Lender announces pilot program

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MCAP will soon launch a new mortgage option for its clients, making them the first monoline lender offering a mortgage deal that could spare investors and homebuyers a blow to their credit scores.

MCAP is due to launch the pilot program wherein they will offer a re-advanceable mortgage option for their clients, a move that is similar to the launch of Firstline’s popular Matrix mortgage.

The news came out of the Canadian Association of Accredited Mortgage Professionals (CAAMP) Mortgage Forum Expo, which ran from Nov. 23 to 25, in Montreal, Quebec.

With a re-advanceable mortgage, the borrower’s line of credit is increased as the borrower makes payments to the mortgage and reduces the principal of the original mortgage, said Surendra Wankhede, a mortgage broker at MonsterMortgage.ca, in an e-mail to MortgageBrokerNews.ca

“The beauty of re-advanceable mortgage specifically takes place if you want to leverage/borrow the equity in your home at any point during the term of your mortgage i.e., after your mortgage has closed.”

The new mortgage option could prove to be a boon for homebuyers and investors as it offers a line of credit as you pay the mortgage down.

For example, if you have a $300,000 mortgage and have paid $30,000 off the loan, you’d have the $30,000 as a line of credit, which spares buyers and investors the hassle of refinancing and potentially damaging their credit.
It also could allow you to consolidate high interest credit cards, borrow money to make an investment, renovate your home or purchase a vehicle or another property, Wankhede added.

The pilot program could prove to be a success for mortgage brokers as they have a new option to provide to their clients. Because the homebuyer or investor is borrowing against a line of credit, they are not required to complete any new appraisals or submit new loan documents.

Wankhede that clients will need to be informed given the potential for added legal costs and the room to overuse the credit.

“You only need to pay interest payments on revolving facilities, so you are not paying down your principal, if you are not disciplined in the management of your finances, you may find yourself with a higher mortgage than you thought come the end of your mortgage term,” he said.

MCAP will be launching the product in the market to see how it performs and they’re hoping to complete the pilot in the coming months.

“There has been an increasing need for a true automatically re-advanceable mortgage and I am proud to say that we have been able to develop the MCAP Fusion Mortgage to meet that demand.  We are supporting our brokers and meeting the consumer demand.  Our pilot has just launched and we are very excited to see how it performs,” said Paul Bruce, Managing Partner, MCAP Single Family Origination. 
  • Gary on 2014-12-01 3:39:05 PM

    This is virtually the same as the Scotia STEP mortgage

  • Ron Butler on 2014-12-01 4:29:49 PM

    The whole point is that this is a program only a bank has offered in the past.

    This is a bank style product from a monoline lender and I am happy to say: Congratulations MCAP!!!

    This is a true benefit to mortgage brokers across Canada.

  • Mortgage Delivery Guy on 2014-12-02 8:50:41 AM

    Great news, much needed & very excited about it.
    Does this comes with Standard or Collateral charges on the property title?

  • Mortgage Delivery Guy on 2014-12-02 8:50:46 AM

    Great news, much needed & very excited about it.
    Does this comes with Standard or Collateral charges on the property title?

  • Mortgage Delivery Guy on 2014-12-02 8:51:16 AM

    Great news, much needed & very excited about it.
    Does this comes with Standard or Collateral charges on the property title?

  • Robbie Ryan on 2014-12-02 12:57:41 PM

    I expect it will come with a collateral charge. I am checking with our regional rep. Huge savings on the penalty compared to Scotia or National. Way to go M-Cap. I expect to see more mono-lines follow suit. I'm still astonished that the likes of First National or Street have not had a similar product.

  • Ron Butler on 2014-12-02 1:04:58 PM

    Just a heads up on the product, this is a very hard program for a monoline to pull off. I am not saying 1st Nat and Street cannot do it, just that it requires a ton of back shop effort and cost. Monolines have to decide where resources need to be applied and both of those very good lenders have a lot on their plates. Thanks again to MCAP for making it happen.

  • Raj Mago on 2014-12-02 4:53:39 PM

    It is similar to National Bank AIO. Gud News for brokers as they have more choice now

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