Wealthsimple mortgage offer: take 0.05% off rate for every $50k invested. How does it make sense?

[f1shsauce]

Am I misunderstanding something? If I had increments of $50k lying around right as I’m signing a new mortgage, why wouldn’t I just get a lower mortgage than 0.05% off the rate?

From their email—

Here’s a quick example

Let’s say Simon gets pre-approved for a 5% interest rate on a $500,000 mortgage (on a 5 year term). That means his monthly mortgage payments would be $2,908.

But because Simon is a Wealthsimple Core client, he’ll get 0.05% equivalent of his mortgage rate back as a cash rebate of $14 a month.

Now, since Simon wants to pay even less for his mortgage (smart guy), he transfers $100,000 to Wealthsimple, adding a further 0.10% equivalent to his rebate, or $28 extra a month.

In total, once Simon closes on his new house, he’ll pay $2,908 for his mortgage, and get a rebate of $42 cash back every month — the equivalent of a 4.85% rate.

Over 5 years, that’s $2,552 in savings.

 

[jeffreyanovero]

@f1shsauce If you have $1 million in RRSP/TFSA/LIRA, this promo is for you.

I just ran the calculator, I would get a 5 year fixed at 3.79% if I had $1 million in investments.

I wouldn't need to liquidate my/partners retirement accounts.

This is an insane promo for the rich! The catch is you have to remain with WS.

EDIT: Pine will be phoning me today apparently, Just got a text. I'll ask questions.

EDIT2: Talked to pine. We both agreed its insane. Its exactly like discussed, they will give you an interest free mortgage. They won't pay you, so the "maximum" you would need to transfer is about $4.8 million. That will give you "Generation Status" for a 0.15% discount plus the 4.8% discount.

The rep emphasized "its a limited 2 month promotion", they are doing it almost as a marketing campaign.

 

[mhbb2]

@jeffreyanovero this worries me. i love wealthsimple. but they are throwing SO MUCH MONEY at customer acquisition and running ads making fun of bank advisors, im worried they will RIGHTFULLY gobble up a huge chunk of the personal finance market, and then stop being awesome and start being just as bad as RBC or Scotia eventually once they corner the market. I hope they dont pull an Uber or an AirBNB

 

[gearysa]

@mhbb2 That's what Netflix and Uber have done. Get lots of customers by "shaking up the market" and then when the originals go out of business, they adopt the originals business model.

 

[jim2010]

@gearysa Admittedly it's working great for Netflix.

 

[resjudicata]

@gearysa Netflix is way cheaper than cable was

 

[gearysa]

@resjudicata For now. They have already started the price hikes and removing the cheaper lower tiers. They still have competition too, which slows down the changeover. Although, when I last had cable it was around $50. If I have just 3 of the multitude of streaming services, I'm already paying more.

 

[eco]

@gearysa Perhaps. But it's also costing more to create content.

 

[mely2015]

@gearysa On demand is a way better service than cable.

 

[resjudicata]

@gearysa Netflix isn't responsible for what other services cost. Plus, when were you paying for cable? $50 doesn't go as far it used to.

 

[kowalski1]

@resjudicata Netflix is indirectly substantially responsible for what the other services cost. Its success spurred the development of those services and its pricing model is a major driver in their pricing models.

If that ends up to the detriment of consumers in the long run, I can imagine antitrust implications, though it's probably a pretty outside chance.

 

[andrewzinc]

@gearysa IPTV on a firestick. We haven't used netflix in months plus we get live sports, ppv events, and US tv channels.

There's maybe 2 shows and 1 movie that we looked for that we haven't been able to find so far, and none of them were on netflix or prime anyway. We use Honeybee IPTV but there are tons of options available.

Costs $8/month.

 

[chillipepper]

@andrewzinc Yeah, but not legal. They'll come for those one day.

 

[andrewzinc]

@chillipepper Totally legal in Canada unless you are streaming content that was obtained illegally. Maybe they'll shut it down someday but until then I'm going to continue not paying netflix $20/month for a tenth of the content.

How many years has utorrent been around?

 

[chillipepper]

@andrewzinc Yeah, torrenting is a weird example to throw for legality purposes, LOL!!

Streaming PPV content when you're paying $8/month should be the red flag, among other things.

 

[andrewzinc]

@chillipepper I never said anything was legal about utorrent, that was my point. As far as I'm concerned everything i stream is licensed by the provider, but I'll let you know when the RCMP kicks my door in.

 

[gearysa]

@andrewzinc I'll have to look into that.

 

[andrewzinc]

@gearysa Its a little work to set it up, takes about 20 minutes but there's lots of youtube videos and guides online. I will never go back.

 

[msbelle]

@andrewzinc which iptv app do you use?

 

[andrewzinc]

@msbelle Honeybee. Not advertising them in any way just the one I picked, there are tons to choose from. They had like a $1 3 day trial and I liked it so stuck with it. Customer support is excellent and the ui is easy to navigate. I use Tivimate to load it on the firestick.