Mortgage Intelligence

Oshawa's Mortgage News Desk!


Leave a comment

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.

Advertisements


Leave a comment

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.


Leave a comment

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!


Leave a comment

Appraisal or Home Inspection… what’s the difference?

Often in a home purchase, home inspections and appraisals are both common practice. So what’s the difference?

A home inspection is often a condition of a purchase and is usually done to protect the homebuyer. A qualified home inspector will assess the physical condition of the home and all of its major systems to help you determine if everything is in good working order. You typically receive a schedule outlining what repairs are needed and by when.

An appraisal is an objective assessment of the home’s value to confirm that the property is suitable as security for the mortgage. This is rarely a problem, but lenders and insurers take on their own financial risk, and they want to feel confident in the property before they approve the mortgage.

If you are thinking about homeownership it’s best that you understand the different processes that you need to follow from making an offer on a property and obtaining mortgage financing. Contact the experts at MiMortgage.ca at 1 866 452-1100 to speak to an expert for more information about mortgage financing.

 


Leave a comment

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.


Leave a comment

Who should get a mortgage preapproval?

A mortgage pre-approval can be an important part of your pathway to building wealth, giving you a real-world picture of your options: that is, your opportunities as well as your limitations.

A mortgage preapproval will tell you how much you qualify for (you may be pleasantly surprised), what your mortgage payments will be, and you’ll get an interest rate that will be held for a specific time period, like 120 days.

If you are purchasing a new home, then you’ll be shopping with a full wallet! You’ll know exactly what you can afford. You want to avoid reaching too far financially for a house you’ve fallen in love with, but you may also discover that you’re ready for the house of your dreams and didn’t know it. A mortgage preapproval tells you that.

In other words, a mortgage preapproval is always a good idea.  Remember, of course, that a preapproval isn’t a mortgage approval.  Make sure you have a financing condition in place when purchasing because your property needs to be assessed by your lender during the mortgage approval process.  You’ll need to provide the necessary information such as the offer to purchase, MLS listing, and any other documents required by the lender so they can assess the property.

Additionally, any planned financing might fall through if your circumstances change. So be careful with changing jobs, adding debt or missing payments, co-signing another loan, or using your downpayment money. You want to keep your financial situation squeaky clean while you’re getting ready to finance.

Wherever you are in your mortgage journey, get in touch, and we’ll show you all the possibilities.

Is your mortgage coming up for renewal in the next few months? If so, you can expect to hear from your lender. Remember that when your lender gets in touch with you, that is your signal to get advice. Staying with your lender might be your best option, but you should always use renewal time as an opportunity to look around and make sure you have the best deal. Contact the experts at MiMortgage.ca at 1 866 452-1100 for a review of your mortgage options.


Leave a comment

Seven signs you may need a mortgage tune-up

Did you know that just like your car or your home, you mortgage can benefit from a seasonal inspection!  Your car gets taken in for regular servicing to keep it running for the long term, shouldn’t your financial future get the same kind of attention?

Here are seven common signs you need a mortgage tune-up:

  1. You are locked in at a higher rate than you could get today – and you want a professional opinion on your options;
  2. You’re thinking about moving to a new home this year – or pondering buying an investment property;
  3. You’re carrying more than $25,000 in high-interest loans or credit cards and it’s affecting your cash flow;
  4. There’s a renovation or home repair project coming up this year – either by choice or necessity;
  5. An investment or business opportunity is available – and you wish you could take advantage;
  6. There’s a large expense looming – tuition, wedding – and you want to plan ahead; and,
  7. Your mortgage is up for renewal this year.

If you haven’t had a mortgage review in the last year – or if you recognize one of the signs that it’s time for a tune-up – then get in touch with the experts at MiMortgage.ca. And if you know someone who could also benefit: consider this a coupon for a free inspection for a friend or family member! A mortgage in tip-top condition is the best way to get you where you’re going in your financial future!