About Patricia McKean

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So far Patricia McKean has created 18 blog entries.

Rural Lending Information

Financing the Rural Lifestyle If your dream is living in the country,  there are a few extra considerations that come into play when we talk about financing a rural property purchase.  It is important to understand some of these nuances to know what type of property to be looking at to suit your budget and financing options.  For many, we dream of owning a quarter section of land, with a log home tucked away in the woods but that doesn't mean that this type of property is easy to get a mortgage for so before you fall in love with a home, let's explore some of the rules and restrictions which may require some planning before purchasing. Buying Raw Land If your plan is to pick up a parcel of vacant land and build your dream home, be prepared for a higher down payment requirement.  Raw land purchases require commonly in the 35% - 50% down payment category depending on the use, location, province and size of the property.  A 1 acre parcel close to the city for example, might require only 35% down, whereas 80 acres of farm land will require more like 50% down.  Raw land loans also


Mortgage Refinancing?

Credit cards, student loans and lines of credit cost borrowers like you and I a small fortune every year. That's because interest rates for these products are higher than secured loans, and they're compounded frequently making them extremely unaffordable for most. A little-known secret is a $2,000 credit card will take approximately 83 years to pay off if only the minimum payment is made. That's incredible, isn't it?! It's also very legal which is precisely the reason why banks are mailing everybody with a postal code a pre-approved Visa and MasterCard these days! What happens to people like you and I who use these cards regularly? What happens when we are not able to pay them off? We may find ourselves living pay cheque to pay cheque and without a long or short-term savings plan. If this sounds like you, the solution is easy! Refinancing is proven to be the gold-standard when it comes to debt consolidation. Extremely low-interest rates help you recover cash flow each month instead of using it to pay high interest only credit cards and other loans. The process of paying everything off is also quick and easy. Many people have graciously trusted me to refinance


Things to Consider When Buying an Acreage or Country Property

HOW MANY ACRES ARE YOU PURCHASING? For conventional mortgages,  mortgage lenders will finance a certain number of acres, a house & a garage. The number of acres that they will consider can vary based on the property location and the norm for that area. The minimum down payment can also vary based on the size and location of the land. For example, a property that is close to a major urban area and under 10 acres would most likely be approved with 20% down payment. If it is a larger acreage 30+ acres and not within an hour of a major urban area, the minimum down payment will likely increase.   The lender may consider including value of out building if the product is changed to an Ag mortgage instead of residential mortgage and the have a higher interest rate. For high-ratio / CMHC insured mortgages with a minimum of 5% down, they will approve and insure the value of the house, garage and the `residential component` of the land. If the norm / average acreage size for the area is 20 acres, this is what they will approve in land value. If it is 160k – then this is


Why is it important to be pre-approved?

There is a huge difference in Pre-qualification and Pre-approval.  To get a pre-qualification (just as one of the big banks is offering in 60 seconds) only tells you the amount you could qualify for.  It doesn't know if you are qualified because no credit has been pulled, no income requirements reviewed and no down payment proof sent in.  This is why it is so important to work alongside a broker who will take the time review and provide guidance on the pre-approval process.  It is very important to have this in place when going and shopping the housing market to know what you qualify for. The other important reason is if you were pre-approved with a rate hold in place and the mortgage rules change you are grandfathered with those old rules for a time period.  For an example a family with a household income of $80,000 qualified for  new mortgage of $361,800.00 prior to May 7th when the Bank of Canada changed the benchmark qualifying rate from 5.14% to 5.34% now that same family only qualifies for a mortgage of $354,800.00.  This can make or break your chance to purchase the dream home you have your heart set on. 


How much mortgage can you qualify for?

The first step in buying a house is determining your budget and what your allowable amount will be for qualifying. The amount you can qualify for depends on your credit history and your ratios of debt to income (TDS and GDS ratios.) The normal maximum TDS & GDS ratios are 42% and 39% respectively, but for those with exceptional credit, the mortgage qualification process only looks at the TDS ratio, and relaxes it to as much as 44%. GDS Ratio: Your Gross Debt Service Ratio is your monthly housing costs (mortgage, heating, half of condo fees, property taxes) divided by your income. TDS Ratio: Your Total Debt Service Ratio is all of your monthly obligations divided by your income. With ever changing mortgage rules the latest change is the stress test which has borrowers qualifying at the bench mark rate to ensure if rates increase they can handle the extra payment requirements. Today the bench mark rate is set at 5.34%. That can affect a client who would qualify for a mortgage for $310,000 at the current rate 3.24% with a $60,000 income. Now with the 5.34% stress test that same client only qualifies for $260,000. It is very important


What is a first time home buyer?

This is a question we get all the time so thought it would be a good idea to explain. The term "First Time Home Buyer" actually does not exist anymore in purchasing a property. It used to be a few years back that in order to go as low as 5% down payment on a home you could not have owned a property for the past 5 years and the property you are buying had to be your principal residence. That is no longer the case. The new rules are only that you must be going to live in the property as your home. You can own as many other properties as you like however as long as you are going to live in the property you are getting the mortgage on you can go as low as 5% down payment. There may be some exceptions to that due to the type of property you are buying so the best advice a can give is check with us at Unbeatable Mortgages ahead of time and we can advise. It is always best to work with an experienced and qualified Mortgage Broker, to get the best advise for your home purchase.


Up for Renewal? Should you renew now or wait?

Should You Renew Now Or Wait? In every homeowner’s journey, the question of mortgage renewal will eventually come up. It seems to be a longstanding debate whether to take the chance to renew later and hope the rates go down, or go with certainty and renew now. In light of the current market, our experts have something to say on the matter: Sooner or Later Our experts highly recommend renewing sooner rather than later. It may be tempting to put off the inevitable for an extra year or so, but they advise against it. With interest rates steadily rising, people who have mortgages maturing in the next three years should seriously consider renewing early and locking in now. Avoid Rocketing Rates This may seem counterintuitive since the rate you might pay later may likely be lower than the rate you would pay to renew today. But waiting one to two years could be even worse. In a year from now, it is estimated that rates will be up on average another 1%. That would increase the standard five year fixed rate to 4.25%. Renewing today, would lock you in somewhere around 3.25% and would have no out of pocket expenses


Why use a Mortgage Broker?

Mortgage Broker 1. Get independent advice on your financial options. As independent mortgage brokers and mortgage associates, we are here for you. Our goal is to help you successfully finance your home or property with the right mortgage product for you. We’ll start by getting to know you and your homeownership goals. We’ll draw from available mortgage products that match your needs, make a recommendation, and together decide on the right mortgage product for you. 2. Save time with one-stop shopping. It could take weeks for you to organize appointments with competing mortgage lenders — and we know you’d probably rather spend your time house-hunting! We work directly with dozens of lenders, and can quickly narrow down a list of lender products that suit your needs best. It makes comparison-shopping fast, easy, and convenient. 3. We negotiate on your behalf. As Mortgage Associates, we negotiate mortgages each and every day on behalf of Canadian homebuyers. You can count on our market knowledge to secure competitive rates and terms that benefit you. 4. More choice means more competitive rates. We have access to a network of major lenders in Canada, so your options are extensive, including traditional lenders, credit unions, trust


All Mortgage Penalties Are NOT Equal

Patricia McKean Blogs This is a story about Tom and Mary. Two different people with similar mortgages, but very different prepayment penalties. Tom and Mary each buy a house at the exact same time for the exact same price and get a mortgage for the exact same amount. The only difference is Tom uses a Big Bank, and Mary uses a monoline lender for their mortgages. Let’s assume they both received a rate of 2.99% for a 5 year fixed term. Three years into their mortgages, Tom and Mary are both going to be paying off their respective mortgages which are both at $250,000 at the time of the payoff. Now to keep the comparison fair, we will pretend that interest rates have not changed at all for any of the terms, whether it is the posted rates or the discounted rates. The rates are based on the actual interest rates at the time of writing. Now because they have ended their 5 year contract early, they will have to pay a penalty. Both agreed at the time they took out their mortgage they would pay the greater of 3 months interest or the Interest Rate Differential (IRD). The IRD


What is the Difference Between a Fixed and a Variable Rate Mortgage?

Difference Fixed Variable Rate Mortgage What is a Mortgage Rate? Mortgage rate describes the amount of interest charged by a lender to the mortgage holder each year. It is expressed as a percentage, just like the Annual Percentage Rate on a credit card. The lower the mortgage rate, the less a mortgage holder ends up paying in the long run. Mortgage rates are decided according to many factors, including borrower finances and market conditions. What is a Fixed Rate Mortgage? A fixed rate mortgage is a common loan where interest rates remain unchanged until the term of the mortgage is up. Its simplicity makes it the most popular type of home loan. Neither principal nor interest will fluctuate with time, so there are no “surprises.” Fixed rate mortgage terms are usually 3-5 years. During that period, monthly payments don't changed unless changed by the borrower. In general, if you want to change the interest rate of a fixed rate mortgage – to take advantage of superior market conditions, for example – you need to refinance the loan. This essentially generates a new loan referred to as a refinance. What is a Variable Rate Mortgage? A variable rate mortgage is a