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Email this5:39 pm
January 3, 2009
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Hello,
I am looking for advice from people and maybe examples of what others have done in the past to not waste the chance to earn higher interest on their house funds between purchases by parking the lump sum at a major bank.
We're going to sell our house on Vancouver Island around May and then move to Ottawa in the end of July, beginning of August.
In the most likely scenarios, we:
1) find a new place to buy prior to moving in July/August and take possession shortly after arriving in Ontario. Money in limbo for a month or two.
2) Don't find a place and rent while continuing to look. Money in limbo for up to a year or two.
3) Don't find a place and rent while continuing to look and then decide to keep renting. Money in limbo for up to a year before deciding not to buy.
In all scenario's there is an initial period of 1 month to 1 year where we may need access to all the funds, so we can't lock them in or put them in accounts that are not easily accessible and I think this is too much money to put in a TD savings account with the big banks horrendous savings account rates.
I do not know if we spread it out accross EQ bank and the like if we could pull it all together in time for a purchase. Maybe Alterna Bank is a good place to put some, because they have some B&M in Ottawa and their rate is ok, but we wouldn't want to go above the CDIC limit and the total of the funds in question will probably be around 500k.
I am not an expert on loans so I don't know if there is a type of bridge loan I could have in place which would front me as much money as we needed to make a purchase until we were able to pull the HISA funds together, or what other kind of strategies may be viable under this circumstance?
If we decide to buy a new build getting the money together quickly won't be as much of a concern, but if we buy an old house, I'm not sure how much time we'd get to pool our funds.
Are there any suggestions?
Thank you for your help!
6:53 pm
October 21, 2013
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I think you probably know the options as well as any of us in terms of HISAs. EQ and Tangerine are very quick with transfers in my experience - if you happen to have a good offer from Tang. However, EQ does not offer joint accounts and I think you probably would want one for this purpose. I think Hubert is pretty good too. I've never had any trouble with any of them except those that have the daily/weekly/monthly withdrawal limits. AlternaBank has withdrawal limits which you might want to avoid and I think EQ might too. That's something you need to clarify. Tang has no limits as long as you do it over the phone, but only 100K insured..
All you should need to secure your purchase is a deposit. You need to talk to a realtor about how much those tend to be as I don't know. I'm guessing maybe 10K, but it is only a guess. So, you might want to keep that much handy. Most of them want a draft or certified cheque.
The terms of purchase will specify when the deal is to "close", i.e. when you have to come up with the money and get the key. Most people have to arrange a mortgage or at least arrange the final details, and that takes a little bit of time also.
The closing date is usually negotiated between seller and purchaser at the time the offer is accepted. It can vary from a few days to six months, but I would say 1 to 3 months is fairly common, so it is not an emergency to come up with the money. If the time the seller wants is not acceptable to you, then you say so at the time of purchase and get them to extend it.
It sounds like you may require more than one FI. Don't forget that MB and points west all have unlimited insurance coverage in CUs. Ontario has 250K in CUs. Oaken can provide double coverage through its 2 subsidiaries.
I hope that helps a bit.
7:31 pm
January 3, 2009
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Thanks Loonie. I'm concerned with something like the EQ debacle occurring right when I need the funds, but maybe that's just over thinking it.
In my mind, I was thinking of things playing out much like how you describe and it does help that you took the time to respond, because I value third party opinions when making decisions which are the bigger side to try and prevent myself missing something which could result in an easily preventable negative impact.
9:18 pm
October 21, 2013
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My recollection is that CDIC states on its website that it intends to refund people's money, if necessary, in fairly short order. I think it gives a specific time frame,which you could check. i don't think this has been tested though, as it used to take longer.
Did you perhaps mean the debacle at Oaken? Whatever else happened, those folks who had savings accounts there did get their money out if they chose to do so. That was what caused the "run". If it had really gone belly up, it would then have been in CDIC's lap, as above.
If worst came to worst and you had to wait for the money for some unanticipated reason, I would think it ought not be difficult to arrange a bridge loan. Presumably you would have some evidence of your investment. But I can't speak for the detail of how that would work out.
Perhaps other people will chime in.
8:05 pm
February 18, 2016
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Hubert, Hubert, Hubert...
Simplest is to have an account in one of brick and mortar banks or institution you can actually GET your cash from. Open an account at Huber and link it with 'big bank'. Sell house, deposit money into big_bank, transfer to Hubert. Open 1year GIC. Put ALL money into 1y GIC. Every 3 months you can close GIC AND get your principle AND interest OR leave it for next 3 months; after every 3 months interest is higher (currently 2.1, 2.2, 2.3 & 2.4% for each quarter). AT ANY time if you need money you can close GIC. You will loose only interest between quarters.
8:25 pm
January 3, 2009
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I wasn't aware of that kind of GIC. Thanks for the tip SavingIsGood. Between people like you and Loonie, I am fortunate you guys share knowledge openly.
8:47 pm
December 4, 2016
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Lots of people go back and forth between tangerine promos and simplii. You can probably get an average higher than the GIC rate. Issue is you have to become a active player in your finances. More so than most of us want to. I personally don't.
Most HISA are pretty good. For the added amount you might get from a extra 0.45% from EQ bank it probably doesn't make sense to switch over.
For example,
200,000 x 0.45% is 900 dollars a year. For the added stress of adding and needing to deal with that bank and check on that bank. Is it worth it. Some say yes. I think most would say no though. People in this forum and forum like these are not exactly normal people though. In a good way though.
9:01 pm
October 21, 2013
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Yes, I have used the Hubert one year GICs several times. I just assumed you knew about them; sorry I didn't mention it. It works as SavingisGood has described.
You just call them up when you need the money and they send it back to TD or wherever. The only downside is losing interest between the 3 month periods, potentially - depending on timing. Perhaps you can do it online too.
As long as you're comfortable with having your money in a MB CU.
You might want to keep some of the money in a smaller GIC for the deposit so that you dont have to break the whole thing at once. They will accommodate any number of GICs, for that matter.
If I were going to put 500K in one non-Big-Bank FI, and knew I was going to need it all at once, I might warn them when the closing date was coming, just in case there are any unanticipated issues. It might make you feel better.
10:01 am
January 3, 2009
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I have been lucky and dealing with a small MB CU for the past 8 or so years. Prior to that I used to deal with them, PCF, Citizens Bank, ING, ICICI and some other small institutions in the Toronto area.
Now, that small MB CU is becoming less and less competitive, due to a change in leadership and vision, they're slowly becoming more like a bank and less like a CU. At first they starting lagging behind on their rates and taking a month or so to adjust to the highest or very close to the highest rate, but as of the last set of hikes last year they aren't adjusting and it's time for me get back into the interest hunting game. So I've kept in touch, but haven't been using and gaining experience with the new state of things like you guys have. So I appreciate your help.
What I'm noticing with these new CU's etc, is that they are extremely simple and do not have much information on their site which is easily found. Things like do they reimburse RRSP transfer fees or transfer in and out limits.
Since we're moving I did start building up a liquid savings account and after reading a lot of your posts, I decided to use EQ bank for that and it's been good. Between that and Simplii I have been getting by with a good enough rate on savings account funds, but now I'm entering a locking in stage again and when you add onto that the potential flood of money from the sale of our house, it's time to start shopping and looking for options. I've been reading a lot and almost ready to open a Hubert account, but I had somehow missed that different kind of GIC. I want good rates, but when it comes to the house money I need to prioritise service and accessibility.
I had some bad experiences with ING as they were changing to Tangerine and don't want to deal with them yet. They were disrespectful to the point my wife and I closed out accounts with them. I also find their way of not offering their best rates without playing a game annoying, so thank you for telling me about that game, but I will still avoid them until I lose something substantial by not using them.
I think I'm going to look into a joint account solution with Hubert for the house funds while they're in play and then using them and potentially Oaken for locking in terms as they become available and for new RRSP and TFSA deposits. They may not reimburse transfer fees of existing RRSPs, but at least they charge none. I have a grandfathered account with TD that could act as my B&M. Now I start researching how to make that work in regards to potential fees, transfer in/out limits and hold times. I wish there was just one big bank that didn't gouge us so I could deal with a B&M with the house money at least, but I cannot believe how little they give for what they take.
11:00 am
October 21, 2013
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the new online versions of these MB CUs are indeed fairly simple and most don't offer a ful array of services (and fees!)
you could try looking at the bottom of the screen under "Legal" for additional info, which is available in some cases.
It might also be helpful to remember that they are usually divisions of traditional CUs, which might give you more info of some sort. For example, Hubert is a project of Sunova. Sunova issues their tax slips.
As a general rule, the FIs that charge transfer fees will also reimburse them, sometimes with a limit usually about $50, but I don't think I've ever seen it written as a policy. You have to negotiate it as they don't want everyone to get it automatically.
It sounds like you're developing a plan anyway. Good idea to get the joint account. In my experience, Hubert actually encourages that. It's a major weakness at EQ.
1:12 pm
January 3, 2009
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That is a great tip that many people leary of dealing with MB CU's may not be aware of. If you thought the online portion was the entire company, it may look a little weak.
Joint account is not a big deal....... until it is and then the impact can be disastrous. That's why I'm very careful with how we use EQ bank, but I do wish the other banks would make it as easy to open an account and link other accounts, as they do. I see Hubert allows you to easily link accounts. You just shouldn't have to be using snail mail these days for much of anything.
If EQ Bank allowed joint accounts and had competitive GICs I think their business would explode, but maybe that's that their goal. I feel like they're a placeholder for something or that they have some sort of unspoken goal.
Yes, I think the plan is to open joint accounts with Hubert and Oaken and use them when they serve best. I like that Oaken has the best rates right now, but they fluctuate and I actually tried to open an account with them early last year, but they messed it up, then their rates dropped and so I asked them to cancel the process. In retrospect that was dumb, but it won't matter if their rates aren't top when I'm in need, because I wouldn't use them after that unless they are number 1 by a bit. You see, some time after I told them to cancel opening my account they still cashed my check; which they had lost at the time; and didn't offer to give me the money back until I contacted them 3 months after they cashed it! I felt that was enough time to see if they were going to try to keep my money. When I called them to ask them why they had cashed my check after the cancellation request and then on top of that not returned my money, their only answer was that they had already cashed the check! lol. Ok. Hopefully I'll have better luck opening new accounts this time.
7:37 pm
October 11, 2015
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Is no one worried about the CDIC limits? Presumably we are talking about a large sum of money.
8:41 pm
October 21, 2013
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dentgal said
Is no one worried about the CDIC limits? Presumably we are talking about a large sum of money.
He's looking at Hubert and Oaken specifically, in joint accounts. He could put 200K in the 2 divisions of Oaken, which would all be CDIC insured. Then the remaining 300K (or more) at Hubert is all insured by MB CU insurance.
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