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The MERIX 50/50 Wise Mortgage
“…the wise choice in today’s economy”
Don’t choose between Fixed and Variable. Choose Both! (scroll down for Features and Specific Detail)
An exciting day for all us: Launch day of the 50/50 Wise Mortgage….”the wise choice in today’s economy.” Since the announcement, the initial feedback has been
excellent and many of you already can see this as a great strategy to use with your clients during these times.
Remember the following: Today’s effective rate on the 3rd of June for the 50/50 wise mortgage is 3.37%.
Key considerations….
- 50% of mortgage is at the lowest ARM rate in the Industry…with flexibility to convert to a fixed…
- 50% of the mortgage is secure at a competitive 5 year fixed rate
- Combined total is at the lowest current 5 year effective rate of approximately 3.37%.. (weighted average interest rate given today’s current pricing!)
- Effective rate is lowest when mortgage balance is greatest…for maximum interest savings impact..
- It would require a move in prime to north of 3.50% to reach a 3.99% effective weighted average rate…
- Provides flexibility to prepay 20% annually or increase payment 20% annually on the portion of best advantage…
- Bank of Canada statement and intention is to leave the B. of C. rate steady until at least June 2010…
For your someone that likes the ARM rates and who wouldn’t at Prime +.40%, but are worried about future rate increases, you should consider the following:
“The Bank of Canada has indicated that future rate increases are not likely until mid 2010 and only half of your mortgage is subject to any rate increase. Today’s Prime at 2.25% would need to go up to 3.75% for your effective rate to jump over 4%. In the meantime, you can enjoy the benefits of the ARM rates knowing that you have hedged against any future rate increases. The ARM portion is also convertible to a fixed rate and Merix only has discounted rates if we are going to lock-in.”
The same applies to persons who like the security of fixed rates, but know the advantages of going into an ARM
If you have a little more tolerance for risk, then the ARM at Prime +.40% is probably the way to go. But please first consider this new 50/50 mortgage and call us today. 416-440-1224 x22
Specifications & Features: ______________________________________________________________________ Features:
- 50% of mortgage amount is at current 5 year fixed rate pricing (now at 4.09%)
- 50% of mortgage is at current 5 year ARM pricing (now at Prime +.40%)
Ideally suited for:
- Customers who are unsure whether to go Variable or Fixed. This product eliminates the biggest dilemma facing mortgage borrowers in today’s economy.
- Customers who want a low interest rate and are more risk-averse than a typical ARM client. The weighted average interest rate on this mortgage is approximately 3.38% given today’s current pricing! And only 50% of the mortgage is subject to interest rate risk.
- Customers who want added flexibility in paying down their mortgage. The two portions operate independently of each other, so your customers can choose to make prepayments on the fixed portion which has the higher interest rate or they can choose to pay down the ARM portion aggressively which in turn further minimizes their future interest rate risk!
- Customers you may be on the verge of losing to a competitor.
Additional Features:
- Only one charge is registered (conventional charge, not collateral).
- Each portion operates independently of each other in terms of payment frequencies, prepayment privileges, and prepayment penalties.
- Each portion has the usual 20/20 prepayment privileges.
- This product will be part of our regular offering (i.e. not a quick close).
Convertibility:
- The ARM portion can convert to a fixed rate at any time without penalty, HOWEVER, the term cannot be extended.
- The ARM would convert at the then-prevailing MERIX rate for the term closest to the remaining term on the ARM. This ensures the two portions renew/mature on the same day.
Portability:
- The mortgage is portable, either to a new 50/50 product or the customer can lock in the arm portion prior to porting and port the whole mortgage as a blended fixed rate. No penalties would be charged in either scenario.
Rate Hold:
- 120 days rate holds on purchases, 60 day refinances.
- No Transfers/Switches permitted.
- No pre-approvals offered.
Additional Info:
- Max amortization is 35 years
- Max LTV is 95%
- 15 bps rate premium applied to both portions for Stated Income or Non owner occupied Rental.
- Product will qualify at the 5 year fixed rate (unless the 3 year published rate is higher).
- Second Homes permitted.
- No specific credit criteria – general lending guidelines apply
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