Mortgage Intelligence

Oshawa's Mortgage News Desk!


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For 2018: Ten mortgage tips you won’t get from your bank

More new mortgage rules come into effect January 1, which will make it trickier to negotiate a mortgage for many Canadians. But with a little expert advice, we can help ensure you have a happy new year that keeps you on the path to prosperity for the coming year and beyond.

  1. That “best” 5-year rate? It probably isn’t. Fact is, a “best rate quote” is now meaningless, because mortgage pricing is now based on multiple factors. Everything depends on your personal situation. That’s why we start with an in-depth assessment, and then review a broad range of lenders and products for the best fit for you.
  2. Going variable and long may pay off. If you have over 20% equity, you may want to consider a 30-year amortization mortgage. Benefits can be significant and outweigh any rate premium – more purchasing power, easier mortgage qualifying, and lower payments to boost cash flow or to allow you to divert cash to build a savings buffer or use for investing. Taking a variable-rate mortgage could also improve your mortgage qualifying, then you can lock in later. Let’s discuss if these strategies might work for you.
  3. The devil is in the details. You can save thousands by making sure you get a mortgage that has a fair prepayment penalty and will also treat you fairly at renewal. Don’t end up paying exorbitant fees or be forced to take a high rate at renewal. Look deeper than rate.
  4. High-ratio insurance costs more, except when it doesn’t. While counter intuitive, lenders offer the best rates to borrowers who need mortgage insurance because they have less than 20% down. So even if you have more than 20% down and don’t need mortgage insurance, it may actually be worth purchasing. You’ll get a lower rate and better options at renewal. We can run the numbers and see if it makes sense for you.
  5. At renewal, insured mortgages are gold. Lenders love insured mortgages. If you have one, be sure to check out the competitive landscape at renewal. If you aren’t sure if your mortgage is insured or not, we can find out.
  6. No company paycheque? Start building your case. If you are self-employed, get in touch now for advice on mortgage planning for the future. We will advise you on what documentation and information you’ll need so that we can build a strong case on your behalf for lenders.
  7. Does a collateral mortgage make sense? A bank collateral mortgage is registered for more than the value of the home at closing. It can be difficult to transfer and you may find yourself locked in with that bank. Always get a second opinion!
  8. Let renters help pay your mortgage. A home with a rental suite could help you become a homeowner in that neighbourhood you love, or help you offset mortgage payments in the house you’re in.
  9. Keep good credit habits. The best rates go to borrowers with the best credit scores. Keep up good credit habits: pay your bills on time, never let your debt exceed more than 30% of your limit, and don’t be tempted to apply for store cards “to save on your purchase today”.
  10. Let’s keep a dialogue going. Wherever you are in your homeownership journey, a great conversation at any time can identify all the ways you can save thousands of dollars in interest and fees during your mortgage years.

New year. New rules. New chance to review your mortgage and wealth-building options. Get in touch with the experts at MiMortgage.ca at 1 866 452-1100 now, for a review of your situation.

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How to deal with mortgage payment difficulties

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:

  1. Converting a variable-interest rate mortgage to a fixed-rate mortgage to protect you in the event of a sudden jump in interest rates.
  2. 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.
  3. 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.
  4. 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!)
  5. 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!

 


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Your Home & Mortgage

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Be prepared with your income verification

One of the most critical components of a successful mortgage approval is verifying your income. Being prepared up front will make the entire process easier and less stressful.  Here is a summary of the different types of income and what is acceptable as verification to lenders.

Full-time salary: Provide a recent paystub and letter on company letterhead of employment signed by an authorized officer confirming position, annual salary and length in position. If you are new to your position, the letter must state that you are no longer on probation. Lenders will follow up and confirm these details. Commissions and bonuses can be supported by averaging your last two notices of tax assessments.

Commission, contract, part-time, seasonal employment: Company letter and paystub are required. Income must be consistent and can be proven with a 2 year average of tax assessments or T4s. If the position  is contract, a copy of the contract and any renewals is required.

Self-employed: Two years of tax assessments, a business license/registration or articles of incorporation and the last 2 years T1 general tax returns or 2 years of accountant prepared financial statements if incorporated. Since the amount of income is purposely kept low, some expenses on the statement of business activities can be added back. If income is difficult to prove then be sure to have a strong credit history and downpayment.

Child support: A copy of the separation/divorce agreement and three to six months bank statements are typically required. This income should be less than 30 per cent of total income.

Disability: A letter confirming permanent status along with a paystub.

Maternity leave – Some lenders use full employment income if the employment letter confirms a return date within one year.

Pension/RRIF/Investment income: Most recent tax assessment, T4A’s for pension income. There must be sufficient funds in the investment to support the income being withdrawn.

Being fully prepared to verify your income will make a considerable difference to your stress level and mortgage success.  If you have any questions, ask! Contact us now to speak to an expert or to get pre-approved, apply now through our secure website.


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First-Time Home Buyers’ Tax Credit

Tax Credit relief

First-Time Home Buyers

A frequent question that we get asked from potential home buyers is “if there are tax credits for First-Time Home Buyers?” The federal government has introduced a tax credit initiative for first-time home buyers that will grant these buyers up to $750 in tax relief. More information pertaining to the first-time home buyers’ tax credit initiative can be found at Canada’s Economic Action Plan and Canada Revenue Agency.

Also did you know that a survey conducted by TD Bank has revealed that 44% of first-time buyers used mortgage brokers? This could be due to mortgage brokers taking on the role of a trusted adviser in guiding first-time buyers towards the most suitable mortgage option, in the recent past.

We hope the information on first-time buyer tax credit initiative has been helpful. When it comes to first-time home buying contact our team at (866) 452-1100 or via email for a free assessment.