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The MCAP Value Mortgage

MCAP MCAP has entered the no-frills mortgage market with a brand new product.  It’s called the MCAP Value Mortgage.

The Value Mortgage is designed for folks without the desire or means to pre-pay their mortgage.  First-time homebuyers are a prime example.

The product will be launched on Monday at a rate of 3.59%.  That’s at least 1/4% below typical 5-year fixed rates.  Over five years, this equates to an interest savings of roughly $1,189 on a $100,000 mortgage with 25-year amortization.

So what’s the tradeoff?  To get the rate down, MCAP had to throw out some extras.  Specifically:

  • There are no lump-sum pre-payments (although you can have accelerated payments and also increase them up to 10% per year)
  • It is fully closed (i.e., no refinancing and no breaking for five years unless due to a bona fide sale of the property)
  • There are no pre-approvals

Generally speaking, no-frills mortgages have slowly been picking up steam.  Industrial Alliance (INALCO) has a version that is advertised around the web for under 3.65%.  That’s given the limited number of INALCO-approved brokers a huge marketing advantage.  MCAP has now leveled the playing field a bit, enabling far more brokers to market rock-bottom rates.

Here are more details on the product:

  • Business type:  New purchases or refinances (No transfers. New business only.)
  • Rate Guarantee:  30 days
  • Term:  5 years
  • Occupancy:  Owner occupied only (rentals and second homes not allowed)
  • Max. LTV:  95%
  • Min. Credit Score:  620
  • Ratios:  32% GDS and 42% TDS (no exceptions)
  • Income:  Income qualified only (no stated income)
  • Penalty:  3-months interest/IRD (if property is sold)

MCAP is Canada’s largest independent mortgage company, with over $30 billion in assets under administration.  MCAP mortgages are available only through MCAP-approved mortgage planners.