- Hey, it's Nolan, this is Mortgage 360
and today we're discussing:
where is the best bank in Canada to get a mortgage?
And what we're gonna do is we're gonna run through,
we're gonna compare all the banks.
We're gonna tell you the one little trick that every
single one of them has 'cause they all have at least one.
And at the end,
we're gonna get to our very favorite bank
and the one that we think is the best choice for most
consumers in Canada to get their mortgage.
But before we get into it, do me that favor,
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Okay, so let's talk about banks real quickly.
They all do certain things well.
If you want great commercial banking
or you want wealth management, RBC is the place.
If you want the best online trading platform
for self investing, then BMO is the to go.
And if you want a free iPod and a comfy couch
and the best technology in the industry,
then TD is your place to go.
And if you're like me and you have a parent who is
a banker for 47 years of her life,
you make sure that you go to whatever bank your mother
doesn't work at so that she can't see
where you're spending your money on the weekends.
My wife and I personally we have bank accounts
spread over all the different banks.
We have them at BMO, we have them at TD.
We have them at RBC and we have them at Scotiabank because
all of those banks do different things well.
And we pick and choose the products that we want for me
based on what that individual bank does well.
But how do we define the best bank for your mortgage?
Well, it's really simple.
We wanna choose the bank that has the least overall costs
over the life of your mortgage
and the one with the most flexibility, right?
You want the bank that's gonna cost you
the least amount of money.
And there are some banks that will cost you more money
even if the interest rates are exactly the same
and that's what we're gonna examine today,
is which bank is the one that makes the most sense for you?
And you won't be surprised that you don't wanna pick your
bank based on the lowest rate.
And we'll talk about why,
when we get to the BMO portion of this conversation
But more than just cost,
we need a criteria to figure out which one of the banks
is going to be the best option.
And here's how we suggest that we're gonna do that.
We're gonna look at their prepayment privileges
because what we find is the banks with the best
prepayment privileges have the best overall mortgage
and the best prepayment privileges mean
you can pay off the mortgage the fastest,
which means that you pay the least
amount of interest over time.
And what we found is that the greater the greed factor,
the worst the bank is for a mortgage
and the lower the greed factor,
the better the bank is for a mortgage.
And how are we gonna rank these as based on how quickly
they will let you pay out your mortgage.
And therefore the faster a lender will let you pay out
your mortgage, the lower the greed factor,
which makes for a better lender for a mortgage.
So let's get into this.
And what we're gonna do is we're gonna rank them
from worst to best, finishing with the best place
to get a mortgage in Canada, in our opinion.
So let's start with RBC.
There's a clear reason why we think RBC is the worst lender
to get a mortgage out in Canada
and that's because their prepayment privileges
are the worst.
They're the only bank in Canada that will only allow you
to pay 10% of your mortgage in lump sum payments
every year without penalty.
Now here's the interesting part is RBC clients
are the most loyal clients in the industry.
For whatever reason, maybe it's the connotation
of it being the Royal bank of Canada.
They don't wanna leave and all they wanna do
Okay, now slightly better is BMO.
BMO has great mortgages and
they've got low featured mortgages.
And you have to know which one you're getting
when you're getting a mortgage from this particular bank.
They have what's called their "Smart Mortgage,"
which is there no frills mortgage.
We've talked a lot about no frills in other videos.
We'll link them up here.
They've also got their normal mortgage,
which is for all intents and purposes, an awesome mortgage.
It has 20% prepayment privileges and often comes with what's
called a mortgage cash account,
which means that if you pay your mortgage in advance
and you need to get the money back out,
you're allowed to do that.
They're one of the few lenders
in the industry that does this.
It's an awesome feature that typically only comes with the
BMO mortgage,
But that being said, most people are rate driven.
And as a result, they're choosing BMO's Smart Mortgage,
and be BMO's Smart Mortgage is really only smart for BMO
because it comes with a few things
that aren't in the best interest of the consumer.
One it's got prepayment privileges similar to RVC is 10%.
It's also got what's called a bonafide sale clause,
which is essentially a no refinance clause or no leave
and go to a different lender clause.
And what that means is that you're stuck with BMO until
such time as you sell the property
or the end of the term comes up.
So if you get offered a better rate elsewhere,
if you wanna refinance and you don't qualify at BMO
and you wanna go, too bad because you've got
their smart mortgage, you're pretty much stuck with them.
So that's their little trick
and you've gonna watch out for that
when you're dealing with BMO.
Now, moving on to CIBC.
CIBC, depending on the product you get
has different prepayment privileges.
It can be 10, 15, 20%, depending on what you get
and what you've negotiated.
Now, similar to BMO,
the lowest prepayment privileges often come with the product
that is the least flexible,
the highest ones with the product that is the most flexible.
But in order to get that higher prepayment privilege,
you have to pay a higher rate in most cases.
Now you'll know that when we get to CIBC they have what's
called a hundred percent increase your payment option.
Now this is an interesting option because
what it means is that if you wanna increase your payment,
by up to double the original payment amount,
you can do that,
which is really cool because let's say you're paying
$1000 a month and you decide,
Hey, now I can afford to pay $1,500 a month.
You can increase it by 50% to $1,500 or by
if you want it to a hundred percent to $2,000
and they will allow you to do this.
Now often they'll let you pull it back if you want to,
but there are privileges similar to this that are better
than increasing your payments by a hundred percent
and we'll get to those
when we start talking about Scotiabank.
So CIBC little trick is this
The cashback.
They love the cashback and here's why,
so what they'll do is upon closing, they will say,
okay, we're gonna give you a $5,000 cash back, for example.
And let's say in year three of your five year term,
you decide that you wanna leave your mortgage.
You either wanna leave to go to a different lender or
you've sold the property.
Well, CIBC is going to make you pay back
that $5,000 in its entirety.
In fact, if you pay off the mortgage a day
before your term ends,
they will still expect you to pay back the whole $5,000
even though you've paid them five years worth of interest
on that mortgage.
We've had this happen with clients where we request
appeal statement a month early and CIBC comes back
and says, okay, well you owe us the mortgage
plus the penalty, plus this $5,000 we gave them.
Now if they were to pay off the mortgage
on the renewal date,
they wouldn't have to pay the $5,000 back.
Most banks do cash backs,
but they will only make you pay back the amount
that's relative to the amount of time
you have left on the mortgage.
So let's say you had a $5,000 cash back and you had
two years left on the mortgage,
they're only gonna make you pay back 2000
not the whole 5,000.
But CIBC is a little bit different,
they use this as a retention strategy.
It works well because that $5,000 cashback
is usually long gone by the time they come back
asking for it because you already earned your mortgage.
So, you know, cash is free only if you end up
having your mortgage to the end of the term with CIBC.
So let's move on to TD's now.
TD's got very similar prepayment privileges again to CIBC.
They have the increase your payment
by up to a hundred percent,
they have 15% lump sum prepayment privileges
on all of their mortgages
so you can pay up to 15% per year without penalty.
This is a great lender.
They have a lot of great features.
They have a lot of great products.
They're new to Canada product is second to none.
Absolutely phenomenal lender.
We love them to death.
The one thing you have to watch out for, their little trick
is you have to watch out for their collateral charge.
So what TD likes to do is they like to register their
mortgage for up to 125% of the value of your property,
which is way more than what you actually borrowed.
They're the only lender in Canada that we know of
that does this.
And what that means is that if you ever
wanna get a second mortgage,
or you ever wanna get a line of credit
with a different bank, you can't do that.
You're pretty much stuck with TD because they've said,
Hey, nobody else can lend against this property
except for us.
So something to watch out for with them.
We don't love that about them,
but that's not a super, super big issue,
but it's just something that's different
from the other lenders,
so something to watch out for there.
Again, TD great technology, great online user interfaces,
free iPods, free TVs.
Like they are the lender that is most millennial friendly
in my mind or bank that's most millennial friendly
in my mind,
but we don't think they're the absolute best bank
to get a mortgage up in Canada.
So we've gone through four of the five major banks in
Canada, who's left?
Who's the best bank to get a mortgage on in Canada?
Well, it's Scotiabank, here's why.
So Scotiabank is by far the leading lender
when it comes to paying your mortgage off quicker.
In fact, they are the number one lender when it comes
to being able to pay the least amount of interest
over the term of your mortgage.
Why?
Because their prepayment privileges are awesome.
Their standard mortgage comes with a
15% prepayment privilege,
which means you can make lump sum payments
up to 15% per year.
And if you negotiate with them,
they'll increase this to 20%.
They've also got the ability
to increase your payment by 15% per year.
Now you may be thinking well,
TD and CIBC will allow you
to increase it by a hundred percent.
Yes, well, let me get there.
15% is the amount that you can set your payment higher
than it was in the year before,
but they've also got another feature and that's called a
"Double up payment".
And what the double up payment allows you to do
is double any payment you would like.
So if throughout the course of the year,
you wanna double up every single payment,
you can do that and you've increased your payment by
a hundred percent.
Plus you can use your 15% increase to increase it by
basically 115%,
which makes it the best increase payment option
in the industry.
The other thing that you can do is you can decide not to
increase every single payment.
You can decide you just want to double the payments
that you want to.
And what that means is that you can turn on the double up
and you can turn it off and you can do this payment
or next payment, or the one, three months from now,
but you don't have to do them all.
With the hundred percent increase your payment options
at CIBC and TD Canada Trust have,
once you've set your payment to that amount,
you pretty much have to leave it there
you can't fluctuate up and down as you feel.
Now the other really great thing
that we love about Scotiabank is lets
you use your double up payment option.
Well, you can also choose to miss a payment down the road,
which is absolutely awesome because let's say you get a
little bit too aggressive paying down your mortgage
and you've doubled up and doubled up and double up
and you decide,
"Hey, we want to take a break completely
from our mortgage payments."
You can do that with Scotiabank.
We absolutely love it.
Now we did mention every single bank has a trick.
What is Scotiabank's?
Well, when they port a mortgage,
they do something that's a little bit tricky.
What they do is they keep your original mortgage
and if you borrow any new funds,
they start a new second mortgage.
So you end up with two mortgages on the new property
that you're buying.
And what that means is if you don't get the maturity dates
to line up, you could end up with a mortgage that
renews in 2021 and then the second portion renews in 2023.
And because they were new at different times,
you're always stuck with a penalty
on one of the two mortgages.
So the trick to Scotia's trick is to make sure
that when you borrow new funds,
you always get the new mortgages maturity date to line up
with the other mortgage.
So if you've got two years left on your mortgage reporting,
you're borrowing new money,
the new money you wanna get on a two year mortgage
instead of a five year mortgage so that they both
come up for renewal at the same time.
And you can ultimately end up having them merged into one
mortgage so you can avoid being forced into a penalty
if you decide to make a change down the road.
So at the end of the day in our minds the choice is clear,
when it comes to getting a mortgage at a bank,
Scotiabank is the clear winner, there is nobody better.
Now, are there other lenders
that have better products, better features?
Maybe, we'll discuss that in our next video,
but for the most part,
if you're going to get a mortgage from a bank and you insist
on getting it from a bank,
not necessarily a lender that specializes in just mortgages,
which has a lot of merit to it, by the way.
But if you insist on getting a mortgage from the bank,
Scotiabank is by far the place to get your mortgage.
TD is a close second, everyone else, you know what?
They're all good lenders.
They're all good banks.
They all have great things that they do really, really well,
but none of them compare to Scotiabank when it comes to
getting a mortgage.
So if you found this information useful,
if you'd liked what you saw,
please hit that subscribe button,
hit the notification bell and hit that like button for the
YouTube algorithm.
And most importantly,
if you're subscribed,
you're gonna get to see that next video,
where we talk about non bank lenders.
And perhaps we have a competitor to Scotiabank when it
comes to the best place in Canada to get a mortgage.
Cheers.