Competition in the wireless market heats up

Today’s post is less about mortgages and more about saving money on your cell phone bill each month. Yesterday, a friend told me about a new plan from Fido called “FidoCity” where, for $40.00 a month, you get 2000 anytime minutes, unlimited text messages and pay NO monthly $6.95 system access fee. They are also giving away Blackberry Pearls for free when you sign up for a three year contract. Seemed like a good deal to me.

I took a look at my last Rogers bill. (I’ve been with them for 5 years and have been fairly happy with their service). Here’s what I found: I had unlimited evening and weekends starting at 8pm each night & 250 anytime minutes for $25.00 a month. Extra “anytime” minutes clock in at $0.35.  I was also paying $10.00/month for 2500 text messages plus of course the extra annoying no-value charge of $6.95 for that ridiculous system access fee. On top of that it was costing me $7.00 a month and Caller ID was costing me $8.00. Extra charges! Tons of them. Yuck.

Time for a phone call to Rogers customer service. Mission: get a better deal than what was being offered by the competition. A WAY better deal.

I’ve written about this before, but anytime you’re calling a company to get more from them, always remember the golden rule: Be pleasant and polite. Nothing will nowhere faster than taking a poor attitude with an over-worked, underpaid customer service rep. Trust me. I know. I was one for years.

I decided to direct my first call to someone in the Sales department; I figure that most sales people understand value and the importance of customer retention. The woman I spoke to was nice, but was unable to help me get into a new plan similar to what Fido was offering. I asked to speak to someone at the management level who had the authority to help save the company a long term pre-authorized paying client. After being told “sir, management will just tell you the same thing”, I said I didn’t mind reiterating my story again to someone new. I was put on hold for about a minute before someone new came on the phone.

This next person had clearly had a rough day, and seemed to be coming into the call braced for another heaty call from some hot-headed jerk. (There’s LOTS of them out there. Trust me. I know. I was “the manager” you’d talk to at a phone company for years.) Anyway, after repeating to me three times that Rogers simply didn’t have a plan that came anywhere close to what Fido was offering, I asked her what Rogers was prepared to do to save an otherwise happy customer that just wanted a better deal. If they didn’t have the exact plan I was after, perhaps they could sweeten the deal with some other perks? After all, I was a happy, long term pre-authorized paying customer that didn’t want to leave, but if the value was better elsewhere….(you get my drift) With that, the manager suggested I speak to someone in the Retentions Department. Bingo.

The woman I spoke to in The Retentions Department was nothing less than awesome. She doctored me up a plan that buries the Fido plan as well as anything else out there. I no longer pay system access fees. I now have free unlimited texts. All incoming minutes are free, and I have more outgoing minutes than I know what to do with. I also got a brand new, free upgrade to a Blackberry Curve. Moral of the story: Always be nice to your customer service people on the phone, especially when you want something. Know that in terms of numbers from the corporate side of things, it costs a company a lot more to go out and get a new customer than it does to keep an existing one. Always use that fact to your advantage, and don’t stop politely escalating your calls until you are speaking to someone who’s job it is to make sure you don’t walk out the door.

Dealing with your bank is no exception to this rule.

Product Spotlight: Scotia STEP

Otherwise known as The Total Equity Plan, Scotiabank has a product that allows their clients to split the mortgage into up to three different categories.  With a traditional mortgage, you typically have one rate, fixed or variable, that remains the same throughout the course of the term. With the STEP mortgage, you could have part of it as a line of credit, part of it as variable, and part of it as a credit card. They approve you at what’s called a “global limit”, and that amount is re-advance-able at any time. In many ways, this mortgage product is what one might refer to as a “HELOC” (Home Equity Line of Credit.)

What’s the benefit of structuring a mortgage this way? First, you are diversifying your interest risk. If you work with a financial planner, you will hear them discuss a “diversified portfolio” which spreads the risk out evenly amongst a variety of investments; the goal is to mitigate risk by avoiding having “all of your eggs in one basket”. The same works with the STEP program; you can take advantage of low variable rates AND the safety of a fixed rate portion. Secondly, because a global limit is set up at the outset, you have access to your home equity at any time. This can be extremely convenient for investing purposes since you don’t have to re-apply for additional credit. Borrowing to invest from the line of credit portion can be a great way to build up a healthy no-registered portfolio.

Things to consider: you need at least a 20% down payment. You cannot be a temporary resident of Canada. Your beacon score should be right up around the 700 mark. If you want to invest with some of your home equity, make sure you do it with a professional.

A helping hand?

In some mortgage transactions, a little extra help is needed to get the deal done. Sometimes, the applicant is fresh out of school and has little work history. Other times, there has been blemished credit and the lender needs a bit more security on the loan. These are just two examples of when a co-signer or guarantor might come into play.

What’s the difference between these two? Quite a bit, actually.

A co-signer is registered on title and has an interest in the subject property. Payments are typically made by the primary applicant. A co-signer is somewhat of a co-owner.

A guarantor is a little different; first, they are not registered on title, so they have no claim on the property. Secondly, the guarantor personally guarantees payments if the primary applicant defaults.

So, with a guarantor then, we have more responsibility for the property but less, if any, claim to it. It is for this reason that anyone wishing to be a guarantor for a transaction must consult legal council before proceeding.

In most cases, we see guarantors involoved with young buyers who either haven’t been working long enough or don’t have enough established credit. Typically, it is a parent helping out one of their kids. Depending on the payment history, income and education level of the primary applicant, a guarantor could be released from obligation within a year. However, this varies situation to situation, lender to lender. Co-signers, on the other hand, must go through a legal process to be removed from title, and like 99.9%  of all legal processes, fees are involved.