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.

  1. You can get 3.59% for a 5 year fixed with the banks right now, and it will not be a no frills mortgage, why bother with this, when I can get same rate with all the frills.

  2. Are we trying to re-inflate the bubble or what? I’ll never understand why people want to make banks rich and why these products are in demand. Before I got smart, I used to stretch payments out. I always thought money now was more important, but it’s not, what is important is freedom and choices. This product has neither and such an arrangement doesn’t either. Now it’s going to come down to roulette for people. When they have to renew and interest is 5% higher, then what? Another RE crash?

  3. This is a fantastic website with the comment sections the most valuable.
    I just got 3.7 at TD on a transfer. I organized all my documents including income verification, recent property assessment notice, mortgage summary sheet from my current bank and my Equifax report. I then went to Kinkos and made pdf files (the guys at Kinkos basically did it for me).
    I then emailed this documentation with a simple summary of my situation to banks. I was planning to start emailing to brokers as well when I got the 3.7% offer from TD (I first dropped by for a face to face one minute to let them know it was coming).
    In my email I referenced that I puruse both this site and http://www.ratesupermarket.ca. In other words if they wanted my business they had to give me the most competitive rate.
    I think having everything organized electronically beforehand helped as it showed them both that I was seriously shopping around and I’m easy to deal with (no chasing me for paperwork).
    I was prepared to go to a broker but didn’t need to go that far. I’m guessing I could have got that 3.59 Herb is talking about but 3.7 was close enough.

  4. TD quoted me 3.95% last week. It is really aggravating how banks give different rates to different people.
    I decided to try a mortgage broker instead. The broker I used was fantastic (I am not sure if I can list her name here?). She gave us excellent advice a found us a rate of 3.69%.
    To be honest there was a certain satisfaction by not giving a bank my business.

  5. Hi,
    I just got a pre – approval from MCAP for a 5 year fixed rate. The offer says however, that the mortgage is closed. I am a first time home buyer and would like to know if this is something they change when they commit to giving you the mortgage. I.e when you make an offer on a house. I would like the option to prepay. FYI its a 3.8% fixed rate. Thanks in advance.
    Brian

  6. Brian, All of MCAP’s 5 year fixed mortgages are closed. I believe some may have a clause that says you can’t repay them in full during the first three years without selling the property. Maybe someone else can comment on that.
    All MCAP 5 year fixed mortgages have 20% annual prepayment allowance except the Value Mortgage.

  7. i am buying property in london ont , has 5 units and looking for mortgage, but looking with 20 % down , price about 360,000. all rented now. so 2 options, i could use 1 unit for my office or live in one.
    iam looking for mtg of 1.75 variable locked for 5 yrs . 35 yrs amt.
    to meet requirements not a problem.
    possible or not . quick ans.
    thanks les

  8. We got a no-frills mortgage from MCAP in 2010 and it was the worst decision we ever made. The rate was good at 3.39% fixed (was 3.49% but my broker bought it down 10 basis points as she has pull with some lenders); however, you can’t get out of the mortgage before the 5 year term AND you can only make so much percentage in extra payments in that 5 years (can’t remember exact % but it’s low). In the first 5 years of a mortgage is when you should make the most extra payments in order to pay it down faster. Read the fine print before you sign on for mortgages like this.

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