March 26, 2018
Five credit habits that can boost your score Your credit score is essentially your passport to financial opportunities. With a possible range of 300 to 900, your score tells lenders what kind of a riRead More...
Find out how much you can afford before you go househunting! This will keep you focused on shopping for homes within your price range. If you qualify for a preapproved mortgage, you'll be certain of the size of mortgage for which you qualify and guaranteed a rate for a specific period of time. If you don't qualify for a pre-approved mortgage, we will be able to help you estimate a mortgage-qualifying amount.
Buying a home is an exciting time! You're about to take a big step so you'll definitely need some advice from a mortgage professional. We'll give you the facts your bank won't tell you about financing your next purchase. With access to multiple lenders, we'll help you find the best rates and best mortgage options to help you buy your dream home. Our best advice? Begin with a conversation with a mortgage professional in your area.
If your mortgage renewal is fast approaching then you’ll soon be at an important financial milestone. Now's a great time to look at the many innovative options and competitive rates available. Lenders send out renewal forms just prior to renewal dates to those with good payment histories, with about 70% of homeowners sending it back without asking any questions. In today’s hectic world, that can be the easiest and best route, but you should ask yourself some questions before you sign on the dotted line. This could be an important moment of opportunity.
Maybe it just needs some new landscaping, an extra wing for your growing family, an expanded kitchen, or a swimming pool in the backyard! A record number of Canadians have taken advantage of the historic low mortgage rates and rising real estate values and have tapped into their home equity through equity take-outs. There's never been a better time to access the extra funds that can help bring your home to that next level of comfort. Consider accessing the cash you need for the renovations and improvements you've been dreaming about!
Investment properties - particularly smaller, residential real estate - are now accessible to many average Canadians. And as any homeowner will confirm, real estate has been one of the most attractive investment categories in Canada for the past decade. If you're considering an investment in real estate, start by having a conversation with an experienced Mortgage Broker, to explore some of the innovative new options and great rates available today.
There are many Canadians jumping at the chance to own a recreational property. The aging baby boomer population is flush with capital and an insatiable desire for a waterfront or other recreational property. And with the advent of better roads, Internet and telephone service, satellite service, and winterization expertise, people are realizing that vacation properties can make ideal retirement homes. No longer just perceived as a welcome retreat from the city, a second home is now viewed as a solid financial investment with the added value of a potential retirement property.
Many Canadians are taking advantage of refinancing some of the equity in their mortgage to reduce their credit card debt. Why pay high interest rates on your bank's credit card debt when you can add that debt to your mortgage and pay a much lower interest rate! One important part of a strategy is knowing "good debt" from "bad debt". A well-planned mortgage can help you turn those bad debts into good debts and get them out of the way.
Mortgage Brokers primary expertise is locating funding for mortgage financing. They know where the best rates can be found. What's more, they have the knowledge required to present a proposal for financing to lenders in the best way possible to successfully obtain mortgage financing.
Excellent service, great rates and attention to detail. You walked us through everything so there were no surprises at all. Were grateful that we found your services! Highly recommended for sure.
We wanted to get a mortgage through our bank but came across your website on the internet. Are we ever glad we did. We saved literally tens of thousands of dollars and the whole experience was a breeze.
February 21, 2018
“Conditional on financing”: the most important part of your offer When you find the condo or house of your dreams and want to make an offer, do you need a financing condition? UnlesRead More...
How rising rates can affect your mortgage
The one-two-punch of supply chain issues and the war in Ukraine has pushed inflation in Canada to its highest level in 30 years and spurred the Bank of Canada to move toward a tighter monetary policy. On June 1, the Bank announced a second consecutive .5% increase to its policy rate (the third increase in 2022) and signalled its intention to continue increasing rates in the short term.
For homeowners with variable-rate mortgages, the effects of these policy rate hikes will have an immediate impact as lenders increase their prime lending rate in response. Depending on the terms of your variable-rate mortgage, you may see an increase in your payment or find that a higher portion of your fixed payment is going toward interest rather than principal.
After three consecutive increases, it’s natural to start considering fixed-rate mortgages more carefully. Even if you are far away from renewing, many mortgage contracts will allow you to convert your variable-rate mortgage to a fixed rate but it is vital to make an informed comparison between mortgage types. In a rising-rate environment, variable-rate mortgages still have significant advantages that are worth considering. The key question is how high rates would have to go to make it worthwhile taking the fixed rate today.
People often prefer fixed-rate mortgages for their predictability, but this usually comes at the price of higher rates. The spread (gap) between fixed and variable rates today on 5-year terms is approximately 1%. That means that even with the Bank of Canada signalling further rate hikes, it would take several increases to make a monthly payment under the variable-rate contract equal to its fixed-rate counterpart.
It is also uncertain whether high interest rates will persist throughout your mortgage term. Even if you are motivated to consider a fixed-rate contract because of sharply increasing interest rates, you need to keep your eyes on the horizon as you sign with a new lender. Bank of Canada policy rates have been at or near historic lows since 2008. When the Bank raised rates aggressively, as it did in 2018, these hikes have been short-lived. When the Bank raised rates in April, it also projected that inflation would begin to ease in 2023. Before locking into a fixed-rate contract, it’s worth asking yourself whether you will be paying more for security you don’t need.
If you aren’t close to the end of your mortgage term, there may be further costs to either breaking your current variable-rate contract or exercising the option to convert to a fixed rate. If you have the option to convert to a fixed rate under your existing contract, you may be charged a fee to do so. Moreover, your current lender may not offer you the best fixed rate, tempting you to shop around for a better deal. If you find one, you may pay a steep penalty for breaking your current contract to grab that deal. How much money will you save over the balance of your existing term?
If you are in a variable-rate mortgage and anticipate higher rates, but aren’t ready to switch to a fixed rate, you can still take steps to protect yourself. Consider increasing your payments, if your current mortgage allows you, to the level they would be under a fixed-rate contract. Your larger payments will chip away at your principal, building a financial buffer against future rate increases.
If you have a fixed-rate mortgage, the rate increases that have happened and may happen in the future largely don’t affect you other than the consideration around your renewal date. If you are renewing soon, it may be worth reaching out and having a call with me to discuss your options and consider various scenarios to make sure you’re benefiting from the best possible monthly payment.
As always, a great way to begin navigating a higher-rate environment is a review of your situation to determine your best course. Whether you’re ready to make a change, or just want to discuss your options inside your current contract, a short conversation can give a big boost to your confidence.
The Tax Free First Home Savings Account (“FHSA”) explained
If you or someone you know is saving for a downpayment on their first home, the Federal government announced a new program aimed at first-time buyers in their recent budget. The First Home Savings Account combines the features of an RRSP and TFSA to give prospective homeowners some tax relief and a boost toward their homeownership goals.
Here are the highlights:
For those who are in the saving stage of their homebuying journey, there is no downside to the FHSA as a savings vehicle. You’ll get the tax deduction on contributions, like an RRSP, and the tax-free growth and withdrawal of funds when it’s time to purchase a home. If the home purchase doesn’t materialize, funds can be transferred to an RRSP or RRIF tax-free and added to a retirement nest egg.
The FHSA does not replace the existing RRSP Home Buyer’s Plan but provides another tax-advantaged home-savings opportunity for Canadians buying their first home. The two programs cannot be used in tandem. Unlike the RRSP Home Buyer’s Plan, however, the FHSA does not require that funds withdrawn from the account be repaid.
The First Home Savings Account is expected to be up and running sometime in 2023. There are numerous eligibility requirements, and rules and conditions and I would be happy to explain the details to you – if this is something you think you’d like to take advantage of.
Did you know?
The Bank of Canada will make their next rate announcement on June 1 and many industry experts are predicting another .5% rate hike. Let’s review your mortgage strategy now and determine the best way for you to navigate the rising rate environment. A short-term adjustment might pay off in the long run. It all starts with a conversation. Get in touch today.
Spring clean your finances
Spring finally arrived after a long winter, and with inflation and the rising cost of living on everyone’s mind, there’s never been a better time to do a little spring cleaning… of your finances. A few quick and easy adjustments can make a difference to your bottom line each month.
Here are a few items for your spring-cleaning checklist:
You never know, taking a few easy steps may save you money every month. Give me a call and let’s talk about how you can leverage your home equity to help you save money and take the heat off your finances this summer.
Did you know?
The Bank of Canada recently announced a rate increase and many believe that we’re in for multiple rate increases throughout the year. I can help you navigate this by locking in your rate until midsummer. If your mortgage is coming up for renewal within the next 12 months it might be advantageous to renew early. If you’re planning on refinancing, buying an additional home, or selling your home and buying another, now’s the time to have a discussion and get a rate hold. This will ensure you benefit from today’s rates no matter what the Bank of Canada does.
HIGHER INTEREST RATES ARE HERE. WHAT DOES THAT MEAN FOR YOU?
The Bank of Canada has been signaling for a while now that they will respond to inflation by raising interest rates. Sure enough, on March 2nd they announced a hike in the overnight rate by 0.25%. Here are answers to the most commonly asked questions.
How does this affect my current mortgage?
It depends if your mortgage is fixed or variable. A rate hike will impact variable-rate mortgage holders immediately as more of your monthly payment will now be going to pay interest and less toward your principal. Fixed-rate mortgage holders will not be affected until it’s time to renew or refinance.
Should I refinance now?
According to many economists, the March 2nd rate increase was the first of several expected this year. Despite that, rates are still at near-historic lows so if you’ve been thinking about refinancing to secure a better rate or to consolidate debt, it’s a good idea to get the ball rolling before the next rate hike. An analysis of your situation will determine if it makes sense for you to stay in your current mortgage until it’s time to renew or if it’s advantageous for you to pay the penalty and break out of the mortgage, but the potential savings diminish slightly with each rate increase.
Should I convert my variable-rate mortgage to a fixed rate?
It’s natural to be tempted to lock in as soon as you see rates starting to climb but just keep in mind that it’ll take a few more rate hikes to narrow the gap between variable-rate mortgages and their fixed rate counterparts. If nothing else about your situation has changed then the reasons you chose variable over fixed still apply and you’ll still be paying less for the next several months at least.
If you can afford to, a great tactic to consider is to increase your mortgage payment to the equivalent of what you’d pay in a fixed rate. The extra payment goes directly to principal which lowers your cost of borrowing (the amount of interest you pay over the life of the mortgage) and protects you from “payment shock” when it comes time to renew your mortgage.
If you’re still feeling uneasy, let’s have a conversation about your conversion options.
I am thinking about a purchase in the coming months. Should I get a mortgage preapproval?
Yes! A preapproval is a smart move anytime you’re considering a purchase but especially in a rising rate environment. A preapproval will lock in your rate for up to 120 days so you’re protected from any rate increases while you shop around.
You are unique and so are your home financing needs. Call me so we can determine what is the best plan for you, whether you have a fixed mortgage, a variable rate mortgage or you are simply looking for advice. I am happy to put my expertise to work for you.
IN CASE YOU MISSED IT…
If you’re applying for a mortagge in Canada, you must pass a mortgage “stress test” regardless of whether your mortgage is insured or uninsured. The test gauges your likelihood of default in the event of an interest rate hike. Stress test rates for uninsured mortgages are set by the Office of the Superintendent of Financial Institutions (OSFI), while rates for insured mortgages are set by the Minister of Finance.
In December, OSFI announced that the stress test rate for uninsured mortgages will continue to be the higher of 5.25%, or the contract rate plus 2%. Rates for insured mortgages are currently identical.
Sensible strategies to help you thrive in 2022
Canadians keep talking about the housing market! Are we in a housing bubble, will rates rise in 2022 and by how much, is this the right time to buy or refinance, is a lender’s renewal offer the best available, and on and on! For many, it feels like some uncertain times ahead. Often, it’s just a few sensible strategies that can help you thrive in the current climate. Here are my top tips for the year ahead:
New year and a new chance to make sure your mortgage plan is helping you build wealth and thrive! Get in touch at any time for a discussion on your best mortgage strategy.
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