1M+ Buyers; When to Use a Broker
For the high-end buyers, we find most people have Private Wealth banks that can pretty much do anything … and we don’t win lots of deals for more than $1M+ unless it is a complicated deal.
If it is complicated, you have a private “general banker” trying to either “figure it out for the first time,” or remember how it works. Not the data a high-end buyer wants to rely on when structuring complicated trades in real estate.
SLIDING SCALE DOWN PAYMENT:
The 1 thing that does make a difference for high end buyers is the sliding scale – where their bank does 20% down on the first $750k and then 50% down on the balance. This 50% on the balance is the deal breaker.
We have Broker-lenders (totally secure, including 1st National, Canada’s largest lender with $110 Billion on the books) that will do 20% down on the entire purchase.
That could be a difference of 200k – 400k of down payment in the end. That often means selling more assets, in turn triggering more tax consequences longer term. A high price to pay for a nice home via your “private wealth” bank.
Summary:
Our big advantages for high-end buyers are:
- the Sliding Scale where the bank’s “Risk Dept” will not bend on the LTV/ down payment %.
- This can save 200k in lower down payment and lower medium-term, tax consequences.
- Payout Penalties are 500% – 800% – yes 5x to 8x higher at the Big-6 banks over Broker lenders who use the “old way” to calculate the payout penalties.
- The very, very detailed math is here: http://markherman.ca/fixed-rate-mortgage-penalties-larger-than-ever/ (you have been warned… this is math city.)
Always call a mortgage broker before buying a home. Especially if you are using a Private Wealth Banker. … Mark Herman, Top Calgary Mortgage Broker near me.