If you’ve got a mortgage – or plan to get one this year – you probably know that it’s more complicated than it used to be just a few short years ago. That said, we have many tips and strategies that can help you get the mortgage you need, tweak the one you have, or help you plan for renewal. Here are our top eight:
To get the best deal, you need options. When you go to your bank, you’re talking to one lender. Their best deal might not be THE best deal. It’s also difficult to qualify at a bank if you are self-employed, have past credit issues or finding the stress test a challenge. Credit unions, alternative and private lenders are increasingly helping people get into new homes or refinance their mortgage.
Best-rate quotes are often meaningless. Mortgage rule changes have thrown mortgage pricing up in the air. Your actual rate depends on a whole slate of factors, which is why you can only get an accurate rate quote after an in-depth assessment of your personal situation.
The devil is in the details. People tend to focus on rate, but you can save thousands by making sure you get a mortgage that has fair penalties, allows you to prepay, and ensures you will also be treated fairly at renewal. Don’t end up paying exorbitant fees, or be forced to take a high rate at renewal.
An insured mortgage might be a smart move. If your mortgage is “uninsured” and you want to switch to a new lender for a better rate at renewal, that lender will qualify you using a “stress test”, which may affect your ability to move your mortgage, and giving your lender no incentive to offer you the best rates. It’s possible that you can switch your mortgage to a lower-rate insurable mortgage that has more flexibility.
A 30-year amortization can give you wiggle room on cash flow. A longer amortization (20% or more in equity required) allows you to minimize your mortgage payments and free up cash flow for uses like investing, business needs, post-secondary education, maternity leave, home maintenance, or other life situations. You can keep your payments at a shorter amortization and only use this flexibility if the need arises.
Monitor your credit score. The best rates go to borrowers with the best credit scores. Lenders are also paying closer attention to any warning signals that clients may have trouble paying their mortgage. If your credit slips and your lender feels your risk has increased, you may be offered a higher rate at renewal.
A rental suite can be a sweet mortgage helper. A home with a rental suite could help you buy a single-family home instead of a condo, get you into that neighbourhood you love, or help you offset mortgage payments in the house you’re in so you can become mortgage free sooner or have the freedom to channel money into other areas.
Plug your biggest money leak. If debt is choking your cash flow and you have enough equity in your home, you may be able to move that debt to your lower-rate mortgage and save thousands. Using home equity to pay down debt is one of my specialties!
It’s a New year. A New chance to make sure your mortgage strategy is working for you and helping you build wealth. Get in touch with the experts at MiMortgage.ca for a review of your situation. Contact us at 1.866.452.1100 to speak to an expert now!
There’s a silver lining to the low loonie if you happen to own a home south of the border. A few years ago, a wave of Canadians took advantage of a strong loonie and low U.S. home prices – and picked up some American real estate. Those homes are as good as a piggy bank now.
Why? If you refinance your U.S. home, you can bring those U.S. dollars back to Canada at the current exchange rate. That powerful U.S. dollar is your financial friend, and we don’t know how long it will last. You could use the money to pay off any debts in Canada – or even use the proceeds to purchase another Canadian property. The goal is to get those U.S. dollars back over the border to Canada.
By the way, selling the home triggers capital gains. Refinancing does not. Any income you generate by exchanging your dollars doesn’t count as capital gains, so you don’t pay tax when you exchange your US dollars for Canadian dollars. You also get to keep your vacation property.
Many Canadian owners of U.S. homes rent out the property when they’re not using it – giving them rental income to maintain the home and pay down the mortgage.
Most property values have rebounded well from their lows; so many owners are also taking advantage of the growth in their U.S. home equity. A U.S. bank will typically lend 60% of the appraised value of a property.
If you own a home in the U.S., let’s chat. Contact us at 1 866 452-1100. We have an excellent relationship with a U.S. lender that is licensed in Florida and California. You may be able to give your wealth-building a boost!
A bridge loan is a short-term financing tool that helps you “bridge” the gap between old and new mortgages when you move from one home to another. You may be taking possession of your new home a week or two in advance of closing on your current home, either because of how your closing dates worked out, or because you want to do some renovating on your new home before you move in. Whatever the reason, bridge financing is going to be your best friend for a few weeks: making it possible to easily transition from the old to the new.
Here’s what you need to know:
It’s for a specific amount, which is your home’s selling price minus your current mortgage and costs (realtor and legal fees).
It’s for a short period of time e. 1 to 30 days, and your lender will want to see a firm sale agreement for your existing place, with conditions waived.
Not all lenders offer bridge loans, although there are private lenders that meet this need. Since you are working with a mortgage broker, you are in good hands: We can put together a combination of a new mortgage and bridge loan even if it’s not with the same lender.
Expect to pay more. Your bridge is going to be at a higher rate than your mortgage, and will include administration fees, even when the bridge loan is with the same lender. Bridge loans from private lenders will likely have higher rates and fees, although they may offer more flexible terms. For most homebuyers, the convenience is worth it!
Plan in advance just in case. Together we’ll discuss your ability to carry two mortgages in the event that a rare worst-case scenario plays out. Your lawyer will pay out your bridge loan from the sale proceeds of your home. If for any reason the sale falls through, your lawyer will register the bridge loan as a charge on the property. And if you require a longer bridge i.e over 30 days, or for an amount over the lender’s maximum, your lender may register a charge against the property and your costs will increase
Most homebuyers say a bridge was well worth it to buy some extra time for a smooth transition. If you think you’ll need a bridge, let’s talk. Contact the team at MiMortgage.ca at 1 866 452-1100 to speak to an expert now. Our ability to offer you multiple lending options definitely works in your favour!
Leading up to the last federal budget, there was speculation that Canadians should brace for some changes in capital gains rules. That didn’t happen, and that’s good news. The sale of your principal residence for a gain is still a tax freebie. If you are selling a property other than your principal residence, then you’ll pay tax on 50% of any gain you realize. That rate first went into effect in 1972. The inclusion rate was increased to 66.6% in 1988 and then to 75% in 1990 as part of a two-stage increase. But it was ratcheted back down in 2000, and landed once again at the 50% rate where it has remained to today. You are now required to report the sale of your principal residence on your tax return. While still tax exempt, you may be asked to prove that it was your principal residence. If the feds do once again increase the inclusion rate, we can expect the government to provide ample advance warning to allow people to adjust their financial situations. So basically no real changes, but keep good records!
Want to find out more information on how capital gains from the sale of your residence will affect you? Speak to an extpert at MiMortgage.ca at 1 866 452-1100 now!
Are you looking to buy a home but faced with budget constraints on how much you can afford on payments? A solution to this dilemma maybe a fixer upper home in the neighbourhood that you would like to live in.
Once you have your eye on a potential fixer upper home, getting a home inspection on the property and hiring a contractor to get an indication of any structural issues, repairs and renovations that maybe required and to get quotes on the costs involved is a smart way forward. Be sure to add an additional 30% or so to the estimated amounts for any other unexpected costs that may incur. Expensive renovations and upgrades include full kitchen, bathrooms, electrical, plumbing windows and repairs to the roof. All renovation costs can be added on to your mortgage at the time of purchase.
If you have found the right home but need a fixer upper to make it your dream home, contact the team at mimortgage today. To get pre-approved today, apply now through our secure online website or speak to one of our agents at (866) 452-1100.
With a 5-year down turn in the stock markets, many people have turned to Real Estate as an investment vehicle. The fact of the matter is housing has continued to increase while stock markets rise and fall with every little global hick-up shows on the daily trending of markets around the world.
So it’s good to know where the hot real estate area is if you happen to want a good investment property. While lists of top areas and for investment abound, there’s just no better way to find a solid property with good future potential than to use your local professionals as a guide.
Build a Team of Professionals.
Along with a local Realtor its also a great idea to have a mortgage adviser that is familiar with the area in which you are buying. Having relationships with lenders that are familiar in a select areas can culminate in fast approvals, less paper and a better rate. Together with an experienced Home Inspector, Legal Representative and Insurance Adviser the whole process can and should create a sound future investment.
There is really no replacement for a team of seasoned professionals and their collective knowledge when it comes to buying investment Real estate.
With a team of full time Mortgage Agents, and Durham Region’s largest Mortgage Intelligence office you know you have found the best possible starting point for your investment mortgage solutions.
For Investment Mortgages there one great place to start!
In the past Investors who had good assets through registered investments had the option of lending themselves money through Self Directed RRSPs. That meant that as long as they had enough money they could lend without explanation. It gave them the opportunity to buy investment properties that the Banks may not have considered but that they knew were profitable and added value to their portfolio.
But now that option, that personal choice, is no longer available through a Bank. At this time only three companies in Canada will allow it. They are Home Trust, Community Trust and Great Western.
The idea that a Bank will not allow mortgages through Self Directed RRSPs may cause investors to think there is greater risk than there may actually be.
From a mortgage broker standpoint it also means we have one less option to offer our Investor clients. Keep in mind that in the past those who used this method were generally season investors in the first place, not the beginner.
We must ask the question, “Are Banks trying to eliminate the competition that the use of private funds creates or is there great risk in borrowing your own money?”
What do you think about this? Your comments are welcomed.