Mortgages

 
We offer a number of flexible and convenient options to assist you with your mortgage financing needs. Whether you are looking to purchase your first home, working towards a debt consolidation or needing some funds to complete home renovations we have many great options available.
 
Product Facts

All of our closed mortgage term loans offer flexible “15/15” prepayment options to help you pay off the mortgage faster.

Weekly, biweekly, semi-monthly and monthly payment options are available for our fixed term mortgages.

Interest only minimum payments are available for our mortgage line of credit product, which is also known as a “Primeline”.

VPCU offers fixed and variable mortgage rates. Our variable rates are based on the VPCU Prime Lending Rate.

We offer mortgage term loans ranging from one to five year terms in length. Amortization lengths can be up to 25 years if insured by CMHC or 30 years if using our CreditMaster option.

Affordable payment protection is available.

All VPCU mortgage application pre-approvals and mortgage approvals are valid for 120 days. In addition, all mortgage rate guarantees are also held for 120 days.


Homeowner Checklist
Whether you are looking to purchase your first home, “upsize” to a bigger home or “downsize” for retirement, there are a number of considerations to take into account before the big move. A sound plan that includes a budget to address unforeseen events and costs will set you up for success and make the transition as smooth as possible. V.P. Credit Union encourages all prospective home purchasers to view our "Home Purchaser Checklist" by clicking HERE.

 
Questions & Answers
 
1. Is it possible to get a better rate than the posted rate?
Yes it is! At VPCU we have a relationship pricing model in place. That means the more business you have with us, the better the rate you will get. If you bring over your direct payroll deposit, use our Visa card, setup an RRSP investment account or have other lending products with us, we will take that all into consideration and offer a better rate accordingly. Relationship pricing is offered for new and existing mortgages as well as for mortgages that are up for renewal. Please contact us at loans@vpcu.com for more details.
 

2. I have a current mortgage with VPCU and I am looking to “upsize” and purchase a bigger residence and need a larger mortgage, but my current mortgage does not come due to renew for another two years. What are my options?
We would look at a “Blend & Extend” of your mortgage rate. This option “blends” your current rate with the new rate and “extends” the term of your current mortgage with the term of your choice. In addition, your new term must be of equal or greater length than the existing term. This option is the best of both worlds. You avoid paying a mortgage penalty and your mortgage rate is somewhere between the rate you are currently paying and the current posted mortgage rate. Please contact our lending department at loans@vpcu.com for full details. 
 

3. What is a debt consolidation loan?
A debt consolidation loan is a loan that re-organizes all or a significant portion of your outstanding debt into one focused loan and loan payment. When you complete a debt consolidation through a mortgage you will save a great deal in interest as mortgage rates are much lower than unsecured loan rates and credit card rates.
 

4. VPCU has the 20/20 mortgage pre-payment options attached to the fixed term mortgage products. Could you please explain how that works?
Members are permitted to increase mortgage payments by 20% and are also permitted to make up to a 20% lump sum payment based on their original mortgage balance per mortgage year. To illustrate how this works, please refer to the example below.

Example: Member received a new mortgage of $100,000 on February 1, 2017. They currently pay $1000/month. Their mortgage year runs from February 1, 2017 to January 31, 2018.

Between February 1, 2017 to January 31, 2018 this member may use one or both of these options:
 

1. Lump Sum Payment – This member may make a lump sum payment of up to $20,000 (20% * $100,000). This lump sum payment may be split up into a few portions, but the total amount during this period cannot exceed $20,000. On February 1, 2018, the member’s lump sum payment option resets and they are allowed to make another $20,000 lump sum during the next mortgage year running from February 1, 2018 to January 31, 2019. Please note that if a member does not use their lump sum option during the mortgage year, this option is not carried forward.

 

2. Payment Increase – This member may increase their monthly payment to a maximum of $1200 ($1000 + 20%). On February 1, 2018, they will be eligible for another payment increase by up to 20%. In other words, they can increase their monthly mortgage payment from to $1323 ($1440 + 20%). Please note that if a member does not use their payment increase option during the mortgage year, this option is not carried forward.

 

5. Other banks and credit unions charge hundreds of dollars just to process mortgage applications these days. Does the same apply to VPCU?
No. VPCU does not charge any loan application processing fees.
 

6. What are the other fees I should be aware of when applying for a mortgage?
Depending on the type of mortgage some or all of the fees listed below may apply:

Appraisal fee – Depending on the value of the mortgage you are trying to obtain we may require a condensed online appraisal report or a full appraisal report where an inspector views your property in person.

Legal fees – Some existing mortgages and all new mortgages require new legal documents to be completed. Pricing will vary depending on which notary or solicitor you choose.

Title search fees – Any financial institution completing a mortgage refinance will complete a title search. This ensures that there are no other liens ranking ahead of the mortgage registration. The majority of lenders require their mortgage to be in first priority, which is also known as a “first mortgage charge”.

Discharge fee – If you are selling your home and paying off an existing mortgage, the mortgage registration needs to be removed from the property title. Only a lawyer or notary public can do so and there is a cost for them to complete the discharge.
 

7. I’m a first time home buyer and I’d like to prepare myself as best I can before purchasing a new home. Besides budgeting for the appraisal fee and legal fees are there any other costs I should be aware of?
As a first time home buyer it is best to set a budget to plan for all costs associated with home ownership. Here are some of the key costs to consider:
 
High Ratio Insurance – In the event the borrower has less than a 20% down payment when purchasing your new residence, banking regulations require the borrower to add “default insurance” to the cost of the mortgage. The insurance premium is typically added to the mortgage loan balance. Default insurance protects the lender because the borrower is provided a larger mortgage loan. VPCU’s current default insurance provider is the Canadian Mortgage & Housing Corporation (CMHC).


Should you wish to get an estimate of what that premium cost may be or obtain more information, please refer to the CMHC website by clicking on the CMHC logo below!

 







B.C. Property Transfer Tax – This cost is considered a “closing cost” meaning at the time you sign your mortgage documents at your lawyer/notary’s office, they will request sufficient funds to cover this cost. There are some exemptions available for this tax so we recommend members contact their lawyer or notary to advise accordingly. You can calculate your estimated property transfer tax by view a calculator provided by the B.C. government HERE.
 
GST on New Home Sales – This is another “closing cost”. All brand new properties are required to pay GST upon the completion of the sale of the property. There are some rebates available for this tax so we recommend members contact their lawyer or notary to advise accordingly.
 
Home Insurance – A member’s lawyer/notary will request a copy of a home insurance policy be provided at the time mortgage documents are signed. We recommend members shop around for a home insurance policy at least three weeks in advance of the completion date of your home purchase. We also recommend members seek earthquake and flood insurance in addition to the standard fire insurance included in most home insurance policies.
 
Moving Costs – Yes, you will have to pay the movers! Don’t forget to add them to your budgeting.
 
Property Tax – As a homeowner, annual property taxes are due typically on the first business day of July each year. Many municipalities also require homeowners to pay annually for water and utilities charges in the months of February or March or they may charge on a quarterly basis.
 
Strata Fees – If you live in a condominium, you will have to pay a monthly strata fee. This pays for all the maintenance costs for the building that you live in.
 
Condominium Content Insurance – If you live in a condominium, the strata will take care of all the maintenance costs through your strata fees. However, within your condo unit, the contents are not covered. In addition, should you be found responsible for an accident such as a flood of a condo unit below your unit, you are required to pay the strata the deductible for the strata’s insurance claim. In many cases, this deductible fee is in the tens of thousands of dollars. A condo content insurance policy will provide you with coverage to pay the strata’s deductible in situations like this. It is highly recommended that all condo owners take some form of condo content insurance to mitigate this risk.
 
Regular Maintenance – Depending on the age and build of your property, these costs will vary.
 

8. How long does it take to get a mortgage approval at VPCU?
Once you have provided us with a completed mortgage application form and the required income verification documentation, we will respond to your request within 1 to 2 business days. Response times will vary depending on the volume of requests. The most efficient way to submit your request is to email the signed completed mortgage application form and your income verification documents to loans@vpcu.com . If you are applying for a debt consolidation mortgage loan, please also send us the most recent statements of the loans and credit cards you wish to consolidate as well.
 

9. I can’t make it into the branch to sign documents or chat with a Loans Officer because of my unusual schedule. What can I do?
You can send us the loan application form by printing it off, completing and signing it and scanning it to us via email at loans@vpcu.com or directly to a lender you may be working with. We will correspond with you accordingly from there. Should your request be approved, and as electronic signatures are now accepted, all required documents would be sent through Docusign for you to sign via email. Please read about our Docusign service by clicking here.
 

10. I was declined for a mortgage 10 years ago. Does that mean I likely wouldn’t get approved today?
If an applicant was declined we would typically reconsider a new application within a year. Having said that, your financial circumstances may have changed recently or you may now have a co-applicant that is willing to support your loan request. In short, being declined for a loan 10 years ago has very little bearing on how we view a loan application today. We are focused on your current financial circumstances so please connect with our lending team so we can provide you our advice on how to best to move forward with your credit inquiry.

We have assisted members with many different solutions to help them rebuild their credit. We recognize life happens and there are all sorts of financial challenges that everyone is faced with at different points in their lives. In view of this, we do our best to come up with creative lending solutions to assist accordingly.
 

11. I see a lot of non-traditional lenders advertising on television and the radio saying you’re instantly approved if you own a home. What’s the catch?
Every lender will have a variety of different pros and cons with each of their product offerings and lending approaches. There are some lenders that focus on offering mortgage lending based exclusively on the amount of equity in your home while other traditional lenders (banks and credit unions) focus on a combination of equity, credit rating and a borrower’s employment income. Lenders that focus just on the equity of a home tend to charge higher interest rates and require applicants to pay higher loan fees while traditional lenders tend to offer better overall pricing.

 
12. I see a lot of great low mortgage rate offers promoted all the time on various websites. Does that mean I am eligible for all of them?
Yes and no. All financial institutions will typically promote many outstanding offers at various times during the year. However, one must qualify and be pre-approved or fully approved in order to be eligible for that rate offer. It is also highly recommended that you receive the interest rate offer and confirmation of financing in writing from the financial instituition. Furthermore, it is important to know that not all rate offers are equal. Some institutions may include restrictive terms to promotional rate offers such as reduced amortization length, requirements to obtain high ratio mortgage insurance or restrict you from being able to refinance the mortgage during the entire length of the term.  


13. What does a mortgage pre-approval and rate guarantee mean?
A mortgage pre-approval means that your financial institution has approved you for a mortgage loan for a set period of time, but there are still conditions to be met before you are 100% approved for the financing. Some of the typical conditions that financial institutions would make are as follows:
 

1. Property Appraisal – All financial institutions would require a property appraisal to be completed prior to final approval. Depending on the type and the amount of financing request, the appraisal may be in the form of an online appraisal or it may be an in person appraisal where an appraiser would view the subject property. The cost of this appraisal is typically incurred by the borrower.

 

2. Sale of Existing Property – If a Borrower is using the sale proceeds of their existing home to be part or all of the down payment for the new property purchase, your financial institution will require a copy of the sale agreement for your existing home. It is highly recommended that the sale of the existing home is completed before the completion date of the new property purchase. Aligning the completion date for the property being sold one or two days ahead of the completion date of the property to be purchased is advisable. This provides your lawyer or notary additional time to facilitate the transactions. Your realtor can work with you to ensure the completion dates are selected accordingly.

 

3. Pre-Approval period – Most financial institutions allow borrowers to be pre-approved for up to 90 days while there are some financial institutions that offer up to 120 days or longer. After the pre-approval period has elapsed, the borrower may have to complete a new mortgage application and provide updated documentation to the financial institution should the borrower wish to maintain a pre-approval.

A rate guarantee protects the borrower from any interest rate increases during the pre-approval period. The guarantee period will typically match the pre-approval period. Once the rate guarantee period expires, you will have to re-apply for a new mortgage pre-approval at the prevailing market rates.
 

14. What are the risks in purchasing a “pre-sale” property?
A “pre-sale property” is a property that has not yet begun or is currently in the middle of the construction phase. The construction phase can take years and delays in completion are not uncommon. Condominium and townhouse developments would make up the majority of the pre-sale developments within Greater Vancouver. When purchasing a pre-sale property, there are several key considerations to keep in mind:
 

1. Right of Rescission – The purchaser will typically have the right to rescind the signed purchase offer within seven days. After the seven days have elapsed, the contract to purchase is considered firm and the purchaser is legally obligated to finalize the purchase once the building has been completed.

 

2. Contingencies for financing – If the purchaser has chosen to move forward with the pre-sale purchase and the seven day right of rescission period has elapsed, the purchaser must either have the financial resources to facilitate the purchase on their own or acquire financing from a financial institution. Most financial institutions would not offer mortgage pre-approvals or rate guarantees for more than 90 to 120 days. However, there typically are a couple lenders at the pre-sale developments that do offer pre-approval and rate guarantees, but the rates are usually much higher. It is recommended that the borrower obtain a pre-approval with one of the lenders at the pre-sale development site, but also to connect with their existing or another financial institution 90 to 120 days before the expected completion date in order to obtain the best financing package available.

 

3. Sale of an existing home – If the purchaser of a pre-sale property is dependent on the sale of an existing home to facilitate the purchase transaction, there is a risk that a market downturn may significantly reduce the final amount of sale proceeds received and that in turn may create a shortfall of funds. Since some pre-sale developments can take over three years to complete, there is a risk that in three years’ time your existing home price may be reduced significantly. It is recommended that the purchaser have a sufficient “backup” plan or additional financial resources available should they decide to pursue this approach in purchasing a pre-sale development.

 

4. Non-completion by developer – This is a rare occurrence, but it can and has happened within Greater Vancouver. Depending on how your pre-sale property purchase contract is written, developers can choose to return your deposit for your pre-sale purchase and opt not to follow through with the development. The best way to mitigate this risk is to complete some due diligence on the developer by finding out if they have a long established history of completing construction on quality buildings. It is best to connect with your realtor for more information.  

 

15. How much can I borrow against my home? What if I own a revenue/rental property?
At VPCU, under conventional lending guidelines, you may borrow up to 80% of the appraised value of your principal residence whereas you may borrow up to 75% of the appraised value for a revenue/rental property subject to qualification.
 
Should you choose the “Primeline” mortgage line of credit product, there is a maximum 65% of the appraised value (also known as loan to value ratio) that can be assigned to that product type. For further clarity, please see the examples below:
 
Example 1: Property appraised value is $1,000,000. Member intends to make this property their principal residence. They only want a mortgage loan and do not want a Primeline.

$1,000,000 Appraised Value * 80% Loan to Value Ratio (LVR) = $800,000 Total Lending Available.

Thus, the maximum mortgage amount the borrower could apply for would be $800,000.
 

Example 2: Property appraised value is $1,000,000. Member intends to make this property their principal residence. They request the maximum Primeline and also the maximum amount available mortgage term loan as well.

$1,000,000 Appraised Value * 80% Loan to Value Ratio (LVR) = $800,000 Total Lending Available.

Maximum Primeline at 65% LVR = $1,000,000 * 65% = $650,000.

Remaining borrowings as a mortgage term loan = $800,000 - $650,000 = $150,000.

Thus, the maximum Primeline mortgage amount the borrower could apply for would be $650,000. However, upon qualification, they would also be able to obtain a $150,000 mortgage term loan as well. 

 
Example 3: Property appraised value is $1,000,000. Member intends to make this a rental/revenue property. They only want a mortgage loan and do not want a Primeline.

$1,000,000 Appraised Value * 75% Loan to Value Ratio (LVR) = $750,000 Total Lending Available.

Thus, the maximum mortgage amount the borrower could apply for would be $750,000.
 

Example 4: Property appraised value is $1,000,000. Member intends to make this a rental/revenue property. They request the maximum Primeline and also the maximum amount available mortgage term loan as well.

$1,000,000 Appraised Value * 75% Loan to Value Ratio (LVR) = $750,000 Total Lending Available.

Maximum Primeline at 65% LVR = $1,000,000 * 65% = $650,000.

Remaining borrowings as a mortgage term loan = $750,000 - $650,000 = $100,000.

Thus, the maximum Primeline mortgage amount the borrower could apply for would be $650,000. However, upon qualification, they would also be able to obtain a $100,000 mortgage term loan as well. 
 

16. I would like to defer my property taxes. What happens to my mortgage if I do this?
Nothing will happen to your VPCU mortgage if you choose the property tax deferral option. However, should you decide to borrow additional mortgage funds in the future, VPCU will require the borrower to pay off the outstanding property tax balance.

For more information regarding property tax deferrals, please refer to the B.C. Government website that summarizes the process by clicking HERE.

Should you require VPCU to complete the property tax deferral form, please email/scan a copy of the form to loans@vpcu.com so that we can process accordingly.


17. I heard about the new rules in the 2019 Federal budget regarding the first time Homebuyers' plan limits being changed. Where can I find more information about that program?
Please refer to the website link below. It contains all the information regarding the limits, eligibility and how to repay the Homebuyers' RRSP withdrawal.

https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/rrsps-related-plans/what-home-buyers-plan.html 


18. I would like to complete a RRSP Homebuyers' withdrawal from my VPCU RRSP account and/or at a RRSP account held with another financial institution. What form do I need to fill out?
Please refer to the website link below. You will need to complete this form and forward it to your financial institution for processing. 

https://www.canada.ca/en/revenue-agency/services/forms-publications/forms/t1036.html


19. I am planning on selling my property and will be paying out my mortgage at VPCU. What type of mortgage penalty would be applicable to me? 
In most cases, a three-month interest penalty will apply. However, for a three-year, four-year or five-year fixed rate mortgage agreement, the penalty to end the mortgage agreement early can be much larger as an interest rate differential (IRD) calculation may be used. 

For a 3 year, 4 year or 5 year fixed rate mortgage term with greater than two years left remaining on the existing mortgage agreement, the greater of the IRD or a three month interest penalty will apply. The member's existing mortgage rate will be compared to the VPCU posted rate for a term of similar duration. 

For example: Say a VPCU member has a 5-year fixed mortgage rate of 3.80%. After 1.5 years, the member has decided to sell their home and will not be needing a new VPCU mortgage. In this scenario, there are 3.5 years left on the existing mortgage term and let's say there is a $500,000 outstanding balance. Thus, the rate that shall be used to calculate the interest rate differential would be the current VPCU 4-year fixed posted rate because 3.5 years shall be rounded up to the nearest year of comparison. Let's also say that the current VPCU 4-year fixed posted rate is 3.00%. This would mean an interest rate difference of 0.80% (3.80% - 3.00%). This interest rate difference would then be multiplied by the outstanding balance and the time remaining (in years) to arrive at the IRD penalty amount. 

IRD Calculation: 0.80% * $500,000 * 3.5 years = $14,000

In comparison, a three-month interest penalty would be approximately:
$500,000 * 3.80% / 12 months * 3 months = $4,750


For all mortgages with less than three months remaining in your existing mortgage term, your interest penalty would be prorated based on the time left remaining on the existing term. For example, if there are only two months remaining on your mortgage term, then you would only have to pay a two month penalty. Another example is if you have only one month remaining on your mortgage term, then you would only have to pay a one month penalty. 

We strongly encourage members to reach out to our lending department to provide mortgage penalty estimates prior to confirming any sale of a VPCU mortgaged home. Any quoted mortgage penalty amount in writing shall be guaranteed for up to a 14 days. 

20. I am paying Prime - 0.20% on my Flex Rate Mortgage right now, but I see that the current VPCU market rate is even lower at Prime - 0.50% and I would like to obtain that lower rate. Do I have to pay a penalty?
Yes, you will have to pay a penalty. Anytime you with to get a lower rate, a penalty would apply. Please contact us to request a calculation as to what that penalty would be. In some cases, you may save money over five years by paying the penalty and opting for the lower market rate. Please note any penalties quoted are valid for 14 days and are emailed accordingly.

21. I am paying Prime - 0.20% on my Flex Rate Mortgage right now with Prime currently being 2.45%. That means I am paying an actual rate of 2.25%. However, I see the 5 year fixed rate dropped to 2.19%. Can I lock in my Flex Rate Mortgage to the 5 year fixed at 2.19%?
Yes, you can. However, you will have to pay a penalty to do so because the current market rate of 2.19% is lower than what you are currently paying. The other option is you may lock in your variable rate at a new 5 year fixed rate of 2.25%, without a penalty. 

The general rule with locking in Flex Rate mortgages is that you can lock into a similar fixed rate that is equal to or greater than what you are currently paying on your variable rate mortgage. Also, the length of the term you lock into must be equal to or greater than what you currently have left remaining on your existing Flex Rate mortgage. Here's an example:

You have a 5 year Flex Rate mortgage at a Prime - 0.20% rate and Prime is currently 2.45%. That means you are currently paying 2.25%. You are currently past the first two years of your mortgage so there are three years left remaining. In this case, you would be eligible to lock in your Flex Rate mortgage to a new three year fixed term or longer. The term length is always rounded up to the nearest year. Also, the three year fixed rate (or longer) must be equal or greater than 2.25%.

Scenario 1: Assuming you are currently paying Prime - 0.20%, which is 2.25% and have just under three years left to go on your existing mortgage term, if the VPCU 3-year fixed rate is currently 2.40% for instance, then you would be able to lock in at 2.40%. Similarly, if the 5 year fixed rate was 2.50% for instance, you would be able to lock in at 2.50% for a new 5 year fixed rate. No penalty would be charged.

Scenario 2: Assuming you are currently paying Prime - 0.20%, which is 2.25% and have just under three years left to go on your existing mortgage term, if the VPCU 3-year fixed rate is currently 2.00% for instance, then you would be able to lock in at 2.25%. Similarly, if the 5 year fixed rate was 2.10% for instance, you would be able to lock in at 2.25% for a new 5 year fixed rate. No penalty would be charged.

The spirit of the locking in feature is to limit the upside on rising rates.