Traditional mortgage lenders are facing increased competition from innovative financial technology companies that are reshaping the way people borrow money to purchase homes.
One such company making waves in the Canadian mortgage space is Neo Financial.
Neo Financial is a Canadian fintech company that has gained attention for its modern approach to financial services.
Founded in 2019, Neo Financial aims to provide its customers with a seamless and user-friendly experience when it comes to managing their money.
While the company offers a range of products and services, including investment accounts and credit cards, its mortgage solutions have garnered considerable interest from prospective homeowners.
With its digital-first approach, Neo Financial aims to simplify the mortgage application process and make it more accessible to individuals looking to purchase, renew or refinance a home.
In this review, we will explore the features and benefits of Neo Financial’s mortgage offerings.
We will also examine the drawbacks associated with the company’s mortgage products to provide a comprehensive analysis for prospective borrowers.
Table of Contents
- What is a Neo Mortgage?
- How Neo Mortgage Works
- Neo Mortgage Rates
- Does Neo Charge Mortgage Fees?
- Pros and Cons of Neo Mortgage
- How to Apply for Neo Mortgage
- Is a Neo Mortgage Safe?
- How Neo Mortgage Rate Compares
- Neo Mortgage Review: Should You Apply?
Table of Contents
What is a Neo Mortgage?
Neo Mortgage is a digital-first mortgage brokerage service that works with multiple lenders to get you the best rate.
The product was introduced in 2022 to complement other competitive products of Neo Financial.
Neo Mortgage Services Inc. is licensed to operate in all the provinces and territories of Canada excluding Quebec.
With Neo, you can get a mortgage with as little as a 5% down payment¹ to purchase a new home.
This means that the mortgage can be a high-ratio mortgage, with less than a 20% down payment.
A high-ratio mortgage will require you to purchase mortgage insurance to cover the provider against default.
That being said, Neo Mortgage has a 25-year amortization, which is the most popular amortization in Canada.
The interesting thing is that Neo assigns a personal mortgage advisor to each client who will guide them throughout the application process.
Your advisor will also help you get the best mortgage rate from the pool of Neo’s mortgage partners.
How Neo Mortgage Works
Neo offers a streamlined mortgage experience while serving as a middleman for buyers and mortgage lenders.
With Neo Mortgage, the entire process, from application to approval, can be completed conveniently and efficiently without the need to leave your home².
Below is a step-by-step process for buying, renewing, or refinancing a mortgage through Neo:
- Quick Application: It takes just minutes to apply for a new mortgage, refinance, or renew through the Neo website or app. You can make the application from the comfort of your home, eliminating the need for in-person visits to a bank or mortgage broker.
- Digital Document Upload: As part of the application process, you will be required to document digitally for verification purposes. This eliminates the need for physical paperwork and speeds up the verification process.
- Online Mortgage Advisor: Through Neo, you have the convenience of connecting with a mortgage advisor online or over the phone. This allows you to discuss your mortgage options, ask questions, and receive personalized guidance from the comfort of your own home.
- Virtual Meetings with Lawyers: Neo enables you to meet with a lawyer online, removing the need for office visits. This digital approach makes it easier and more convenient to review and finalize legal documents associated with your mortgage.
- Sign Documents Online: You will also be required to sign all legal documents online. This again eliminates the need for physical paperwork and allows for a seamless and efficient signing process.
- Complete Online Mortgage Management: Once your mortgage is approved, you will have a user-friendly online portal to manage your mortgage. You can access your account, view statements, make payments, and track the progress of your loan, all from the convenience of your home.
By offering a fully digital mortgage experience, Neo aims to simplify the process, save you time, and provide the support you need to navigate your mortgage journey.
With the ability to complete everything online, Neo offers a modern and convenient solution for those seeking a new mortgage, refinance, or renewal.
Neo Mortgage Rates
If you’re considering a mortgage with Neo, you’ll be pleased to know that as of August 9, 2023, they offer access to a highly competitive 5-year fixed mortgage rate (closed) of 5.59%.
This rate stands out as one of the best mortgage rates in Canada.
It’s important to note that the rate mentioned is applicable for high-ratio mortgages, and approval from the lender is required.
Additionally, it’s essential to keep in mind that mortgage rates are subject to change without notice, as they are influenced by various factors in the financial market.
Securing a mortgage at a low-interest rate is crucial for homeowners, as it can significantly impact the overall cost of homeownership.
Neo’s offering of a 5.59% 5-year fixed mortgage rate demonstrates their commitment to providing competitive rates and potentially saving borrowers a substantial amount of money over their mortgage term.
Does Neo Charge Mortgage Fees?
Neo takes a unique approach when it comes to mortgage fees.
Unlike traditional lenders who often charge borrowers various fees throughout the mortgage process, Neo offers its mortgage services free of charge to borrowers.
Neo Mortgage is completely fee-free, meaning you are not required to pay any application fees, origination fees, or other associated charges typically found with mortgage loans.
This can be a significant advantage for borrowers looking to minimize their upfront costs when obtaining a mortgage.
The revenue model of Neo differs from that of traditional lenders. Instead of charging borrower fees, Neo generates its revenue through partnerships with lending institutions.
These lending partners pay Neo directly for each mortgage funded through the platform. In this way, Neo acts as a facilitator. It connects borrowers with lending partners while not burdening borrowers with additional fees.
By eliminating mortgage fees, Neo aims to provide a more accessible and transparent mortgage experience for borrowers.
This fee-free approach aligns with Neo’s mission to simplify and revolutionize the mortgage industry. It also makes homeownership more attainable and affordable for individuals.
It’s important to keep in mind that while Neo does not charge mortgage fees directly, there may still be certain costs associated with the mortgage process.
These costs can include third-party fees such as appraisal fees, title search fees, and legal fees.
It is advisable for you to carefully review the terms and conditions of Neo Mortgage to understand any potential costs beyond Neo’s fee-free service.
Pros and Cons of Neo Mortgage
From the above review, you can see that Neo Mortgage has several benefits. But there are also drawbacks you need to be aware of.
Below are the key pros and cons of Neo Mortgage:
- Competitive rate: The current Neo Mortgage rate stands out among the best 5-year fixed rate in Canada.
- Low down payment: Neo requires a 5% down payment for homes under $500k, 10% for homes above $500k, and 20% for homes above $1 million.
- Easy application: You can apply for a Neo Mortgage within minutes online without branch visits.
- Fast turnaround: Because Neo operates entirely online, it provides a faster turnaround than traditional mortgage lenders.
- No fees: The absence of mortgage fees from Neo’s offerings can be a significant advantage for borrowers seeking a cost-effective and transparent mortgage solution.
- 120-day rate lock: You can lock a Neo Mortgage rate for up to 120 days if you’re looking to renew your mortgage with the bank.
- Customized solutions: Neo provides a personal mortgage advisor for each client to provide customized solutions and guide you throughout the mortgage buying journey.
- Access to mortgages with poor credit scores: By partnering with multiple lenders, Neo can offer mortgages to people with poor credit scores.
- Third-party lender: Neo serves as a brokerage, not a mortgage lender. So if you’re looking to buy a mortgage directly from a lender, you may want to consider another option.
How to Apply for Neo Mortgage
You can apply for a Neo Mortgage within a few minutes online. But before you can do so, you must meet the eligibility below:
- Live in any Canadian province or territory other than Quebec
- Possess a Canadian photo ID
- Attain the age of majority in your province
If you meet the above eligibility, you can proceed to apply for a Neo Mortgage through the steps below:
- Visit the application page
- Click on the “Get Started” button
- Choose the mortgage you want (new, renew, or refinance)
- Indicate when you need the funds
- Enter the value of the home
- Enter the down payment amount (starting from 5%)
- Indicate your credit score (learn how credit score is calculated)
- Provide your personal details and follow the prompts
Upon providing all the required information, your personal mortgage advisor will scan the mortgage market to find the best rate and terms for you.
Feel free to contact a Neo Mortgage advisor at 1 (855) 536-1993 for any clarification. You can reach them between 9-5 MST (Mondays to Saturdays).
Is a Neo Mortgage Safe?
Neo offers mortgage services that prioritize the safety and security of their customers.
There are many factors that make Neo Mortgage safe.
Firstly, your deposits with Neo Financial receive the same level of security as you would expect from a traditional bank.
This ensures that your funds are protected and managed reliably.
It’s important to note that your deposits with Neo Financial are held by Concentra Bank, which is a Schedule I federally regulated bank and a member of the Canada Deposit Insurance Corporation (CDIC),
As such, your deposits at Neo Financial are protected up to $100,000 per insured category. This means that in the unlikely event of bank insolvency, your eligible deposits are safeguarded.
Neo Financial also prioritizes the safety of your personal information and data.
They have implemented industry-standard security measures to protect your sensitive information from unauthorized access and ensure the privacy and integrity of your data.
This includes robust encryption protocols, secure data storage practices, and ongoing monitoring for potential threats.
As a customer, you have control over the security of your Neo Financial account. You can reset your PINs, providing an additional layer of protection in case of any suspected unauthorized access.
While it’s important to conduct your own research and due diligence, the combination of regulated banking practices, CDIC protection, industry-standard security measures, and customer control features provided by Neo Financial helps create a safe environment for mortgage services.
How Neo Mortgage Rate Compares
The following tables show how Neo’s 5-year fixed mortgage rate compares with those of other online banks as of August 8, 2023:
|5-Year Fixed Rate
As you can see, Neo Mortgage stands out among all the banks compared.
However, you should look beyond the mortgage rate when deciding which mortgage rate to choose.
Most importantly, should consider the APR, repayment options, mortgage terms, and conditions before finalizing.
Neo Mortgage Review: Should You Apply?
Whether or not you should apply for a Neo ortgage depends on your circumstances and needs.
Based on the above review, you can see how Neo offers competitive rates with no mortgage fees. With this, you can’t go wrong with a Neo Mortgage.
But if you’re concerned about the drawbacks of Neo Mortgage, then you need to extend your search by comparing other mortgage providers.
Before making any financial decisions, you should conduct thorough research and seek professional advice to avoid costly mistakes.
Hopefully, now you can determine whether Neo Mortgage is perfect for you or not.
Read Also: Neo Financial Secured Credit Card Review
¹ Applicable to residential mortgages only, subject to approval. A minimum 5% down payment is required for a purchase price of $500,000 or less. For a purchase price between $500,000 and $1 million, the minimum down payment is 5% on the first $500,000 and 10% on the balance. A home purchase price of greater than $1 million requires a minimum down payment of 20%.
² Digital closing is currently only available in Ontario, Alberta, and British Columbia.
Neo Mortgage Services Inc. Licenses – Ontario #13444, British Columbia MB600606, Alberta, Saskatchewan 510903, Manitoba, Newfoundland & Labrador #2207NE1151, New Brunswick #220015509, Nova Scotia #20223000379, PEI, Yukon, Nunavut, Northwest Territories.