ECross Posted May 25, 2011 Report Share Posted May 25, 2011 When you say pre-existing debt that does not include government student loans though does it? Link to comment Share on other sites More sharing options...
The Ace of Spades Posted May 25, 2011 Author Report Share Posted May 25, 2011 Here's what the TD Rep said: "Each application is reviewed on its own but you do not necessarily have to combine all other student loans with the professional line of credit." So possibly it is dependent on your credit score. Link to comment Share on other sites More sharing options...
The Ace of Spades Posted May 25, 2011 Author Report Share Posted May 25, 2011 And I just heard back from the Scotiabank Rep: "Under the Medical Program we do not decrease the amount of student loan we authorize by the amount you have outstanding in Government Student Loans. We do, however, reduce it by the amount of outstanding debts you have at other Financial Institutions (unless we pay them off and close them in full). I recommend, the process you should take, as follows: Obtain approval for the Student Line of Credit through Scotiabank first. Then apply for your Government Student Loans after you get approved. If you apply for Government Student Loans first, we will ask for a copy of the balances outstanding." Link to comment Share on other sites More sharing options...
The Ace of Spades Posted May 31, 2011 Author Report Share Posted May 31, 2011 Another update. Just met with and signed with MD Management today. Don't know why I wasted my time looking at the five major banks because their program is by far the best. I recommend looking at them as another viable option because most medical students aren't even they exist! Link to comment Share on other sites More sharing options...
DocT7 Posted June 1, 2011 Report Share Posted June 1, 2011 Another update. Just met with and signed with MD Management today. Don't know why I wasted my time looking at the five major banks because their program is by far the best. I recommend looking at them as another viable option because most medical students aren't even they exist! I've been looking at theirs, too. Why do you say its by far the best? I wasn't getting that impression (less money, not guaranteed at prime after residency etc)... Link to comment Share on other sites More sharing options...
The Ace of Spades Posted June 1, 2011 Author Report Share Posted June 1, 2011 At first, BMO was the only institution that told me they couldn't guarantee repayment at prime. I scratched them off my list because I thought the other four major banks were being competitive by saying I could have repayment at prime. But at MD Financial, the adviser said NO bank could guarantee that huge LOC to be repaid at prime. If you look at the fine print on the papers you sign, the repayment is actually negotiated after the grace period (12 months after residency). Unless you've been REALLY good with your LOC (i.e. paying more than the minimum interest during residency, actually paying off the principal) the banks will negotiate at prime +1 or +2, etc. Talk to any practicing physician and they will tell you that they are paying more than prime for their LOC. It's a common misconception (I had thought that too), but the banks will say anything to get you to take out a LOC with them, and they will make lots of money during repayment - especially with long amortization times. So MD Management admits that National Bank will do this too, but the adviser strongly recommends paying off as much of the principal you can during residency. This boosts your credit rating and puts you in a better spot during negotiation - and if you can't get as low as prime, which is likely, you will still be much further ahead than your colleagues. Bottom line is that MD Management didn't offer a better product, but their honest advice is what sold me. Link to comment Share on other sites More sharing options...
ECross Posted June 1, 2011 Report Share Posted June 1, 2011 At first, BMO was the only institution that told me they couldn't guarantee repayment at prime. I scratched them off my list because I thought the other four major banks were being competitive by saying I could have repayment at prime. But at MD Financial, the adviser said NO bank could guarantee that huge LOC to be repaid at prime. If you look at the fine print on the papers you sign, the repayment is actually negotiated after the grace period (12 months after residency). Unless you've been REALLY good with your LOC (i.e. paying more than the minimum interest during residency, actually paying off the principal) the banks will negotiate at prime +1 or +2, etc. Talk to any practicing physician and they will tell you that they are paying more than prime for their LOC. It's a common misconception (I had thought that too), but the banks will say anything to get you to take out a LOC with them, and they will make lots of money during repayment - especially with long amortization times. So MD Management admits that National Bank will do this too, but the adviser strongly recommends paying off as much of the principal you can during residency. This boosts your credit rating and puts you in a better spot during negotiation - and if you can't get as low as prime, which is likely, you will still be much further ahead than your colleagues. Bottom line is that MD Management didn't offer a better product, but their honest advice is what sold me. So I'm wondering...has anyone here signed up for a LOC where the bank has guaranteed prime interest rate during repayment? And if so, which bank was it? Link to comment Share on other sites More sharing options...
The Ace of Spades Posted June 1, 2011 Author Report Share Posted June 1, 2011 Here's a thread from last year about the same topic: http://www.premed101.com/forums/showthread.php?t=43707 No bank is going to guarantee repayment at prime up front. There is just the potential to lose so much money, plus you're talking about long term liabilities. Anything the bank says to get you to sign is worthless! Link to comment Share on other sites More sharing options...
rmorelan Posted June 1, 2011 Report Share Posted June 1, 2011 Here's a thread from last year about the same topic: http://www.premed101.com/forums/showthread.php?t=43707 No bank is going to guarantee repayment at prime up front. There is just the potential to lose so much money, plus you're talking about long term liabilities. Anything the bank says to get you to sign is worthless! yeah the best I have seen is prime during residency - that is I suppose a pretty long time at prime but of course we all want the most we can get Even after residency any bank is going to have to be careful jacking that up - you might get some extra $ during repayment but that isn't at all where the big money is. If you stay with a bank and run you business through them you will be paying a lot of money in bank fees for instance - and that is money the bank doesn't risk a thing to earn, it is just pure profit. Link to comment Share on other sites More sharing options...
hking03 Posted June 1, 2011 Report Share Posted June 1, 2011 The scotia rep for Vancouver stated that they have not raised repayment from prime since they brought the program forwards and have no intention to. Link to comment Share on other sites More sharing options...
*HopefulMD Posted June 1, 2011 Report Share Posted June 1, 2011 The scotia rep for Vancouver stated that they have not raised repayment from prime since they brought the program forwards and have no intention to. They told me the same thing, but from Edmonton. Link to comment Share on other sites More sharing options...
NAD(P)H Posted June 1, 2011 Report Share Posted June 1, 2011 The scotia rep for Vancouver stated that they have not raised repayment from prime since they brought the program forwards and have no intention to. RBC & BMO told me the exact same thing (Saskatoon). Ace, I wonder if the MD Financial guy you talked to knows his stuff..? Otherwise, banks are outright lying to me. Link to comment Share on other sites More sharing options...
rmorelan Posted June 1, 2011 Report Share Posted June 1, 2011 They told me the same thing, but from Edmonton. Same in London - checking with post residents recently seems to confirm the practice Link to comment Share on other sites More sharing options...
The Ace of Spades Posted June 1, 2011 Author Report Share Posted June 1, 2011 Well it's not that important right now. While in school/residency, they all give prime. We can always shop around if they won't give us prime post residency! Also, remember that just because they TELL you that, if it's not on the paperwork, it's not guaranteed. Link to comment Share on other sites More sharing options...
bosco Posted June 1, 2011 Report Share Posted June 1, 2011 I talked to a friend who is a financial planner and he said that banks can guarantee prime and just to ensure it is in the written contract (unlike what MD management said). He does not know about the specific LOCs, but it is completely reasonable to guarantee prime after residency. He also mentioned to ensure that if you sign with MD management for your LOC that you are not obligated to hold investments with them. The planners there are not great and some bad investment decisions lost a lot of people a great deal of money in the 2008 recession (I think that is true overall, but there are definitely places that faired much better). IMHO, as long as you have your eyes wide open when making a decision on who to use for your LOC you should be fine. They all seem to have pros and cons. Link to comment Share on other sites More sharing options...
MD/CMA Posted June 1, 2011 Report Share Posted June 1, 2011 Complete our net worth financial assessment today. It will provide a snapshot of your current financial health and be the starting point of your financial planning journey. Together with your MD advisor, you can build a financial plan that will support you throughout medical school, residency and into practice. http://www.md.cma.ca/tools/debt-projection Link to comment Share on other sites More sharing options...
DocT7 Posted June 1, 2011 Report Share Posted June 1, 2011 Well it's not that important right now. While in school/residency, they all give prime. We can always shop around if they won't give us prime post residency!Also, remember that just because they TELL you that, if it's not on the paperwork, it's not guaranteed. Yeah Ace, I don't know... Maybe its just for U of T but I have it in writing that it's prime during the total duration of the loan, including repayment from Scotia. You've changed your tune from "No bank is going to guarantee repayment at prime up front" to its not important right now, but for me its one of the few distinguishing features between all these banks... An MD rep Ive emailed has also told me that no bank would give me that, and when I told him that I had received it in writing, he responded that I could just change my banking institution at any point and that usually, through a promotion of some sort, I can receive a repayment rate of prime with the National Bank. I don't think there's any *bad* bank to go with for a LOC, I was just interested in knowing what sold you Honest advice is always good but salesman are salesman after all... Link to comment Share on other sites More sharing options...
The Ace of Spades Posted June 1, 2011 Author Report Share Posted June 1, 2011 Damn, you guys are making me think twice about MD Management! Guess I just have a general distrust of banks. Link to comment Share on other sites More sharing options...
ECross Posted June 2, 2011 Report Share Posted June 2, 2011 RBC & BMO told me the exact same thing (Saskatoon). Ace, I wonder if the MD Financial guy you talked to knows his stuff..? Otherwise, banks are outright lying to me. No, they aren't lying to you, it's just a little more complicated than outright prime. I went with BMO, who guaranteed me-in writing- the same interest rate throughout residency and repayment. That being said, the same interest rate is not explicitly stated as prime, it is said to be "the bank's base rate - 1.00%". I have a few friends in banking and here's how it was explained to me. Every bank has a base interest rate for all their dealings including business lines of credit, personal loans, etc. From this base rate they negotiate up or down based on a few other factors such as the applicants credit score and income. BMO's base rate at the moment is prime plus 1%, and BMO offers its medical student line of credit at the banks base rate minus 1.00%, which happens to be [prime+1.0%]-1.0% i.e. it's at prime. It will stay at the base rate -1.00% throughout the whole thing including repayment. The reason the reps say they can't guarantee repayment at prime is because if down the road the bank changes its base rate to- for example, prime + 2.00%, now the line of credit will still be at base rate-1.0 which is now prime +1. I hope this makes sense. I will not have to renegotiate my repayment interest rate, and the reason I am not really worried about the interest rate going up is that if the bank does raise its base interest rate a lot more people than just me would be affected since most lines of credits/loans are negotiated using this wording. The bank cannot raise my interest rate alone or just the rate of the professional line of credit, they have to raise the base interest of ALL their dealings and they will think twice about doing that to everyone who deals with them since people can switch to competitors if their base rate is suddenly higher than everyone else's. From what I understand most other banks negotiate their line of credits in a similar fashion and have similar base rates so that it's not unusual, but the reason they say they cannot guarantee it is that if the bank should suddenly need to raise its entire base rate your line of credit will be affected along with the interest rate of everyone else dealing with the same bank. My rep says that she has yet to see someone who has been affected by something like that during repayment because banks are really reluctant to change their base interest rates but also because if they do, they usually keep existing customers at the same rate and apply the new rate to new customers. I hope this makes a little sense at least...like I said this comes from a few friends who are in bank management as well as from the rep that did my line of credit... Link to comment Share on other sites More sharing options...
thatonekid Posted June 2, 2011 Report Share Posted June 2, 2011 No, they aren't lying to you, it's just a little more complicated than outright prime. I went with BMO, who guaranteed me-in writing- the same interest rate throughout residency and repayment. That being said, the same interest rate is not explicitly stated as prime, it is said to be "the bank's base rate - 1.00%". I have a few friends in banking and here's how it was explained to me. Every bank has a base interest rate for all their dealings including business lines of credit, personal loans, etc. From this base rate they negotiate up or down based on a few other factors such as the applicants credit score and income. BMO's base rate at the moment is prime plus 1%, and BMO offers its medical student line of credit at the banks base rate minus 1.00%, which happens to be [prime+1.0%]-1.0% i.e. it's at prime. It will stay at the base rate -1.00% throughout the whole thing including repayment. The reason the reps say they can't guarantee repayment at prime is because if down the road the bank changes its base rate to- for example, prime + 2.00%, now the line of credit will still be at base rate-1.0 which is now prime +1. I hope this makes sense.This is a really nice, clear description. Link to comment Share on other sites More sharing options...
The Ace of Spades Posted June 2, 2011 Author Report Share Posted June 2, 2011 So basically, the banks will say "prime", but it's not really prime? Link to comment Share on other sites More sharing options...
NAD(P)H Posted June 2, 2011 Report Share Posted June 2, 2011 No, they aren't lying to you, it's just a little more complicated than outright prime. I went with BMO, who guaranteed me-in writing- the same interest rate throughout residency and repayment. That being said, the same interest rate is not explicitly stated as prime, it is said to be "the bank's base rate - 1.00%". I have a few friends in banking and here's how it was explained to me. Every bank has a base interest rate for all their dealings including business lines of credit, personal loans, etc. From this base rate they negotiate up or down based on a few other factors such as the applicants credit score and income. BMO's base rate at the moment is prime plus 1%, and BMO offers its medical student line of credit at the banks base rate minus 1.00%, which happens to be [prime+1.0%]-1.0% i.e. it's at prime. It will stay at the base rate -1.00% throughout the whole thing including repayment. The reason the reps say they can't guarantee repayment at prime is because if down the road the bank changes its base rate to- for example, prime + 2.00%, now the line of credit will still be at base rate-1.0 which is now prime +1. I hope this makes sense. Thanks ECross. Greasy banks... Link to comment Share on other sites More sharing options...
isix Posted June 8, 2011 Report Share Posted June 8, 2011 So, I met with Scotia for a follow-up meeting today and the manager filled out my loan application. I'm currently not working and only have a couple of thousand saved up and will most likely not work next year unless I absolutely have to. That being said, my OSAP estimate is about $10k, and after the manager and I filled out my form, it seems like with tuition, books and equipment, living expenses (rent+food+travel expenses) I will really only need $32k for first year, and so she's only applying for $33k for me for the first year. Would that be sufficient? I know they say they loan up to $200,000 and $50k limit per year, but after our initial meeting, she hasn't really mentioned such a large loan. With others on this thread talking about removing the $50k limit, I'm starting to worry that my LOC amount may not be enough. Realistically, what's the ballpark of a first year's expenses? (I can't find the info on Queen's site). I'm also thinking that with the interest payment coming out of the LOC itself (ugh) I should discuss a larger loan amount...? Link to comment Share on other sites More sharing options...
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rmorelan Posted June 8, 2011 Report Share Posted June 8, 2011 So, I met with Scotia for a follow-up meeting today and the manager filled out my loan application. I'm currently not working and only have a couple of thousand saved up and will most likely not work next year unless I absolutely have to. That being said, my OSAP estimate is about $10k, and after the manager and I filled out my form, it seems like with tuition, books and equipment, living expenses (rent+food+travel expenses) I will really only need $32k for first year, and so she's only applying for $33k for me for the first year. Would that be sufficient? I know they say they loan up to $200,000 and $50k limit per year, but after our initial meeting, she hasn't really mentioned such a large loan. With others on this thread talking about removing the $50k limit, I'm starting to worry that my LOC amount may not be enough. Realistically, what's the ballpark of a first year's expenses? (I can't find the info on Queen's site). I'm also thinking that with the interest payment coming out of the LOC itself (ugh) I should discuss a larger loan amount...? I would go for the full 50K that everyone gets - give yourself that extra insurance that you definitely have enough (and get the same amount that everyone else has). Plus I don't understand how that would affect you next year (ie Scotia generally gives 50K max per year which is tons - particularly with OSAP - but if you are not getting the full amount this year is that max amount you will ever be able to get reduced?) Link to comment Share on other sites More sharing options...
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