Ed Rempel has put together a lengthy article for us indicating his favorite Smith Manoeuvre Mortgage(s). This is part 2 of 3. If you haven't already, check out Part 1 which listed Ed Rempel's 3 favorite readvanceable mortgages. This article will help you determine what to look for in a Smith Manoeuvre mortgage so you can do your own research.
What should you look for in an SM mortgage? We prefer to use a readvanceable mortgage that:
- Readvances automatically (not manually).
- Variable rate at prime -.5% to -.6% or better (at today's rates – recently reduced).
- Fully open. (Flexibility can be extremely useful in future years.)
- Allows investing directly from the credit line.
- No fees at all – no legal, appraisal, broker, or administration fee.
- Allows multiple credit lines (add one for emergencies or for the Cash Dam).
While you would think mortgage brokers would have the big advantage here because they are independent and have access to many mortgages, none of the mortgages available to mortgage brokers have more than 2 of these 6 features. And only one mortgage available to mortgage brokers is in our top 4.
We’ve found that in every situation we have encountered or can think of (except for the odd case where Manulife One might be best), one of these 4 is the best. However, working out the best choice among them can be somewhat complex and depends on quite a few variables.
I started to write down all the details of these 4 and exactly when we would use each one, but ended up with pages of detail. Here is what it depends on:
- Do you have the 20% down (to avoid CMHC)? What is your existing mortgage balance and the value of your home?)
- When is your mortgage due?
- How quickly are you paying your mortgage down? (What is your payment and amortization?)
- Where do you do all your regular banking?
- How good is your credit rating?
- Are you good at details? Would you take a mortgage that required more manual transactions each month if it saved you money?
- How long do you expect to be in your existing home?
- Is your mortgage paid off or almost paid off? (If so, then is your cash flow relatively even or does it come in large lumps?)
- Is the mortgage on your home, a rental property or a cottage?
- Are you stuck in an existing non-SM mortgage? (More on this in Part 3.)
FT has been asking us how we can help his readers figure out which mortgage is really the best mortgage in your situation. Since the answer can be somewhat complex, we are offering “Ed’s Mortgage Referral Service” only to Million Dollar Journey readers.
For MDJ readers, if you call or email us or FT with answers to the 10 questions above, and leave your email address and phone number, one of our advisors will contact you to tell you which SM mortgage is best for you and why, tell you what terms you should expect and give you our contact person to get that mortgage. Ask for “Ed’s Mortgage Referral Service” when you call or in the subject of your email.
Because we refer a high volume of mortgages and try to negotiate with our contacts the best possible deal, people we refer often get a better deal than if they contact the bank themselves. We have not been paid anything by any of our mortgage suppliers (except TD has a points for merchandise program), so our advice is completely objective. By contacting us, you can be confident that you have the best SM mortgage for your situation.
Please do not use this service unless you are serious about implementing the SM in some form (either with us or by yourself). We recently had someone call us for an SM mortgage referral, started the mortgage process and then changed his mind – so he will now have to pay the bank’s legal and appraisal fees. We usually get all fees absorbed – but only if you actually take the mortgage.
FT has been very generous in publishing my articles, which is why we are willing to offer this service. It is for MDJ readers only. We are asking all the questions and for your email and phone so that only those serious about implementing a Tax Deductible Mortgage strategy will request it and so this free service does not take more than 5-10 minutes of our time.
There you have it folks. Ed Rempel is willing to take some of his time and offer you advice on which Smith Manoeuvre/readvanceable mortgage would be best in your case. If you are curious about which readvanceable mortgage would suit your situation, please include answers to the 10 questions above in the email that you send to either Ed Rempel or me.