MI_ComplicatedRates
0

Your Home & Mortgage March 2017

Your Home & Mortgage March 2017

This Is Why Mortgage Rates Are Suddenly Way More Complicated

If you’ve been shopping for a mortgage lately, you’ll have figured out that rates can be all over the map. That’s because you’re not comparing apples to apples anymore. Thanks to new mortgage rules, the mortgage pricing matrix is much more complicated, and quick online mortgage quotes are less reliable. That’s why it’s important to have a basic understanding of the mechanics behind mortgage rates. Here’s a quick guide:

Variable mortgages and lines of credit hinge on the Bank of Canada’s “overnight rate”. Eight times a year the Bank of Canada determines if they are changing this rate. While they may hold the rate, they will increase it when the economy strengthens and inflation is a concern, and decrease it if they need to get the economy moving. It’s a careful balance. The chartered banks base their prime lending rate on this overnight rate because it influences their own borrowing. So if the central bank changes the overnight rate, it’s sending a signal to the banks to change their prime rate, which in most cases they will, passing on some or all of the change to their variable/line of credit clients.

Fixed-rate mortgages are different. Lenders use Government of Canada bonds to establish pricing for fixed-rate mortgages so you need to watch bond yields to determine where fixed mortgage rates are heading.

Whether it’s a fixed or variable-rate mortgage, the new mortgage rules mean lenders now have different rules and rates for insurable vs. uninsurable mortgages. If a mortgage is insurable, it will qualify for the best rates. Most homebuyers know that if they have less than 20% downpayment, they need to pay for mortgage insurance as a way to protect the lender. In order to obtain the lowest cost of funds, some lenders use this insurance to insure mortgages with more than 20% equity.

Mortgages that are “uninsurable” can include rental properties and second homes, switch mortgages that move to another lender, 30-year amortizations, refinance mortgages, mortgages over $1 million, and even some conventional 5-year mortgages. These mortgages are charged a rate premium and some lenders no longer offer them. Additionally, interest rate surcharges are often charged if it’s difficult to prove your income or you have bad credit, the property is in a rural location, you want a long rate hold, you want the best pre-payment privileges and porting flexibility, and you don’t want refinance restrictions. As a result, be wary of rates you see online, because you might not qualify for them.

Without a doubt, insurable vs. uninsurable has made the mortgage landscape significantly more confusing. Getting good solid advice is critical, and Mortgage Brokers have never been more important in the home financing process. I have access to all the lenders I need, and the experience and knowledge to get you the best mortgage for your situation. I am here to help you!

CMHC Insurance Premiums Increase on St. Patrick’s Day – March 17

You may be lucky and get the lower rates, but you need to get in touch today!

Call:

Wimal Navaratnam

Mortgage Aget

416 399 3449

Mortgage Intelligence

DB15036_concepts_74549777
0

How to Deal With Mortgage Payment Difficulties

How to Deal With Mortgage Payment Difficulties

Sometimes unforeseen financial circumstances can impact your ability to make your regular mortgage payments. Or perhaps your debt demons have been caused by taking on too much other high-interest debt. It can be tempting to want to conceal your debt problem for as long as possible – but that’s almost never the best strategy. With early intervention, there are weapons available that can help you fight these demons! Your mortgage lender doesn’t want to see you default on your mortgage; they’d much rather help homeowners find a way to keep their home. For mortgages insured by the Canada Mortgage and Housing Corporation (CMHC), they have identified several tools available to help you ride out a period of financial uncertainty: 1. Converting a variable-interest rate mortgage to a fixed-rate mortgage to protect you in the event of a sudden jump in interest rates. 2. Your lender may be willing to offer a temporary payment deferral, or other flexible options for short-term relief. If you’ve made any lump-sum payments against your mortgage in the past – or if you’ve been on an accelerated payment schedule – that history can help. 3. You may be able to extend your amortization period to reduce your monthly payments. You can shorten the amortization again later if your circumstances change. 4. If you’ve actually missed a few payments already, you may ask if the lender is willing to add them to the mortgage balance and extend the payment period accordingly. (Best, however, to start talking before you start missing payments!) 5. A special payment arrangement unique to your situation may also be possible. Genworth Canada also has a Homeowner Assistance Program designed to help homeowners who are experiencing temporary financial difficulties that may put their mortgage at risk. Ultimately though, it’s best to seek help at the first sign of financial trouble. Getting in touch and having a conversation is a great place to begin – because as an independent mortgage professional, I work for my clients and look out for their best interests, not the lenders, and I know what the lenders are after. It’s possible that your financial situation just requires some extra penny-pinching to stay on budget. But if you find yourself adding to your credit card debt – or borrowing to make mortgage payments – then it’s time to have that conversation. The earlier you get help, the easier it will be to conquer those debt demons!

Call me today at 416 399 3449

Wimal Navaratnam

Mortgage Agent

MI_ComplicatedRates
0

After the rate hike…what’s next?

On July 12th, for the first time in seven years, the Bank of Canada increased the overnight rate by .25%, withdrawing some of the stimulus that was needed after the oil price collapse and 2008 financial crisis.

Variable rate mortgages and lines of credit will see higher rates and modest payment increases. Fixed-rate mortgages – which are based on the bond market – had already been trending slightly upward, although if you have a fixed mortgage, you aren’t affected until it’s time to renew. Keep in mind that this is a very small increase, and we’re still in an ultra-low rate environment and an incredibly stable market. We’ve also seen increases before to only see them decrease again. But rates have risen, so here are answers to the questions I’m getting:

Should I jump into the market now? Actually, my advice is always the same: buy when you are financially ready. Don’t jump the gun just because rates “may” go higher. But by all means, if you’re thinking about buying, I can arrange a pre-approval so you’re protected from rate increases while you shop around.

Should I lock in my variable rate mortgage ASAP? That depends. Your new rate with the hike is probably still less than current 5-year fixed rates, and you’ll still likely pay less if there is another .25% increase. So why pay more money than you have to? Stick with your original strategy of focusing on payment vs. rate. But if it’s going to keep you awake at night – or the few extra dollars are hard to find in your budget – then let’s talk about your conversion options. Remember though, you should be confident you’ll stay in a 5-year fixed mortgage for the full term. Breaking a fixed mortgage can result in some tough penalties.

What if my mortgage is coming up for renewal? Don’t feel rushed or pressured by a renewal letter or call. Let’s discuss your options. We’ll review your renewal offer together and I’ll shop around to see if it’s really the best deal available. Got too much other debt? This may be the time to roll it into a new mortgage to boost cash flow and save on interest costs.

Should we talk? Yes for sure. You should have confidence in your mortgage plan and that’s why professional mortgage advice is so critical. I have access to a wide range of lenders and know the right questions to ask to assess your situation and make sure you have the best mortgage strategy.

Let us talk about your mortgage in detail, call me today!

Wimal Navaratnam

416 399 3449

0

WHICH MORTGAGE FEATURES ARE THE MOST IMPORTANT?

It’s easy to look online for a mortgage rate. But rate is only one aspect of saving money on your mortgage over the long term. It’s essential that you also consider mortgage features. Here are the big ones –

Early Payout Penalties.

There are lots of reasons why it makes good financial sense to break your mortgage, even though you can expect to pay a penalty. But not all lenders calculate penalties the same way, and the differences can amount to thousands. Life happens, so make sure you choose a lender that has a fair prepayment penalty. And watch out for no-frill mortgages that don’t let you get out of your mortgage at all, unless you sell or the term is up.

Pre-Payment Privileges.

You want the ability to put lump sum amounts on your mortgage and increase your payments so you can pay down your mortgage faster and save on interest. You should always consider having this flexibility even if you don’t think you’ll use it; your situation may change that gives you the ability to pre-pay. This flexibility can also help you reduce an early payout penalty.

Collateral charge mortgage.

This type of mortgage can be difficult to transfer to another lender and cost you legal fees if you do. You are more locked in, which means your lender may not offer you the best rates if you need to refinance or at renewal. Watch out!

Porting Flexibility.

This is important if there is a chance you’ll move i.e. job change, growing family. You’ll want to take your mortgage to your new place to avoid penalties. But make sure your lender lets you increase too should you buy a more expensive home.

Blended Mortgage.

If you move or refinance, a blended mortgage allows you to blend the rate of your current mortgage with the rate on the additional funds. This way, you don’t break your current mortgage and incur the penalty. Some lenders blend and extend to a new 5 year term, others blend only to the remaining term, or offer both.

There is definitely more to getting a mortgage than just rate. It’s my job to help you find the right mortgage with the rate and flexibility you need to be a happy homeowner.

Call me today at 416 399 3449

Wimal Navaratnam

Untitled-1
0

Getting your home in 5 easy steps

1. Meet with your Mortgage Broker

This important first step is where I get to know you, not just your plans for your new home, but also your goals for the future. I can also offer advice on boosting your credit rating so you are eligible for the best possible mortgage rate, and will outline the extra costs that come with buying and maintaining a home. Be sure to bring all of your questions!

 2. Know your purchasing power and buy your home!

Before you start house shopping, I can make sure you have a good idea of the amount of mortgage you can qualify for based on your down payment, income, assets/liabilities, and credit score. This way you’ll know how much it will cost you to carry the mortgage, and both realtors and sellers will know you’re serious. Now, go house shopping. Let me know if you need a realtor partner. Congratulations, you’ve bought a home!

 3. Get your mortgage

Your mortgage amount will be finalized based on your purchase price. I will submit your application to the selected lender and advise you of the documentation you need to support your mortgage request. Your lender may need an appraisal of the property. We’ll then receive a commitment from the lender, which includes the mortgage details and any conditions. You’ll need to make sure the conditions are met and forward any additional required documents. Once you have your approval, you can waive your financing condition if you had one.

 4. Prepare for the big move

Your lender will send your mortgage information to your lawyer. Please let me know if you’d like to be referred to one of my lawyer partners. Approximately 10 days prior to the closing of your home, you’ll meet with your lawyer to provide identification and your remaining down payment, sign all of the documents that relate to your new home, and review your closing costs. Then everything will be in place for your completion date!

 5. Enjoy your new home!

On the day you take possession of your home, your mortgage funds are sent by your lender to your lawyer. Now you can move in and begin enjoying your new home! And thank you for your confidence and trust! The right mortgage is always a great beginning on a smart financial plan for your future.

SCHEDULE YOUR FREE NO OBLIGATION CONSULTATION TODAY!

Tel: 416 399 3449

Mortgage Intelligence

FSCO Lic # 10428

1 2