MCAP’s FlexStar Mortgage Impresses

MCAP Mortgage innovation never stops.  MCAP’s new FlexStar product is case in point.

FlexStar is a 5-year variable-rate mortgage that’s totally readvanceable (you can re-borrow the money that you pay back).

FlexStar boasts several unique features:

  • It offers a line of credit at a discount to prime (most lenders don’t discount their credit lines).
  • You get a debit card to use any way you like.  Purchases are simply added to your mortgage at a low interest rate.
  • If you need to save money, you can make interest-only payments any time you like.
  • You can pre-pay up to 50% of the original mortgage within 5 years–with no penalty!
  • In some cases, you only need 5% down.  That makes it the highest loan-to-value readvanceable mortgage on the market.
  • You can convert it to a fixed-rate mortgage any time.

This product is by far the most innovative we’ve seen in recent memory.  It plays right into one of the hottest trends in the industry–readvanceable mortgages.  People absolutely love the ability to re-borrow their equity without having to reapply or get a line of credit.

It also offers the lowest down payment (5%) of any interest-only mortgage in Canada.  You’ll need to get mortgage insurance if you put down less than 20%, however.

For more information, contact us or your favorite mortgage planner.

  1. Hi FT,
    Yes. Funds can be transfered electronically to other bank accounts.
    The typical rate today is 5.99% (for both the “mortgage” and “line of credit”). The rate depends on the applicant, however, and may be higher or lower. Consult a mortgage planner for a precise quote.
    Note, however that the mortgage and line of credit are one in the same. In other words, there is no seperate line of credit or sub accounts.
    Because the product is so new, MCAP doesn’t have any sample statements yet–so we can’t evaluate if FlexStar would be any good for situations where you have to track investment interest (like the Smith Manoeuvre).
    More to come soon…
    Rob, Co-Ed. CMT

  2. I was reading through something google found for me and noticed that this mortgage is callable at any moment, is this standard for most mortgages? I don’t recall reading anything like that on my mortgage, but I may have to double check.
    “The Lender may, at its option and at any time, demand all amounts outstanding under or in connection with the
    Mortgage Loan be paid forthwith.”
    Found:
    http://www.mcapsolicitor.com/english/documents/PDF/SCHEDULE_I_English.pdf

  3. Traciatim: Many readvanceables and HELOCs are callable. Unless you default, however, lenders almost never call them because doing so would mean bad PR and a lost client for life.
    Brian: No. MCAP can only receive mortgage payments from another financial institution (their bank account) via a pre-authorized electronic transfer. It’s not the world’s best Smith Manoeuvre product. It’s more for people who don’t plan to use the credit readvances for tax deductible investment purposes.

  4. ” . . . lenders almost never call them . . . ”
    That’s interesting, my Dad had a mortgage called in the 80’s because he had lost his job and was starting a business. He was even making his payments. The bank claimed that his credit situation had changed and was now no longer an acceptable risk. We had to move and start renting.
    Also, these borrowers will be the ones that are called when the lender gets in to any financial trouble, when they have to they will call their loans and people that can’t immediately pay will lose their homes. I suppose that’s the risk the borrowers take when they get their HELOCs to invest the money and try to get ahead, but I bet there will be tons of whining when Canada slows down following the US lead soon.

  5. Hi NSB,
    The insurance premium would be 3.25% with a 5% downpayment.
    The FlexStar is similar to a HELOC but:
    * It offers a discount from prime
    * It requires less down
    * Prepayment privileges are 50% in the first five years
    * After 5 years it’s fully open after that like a regular HELOC.
    Have a great weekend,
    Melanie

  6. Hi Rob,
    It’s a very new product so MCAP hasn’t added it to their site yet. Just email me at:
    melanie @ myvirtualmortgage broker . com (without the spaces)
    …and I’ll shoot you over a brochure.
    Cheers,
    Melanie

  7. Hi Melanie, That rate is pretty good for an interest-only mortgage. How long can I keep it as interest only? I think some lenders make you convert to a fixed rate after 5 years or something.
    Kev

  8. Hi Kev,
    If the mortgage is 80% loan-to-value or less then they’ll let you make interest-only payments for up to 25 years. Otherwise, it’s for the first 5-10 years only.
    Another nice feature of FlexStar, at this time, is that it doesn’t appear on your credit report (unless you default). Most other lenders do report credit lines to the bureaus, and that can weigh down your credit score.
    Cheers,
    Melanie

  9. Melanie,
    Can this product be added or coverted to if I already have a 1st mortgage with MCAP? If so, are there fees involved for myself? I would like to have the equity from my house available to borrow.
    Thanks,
    Bruce

  10. Hi Bruce,
    Unfortunately FlexStar is not currently available to existing MCAP clients (I’m not sure why). This is expected to change “soon” but no one knows when exactly.
    If/when it does, you could refinance into it, which entails the typical legal and appraisal fees (and applicable penalty if breaking an existing MCAP or non-MCAP closed mortgage).
    We’ll try to post here once we get word from MCAP that they’re allowing their clients to get it.
    Have a good weekend,
    Rob

  11. Melanie
    I already have a HELOC with PC Financial and a 1st mortgage with CIBC. I have borrowed from HELOC for investment and the interest I pay is tax deductible. Can I transfer my mortgage and HELOC to MCAP’s flexstar without losing tax deductibility? Please advise. Thanks.
    Jaspal Cheema

  12. Hi Jaspal, MCAP just pulled FlexStar from the market so unfortunately you can’t move there anymore. Even so, we wouldn’t recommend FlexStar for investing because it’s too hard to track the interest.

  13. Hithere
    My existing mcap mort.is up for renwal in august and i would like a brocure on the flexstar variable mort.
    I’m looking to do a debt consolidation and curious what my options are
    tnx Lorne

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