Mortgage Intelligence

Oshawa's Mortgage News Desk!


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Purchase or refinance now before rules change in January

If you’re looking to buy and will have more than 20 percent down, or if you are considering refinancing, then you might want to do so before January 1, 2018. Why? On October 17, the Office of the Superintendent of Financial Institutions (OSFI) released new guidelines for residential mortgage underwriting at all federally regulated financial institutions. Starting from January 1, 2018, a new ‘stress test’ will be applied to all new conventional mortgages – and not just those mortgages that require mortgage insurance (downpayment or equity of less than 20%).

The so-called “stress test” is designed to protect homeowners should interest rates rise. Lenders will be obligated to qualify all new conventional mortgages at the greater of the Bank of Canada’s five-year benchmark rate (currently 4.89%) or the contracted rate plus 2%. So if your contract rate is 3.29%, you will be qualified at 5.29%.

Here’s what that might mean for you:

You want to buy a home with more than 20% down. Your payments will always be based on your contract rate so this new rule isn’t costing you more. However, the new rule changes how much mortgage financing you would qualify for. If that’s the case, you may need to look at a less expensive home, save up for a larger downpayment, or reduce any other debt. Or we can take a look at a variable rate mortgage that lowers your qualifying rate (if the rate plus 2% is less than the benchmark 4.89%) and has the option to convert to a fixed mortgage.

You want to refinance to pay off debt or buy an investment property. Here too, your actual mortgage payment will not be affected.  But the new rule could slow you down by making it more difficult to qualify for your refinance. You may need to wait and accumulate more equity, or look at a lower-rate variable mortgage.  If that refinance is important to securing your own financial health, get in touch with the team at MiMortgage.ca ASAP.

Your mortgage comes up for renewal next year. This more stringent qualifying requirement will not apply to mortgage renewals. If you go shopping for a better deal with a new lender, however, that will require that you re-qualify… and the new rule will kick in for you too. It still is very important that we review your options together.

What can you afford?

New mortgage qualifying for purchases with 20% down

Household Income Purchasing Power Today Purchasing Power    Jan 1, 2018
$60,000 $409,626 $334,323
$100,000 $682,710 $557,206
$150,000 $1,024.065 $835,809
$200,000 $1,365,420 $1,114,411

For illustration purposes only. Based on 25 yr amortization, 20% down purchases, 5 yr term, qualifying rate 3.29% today and 5.29% January 2018. Does not include property taxes, heat or condo fees. OAC.

Get in touch now – you have the rest of 2017 to get in under the old rules. Going forward, we’re here to work with you early in the process to make sure you are fully prepared for your purchase or refinance. We also have access to non-federally regulated lenders that do not fall under this new guideline. We’re always here to answer your questions, so feel free to contact the experts at MiMortgage.ca at 1 866 452-1100 or by email any time!

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Ten great reasons to use a mortgage broker

For many Canadians, mortgage payments are their single biggest expense. Yet most don’t comparison shop to ensure they’re getting the best mortgage rate and terms available, which can cost tens of thousands of dollars over their mortgage years. Don’t make the same mistake! Here are 10 reasons why you need a mortgage broker working for you:

  1. Choice.  A wide range of lenders, including major banks, credit unions, and other national, regional and private lenders will instantly become accessible to you, ensuring that your specific needs are matched to the right mortgage.
  2. Great rates. Get money in your pocket by taking advantage of Mortgage Intelligence’s clout with lenders. Our stellar reputation and longstanding experience allows us to negotiate great rates and access limited time specials.
  3. A focused expert.  A mortgage is a very significant financial event. That’s why you want someone who is highly specialized in the mortgage marketplace and focused solely on your needs. You’ll get advice that will make a significant difference in your financial life.
  4. Independence & objectivity.  We work for you, not the lender.
  5. Solutions when you need them.  We can provide funding for bank turndowns, the self-employed, past credit problems, etc. There are mortgages for almost any situation and we know them all.
  6. Save time. Everything relating to your mortgage can be managed around your busy schedule.
  7. Service, service, service. We’ll be with you every step of the way, to answer all your questions, outline your best options, and efficiently guide you through the process.
  8. Ongoing support.  Our services don’t stop after the mortgage closes. We will stay in touch with you for the life of your mortgage with advice and opportunities.
  9. No cost (oac). The winning lender pays compensation for the services and solution provided, which means no fees for you in the vast majority of cases.
  10. Your satisfaction.  Our goal is to ensure that you are so completely satisfied with your mortgage experience that you will be happy to refer us to your friends, family and colleagues.

With all changes that have taken place in the last twelve months, and the anticipated changes that are due to be announced soon, a mortgage broker’s role has never been more important. To find out more about how the new rules might effect you, contact the team at MiMortgage.ca at 1 866 452-1100 to speak to an expert now.

 

 

 


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How to deal with mortgage payment difficulties

Sometimes unforeseen financial circumstances can impact your ability to make your regular mortgage payments. Or perhaps your debt demons have been caused by taking on too much other high-interest debt.  It can be tempting to want to conceal your debt problem for as long as possible – but that’s almost never the best strategy. With early intervention, there are weapons available that can help you fight these demons! Your mortgage lender doesn’t want to see you default on your mortgage; they’d much rather help homeowners find a way to keep their home.

For mortgages insured by the Canada Mortgage and Housing Corporation (CMHC), they have identified several tools available to help you ride out a period of financial uncertainty:

  1. Converting a variable-interest rate mortgage to a fixed-rate mortgage to protect you in the event of a sudden jump in interest rates.
  2. Your lender may be willing to offer a temporary payment deferral, or other flexible options for short-term relief. If you’ve made any lump-sum payments against your mortgage in the past – or if you’ve been on an accelerated payment schedule – that history can help.
  3. You may be able to extend your amortization period to reduce your monthly payments. You can shorten the amortization again later if your circumstances change.
  4. If you’ve actually missed a few payments already, you may ask if the lender is willing to add them to the mortgage balance and extend the payment period accordingly. (Best, however, to start talking before you start missing payments!)
  5. A special payment arrangement unique to your situation may also be possible.

Genworth Canada also has a Homeowner Assistance Program designed to help homeowners who are experiencing temporary financial difficulties that may put their mortgage at risk.

Ultimately though, it’s best to seek help at the first sign of financial trouble. Getting in touch with the team at MiMortgage.ca and getting your situation assessed by an expert is a great place to begin – because as independent mortgage professionals, we work for our clients and look out for their best interests, and ensure that their needs are met.

It’s possible that your financial situation just requires some extra penny-pinching to stay on budget. But if you find yourself adding to your credit card debt – or borrowing to make mortgage payments – then it’s time have that conversation with an expert at MiMortgage.ca. Conatct us at 1 866 452-1100 to speak to an expert now. The earlier you get help, the easier it will be to conquer those debt demons!

 


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Four insurance definitions for homebuyers.

It’s easy to get caught up in home buying frenzy and just focus on finding that perfect home. During all that excitement, be sure to take some time to get acquainted with a few key terms. Here are the four types of insurance you’ll encounter.

High-Ratio Mortgage Insurance

If your downpayment is between 5% and 20%, you are required to have “high-ratio mortgage insurance.” This insurance is there to protect the lender, and the premium is almost always added to your mortgage amount.

Example: Purchase price is $400,000 and you have 5% downpayment, for a total mortgage amount of $380,000. The mortgage insurance premium is 4% or $15,200, which is then added to your mortgage. The insurance premium declines at 10% and at 15% down. If you’ve saved up more than 20% of the purchase price, then you don’t need this insurance unless it’s required by the lender. 

Title Insurance

Having “title” means you have legal ownership of property. Title Insurance protects owners and their lenders against losses related to the property’s title or ownership, such as: unknown title defects, liens against the property’s title, encroachment issues, title fraud, survey errors, and other title-related issues that can affect your ability to sell, mortgage or lease your property in the future. Premiums are collected upon purchase and based on the value of the property.

Home & Property Insurance

This must-have insurance protects against risks to your property and contents in the event of fire, theft and some weather damage; it also includes liability insurance in the event that someone is hurt on the insured property. Most lenders require proof of home insurance, so be sure to have your policy in place after your offer is accepted and before your closing date.

Mortgage Life Insurance

In the event of death, this insurance will pay the insured balance of the mortgage, discharge fees and prepayment penalties to the lender, and leaves the property with little or no mortgage for the surviving family or estate. There are many reasons to strongly consider this coverage because anything can happen at any age and at any time. Premiums are calculated based on age and the original mortgage balance.

Insurance can protect you and your family throughout your home ownership journey. If you are unsure about something, get in touch. Contact the team at MiMortgage.ca at 1 866 452-1100. We’re here to make sure your journey has a happy ending!


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Back to school on saving money

September is here so let’s use that brisk back-to-work attitude to make sure your personal finances are on track to save you money over the long term.  If we haven’t talked in the last year, or if any of these situations apply, please get in touch:

  1. You are considering a refinance for any reason – too much high interest debt is making cash flow tight, or you are considering a renovation, investment property, or have a large looming expense.  Proposed new mortgage rules include stress testing for conventional mortgages which, if implemented, will make refinancing more difficult for many Canadians.  Don’t delay; the new rules could be in place before year end.
  2. You are thinking about moving to a new home and want to review your mortgage options.
  3. You are wondering if you should lock in your variable-rate mortgage.
  4. Your mortgage is coming up for renewal and you want to guarantee your rate now and ensure you get the best deal possible.
  5. You know someone who could benefit from a fresh look at their mortgage options and would appreciate paying the least amount of interest and fees during their mortgage years.

Always keep in mind that the right mortgage plan can save you thousands of dollars!  Enjoy the fall season, and thank you so much for your ongoing support.

P.S. Do you have any home improvement store purchases coming up?  We have a new product that will save you money on these purchases.  Contact the team at MiMortgage.ca at 1 866 452-1100. Let us know if this applies to you!


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After the rate hike, what’s next?

On July 12th, for the first time in seven years, the Bank of Canada increased the overnight rate by .25%, withdrawing some of the stimulus that was needed after the oil price collapse and 2008 financial crisis. Variable rate mortgages and lines of credit will see higher rates and modest payment increases. Fixed-rate mortgage – which are based on the bond market – had already been trending slightly upward, although if you have a fixed mortgage, you aren’t affected until it’s time to renew. Keep in mind that this is a very small increase, and we’re still in an ultra-low rate environment and an incredibly stable market. We’ve also seen increases before to only see them decrease again. But rates have risen, so here are answers to the questions we’re getting:

Should I jump into the market now?  Actually, our advice is always the same: buy when you are financially ready. Don’t jump the gun just because rates “may” go higher.  But by all means, if you’re thinking about buying, we can arrange a pre-approval so you’re protected from rate increases while you shop around.

Should I lock in my variable rate mortgage ASAP? That depends. Your new rate with the hike is probably still less than current 5-year fixed rates, and you’ll still likely pay less if there is another .25% increase. So why pay more money than you have to? Stick with your original strategy of focusing on payment vs. rate. But if it’s going to keep you awake at night – or the few extra dollars are hard to find in your budget – then let’s talk about your conversion options. Remember though, you should be confident you’ll stay in a 5-year fixed mortgage for the full term. Breaking a fixed mortgage can result in some tough penalties.

What if my mortgage is coming up for renewal? Don’t feel rushed or pressured by a renewal letter or call. Let’s discuss your options. We’ll review your renewal offer together and we’ll shop around to see if it’s really the best deal available. Got too much other debt? This may be the time to roll it into a new mortgage to boost cash flow and save on interest costs.

Should we talk? Yes for sure. You should have confidence in your mortgage plan and that’s why professional mortgage advice is so critical.  We have access to a wide range of lenders and know the right questions to ask to assess your situation and make sure you have the best mortgage strategy. Contact the team at MiMortgage.ca at 1 866 452-1100 to speak to an expert or apply online now!