HSBC launched a great new promotion for mortgage planners this week on fixed and variable-rate mortgages.  That’s made us look twice at HSBC’s venerable Equity Power Mortgage (EPM). 

If you’ve got at least 20% to put down, you might find the EPM a very interesting option.  Here’s a quick rundown…

The Basics

• Maximum Loan-to-value:  80%
• Minimum credit score:  650
• Rate options:  Fixed, variable, or both

What we Like

• The EPM is a hybrid mortgage.  You can get part of your mortgage at a variable rate and part at a fixed rate. This is key if you’re big on debt diversification.
• The variable portion is fully open after 36 months (i.e.  no penalties for breaking it)
• You can get a fixed payment on the variable-rate mortgage so changes to prime don’t raise your payment (exceptions apply).
• Even though 80% is the maximum loan-to-value, HSBC can register the mortgage for up to 100% of the home value.  This let you increase your credit limit later (e.g.  if your home value rises) without doing a full new application and paying legal/closing fees.
• You can have five or more sub-accounts in the line of credit. (Good for separating investing and personal borrowing)
• It’s portable

Miscellaneous

• You can pre-pay up to 20% per year, in one lump sum, or by doubling up monthly payments periodically.
• Payments can be increased annually up to 20%.
• To readvance funds you have to call the branch and sign paperwork.  We prefer automatic readvancing, a la FirstLine’s Matrix, RBC’s Homeline, etc.  But if you don’t use the credit line regularly for investing then it’s not that big a deal.
• HSBC, last we heard, charges a $25 fee per re-advance.
• There’s no 40-year amortization on variables, only on fixed rate mortgages.  Variables have a maximum 30-year am.
• The EPM is a collateral charge, and is not transferable.
• Call a mortgage planner for complete details.

The EPM’s interest rates are a bonus.  If you’re closing by August 31, 2008 and have an excellent credit/income profile, you’ll get outstanding interest rates on this product.  Call any mortgage planner or contact us for a quote.