Those of you who own a TV know this man, Kevin O’Leary. If you don’t own a TV, congratulations. You’re officially a douche.
O’Leary famously turned a $10,000 loan from his mother into a software company, The Learning Company, which was eventually acquired by Mattel at the height of the tech boom, back in 1999. O’Leary went to work at Mattel, parted ways with the company shortly after, and then set his sights on a television career. He was the “investor at large” at BNN in the early 2000s, leveraging that success to a primetime show on the same network, and then into his well known gigs as a wealthy investor on both Dragon’s Den and Shark Tank.
O’Leary has leveraged his newfound celebrity into all sorts of different brands. In 2009, he launched O’Leary Funds, a series of closed-end funds (mutual funds that trade on the stock exchange), and quickly raised $1 billion in assets. O’Leary’s sales pitch was these funds would be invested in conservative stocks that pay dividends, a topic that gets O’Leary particularly hard in the pants. The funds continue to chug forward today.
In 2012, O’Leary launched his own wine label into Ontario liquor stores. O’Leary has been making appearances at stores, selling wine and autographing bottles. No word on whether he was drunk on his own wine at the time, but we all know he’s arrogant enough to think getting drunk off his own wine is a pretty good idea.
He ain’t done. O’Leary recently decided the mortgage business isn’t bald enough, so he threw his hat in that ring as well. O’Leary Mortgages offer fixed rate loans, to well qualified borrowers, who apparently aren’t all bald assholes.
I wanted to see how O’Leary Mortgages compared to the competition, so I took a couple minutes off searching for porn and went over to the website. Here are the highlights.
- O’Leary Mortgages don’t offer variable rate loans. They’re all fixed rates.
- They have a 5-year no-frills mortgage at 2.74%. That’s not bad, but it offers no prepayment penalties and increased penalties if you break the term early
- Their regular 5-year mortgage is 2.99%. That’s competitive with the rest of the players out there.
- O’Leary offers a 3-year product at 3.14%. This kinda sucks compared to the rates mortgage brokers advertise, but is pretty decent when you compare it to the banks.
- I like bullet points.
So, how exactly do O’Leary Mortgages work? Is Kevin waiting at the end of some rainbow somewhere, with a sack of money? (It’s funny, see, because he’s short and Irish. God, do I have to explain all the jokes?) Uh, not exactly.
Essentially, O’Leary Mortgages is just a mortgage broker. They act as the intermediary between the borrower and the lender. They’re not a bank, and rich uncle Kevin isn’t lending you any of his cash. They’ll make about 0.8% of the mortgage amount for doing the work, (on a 5-year loan, anyway) and that’s about it.
What’s different between O’Leary Mortgages and every other mortgage broker in existence? Duh. Kevin O’Leary is in charge. He’s on TV, and that makes me swoon. Also, his daughter is attractive. That helps.
O’Leary relentlessly touts the honest mortgage, but his site is a little sketchy with the details. From what I understand, people from O’Leary Mortgages will go over your mortgage contract with you, explaining the fees and whatnot, and then give the borrower a game plan on how to pay down their mortgage faster. If this is true, it’s actually pretty neat. There are a few mortgage brokers who will do the same thing, but most just care about getting you through the pipeline so they can get their sweet, savory, money.
The other thing O’Leary is doing, at least according to this Globe and Mail article, is matching borrowers up with only one lender. This is why they’re only offering so few products. O’Leary can get cheaper pricing from the lender if they only offer a few different products. In theory O’Leary would pass those savings onto customers, but in reality will probably just keep it and increase margins. If he’s going to do a large business, he can get special pricing from his chosen lender, and will get paid a little more than 0.80% for a 5-year fixed mortgage, which is what a 5-year mortgage typically pays in commission to the broker.
Anyway, would I get an O’Leary Mortgage? Sure, why not? The rates are decent, and I’m curious about the pay down your mortgage thing they’ll give you. There’s one huge downfall though, and that’s the lack of a variable product. It’s not the worst mortgage out there, but it’s probably not the best either. I’m giving it the ol’ Financial Uproar sideways thumb, the greatest honor something can ever have.