Monday, July 12, 2010

To renew or to refinance? Bank or broker?

Crazy 9 days ahead!  We are headed to the East Coast next week for two weddings.  This adds a bit of a wrench to our already chaotic plans, since the condo's mortgage is up for renewal during the 11 days we're away, and the new house closes 4 days after we return.  So lots to sort out before we go next week!

After Friday's phone call from BMO, you would  think our mortgage decision should now be an easy one.  Not so!  I actually spent a good portion of Friday evening on the phone with the Invis Mortgage Broker (yes, this is what my Fridays have become lately) going through all kinds of numbers (Math and Stats was my major after all!).  Here is where we are at:


  • Can get us a 3.99% 5-year fixed rate on both the renewal and the purchase.

  • Can't refinance the condo, so that means we are only putting 10% down on the new home, and will be paying CMHC.

  • Offers free banking (and I think Air Miles too!  Definitely have to double-check on that!)


  • Can get us 4.34% 5-year fixed rate on the renewal, and can refinance that one, getting us an extra 10% to put down on the purchase, and saving us the CMHC premium on the new house.

  • He feels that a rate of 3.99% is not really attainable for the new home, but is willing to take a cut of his own commission to match that rate.   (From what I understand, BMO is on a huge customer service kick right now, and has unbeatable low rates!)

So where does that put us?  Well, I put together some pretty involved spreadsheets today (honestly, I LOVE Excel), and compared all the different scenarios.  The differences appear to be pretty negligible.  The higher interest rate, despite saving us the CMHC premium altogether, would cost us about $1,600 extra in interest over the first 5 years.   What is more notable, is the distribution of interest - with Invis, more interest would be paid on the income property, where we can claim it on taxes.

So the answer to where that leaves us?  Optimistically waiting for even more rates drops?  But also... caught in a huge moral dilemma.  Caroline, who I've been dealing with at BMO, and Bill at Invis, have both been exceptionally helpful.  Both have spent endless hours talking with me on the phone - evenings and weekends included.  And both, in my opinion, deserve the business.  The catch, is that I really don't think there's anything in it for Caroline if I go with BMO, whereas Bill's income hinges on commissions.  My fiance and I have both been debating whether there is a benefit to going with a big bank rather than the more obscure/less-known lenders that the mortgage brokers find.  Anyone have any thoughts for/against either side?  I'm getting pretty stuck here, and like I said, the rush is on!  I've got  to have the renewal finalized by next week, and everything really hinges on which option we go with.

You know, my parents have bought me a variety of "decision makers" over the years, and go figure they are the one thing that I've actually packed into boxes already!

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