“No-frills” mortgages have become a tempting option for home buyers with limited pre-payment ability. The newest entrant in this segment is Street Capital’s “Street Sense Closed Adjustable Rate Mortgage” (ARM).
The Street Sense Closed ARM is a highly-discounted, fully-closed variable with minimal pre-payments. The benefit it offers, in exchange for less flexibility, is a lower rate. The Closed ARM’s rate is intended to float about 5-10 basis points below most competitors (most good lenders currently stand at prime – 0.50% to –0.60%).
“The Closed ARM is a mortgage for a client who just wants a rate and really has no intention of refinancing their property,” said Street Capital President, Paul Grewal.
"This product is not meant for everyone. We wanted to test the market and expand our product offering to pick up additional volume."
More details on the Closed ARM:
- Term: 3-year or 5-year variable rate
- Early Exit: None. No refinance or early payout is allowed unless there is a bona fide sale of the property.
- Pre-payment Penalty: 3-months interest plus discharge administration fee
- Lump-sum Pre-payment Option: None
- Annual Payment Increase Option: 10%
- Portable: Yes, upon qualification
- Rate hold: None. Rate set 5 days before closing
- Switches: Yes. No legal or appraisal fees if a CMHC-insured switch
- Available on Rentals? Yes; up to 80% LTV
- Minimum Beacon: 600
- Maximum mortgage: $1,500,000
- Available Amortizations: 16 – 35 years
- Conversion to Fixed? Yes. May be converted into a fully-closed fixed mortgage (equal to or greater than the remaining ARM term) at any time without penalty
Certain conditions apply. Contact a Street Capital-approved mortgage planner for rate and product information and to determine suitability.
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About Street Capital: Street Capital Financial Corporation is a Canadian wholesale lending company. The company has approved lender status with Canada Mortgage and Housing Corporation (CMHC) and distributes through the mortgage broker origination channel.
Last modified: April 26, 2014
What are the main differences between Adjustable-Rate Mortgage offered by StreetCapital and the typical Closed Variable Mortgage offered by banks?
ING still offers a 1.85% variable rate, does that mean the ARM offered by StreetCapital would be even lower (highly-discounted)?
ING is now at 1.90%
The concern I would have with this Street Capital product is the inability to increase your mortgage should you port it to a more expensive home. Perhaps they allow an increase and blend but a borrower would want to be sure if there is any chance they are moving within 5 years.
Status brokers at Street Capital can offer this product at prime – .7%
And not to rule out the fact that people do get Separated, and may want to refinance in order to buy out their Spouses interest in the matrimonial home…
None the less, more product and choice is a good thing!