What is Investors Group 1.99% Variable All About?

“BMO and IG (Investors Group) have started a “Mortgage War” with the rest of the industry. First it was BMO’s 2.99% fixed 5 year and today IG rolled out a 1.99% variable rate mortgage. To no surprise IG’s 1.99% product isn’t all it’s cracked up to be, just like BMO’s 2.99. Here’s some info we know about it:

– Not available through the broker channel

– It’s a 3 year closed variable (adjustable) rate mortgage

– Rate is Prime minus 1.01%

-Sales only clause (meaning the only way to break this contract is to sell your home)

– ALL IG’s mortgages are registered as collateral mortgages, just like TD Bank

Some things to consider, if you think this is as good as sliced bread:

– there was no mention of portability. This would leave you breaking your contract, paying a penalty and starting a new contract.

– if you are considering locking into a fixed rate mortgage after a few years of low rates, will you be offered best rates? Currently IG is offering 4.99% as their best 5 year fixed. Is it worth it to have a low low rate for a short time, only to lock into a SUPER HIGH fixed rate later?

– Sale only clause. Ok you’re selling and breaking this contract, will you be paying very expensive IRD penalties to get out? You don’t want to sell, you want to re-finance early you say? No problem, but you can ONLY re-finance back with IG, pay a penalty and more than likely lock back into a high, fixed rate product. Likely your payment is much higher than it was when at 1.99%, so is it worth it all in the end?

– This isn’t available through the broker channel, so how will their service be? Traditionally investment companies have terrible service both post and pre-funding. Do you want to be attached to a lender that offers ONE good product with many strings attached?

– IG wants ALL of your business. They want more than just your mortgage, so look for the “hard sell” to transfer the rest of your portfolio to them.

As I have said before it’s not always about the rate. As a homeowner you need to look more into the actual product and the “strings attached” than just the rate. For the record, as of today our best 5 year closed variable is at Prime minus .60% = 2.40%. This offer has FULL repayment options, NO  sale only clause, available through the broker channel, high or low ratio (big or small down payment), lump sum payments allowed up to 20%, double up payments allowed and the ONLY penalty to break early (should you wish), is 3 months interest. The payment difference on a $300,000 mortgage is only $62 per month, comparing the 1.99% to our 2.40%.”

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