clients with a variety of credit profiles. We provide leasing products for sole proprietors, partnerships, limited companies, public companies, municipalities and professionals. We structure approvals for start-up operations through to mature companies with prime, near prime or sub-prime credit.

What services does DLC Leasing offer?

1) Commercial Equipment Leasing

Enables businesses to obtain the use of machinery or other equipment on a rental basis while avoiding the need to invest capital in equipment. Ownership rests in the hands of the financial institution or leasing company, while the business has actual use of the equipment.

Who is eligible?

What is eligible?

Any asset that is new or used, and where the function is for cash-generating business-related purposes. A business can lease practically any asset depending on their credit, including:

2) Merchant Cash Advance

A Merchant Cash Advance is a lump-sum payment to a business in exchange for an agreed upon percentage of future credit card and/or debit card sales.

Who is eligible?

3) Business Factoring

A financing method in which a business owner sells accounts receivables at a discount to a third-party funding source in order to raise capital.

Who is eligible?

Incorporated businesses such as:

4) Vehicle Leasing

Vehicle leasing is the leasing (or the use of) a motor vehicle for a fixed period of time. It is commonly offered by dealers as an alternative to vehicle purchase, but is widely used by businesses as a highly cost-effective method of acquiring vehicles for business, without the need for cash outlay.

Who is eligible?

  • Incorporated Businesses
  • Proprietorships
  • Professionals (that use their vehicle for business use)
  • Consumers


Vehicle Leasing Cheat Sheet

Vehicle Use

Business (Commercial)

Personal (Consumer)

Mileage – under 90,000

A credit – Yes/B credit – Yes *

Yes (nothing over 90,000)

Age – under 5 years

A credit – Yes/B credit – Yes **

Yes (nothing over 5 years old)

Cost – over $10,000 pre-tax

A credit – Yes/B credit – Yes

Yes (nothing under $10,000)

Private Seller

Okay, except Ontario

Okay, except Ontario

* must be under 150,000km ** must be under 8 years

In order to qualify as Business or Commercial use, the vehicle must be used primarily for business, not driving to work. We are not able to finance Taxi or Limo vehicles at this time.


For further details on leasing please feel free to contact me.

21 Aug

Everything you Need to know about CHIP Reverse Mortgages!

Mortgage Tips

Posted by: Kim Seifert


Wouldn’t it be wonderful to be able to have money to do more of the things you love? To be able to have the freedom to pursue things you truly enjoy, especially in your Golden Years? Enter in a CHIP Reverse Mortgage! A Reverse mortgage is a simple and sensible way to unlock the value in your home. This mortgage product can tap into your home’s equity and turn it into cash to allow you to enjoy life on your terms.

A CHIP Reverse Mortgage is a loan secured against the value of the home. With this type of mortgage product, you are not required to make regular mortgage payments. Instead the loan is repaid only when the homeowners no longer live in the home. Keep in mind that there are conditions with this. The homeowner is required to keep the property in good condition and keep up to date on property taxes and insurance.

There are also other qualifications an applicant must meet in order to qualify for this type of mortgage:

  1. Homeowners must be age 55 or older
  2. You must reside in your home/residence for 6 months out of the year
  3. If the title of the property is registered to more than one person, you must be registered as joint tenants, not just as tenants in common. The difference between these two types of shared ownership is what would happen to the property when one of the owners passes on. If the property is joint tenants, the interest of a deceased owner automatically gets transferred to the remaining surviving owner. If it is tenant in common the deceased tenant’s property interest belongs to his or her estate.
  4. Although you do not need to have an income to qualify for the borrowed amount as there are no payments required, you will have to stay up to date on paying the property taxes, fire insurance and strata fees (if applicable). The income you have coming in will have to be enough to adequately cover those associated fees.

Now for the big question you are all asking: How much can I borrow?

Well, to answer this there are factors that contribute to the total value. First, your age is a determining factor for this mortgage product. Essentially, the older you are the more you will qualify to borrow. The second factor is in direct relation to the details of your property. For instance, a detached home will qualify to borrow a higher amount than say a condo or townhome. The final factor to consider in this is the maximum amount that can be accessed through a CHIP Reverse Mortgage. The max amount is set at 55%. So, if your property is worth $1,000,000 and you are looking to qualify for the maximum amount, that would give you a mortgage of $550,000. If accessing 55% Loan To Value is not high enough there are private lending options that will consider increasing the Loan To Value up to 65%.

An easy way to take all three of those factors into consideration is to visit www.chipadvisor.ca and enter in your details. This can give you a rough idea of what the maximum amount is that you will be able to receive through a CHIP Reverse Mortgage.

One final note is to consider the costs associated with a CHIP Reverse Mortgage. Yes, there are no required payments due while you are living in your home. However, you should expect the following costs to be associated with this product:

1. An appraisal of your property will be required with an approximate cost of $300.
2. There will be legal costs associated which will be around $1495.00 This amount can be included in the mortgage funds and does not need to be paid out of pocket.
3. Independent legal advice is required on all CHIP Reverse Mortgages. The approximate cost will be $600. However, this again can be included in the mortgage funds and does not need to come out of your pocket.
4. Mortgage Penalties may incur if you are breaking the term of your mortgage.

  • In the 1st year it is 5% balance of the funds owing
  • In the 2nd year it is 4% balance of the funds owing
  • In the 3rd year it is 3% balance of the funds owing
  • In the 4th year and beyond it is 3 months interest penalty
  • If you are deceased, no penalty

If you are selling to move to a nursing home the penalty fees will be reduced by 50%.

Below, Reverse Mortgage myths are separated from the facts:

1. Myth: The bank owns the home.
Fact: The homeowner always maintains title ownership and control of their home, and they have the freedom to decide when and if they’d like to move or sell.

2. Myth: Those with a reverse mortgage will owe more than their house is worth.
Fact: HomEquity Bank’s conservative lending practices allow clients to take a maximum of 55% (33% on average) of the home’s appraised value. In fact, 99% of HomEquity Bank’s clients have equity remaining in the home when the loan is repaid.

3. Myth: Reverse Mortgages are too expensive because the rates are high.
Fact: HomEquity Bank rates are modestly higher than regular mortgages because there are no payments required. HomEquity Bank offers rates as low as prime +1.25%*.

4. Myth: The bank can force the homeowner to sell or foreclose at any time.
Fact: A reverse mortgage is a lifetime product, and as long as property taxes and insurance are in good standing, the property remains in good condition, and the homeowner is living in the home, the loan won’t be called even if the house decreases in value. Reverse mortgages provide peace-of-mind that the homeowner can stay in their home as long as they’d like.

5. Myth: The homeowner cannot get a reverse mortgage if they have an existing mortgage.
Fact: Many of our clients use a reverse mortgage to pay off their existing mortgage and debts, freeing up cash flow for other things

6. Myth: The homeowner cannot get a reverse mortgage if they have an existing mortgage.
Fact: Many of our clients use a reverse mortgage to pay off their existing mortgage and debts, freeing up cash flow for other things.

7. Myth: Surviving spouses are stuck paying the loan after the homeowner passes  away.
Fact: Surviving spouses can choose to remain in the home without having to make a payment unless they choose to sell the home.

8. Myth: A reverse mortgage is a solution of last resort
Fact: Many Financial professionals recommend a reverse mortgage because it’s a great way to provide financial flexibility. Since it’s tax-free money, it allows retirement savings to last longer.

Below are some common questions and answers:

Will the homeowner owe more than the house is worth?
The homeowner keeps all the equity remaining in the home. In our many years of experience, over 99% of homeowners have money left over when their loan is repaid. The equity remaining depends on the amount borrowed, the value of the home, and the amount of time that’s passed since the reverse mortgage was taken out.

Will the bank own the home?
No. The homeowner retains title and maintains ownership of the home. It’s required for the homeowner to live in the home, pay taxes on time, have property insurance, and maintain the property in good condition.

What if the homeowner has an existing mortgage?
Many of our clients use a reverse mortgage to pay off their existing mortgage and debts.

Should reverse mortgages only be considered as a loan of last resort?
No. Many financial professionals recommend a reverse mortgage to supplement monthly income instead of selling and downsizing, or taking out a conventional mortgage or a line of credit.

What fees are associated with a reverse mortgage?
There are one time fees to arrange a reverse mortgage such as an appraisal fee, fee for independent legal advice as well as our fee for administration, title insurance, and registration. With the exception of the appraisal fee, these fees are paid for with the funding dollars.

What if the homeowner can’t afford payments?
There are no monthly payments required as long as the homeowner is living in the home.

In closing, a CHIP Reverse Mortgage product is a unique product that can be very powerful and useful for a certain demographic. It can allow you tap into the funds that you need while allowing you to remain in your family home. We have seen clients use their home’s equity for a variety of things from supplementing their pension income, to paying off debts and helping out family without depleting their current savings. It offers unique benefits that may just be right for you.

If you are interested or want to learn more, contact me today and I can give you the details that will relate to your unique situation.

Kim Seifert
Mortgage Broker  lic# 316147
M 306-533-4492 | F 306-545-7446| kseifert@dominionlending.ca    
The Mortgage Firm 
lic# 315912
3889 Arcola Ave E, Regina, SK S4V 1P5

20 Aug

Top 5 Costly Financial Mistakes Homeowners Make With their Mortgage!

Mortgage Tips

Posted by: Kim Seifert

Top 5 Costly Financial Mistakes Homeowners Make With their Mortgage!

Which Financial Mistakes are you guilty of?

1. Not consolidating high interest debt into low interest mortgage.
2. Paying “fees” to get the lower rate
3. Not looking at their long term forecast
4. Taking a 5 year rate when 3-4 years can be cheaper
5. Having their mortgage with a lender that has high penalties and restrictive clauses.

Not consolidating high interest credit or vehicle loans into their mortgage.

I hear this often “I don’t want to use the equity in my home” or “I can pay it off”. This is probably one of the biggest financial mistakes clients make. Many times when people end up with debts it is due to inefficient budgeting and understanding what your income is vs your debt payments are. There are many folks where making their minimum monthly payment is the driving factor in their monthly budget. Making minimum payments can take you YEARS to pay off and soon after people get mortgages, they are buying that new car at 0% interest and $600 month payments, then the roof or hot water tank goes and they put another $15,000 on credit, then someone gets laid off and boom…can’t make all the payments on all those debts that it took a 2 income family to make. It’s a true reality. Let’s look at an example:

Paying Fees to get the lower rate.
Dear rate chasers…they catch up with you somewhere. Nothing comes for free. Let’s face it, you go to the bank and their goal is to make money! A lender that offers you a 4.49% with a $2500 vs a 4.64% with no fee and you think “yes, score what a great rate!” Hold your coins… as you could be walking away poorer as the banker didn’t run the bottom line numbers for you. Chasing rates can cost you more money in the long run.

Your $500,000 mortgage was offered with two rates for the business for self guy who needed a mortgage where they didn’t look at the income so much: 4.49% and $2500 fee and $4.64% no fee. Lets see what it really looks like for a 2 year mortgage.

$502,500 (built in the $2500 fee) 4.49% – payments $2778 per month – $479,563 owing in 2 years
Total payments: $66,672
$500,000 (no fee) 4.64% – payments $2806 per month – $477,634 owing in 2 years
Total payments: $67,344.

Wait? So by taking the lower rate with the fee means I owe $1929 MORE in 2 years and only saved $672 in overall payments?

The long term financial planning side.
I counsel many of my clients to take 2-3 year year terms for a variety of reasons.

  • Better Rates
  • Lower Payments
  • Capitalizing on the equity in your home to pay off a car loan or upcoming wedding. Did you know the average homeowner refinances every 3 years?

Taking a 5 year when 3 and 4 year rates might be a better option.
Many times the 2-4 year rates can be significantly lower than the 5 year rates. Remember, the bank wants money and the longer you take the term, the more they make. True, many folks prefer or fit the 5 year terms, but many don’t. Worrying about where rates will be in 3-5 years from now should be a question, but not always the guiding factor in you “today” budget. Here is an example of a $450,000 mortgage and what the difference in what you will owe on a 3 year term.

2.34% – payments are $990 every two weeks = $402,578 owing in 3 years
2.59% – payments are $1018 ever two weeks = $403,604 owing in 3 years.
Your paying $28 MORE every two weeks ($2184 total) and owe $1026 MORE in 3 years. Total LOSS $3210! Planning is key. Stop giving away your hard earned money!

Mortgage monster is in the penalties you pay when you fail to plan.
Since many families today are getting in with 5-10% as their down payment. If you got your mortgage with many of the traditional banks, your current mortgage is $403,750, and you need to break your mortgage early your potential penalty could be $12,672! Going with a mortgage broker who can put you with a lender that has a similar rate your penalty would be significantly different – almost $10,000 dollars different!

Get a plan today to avoid future financial mistakes! If you have any questions, please contact me to discuss your specific scenario. APPLY online.