The cost to break your mortgage

Most 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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Sixteen Years Strong!

A big ‘Thank You’ to our clients for your support over the years!

 

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Real Mortgage Story for May

 

Tom and Anne made initial contact with our office in February 2015. Tom is employed with an approx. annual income of $130,000. Anne is a stay-at-home mom looking after their three children.

Tom’s credit needed to be improved (Beacon score 546) and the family was also looking to downsize to a smaller home as their current home was too large and incurring expenses which were far more than what Tom & Anne could afford on a single family income. Tom and Anne were unable to secure financing through a bank due to Tom’s precarious credit situation.

The team at MiMortgage.ca was able to obtain financing through a 2^nd mortgage that enabled Tom to pay off all outstanding debt and was left with sufficient funds for an initial investment on a property with a long closing date.

• By May 2015, Tom’s credit had improved to a beacon score of 597.
• In the meantime, Tom and Anne managed to sell their house, pay off the 2^nd mortgage and make a 10 per cent down payment on the new property they were looking to purchase.
• Our team was successful in securing financing for the new property through a bank.
• Tom and Anne were previously making bi-weekly mortgage payments of $1,015.52 plus other debts.
• Monthly mortgage payments of $1,665.39 and debt free.

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!

** Fictitious names have been used to protect our clients’ identity.

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Build It! Two Mortgages to Help You Build Your Dream Home

Money when it’s done: The Completion Mortgage. Just like it sounds, this is for situations when you don’t need to actually come up with full funding until the home is complete and move-in ready. You’ll need to provide a downpayment when you make an offer to purchase the planned home, and then the mortgage you are approved for is advanced to the builder at possession. This is a single advance mortgage and is the same as a regular residential mortgage.

Money as you build: The Progress Draw Mortgage.  This type of mortgage will give you funds at specific intervals as the house is built. Generally, you’ll need to provide a progress report and have an inspection in order to secure the next “draw” of funds. While the number of draws can vary, it is common to have three draws: one at rough-in, one at completion, and a final draw when you take possession of the home.  Once the home is completed, the mortgage will be converted to a conventional home mortgage.  Keep in mind that you will need to pay for the progress inspections, and interest payments may be payable or accrue. Funds are released to the builder through your lawyer.

Be prepared for your big build adventure!

As with any mortgage, you’ll need to complete a mortgage application, and your lender will be reviewing your credit and income. While you are waiting for your home to be built, make sure you don’t make any big changes to your financial situation: no big purchases, for example. In fact, it’s best to take on NO new debt. Until the home is in your name – and your mortgage is complete – you’ll want to hold the line on debt, and ensure your employment is stable (this isn’t a good time to switch jobs).

Dream on.

Building a new home is an exciting project. Come in to speak with the team at MiMortgage.ca as early as possible in the process. We’ll outline all of the documentation you need to obtain your construction mortgage, and then get the process started in an efficient and stress-free manner.  And then… dream on!

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Is your mortgage coming up for renewal?

 

Got a mortgage coming up for renewal in the next few months? There are some great options out there; and we shop around for mortgage solutions to suit your needs. Conact the team at MiMortgage.ca to have a conversation today!

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Happy Morther’s Day!

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Purchasing a home after a bankruptcy or consumer proposal

Discharged from a bankruptcy or consumer proposal and wondering if you can still purchase a home? Speak to an expert at MiMortgage.ca at 1 866 452-1100 for more information.

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