OK, ING DIRECT is advertising this wonderful new mortgage product called the "unmortgage”. The way it's being advertised you’d think they just re-invented the mortgage wheel…
Who knows, maybe they have, lets take a look.
Based on information taken from their website, I've compiled a summary of the “unmortgage” in point form. Along with each summary point, I’ve provided a comment comparing their feature with features offered by other financial institutions so you can easily see if the “unmortgage” is really as unique as they seem to be suggesting.
“unmortgage” - Described as a loan secured against a property.
- No difference, all mortgages are “secured” or “registered” against property. They use the word "loan" as opposed to the word "mortgage". In general, a "loan" is something you associated more when you buy a car. The term "mortgage" is used when a loan is secured against property.
“unmortgage” - You get to select the frequency of your regular payments.
- Somewhat of a general statement so we made a call. ING DIRECT offers payment frequencies, which include monthly, bi-weekly and accelerated bi-weekly. Is this any different? No, most all financial institutions offer this type of option. In fact, the majority also offer the option of weekly payments.
“unmortgage” – You can choose the length of your amortization period up to 25 years.
- Again, somewhat of a general statement so we asked the question. The length of the amortization period depends on a number of factors which could include but is not limited to the age and remain economic life of the home/property, your ability to pay and so on. You get to choose the amortization period but they get the final say. Again, no different and in fact several financial institutions even offer 30 year amortization's.
“unmortgage” – ING DIRECT offers you a choice of 1, 3, 5 or 10 year mortgage terms.
- Most financial institutions offer 1,2,3,4,5,7 and 10 year terms. In fact some offer terms as long as 18 years.
“unmortgage” – They say that with ING DIRECT, you never have to haggle for the best rate. They indicated that last year clients received an interest rate better than 1% below the average posted rate of the big 5 banks.
- There is probably no question that ING DIRECT and the unmortgage offers competitive mortgage rates but to compare them to posted rates and make a mortgage savings comparison between the two, I think is a bit misleading. Why? Because unless you’re “brain dead” nobody pays the posted bank rate. Take that back, even “brain dead” people don’t pay posted bank rates…BTW, we typically averages 1.3% below posted bank rates.
“unmortgage” – ING DIRECT says “Picking the right loan can be confusing. Banks offer so many choices and options – it’s like trying to order dinner from a dictionary”.
- Since when has having options been a bad thing? The statement “Banks offer so many choices and options” reminds me of something my dad said to me once when I suggested that we go to an all inclusive hotel on a holidays. He says “ I don’t like all inclusive hotels cause there’s too much food…”
“unmortgage” – The “unmortgage” offers both fixed and variable rate mortgages.
- No difference here as most all financial institutions offer fixed and variable rate mortgage options. Having the ability to roll over your fixed or variable rate mortgage is also something most financial institutions offer.
“unmortgage” – No teasers or gimmicks.
- If you compare apples to apples there are no teasers or gimmicks. Sure the banks offer teaser rates or “special rates for a limited time” but it’s not like you won’t know that going in. Just make sure you know which option is best for you.
“unmortgage” – Prepayment: The “unmortgage” offers you the ability to prepay up to 25% of the original principal amount and increase your payments by up to 25% without penalty.
- Numerous financial institution offer this option. In fact, there are several institution which give you the ability to prepay 25% and increase your mortgage payment up to 100%.
“unmortgage” – Portable and assumable. ING DIRECT offers you the ability to take your mortgage with you to a new home without a penalty at your current rate, term and amount. The “unmortgage” is also assumable with qualifications.
- Most financial institutions offer these features. No big deal here.
“unmortgage” – Skip a payment. ING DIRECT “unmortgage” allows you to skip a payment. The payment amount is added to the outstanding principal.
- Most financial institutions offer this feature.
“unmortgage” – Re-advanceable. As you slowly pay down your mortgage, you are building up equity. ING DIRECT “unmortgage” allows you to borrow the difference between the outstanding balance and the original mortgage amount.
- Again, no exclusive here, we also have access to several financial institution that offer this feature with more coming on board.
Well there you go. Has the ING DIRECT “unmortgage” re-invented the mortgage wheel? I don't think so.
The features of the unmortgage they talk about are relatively easily found throughout the Canada mortgage industry. In fact, if you look for it, there are several mortgage products out there offering even more flexible features.
ING DIRECT is correct in saying that banks offer so many choices and options, but they themselves are just one more institution in the pile making the selection of the right mortgage product just that much more difficult.
One more thing.. ING is now running new ads giving people the impression that higher interest rates make paying off your mortgage take longer. This is completely false. The only way that anything makes your mortgage take longer to pay off is if you extend your amortization period. By itself, higher interest rates make your payment higher, that's it!
Here’s our plug…
The additional confusion caused by another mortgage product coming onto the mortgage scene is just one more reason why you should choose the services of a mortgage specialist. Members of the Mortgage Team not only look at ING DIRECT’s mortgage products but will weed through the almost endless supply of competing mortgage products to find the mortgage which best suit's your needs.
Whether your purchasing a new home, refinancing you're existing home, or looking to switch your existing mortgage for a better rate, we would love the opportunity to impress you. Remember, there is no cost or obligation.
Questions? Talk to one of our Mortgage Specialists today.
Mortgage Glossary – Don’t understand some of the terms used in these articles? Our mortgage glossary provides simple definitions.
Canadian Mortgage Calculator - Calculate mortgage payments, amortization schedules, interest costs and more. The more you play with it, the more you’ll see what it can do.
GDS and TDS – Understanding your GDS and TDS is an important part of your borrowing ability.
Credit repair 101 - Tips on how to repair not so good credit.