Most mortgage shoppers are still in love with fixed rates, but many have been licking their chops with variable rates near 2%.
That’s driving new interest in short-term variable mortgages. Just last Thursday, Home Trust became the 2nd lender in eight days to unveil a one-year variable-rate product. (Street Capital launched its on January 20.)
Armando Diseri, Home Trust’s VP of Mortgage Lending for its Accelerator Products, says: “We noticed that there has been an increased demand for shorter-term mortgages because some people think that rates have not bottomed out.”
“In order to satisfy this demand and give our brokers and consumers more options, we felt introducing the 1- and 3-year Variable Rate Mortgage was the sensible thing to do.”
One-year terms offer variable-rate fans the chance to renew into potentially fatter variable-rate discounts in one year, as opposed to waiting to renew a 3- to 5-year term.
Of course, if you plan to convert your new variable mortgage to a fixed rate within 11 months (you can do that at no cost), then a lower variable rate and better conversion rate are more important than the term you pick.
For those familiar with Home’s products, its new 1-year term has the same features and guidelines as its 5-year variable, with one exception. Unlike Street Capital, Home Trust passes the default insurance premium through to borrowers on its conventional one-year variable. These premiums range from 0.50% to 1.00% of the principle amount, depending on loan-to-value.
Home Trust and Street Capital have other important differences too, like rate structure, pre-payment policies, and broker incentives. Talk to a mortgage planner if you’re curious about them.
Last modified: April 28, 2014
Home Trust also has a extensive and punishing service charge menu that should also be taken into account
Really? I don’t think their fees are much different from other lenders, and they rarely apply regardless.
rarely apply? None of the big banks I know of charge a $120 annual administration maintenance fee or many of their other charges as detailed on the Home Trust website.
I would hardly call a annual fee rare or do you know something that I don’t and suggest Home Trust often waive or rarely apply their standard servicing charges?
Hi Banker, Just to clarify, maintenance fees do not apply to regular mortgages at Home Trust (like the one in this story). The maintenace fee applies only to their non-prime mortgages.
Cheers,
Rob
Can someone clarify how Home Trust charging penalty on their variable? Do they allow refi before 3 years? Still confused with my commitment. Thanks
It is 3 months interest to break it.
Home trust administration fee is $300 as of 2015..they increase it every year. Yr 2014 was $240. Based on what?
And do not fool yourself by allowing them to pay your property tax. That’s another $300 fee.
Home trust applies maintenance fee 300$+tax administration fee+interest adjustment fee it is not good policy.