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Wednesday, July 27th, 2016

Super Prime Mortgage

Best Mortgage Rates in BC get Better

In the past, having “excellent” credit and having “good” credit didn’t make a whole lot of a difference when applying for a mortgage. But times are changing.

XCEED Mortgage has launched a new product called the “Super PRIME” mortgage.  It was developed to reward premium clients,  separating them from clients with credit that is simply “good”.

Today, it has a rate of 2.84%, which is now one of the best mortgage rates in BC for a full-featured and reasonable mortgage with a five-year term.

Michael Jones, president of XCEED  said that in the past, lenders gave everyone with insured mortgages about the same rate. He claims that Super PRIME  is a way to provide additional value to the top tier of customers, compared to the majority.

As far as Jones is aware, there are no other lenders in the market providing a comparable premium credit mortgage.

A definite business case exists for providing such a mortgage product says Jones.  Premium borrowers are simple to manage and easy to approve. Customers who manage their credit well and save in a disciplined fashion have a much lower chance of defaulting.

In order to qualify for a super-premium mortgage, borrowers will be required to make a 10% down payment as opposed to the traditional minimum, 5%.  This should further decrease the rate of defaults.

In the wake of XCEED’s  announcement, other lenders are also expected to release similar super-premium mortgage products.  That benefit to lenders is that the market can be further segmented, creating differentiation and drawing customers of a higher quality.

So what are the benefits of the super PRIME mortgage?

For starters, those who qualify and are looking for the best mortgage rates in BC get a fantastic rate. Penalties for prepayment are based on MCAP‘s discounted mortgage rates,  not the posted rates that many banks are dealing in. There is penalty discounting for borrowers who choose to refinance before maturity. There is no fully closed term, as in the case of some other discount mortgages.  There are also no unusual charges related to early breakage and no reinvestment fees.

But those interested in the best mortgage rates in BC should also be aware of the downsides.

As a rule, XCEED is a high-ratio  lender; all mortgages are securitized. This is according to Gleb Ioussoufovitch,  the sales and marketing director of XCEED.  Because of this, all mortgages need to be insured. “Flow”  insurance provided by CMHC is used and paid for by the borrower. So even clients with down payments larger than 20% will end up paying CMHC premiums, making the super PRIME mortgage only suitable for borrowers putting 10% to 19.9% down.

This super-premium mortgage also mandates a minimum amortization period of 20 years.  Prepayments can only be made in lump sums one time per calendar year.  If the borrower needs  for any reason to increase their mortgage, they will have to pay a penalty; this penalty will be blended into their new rate if the client would like. While many lenders will allow a 30 to 90 day gap in between a home purchase and sale when porting, both properties must close during the same day for a super PRIME mortgage.

This is a welcomed product for brokers and sets XCEED ahead of its peers by offering the best mortgage rates in BC.

 

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