Q. Am I better off with a Simplicity Mortgage or a Super-Mortgage for my home. The Simplicity Mortgage does not include Profit Shares. Which mortgage is more cost effective for the consumer?
A. Both mortgages have their cost-effective advantages. More than anything else, your personal situation will determine which mortgage gives you more of an advantage. So let’s have a closer look, and then you can decide.
If you think you’ll be taking out a loan in the future, such as a car, RV or vacation loan, taking out a Super-Mortgage now might be the way to go. That’s because you can readvance your loan on your Super-Mortgage, at the low Super-Mortgage rate. The more you pay down on your mortgage, of course, the more you are able to borrow. And it’s easy to arrange the loan. All it takes is a call to our contact centre.
Using the Super-Mortgage loan for a car, for example, could make a difference from about 4.4% to 9%, which can really make a difference in your monthly payment. In essence, you could be borrowing at about half the price.
Another feature is that Super-Mortgage is portable. You can sell your house and buy another using your same Super-Mortgage loan, so you avoid having to pay legal fees to transfer your mortgage.
There are other cost-saving features, too. Synergy will cover the costs of house inspection and appraisal fees if needed and approved ahead of time. The Super Mortgage also gives you the freedom to prepay as much as you want at any time, without penalties.
You also mentioned Profit Shares, and that’s a good point. In an average year, Synergy’s Profit Shares allocations have equaled the equivalent of one mortgage payment per year. Profit Shares is a program that pays back to our members a share of Synergy’s surplus earnings through allocations to your equity account. Allocations are based on interest paid on loans and earned on savings and term deposits.
Those are all great benefits – but only if you see yourself taking advantage of them. Quite simply, the Simplicity Mortgage is our “bare-bones” mortgage, with the lowest rate. Keep in mind that there is a penalty for paying down this mortgage by more than 20% a year. For most consumers, though, this might be an issue only if you decide to sell your house during this time period. In other words, it all comes down to what you have planned, and making sure you have the right option to fit those plans.
If you’re still not sure about which option is best, you can go to http://www.synergycu.ca/ for our easy-to-use mortgage calculators (these are located under the "Borrowing" tab then "Mortgages"). To discuss your personal situation or apply for a mortgage, give us a call. We would be happy to help you over the phone or in person.
