Mortgage Intelligence

Oshawa's Mortgage News Desk!


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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?

These are all 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  at 1.866.452.1100 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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Happy Canada Day!


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How to get a kitchen with your new mortgage

Canadians know that a smart home renovation can both increase their property value, and improve the way they live in their home. Putting a renovation on your high-interest credit card can wipe out the value you’re adding, and create months – or years – of financial stress. Good news, there is a better way. You may be able to get that new kitchen (or bathroom, backyard etc.) through your mortgage, typically your most cost-effective way to finance. Here’s how we can help:

PURCHASE Plus Improvements: Perfect for those looking at buying a fixer-upper, a Purchase Plus Improvements Mortgage covers the sale price of the home, plus the cost of any renovations that will increase the value of the property, up to $40,000. Then you can look at financing up to 95% of this future post-reno value. If you’ve found a house with “great bones” that can be renovated into the home of your dreams, then this is the mortgage that can make those dreams come true.

REFINANCE Plus Improvements: Tailor-made for those that don’t have enough equity to refinance, the Refinance Plus Improvements Mortgage allows you to finance up to 80% of the improved value of your home once the up to $40,000 in home improvement renovations are completed. Your lender will advance the total mortgage, pay off your existing mortgage, and instruct the solicitor to hold back the amount for the improvements. Once the lender is satisfied the renos are complete, the solicitor is instructed to release the funds for the renos. There are options we can discuss for carrying your expenditures until the funds are released. Should you have more than 20% equity in your current home, you may be able to simply do a conventional refinance and take out the equity you need.

It’s almost always better to protect your savings, keep large expenses off your credit card, and simply access funds through your mortgage. The team at MiMortgage.ca can even help structure a mortgage with features to help you pay your project off faster – for more savings. There are several steps required to complete these types of mortgages and our experts would be happy to review the process with you. Let’s make your dream a reality!

 


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Wow. All these mortgage renewals!

Is your mortgage coming up for renewal this year? If so, you’re not alone. In fact, there’s an unprecedented spike in the number of mortgages renewing in 2018! If you’re one of them, then you’ve got a perfect opportunity to potentially save thousands of dollars. Get in touch with the team at MiMortgage.ca at 1.866.452.1100 to speak to an expert now. Together we can review what your current lender is offering, and also look at the marketplace to see if it makes sense for you to take your mortgage elsewhere.


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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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What is the Qualifying Rate?

You’re probably aware that there have been many mortgage rule changes over the last several years, and you’re almost certainly affected whether you’re an existing homeowner or first-time buyer. These rules are designed to ensure a sable long-term housing market, and to make sure Canadians can handle their debt should rates begin to rise.

As a result of the rule changes, lenders must ensure that you can handle payments at a certain qualifying rate. That rate will vary depending if your mortgage is high ratio (less than 20% equity/downpayment), or conventional (more than 20% equity/downpayment). The qualifying rate will be higher than the rate of your actual mortgage: a situation that some may find frustrating. But rest assured that your actual payments will be based on the lower mortgage contract rate that we negotiate for you.

Qualifying Rate for High Ratio Mortgages

The Department of Finance introduced the qualifying rate for high ratio mortgages in 2010. The high-ratio qualifying rate is a 5-year rate published every week by the Bank of Canada. The Bank surveys the six major banks’ posted 5-year rates every Wednesday and uses a mode average of those rates to set the official benchmark rate. Your lender is required to use this rate to calculate debt service ratios when reviewing mortgage applications for all insured high-ratio mortgages.

Qualifying Rate for Conventional Mortgages

The Office of the Superintendent of Financial Institutions (OSFI) implemented a new “stress test” or qualifying rate for conventional mortgages that went into effect January 1, 2018.  This requires federally regulated lenders to qualify all new conventional mortgages at whichever rate is higher: the benchmark rate (described above), or your actual contracted mortgage rate plus 2%.  An interesting outcome is that this qualifying rate is often higher than the rate used when qualifying high-ratio mortgages where there is less equity or downpayment.

Why the difference? One reason is simply because these rules were implemented by two different government bodies.

While mortgages have become more complex, this doesn’t mean that Canadians can’t get into their dream homes, consolidate debt, take out equity, or buy a second property. It just means that if you have an upcoming new mortgage need, we should discuss your plans as early as possible. We have access to many lenders that aren’t federally regulated and strategies that you can employ to improve your credit and ensure you are in the best situation possible when you need financing. We are here to help you so please get in touch with the experts at MiMortgage.ca at any time.


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Self-employed and bad credit?

If you are self employed, you already know it makes sense to go to a specialist to get the job done. Contact the team at MiMortgage.ca at 1-866-452-1100 to speak to a specialist now!