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The 4 Debt Contracts. Has anyone ever taken the time to inform you about the 4 Types of Debt Contracts? *NB Declaration: Please remember, I am not a mortgage.

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Presentation on theme: "The 4 Debt Contracts. Has anyone ever taken the time to inform you about the 4 Types of Debt Contracts? *NB Declaration: Please remember, I am not a mortgage."— Presentation transcript:

1 The 4 Debt Contracts

2 Has anyone ever taken the time to inform you about the 4 Types of Debt Contracts? *NB Declaration: Please remember, I am not a mortgage broker, nor do I hold myself out to be a mortgage broker. These are Simply 4 Types of Debt Contracts typically available to consumers through licensed professionals.

3 The 4 Debt Contracts 1.Mortgage (Traditional) 2.Secured Line of Credit / HELOC (Regular) 3.HELOC (Special) 4.Self-Directed Mortgage (Rare)

4 Contract #1 Traditional 5% Purchase or 20% Refinance Banks, Brokerages, Private Lenders Rate V/F Term 6mo-10yr Freq 1Wk-1Mo Amort 25-40yr Pen 3Mo +/or IRD Set Up Fees: Legal, Appraisal Admin. Semi Annual (Compound): P I 6mo P I Blend Monthly Bi-weekly Weekly

5 Contract #2 Regular HELOC 20-35% Purchase or Refinance SLOC / HELOC Banks, Brokerages, Private Lenders P I Only Rate V/F Term Open Freq Monthly Amort Open Penalty: None, with possible Admin Fee Set up Fees On the “highest” balance 14 th 15 th 16th 10K Or the average balance over the statement period Up to 60 days (Compound)

6 Contract #3 Special HELOC 20-35% Purchase or Refinance SLOC / HELOC P I Only Rate V/F Term Open Freq Monthly Amort Open Penalty: None Or admin fee Set up fees: maybe 24 I 24 Some Credit Unions TD (46% market share) ↓ Manu (Cash Management) Combo Cheq Account No Minimum Payment up to 15 Sub Accounts NO set-up or legal fees 2 Days 10K Daily Balance Simple Interest

7 Contract #4 $1400/mo SD RRSP $300 K $100K $200K $400K $200K Rare 35% Purchase or Refinance SD MTG Trusts with Intermediaries BANK $1400/mo Bank gets to lend out your monthly deposit approx 10 TIMES!!

8 Contract #4 $1400/mo SD RRSP $300 K $100K $200K $400K $200K 5% Mortgage 1.5% GIC 5% GMWB 6.5% ROR Risk Free

9 Contract #4 A Trustee is required Trustee may limit how much of RRSP can be used for this type of investment Trustee, Legal and Admin Fees apply The borrower must financially qualify independently as if a third party Default still results in Foreclosure by CMHC

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