As if collateral charge mortgages needed another knock against them, one broker is having trouble refinancing those clients who find themselves in an uninsured collateral charge product.
“I’m seeing a lot of collateral charge uninsured mortgages that we can’t transfer or the new lenders are unwilling to transfer,” Marc Crossman of Dominion Lending Centres
Mortgage Mentors told MortgageBrokerNews.ca. “There are a couple lenders who will transfer a collateral charge, but they aren’t transferring uninsured collateral charge mortgages.”
The Bank of Canada cut its overnight rate target to ¾ per cent in late January and since then brokers across the country have received calls from clients inquiring about possible refinance options. However, some brokers are hesitant to entertain the idea at all.
“I have received numerous refinance requests, especially after the first couple days following the rate drop, but I’m not a fan of pushing refinances,” Don Blair of Mortgage Tech Corporation told MortgageBrokerNews.ca. “Because of the interest rate penalties that clients are going to pay, I’m pretty careful about giving anybody council to encourage them to incur the rate penalty unless I’m absolutely convinced with numbers in front of me to do so.”
Still, for some clients it makes sense to refinance at the time. And Crossman is frustrated by his inability to help those with collateral charge mortgages.
“Typically, the clients who have collateral charge mortgages are those who put down 20 per cent or more and took out a line of credit that was registered as a collateral charge,” Crossman said. “So refinancing those … we’ve started the process and as we’ve clarified the situation we can’t transfer that.”