Mortgage Intelligence

Oshawa's Mortgage News Desk!


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Why Variable Rate drops are creating a surge in activity

This Spring we’re seeing lenders getting aggressive with their pricing for variable rate mortgages: a sign that lenders are fighting for market share, making it a great time to be shopping for a mortgage!

First a reminder of the difference between fixed vs variable.  Fixed rates are often well suited to first-time buyers or those who haven’t owned a home for long because they want to know with absolute certainty what their payment will be for a set number of years.  A variable mortgage has an interest rate that will move in conjunction with your lender’s Prime rate, which in turn tracks the Bank of Canada’s overnight rate, and will be expressed as “prime minus x percent.”  If the Bank of Canada raises or lowers its rate, then you’ll likely see that reflected in your mortgage payment.

Right now, lenders are shaving off those variable rate mortgage offers: creating some of the best rates we’ve seen in many months. Consider the advantages:

  1. Save big on interest. It’s true that your payments could go up if the Bank of Canada’s rate starts to move up. But it would have to go WAY up to wipe out the savings you’d get from some of the current deep “prime minus” variables being offered right now.
  2. Build a buffer. You can set up your payments at what they would be if you took the higher fixed rate, which helps you pay down your mortgage faster, and creates a financial buffer for you if rates rise later.
  3. Easier to get out. If your circumstances change and you need to get out of your mortgage – a situation that happens more frequently than people anticipate — you will appreciate the lower penalty to get out of a variable vs a fixed mortgage. You could save thousands!
  4. Lock in later. 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.

We’ve even got clients breaking their existing mortgages to take advantage of this sudden crop of very low variable rates being offered right now.

However variable rates are not for everyone. But the possibility of big savings is out there right now, and it won’t last forever. Get in touch with the team at MiMortgage.ca at 1.866.452.1100 and we can review the numbers to see if it’s something you should be taking advantage of.

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Six reasons why a second mortgage can be a smart move

Every month, you put money against your mortgage. Over the years, thanks to all those payments (and a healthy increase in home values), you’ve built up some equity. Way to go! Sometimes, we want to be able to tap into that equity. But new mortgage rules have made it harder to refinance a mortgage. No surprise, then, that we’re seeing a jump in second mortgage financing. Here are six reasons why a second mortgage might be a smart move for you too:

  1. A second mortgage can be a great way to access available equity without having to break your first mortgage.
  2. Ability in some cases to refinance up to 85 per cent loan to value.
  3. Second mortgage interest rates can be significantly less than credit cards. You can use the second mortgage to pay off your high-interest credit card debt, which will clean up any bruised credit and get you in a better position to qualify for the best rates later.
  4. Ability to use this lower-cost financing as you see fit – pay off debt, renovations, cash flow for your business, an investment, tuition, wedding, trip, or other major expenditure.
  5. That second mortgage can help you complete your purchase if your downpayment is a little short of what you need.
  6. A second mortgage is often easier to qualify for than a secured line of credit.

The value you’ve built up in your home is a wealth-building tool, and usually the best place to borrow funds when you need them. That’s why – for a growing number of financially savvy Canadians – a second mortgage can be a smart move! Get in touch with an expert at MiMortgage.ca to find out if this is the way forward for you.


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Low-Interest Credit Card for Homeowners.

9.9% interest plus earn reward points! If you typically carry a credit card balance, you can reduce your interest by 50% or more with our Centra Gold Card. By paying less interest each month, you can work towards becoming debt free sooner. Plus you earn reward points that translate into 1% cash back on your purchases.* Let’s discuss how this card can help you save money during your mortgage years and keep your credit sharp! Contact the team at MiMortgage.ca at 1 866 452-1100 for more information.

*REWARDS: Eligibility for rewards and/or account credit is subject to the terms and conditions of the Collabria MySelect Rewards and Cash Rewards programs. For full terms and conditions, visit http://www.collabriacreditcards.ca/webres/File/Rewards Terms/RTC-0415-FCG – MySelect Rewards Terms and Conditions.pdf. The Collabria Mastercard is issued by Collabria Financial Services Inc. pursuant to a license from Mastercard International Incorporated. Mastercard and the Mastercard Brand Mark are registered trademarks of Mastercard International Incorporated.


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New mortgage rules start January 1, 2018.

Act now to restructure your debt.

 

By using the equity in your home to consolidate your high-interest debt into a new or existing mortgage, you can boost your monthly cashflow, pay down your debt faster and save potentially thousands of dollars in interest. Unfortunately, new mortgage rules may affect your ability to access your home equity. Act now to realize these benefits:

Consider the following example – existing mortgage, car loan and credit cards total $400,000. Roll all that debt into a new $412,000 mortgage (including a fee to break the existing mortgage) and just look at the payoff:

 MONTHLY PAYMENTS*
TOTAL DEBT CURRENT NEW
Mortgage $350,000 $1,746 $2,055
Car Loan $25,000 $517 $0
All credit cards $25,000 $650 $0
TOTAL $400,000 $2,913 $2,055

That’s $858 less each month!

If you put $500 of your monthly savings back into your mortgage payment, you’ll reduce your amortization from 25 years to 19. Or you could invest in RRSPs or RESPs and reap some tax benefits. The choice is yours.

To find out how you can lower your debt, boost your monthly cashflow and be mortgage-free quicker, before the new rules come into effect, contact the experts at MiMortgage.ca at 1 866 452-1100 today!

*3.49% mortgage, 5 yr term, 25 yr amortization. Credit cards 19.9% and car loan 9%, both 5 yr am. OAC. Subject to change. For illustration purposes only.


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Mortgage choice – monoline lenders

Finding a perfect mortgage that fits your life is like finding the perfect home. It’s an important decision that requires a lot of shopping around. That’s where we come in. With access to over 50 of Canada’s leading lenders, we are a one stop shop. We work with major banks, credit unions, and national, regional and private lenders. One specific lender type that we work with is called a “monoline” lender, which focuses just on mortgages and doesn’t take deposits. They don’t have other products to cross-sell, which differentiates them from a bank or credit union.  They are an important part of the mortgage market because their mortgage products and low pricing improve consumer choice and ensure that our banks remain competitive. Most monoline mortgages 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.


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The Mortgage Broker Advantage

Increasingly, Canadians are turning to mortgage brokers for their first and next mortgage, taking advantage of the value and convenience of their services. One of their most compelling reasons to work with a mortgage broker is that they have access to a wide range of lending sources, making it significantly easier to match borrowers with the mortgage product that best suits them. When you’re dealing directly with one financial institution, you just don’t know if you’re getting the best deal because they’ve only got their own menu of products to offer you.

If you are dealing with one of the largest mortgage brokers in the country, you’ll also enjoy considerable bargaining power. A large brokerage has clout with lenders to negotiate volume discounts that lead to lower rates and greater product choice than other companies. And, brokers are generally paid by the lender rather than the borrower, making it a logical choice to always consult with a mortgage broker.  They’re shopping the market for the best rates, doing all the work, and there’s no cost to you.

But a mortgage broker’s role extends beyond securing financing – to arranging the home appraisal and lawyer or notary, reviewing the purchase contract and statement of adjustments, securing mortgage life insurance, and keeping tabs on the entire closing process. And that’s just during the mortgage transaction. The broker then stays in touch, keeping clients apprised of new mortgage offers and rate fluctuations, and advising when to lock in a variable-rate mortgage.

Ultimately, the role of your mortgage broker is that of a trusted advisor and it’s a relationship that can last a lifetime. Many mortgage brokerage clients have been referred by word of mouth, and many are even second- and third generation client families.

Whether you’re taking on your first mortgage or a long-time homeowner looking to refinance, consolidate debt or leverage your equity to acquire a new property, a mortgage broker is a wealth of information. They can advise about down payment requirements, mitigating credit history issues, mortgage payment and prepayment options, interest-saving strategies, purchasing vacation, investment and commercial properties, qualifying with supplemental rental income, and mortgage options for new immigrants.

When you get a mortgage, most likely the biggest financial commitment you’ll make in a lifetime, it’s critical that the person you’re dealing with is knowledgeable, able to answer your questions, and has access to a full range of lenders so you get the best mortgage for your needs. Contact the experts at MiMortgage.ca at 1 866 452-1100 or apply online now!

 


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Capital gains tax: a quick primer

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!