Mortgage Intelligence

Oshawa's Mortgage News Desk!


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Love It and Renovate!

Looking to do renovations to your home this summer? Speak to an expert at MiMortgage.ca about a refinancing options that’s best suited for you. Contact the team at MiMortgage.ca at 1 866 452-1100 to speak to an expert or apply online now!


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“Conditional on financing”: the most important part of your offer

When you find the condo or house of your dreams and want to make an offer, do you need a financing condition?  Unless you can pay cash for the home, then yes you do. That little phrase – “conditional on financing” – is an important protection for buyers.

When an offer to purchase is made “conditional on financing”, we gain the time needed i.e. 3 to 5 days to ensure that you are fully approved for the necessary funds. Your lender needs to feel as comfortable about the property as you do and will likely conduct an assessment. After all, the property is the lender’s security if something goes wrong. Even if you have a mortgage preapproval, the lender may decline the property for reasons such as:

  • The address may be just outside the acceptable location perimeter for the lender.
  • Concern over a former grow op, an environment matter, or zoning issues.
  • The appraisal may not match the offer you’ve made.

Don’t let the rush to buy overcome common sense. A preapproval is a guideline only, and a lender could disregard it: especially if your income or financial situation has changed. That “conditional on financing” gives you time to confirm with the lender, and to withdraw the offer if the lender’s queries turn up something negative about the house.

An offer without conditions leaves you and your family on the hook. If the financing falls through, you will lose your deposit, and could be sued by the seller. It’s not the happily-ever-after scenario you envisioned when you made your offer. If you really want to put in an offer with no financing conditions, the team at MiMortgage.ca can assist you in mitigating your risk i.e. review the strata docs, listing information, and contact the lender and insurer about the property prior to writing the offer, which can help eliminate some of the risk but nothing can be 100% guaranteed.  Let the team at MiMortgage.ca help you make sure your homebuying journey has a happy ending.


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Which mortgage features are the most important?

It’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. For more information, contact the team at MiMortgage.ca at 1 866 452-1100 or apply online 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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Downpayment Savings Strategies

Saving for a down payment requires descipline & determination, whether you’re working towards saving for a minimum downpayment like most first-time homebuyers or 20% down.

Here are a few strategies that will help you to get started with saving.

If you are at the stage of working out your downpayment strategies towards homeownership, it’s time for a meeting with the team at MiMortgage.ca. Contact us at 1 866 452-1100 or apply online now!


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What is the Qualifying Rate?

In 2010 the Department of Finance introduced the Qualifying Rate to assess borrower eligibility and ensure that potential borrowers can maintain their payments should rates begin to rise. The qualifying rate is a 5-year rate published every week by the Bank of Canada, and will be higher than your actual contract rate. The Bank of Canada surveys the six major banks’ posted 5-year fixed rates every Wednesday and uses a mode average of those rates to set the official benchmark.

As a result, your lender is required to use this rate to calculate debt service ratios when reviewing mortgage applications for all insured mortgages. Prior to October, 2016, this financial “stress test” was applicable for fixed-rate mortgages with terms of 1 to 4 years and all variable-rate mortgages. Now, it also applies to fixed-rate insured mortgages of 5 years or longer, and some conventional mortgages.

Although we can find you a much better mortgage rate – you’ll still need to show you can maintain your mortgage using the higher qualifying rate. While you must “qualify” at this higher rate, your actual payments will be based on your lower mortgage contract rate.

Our goal is to provide expert advice, education and resources that homebuyers need. It’s important that you understand the terms you agree to when making what is likely your biggest purchase decision. Want to learn more about the qualifying rate and how it applies to you? Contact the team at MiMortgage.ca now. We’re here to help you!


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Why Mortgage Before March 17?

db14142_fb_homeowners_i14759090_miIf you’re in the market for an insured mortgage, then you might want to get that mortgage before March 17.

Canada Mortgage and Housing Corporation (CMHC) is raising premiums for insuring mortgages on Canadian homes for the third time in three years. Canadian homebuyers are required to have mortgage insurance if they have less than a 20 per cent downpayment. The insurance provides protection for the lender in the case of a default.

How will it hit your wallet? The increase is not too significant for those making the minimum downpayment required. A homebuyer with a $250,000 mortgage and a 5 per cent downpayment will only pay about $5 per month more in insurance premiums.  We can calculate exactly how much the increase will mean to you if you get your mortgage approval on or after March 17.

The increases are actually more substantial for larger downpayments of 15 per cent or more. Those with 20 per cent or more downpayment aren’t required to have mortgage insurance, although it’s used by lenders that securitize their mortgages. As a result, any increased cost will likely be passed on to customers through higher rates.

Premiums are also increasing for “non-traditional” insured mortgages i.e. home buyers with borrowed downpayments, a type of mortgage downpayment that could grow in popularity as homebuyers strive to gain entry in the housing market.

The premium change will come into effect on March 17. Homebuyers will be able to access the current lower rates if they have bought a home and are approved before the March 17 deadline, even if they have a later closing date.

If you are looking to buy, get in touch with the team at MiMortgage.ca today!


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Surviving and Thriving: Your Mortgage Blueprint for 2017

blueprints

Image by courtesy of scvnest.com

Canadians are definitely talking about the housing market – what do the new mortgage rules mean, is this the right time to buy, have mortgage rates bottomed out, is a lender’s renewal offer the best available, and on and on! For many, it feels like some uncertain times ahead. Often it’s just a few sensible strategies that can help you survive and thrive in the current climate:

  1. Take care of your credit. It’s so important to have good credit behaviours so you always qualify for the best mortgage rate. Pay your bills on time. Don’t let your credit accounts exceed 50% of the credit available. Also don’t apply for a store card just to save on your purchase that day! Before you cancel any credit cards, speak to an expert and get advice.
  2. Let renters help pay your mortgage. A home with a rental suite can be a great option for homebuyers, especially if the area you love is pricey or you don’t want to buy a condo at a lower cost. It’s also a great option for existing homeowners looking to lower their mortgage payment.
  3. What’s the prepayment penalty? If you ever need to get out of your mortgage early, the right mortgage could save you thousands!  Not all lenders calculate penalties the same way, and the differences can be substantial. It helps to know which lenders have the most fair prepayment penalties and your mortgage broker will have that information at their fingertips.
  4. Choose low-interest debt. Whatever your need might be – paying down high-interest debt, funding education, a large purchase, investments, or renovations, your mortgage might be your most cost-effective financing option, if you have enough home equity.
  5. If you bought your first home in 2016 you may be able to take advantage of the $5,000 non-refundable Home Buyer Tax Credit amount, which provides up to $750 in federal tax relief.  Not sure if you qualify, just ask!
  6. Renovate over relocate? The right renovation might be all it takes to turn the house you’re in, into the home of your dreams. It is almost always less expensive to renovate than to relocate! We have great renovation financing options if that’s where you’re heading!
  7. Renew with your eyes open. When your lender sends out a letter suggesting you renew your mortgage at their current offer, speak to your mortgage broker, get advice.  Don’t renew with your eyes closed! This is your opportunity to negotiate the best possible deal!
  8. Speed up your mortgage pay-down. Change from monthly payments to weekly or bi-weekly payments. Or take your tax refund and put it against your mortgage principal. Your interest costs will go down with every dollar you’ve reduced on your principal.
  9. Don’t neglect your savings. In managing debt, you want to make sure you don’t need to use credit to get you through a financial emergency when your car breaks down or your washing machine quits. Make a point of setting aside a small sum every paycheque into a special emergency fund.

And lastly, it’s always a good idea to get expert mortgage advice well in advance of buying your home, and then always on an annual basis. So take the time to meet with your mortgage broker and get your blueprint for surviving and thriving in 2017.