Mortgage Renewals
Why do clients renew their mortgage?
Their current term is up, or they are renewing early to take advantage of favorable interest rates.
What’s the difference between a fixed-rate and a variable-rate mortgage?
A fixed-rate mortgage has a set interest rate that doesn’t change for the entire mortgage term.
A variable-rate mortgage has a rate that isn’t set, so it can fluctuate up and down with the prime rate during the mortgage term.
Why do clients refinance their mortgages?
•They want to make a major purchase and then blend the expense into their mortgage
•They want to blend their existing debt into their mortgage
•They want to improve their cash flow
What’s the Home Power Plan?
The HPP is the combination of a PLC and a mortgage. As the mortgage portion is paid down, the PLC limit automatically increases.
Why might a client choose to renew into an open term?
•Plan on selling in the near future
•Do not want limitations on prepayment
What’s the difference between an open and a closed mortgage?
An open mortgage can be repaid at any time and up to 100% of the mortgage, without penalty.
A closed mortgage has a prepayment limit (for example, 10% of the mortgage), which can’t be exceeded, otherwise a penalty is applied.
What minimum amount does a client need to increase their mortgage by in order to qualify for a mortgage refinance?
$10,000
What’s the maximum PLC amount a client can borrow under the Home Power Plan?
65% of the property value (lower of appraised value or purchase price)
For example, $500,000 property x 65% = $325,000 PLC
What’s the minimum acceptable income for a mortgage renewal?
$0, if the client already has the mortgage but does not currently have acceptable income we can still renew into a new term!
What is a Conventional Mortgage?
What’s the minimum LTV required so that a refinanced mortgage remains a conventional mortgage?
80% or less
What’s the maximum combined amount of mortgage + PLC a client can borrow under the Home Power Plan?
80% of the property value (lower of appraised value or purchase price)
For example, $500,000 property x 80% = $400,000 HPP (mortgage + PLC)
Can a client apply for an HPP PLC while also renewing their mortgage?
Yes!
(If adding new funds (HPP or refi) as part of the renewal process, full prequalification must be completed and transferred to eMortgages.)
Why do clients renew their mortgages early?
•They want to take advantage of lower rates
•They want to take advantage of early renewal offers
•They want to lower their mortgage payments
•They want to pay off their mortgages faster
What are the 2 types of rates clients can have when they refinance their mortgage?
Fixed or variable
The mortgage portion of the Home Power Plan is optional. Is the PLC portion also optional?
No, the PLC portion is mandatory; however, it can be as low as $1.
When can a client renew without penalty?
•<150 days if renewing into a term longer than 3 years
What’s the calculation for home equity?
Property Value x Maximum LTV (80%) – Mortgage Balance
How will you explain the features and benefits of a mortgage refinance to a client?
“Refinancing your mortgage lets you blend outside debt into your mortgage, which saves you money because you’re paying a lower rate and it makes life easier because you’re only making one payment.”
How will you explain to a client the benefits of the Home Power Plan?
“As you pay down your mortgage, you reward yourself with a larger and larger credit limit on your PLC, so when the time comes to buy new furniture, do home renovations or take a well-deserved vacation, the money is there for you.”