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5 Tips for Renewing Your Mortgage

Mortgage stress tests mean borrowers no longer negotiating from position of power

Mark Ting · for CBC News · 

 

Until recently, homeowners looked forward to renewing their mortgages as they were likely renewing at a lower rate and had several financial institutions competing for their business.

Consumers were negotiating from a position of power knowing they could leave without penalty if their demands were not met.

 

This is no longer the case as much of the negotiating power has shifted back to the financial institutions due to the expansion of the mortgage stress test.

When your mortgage is up for renewal, your financial institution will mail a letter stating the new term and interest rate of your mortgage. In most cases, you are not subject to the mortgage stress test and are simply signing the letter to renew your mortgage — easy.

Consider moving mortgage

The downside to signing the renewal letter is that you are giving up your ability to negotiate. Unfortunately, if a competitor offers you a better rate you want to accept, you will be subject to the stress test to re-qualify for your mortgage.

As of January 1, 2018, all home buyers, regardless of the size of their down payment are subject to the stress test. The purpose of the test is to assess a buyers' ability to afford mortgage payments at higher interest rates.

Borrowers must qualify based on the greater of Bank of Canada qualifying rate or your contracted rate plus two per cent. It's a federal initiative, so only banks must follow the new rules. However most provincial-run financial institutions, such as credit union, have voluntarily adopted the stress test's higher standards.

If you fail the stress test, you will not be able to move your mortgage and will have to accept the rate your existing lender is offering. If you are confident that you can pass the mortgage stress test, go ahead and shop around.

Gather all of the competing offers and request your current lender match the rate and/or conditions. If they are unable to so, consider moving your mortgage if the discrepancy is large enough and the new lender is willing to absorb most of the start-up costs.

I would also suggest you speak to a mortgage broker as he or she can determine the competitiveness of your renewal offer and your likelihood of passing the stress test.

If it is determined that you can pass the stress test, a broker will lay out the various options so that you are able to make an informed decision.

5 tips

My top 5 tips for someone renewing their mortgage:

  • Do not sign the renewal letter that is automatically sent to you in advance of your renewal date. Always speak to someone and negotiate.
  • Consider the financial institution's reputation, flexibility regarding pre-payments and rates when deciding on a lender. The stress test makes it much more difficult to change lenders so best to pick one you are comfortable remaining with long term.
  • Your credit score is important. Make your payments on time and try to avoid excess debt as the rate you will be offered is risk based. Try to put yourself in a position to pass the stress test so that more lenders will compete for your business.
  • If you need a loan, delay applying for it until after your mortgage renews. That loan could be the difference between passing or failing the stress test.
  • If you have a loan and are planning to pay it off, do so before you renew the mortgage (ideally a couple of months before). By eliminating that debt, you will be perceived as less risky and will likely be offered a better rate.

If you would like to discuss your renewal options,  please call Your Island Mortgage Team for assistance: 250-898-8821.

Sold Data Coming to Realtor.ca

CREA’s Board of Directors has voted to add sold and historical data to the property listings on Realtor.ca without the need for a login.

In a message to real estate boards across the country, CREA says the move comes “in order to meet consumer demand and at the request of Realtors and boards.”

It says, “In addition to responding to requests from members, this will ensure we continue to offer leading edge services on the best real estate website in Canada.”

A Competition Tribunal decision in July 2016 found that by not including sold and other data in its VOW feed to members, TREB had engaged in anti-competitive acts. An appeal court upheld the decision and on Aug. 23 of this year, the Supreme Court of Canada announced that it would not hear TREB’s appeal. CREA supported TREB at the tribunal and had intervenor status in the proceedings.

TREB is now supplying the disputed data to its member VOWs.

CREA media relations officer Pierre Leduc says that before the sold data can be displayed on Realtor.ca, each real estate board must request that the information be added. CREA will then work with the boards, the provincial associations and the regulators to ensure that it complies with all laws and regulations.

“We’ll have to check with the boards to see what historic sold data they have access to, and how far back that data will go,” says Leduc.

Only historic sold prices will be posted and not pending solds, he says. Pending solds were part of the Competition Tribunal order for VOWs, but consumers and Realtors are concerned about privacy issues on deals that have yet to close.

Leduc says CREA hopes to have the sold data rolled out on Realtor.ca as soon as possible.

For more information about mortgages, please contact:

Angela Zumbo, Accredited Mortgage Professional
The Mortgage Centre – Your Island Mortgage Team
Office: 250-898-8821
Email: angela@yourislandmortgage.ca

New Mortgage Rules 2018

New Mortgage Rules Coming January 1, 2018

The government is changing how Canadians must qualify for a Conventional Mortgage.  Starting January 1, 2018, anyone purchasing a property with 20% or more down payment, or anyone refinancing an existing mortgage, must qualify at the greater of the Bank of Canada Benchmark Rate (currently 4.99%) or the Contract Rate of the mortgage plus 2% (ie. 3.29% + 2% = 5.29%).

The effect of this change on the average mortgage borrower will be a 20% reduction in borrowing power.  For example, if you can qualify today for a mortgage of $400,000, then after January 1st this maximum will be reduced to $320,000.

The new rules are being implemented as follows:

  • If the Purchase Contract is dated prior to January 1, 2018, regardless of the Closing Date, the old rules will apply.
  • If the Purchase Contract is dated January 1, 2018 or later, the new rules will apply.
  • Any Mortgage Refinance submitted and approved under the old rules prior to January 1, 2018 must close within 120 days of the new year.
  • Any pre-approvals that have not been activated with an accepted Purchase Contract prior to January 1, 2018 will not preserve qualification under the old rules, although the associated rate hold will stay intact.

For more information about these new mortgage rules and how they will affect you, please contact:

Angela Zumbo, Accredited Mortgage Professional
The Mortgage Centre – Your Island Mortgage Team
Office: 250-898-8821
Email: angela@yourislandmortgage.ca

New Mortgage Rules

New Mortgage Rules came into effect on October 17.  Here are the basics of the new mortgage rules and what they mean for you…

High Ratio purchases will be “Stress Tested”:

When a buyer has a down payment of less than 20% of the purchase price, this is considered a High Ratio purchase and must be insured by one of Canada’s three insurers, which are CMHC, Genworth or Canada Guaranty.  All High Ratio mortgage terms must now be “stress tested” or qualified using the Bank of Canada benchmark rate, which as of today is 4.64%.  The stress test effectively reduces a buyer’s purchasing power by approximately 20%.

If you are feeling concerned, there are a few solutions for buyers who do not qualify under this new rule:

  • Increase down payment to make up the difference in qualification amount
  • Add a qualified co-borrower to the application (someone with good credit and income)
  • Purchase a lower priced property

Portfolio Insurance must follow same qualification rules as High Ratio:

Lenders that use Portfolio Insurance (non-bank lenders) for mortgages with down payments of 20% or more must follow the same qualification rules as High Ratio.  The property being purchased must be owner occupied, and cannot be a rental or an investment property.  The effects to buyers under this rule are:

  • Limits options for difficult to place purchases
  • Limits ability to refinance an existing property for down payment on another property purchase
  • Eliminates competition, allows banks to charge higher rates
  • Limits options for purchasing multiple rental properties under residential financing terms

Capital Gains Exemption for sale of Principal Residences to be reported on income tax returns:

A sale of a principal residence must now be reported on income tax returns, effective for the 2016 tax year.  Principal Residence Exemptions (PRE) will be claimed upon tax filing.  You are only allowed to claim 1 PRE per year and the property must be owner occupied at the time of sale.  If you are uncertain about your PRE eligibility, we encourage you to speak with your accountant or tax preparer.

What is the reason for the New Rules?

“These new rules are being put in to place to protect the financial security of Canadians and support the long term stability of the housing market in Canada.”

If you are concerned about anything surrounding the new rules, how they affect you directly, and what your options are moving forward, please call Your Island Mortgage Team for assistance: 250-898-8821.

8 Tips For Getting and Keeping a High Credit Score

Credit Scores can be a little intimidating, especially since your credit score affects how much money you can borrow at what interest rate, and not many people understand how Credit Scores work.  There are ways to increase your credit score and keep it high. 

We wrote a post about understanding your credit score, even though it is a few years old it is still relevant. The article is a good read to learn more about how your credit activities affect your credit score.

Building good financial habits is the best way to get a high score and keep it.  Here are 8 tips to help you build those healthy financial habits and keep your credit score high:

  1. Don’t apply for credit unless absolutely necessary
  • Reduce the number of credit card applications you submit.  Every time your apply for a credit card they do a credit check, these affect you credit score because multiple credit card applications implies you may be in a difficult Financial situation.  The exception is having multiple credit checks in a short period of time for either a mortgage or car loan, this is considered shopping around for the best deal, and therefore is not as harmful to your score.
  • And try to maintain a good “credit mix” – a mixture of credit cards and loans
  1. Be aware of overall credit utilization
    • You are better off to have two credit cards at 50% of the limit than you are to have one maxed out and another at zero.  It is not total dollar value of debt, but total debt as compared to available credit.
  2. Always pay at least the minimum payment by the due date, and if you can pay the bill in full
    • Pay all collections you may have, and avoid letting any disputes get that far.  In a dispute, you are better off to pay the account and then fight with the company for a refund, than to withhold funds and get sent to collections.
    • If you tend to be forgetful set up payment reminders or automatic debits
  3. Don’t go over your limit on your credit cards.
    • Ideally, you would like your credit card balance to be below 50% of your limit, but definitely not more than 70%
  4. Protect yourself from Identity theft
    • Be cautious when giving out personal information over the phone, through mail, or on the internet. 
    • Limit the amount of id you carry with you.  Keep items like your birth certificate and social insurance card at home in a safe unless you need them with you for a particular purpose.
    • Shred all old financial documents instead of just recycling or throwing them out.
    • If you think you have been the victim of identity theft:
      • File a fraud report with your local police
      • Call your bank and credit card providers right away
      • Contact Canada’s credit reporting agencies (Equifax and TransUnion),
  5. Reduce your debt. I know easier said than done, here are some tips:       
    • Have a plan with clear goals and deadlines, and make sure they are achievable
    • Look at your budget, and if you don’t have a budget making one may be a good idea to help you see where you stand financially. You may be surprised at how much you actually spend eating out compared to what you spend on groceries.
    • Try negotiating a lower rate with your credit card company.
    • Pay mostly with cash, this will help you to be more conscious about your spending
    •  And lastly, if you really are having trouble managing your debt you may want to look into debt consolidation.  Debt consolidation is a low interest loan which combines your entire debit into one, giving you only one payment to worry about.
  6. Pull your credit report at least once a year to review for accuracy. 
    • It is free if you order by mail.  Don’t pay for a credit score from Equifax, as it is not the same score that lenders use anyway.  This score is good to see if your credit is going in the right direction, but it is not an indicator of what mortgage you may qualify for.
  7. If trying to build your score, try using credit card every second month like this:
    • Use card for something you normally buy, like gas or groceries
    • Wait for the bill to come in the mail (don’t rush home and pay the card off, let the bill come showing this purchase balance)
    • Pay the card in full by the due date.   You won’t have any interest if you pay it in full.
    • Don’t use the card again, wait a full month for the next bill to come in the mail showing the zero balance.
    • Repeat.
    • Equifax is all computer algorithms.  It doesn’t know if you are paying your card off in full each month, or just carrying the same balance.  By using the card every other month as described, you are showing that you have a balance, paid it off, etc.  This really works to increase your score much faster than most other ways.

Increasing your credit score may not be easy and it may take time but it is worth it, especially if you ever plan to purchase a home or get a car loan. 

If you have any questions about credit scores or mortgages please give us a call at (250)898-8821 or Toll Free at 1-866-898-8821.

What is Title Insurance??

First what is a Title?

Your property’s title is legal proof that you do in fact own your property and describes your right to the land.  This concept is sometimes confused with a property deed which is the legal document that transfers title from one person to another.

 

What does Title Insurance Protect Me From?

Typical insurances such as life or home insurance protect you from events that may happen in the future, for instance fire or accidental death.  Title Insurance on the other hand protects you from events which happened in the past, such as survey or public record errors, and unknown title defects.

Each Title Insurance Policy is different, but typically title insurance covers:

  • Title Fraud – usually involves someone using stolen personal information or forged documents to transfer the title of your home to themselves
    (or an accomplice), then taking out a mortgage on the property and disappearing with the money
  • Unknown Title Defects – title issues that prevent you from having clear ownership of the property
  • Encroachment Issues – an example of this would be if you discover that a structure on your property goes into your neighbour’s property
  • Construction done by a previous owner without permits – imagine if the previous owner removed a wall not realizing it was structurally supportive.  When you first moved in you loved the open concept but slowly you notice second floor is starting to sink. How much do you think it would cost to fix that mistake?
  • Legal Service Coverage protects against lawyers making mistakes during purchase
  • Survey or Public Record Errors
  • Existing Undisclosed Liens
  • Endorsement can be added for Well Water and/or Septic System defects

 

Title Insurance does not cover events such as:

  • Zoning bylaw or building code violations you create yourself
  • Environmental hazards
  • Native land claims
  • Known title defects
  • Issues which would have been discovered with a new survey or inspection of the property (property is smaller then you originally thought)

How much will this cost me?

The cost of Title Insurance varies based on the value of your property and which company you choose to go with.  Title Insurance is a one time premium that lasts as long as you own your home, and depending on your policy it maybe able to extend to heirs, a spouse in the event of divorce, or to children when the property is transferred from parents for nominal consideration. Though usually purchased when you buy your home, Title Insurance can be bought anytime after you have purchased your home. 

 

So where do I sign?

If you think Title Insurance maybe for you, contact your lawyer to discuss your options.

Before you sign on the dotted line here are a few tips to think about:

  • Make sure your property is insured for its full value
  • If you are purchasing your Title Insurance when you are buying your home, make sure the policy takes effect on your closing date
  • Make sure you understand what your policy covers and does not cover, and if you have any questions make sure you ask your lawyer or insurance provider.

 

Your Island Mortgage Team is here for you. If you have any questions concerning
mortgages, please contact us 1-866-898-8821.

 

Article written by: Jessica Cruickshank (Your Island Mortgage Team - Administrative Assistant)

Moving Check List

You have found the home of your dreams; your mortgage is all sorted out, now what? Moving Day!!

Moving day can be exciting, stressful, and even emotional all at the same time.  Your Island Mortgage Team cares about your entire home owning experience, and we want to help make it as stress free as possible.

 

Here are some tips to help make your move go more smoothly.

  • Use colored duct tape to easily and quickly mark boxes while packing.  Colour code each room in your home and stick a piece of the coordinating color of duct tape on the box for which room it is destined for.  This will make it easier to identify which box goes where.
  • Keep the contents of smaller drawers in zip lock bags.
  • Don’t have any of those fancy wardrobe boxes? Make it easy to transport hanging clothing by putting them in trash bags.

  • While moving use an elastic band to keep your door from latching closed.  Loop the band around the inner and outer knobs and over the door latch.  This is especially helpful if you are moving out of an apartment whose door likes to lock automatically.
  • Have lots of heavy books? Save your back and pack them in rolling suitcases to make them easy to transport.
  • Check out restaurants in your new neighbour hood before moving day. This way when dinner time rolls around while you are unpacking you aren’t struggling to figure out where to order from.
  • Pack essentials for your first night such as sheets and shower curtains in your new place in clear plastic totes. 

  • When dissembling furniture put all of the small pieces such as screws, nuts, and bolts into a zip lock bag. Either label the bags or use tape to the bag to the piece of furniture so it is easy to find when it comes time to put it back together.
  • Use toilet paper rolls to pack cords and wires.  Not only does this keep them from getting all tangled you can write on the toilet paper roll what the cord is for.
  • The first thing you should set up is your bed.

 

And the most important tip:

 

  • Start organizing your move early.  Check out the Your Island Mortgage Team Moving Check List to make sure you stay on track with everything that needs to be done. Just click the link below:

Your Island Mortgage - Moving Check List

 

Your Island Mortgage Team is here for you.  If you have any questions concerning mortgages please don’t hesitate to call us 250-898-8821 or toll free 1-866-898-8821

 

Have any Moving Tips you would like to Share? Feel free to leave a comment below.

 

-article written by: Jessica Cruickshank (Your Island Mortgage Team - Administrative Assistant)

“This house would be perfect, if only…”

The Only Thing You Can’t Change is Location…


You’ve been searching for what seems like an eternity. The homes you are seeing are great except...

The kitchen needs updating… Who would love green shag carpet…in a bathroom? … Harvest Gold Appliances just aren’t your style… You love the neighbours but… a fence would be great… The Basement needs finishing…

You have saved up your down payment and closing costs, and a small emergency fund… green shag  is unpleasant but not an emergency… right?

That’s right. In the Grand Scheme of things, green shag is not an emergency. And there are great, cost-effective ways to turn that “almost” perfect house into your perfect home (and likely add some equity at the same time!). Here are just a few ways you can do this:

 


Cashback Mortgages

A cashback mortgage is a mortgage product that offers a percentage of cashback to the borrower at funding. The percentage usually ranges from 1 to 5% of the total loan amount (for example, a $200,000 mortgage with a 5% Cashback would grant the borrower $10,000. These loans are a bit higher than best rates (not much at all!). The cashback cannot be used for your down payment, but it can be used to pay off or down debt, new appliances or home improvements or even closing costs. When considering penalties for these products, the cash-back amounts are usually pro-rated, and if you decide to break your mortgage term, you will be looking at the penalty for breaking the mortgage, as well as the pro-rated balance of the cash-back portion.

These products are available a bit higher rate. It might be worth keeping in mind that the rates are generally still much lower than those on lines of credit and/or credit cards. Cashback mortgages are available at 3 and 5 year terms.


Purchase Plus Improvements

A Purchase Plus Improvements mortgage allows for borrower to borrow up to 10% of the total loan amount, to a maximum of $40,000. The borrower collects quotes and estimates for the work to be done, and submits these when they are applying for their mortgage funding. When the lender approves the application and the property is purchased, the borrower has the work completed and notifies their mortgage broker that the projects are complete. The broker arranges for an appraiser to come out and confirm the work is completed. Once confirmed, the lender advances the funds to the borrower’s lawyer or notary, and they release the funds to the client to pay the contractors.

In this instance, the borrower must have at least 5% down payment on the total amount to be advanced. So, if you are looking at purchasing a $200,000 home, and want to borrow $20,000 for improvements, you would need to have $11,000 for down payment (5% of $220,000), plus closing costs.
These products are available at best available rates, generally for at least 3 or 5 year terms.
 

Construction or Draw Mortgages

Now let’s say you find a home that is in the perfect spot. But the house is very far from perfect, and it’s going to take more than 10% of the purchase price to bring it closer to perfect. This is when you might consider a construction or draw mortgage. This allows you to borrow more than 10% of the purchase price. However, it also changes the structure of the loan. There are options out there that will allow you to make draws on large renovation projects (similar to a new build). There are things to consider, like the costs to have the appraiser confirm that the work is completed before the draws are advanced, and some lenders might restrict the number of draws (for example, 3 draws of $25,000 for a $75,000 renovation). Payment structure can vary widely, so it is best to speak with your Mortgage Broker; we will walk you through the steps and help you to decide the best mortgage to fit your budget, plans and financial situation.

One more thing to consider is combining one of these great, low-rate mortgage options with improving the Energy Efficiency of the home you are purchasing. There are a number of financial incentives offered by insurers and governments to people who are upgrading the energy efficiency of their home. These options are available when your mortgage is up for renewal – why not take advantage of the record low rates available to not only save money on your payments, but add equity to your property.

This post contributed by team member Amanda Jacobson.

If you have any questions, or for more information, please do not hesitate to contact Your Island Mortgage Team today!

250-898-8821 or toll free 1-866-898-8821
 

Is your mortgage coming up for renewal?

When you first sign your mortgage contract, you are establishing the rate and conditions under which you will be obligated to pay to your lender for the term of your contract. What happens when this term is up and there is still a balance owing on your mortgage?

If your current mortgage is with a financial institution that falls under federal regulations (such as a bank), the lender MUST provide you with a renewal statement at least 21 days before the end of the existing term. If the lender does not intend to renew your mortgage, it must notify you 21 days prior to the end of your term as well. You can expect that your mortgage holder will begin contacting you at up to 6 months before your renewal date.

Your lender may offer “special” rates or incentives if you sign your renewal early, in an effort to deter you from shopping for the best renewal rate and terms. An astonishing amount of Canadians simply sign their renewals and don’t think about it again, a hasty move that could cost them thousands.

At Your Island Mortgage Team, we believe that your mortgage renewal is not a formality to endure, but rather an opportunity to revisit your (likely) biggest investment and ensure that it is working for you!

It may save some time to simply sign on the dotted line - but it will very likely save you money to have a professional at Your Island Mortgage Team review your mortgage before your renewal date to ensure that your terms and conditions are meeting your needs, and you are paying the lowest rate. We can hold a renewal rate for up to 120 days, and can tailor the renewal terms to you.  Why try to fit you into the box, when we can build the box to fit you?

Here are just a few reasons why you shouldn’t “sign on the line and carry on”:

  • Lenders rarely offer their best rates at renewal. They count on customers simply signing the renewal letter, without question, and carry on. That’s leaving a lot of money on the table!
  • The mortgage lending market is very competitive! There are dozens of lenders available to you through a mortgage professional that want your business. They offer great rates, plus flexible and innovative products that your current lender may not have available.
  • Your situation may have changed. Life happens! We will review your finances with you and make sure that your mortgage works for you, saving you money and headaches for years to come!
  • The mortgage market has changed. Many banks are trending toward collateral charge mortgages, which can be confusing and have significant effects on your equity. We will explain any questions you may have so that you understand how your mortgage works and the terms and conditions you are signing up for!

The best reason is that our services are free to you, the borrower*. Our goal is to save you money and ensure that your mortgage is working for you! Call our office and speak with one of our mortgage professionals today.

Office 250-898-8821 or Toll Free 1-866-898-8821

When you think Mortgage – think Your Island Mortgage Team.

*OAC, E&OE. Some exceptions apply; all fees are discussed up front, if applicable.

Fixed Versus Variable - some I.D.E.A.S. to consider

I.D.E.A.S. For Choosing Between A Fixed And Variable Rate

Best-Mortgage-termsThe first question people often ask when deciding between a fixed and variable mortgage is: “Where do you see rates going?”  

They assume we as mortgage planners know…and of course we don’t.  No one does. 

We can, and do, present a variety of possible rate scenarios based on:

  • where we are in the rate cycle
  • how rates have performed after past recessions
  • and other available research.

But you never know for sure where the rate setters (the Bank of Canada and bond traders) will take the market.

Aside from reading the tea leaves on rates, the best thing a borrower can do is measure his/her ability to handle rising payments. To gauge that, we use a handy acronym called IDEAS.

IDEAS stands for Income, Debt, Equity, Assets, Sensitivity to Risk.

More specifically:

  • Income -- Is the borrower’s income stable and reliable?
    • Is there a low chance of income interruption?  (You don’t want payments to soar if there’s a chance you’ll be out of a job for a while)
    • Does the borrower earn enough to pay his/her variable-rate mortgage as if it were a 5-year fixed mortgage? (i.e.,  Can he/she afford to set his/her payments higher to offset the effect of rising rates?)
  • Debt -- Does the client have a reasonable debt ratio?
    • Is the person’s total debt ratio under 40% based on the posted 5-year fixed qualification rate (so that his/her budget isn’t crushed if prime rate jumps to 6.25% or more)?
    • Can the borrower withstand 50% higher payments if rates rocketed up 4%?
  • Equity -- Does the client have enough equity?
    • Is the loan-to-value under 80-85% so the person could refinance if absolutely needed?
  • Assets -- Does the client have enough assets?
    • Preferably 6 months of living expenses (in liquid assets) to act as a payment buffer if needed.
    • Does the person have a credit line as a backup source of liquidity?
  • Sensitivity (to Risk) -- Can the client accept risk?
    • If rates increase 2.50%, can he/she handle payments rising over 30%? What if rates jump 4%?
    • Does he/she understand that a fixed rate will save him/her more money up to 23% of the time--according to popular research? (Fixed or Variable)

If most, or all, of the answers to the above are affirmative, a variable rate is something the homeowner can entertain.

After evaluating someone against the IDEAS measure, we then discuss (among other things):

  • The probability they'll need to break their mortgage early or increase it before maturity (each of which could impact their total borrowing cost due to differences in fixed and variable penalties)
  • Future interest rate scenarios, and how rising rates could impact payments and amortization time.
  • The tools that variable rate holders can use to deal with payment risk, like “hold-the-payment” features (which don’t eliminate payment risk entirely) and hybrid mortgages.
  • The pros and cons of relying on a rate conversion (i.e.,  locking in a variable rate)
  • The cost comparison of variable versus fixed terms, based on future rate assumptions.

For most people, the decision between fixed and variable will either save them thousands or cost them thousands.  The goal is to try and take as much of the gamble out of the equation as possible.

 

Article copied from: http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/03/ideas-for-choosing-between-a-fixed-and-variable-rate.html

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5 Tips for Renewing Your Mortgage

Mortgage stress tests mean borrowers no longer negotiating from position of power

Mark Ting · for CBC News · 

 

Until recently, homeowners looked forward to renewing their mortgages as they were likely renewing at a lower rate and had several financial institutions competing for their business.

Consumers were negotiating from a position of power knowing they could leave without penalty if their demands were not met.

 

This is no longer the case as much of the negotiating power has shifted back to the financial institutions due to the expansion of the mortgage stress test.

When your mortgage is up for renewal, your financial institution will mail a letter stating the new term and interest rate of your mortgage. In most cases, you are not subject to the mortgage stress test and are simply signing the letter to renew your mortgage — easy.

Consider moving mortgage

The downside to signing the renewal letter is that you are giving up your ability to negotiate. Unfortunately, if a competitor offers you a better rate you want to accept, you will be subject to the stress test to re-qualify for your mortgage.

As of January 1, 2018, all home buyers, regardless of the size of their down payment are subject to the stress test. The purpose of the test is to assess a buyers' ability to afford mortgage payments at higher interest rates.

Borrowers must qualify based on the greater of Bank of Canada qualifying rate or your contracted rate plus two per cent. It's a federal initiative, so only banks must follow the new rules. However most provincial-run financial institutions, such as credit union, have voluntarily adopted the stress test's higher standards.

If you fail the stress test, you will not be able to move your mortgage and will have to accept the rate your existing lender is offering. If you are confident that you can pass the mortgage stress test, go ahead and shop around.

Gather all of the competing offers and request your current lender match the rate and/or conditions. If they are unable to so, consider moving your mortgage if the discrepancy is large enough and the new lender is willing to absorb most of the start-up costs.

I would also suggest you speak to a mortgage broker as he or she can determine the competitiveness of your renewal offer and your likelihood of passing the stress test.

If it is determined that you can pass the stress test, a broker will lay out the various options so that you are able to make an informed decision.

5 tips

My top 5 tips for someone renewing their mortgage:

  • Do not sign the renewal letter that is automatically sent to you in advance of your renewal date. Always speak to someone and negotiate.
  • Consider the financial institution's reputation, flexibility regarding pre-payments and rates when deciding on a lender. The stress test makes it much more difficult to change lenders so best to pick one you are comfortable remaining with long term.
  • Your credit score is important. Make your payments on time and try to avoid excess debt as the rate you will be offered is risk based. Try to put yourself in a position to pass the stress test so that more lenders will compete for your business.
  • If you need a loan, delay applying for it until after your mortgage renews. That loan could be the difference between passing or failing the stress test.
  • If you have a loan and are planning to pay it off, do so before you renew the mortgage (ideally a couple of months before). By eliminating that debt, you will be perceived as less risky and will likely be offered a better rate.

If you would like to discuss your renewal options,  please call Your Island Mortgage Team for assistance: 250-898-8821.

Sold Data Coming to Realtor.ca

CREA’s Board of Directors has voted to add sold and historical data to the property listings on Realtor.ca without the need for a login.

In a message to real estate boards across the country, CREA says the move comes “in order to meet consumer demand and at the request of Realtors and boards.”

It says, “In addition to responding to requests from members, this will ensure we continue to offer leading edge services on the best real estate website in Canada.”

A Competition Tribunal decision in July 2016 found that by not including sold and other data in its VOW feed to members, TREB had engaged in anti-competitive acts. An appeal court upheld the decision and on Aug. 23 of this year, the Supreme Court of Canada announced that it would not hear TREB’s appeal. CREA supported TREB at the tribunal and had intervenor status in the proceedings.

TREB is now supplying the disputed data to its member VOWs.

CREA media relations officer Pierre Leduc says that before the sold data can be displayed on Realtor.ca, each real estate board must request that the information be added. CREA will then work with the boards, the provincial associations and the regulators to ensure that it complies with all laws and regulations.

“We’ll have to check with the boards to see what historic sold data they have access to, and how far back that data will go,” says Leduc.

Only historic sold prices will be posted and not pending solds, he says. Pending solds were part of the Competition Tribunal order for VOWs, but consumers and Realtors are concerned about privacy issues on deals that have yet to close.

Leduc says CREA hopes to have the sold data rolled out on Realtor.ca as soon as possible.

For more information about mortgages, please contact:

Angela Zumbo, Accredited Mortgage Professional
The Mortgage Centre – Your Island Mortgage Team
Office: 250-898-8821
Email: angela@yourislandmortgage.ca

New Mortgage Rules 2018

New Mortgage Rules Coming January 1, 2018

The government is changing how Canadians must qualify for a Conventional Mortgage.  Starting January 1, 2018, anyone purchasing a property with 20% or more down payment, or anyone refinancing an existing mortgage, must qualify at the greater of the Bank of Canada Benchmark Rate (currently 4.99%) or the Contract Rate of the mortgage plus 2% (ie. 3.29% + 2% = 5.29%).

The effect of this change on the average mortgage borrower will be a 20% reduction in borrowing power.  For example, if you can qualify today for a mortgage of $400,000, then after January 1st this maximum will be reduced to $320,000.

The new rules are being implemented as follows:

  • If the Purchase Contract is dated prior to January 1, 2018, regardless of the Closing Date, the old rules will apply.
  • If the Purchase Contract is dated January 1, 2018 or later, the new rules will apply.
  • Any Mortgage Refinance submitted and approved under the old rules prior to January 1, 2018 must close within 120 days of the new year.
  • Any pre-approvals that have not been activated with an accepted Purchase Contract prior to January 1, 2018 will not preserve qualification under the old rules, although the associated rate hold will stay intact.

For more information about these new mortgage rules and how they will affect you, please contact:

Angela Zumbo, Accredited Mortgage Professional
The Mortgage Centre – Your Island Mortgage Team
Office: 250-898-8821
Email: angela@yourislandmortgage.ca

New Mortgage Rules

New Mortgage Rules came into effect on October 17.  Here are the basics of the new mortgage rules and what they mean for you…

High Ratio purchases will be “Stress Tested”:

When a buyer has a down payment of less than 20% of the purchase price, this is considered a High Ratio purchase and must be insured by one of Canada’s three insurers, which are CMHC, Genworth or Canada Guaranty.  All High Ratio mortgage terms must now be “stress tested” or qualified using the Bank of Canada benchmark rate, which as of today is 4.64%.  The stress test effectively reduces a buyer’s purchasing power by approximately 20%.

If you are feeling concerned, there are a few solutions for buyers who do not qualify under this new rule:

  • Increase down payment to make up the difference in qualification amount
  • Add a qualified co-borrower to the application (someone with good credit and income)
  • Purchase a lower priced property

Portfolio Insurance must follow same qualification rules as High Ratio:

Lenders that use Portfolio Insurance (non-bank lenders) for mortgages with down payments of 20% or more must follow the same qualification rules as High Ratio.  The property being purchased must be owner occupied, and cannot be a rental or an investment property.  The effects to buyers under this rule are:

  • Limits options for difficult to place purchases
  • Limits ability to refinance an existing property for down payment on another property purchase
  • Eliminates competition, allows banks to charge higher rates
  • Limits options for purchasing multiple rental properties under residential financing terms

Capital Gains Exemption for sale of Principal Residences to be reported on income tax returns:

A sale of a principal residence must now be reported on income tax returns, effective for the 2016 tax year.  Principal Residence Exemptions (PRE) will be claimed upon tax filing.  You are only allowed to claim 1 PRE per year and the property must be owner occupied at the time of sale.  If you are uncertain about your PRE eligibility, we encourage you to speak with your accountant or tax preparer.

What is the reason for the New Rules?

“These new rules are being put in to place to protect the financial security of Canadians and support the long term stability of the housing market in Canada.”

If you are concerned about anything surrounding the new rules, how they affect you directly, and what your options are moving forward, please call Your Island Mortgage Team for assistance: 250-898-8821.

8 Tips For Getting and Keeping a High Credit Score

Credit Scores can be a little intimidating, especially since your credit score affects how much money you can borrow at what interest rate, and not many people understand how Credit Scores work.  There are ways to increase your credit score and keep it high. 

We wrote a post about understanding your credit score, even though it is a few years old it is still relevant. The article is a good read to learn more about how your credit activities affect your credit score.

Building good financial habits is the best way to get a high score and keep it.  Here are 8 tips to help you build those healthy financial habits and keep your credit score high:

  1. Don’t apply for credit unless absolutely necessary
  • Reduce the number of credit card applications you submit.  Every time your apply for a credit card they do a credit check, these affect you credit score because multiple credit card applications implies you may be in a difficult Financial situation.  The exception is having multiple credit checks in a short period of time for either a mortgage or car loan, this is considered shopping around for the best deal, and therefore is not as harmful to your score.
  • And try to maintain a good “credit mix” – a mixture of credit cards and loans
  1. Be aware of overall credit utilization
    • You are better off to have two credit cards at 50% of the limit than you are to have one maxed out and another at zero.  It is not total dollar value of debt, but total debt as compared to available credit.
  2. Always pay at least the minimum payment by the due date, and if you can pay the bill in full
    • Pay all collections you may have, and avoid letting any disputes get that far.  In a dispute, you are better off to pay the account and then fight with the company for a refund, than to withhold funds and get sent to collections.
    • If you tend to be forgetful set up payment reminders or automatic debits
  3. Don’t go over your limit on your credit cards.
    • Ideally, you would like your credit card balance to be below 50% of your limit, but definitely not more than 70%
  4. Protect yourself from Identity theft
    • Be cautious when giving out personal information over the phone, through mail, or on the internet. 
    • Limit the amount of id you carry with you.  Keep items like your birth certificate and social insurance card at home in a safe unless you need them with you for a particular purpose.
    • Shred all old financial documents instead of just recycling or throwing them out.
    • If you think you have been the victim of identity theft:
      • File a fraud report with your local police
      • Call your bank and credit card providers right away
      • Contact Canada’s credit reporting agencies (Equifax and TransUnion),
  5. Reduce your debt. I know easier said than done, here are some tips:       
    • Have a plan with clear goals and deadlines, and make sure they are achievable
    • Look at your budget, and if you don’t have a budget making one may be a good idea to help you see where you stand financially. You may be surprised at how much you actually spend eating out compared to what you spend on groceries.
    • Try negotiating a lower rate with your credit card company.
    • Pay mostly with cash, this will help you to be more conscious about your spending
    •  And lastly, if you really are having trouble managing your debt you may want to look into debt consolidation.  Debt consolidation is a low interest loan which combines your entire debit into one, giving you only one payment to worry about.
  6. Pull your credit report at least once a year to review for accuracy. 
    • It is free if you order by mail.  Don’t pay for a credit score from Equifax, as it is not the same score that lenders use anyway.  This score is good to see if your credit is going in the right direction, but it is not an indicator of what mortgage you may qualify for.
  7. If trying to build your score, try using credit card every second month like this:
    • Use card for something you normally buy, like gas or groceries
    • Wait for the bill to come in the mail (don’t rush home and pay the card off, let the bill come showing this purchase balance)
    • Pay the card in full by the due date.   You won’t have any interest if you pay it in full.
    • Don’t use the card again, wait a full month for the next bill to come in the mail showing the zero balance.
    • Repeat.
    • Equifax is all computer algorithms.  It doesn’t know if you are paying your card off in full each month, or just carrying the same balance.  By using the card every other month as described, you are showing that you have a balance, paid it off, etc.  This really works to increase your score much faster than most other ways.

Increasing your credit score may not be easy and it may take time but it is worth it, especially if you ever plan to purchase a home or get a car loan. 

If you have any questions about credit scores or mortgages please give us a call at (250)898-8821 or Toll Free at 1-866-898-8821.

What is Title Insurance??

First what is a Title?

Your property’s title is legal proof that you do in fact own your property and describes your right to the land.  This concept is sometimes confused with a property deed which is the legal document that transfers title from one person to another.

 

What does Title Insurance Protect Me From?

Typical insurances such as life or home insurance protect you from events that may happen in the future, for instance fire or accidental death.  Title Insurance on the other hand protects you from events which happened in the past, such as survey or public record errors, and unknown title defects.

Each Title Insurance Policy is different, but typically title insurance covers:

  • Title Fraud – usually involves someone using stolen personal information or forged documents to transfer the title of your home to themselves
    (or an accomplice), then taking out a mortgage on the property and disappearing with the money
  • Unknown Title Defects – title issues that prevent you from having clear ownership of the property
  • Encroachment Issues – an example of this would be if you discover that a structure on your property goes into your neighbour’s property
  • Construction done by a previous owner without permits – imagine if the previous owner removed a wall not realizing it was structurally supportive.  When you first moved in you loved the open concept but slowly you notice second floor is starting to sink. How much do you think it would cost to fix that mistake?
  • Legal Service Coverage protects against lawyers making mistakes during purchase
  • Survey or Public Record Errors
  • Existing Undisclosed Liens
  • Endorsement can be added for Well Water and/or Septic System defects

 

Title Insurance does not cover events such as:

  • Zoning bylaw or building code violations you create yourself
  • Environmental hazards
  • Native land claims
  • Known title defects
  • Issues which would have been discovered with a new survey or inspection of the property (property is smaller then you originally thought)

How much will this cost me?

The cost of Title Insurance varies based on the value of your property and which company you choose to go with.  Title Insurance is a one time premium that lasts as long as you own your home, and depending on your policy it maybe able to extend to heirs, a spouse in the event of divorce, or to children when the property is transferred from parents for nominal consideration. Though usually purchased when you buy your home, Title Insurance can be bought anytime after you have purchased your home. 

 

So where do I sign?

If you think Title Insurance maybe for you, contact your lawyer to discuss your options.

Before you sign on the dotted line here are a few tips to think about:

  • Make sure your property is insured for its full value
  • If you are purchasing your Title Insurance when you are buying your home, make sure the policy takes effect on your closing date
  • Make sure you understand what your policy covers and does not cover, and if you have any questions make sure you ask your lawyer or insurance provider.

 

Your Island Mortgage Team is here for you. If you have any questions concerning
mortgages, please contact us 1-866-898-8821.

 

Article written by: Jessica Cruickshank (Your Island Mortgage Team - Administrative Assistant)

Moving Check List

You have found the home of your dreams; your mortgage is all sorted out, now what? Moving Day!!

Moving day can be exciting, stressful, and even emotional all at the same time.  Your Island Mortgage Team cares about your entire home owning experience, and we want to help make it as stress free as possible.

 

Here are some tips to help make your move go more smoothly.

  • Use colored duct tape to easily and quickly mark boxes while packing.  Colour code each room in your home and stick a piece of the coordinating color of duct tape on the box for which room it is destined for.  This will make it easier to identify which box goes where.
  • Keep the contents of smaller drawers in zip lock bags.
  • Don’t have any of those fancy wardrobe boxes? Make it easy to transport hanging clothing by putting them in trash bags.

  • While moving use an elastic band to keep your door from latching closed.  Loop the band around the inner and outer knobs and over the door latch.  This is especially helpful if you are moving out of an apartment whose door likes to lock automatically.
  • Have lots of heavy books? Save your back and pack them in rolling suitcases to make them easy to transport.
  • Check out restaurants in your new neighbour hood before moving day. This way when dinner time rolls around while you are unpacking you aren’t struggling to figure out where to order from.
  • Pack essentials for your first night such as sheets and shower curtains in your new place in clear plastic totes. 

  • When dissembling furniture put all of the small pieces such as screws, nuts, and bolts into a zip lock bag. Either label the bags or use tape to the bag to the piece of furniture so it is easy to find when it comes time to put it back together.
  • Use toilet paper rolls to pack cords and wires.  Not only does this keep them from getting all tangled you can write on the toilet paper roll what the cord is for.
  • The first thing you should set up is your bed.

 

And the most important tip:

 

  • Start organizing your move early.  Check out the Your Island Mortgage Team Moving Check List to make sure you stay on track with everything that needs to be done. Just click the link below:

Your Island Mortgage - Moving Check List

 

Your Island Mortgage Team is here for you.  If you have any questions concerning mortgages please don’t hesitate to call us 250-898-8821 or toll free 1-866-898-8821

 

Have any Moving Tips you would like to Share? Feel free to leave a comment below.

 

-article written by: Jessica Cruickshank (Your Island Mortgage Team - Administrative Assistant)

“This house would be perfect, if only…”

The Only Thing You Can’t Change is Location…


You’ve been searching for what seems like an eternity. The homes you are seeing are great except...

The kitchen needs updating… Who would love green shag carpet…in a bathroom? … Harvest Gold Appliances just aren’t your style… You love the neighbours but… a fence would be great… The Basement needs finishing…

You have saved up your down payment and closing costs, and a small emergency fund… green shag  is unpleasant but not an emergency… right?

That’s right. In the Grand Scheme of things, green shag is not an emergency. And there are great, cost-effective ways to turn that “almost” perfect house into your perfect home (and likely add some equity at the same time!). Here are just a few ways you can do this:

 


Cashback Mortgages

A cashback mortgage is a mortgage product that offers a percentage of cashback to the borrower at funding. The percentage usually ranges from 1 to 5% of the total loan amount (for example, a $200,000 mortgage with a 5% Cashback would grant the borrower $10,000. These loans are a bit higher than best rates (not much at all!). The cashback cannot be used for your down payment, but it can be used to pay off or down debt, new appliances or home improvements or even closing costs. When considering penalties for these products, the cash-back amounts are usually pro-rated, and if you decide to break your mortgage term, you will be looking at the penalty for breaking the mortgage, as well as the pro-rated balance of the cash-back portion.

These products are available a bit higher rate. It might be worth keeping in mind that the rates are generally still much lower than those on lines of credit and/or credit cards. Cashback mortgages are available at 3 and 5 year terms.


Purchase Plus Improvements

A Purchase Plus Improvements mortgage allows for borrower to borrow up to 10% of the total loan amount, to a maximum of $40,000. The borrower collects quotes and estimates for the work to be done, and submits these when they are applying for their mortgage funding. When the lender approves the application and the property is purchased, the borrower has the work completed and notifies their mortgage broker that the projects are complete. The broker arranges for an appraiser to come out and confirm the work is completed. Once confirmed, the lender advances the funds to the borrower’s lawyer or notary, and they release the funds to the client to pay the contractors.

In this instance, the borrower must have at least 5% down payment on the total amount to be advanced. So, if you are looking at purchasing a $200,000 home, and want to borrow $20,000 for improvements, you would need to have $11,000 for down payment (5% of $220,000), plus closing costs.
These products are available at best available rates, generally for at least 3 or 5 year terms.
 

Construction or Draw Mortgages

Now let’s say you find a home that is in the perfect spot. But the house is very far from perfect, and it’s going to take more than 10% of the purchase price to bring it closer to perfect. This is when you might consider a construction or draw mortgage. This allows you to borrow more than 10% of the purchase price. However, it also changes the structure of the loan. There are options out there that will allow you to make draws on large renovation projects (similar to a new build). There are things to consider, like the costs to have the appraiser confirm that the work is completed before the draws are advanced, and some lenders might restrict the number of draws (for example, 3 draws of $25,000 for a $75,000 renovation). Payment structure can vary widely, so it is best to speak with your Mortgage Broker; we will walk you through the steps and help you to decide the best mortgage to fit your budget, plans and financial situation.

One more thing to consider is combining one of these great, low-rate mortgage options with improving the Energy Efficiency of the home you are purchasing. There are a number of financial incentives offered by insurers and governments to people who are upgrading the energy efficiency of their home. These options are available when your mortgage is up for renewal – why not take advantage of the record low rates available to not only save money on your payments, but add equity to your property.

This post contributed by team member Amanda Jacobson.

If you have any questions, or for more information, please do not hesitate to contact Your Island Mortgage Team today!

250-898-8821 or toll free 1-866-898-8821
 

Is your mortgage coming up for renewal?

When you first sign your mortgage contract, you are establishing the rate and conditions under which you will be obligated to pay to your lender for the term of your contract. What happens when this term is up and there is still a balance owing on your mortgage?

If your current mortgage is with a financial institution that falls under federal regulations (such as a bank), the lender MUST provide you with a renewal statement at least 21 days before the end of the existing term. If the lender does not intend to renew your mortgage, it must notify you 21 days prior to the end of your term as well. You can expect that your mortgage holder will begin contacting you at up to 6 months before your renewal date.

Your lender may offer “special” rates or incentives if you sign your renewal early, in an effort to deter you from shopping for the best renewal rate and terms. An astonishing amount of Canadians simply sign their renewals and don’t think about it again, a hasty move that could cost them thousands.

At Your Island Mortgage Team, we believe that your mortgage renewal is not a formality to endure, but rather an opportunity to revisit your (likely) biggest investment and ensure that it is working for you!

It may save some time to simply sign on the dotted line - but it will very likely save you money to have a professional at Your Island Mortgage Team review your mortgage before your renewal date to ensure that your terms and conditions are meeting your needs, and you are paying the lowest rate. We can hold a renewal rate for up to 120 days, and can tailor the renewal terms to you.  Why try to fit you into the box, when we can build the box to fit you?

Here are just a few reasons why you shouldn’t “sign on the line and carry on”:

  • Lenders rarely offer their best rates at renewal. They count on customers simply signing the renewal letter, without question, and carry on. That’s leaving a lot of money on the table!
  • The mortgage lending market is very competitive! There are dozens of lenders available to you through a mortgage professional that want your business. They offer great rates, plus flexible and innovative products that your current lender may not have available.
  • Your situation may have changed. Life happens! We will review your finances with you and make sure that your mortgage works for you, saving you money and headaches for years to come!
  • The mortgage market has changed. Many banks are trending toward collateral charge mortgages, which can be confusing and have significant effects on your equity. We will explain any questions you may have so that you understand how your mortgage works and the terms and conditions you are signing up for!

The best reason is that our services are free to you, the borrower*. Our goal is to save you money and ensure that your mortgage is working for you! Call our office and speak with one of our mortgage professionals today.

Office 250-898-8821 or Toll Free 1-866-898-8821

When you think Mortgage – think Your Island Mortgage Team.

*OAC, E&OE. Some exceptions apply; all fees are discussed up front, if applicable.

Fixed Versus Variable - some I.D.E.A.S. to consider

I.D.E.A.S. For Choosing Between A Fixed And Variable Rate

Best-Mortgage-termsThe first question people often ask when deciding between a fixed and variable mortgage is: “Where do you see rates going?”  

They assume we as mortgage planners know…and of course we don’t.  No one does. 

We can, and do, present a variety of possible rate scenarios based on:

  • where we are in the rate cycle
  • how rates have performed after past recessions
  • and other available research.

But you never know for sure where the rate setters (the Bank of Canada and bond traders) will take the market.

Aside from reading the tea leaves on rates, the best thing a borrower can do is measure his/her ability to handle rising payments. To gauge that, we use a handy acronym called IDEAS.

IDEAS stands for Income, Debt, Equity, Assets, Sensitivity to Risk.

More specifically:

  • Income -- Is the borrower’s income stable and reliable?
    • Is there a low chance of income interruption?  (You don’t want payments to soar if there’s a chance you’ll be out of a job for a while)
    • Does the borrower earn enough to pay his/her variable-rate mortgage as if it were a 5-year fixed mortgage? (i.e.,  Can he/she afford to set his/her payments higher to offset the effect of rising rates?)
  • Debt -- Does the client have a reasonable debt ratio?
    • Is the person’s total debt ratio under 40% based on the posted 5-year fixed qualification rate (so that his/her budget isn’t crushed if prime rate jumps to 6.25% or more)?
    • Can the borrower withstand 50% higher payments if rates rocketed up 4%?
  • Equity -- Does the client have enough equity?
    • Is the loan-to-value under 80-85% so the person could refinance if absolutely needed?
  • Assets -- Does the client have enough assets?
    • Preferably 6 months of living expenses (in liquid assets) to act as a payment buffer if needed.
    • Does the person have a credit line as a backup source of liquidity?
  • Sensitivity (to Risk) -- Can the client accept risk?
    • If rates increase 2.50%, can he/she handle payments rising over 30%? What if rates jump 4%?
    • Does he/she understand that a fixed rate will save him/her more money up to 23% of the time--according to popular research? (Fixed or Variable)

If most, or all, of the answers to the above are affirmative, a variable rate is something the homeowner can entertain.

After evaluating someone against the IDEAS measure, we then discuss (among other things):

  • The probability they'll need to break their mortgage early or increase it before maturity (each of which could impact their total borrowing cost due to differences in fixed and variable penalties)
  • Future interest rate scenarios, and how rising rates could impact payments and amortization time.
  • The tools that variable rate holders can use to deal with payment risk, like “hold-the-payment” features (which don’t eliminate payment risk entirely) and hybrid mortgages.
  • The pros and cons of relying on a rate conversion (i.e.,  locking in a variable rate)
  • The cost comparison of variable versus fixed terms, based on future rate assumptions.

For most people, the decision between fixed and variable will either save them thousands or cost them thousands.  The goal is to try and take as much of the gamble out of the equation as possible.

 

Article copied from: http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/03/ideas-for-choosing-between-a-fixed-and-variable-rate.html

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5 Tips for Renewing Your Mortgage

Mortgage stress tests mean borrowers no longer negotiating from position of power

Mark Ting · for CBC News · 

 

Until recently, homeowners looked forward to renewing their mortgages as they were likely renewing at a lower rate and had several financial institutions competing for their business.

Consumers were negotiating from a position of power knowing they could leave without penalty if their demands were not met.

 

This is no longer the case as much of the negotiating power has shifted back to the financial institutions due to the expansion of the mortgage stress test.

When your mortgage is up for renewal, your financial institution will mail a letter stating the new term and interest rate of your mortgage. In most cases, you are not subject to the mortgage stress test and are simply signing the letter to renew your mortgage — easy.

Consider moving mortgage

The downside to signing the renewal letter is that you are giving up your ability to negotiate. Unfortunately, if a competitor offers you a better rate you want to accept, you will be subject to the stress test to re-qualify for your mortgage.

As of January 1, 2018, all home buyers, regardless of the size of their down payment are subject to the stress test. The purpose of the test is to assess a buyers' ability to afford mortgage payments at higher interest rates.

Borrowers must qualify based on the greater of Bank of Canada qualifying rate or your contracted rate plus two per cent. It's a federal initiative, so only banks must follow the new rules. However most provincial-run financial institutions, such as credit union, have voluntarily adopted the stress test's higher standards.

If you fail the stress test, you will not be able to move your mortgage and will have to accept the rate your existing lender is offering. If you are confident that you can pass the mortgage stress test, go ahead and shop around.

Gather all of the competing offers and request your current lender match the rate and/or conditions. If they are unable to so, consider moving your mortgage if the discrepancy is large enough and the new lender is willing to absorb most of the start-up costs.

I would also suggest you speak to a mortgage broker as he or she can determine the competitiveness of your renewal offer and your likelihood of passing the stress test.

If it is determined that you can pass the stress test, a broker will lay out the various options so that you are able to make an informed decision.

5 tips

My top 5 tips for someone renewing their mortgage:

  • Do not sign the renewal letter that is automatically sent to you in advance of your renewal date. Always speak to someone and negotiate.
  • Consider the financial institution's reputation, flexibility regarding pre-payments and rates when deciding on a lender. The stress test makes it much more difficult to change lenders so best to pick one you are comfortable remaining with long term.
  • Your credit score is important. Make your payments on time and try to avoid excess debt as the rate you will be offered is risk based. Try to put yourself in a position to pass the stress test so that more lenders will compete for your business.
  • If you need a loan, delay applying for it until after your mortgage renews. That loan could be the difference between passing or failing the stress test.
  • If you have a loan and are planning to pay it off, do so before you renew the mortgage (ideally a couple of months before). By eliminating that debt, you will be perceived as less risky and will likely be offered a better rate.

If you would like to discuss your renewal options,  please call Your Island Mortgage Team for assistance: 250-898-8821.

Sold Data Coming to Realtor.ca

CREA’s Board of Directors has voted to add sold and historical data to the property listings on Realtor.ca without the need for a login.

In a message to real estate boards across the country, CREA says the move comes “in order to meet consumer demand and at the request of Realtors and boards.”

It says, “In addition to responding to requests from members, this will ensure we continue to offer leading edge services on the best real estate website in Canada.”

A Competition Tribunal decision in July 2016 found that by not including sold and other data in its VOW feed to members, TREB had engaged in anti-competitive acts. An appeal court upheld the decision and on Aug. 23 of this year, the Supreme Court of Canada announced that it would not hear TREB’s appeal. CREA supported TREB at the tribunal and had intervenor status in the proceedings.

TREB is now supplying the disputed data to its member VOWs.

CREA media relations officer Pierre Leduc says that before the sold data can be displayed on Realtor.ca, each real estate board must request that the information be added. CREA will then work with the boards, the provincial associations and the regulators to ensure that it complies with all laws and regulations.

“We’ll have to check with the boards to see what historic sold data they have access to, and how far back that data will go,” says Leduc.

Only historic sold prices will be posted and not pending solds, he says. Pending solds were part of the Competition Tribunal order for VOWs, but consumers and Realtors are concerned about privacy issues on deals that have yet to close.

Leduc says CREA hopes to have the sold data rolled out on Realtor.ca as soon as possible.

For more information about mortgages, please contact:

Angela Zumbo, Accredited Mortgage Professional
The Mortgage Centre – Your Island Mortgage Team
Office: 250-898-8821
Email: angela@yourislandmortgage.ca

New Mortgage Rules 2018

New Mortgage Rules Coming January 1, 2018

The government is changing how Canadians must qualify for a Conventional Mortgage.  Starting January 1, 2018, anyone purchasing a property with 20% or more down payment, or anyone refinancing an existing mortgage, must qualify at the greater of the Bank of Canada Benchmark Rate (currently 4.99%) or the Contract Rate of the mortgage plus 2% (ie. 3.29% + 2% = 5.29%).

The effect of this change on the average mortgage borrower will be a 20% reduction in borrowing power.  For example, if you can qualify today for a mortgage of $400,000, then after January 1st this maximum will be reduced to $320,000.

The new rules are being implemented as follows:

  • If the Purchase Contract is dated prior to January 1, 2018, regardless of the Closing Date, the old rules will apply.
  • If the Purchase Contract is dated January 1, 2018 or later, the new rules will apply.
  • Any Mortgage Refinance submitted and approved under the old rules prior to January 1, 2018 must close within 120 days of the new year.
  • Any pre-approvals that have not been activated with an accepted Purchase Contract prior to January 1, 2018 will not preserve qualification under the old rules, although the associated rate hold will stay intact.

For more information about these new mortgage rules and how they will affect you, please contact:

Angela Zumbo, Accredited Mortgage Professional
The Mortgage Centre – Your Island Mortgage Team
Office: 250-898-8821
Email: angela@yourislandmortgage.ca

New Mortgage Rules

New Mortgage Rules came into effect on October 17.  Here are the basics of the new mortgage rules and what they mean for you…

High Ratio purchases will be “Stress Tested”:

When a buyer has a down payment of less than 20% of the purchase price, this is considered a High Ratio purchase and must be insured by one of Canada’s three insurers, which are CMHC, Genworth or Canada Guaranty.  All High Ratio mortgage terms must now be “stress tested” or qualified using the Bank of Canada benchmark rate, which as of today is 4.64%.  The stress test effectively reduces a buyer’s purchasing power by approximately 20%.

If you are feeling concerned, there are a few solutions for buyers who do not qualify under this new rule:

  • Increase down payment to make up the difference in qualification amount
  • Add a qualified co-borrower to the application (someone with good credit and income)
  • Purchase a lower priced property

Portfolio Insurance must follow same qualification rules as High Ratio:

Lenders that use Portfolio Insurance (non-bank lenders) for mortgages with down payments of 20% or more must follow the same qualification rules as High Ratio.  The property being purchased must be owner occupied, and cannot be a rental or an investment property.  The effects to buyers under this rule are:

  • Limits options for difficult to place purchases
  • Limits ability to refinance an existing property for down payment on another property purchase
  • Eliminates competition, allows banks to charge higher rates
  • Limits options for purchasing multiple rental properties under residential financing terms

Capital Gains Exemption for sale of Principal Residences to be reported on income tax returns:

A sale of a principal residence must now be reported on income tax returns, effective for the 2016 tax year.  Principal Residence Exemptions (PRE) will be claimed upon tax filing.  You are only allowed to claim 1 PRE per year and the property must be owner occupied at the time of sale.  If you are uncertain about your PRE eligibility, we encourage you to speak with your accountant or tax preparer.

What is the reason for the New Rules?

“These new rules are being put in to place to protect the financial security of Canadians and support the long term stability of the housing market in Canada.”

If you are concerned about anything surrounding the new rules, how they affect you directly, and what your options are moving forward, please call Your Island Mortgage Team for assistance: 250-898-8821.

8 Tips For Getting and Keeping a High Credit Score

Credit Scores can be a little intimidating, especially since your credit score affects how much money you can borrow at what interest rate, and not many people understand how Credit Scores work.  There are ways to increase your credit score and keep it high. 

We wrote a post about understanding your credit score, even though it is a few years old it is still relevant. The article is a good read to learn more about how your credit activities affect your credit score.

Building good financial habits is the best way to get a high score and keep it.  Here are 8 tips to help you build those healthy financial habits and keep your credit score high:

  1. Don’t apply for credit unless absolutely necessary
  • Reduce the number of credit card applications you submit.  Every time your apply for a credit card they do a credit check, these affect you credit score because multiple credit card applications implies you may be in a difficult Financial situation.  The exception is having multiple credit checks in a short period of time for either a mortgage or car loan, this is considered shopping around for the best deal, and therefore is not as harmful to your score.
  • And try to maintain a good “credit mix” – a mixture of credit cards and loans
  1. Be aware of overall credit utilization
    • You are better off to have two credit cards at 50% of the limit than you are to have one maxed out and another at zero.  It is not total dollar value of debt, but total debt as compared to available credit.
  2. Always pay at least the minimum payment by the due date, and if you can pay the bill in full
    • Pay all collections you may have, and avoid letting any disputes get that far.  In a dispute, you are better off to pay the account and then fight with the company for a refund, than to withhold funds and get sent to collections.
    • If you tend to be forgetful set up payment reminders or automatic debits
  3. Don’t go over your limit on your credit cards.
    • Ideally, you would like your credit card balance to be below 50% of your limit, but definitely not more than 70%
  4. Protect yourself from Identity theft
    • Be cautious when giving out personal information over the phone, through mail, or on the internet. 
    • Limit the amount of id you carry with you.  Keep items like your birth certificate and social insurance card at home in a safe unless you need them with you for a particular purpose.
    • Shred all old financial documents instead of just recycling or throwing them out.
    • If you think you have been the victim of identity theft:
      • File a fraud report with your local police
      • Call your bank and credit card providers right away
      • Contact Canada’s credit reporting agencies (Equifax and TransUnion),
  5. Reduce your debt. I know easier said than done, here are some tips:       
    • Have a plan with clear goals and deadlines, and make sure they are achievable
    • Look at your budget, and if you don’t have a budget making one may be a good idea to help you see where you stand financially. You may be surprised at how much you actually spend eating out compared to what you spend on groceries.
    • Try negotiating a lower rate with your credit card company.
    • Pay mostly with cash, this will help you to be more conscious about your spending
    •  And lastly, if you really are having trouble managing your debt you may want to look into debt consolidation.  Debt consolidation is a low interest loan which combines your entire debit into one, giving you only one payment to worry about.
  6. Pull your credit report at least once a year to review for accuracy. 
    • It is free if you order by mail.  Don’t pay for a credit score from Equifax, as it is not the same score that lenders use anyway.  This score is good to see if your credit is going in the right direction, but it is not an indicator of what mortgage you may qualify for.
  7. If trying to build your score, try using credit card every second month like this:
    • Use card for something you normally buy, like gas or groceries
    • Wait for the bill to come in the mail (don’t rush home and pay the card off, let the bill come showing this purchase balance)
    • Pay the card in full by the due date.   You won’t have any interest if you pay it in full.
    • Don’t use the card again, wait a full month for the next bill to come in the mail showing the zero balance.
    • Repeat.
    • Equifax is all computer algorithms.  It doesn’t know if you are paying your card off in full each month, or just carrying the same balance.  By using the card every other month as described, you are showing that you have a balance, paid it off, etc.  This really works to increase your score much faster than most other ways.

Increasing your credit score may not be easy and it may take time but it is worth it, especially if you ever plan to purchase a home or get a car loan. 

If you have any questions about credit scores or mortgages please give us a call at (250)898-8821 or Toll Free at 1-866-898-8821.

What is Title Insurance??

First what is a Title?

Your property’s title is legal proof that you do in fact own your property and describes your right to the land.  This concept is sometimes confused with a property deed which is the legal document that transfers title from one person to another.

 

What does Title Insurance Protect Me From?

Typical insurances such as life or home insurance protect you from events that may happen in the future, for instance fire or accidental death.  Title Insurance on the other hand protects you from events which happened in the past, such as survey or public record errors, and unknown title defects.

Each Title Insurance Policy is different, but typically title insurance covers:

  • Title Fraud – usually involves someone using stolen personal information or forged documents to transfer the title of your home to themselves
    (or an accomplice), then taking out a mortgage on the property and disappearing with the money
  • Unknown Title Defects – title issues that prevent you from having clear ownership of the property
  • Encroachment Issues – an example of this would be if you discover that a structure on your property goes into your neighbour’s property
  • Construction done by a previous owner without permits – imagine if the previous owner removed a wall not realizing it was structurally supportive.  When you first moved in you loved the open concept but slowly you notice second floor is starting to sink. How much do you think it would cost to fix that mistake?
  • Legal Service Coverage protects against lawyers making mistakes during purchase
  • Survey or Public Record Errors
  • Existing Undisclosed Liens
  • Endorsement can be added for Well Water and/or Septic System defects

 

Title Insurance does not cover events such as:

  • Zoning bylaw or building code violations you create yourself
  • Environmental hazards
  • Native land claims
  • Known title defects
  • Issues which would have been discovered with a new survey or inspection of the property (property is smaller then you originally thought)

How much will this cost me?

The cost of Title Insurance varies based on the value of your property and which company you choose to go with.  Title Insurance is a one time premium that lasts as long as you own your home, and depending on your policy it maybe able to extend to heirs, a spouse in the event of divorce, or to children when the property is transferred from parents for nominal consideration. Though usually purchased when you buy your home, Title Insurance can be bought anytime after you have purchased your home. 

 

So where do I sign?

If you think Title Insurance maybe for you, contact your lawyer to discuss your options.

Before you sign on the dotted line here are a few tips to think about:

  • Make sure your property is insured for its full value
  • If you are purchasing your Title Insurance when you are buying your home, make sure the policy takes effect on your closing date
  • Make sure you understand what your policy covers and does not cover, and if you have any questions make sure you ask your lawyer or insurance provider.

 

Your Island Mortgage Team is here for you. If you have any questions concerning
mortgages, please contact us 1-866-898-8821.

 

Article written by: Jessica Cruickshank (Your Island Mortgage Team - Administrative Assistant)

Moving Check List

You have found the home of your dreams; your mortgage is all sorted out, now what? Moving Day!!

Moving day can be exciting, stressful, and even emotional all at the same time.  Your Island Mortgage Team cares about your entire home owning experience, and we want to help make it as stress free as possible.

 

Here are some tips to help make your move go more smoothly.

  • Use colored duct tape to easily and quickly mark boxes while packing.  Colour code each room in your home and stick a piece of the coordinating color of duct tape on the box for which room it is destined for.  This will make it easier to identify which box goes where.
  • Keep the contents of smaller drawers in zip lock bags.
  • Don’t have any of those fancy wardrobe boxes? Make it easy to transport hanging clothing by putting them in trash bags.

  • While moving use an elastic band to keep your door from latching closed.  Loop the band around the inner and outer knobs and over the door latch.  This is especially helpful if you are moving out of an apartment whose door likes to lock automatically.
  • Have lots of heavy books? Save your back and pack them in rolling suitcases to make them easy to transport.
  • Check out restaurants in your new neighbour hood before moving day. This way when dinner time rolls around while you are unpacking you aren’t struggling to figure out where to order from.
  • Pack essentials for your first night such as sheets and shower curtains in your new place in clear plastic totes. 

  • When dissembling furniture put all of the small pieces such as screws, nuts, and bolts into a zip lock bag. Either label the bags or use tape to the bag to the piece of furniture so it is easy to find when it comes time to put it back together.
  • Use toilet paper rolls to pack cords and wires.  Not only does this keep them from getting all tangled you can write on the toilet paper roll what the cord is for.
  • The first thing you should set up is your bed.

 

And the most important tip:

 

  • Start organizing your move early.  Check out the Your Island Mortgage Team Moving Check List to make sure you stay on track with everything that needs to be done. Just click the link below:

Your Island Mortgage - Moving Check List

 

Your Island Mortgage Team is here for you.  If you have any questions concerning mortgages please don’t hesitate to call us 250-898-8821 or toll free 1-866-898-8821

 

Have any Moving Tips you would like to Share? Feel free to leave a comment below.

 

-article written by: Jessica Cruickshank (Your Island Mortgage Team - Administrative Assistant)

“This house would be perfect, if only…”

The Only Thing You Can’t Change is Location…


You’ve been searching for what seems like an eternity. The homes you are seeing are great except...

The kitchen needs updating… Who would love green shag carpet…in a bathroom? … Harvest Gold Appliances just aren’t your style… You love the neighbours but… a fence would be great… The Basement needs finishing…

You have saved up your down payment and closing costs, and a small emergency fund… green shag  is unpleasant but not an emergency… right?

That’s right. In the Grand Scheme of things, green shag is not an emergency. And there are great, cost-effective ways to turn that “almost” perfect house into your perfect home (and likely add some equity at the same time!). Here are just a few ways you can do this:

 


Cashback Mortgages

A cashback mortgage is a mortgage product that offers a percentage of cashback to the borrower at funding. The percentage usually ranges from 1 to 5% of the total loan amount (for example, a $200,000 mortgage with a 5% Cashback would grant the borrower $10,000. These loans are a bit higher than best rates (not much at all!). The cashback cannot be used for your down payment, but it can be used to pay off or down debt, new appliances or home improvements or even closing costs. When considering penalties for these products, the cash-back amounts are usually pro-rated, and if you decide to break your mortgage term, you will be looking at the penalty for breaking the mortgage, as well as the pro-rated balance of the cash-back portion.

These products are available a bit higher rate. It might be worth keeping in mind that the rates are generally still much lower than those on lines of credit and/or credit cards. Cashback mortgages are available at 3 and 5 year terms.


Purchase Plus Improvements

A Purchase Plus Improvements mortgage allows for borrower to borrow up to 10% of the total loan amount, to a maximum of $40,000. The borrower collects quotes and estimates for the work to be done, and submits these when they are applying for their mortgage funding. When the lender approves the application and the property is purchased, the borrower has the work completed and notifies their mortgage broker that the projects are complete. The broker arranges for an appraiser to come out and confirm the work is completed. Once confirmed, the lender advances the funds to the borrower’s lawyer or notary, and they release the funds to the client to pay the contractors.

In this instance, the borrower must have at least 5% down payment on the total amount to be advanced. So, if you are looking at purchasing a $200,000 home, and want to borrow $20,000 for improvements, you would need to have $11,000 for down payment (5% of $220,000), plus closing costs.
These products are available at best available rates, generally for at least 3 or 5 year terms.
 

Construction or Draw Mortgages

Now let’s say you find a home that is in the perfect spot. But the house is very far from perfect, and it’s going to take more than 10% of the purchase price to bring it closer to perfect. This is when you might consider a construction or draw mortgage. This allows you to borrow more than 10% of the purchase price. However, it also changes the structure of the loan. There are options out there that will allow you to make draws on large renovation projects (similar to a new build). There are things to consider, like the costs to have the appraiser confirm that the work is completed before the draws are advanced, and some lenders might restrict the number of draws (for example, 3 draws of $25,000 for a $75,000 renovation). Payment structure can vary widely, so it is best to speak with your Mortgage Broker; we will walk you through the steps and help you to decide the best mortgage to fit your budget, plans and financial situation.

One more thing to consider is combining one of these great, low-rate mortgage options with improving the Energy Efficiency of the home you are purchasing. There are a number of financial incentives offered by insurers and governments to people who are upgrading the energy efficiency of their home. These options are available when your mortgage is up for renewal – why not take advantage of the record low rates available to not only save money on your payments, but add equity to your property.

This post contributed by team member Amanda Jacobson.

If you have any questions, or for more information, please do not hesitate to contact Your Island Mortgage Team today!

250-898-8821 or toll free 1-866-898-8821
 

Is your mortgage coming up for renewal?

When you first sign your mortgage contract, you are establishing the rate and conditions under which you will be obligated to pay to your lender for the term of your contract. What happens when this term is up and there is still a balance owing on your mortgage?

If your current mortgage is with a financial institution that falls under federal regulations (such as a bank), the lender MUST provide you with a renewal statement at least 21 days before the end of the existing term. If the lender does not intend to renew your mortgage, it must notify you 21 days prior to the end of your term as well. You can expect that your mortgage holder will begin contacting you at up to 6 months before your renewal date.

Your lender may offer “special” rates or incentives if you sign your renewal early, in an effort to deter you from shopping for the best renewal rate and terms. An astonishing amount of Canadians simply sign their renewals and don’t think about it again, a hasty move that could cost them thousands.

At Your Island Mortgage Team, we believe that your mortgage renewal is not a formality to endure, but rather an opportunity to revisit your (likely) biggest investment and ensure that it is working for you!

It may save some time to simply sign on the dotted line - but it will very likely save you money to have a professional at Your Island Mortgage Team review your mortgage before your renewal date to ensure that your terms and conditions are meeting your needs, and you are paying the lowest rate. We can hold a renewal rate for up to 120 days, and can tailor the renewal terms to you.  Why try to fit you into the box, when we can build the box to fit you?

Here are just a few reasons why you shouldn’t “sign on the line and carry on”:

  • Lenders rarely offer their best rates at renewal. They count on customers simply signing the renewal letter, without question, and carry on. That’s leaving a lot of money on the table!
  • The mortgage lending market is very competitive! There are dozens of lenders available to you through a mortgage professional that want your business. They offer great rates, plus flexible and innovative products that your current lender may not have available.
  • Your situation may have changed. Life happens! We will review your finances with you and make sure that your mortgage works for you, saving you money and headaches for years to come!
  • The mortgage market has changed. Many banks are trending toward collateral charge mortgages, which can be confusing and have significant effects on your equity. We will explain any questions you may have so that you understand how your mortgage works and the terms and conditions you are signing up for!

The best reason is that our services are free to you, the borrower*. Our goal is to save you money and ensure that your mortgage is working for you! Call our office and speak with one of our mortgage professionals today.

Office 250-898-8821 or Toll Free 1-866-898-8821

When you think Mortgage – think Your Island Mortgage Team.

*OAC, E&OE. Some exceptions apply; all fees are discussed up front, if applicable.

Fixed Versus Variable - some I.D.E.A.S. to consider

I.D.E.A.S. For Choosing Between A Fixed And Variable Rate

Best-Mortgage-termsThe first question people often ask when deciding between a fixed and variable mortgage is: “Where do you see rates going?”  

They assume we as mortgage planners know…and of course we don’t.  No one does. 

We can, and do, present a variety of possible rate scenarios based on:

  • where we are in the rate cycle
  • how rates have performed after past recessions
  • and other available research.

But you never know for sure where the rate setters (the Bank of Canada and bond traders) will take the market.

Aside from reading the tea leaves on rates, the best thing a borrower can do is measure his/her ability to handle rising payments. To gauge that, we use a handy acronym called IDEAS.

IDEAS stands for Income, Debt, Equity, Assets, Sensitivity to Risk.

More specifically:

  • Income -- Is the borrower’s income stable and reliable?
    • Is there a low chance of income interruption?  (You don’t want payments to soar if there’s a chance you’ll be out of a job for a while)
    • Does the borrower earn enough to pay his/her variable-rate mortgage as if it were a 5-year fixed mortgage? (i.e.,  Can he/she afford to set his/her payments higher to offset the effect of rising rates?)
  • Debt -- Does the client have a reasonable debt ratio?
    • Is the person’s total debt ratio under 40% based on the posted 5-year fixed qualification rate (so that his/her budget isn’t crushed if prime rate jumps to 6.25% or more)?
    • Can the borrower withstand 50% higher payments if rates rocketed up 4%?
  • Equity -- Does the client have enough equity?
    • Is the loan-to-value under 80-85% so the person could refinance if absolutely needed?
  • Assets -- Does the client have enough assets?
    • Preferably 6 months of living expenses (in liquid assets) to act as a payment buffer if needed.
    • Does the person have a credit line as a backup source of liquidity?
  • Sensitivity (to Risk) -- Can the client accept risk?
    • If rates increase 2.50%, can he/she handle payments rising over 30%? What if rates jump 4%?
    • Does he/she understand that a fixed rate will save him/her more money up to 23% of the time--according to popular research? (Fixed or Variable)

If most, or all, of the answers to the above are affirmative, a variable rate is something the homeowner can entertain.

After evaluating someone against the IDEAS measure, we then discuss (among other things):

  • The probability they'll need to break their mortgage early or increase it before maturity (each of which could impact their total borrowing cost due to differences in fixed and variable penalties)
  • Future interest rate scenarios, and how rising rates could impact payments and amortization time.
  • The tools that variable rate holders can use to deal with payment risk, like “hold-the-payment” features (which don’t eliminate payment risk entirely) and hybrid mortgages.
  • The pros and cons of relying on a rate conversion (i.e.,  locking in a variable rate)
  • The cost comparison of variable versus fixed terms, based on future rate assumptions.

For most people, the decision between fixed and variable will either save them thousands or cost them thousands.  The goal is to try and take as much of the gamble out of the equation as possible.

 

Article copied from: http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/03/ideas-for-choosing-between-a-fixed-and-variable-rate.html

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5 Tips for Renewing Your Mortgage

Mortgage stress tests mean borrowers no longer negotiating from position of power

Mark Ting · for CBC News · 

 

Until recently, homeowners looked forward to renewing their mortgages as they were likely renewing at a lower rate and had several financial institutions competing for their business.

Consumers were negotiating from a position of power knowing they could leave without penalty if their demands were not met.

 

This is no longer the case as much of the negotiating power has shifted back to the financial institutions due to the expansion of the mortgage stress test.

When your mortgage is up for renewal, your financial institution will mail a letter stating the new term and interest rate of your mortgage. In most cases, you are not subject to the mortgage stress test and are simply signing the letter to renew your mortgage — easy.

Consider moving mortgage

The downside to signing the renewal letter is that you are giving up your ability to negotiate. Unfortunately, if a competitor offers you a better rate you want to accept, you will be subject to the stress test to re-qualify for your mortgage.

As of January 1, 2018, all home buyers, regardless of the size of their down payment are subject to the stress test. The purpose of the test is to assess a buyers' ability to afford mortgage payments at higher interest rates.

Borrowers must qualify based on the greater of Bank of Canada qualifying rate or your contracted rate plus two per cent. It's a federal initiative, so only banks must follow the new rules. However most provincial-run financial institutions, such as credit union, have voluntarily adopted the stress test's higher standards.

If you fail the stress test, you will not be able to move your mortgage and will have to accept the rate your existing lender is offering. If you are confident that you can pass the mortgage stress test, go ahead and shop around.

Gather all of the competing offers and request your current lender match the rate and/or conditions. If they are unable to so, consider moving your mortgage if the discrepancy is large enough and the new lender is willing to absorb most of the start-up costs.

I would also suggest you speak to a mortgage broker as he or she can determine the competitiveness of your renewal offer and your likelihood of passing the stress test.

If it is determined that you can pass the stress test, a broker will lay out the various options so that you are able to make an informed decision.

5 tips

My top 5 tips for someone renewing their mortgage:

  • Do not sign the renewal letter that is automatically sent to you in advance of your renewal date. Always speak to someone and negotiate.
  • Consider the financial institution's reputation, flexibility regarding pre-payments and rates when deciding on a lender. The stress test makes it much more difficult to change lenders so best to pick one you are comfortable remaining with long term.
  • Your credit score is important. Make your payments on time and try to avoid excess debt as the rate you will be offered is risk based. Try to put yourself in a position to pass the stress test so that more lenders will compete for your business.
  • If you need a loan, delay applying for it until after your mortgage renews. That loan could be the difference between passing or failing the stress test.
  • If you have a loan and are planning to pay it off, do so before you renew the mortgage (ideally a couple of months before). By eliminating that debt, you will be perceived as less risky and will likely be offered a better rate.

If you would like to discuss your renewal options,  please call Your Island Mortgage Team for assistance: 250-898-8821.

Sold Data Coming to Realtor.ca

CREA’s Board of Directors has voted to add sold and historical data to the property listings on Realtor.ca without the need for a login.

In a message to real estate boards across the country, CREA says the move comes “in order to meet consumer demand and at the request of Realtors and boards.”

It says, “In addition to responding to requests from members, this will ensure we continue to offer leading edge services on the best real estate website in Canada.”

A Competition Tribunal decision in July 2016 found that by not including sold and other data in its VOW feed to members, TREB had engaged in anti-competitive acts. An appeal court upheld the decision and on Aug. 23 of this year, the Supreme Court of Canada announced that it would not hear TREB’s appeal. CREA supported TREB at the tribunal and had intervenor status in the proceedings.

TREB is now supplying the disputed data to its member VOWs.

CREA media relations officer Pierre Leduc says that before the sold data can be displayed on Realtor.ca, each real estate board must request that the information be added. CREA will then work with the boards, the provincial associations and the regulators to ensure that it complies with all laws and regulations.

“We’ll have to check with the boards to see what historic sold data they have access to, and how far back that data will go,” says Leduc.

Only historic sold prices will be posted and not pending solds, he says. Pending solds were part of the Competition Tribunal order for VOWs, but consumers and Realtors are concerned about privacy issues on deals that have yet to close.

Leduc says CREA hopes to have the sold data rolled out on Realtor.ca as soon as possible.

For more information about mortgages, please contact:

Angela Zumbo, Accredited Mortgage Professional
The Mortgage Centre – Your Island Mortgage Team
Office: 250-898-8821
Email: angela@yourislandmortgage.ca

New Mortgage Rules 2018

New Mortgage Rules Coming January 1, 2018

The government is changing how Canadians must qualify for a Conventional Mortgage.  Starting January 1, 2018, anyone purchasing a property with 20% or more down payment, or anyone refinancing an existing mortgage, must qualify at the greater of the Bank of Canada Benchmark Rate (currently 4.99%) or the Contract Rate of the mortgage plus 2% (ie. 3.29% + 2% = 5.29%).

The effect of this change on the average mortgage borrower will be a 20% reduction in borrowing power.  For example, if you can qualify today for a mortgage of $400,000, then after January 1st this maximum will be reduced to $320,000.

The new rules are being implemented as follows:

  • If the Purchase Contract is dated prior to January 1, 2018, regardless of the Closing Date, the old rules will apply.
  • If the Purchase Contract is dated January 1, 2018 or later, the new rules will apply.
  • Any Mortgage Refinance submitted and approved under the old rules prior to January 1, 2018 must close within 120 days of the new year.
  • Any pre-approvals that have not been activated with an accepted Purchase Contract prior to January 1, 2018 will not preserve qualification under the old rules, although the associated rate hold will stay intact.

For more information about these new mortgage rules and how they will affect you, please contact:

Angela Zumbo, Accredited Mortgage Professional
The Mortgage Centre – Your Island Mortgage Team
Office: 250-898-8821
Email: angela@yourislandmortgage.ca

New Mortgage Rules

New Mortgage Rules came into effect on October 17.  Here are the basics of the new mortgage rules and what they mean for you…

High Ratio purchases will be “Stress Tested”:

When a buyer has a down payment of less than 20% of the purchase price, this is considered a High Ratio purchase and must be insured by one of Canada’s three insurers, which are CMHC, Genworth or Canada Guaranty.  All High Ratio mortgage terms must now be “stress tested” or qualified using the Bank of Canada benchmark rate, which as of today is 4.64%.  The stress test effectively reduces a buyer’s purchasing power by approximately 20%.

If you are feeling concerned, there are a few solutions for buyers who do not qualify under this new rule:

  • Increase down payment to make up the difference in qualification amount
  • Add a qualified co-borrower to the application (someone with good credit and income)
  • Purchase a lower priced property

Portfolio Insurance must follow same qualification rules as High Ratio:

Lenders that use Portfolio Insurance (non-bank lenders) for mortgages with down payments of 20% or more must follow the same qualification rules as High Ratio.  The property being purchased must be owner occupied, and cannot be a rental or an investment property.  The effects to buyers under this rule are:

  • Limits options for difficult to place purchases
  • Limits ability to refinance an existing property for down payment on another property purchase
  • Eliminates competition, allows banks to charge higher rates
  • Limits options for purchasing multiple rental properties under residential financing terms

Capital Gains Exemption for sale of Principal Residences to be reported on income tax returns:

A sale of a principal residence must now be reported on income tax returns, effective for the 2016 tax year.  Principal Residence Exemptions (PRE) will be claimed upon tax filing.  You are only allowed to claim 1 PRE per year and the property must be owner occupied at the time of sale.  If you are uncertain about your PRE eligibility, we encourage you to speak with your accountant or tax preparer.

What is the reason for the New Rules?

“These new rules are being put in to place to protect the financial security of Canadians and support the long term stability of the housing market in Canada.”

If you are concerned about anything surrounding the new rules, how they affect you directly, and what your options are moving forward, please call Your Island Mortgage Team for assistance: 250-898-8821.

8 Tips For Getting and Keeping a High Credit Score

Credit Scores can be a little intimidating, especially since your credit score affects how much money you can borrow at what interest rate, and not many people understand how Credit Scores work.  There are ways to increase your credit score and keep it high. 

We wrote a post about understanding your credit score, even though it is a few years old it is still relevant. The article is a good read to learn more about how your credit activities affect your credit score.

Building good financial habits is the best way to get a high score and keep it.  Here are 8 tips to help you build those healthy financial habits and keep your credit score high:

  1. Don’t apply for credit unless absolutely necessary
  • Reduce the number of credit card applications you submit.  Every time your apply for a credit card they do a credit check, these affect you credit score because multiple credit card applications implies you may be in a difficult Financial situation.  The exception is having multiple credit checks in a short period of time for either a mortgage or car loan, this is considered shopping around for the best deal, and therefore is not as harmful to your score.
  • And try to maintain a good “credit mix” – a mixture of credit cards and loans
  1. Be aware of overall credit utilization
    • You are better off to have two credit cards at 50% of the limit than you are to have one maxed out and another at zero.  It is not total dollar value of debt, but total debt as compared to available credit.
  2. Always pay at least the minimum payment by the due date, and if you can pay the bill in full
    • Pay all collections you may have, and avoid letting any disputes get that far.  In a dispute, you are better off to pay the account and then fight with the company for a refund, than to withhold funds and get sent to collections.
    • If you tend to be forgetful set up payment reminders or automatic debits
  3. Don’t go over your limit on your credit cards.
    • Ideally, you would like your credit card balance to be below 50% of your limit, but definitely not more than 70%
  4. Protect yourself from Identity theft
    • Be cautious when giving out personal information over the phone, through mail, or on the internet. 
    • Limit the amount of id you carry with you.  Keep items like your birth certificate and social insurance card at home in a safe unless you need them with you for a particular purpose.
    • Shred all old financial documents instead of just recycling or throwing them out.
    • If you think you have been the victim of identity theft:
      • File a fraud report with your local police
      • Call your bank and credit card providers right away
      • Contact Canada’s credit reporting agencies (Equifax and TransUnion),
  5. Reduce your debt. I know easier said than done, here are some tips:       
    • Have a plan with clear goals and deadlines, and make sure they are achievable
    • Look at your budget, and if you don’t have a budget making one may be a good idea to help you see where you stand financially. You may be surprised at how much you actually spend eating out compared to what you spend on groceries.
    • Try negotiating a lower rate with your credit card company.
    • Pay mostly with cash, this will help you to be more conscious about your spending
    •  And lastly, if you really are having trouble managing your debt you may want to look into debt consolidation.  Debt consolidation is a low interest loan which combines your entire debit into one, giving you only one payment to worry about.
  6. Pull your credit report at least once a year to review for accuracy. 
    • It is free if you order by mail.  Don’t pay for a credit score from Equifax, as it is not the same score that lenders use anyway.  This score is good to see if your credit is going in the right direction, but it is not an indicator of what mortgage you may qualify for.
  7. If trying to build your score, try using credit card every second month like this:
    • Use card for something you normally buy, like gas or groceries
    • Wait for the bill to come in the mail (don’t rush home and pay the card off, let the bill come showing this purchase balance)
    • Pay the card in full by the due date.   You won’t have any interest if you pay it in full.
    • Don’t use the card again, wait a full month for the next bill to come in the mail showing the zero balance.
    • Repeat.
    • Equifax is all computer algorithms.  It doesn’t know if you are paying your card off in full each month, or just carrying the same balance.  By using the card every other month as described, you are showing that you have a balance, paid it off, etc.  This really works to increase your score much faster than most other ways.

Increasing your credit score may not be easy and it may take time but it is worth it, especially if you ever plan to purchase a home or get a car loan. 

If you have any questions about credit scores or mortgages please give us a call at (250)898-8821 or Toll Free at 1-866-898-8821.

What is Title Insurance??

First what is a Title?

Your property’s title is legal proof that you do in fact own your property and describes your right to the land.  This concept is sometimes confused with a property deed which is the legal document that transfers title from one person to another.

 

What does Title Insurance Protect Me From?

Typical insurances such as life or home insurance protect you from events that may happen in the future, for instance fire or accidental death.  Title Insurance on the other hand protects you from events which happened in the past, such as survey or public record errors, and unknown title defects.

Each Title Insurance Policy is different, but typically title insurance covers:

  • Title Fraud – usually involves someone using stolen personal information or forged documents to transfer the title of your home to themselves
    (or an accomplice), then taking out a mortgage on the property and disappearing with the money
  • Unknown Title Defects – title issues that prevent you from having clear ownership of the property
  • Encroachment Issues – an example of this would be if you discover that a structure on your property goes into your neighbour’s property
  • Construction done by a previous owner without permits – imagine if the previous owner removed a wall not realizing it was structurally supportive.  When you first moved in you loved the open concept but slowly you notice second floor is starting to sink. How much do you think it would cost to fix that mistake?
  • Legal Service Coverage protects against lawyers making mistakes during purchase
  • Survey or Public Record Errors
  • Existing Undisclosed Liens
  • Endorsement can be added for Well Water and/or Septic System defects

 

Title Insurance does not cover events such as:

  • Zoning bylaw or building code violations you create yourself
  • Environmental hazards
  • Native land claims
  • Known title defects
  • Issues which would have been discovered with a new survey or inspection of the property (property is smaller then you originally thought)

How much will this cost me?

The cost of Title Insurance varies based on the value of your property and which company you choose to go with.  Title Insurance is a one time premium that lasts as long as you own your home, and depending on your policy it maybe able to extend to heirs, a spouse in the event of divorce, or to children when the property is transferred from parents for nominal consideration. Though usually purchased when you buy your home, Title Insurance can be bought anytime after you have purchased your home. 

 

So where do I sign?

If you think Title Insurance maybe for you, contact your lawyer to discuss your options.

Before you sign on the dotted line here are a few tips to think about:

  • Make sure your property is insured for its full value
  • If you are purchasing your Title Insurance when you are buying your home, make sure the policy takes effect on your closing date
  • Make sure you understand what your policy covers and does not cover, and if you have any questions make sure you ask your lawyer or insurance provider.

 

Your Island Mortgage Team is here for you. If you have any questions concerning
mortgages, please contact us 1-866-898-8821.

 

Article written by: Jessica Cruickshank (Your Island Mortgage Team - Administrative Assistant)

Moving Check List

You have found the home of your dreams; your mortgage is all sorted out, now what? Moving Day!!

Moving day can be exciting, stressful, and even emotional all at the same time.  Your Island Mortgage Team cares about your entire home owning experience, and we want to help make it as stress free as possible.

 

Here are some tips to help make your move go more smoothly.

  • Use colored duct tape to easily and quickly mark boxes while packing.  Colour code each room in your home and stick a piece of the coordinating color of duct tape on the box for which room it is destined for.  This will make it easier to identify which box goes where.
  • Keep the contents of smaller drawers in zip lock bags.
  • Don’t have any of those fancy wardrobe boxes? Make it easy to transport hanging clothing by putting them in trash bags.

  • While moving use an elastic band to keep your door from latching closed.  Loop the band around the inner and outer knobs and over the door latch.  This is especially helpful if you are moving out of an apartment whose door likes to lock automatically.
  • Have lots of heavy books? Save your back and pack them in rolling suitcases to make them easy to transport.
  • Check out restaurants in your new neighbour hood before moving day. This way when dinner time rolls around while you are unpacking you aren’t struggling to figure out where to order from.
  • Pack essentials for your first night such as sheets and shower curtains in your new place in clear plastic totes. 

  • When dissembling furniture put all of the small pieces such as screws, nuts, and bolts into a zip lock bag. Either label the bags or use tape to the bag to the piece of furniture so it is easy to find when it comes time to put it back together.
  • Use toilet paper rolls to pack cords and wires.  Not only does this keep them from getting all tangled you can write on the toilet paper roll what the cord is for.
  • The first thing you should set up is your bed.

 

And the most important tip:

 

  • Start organizing your move early.  Check out the Your Island Mortgage Team Moving Check List to make sure you stay on track with everything that needs to be done. Just click the link below:

Your Island Mortgage - Moving Check List

 

Your Island Mortgage Team is here for you.  If you have any questions concerning mortgages please don’t hesitate to call us 250-898-8821 or toll free 1-866-898-8821

 

Have any Moving Tips you would like to Share? Feel free to leave a comment below.

 

-article written by: Jessica Cruickshank (Your Island Mortgage Team - Administrative Assistant)

“This house would be perfect, if only…”

The Only Thing You Can’t Change is Location…


You’ve been searching for what seems like an eternity. The homes you are seeing are great except...

The kitchen needs updating… Who would love green shag carpet…in a bathroom? … Harvest Gold Appliances just aren’t your style… You love the neighbours but… a fence would be great… The Basement needs finishing…

You have saved up your down payment and closing costs, and a small emergency fund… green shag  is unpleasant but not an emergency… right?

That’s right. In the Grand Scheme of things, green shag is not an emergency. And there are great, cost-effective ways to turn that “almost” perfect house into your perfect home (and likely add some equity at the same time!). Here are just a few ways you can do this:

 


Cashback Mortgages

A cashback mortgage is a mortgage product that offers a percentage of cashback to the borrower at funding. The percentage usually ranges from 1 to 5% of the total loan amount (for example, a $200,000 mortgage with a 5% Cashback would grant the borrower $10,000. These loans are a bit higher than best rates (not much at all!). The cashback cannot be used for your down payment, but it can be used to pay off or down debt, new appliances or home improvements or even closing costs. When considering penalties for these products, the cash-back amounts are usually pro-rated, and if you decide to break your mortgage term, you will be looking at the penalty for breaking the mortgage, as well as the pro-rated balance of the cash-back portion.

These products are available a bit higher rate. It might be worth keeping in mind that the rates are generally still much lower than those on lines of credit and/or credit cards. Cashback mortgages are available at 3 and 5 year terms.


Purchase Plus Improvements

A Purchase Plus Improvements mortgage allows for borrower to borrow up to 10% of the total loan amount, to a maximum of $40,000. The borrower collects quotes and estimates for the work to be done, and submits these when they are applying for their mortgage funding. When the lender approves the application and the property is purchased, the borrower has the work completed and notifies their mortgage broker that the projects are complete. The broker arranges for an appraiser to come out and confirm the work is completed. Once confirmed, the lender advances the funds to the borrower’s lawyer or notary, and they release the funds to the client to pay the contractors.

In this instance, the borrower must have at least 5% down payment on the total amount to be advanced. So, if you are looking at purchasing a $200,000 home, and want to borrow $20,000 for improvements, you would need to have $11,000 for down payment (5% of $220,000), plus closing costs.
These products are available at best available rates, generally for at least 3 or 5 year terms.
 

Construction or Draw Mortgages

Now let’s say you find a home that is in the perfect spot. But the house is very far from perfect, and it’s going to take more than 10% of the purchase price to bring it closer to perfect. This is when you might consider a construction or draw mortgage. This allows you to borrow more than 10% of the purchase price. However, it also changes the structure of the loan. There are options out there that will allow you to make draws on large renovation projects (similar to a new build). There are things to consider, like the costs to have the appraiser confirm that the work is completed before the draws are advanced, and some lenders might restrict the number of draws (for example, 3 draws of $25,000 for a $75,000 renovation). Payment structure can vary widely, so it is best to speak with your Mortgage Broker; we will walk you through the steps and help you to decide the best mortgage to fit your budget, plans and financial situation.

One more thing to consider is combining one of these great, low-rate mortgage options with improving the Energy Efficiency of the home you are purchasing. There are a number of financial incentives offered by insurers and governments to people who are upgrading the energy efficiency of their home. These options are available when your mortgage is up for renewal – why not take advantage of the record low rates available to not only save money on your payments, but add equity to your property.

This post contributed by team member Amanda Jacobson.

If you have any questions, or for more information, please do not hesitate to contact Your Island Mortgage Team today!

250-898-8821 or toll free 1-866-898-8821
 

Is your mortgage coming up for renewal?

When you first sign your mortgage contract, you are establishing the rate and conditions under which you will be obligated to pay to your lender for the term of your contract. What happens when this term is up and there is still a balance owing on your mortgage?

If your current mortgage is with a financial institution that falls under federal regulations (such as a bank), the lender MUST provide you with a renewal statement at least 21 days before the end of the existing term. If the lender does not intend to renew your mortgage, it must notify you 21 days prior to the end of your term as well. You can expect that your mortgage holder will begin contacting you at up to 6 months before your renewal date.

Your lender may offer “special” rates or incentives if you sign your renewal early, in an effort to deter you from shopping for the best renewal rate and terms. An astonishing amount of Canadians simply sign their renewals and don’t think about it again, a hasty move that could cost them thousands.

At Your Island Mortgage Team, we believe that your mortgage renewal is not a formality to endure, but rather an opportunity to revisit your (likely) biggest investment and ensure that it is working for you!

It may save some time to simply sign on the dotted line - but it will very likely save you money to have a professional at Your Island Mortgage Team review your mortgage before your renewal date to ensure that your terms and conditions are meeting your needs, and you are paying the lowest rate. We can hold a renewal rate for up to 120 days, and can tailor the renewal terms to you.  Why try to fit you into the box, when we can build the box to fit you?

Here are just a few reasons why you shouldn’t “sign on the line and carry on”:

  • Lenders rarely offer their best rates at renewal. They count on customers simply signing the renewal letter, without question, and carry on. That’s leaving a lot of money on the table!
  • The mortgage lending market is very competitive! There are dozens of lenders available to you through a mortgage professional that want your business. They offer great rates, plus flexible and innovative products that your current lender may not have available.
  • Your situation may have changed. Life happens! We will review your finances with you and make sure that your mortgage works for you, saving you money and headaches for years to come!
  • The mortgage market has changed. Many banks are trending toward collateral charge mortgages, which can be confusing and have significant effects on your equity. We will explain any questions you may have so that you understand how your mortgage works and the terms and conditions you are signing up for!

The best reason is that our services are free to you, the borrower*. Our goal is to save you money and ensure that your mortgage is working for you! Call our office and speak with one of our mortgage professionals today.

Office 250-898-8821 or Toll Free 1-866-898-8821

When you think Mortgage – think Your Island Mortgage Team.

*OAC, E&OE. Some exceptions apply; all fees are discussed up front, if applicable.

Fixed Versus Variable - some I.D.E.A.S. to consider

I.D.E.A.S. For Choosing Between A Fixed And Variable Rate

Best-Mortgage-termsThe first question people often ask when deciding between a fixed and variable mortgage is: “Where do you see rates going?”  

They assume we as mortgage planners know…and of course we don’t.  No one does. 

We can, and do, present a variety of possible rate scenarios based on:

  • where we are in the rate cycle
  • how rates have performed after past recessions
  • and other available research.

But you never know for sure where the rate setters (the Bank of Canada and bond traders) will take the market.

Aside from reading the tea leaves on rates, the best thing a borrower can do is measure his/her ability to handle rising payments. To gauge that, we use a handy acronym called IDEAS.

IDEAS stands for Income, Debt, Equity, Assets, Sensitivity to Risk.

More specifically:

  • Income -- Is the borrower’s income stable and reliable?
    • Is there a low chance of income interruption?  (You don’t want payments to soar if there’s a chance you’ll be out of a job for a while)
    • Does the borrower earn enough to pay his/her variable-rate mortgage as if it were a 5-year fixed mortgage? (i.e.,  Can he/she afford to set his/her payments higher to offset the effect of rising rates?)
  • Debt -- Does the client have a reasonable debt ratio?
    • Is the person’s total debt ratio under 40% based on the posted 5-year fixed qualification rate (so that his/her budget isn’t crushed if prime rate jumps to 6.25% or more)?
    • Can the borrower withstand 50% higher payments if rates rocketed up 4%?
  • Equity -- Does the client have enough equity?
    • Is the loan-to-value under 80-85% so the person could refinance if absolutely needed?
  • Assets -- Does the client have enough assets?
    • Preferably 6 months of living expenses (in liquid assets) to act as a payment buffer if needed.
    • Does the person have a credit line as a backup source of liquidity?
  • Sensitivity (to Risk) -- Can the client accept risk?
    • If rates increase 2.50%, can he/she handle payments rising over 30%? What if rates jump 4%?
    • Does he/she understand that a fixed rate will save him/her more money up to 23% of the time--according to popular research? (Fixed or Variable)

If most, or all, of the answers to the above are affirmative, a variable rate is something the homeowner can entertain.

After evaluating someone against the IDEAS measure, we then discuss (among other things):

  • The probability they'll need to break their mortgage early or increase it before maturity (each of which could impact their total borrowing cost due to differences in fixed and variable penalties)
  • Future interest rate scenarios, and how rising rates could impact payments and amortization time.
  • The tools that variable rate holders can use to deal with payment risk, like “hold-the-payment” features (which don’t eliminate payment risk entirely) and hybrid mortgages.
  • The pros and cons of relying on a rate conversion (i.e.,  locking in a variable rate)
  • The cost comparison of variable versus fixed terms, based on future rate assumptions.

For most people, the decision between fixed and variable will either save them thousands or cost them thousands.  The goal is to try and take as much of the gamble out of the equation as possible.

 

Article copied from: http://www.canadianmortgagetrends.com/canadian_mortgage_trends/2010/03/ideas-for-choosing-between-a-fixed-and-variable-rate.html

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Mortgage Articles

5 Tips for Renewing Your Mortgage

Mortgage stress tests mean borrowers no longer negotiating from position of power

Mark Ting · for CBC News · 

 

Until recently, homeowners looked forward to renewing their mortgages as they were likely renewing at a lower rate an…

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Sold Data Coming to Realtor.ca

CREA’s Board of Directors has voted to add sold and historical data to the property listings on Realtor.ca without the need for a login.

In a message to real estate boards across the country, CREA says the move comes “in order to meet consumer demand and at the request of Realtors and boards.”…

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New Mortgage Rules 2018

New Mortgage Rules Coming January 1, 2018

The government is changing how Canadians must qualify for a Conventional Mortgage.  Starting January 1, 2018, anyone purchasing a property with 20% or more down payment, or anyone refinancing an existing mortgage, must qualify at the greater of the Bank o…

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