Variable vs. ARM: What’s the Difference? Many don’t realize that there are two flavors of floating-rate mortgages: The adjustable-rate mortgage (ARM) Its payment rises and falls with prime rate The variable-rate mortgage (VRM) Its payment doesn’t change when prime rate changes The only exception is when rates soar so much that you’re not paying all the interest. Then the payment generally rises to cover the interest due. The answer is a variable-rate mortgage where payments stay the same and your amortization extends.  On an ARM mortgage your interest rate changes based on the Bank of Canada prime rate announcement which they do 8 times a year your payment changes to reflect the new prime rate and your amortization stays the same.   How Much Shock? Let’s compare a VRM to an ARM and see how big a concern this really is. Assume a $300,000 mortgage with a 25-year amortization at a decent rate of prime – 0.90%. If rates jumped 2%  (once every six months), here’s how you’d make out: As you can see, you’re going to be “payment shocked” either way if rates surge a few hundred basis points. What Else You Need to Know Remember this: If we may state the obvious, the

It feels like we've been in this 'rate-hike' for a while. It's actually only been a few months since the first increase started on March 2, when the benchmark rate sat at 0.25%. Since March, the central bank has raised its benchmark rate a full 3.0%. After today, lender prime rates will (likely) rise to 5.45% from 4.70%. Will the BoC hold now? Possibly. Maybe. 🤞 Inflation is still high, but down from its June 2022 peak. Some prices, like for gas, have eased. House prices are cooling in the larger markets, like Toronto and Vancouver. Home sales are tempering with less robust demand — tapping the brakes on the market insanity that brought intense bidding wars and no-conditions offers. Your variable rate mortgage payments are about to increase again With your Adjustable-Rate Mortgage (ARM), your floating payments will float higher in your next full payment cycle. For example, on a $500,000 mortgage, if you have our current lowest variable rate of 3.50% your rate will now be 4.25%, which means an extra $200 per month to soak up. Are variable rates still popular? Despite the BoC's recent rate hikes, our clients are still interested in a variable rate over a fixed

Pay your mortgage off Faster! This is one of those money hacks I love because you only have to make one small change, and it takes care of itself. By moving to accelerated bi-weekly payments and bumping that payment by $25 each year, you can owe $21,582.13 less at the end of the 5 years, reduce your amortization by nearly 6 years, and save almost $2,000 in interest. Let's go through an example. 5 Year Fixed Mortgage with Monthly Payment Mortgage Amount: $400,000 Interest Rate: 3.5% Amortization: 25 Years Monthly Payment: $1,997.09 Over the 5 years, you will make 60 payments on your mortgage. Total Interest Paid: $64,944.84 Total Principal Paid: $54,879.96 Mortgage Balance: $345,120.04 5 Year Fixed Mortgage with Bi-weekly Accelerated Payments In this example, there would be an annual increase to the bi-weekly payment of $25.00 once per calendar year. Mortgage Amount: $400,000 Interest Rate: 3.5% Amortization: 19 Years, 1 Month Bi-Weekly Accelerated Payment Year 1: $998.54 Year 2: $1,023.54 Year 3: $1,048.54 Year 4: $1,073.54 Year 5: $1,098.54 Over the 5 years, you will make 130 payments on your mortgage. Total Interest Paid: $63,098.11 Total Principal Paid: $76,462.09 Mortgage Balance: $323,537.91 With this simple change, not only did you reduce

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

Is Going with a Mortgage Broker Right for You? Let’s face it: shopping for mortgages is tough. There’s a lot of information to sift through and a long checklist waiting to be done. You’ll use the excuse that you’re too busy and keep procrastinating. This will lead you to making the wrong decision by going with your bank or a mortgage broker who may not be offering you the best deal. But, mortgages don’t have to be tough. Or boring. Think of it as paving the way for a new life or leading your company into the great unknown. So, is going with a mortgage broker best for you? Walk with me… Assess What a Mortgage Broker Does Canadian mortgage brokers are licensed and must maintain their accreditation. This means they are always in the know of the latest information on the Canadian real estate and mortgage financing market. Canadian mortgage brokers provide you with expert advice according to your requirements, the market updates, rules, and regulations. Canadian mortgage brokers have more contacts among lenders because some them only work with brokers to get good clientele. Because mortgage brokers work with so many lenders, they help you get offers

How a Landlord Reports to a Credit Bureau Landlords need to screen tenants to limit the amount of trouble and financial strain they will encounter once a tenant takes up residence in their building. They have many factors to consider when screening—credit being a major aspect. Tenants are often uneasy when a landlord does a background check because they worry about their credit scores. While tenants can supply their potential landlords with credit data, landlords will also do a credit check by requesting information from credit bureaus. What Do Credit Bureaus Do? A credit bureau collects and updates credit information on individuals. This includes: repayment history the amount of credit available the amount of credit currently in use outstanding debt public record details (bankruptcy, foreclosure, repossession) Credit bureaus also have an individual’s personal information, such as their address, previous and current employers, and salary information. A credit bureau’s sources consist of a variety of businesses that provide consumer information, resulting in variations depending on the credit bureau you choose. Credit scores are sometimes erroneously calculated, for instance, when two individuals have similar personal information, but this can be disputed. Trust the Unbeatable Mortgage Team to help

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

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

A home is the largest purchase you will ever make in your life. Understanding how mortgages work is crucial, as it allows you to discover the best lending options for you. There are numerous mortgage types, but to help introduce some lending jargon, we have listed the five most popular. Conventional Mortgages As the name itself indicates, this is one of the most popular mortgage options. A conventional mortgage requires you to put down a minimum down payment of 20%, with the remaining amount being covered by your loan. A down payment is usually funded by your own savings, but an alternative to fund a down payment is withdrawing money from your RRSPs. Example: If Mary wants to buy a $100,000 home, she will be required to submit a downpayment of at least $20,000. High Ratio Mortgages These mortgages require the borrower to place a down payment less than 20%. The minimum down payment is 5%, with the lending institution covering the remaining 95%. Because these mortgages are more high risk, they do require the purchase of mortgage default insurance, the cost of which is passed on to you as a lender. High ratio mortgages are capped at residential properties

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.