Scotia has always had a solid readvanceable mortgage (the STEP), but it’s been plagued by one nagging problem. Up until recently, you had to manually request a re-advance of credit when you made a principal payment.
No more.
The Scotia STEP is now automatically readvanceable. If you pay down $100 in principal (the minimum increment), then Scotia automatically increases your authorized available line of credit by that amount.
This change has been a long time coming and it corrects the biggest fault of the STEP. Mortgage planners and those considering the Smith Manoeuvre should be quite pleased by this new option.
One important side note: The auto-readvancing is not available with Scotia’s stated income program.
You state the biggest flaw over the step as in not being readvanceable, the true biggest flaw is trying to transfer or move this mortgage after it funds, good luck with trying to, as BNS registers the step with the 1st mtg, and makes it near impossible to transfer to another FI.
Hi Oliver,
I’m not sure if that issue is Scotia-specific. It’s really an issue with most readvanceables, wouldn’t you say?
Cheers,
-rob
Any word on when this will actually be implemented on existing STEP accounts?
I just checked mine, assuming I’d see my LOC be increased by the amount I’ve paid down my mortgage, but everything’s still the same.
Hi Michael, Not 100% sure to be honest. Best bet is to contact your branch on this one. – rob
Nice improvement. Greate to see a lender realizing the shortfalls with their products and fixing them.
Posterboy–They are not doing it because it was a product shortfall, they chose to not have it readvanceable and are now doing so to keep up with the marketplace as they are losing market share. They finally got the risk area to sign off.
I signed my mortgage papers about a week after this came into effect (about a month ago). They had a great rate and the auto limit increase made it an easy choice. I do plan on doing an SM, but need to pay down my principle since the mortgage is right up to 80%.
You can add this if you have an existing STEP, it must be FCT insured or you can purchase FCT insurance and have it added on.
Hi CF: I agree. This feature makes the STEP a much easier choice now. Even if you didn’t do the Smith Manoeuvre, the manual process and $5000 minimum made it such a hassle to readvance funds before. Can’t express how glad I am to see Scotia make this improvement. – Rob
BrokerBC: Thanks a bunch for passing that along.
Rob (and others)…
how does this STEP compare to the Manulife One or other ELOC products?
thanks,
Jeff
Hi everyone. Be careful with readvancing with STEP. They have just increased the secured LOC rate from P to P + 1%. THAT’S FOR EXISTING CUSTOMERS ASWELL.
I’ve been with STEP for about a year now and was shocked that my secured LOC is now P + 1%. I’ve tried arguing with the bank on the value of having a written legal document, but they got some subsection z someplace alowing them to change the rates.
Just beware that is happening.
Ravi.
All banks have pretty much gotten on the same page for P+1 rates, not just Scotia. They are also looking for more ways to tie your lending and accounts in so it is harder to switch. In this Uber-competitive marketplace, check what is important and if you need to make a wholesale switch.
I did, and moved my entire portfolio to another f/i – they made it easy!
I had a client and tried to switch them to another lender on a re-finance, out of Scotia. Their payout statement indicates, this mortgage is “NON-Transferable”. Client could not move his mortgage and had to stay with Scotia.
http://www.missmortgage.ca
You cannot “switch” out of a STEP but you can “refinance” out of one. They are not fully closed mortgages.