Mortgage Intelligence

Oshawa's Mortgage News Desk!


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Fixed or Variable-Rate Mortgage?

If you are rate shopping, you’ll notice that the lowest available rate will be for a variable mortgage, which is why we’re often asked “what does variable mean and how is it different from a fixed-rate mortgage?”

With a variable mortgage, your mortgage rate will move in conjunction with your lender’s Prime lending rate, which in turn tracks the Bank of Canada’s benchmark rate, and will typically be quoted as Prime minus a specified percentage. It can be difficult to predict our economic future so you won’t know for sure what kind of rate ups and downs might be ahead of you.

With a fixed-rate mortgage, your payments are fixed for the term of the mortgage, which offers stability.  Fixed-rates are usually better suited to first-time buyers or those who haven’t owned a home for a very long period. Ask yourself these questions: Do you like or need to know exactly what your payment is going to be over a longer period of time? Do you want to avoid the need to consistently watch rates? Do you have less than 20% down? If you answered “yes” to all or most, a fixed-rate mortgage could be the better choice for you.  

A variable-rate mortgage is best suited to people who have a flexible budget and can tolerate slightly more risk. Ask yourself these questions: Do you watch market conditions? Can you handle any rate increases that could increase your payment? Do you have more than 20% equity in your home? If you answered “yes” to all or most, a variable-rate mortgage might best suit your needs. Most variables allow you to exercise an option to “lock in” a fixed rate at any time for the remaining portion of your mortgage term or longer. You can also set up your payments at what they would be if you took the higher rate, which helps you pay down your mortgage faster, and creates a financial buffer for you if rates rise later.  

If the uncertainty of a variable rate is going to give you sleepless nights, you’re in good company. Many Canadians prefer the certainty of a fixed-rate mortgage. They know exactly how much they will pay over the term of their mortgage, and they can plan accordingly… with no financial surprises. However, lower-rate variable mortgages with a strong Prime minus offer give you the potential to save a lot on interest. And, if your circumstances change and you need to get of out of your mortgage, you will appreciate the lower penalty to get out of a variable versus a fixed-rate mortgage.  

Your best option is to get professional and personalized advice. The team of experts at MiMortgage.ca would be happy to help you determine which option is best suited to your needs. Contact us at 1.866.452.1100 to speak to an expert now.


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This is what the federal budget means for homebuyers

The recent federal budget included Housing Affordability Measures that may be applicable to your situation, now or in the future.  There are three key measures intended to help: an incentive for first-time homebuyers, an increase in the amount of RRSP funds first-time buyers can access for a downpayment, and allowing divorced individuals to use their RRSP funds under the Home Buyers Plan. Let’s take a closer look at each:

First-Time Home Buyer Incentive (available Fall 2019)

This new measure is basically a shared equity program designed to reduce mortgage payments for first-time buyers with the minimum 5% downpayment. The Canada Mortgage and Housing Corporation (CMHC) will provide 5% of the cost of an existing home, or 10% of a new home in what amounts to an interest-free loan that isn’t payable until you sell the property. The extra encouragement to purchase a newly built home is expected to boost home construction and help address a housing shortage in many areas. 

There are a few caveats. If your household income is more than $120,000, you aren’t eligible for the program. And your total borrowed amount (including the incentive portion) can’t be more than four times your household income. With a 5% downpayment and a household income of $120,000, the maximum purchase price would be approximately $505,000.

The program is expected to be launched this Fall.  We’re still waiting for some details on how the incentive is paid back, and how increases or decreases in equity will be handled.  Stay tuned! In the meantime, we can certainly run some numbers to determine if this is something you, or someone you know, may want to take advantage of later this year.  

Bolstering the Home Buyers’ Plan (available now)

The Home Buyers’ Plan (HBP) has allowed first-time buyers to withdraw up to $25,000 ($50,000 per couple) from their RRSP to help with downpayment and closing costs, without having to pay tax on the withdrawal. HBP withdrawals are not added to a person’s income when withdrawn, but instead must be repaid over a 15-year period. The budget increased the maximum withdrawal amount to $35,000 per qualified buyer, which is effective immediately.  

Divorced individuals eligible for Home Buyers’ Plan (available 2020)

The budget also proposed that those experiencing the breakdown of a marriage or common-law partnership can now participate in the Home Buyers’ Plan. This measure will be available for withdrawals made after 2019, and is great news. After all, a financial plan that starts with homeownership can help both parties make the best possible start on a new path.  

The bottom line on budget 2019? There are some good measures for some homebuyer groups that needed a boost. The new first-time buyer incentive program has certainly added another layer of complexity to the already complicated mortgage world that includes two different stress tests. Getting expert advice throughout your mortgage years is more important than ever. Got a homebuying dream? Feel free to get in touch with the experts at MiMortgage.ca for a review of your situation at any time!


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What’s a monoline lender and how is it different from a bank?

We’re often asked about monoline lenders – who are they, what benefits do they offer, and how do you get access to a monoline lender anyway?

Good questions.  “Mono” means “one”.  So it’s a “one-line” lender that doesn’t do anything else except mortgage lending. They won’t be asking you to do your banking with them, or try to cross-sell you investments. They do one thing: mortgage lending. They’re an important factor in the mortgage market here in Canada because they improve consumer choice and ensure that our Banks remain competitive!

How do you access a monoline lender? Our only job is to get you the perfect mortgage – a combination of rate and features that allows you to live comfortably with your mortgage and save money in the long term. To do that, we work with most of the major banks and credit unions, private lenders, and we work with several monoline lenders. There are a few reasons why a monoline lender might be the perfect option for you.

  1. Lower penalties.  A monoline lender’s penalty to break a fixed-rate mortgage is typically much less than what Banks charge. If your circumstances change and you need to get out of your mortgage, this could save you thousands.  
  2. Easier to transfer. A mortgage with a monoline lender is registered on title as a “standard charge” rather than a “collateral charge”. That means it can be easier and cheaper to transfer your mortgage to another lender at renewal for a better deal.
  3. Great rates. Monoline lenders do not have bricks and mortar branches so they can keep their overhead costs low and focus on competitive interest rates.

Most monoline lenders are only available through mortgage brokers, which is one of the reasons so many Canadians are turning to mortgage brokers for their purchases, refinances and renewals.  Get in touch with the experts at MiMortgage.ca for a review of all your lender options for your next mortgage.  

Some of the monoline lenders we deal with – Merix, First National, MCAP, RMG, CMLS


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First-time buyers – take advantage of the RRSP downpayment boost by March 1

Using your RRSP money for your downpayment is a great strategy for some first-time buyers. It may help you achieve the 20 per cent downpayment needed to avoid mortgage default insurance premiums, or simply give you a financial boost when you need it most.  First-time homebuyers can withdraw up $25,000 per person under the Federal Home Buyers’ Program (HBP).  If you have saved $25,000 and have enough RRSP contribution room, you can contribute that amount to your RRSP by the March 1 deadline. Then after 90 days, you can redeem those funds under the HBP. Since your contribution counts as a tax deduction, you may get a nice tax refund this spring to further assist you with your homebuying plans. You will however need to pay the withdrawn funds back on a 15-year repayment plan. Contact the experts at MiMortgage.ca at 1.866.452.1100 to for more information on how you can access your RRSP money for a downpayment for your first home.

 


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Financial comfort & joy!

Contact the team at MiMortgage.ca at 866.452.1100 to speak to an expert now!


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Five brilliant ways to work a reverse mortgage

It’s true: a reverse mortgage – one of the best financial tools available to Canadians over 55 – can greatly assist cash-strapped seniors who need to pay off their debts and live comfortably in their family home. But reverse mortgages are also a strategy for well-heeled retirees who want to unlock the value in their homes for wealth-building strategies or to enhance their retirement.

Here are five brilliant reverse mortgage strategies:

  1. Buy a second property. Who would have thought you could pull the value out of your first home – after retirement – and use the money to pick up a little vacation home… or maybe an investment property?
  2. Start a business. Canadians are increasingly pursuing a passion or using their professional talents to start a new business after retirement. A reverse mortgage is a great way to pull value from your home and make an investment in something you love to do.
  3. Give your children a leg up on the homebuying ladder. Tougher qualifying rules have created extra obstacles for first-time homebuyers. A reverse mortgage lets you keep enjoying your home – while giving your children some help to get into their own home.
  4. Renovate the home you love. Maybe your dream is a gourmet kitchen to hone your cooking skills. Or an outdoor entertaining area to make the most of your family time. Or maybe you’d like to renovate to make your home more accessible as your mobility decreases. A reverse mortgage can generate the funds to make it all possible.
  5. Use your home to get away! A reverse mortgage can give you a cash infusion to enhance your lifestyle. Many retirees are looking forward to more travel – and a reverse mortgage can provide the funding to make it happen, without ever giving up your home!

Bet you didn’t know a reverse mortgage could be such a powerful financial tool!  You can access equity in your home – tax free –  and never make a mortgage payment on those funds. You always retain ownership of the home, and you are never required to move or to sell. It’s good to know that all those years of mortgage payments have earned you some rewards. Interested?  Contact the experts at MiMortgage.ca at 1.866.452.1100. Let’s talk!


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Fixed or Variable-Rate Mortgage?

If you are rate shopping, you’ll notice that the lowest available rate will be for a variable mortgage, which is why we are often asked “what does variable mean and how is it different from a fixed-rate mortgage?”

With a variable mortgage, your rate will move in conjunction with your lender’s Prime lending rate, which in turn tracks the Bank of Canada’s rate, and will typically be quoted as Prime minus a specified percentage. Unless you have an economic ouija board, you won’t be able to predict what kind of rate ups and downs might be ahead of you.

With a fixed-rate mortgage, your payments are fixed for the term of the mortgage, which offers stability. Fixed-rates are usually better suited to first-time buyers or those who haven’t owned a home for a very long period. Ask yourself these questions: Do you like or need to know exactly what your payment is going to be over a longer period of time? Do you want to avoid the need to watch rates? Do you have less than 20% down? If you answered “yes” to all or most, a fixed-rate mortgage could be the better choice for you.

A variable-rate mortgage is best suited to people who have a flexible budget and can tolerate slightly more risk. Ask yourself these questions: Do you watch market conditions? Can you handle any rate increases that could increase your payment? Do you have more than 20% equity in your home? If you answered “yes” to all or most, a variable-rate mortgage might best suit your needs. Most variables allow you to exercise an option to “lock in” a fixed rate at any time for the remaining portion of your mortgage term or longer. You can also set up your payments at what they would be if you took the higher rate, which helps you pay down your mortgage faster, and creates a financial buffer for you if rates rise later.

If the uncertainty of a variable rate is going to give you sleepless nights, you’re in good company. Many Canadians prefer the certainty of a fixed-rate mortgage. They know exactly how much they will pay over the term of their mortgage, and they can plan accordingly… with no financial surprises. However, lower-rate variable mortgages with a strong Prime minus offer give you the potential to save a lot on interest. And, if your circumstances change and you need to get of out of your mortgage, you will appreciate the lower penalty to get out of a variable versus a fixed-rate mortgage.

Your best option is to get professional and personalized advice. The team at MiMortgage.ca would be happy to help you determine which option is best suited to your needs. Contact us at 1.866.452.1100 to speak to an expert now.