Sometimes unforeseen financial circumstances can impact your ability to make your regular mortgage payments. Or perhaps your debt demons have been caused by taking on too much other high-interest debt. It can be tempting to want to conceal your debt problem for as long as possible – but that’s almost never the best strategy. With early intervention, there are weapons available that can help you fight these demons! Your mortgage lender doesn’t want to see you default on your mortgage; they’d much rather help homeowners find a way to keep their home.
For mortgages insured by the Canada Mortgage and Housing Corporation (CMHC), they have identified several tools available to help you ride out a period of financial uncertainty:
- Converting a variable-interest rate mortgage to a fixed-rate mortgage to protect you in the event of a sudden jump in interest rates.
- Your lender may be willing to offer a temporary payment deferral, or other flexible options for short-term relief. If you’ve made any lump-sum payments against your mortgage in the past – or if you’ve been on an accelerated payment schedule – that history can help.
- You may be able to extend your amortization period to reduce your monthly payments. You can shorten the amortization again later if your circumstances change.
- If you’ve actually missed a few payments already, you may ask if the lender is willing to add them to the mortgage balance and extend the payment period accordingly. (Best, however, to start talking before you start missing payments!)
- A special payment arrangement unique to your situation may also be possible.
Genworth Canada also has a Homeowner Assistance Program designed to help homeowners who are experiencing temporary financial difficulties that may put their mortgage at risk.
Ultimately though, it’s best to seek help at the first sign of financial trouble. Getting in touch with the team at MiMortgage.ca and getting your situation assessed by an expert is a great place to begin – because as independent mortgage professionals, we work for our clients and look out for their best interests, and ensure that their needs are met.
It’s possible that your financial situation just requires some extra penny-pinching to stay on budget. But if you find yourself adding to your credit card debt – or borrowing to make mortgage payments – then it’s time have that conversation with an expert at MiMortgage.ca. Conatct us at 1 866 452-1100 to speak to an expert now. The earlier you get help, the easier it will be to conquer those debt demons!
It’s easy to get caught up in home buying frenzy and just focus on finding that perfect home. During all that excitement, be sure to take some time to get acquainted with a few key terms. Here are the four types of insurance you’ll encounter.
High-Ratio Mortgage Insurance
If your downpayment is between 5% and 20%, you are required to have “high-ratio mortgage insurance.” This insurance is there to protect the lender, and the premium is almost always added to your mortgage amount.
Example: Purchase price is $400,000 and you have 5% downpayment, for a total mortgage amount of $380,000. The mortgage insurance premium is 4% or $15,200, which is then added to your mortgage. The insurance premium declines at 10% and at 15% down. If you’ve saved up more than 20% of the purchase price, then you don’t need this insurance unless it’s required by the lender.
Having “title” means you have legal ownership of property. Title Insurance protects owners and their lenders against losses related to the property’s title or ownership, such as: unknown title defects, liens against the property’s title, encroachment issues, title fraud, survey errors, and other title-related issues that can affect your ability to sell, mortgage or lease your property in the future. Premiums are collected upon purchase and based on the value of the property.
Home & Property Insurance
This must-have insurance protects against risks to your property and contents in the event of fire, theft and some weather damage; it also includes liability insurance in the event that someone is hurt on the insured property. Most lenders require proof of home insurance, so be sure to have your policy in place after your offer is accepted and before your closing date.
Mortgage Life Insurance
In the event of death, this insurance will pay the insured balance of the mortgage, discharge fees and prepayment penalties to the lender, and leaves the property with little or no mortgage for the surviving family or estate. There are many reasons to strongly consider this coverage because anything can happen at any age and at any time. Premiums are calculated based on age and the original mortgage balance.
Insurance can protect you and your family throughout your home ownership journey. If you are unsure about something, get in touch. Contact the team at MiMortgage.ca at 1 866 452-1100. We’re here to make sure your journey has a happy ending!
September is here so let’s use that brisk back-to-work attitude to make sure your personal finances are on track to save you money over the long term. If we haven’t talked in the last year, or if any of these situations apply, please get in touch:
- You are considering a refinance for any reason – too much high interest debt is making cash flow tight, or you are considering a renovation, investment property, or have a large looming expense. Proposed new mortgage rules include stress testing for conventional mortgages which, if implemented, will make refinancing more difficult for many Canadians. Don’t delay; the new rules could be in place before year end.
- You are thinking about moving to a new home and want to review your mortgage options.
- You are wondering if you should lock in your variable-rate mortgage.
- Your mortgage is coming up for renewal and you want to guarantee your rate now and ensure you get the best deal possible.
- You know someone who could benefit from a fresh look at their mortgage options and would appreciate paying the least amount of interest and fees during their mortgage years.
Always keep in mind that the right mortgage plan can save you thousands of dollars! Enjoy the fall season, and thank you so much for your ongoing support.
P.S. Do you have any home improvement store purchases coming up? We have a new product that will save you money on these purchases. Contact the team at MiMortgage.ca at 1 866 452-1100. Let us know if this applies to you!
On July 12th, for the first time in seven years, the Bank of Canada increased the overnight rate by .25%, withdrawing some of the stimulus that was needed after the oil price collapse and 2008 financial crisis. Variable rate mortgages and lines of credit will see higher rates and modest payment increases. Fixed-rate mortgage – which are based on the bond market – had already been trending slightly upward, although if you have a fixed mortgage, you aren’t affected until it’s time to renew. Keep in mind that this is a very small increase, and we’re still in an ultra-low rate environment and an incredibly stable market. We’ve also seen increases before to only see them decrease again. But rates have risen, so here are answers to the questions we’re getting:
Should I jump into the market now? Actually, our advice is always the same: buy when you are financially ready. Don’t jump the gun just because rates “may” go higher. But by all means, if you’re thinking about buying, we can arrange a pre-approval so you’re protected from rate increases while you shop around.
Should I lock in my variable rate mortgage ASAP? That depends. Your new rate with the hike is probably still less than current 5-year fixed rates, and you’ll still likely pay less if there is another .25% increase. So why pay more money than you have to? Stick with your original strategy of focusing on payment vs. rate. But if it’s going to keep you awake at night – or the few extra dollars are hard to find in your budget – then let’s talk about your conversion options. Remember though, you should be confident you’ll stay in a 5-year fixed mortgage for the full term. Breaking a fixed mortgage can result in some tough penalties.
What if my mortgage is coming up for renewal? Don’t feel rushed or pressured by a renewal letter or call. Let’s discuss your options. We’ll review your renewal offer together and we’ll shop around to see if it’s really the best deal available. Got too much other debt? This may be the time to roll it into a new mortgage to boost cash flow and save on interest costs.
Should we talk? Yes for sure. You should have confidence in your mortgage plan and that’s why professional mortgage advice is so critical. We have access to a wide range of lenders and know the right questions to ask to assess your situation and make sure you have the best mortgage strategy. Contact the team at MiMortgage.ca at 1 866 452-1100 to speak to an expert or apply online 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!
Many homebuyers looking at older properties find themselves in a common predicament: they’ve found a property that suits them, but it needs some costly and immediate upgrades. Good news. We’re got a mortgage that will keep you financially afloat!
A “Purchase Plus Improvements” mortgage adds the cost of those immediate renovations into your mortgage, so you don’t have to rack up credit card bills or sell investments to pay for the upgrades. This mortgage will cover the sale price of the home, plus any renovations that would increase the value of the property, up to $40,000. This way you can spread your payments over the life of the mortgage and have a cost-effective way to get into your dream home. You can then use your pre-payment privileges to pay the renovation off faster.
Here is an overview of the process:
- Obtain cost estimates for the upgrades.
- An appraisal with two separate values will be required: first the value of the property “as is” and the estimated value of the property once the improvements are completed.
- Your lender will add the estimated costs of the renovation into your mortgage. The committed amount of the mortgage will be advanced to your solicitor, who will be instructed to hold back the renovation funds until the work has been completed and inspected.
- Complete your upgrades; funds are released upon completion.
- There are options we can discuss for carrying your expenditures until the funds can be released.
So if you find a home with “great bones” that can be renovated into the home of your dreams, get in touch with the experts at MiMortgage.ca early. We’re here to make sure your homebuying journey has a happy ending.