Mortgage Intelligence

Oshawa's Mortgage News Desk!


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Which mortgage features are the most important?

DB14142_fb_financialconcepts_72644617_miIt’s easy to look online for a mortgage rate. But rate is only one aspect of saving money on your mortgage over the long term. It’s essential that you also consider mortgage features. Here are the big ones –

Early Payout Penalties. There are lots of reasons why it makes good financial sense to break your mortgage, even though you can expect to pay a penalty. But not all lenders calculate penalties the same way, and the differences can amount to thousands. Life happens, so make sure you choose a lender that has a fair prepayment penalty. And watch out for no-frill mortgages that don’t let you get out of your mortgage at all, unless you sell or the term is up.

Pre-Payment Privileges. You want the ability to put lump sum amounts on your mortgage and increase your payments so you can pay down your mortgage faster and save on interest. You should always consider having this flexibility even if you don’t think you’ll use it; your situation may change that gives you the ability to pre-pay. This flexibility can also help you reduce an early payout penalty.

Collateral charge mortgage. This type of mortgage can be difficult to transfer to another lender and cost you legal fees if you do. You are more locked in, which means your lender may not offer you the best rates if you need to refinance or at renewal.  Watch out!

Porting Flexibility. This is important if there is a chance you’ll move i.e. job change, growing family. You’ll want to take your mortgage to your new place to avoid penalties.  But make sure your lender lets you increase too should you buy a more expensive home.

Blended Mortgage. If you move or refinance, a blended mortgage allows you to blend the rate of your current mortgage with the rate on the additional funds. This way, you don’t break your current mortgage and incur the penalty. Some lenders blend and extend to a new 5 year term, others blend only to the remaining term, or offer both.

There is definitely more to getting a mortgage than just rate. Contact the team at MiMortgage.ca to speak to an expert now. It’s our job to help you find the right mortgage with the rate and flexibility you need to be a happy homeowner.


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5 essential tips to protect your home when you go on vacation

Image by courtsey of qeisecurity.com

Image by courtsey of qeisecurity.com

It’s finally summer!!!! Most high schools are already closed and elementary schools will close this week for summer…. It also Canada Day long weekend at the end of the week.

Many of you may have already planned time off, to go on vacation with the kids or spend time at your cottage, and you would want to make sure that your home is protected, while you are away. Here are a few tips that will be helpful to protect your home:

  1. Have someone check on your home regularly and pick up mail, flyers and newspapers; items that you can’t put a stop delivery on.
  2. Ask them to also mow the lawn or shovel the driveway, and put out the garbage if you can.
  3. If you post pictures of your holiday fun, make sure your security settings on you social media platforms are set so that only people you trust will see them. Check that your kids are also discreet!
  4. If you have a spare key hiding outside somewhere, be sure to remove it.


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Real Mortgage Story for June

DB15036_concepts_64338180Jay and Edie resided in Peel Region in the Greater Torono Area. Jay and Edie along with their two children had been residing in their home for 14 years and was looking to upgrade to a bigger home. Jay was self-employed while Edie was in employment at a local business and they both had excellent credit standing. Therefore, with the couples’ combined income and they were in a position to live their dream of moving in to a bigger home.

They found their ideal family home with a larger back garden and a pool, also in Peel Region. The couple made an offer on the property. They contacted the team at MiMortgage.ca for assistance with mortgage financing.

A few weeks after making an offer on the property and starting the mortgage application process, Edie was made redundant. The sudden turn of events on the family’s financial circumstances changed the couple’s eligibility to obtain financing through conventional methods. Instead financing was obtained through a bundle, consisting of 1st & 2nd mortgages, on a one year term:

  • 20 percent downpayment
  • Interest rate 4.89 per cent for one year
  • Monthly payments of $3415.88 + $213.49

Whatever your financial circumstances maybe, it’s worth having a conversation with the experts at MiMortgage.ca to find out the way forward for you. Contact us to speak to an expert today!


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The Mortgage Kit: Start with proof of your income

DB15036_concepts_57933601We’ve all heard the scout motto “Be prepared”. It’s great advice if you need a mortgage. Assembling everything your lender needs to verify your income is a critical component of mortgage success.  A last-minute scramble for documents just adds to stress. Get a Mortgage Kit folder ready and begin collecting the verification you will need for your income type:

  1. Full-time salary:  Provide a recent pay stub and a “letter of employment” on company letterhead that confirms a) your position, b) your annual salary, and c) the length of time you’ve been in your position. If you’re a fairly new employee, lenders will want to know that your probationary period is over. And they will follow up. Commissions and bonuses can be supported by your last two notices of tax assessments.
  2. Commission, contract, part-time and seasonal employment: Company letter and paystub are required. Income must be consistent and can be proven with a 2 year average of tax assessments or T4s. If the position is contract, a copy of the contract and any renewals is required.
  3. Self-employed: Assemble:  a) two years of tax assessments, b) business license or registration, or articles of incorporation, c) your T1 general tax returns for the last two years, OR the last two years of accountant-prepared financial statements (if incorporated). Lenders recognize that self-employed income is kept low, so some expenses on your statement of business activities can be added back. If income is difficult to prove, be sure to have a strong credit history and downpayment.
  4. Child support: A copy of the separation/divorce agreement and three to six months bank statements are typically required. This income should be less than 30% of total income.
  5. Disability:  A letter confirming permanent status along with a paystub.
  6. Maternity Leave: Some lenders use full employment income if the employment letter confirms a return date within one year.
  7. Pension, RRIF, Investment income: Most recent tax assessment, T4A’s for pension income. There must be sufficient funds in the investment for the income withdrawal.

If you are fully prepared, then you’re always ready to take advantage of opportunities!


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The cost to break your mortgage

DB15036_financialconcepts_pencalculatorMost homeowners should expect to pay a penalty if they want to break their mortgage to get a better rate or for a complete refinance.  Homeowners in 5 year fixed mortgages often look to break their mortgage during their 3rd year for debt consolidation or to accommodate changing life circumstances.

The penalty to break a mortgage is typically the greater of

  • three months’ interest, or
  • the interest-rate differential (IRD).

With the IRD, your mortgage lender will want you to pay the equivalent of what they will lose by releasing you from your mortgage and lending the money at current rates.  Unfortunately, not all lenders calculate IRD the same way so you should always get the actual penalty from your lender.  Check your lender’s website for their prepayment penalty calculator.

If you want to look at breaking your mortgage, we can review the terms and conditions of your mortgage and do an assessment of your situation to determine if your benefit outweighs the cost. There is no cost or obligation.  Often penalties are rolled into the new mortgage so you don’t have to be out of pocket.

The team at MiMortgage.ca are experts at providing the advice, education and resources that homeowners need. It pays to be informed, and we’re here to help!


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