Up for Renewal? 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 as the new lender would absorb


Why use a 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 companies, and


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


Self Employed and Time to Get a Mortgage?

  Self Employed Time Get Mortgage With all of the new rules, where do our self-employed clients sit amongst all of the changes? That’s a question that we have been working on solving for the last couple years as all the adjustments are being implemented. In the past, we had the great NIQ (No Income Qualifying) Mortgage which allowed clients to take as little as possible out of the company to get the tax break and then to simply “state” their income with as little as 10% down to qualify on an A side mortgage. But lately, having your cake and eating it too, is gone. The product still exists with the 10% down, but with tighter parameters on the A side, we are having to justify the stated with proof of company financials and other documents to support what income is being used. Don’t forget the mortgage insurance premium is also increased on this program. 35% down and bank statement deposits to verify, will get you into the program on the B side, but you won’t be seeing those top rates offered and likely a 1-2% fee on top of the mortgage. So what is the new strategy as


Confused by Mortgage Insurnace?

Confused Mortgage Insurance If you put less than 20% down on a property, then you may be familiar with mortgage default insurance, some people refer to this as CMHC insurance. Truth be told, there are three providers of this type of insurance, CMHC, Genworth and Canada Guaranty. That said, mortgage default insurance should not to be mistaken for mortgage creditor insurance. Mortgage creditor insurance protects the ownership of your family’s home by making sure the mortgage keeps getting paid or gets paid out during the most difficult of life’s circumstances. There is confusing amongst clients with understand which is which. By law, lenders can only provide mortgage financing to those with at least a 20% down payment, unless the mortgage is insured against default. Now in some instances, mortgage default insurance may also be required by some lenders for individuals with more than a 20% down payment. Why is this you ask? Some lenders require this because the loan is considered higher risk, such as self-employed borrowers or properties in remote locations. It also allows lenders to access cheaper funds for mortgage and in return give their borrowers much lower interest rates. Who Pays the Premium Sometimes the client does


There is a better option out there than Mortgage Life Insurance

Better Option For Mortgage Life Insurance Buying a house can be a stressful and exciting event. It’s not surprising, then, that first-time buyers can inadvertently sign up for something they may not need—like mortgage life insurance. Clients  know about their mortgage payments and property taxes, but they weren’t sure if they had insurance for the mortgage. If something happened to one of them, how would they pay it off? Inadvertently buying mortgage life insurance is a common occurrence. (Mortgage life insurance is also called mortgage protection, creditor insurance or simply mortgage insurance, but it’s different from mortgage default insurance or CMHC insurance, which protects a lender if a homebuyer who makes a down payment of 5% to 19.99% can’t pay the rest of the mortgage.)  As first-time homebuyers, the couple was new to the mortgage process and waded through a lot of options, but didn’t talk about insurance with the bank. Bank employees are often “simply checking off a box on the application”. The clients don’t discuss their health or disclose any pre-existing health conditions like diabetes or heart disease; the bank doesn't demand a medical examination or medical records. This is crucial because for clients, who already have diabetes


Are you in a Variable Rate Mortgage?

Variable Rate Mortgage Are You in a Variable-Rate Mortgage? If you’re in a fixed-rate mortgage, this news has no impact on you. Mind you, ‘impact’ is too strong a word for the subtle shift that occurred Jan 17, 2018. Short Version The math is as follows: A payment increase of ~$13.10 per $100,000.00 of variable-rate mortgage balance (unless you are with TD or a specific credit union, in which case payments are fixed and change only at your specific request) For example, a variable-rate mortgage with a balance of $400,000.00 will see a payment increase of ~$54.40 per month Personally, we are staying variable, for a variety of reasons… Long Version Qualification for variable-rate mortgages has been at 4.64% or higher for some time. This requires a household income of greater than $70,000.00 for said $400,000.00 mortgage. Can 99% of such households handle a payment increase of $54.40 per month? Yes. Will 99% of households be frustrated with this added expense? Yes. Ability and annoyance are not the same thing. Have these households enjoyed monthly payments up to $216.80 lower than those that chose a fixed-rate mortgage originally? Yes. Are 99% still saving money over having locked into a long-term


Reasons Why People Break Their Mortgages

Reasons of Breaking Mortgage by People Research shows that 60% of people break their mortgage before their mortgage term matures?  Most homeowners are not aware that when you break your mortgage with your lender, you will have payout penalties and those penalties can be very expensive.  Many homeowners are so focused on the rate that they are ignorant about the terms of their mortgage. Is it sensible to save $15/month on a lower interest rate only to find out that, two years down the road you need to break your mortgage and that “safe” 5-year fixed rate could cost you over $20,000 in penalties? There are a variety of different mortgage choices available. Knowing the 9 reasons for a possible break in your mortgage might help you avoid them! 1. Sale and purchase of a home: • If you are considering moving within the next 5 years you need to consider a portable mortgage. • Not all of mortgages are portable. Some lenders avoid portable mortgages by giving a slightly lower interest rate. • Please note: when you port a mortgage, you will need to requalify to ensure you can afford the “ported” mortgage based on your current income and


Divorce now what to do with the property?

Divorce Among other things, divorces and separations can often leave deep financial wounds. In the case of mortgages, they can be messy and complicated. If you are undergoing a separation, it’s important to know that you have options that can help make this ordeal easier. One tool you may want to consider is our spousal buyout program. Who is this program for?  Our spousal buyout program is intended for those instances where two people, whose names are on a single mortgage, have decided to separate and one of them wishes to stay in the home. Perhaps this is so that any children involved won’t have to move, but the reason why one person wishes to remain in the home is irrelevant. In most cases, this program is used in situations of divorce, but it is also applicable for siblings or even friends who jointly owned a home and now want to go their separate ways. How does this program work?  Through this program, it is possible to finance up to 95% of the home’s purchase price in a private sale in order for the other party to be bought out. These proceeds can only