# Canadian Tire Mortgage



## MacDaddy (Jul 16, 2001)

I dunno how many people have the Mortgage In Your Way ads and have gone and done the calculator, but I am wondering if anybody has used them.

I called and talked to a very nice lady who answered all my questions and gave me a better idea of what it is. Basically its like a giant line of credit and you take out cash when you need it. 

What I got from the website and my call was that I could roll all my current debt and mortgage into the one payment, pay a little less than I am paying now, and still pay off my mortgage sooner (If I keep a good eye on my finances, which I have never been all that good at). 

I dunno why, but it still seems kinda fishy to me. Maybe because it's Canadian Tire and all I can think of is Scrooge commercials! But given they are such a new institution, should I trust them with my mortgage??


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## Demosthenes X (Sep 23, 2004)

Interesting and ingenious concept. I had heard CT was moving into banking a while back, had no idea they were already doing it! That said, rolling all of your debt into one account of this type can be dangerous - it's a line of credit, so I imagine it would be all to easy to spend more than you actually have. So it requires a certain level of self-regulation...

FYI, Canadian Tire Financial Services are not a new institution. They've been around for forty years with the Options Mastercard. Although you're right that this foray into banking is a new venture. Sounds like a good deal to me, though.


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## MLeh (Dec 23, 2005)

Some people need the discipline of a regular mortgage payment. Look at a line of credit this way: if you have money in your wallet, do you spend it? If you have a credit card in your wallet, do you use it even if you don't have the money in your bank account to pay off the card in full at the end of the month?

A line of credit is a very handy thing - if you have self discipline. Not all people have the self discipline necessary. (Let's face it - we live in a consumer oriented society, where advertising is pushing us to buy things 24/7).

Getting out of debt is as simple as 'spending less than you earn'. No line of credit is going to magically fix the reasons you're already in debt. Take a look at your existing debts, figure out how you got into them, and learn from that. Consolidate, yes. Line of credit ... maybe. Probably not.

This new Canadian Tire line of credit mortgage thing may work well for some people, but one line in your post


> (If I keep a good eye on my finances, which I have never been all that good at).


 tells me you might be better off talking to an unbiased third party about ways to refinance and cut down on the interest you're paying without the line of credit option being there to tempt you.


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## da_jonesy (Jun 26, 2003)

ScotiaBank has a similar plan.

Just remember, these are not good ideas as ultimately the Lender will have your equity secured mortgage longer as people use these plans to buy cars and big screen TVs, etc...

You are MUCH further ahead to pay off your mortgage as fast as possible. That will save you tens of thousands of dollars in interest payments.


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## iMatt (Dec 3, 2004)

Manulife also has something along these lines, in six different configurations: Manulife One

Definitely not for everybody (terrible, terrible idea for spendthrifts), but if you have lots of cash flow and good discipline, it looks pretty compelling. 

The most appealing thing IMO is folding all finances into a single account -- no more shuffling short-term savings in and out of accounts with other institutions to get a few points of interest, no more short-term borrowing on a separate line of credit, etc. No juggling = time and money saved. The question is whether it's enough time and money to make it worthwhile. Not at present, in my case.


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## Sonal (Oct 2, 2003)

Well, I bought my place on a line of credit, which is something I would never, ever recommend to anyone. But I did it was because within 2-3 years, I should be able to pull enough out of my investments to pay it off entirely (or almost entirely), and then I still have a huge line of credit to invest with. So as a short-term solution, it can work. But the thing is, I'm not using it as a mortgage or to manage debt--I'm using it to purchase something now because it's not practical for me to pull that money out of my investments for a few years. 

As a long-term solution, this is generally a bad idea because you have to have very strict discipline for many years. You already said you don't keep a sharp eye on your finances... it's not really reasonable for you to expect yourself to suddenly start doing that now.

So the question isn't really should you trust Canadian Tire. It's should you trust yourself? 

Weren't you going to sell this place and travel around the world a few months ago?


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## JumboJones (Feb 21, 2001)

I don't trust them with my car, I don't think I would trust them with my mortgage.


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## MACSPECTRUM (Oct 31, 2002)

JumboJones said:


> I don't trust them with my car, I don't think I would trust them with my mortgage.


:lmao: :lmao: :lmao:


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## MacDaddy (Jul 16, 2001)

Thanks for all the tips. Seems like it would be just like I thought, a pain in the ass all the way around!



> Weren't you going to sell this place and travel around the world a few months ago?


That was the original plan. I shoulda listed a month sooner though. In 3 months, I had 2 viewings and I watched the listing climb from around 4000 to over 12,000 in that time. 5 more places in my complex popped onto the market after mine and a price war ensued with everybody dropping their prices $20-$50k. I just took it off the market. Maybe at a later date if the market gets better again.


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## a7mc (Dec 30, 2002)

This is interesting... I didn't know this was possible. But now I have two pretty big questions:

1- Do they really give $250000 lines of credit? I don't know where you guys are from, but here in Toronto, or even in Ottawa now, it's near impossible to find a place for less than $250000. I was under the impression that lines of credit (no matter how they're "packaged") are MUCH lower than that.

2- I don't understand the whole "it's risky for thrifty spenders" logic. I would consider myself a thrifty spender. I invest a lot of money in my video-making equipment (pro-level, but have almost zero return on investment... at least for now), and I like my gadgets as much as the next guy, but I fail to see how this impacts a payment, whether it's for a line of credit or a mortgage. If you get a mortgage, you have to pay let's say around $1500 a month towards the mortgage. If you have a line of credit for the same amount, is the payment not theoretically the same? I mean, sure you could technically pay less, but as bad as I am with credit, even I wouldn't be stupid enough to miss a payment if it's being treated as a mortgage.

Maybe it's just the way my brain works... line of credit or traditional mortgage... it's all the same mortgage payment to me.

A7


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## MacDaddy (Jul 16, 2001)

a7mc,
here is how it's risky: Since it is basically a line of credit, you can just take out money when you want. Say you get your mortage for $250k. You pay off $50k right off the bat by depositing $50k into the account. You still have $250k you can access! 

Unless you are getting them to lower the limit each time you pay it down, you are going to end up with a lot of extra money that you can take out as you pay it down. So if you are thrifty spender, you end up spending more just because it's there. 

I think I am going to go through First National (Who hold my mortgage now) as they will give me $20k to do some repairs to my place and pay off all my debt, while only raising my mortgage about $200 a month (Which is much less than I am paying right now on my debts).


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## Demosthenes X (Sep 23, 2004)

a7mc said:


> This is interesting... I didn't know this was possible. But now I have two pretty big questions:
> 
> 1- Do they really give $250000 lines of credit? I don't know where you guys are from, but here in Toronto, or even in Ottawa now, it's near impossible to find a place for less than $250000. I was under the impression that lines of credit (no matter how they're "packaged") are MUCH lower than that.


Most are. But in this case, the bank holds your house, so if you ever default on your payment, they seize the property. It's basically like mortgaging your house - the bank gives you a bunch of money, and they own your house. Unsecured lines of credit are usually much lower than $250k, though.

2- I don't understand the whole "it's risky for thrifty spenders" logic. If you get a mortgage, you have to pay let's say around $1500 a month towards the mortgage. If you have a line of credit for the same amount, is the payment not theoretically the same? I mean, sure you could technically pay less, but as bad as I am with credit, even I wouldn't be stupid enough to miss a payment if it's being treated as a mortgage.[/quote]

A line of credit is dangerous for the same reason a credit card is: it allows you to spend money you don't really have. For people that are poor with money, spending money you do not have is a bad idea... if your credit limit is $250 000, that's a *lot* of money to spend, and there's nothing stopping you from doing so.


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## a7mc (Dec 30, 2002)

> A line of credit is dangerous for the same reason a credit card is: it allows you to spend money you don't really have. For people that are poor with money, spending money you do not have is a bad idea... if your credit limit is $250 000, that's a *lot* of money to spend, and there's nothing stopping you from doing so.


I can understand that I suppose. My opinion is that has nothing to do with people who "spend easily" or who buy things on impulse. I think the correct term would be "dangerous for people who may be morons".  Like I said, I do like to spend money, and I do use credit cards to buy stuff I can't afford immediately (and pay off over the year), but I'm not stupid. Whether it's a line of credit or not, it's still a mortgage, and you don't touch your mortgage money. It would be the same as deciding not to pay your rent or mortgage payment this month and spending the money on toys instead. You don't do that with a mortgage, and you don't do it with a line of credit.

Besides, with a line of credit, it would be too much of a pain in the bum to get at the money. It's not like a Visa, where you can access it anywere. Plus you just get them to put it in a separate bank account, and cut up all cards and access to the money. Like I said... anything less is not "poor money management", it's just plain stupidity. 

A7

Edit: Then again... maybe I'm just not as bad with my money as I thought I was.


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## Sonal (Oct 2, 2003)

Actually, you can link your line of credit to a bank card, and then buy things through Interac.

Now THERE'S a dangerous thought. 

Edit: typo. Thanks MacDaddy.


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## MACSPECTRUM (Oct 31, 2002)

Sonal said:


> Actually, you can link your line of credit to a bank card, and then buy things through Interact.
> 
> Now THERE'S a dangerous thought.


at least interact has a much lower daily cap than say a credit card


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## MacDaddy (Jul 16, 2001)

Demosthenes X

Much better description than mine, thank you lol

PS. It's Interac, no T 


/


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## ErnstNL (Apr 12, 2003)

There are schemes to make your mortgage interest payments tax deductible. 
See the Smith Manoeuvre here:
The Smith Manoeuvre - Is Your Mortgage Tax Deductible?



> After the mortgage is amortized in 20 to 25 years, one will be left with an investment loan equal to the original mortgage. But it will be supporting a portfolio of investments that should be worth more than the loan — especially for investors in Canadian stocks where returns have historically compounded at an average rate of 10% per year.


Whether you can get away with it till they close the loopholes is the downside. 
I heard this on CBC radio a couple of weeks ago. Is it a scam, really? You are left with your original mortgage loan principal until the day you die. Is that really wise?
It seems too good to be true.


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## iMatt (Dec 3, 2004)

a7mc said:


> I do use credit cards to buy stuff I can't afford immediately (and pay off over the year), but I'm not stupid.


Not necessarily stupid, but not wise either if you carry a balance on a CC with an interest rate of 18%+, or even just half that...




> Besides, with a line of credit, it would be too much of a pain in the bum to get at the money.


The products linked in this thread involve folding *everything*, mortgage and all, into one account -- a line of credit on steroids -- that you access just like a regular bank account. The idea is that you'll pay off the mortgage faster and save bunches of interest...as long as you don't go nuts drawing on your available credit. 

The Canadian Tire site explains it more straightforwardly but is Flash, so I can't copy text. This is from Manulife:



> Traditional banking has you managing daily finances by depositing your income into chequing and savings accounts while borrowing through mortgages, lines of credit, loans and credit cards. Unfortunately, you usually receive little or no interest on the money you deposit and pay higher interest on the money you borrow.
> 
> What if you could combine your deposits and your borrowings into one account? After all, by using your savings and income to reduce your debts, you could save much more in interest costs than you'd likely ever make in interest earnings.


I didn't look in detail at the Canadian Tire version, but at a glance it's the exact same principle.


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## Kosh (May 27, 2002)

a7mc said:


> I can understand that I suppose. My opinion is that has nothing to do with people who "spend easily" or who buy things on impulse. I think the correct term would be "dangerous for people who may be morons".  Like I said, I do like to spend money, and I do use credit cards to buy stuff I can't afford immediately (and pay off over the year), but I'm not stupid. Whether it's a line of credit or not, it's still a mortgage, and you don't touch your mortgage money. It would be the same as deciding not to pay your rent or mortgage payment this month and spending the money on toys instead. You don't do that with a mortgage, and you don't do it with a line of credit.


Yes, I would agree, impulse buying or spending easy is totally different from having smart financial sense. I do a fair bit of impulse buying, but I know that I either have the money in the bank for it, or I can pay it off in a couple of months, easily. My impulse buys are usually under $500.



a7mc said:


> Besides, with a line of credit, it would be too much of a pain in the bum to get at the money. It's not like a Visa, where you can access it anywere.


Not quite. For example, I can access my line of credit at any bank machine, as my line of credit is one of the accounts on my Visa and banking card. If I wanted too, I could withdraw my limit in a matter of seconds with a few button presses. This is one of the feature of a line of credit versus a loan.

I'm not that stupid, though. I've never used the line of credit for impulse buys either.

I generally use my line of credit like a loan for big purchases and I generally don't add to it until I pay it off.


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## EvanPitts (Mar 9, 2007)

Do they give you Canadian Tire Money???


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