We Partnered to Make a Mortgage That Wasn’t Terrible. People Had Some Questions

FROM OUR SPONSOR

If you’ve tried to buy a house in Canada in the last few years, you may have noticed some problems. In fact, you may have noticed these problems even if you’ve only thought about buying a house, read the newspaper, or accidentally had a TV on while you were at the manicurist. Such problems as: there are not enough houses; they’re too expensive; mortgage rates are exorbitant; there’s fine print that’s impossible to understand. It all adds up to the least affordable market in the history of this country.

That’s why Wealthsimple decided to partner with Pine, one of the most innovative mortgage companies in the country, to find ways for our clients to get lower rates. And we’re proud to announce that it worked! Besides starting with Pine’s low rates that you don’t have to negotiate for, we’ll give you money for your monthly payments — the more of your money you trust with us, the more we’ll give back.

So why, exactly, will we give you a rebate if you trust us with more money? We’ll get into the weeds on that below, but the basic idea is that we make money when you deposit your stocks and other assets with us. When you deposit a little more, we make a little more. And we think passing that savings on to you with a rebate on your mortgage is ultimately going to be better for both of us.

But let’s get to the details. Because there are some things to know about Pine’s mortgages, and we want you to know them.

(1) Who’s Pine? Why did we go into business with them?

Pine was founded in 2021 by a couple of folks who worked in the mortgage business and became disillusioned. They figured the best way to fix the system was to start fresh. So they launched Pine, a digital mortgage lender. The goal: eliminate unnecessary costs, lengthy approval periods, and obfuscation.

Pine works differently. It’s a digital-first process, which means there’s usually no paperwork. About two-thirds of Pine’s clients complete their entire application on a phone. As a digital-first company ourselves, we like that.

(2) How do I get a higher rebate by investing more with Wealthsimple?

The basic rates, as we mentioned, are good and transparent. But you can get more (and more) money back for your mortgage payments depending on how much you trust us with in your stock, retirement, or any other account — by increments of 0.05%.

There are two ways to get these rebates. The first: if you're a Wealthsimple client with less than $100,000 in your account, you’ll get a 0.05% monthly rebate right off the bat. If you’re a Premium client with between $100,000 and $499,999 invested, you’ll get a 0.10% monthly rebate. Generation clients with $500,000 or more get a 0.15% monthly rebate. This link lays out the tiers in handy chart form.

The second way can be even bigger. We’ll add an additional 0.05% rebate for every $50,000 you move over to Wealthsimple within 30 days of closing on your loan — but you do need to apply for the mortgage through https://wealthsimple.pine.ca/ before August 31, 2024.

Which means, by the way, that if you’ve invested enough money with us, you could get the equivalent of an interest-free mortgage payment. If you want to see how much of a rebate you might get, check out the calculator on this page.

(3) When do I need to make new deposits or transfers for them to count toward my mortgage rate?

As long as you apply before August 31, 2024, and transfer or deposit the money within 30 days of closing on your mortgage, it counts.

(4) But you said “rebate.” What the heck is a mortgage rebate? Is it annoying?

It’s only a little annoying, but it could save you real money.

Here’s how it works. When you get a commitment letter from Pine for your mortgage, it will have a rate in it. This is the rate used to calculate how much your payment will be. The wrinkle is what happens next: as we just described, depending on how much you’ve got invested with us and how much you move over before you close your loan, we will rebate you money to effectively make your payment lower. Say your original rate is 6%, and you get .25% in rebates. Wealthsimple will give you the difference between what you’d pay on a 6% mortgage and what you’d pay on a 5.75% mortgage.

How does that work? We’ll deposit that cash rebate into your Wealthsimple Cash account each month until the term of your loan expires — as long as you don’t alter the terms of your loan or miss payments.

Let’s go through an example. Say you’ve got $125,000 with Wealthsimple and can bring over $150,000 to us from an RRSP at an outside bank by the time you close. Your payment rebate will be 0.10% (for being Premium) and an extra 0.15% for the $150,000, giving you a 0.25% total rebate. If your mortgage amount is $800,000 — hello, Toronto GTA! — and you get a 5% five-year fixed rate with monthly payments, we will deposit a little more than $113 (your 0.25% rebate) into your account every month to lower your payment. That’s $6,792 over the five years of your term. Not bad!

(5) Why not just lower my rate instead of giving me a rebate?

Because it’s our way of making your mortgage as affordable as possible. We make money when you invest and save with us (not as much as most banks, our fees are lower), and the rebate passes those savings on to you. But if you withdraw a bunch of money, we make less money, and we have less money to give back to you. That’s why your rebate happens on a monthly basis, because it’s based on the assets you have with us. If that changes, so will your rebate.

(6) Why are you giving more money to people who already have more money?

This is a really good question.

Our business is built on a simple idea: helping you make the most of your money while charging you as little as possible in fees. Having low margins and great products helps us compete in a world where there are entrenched players. One way to make that deal even better is to make our margins lower as we earn more from our clients. So when you trust us with more money, we lower your fees — we’re essentially giving your money back to you.

(7) How do you apply for one of these mortgages?

Click here and you’ll arrive at the Wealthsimple/Pine site. You’ll answer a few simple questions about the property you’re buying. Next, you’ll be asked how much money you’ve already got invested with us and any additional funds you’d like to bring over from another institution. Your mortgage rate and rebate will then be calculated, and if you like what you see, you can move ahead with our pre-approval application. It’ll take about five minutes.

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Wealthsimple

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