Don Stoddart, Brampton Mortgage, mortgage options, Mortgage rates, Mortgage expertise

By: Don Stoddart  09-12-2011
Keywords: Mortgage, debt, home equity

We look forward to being your personal mortgage planner and drawing up an individual plan that is right for you, for whatever your needs and situation:

Mortgages generally qualify as good debt: they are usually available at the lowest possible rates, they represent a good investment in a (generally) appreciating asset, and they make home ownership possible. Bad debt saddles you with high interest rates - often on depreciating assets. High credit card debt is one of the worst, and afflicts most Canadians at some point in their financial lives. But if you have equity in your home, then you have an opportunity to turn bad debt to good debt - by refinancing and rolling high-interest debt into your mortgage for big interest savings. Or it may be beneficial to take equity out and refinance your mortgage for investing, renovations, or to fund educational needs.

If your mortgage renewal is fast approaching then you’ll soon be at an important financial milestone. Lenders send out renewal forms just prior to renewal dates to those with good payment histories, with about 70% of homeowners sending it back without asking any questions. In today’s hectic world, that can be the easiest and best route, but you should ask yourself some questions before you sign on the dotted line. This could be an important moment of opportunity.

Maybe your mortgage needs have changed. This is the time to decide. For example, is this the right time to tap some of your home equity for a renovation project? Or maybe you’re considering a cottage or vacation property. You should also take a look at your other debts; many Canadian homeowners have taken advantage of historically low rates – and rolled all their other higher-interest debts into a mortgage.

Are you confident you will get the best rate at renewal? Having multiple lenders compete for your business is a great way to ensure you get the best rate for your situation. We deal with over 50 lending institutions, including major banks, credit unions, trusts and other national and regional lenders, which means we can put significant negotiating power behind finding the best mortgage to fit your specific situation.

There are many Canadians jumping at the chance to own a recreational property. The aging baby boomer population is flush with capital and an insatiable desire for a waterfront or other recreational property. And with the advent of better roads, Internet and telephone service, satellite service, and winterization expertise, people are realizing that vacation properties can make ideal retirement homes. No longer just perceived as a welcome retreat from the city, a second home is now viewed as a solid financial investment with the added value of a potential retirement property.

Investment properties - particularly smaller, residential real estate - are now accessible to many average Canadians. And as any homeowner will confirm, real estate has been one of the most attractive investment categories in Canada for the past decade. There are several reasons why a growing number of Canadians are purchasing investment properties:

1. Return on investment. Residential real estate is a solid long-term investment, typically appreciating faster than inflation.

2. A pension plan for the future. Over the long term, an investment property or multiple real estate holdings can be a great source of retirement funds. Many Canadians do not have a pension plan, which means they need to take their own action to create sources of retirement income.

3. A better alternative to student residence. Many Canadians are shipping off their university-age children, and housing them in an investment property purchased specifically for that purpose. They can save money on out-of-town accommodations for the student, and use revenue from other renting students to pay the mortgage and maintenance expenses.

4. Earlier access to a first home. For first-time home-buyers, a duplex or triplex can be a terrific way to get onto the home ownership ladder. Rental income from the extra units can help offset the cost of the mortgage as the new homeowners get on their financial feet.

Many Canadians are taking advantage of incredibly low mortgage rates to refinance their mortgages and some of their equity for a renovation project or two.

Mortgages generally qualify as good debt: they are usually available at the lowest possible rates, and they represent a good investment in a (generally) appreciating asset. Bad debt saddles you with high interest rates - often on depreciating assets. But if you have equity in your home, then you have an opportunity to turn bad debt to good debt - by refinancing and rolling high-interest debt into your mortgage for big interest savings and a lower monthly payment.

Find out how much you can afford before you go househunting! This will keep you focused on shopping for homes within your price range. If you qualify for a preapproved mortgage, you’ll be certain of the size of mortgage for which you qualify and guaranteed a rate for a specific period of time. If you don’t qualify for a pre-approved mortgage, we will be able to help you estimate a mortgage-qualifying amount.

 It's wise to begin by talking with a mortgage planner - to understand how much mortgage you can manage, and to explore both traditional and innovative mortgage options. You're about to take a big step; you'll want some advice from the experts. We have access to mortgage rates and features that can help you achieve your home buying dreams. Our best advice? Begin with a conversation.

Trade-up Home

Sometimes a family needs room to grow.  Or maybe you want that perfect house for the life you live.  Whatever your reason for wanting your trade up home, see us first. We have answers to your mortgage questions, and can evaluate whether you are better off taking your mortgage with you, or if you should have 50 banks and lenders compete for your business. If you need more space or want the house to backdrop your lifestyle, call today for a free analysis of what you can afford. Make your dreams a reality!

The zero-down mortgage isn’t for everyone! But for the right buyer – struggling to save up a hefty down payment while paying rent – the zero-down mortgage can be a tremendous financial boost: enabling them to make the step to home ownership and begin building home equity. There are three ways to go zero down – borrowed down payment, cash back or gifted.

Borrowing the down payment is typically done through a loan or unsecured line of credit. The loan amount will be used in your qualifying calculation, but it does then allow you to secure a mortgage for 95% of the purchase price at fully discounted rates.

Cash back mortgages provide the cash upfront for some or all of the down payment, although the lender charges a higher interest rate, and if you pay out your mortgage before your term is up, you’ll be required to pay back some of the down payment portion of the total mortgage. You’ll also need to qualify based on that higher rate.

Gifted down payments, for instance, money provided from a parent, are not used in the qualifying calculation and allow you to qualify for discounted rates. The person gifting you the money must be a blood relative and needs to sign a gift letter saying that you are not required to pay back the gifted money at any time.

Remember too that you’ll need to be able to prove your income: easiest if you’re salaried or an hourly employee. And you should have a good credit rating. Not sure what your credit rating is? Before you do anything (like cancelling credit cards, etc), talk to us.

We understand business owners because we’re business owners, too. What’s more, we have a long list of institutional and private lenders that offer excellent mortgage options for self-employed Canadians. You don’t fit in the neat box at the bank? That’s okay; we don’t have boxes, we have solutions.

Known as a FICO score – with a range from 300 to 900 – your credit score tells lenders what kind of a risk you are likely to be as a borrower. Your score is based on the following five attributes, with some attributes weighted more heavily than others.

  • Previous payment history (approx. 35% of score)
  • Current level of indebtedness (approx. 30% of score)
  • Length of credit history (approx. 15% of score)
  • Pursuit of new credit (approx 10% of score)
  • Types of credit available (approx. 10% of score)

At high credit scores (750 and up), lenders offer a quick approval at the best possible rates. This score says the person is reliable and responsible with debt. At lower scores (below 620), you could pay a premium on your borrowing rate and possibly even find it difficult to qualify.

Your credit score captures your perceived lending risk at a moment in time: your score can change from month to month. The companies that hold your credit accounts and loans report transactions to credit bureaus regularly. That’s a great opportunity for you, because it means you can improve your score with the right credit “behaviours”.

Often a new mortgage may be the best way to manage all of your debts. Moving your high-interest debt into a lower-rate mortgage is a great way to save on your overall interest costs, improve your cash flow, and begin the process of improving your credit rating. It's great news that the right mortgage can help establish your reputation for credit-worthiness.

When you buy a home, you are buying the title to the property. It is sometimes also referred to as a deed. Your lawyer registers you as the owner in the land registry system. Having "good title" to your property is important because it protects your investment so that you will be able to sell your property or obtain mortgage financing.

Title insurance is unlike any other kind of insurance. It is not house insurance, which protects the contents of your home or its structure, and where you pay a monthly or annual premium. Unlike house insurance, you only pay a one-time premium with no deductible for title insurance, which protects your ownership or title against losses incurred as a result of undetected or unknown title defects for as long as you own your home. Even if you are the rightful owner of your home, there are instances such as real estate title fraud when your title can come into question.

There are two options for getting a mortgage in Canada. Your bank represents only one lender, and the person on the other side of the desk from you is working for that bank – not for you. In today’s economy – and with so much of your financial life tied up in your mortgage – it doesn’t always make sense to restrict yourself to a single lender.

That’s where a mortgage broker comes in. Increasingly savvy homebuyers are demanding more information, more choice, and better value with their mortgages. And they’re getting that with mortgage brokers. In Canada, now, over one-quarter of all mortgages are arranged by mortgage brokers. Most of these mortgage professionals are independent. While they are often part of a brokerage firm, they don’t work for any particular lender. They work for the homebuyer.

What many Canadians don’t realize is that there are about 50 different lenders out there – including the major banks, of course – with a huge range of different mortgage products and rates. An independent mortgage broker has access to a huge range of options – and they can shop around and compare rates and features to get you the best mortgage deal: whether you’re buying your first home or your tenth, whether you’re thinking about an investment property, a cottage, a home reno, or a debt-reduction plan.

On any given day, a mortgage broker can give you almost instant insight into countless mortgage rates and options. Maybe a lender has just announced a special deal on a mortgage that’s perfectly suited to your needs. Your bank doesn’t carry it, and the only way you would learn about it is through a broker. The difference could be worth thousands of dollars to you.

But beyond the access to a huge range of lenders, mortgage brokers are there to “go to bat” for you with the lenders. They can weigh the pros and cons of your various options, they know what the lender is looking for, and they’ll negotiate on your behalf. They can help homebuyers – or future homebuyers – polish up their credit rating to ensure they’re eligible for the best possible rates. You can share information with them (for instance, you’re worried about losing your job, you might have to borrow a down payment) that you may not feel comfortable sharing with a lender.

Mortgage brokers work hard to provide service at flexible hours to accommodate your schedule – and because they build their business on referrals, you know they’re working hard to do the best possible job for you. Best of all, their services are free in the majority of cases; the winning lender pays them a fee– which makes sense, since the lender didn’t have to pay a salary for an employee to get the business. Fees may be paid where compensation is not provided by the lender, for instance private lenders.

Mortgage insurance provides default or high ratio insurance that protects the lender against the risk of lending to homebuyers who have less than a 20% down payment. You, the borrower, pay this premium, which is added to your mortgage principal and protects the lender in the event the mortgage is not paid. This is not the same as creditor insurance. Mortgage insurance is provided by the Canadian Mortgage Housing Corp (CMHC) or Genworth Financial. Some buyers prefer to save for a longer period of time so they can bypass paying mortgage insurance. While others choose a high-ratio mortgage even if they can make a larger down payment. Why? Because of the flexibility to use the extra cash for renovations, business need or for investment purposes.

You can use your RRSP savings as a down payment. The Home Buyers’ Plan (HBP) is a government program that allows first-time homebuyers to borrow up to $25,000 from their registered retirement savings plans (RRSPs) to buy or build a principal home. The money you withdraw is not subject to tax but must be paid back to the RRSP account over a 15-year period. Minimum annual repayments are required.

We have been Toronto and Brampton-area mortgage brokers for over twenty years and have successfully closed thousands of mortgages. We have a wide network of Brampton and Toronto area realtors and lawyers to ensure you have an efficient home buying experience. Whether you need a new mortgage, are renewing an existing one, want to consolidate some debt, or just want a frank assessment of your financial options, we'd be honoured to meet with you so you can better understand all of your mortgage options.

Habit for Humanity seeks to eliminate poverty housing and homelessness from the world and to make decent shelter a matter of conscience and action. To accomplish these goals, we invite people of all backgrounds, races and religions to build houses together in partnership with families in need. Today, they have helped build over 400,000 decent, affordable houses and served more than 2 million people around the world.

Most of us feel that we have the right mortgage for our situation, but we certainly don’t want to think about the cost of that borrowing. That's why it's important to consider some tried-and-true money-saving mortgage strategies.

Increase your payment frequency:

A $200,000 mortgage amortized for25 years at 4.5%. Adjust payments from monthly to every two weeks (bi-weekly or 26 payments), and you’ll reduce your amortization to 21.7 years and save $20,033 in interest.

Shorten your amortization:

A 200,000 mortgage amortized for 25 years at 4.5%. Switch to 20 years, and you’ll pay off your mortgage 5 years earlier and save $29,488 in interest.

Use your pre-payment privileges:

A $200,000 mortgage amortized for 25 years at 4.5%. Put $2,000 lump sum amount each year on your mortgage and you’ll pay off your mortgage in under 20 years and save $32,629 in interest costs.

Roll high-interest debt into your mortgage:

You can use the equity in your home to consolidate your other high interest debt such as credit cards or store cards. By consolidating all of your debt into a new mortgage, you can make fewer payments, save money on interest costs, and improve your cash flow. You can then consider using the money you save each month to pay off your mortgage faster. Or use the savings for investing, RRSPs or RESPs. If you are interested in exploring ways to pay off your mortgage sooner, we can review your mortgage and offer suggestions to maximize your savings.

The information in this article was current at 06 Dec 2011

Keywords: debt, home equity, Mortgage, Mortgage Planner

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