Friday, April 20, 2018

Mortgage Broker Value

Mortgage Broker Value


Not surprisingly, borrowers often default to their own Banker. And why not? It’s an established and comfortable relationship. Perhaps it’s viewed as the path of least resistance. But is it the right lender for the borrower’s current specific needs? Perhaps not.
More sophisticated borrowers may be of a size or scale that they have their own internal resources in finance, quite capable of securing the required financing. They are likely only in the market infrequently however, and almost certainly not fully knowledgeable as to all of the financing sources available.
Aren’t all Lenders pretty much the same?
Borrower’s may think that all institutional lenders are pretty much the same. Offering comparable rates, and standardized borrowing terms. This is rarely the case. Lender’s often prefer one asset class over another. They may have a particular need for one type of loan. A specific length of loan term may be desirable, for funds matching purposes. Real Estate risk is a fact for real estate lenders. How they mitigate this risk differs however. It may be stress testing interest rates during the approval process. Sophisticated risk pricing models may be used, having regard to previous loss experiences. The lender may rely significantly on collateral value, or guarantees. The conditions precedent to funding will often differ from lender to lender.
A real world example
I had the pleasure last year in advising a client who had 3 sizable real estate assets, in 3 quite distinct asset classes. The borrower’s loan amount requirements were significant, however they were flexible on loan structure. Accordingly, I sought out competitive, but differing deal structures. My goal was to provide a competitive array of options. A number of “A” class lenders were approached, several/most of whom this particular borrower had no previous experience with. I shortened the list to 5 lenders, and received Term Sheets from each.
Each Offer was competitive on a stand alone basis, but they differed quite substantially, in the following ways:
  • Loans were either stand alone, or blanket loans, or some combination.
  • Length of terms offered, differed by asset class.
  • There was as much as a 75 bps rate difference, from highest to lowest Offer.
  • The amortization period depending upon asset class, ranged from 15 to 25 years.
  • Loan amounts on individual assets differed as much as 20%.
  • Third party reporting requirements differed between lenders.
  • There were a combination of fixed vs. floating rate loan structures.
  • Recourse was limited by some lenders, on select assets, or waived entirely, upon a higher rate structure.
Leverage Your Knowledge
These variances are striking, yet each of the 5 lenders were considering the precise same asset, at the same time, with common supporting information from which to base their analysis. How was the borrower to know which Offer to exercise? As a Broker, I can add value by helping the borrower to consider both their immediate and longer term strategic requirements, in the context of their overall real estate portfolio needs. This was precisely how this borrower landed on the most appropriate Offer for their particular circumstances. In this particular case we presented different, yet competitive, and uniquely structured options for the borrower’s consideration.
Consider a Dominion Lending Centres Mortgage Broker when next in the market for financing. Leveraging a Broker’s knowledge is a tremendous value proposition.
Thank-you Allan Jenson from DLC The Mortgage source for this blog post
Allan Jensen

Allan Jensen

Dominion Lending Centres - Accredited Mortgage Professional
Allan is part of DLC The Mortgage Source based in Ottawa, ON.


Thursday, April 19, 2018

Mortgages are confusing!


With the plethora of every changing mortgage rules and the access to banks, online lenders, investors, alternative lenders etc.  and multiple types of mortgages, where does a home buyer start?

What is a broker?  I have always used my bank, is that bad?  I am overwhelmed and I don't know how to go about this? My friend was offered something else, why is it different for me?
I never try because I don't think I can get a mortgage? 

The questions and or statements in regards to mortgages can go on forever!  I have been a licensed mortgage associate with Brokers For Life DLC for 8 years now and I continue to get new questions every day.  No ones situation is the same or equal when it comes to qualifying for your mortgage.

As your mortgage professional I try to make things simple by taking every potential client through the same process every time so I can truly understand your unique buying situation and make sure I tailor a mortgage to fit your needs.

I am a trained professional who is continually training and learning so I can take the confusion out of your mortgage experience!

I offer a free 5 star service, so call me and ask any questions you have in regards to mortgages and see if getting pre approved for a mortgage will be your next step!

Don't have any questions, but want to get started!  Go to my website and apply online today!





Tuesday, April 17, 2018

Next tip to save money on your mortgage:


Accelerate your mortgage payments:
The most painless way to ramp up your mortgage payments and shorten your amortization period is switching from monthly to accelerated bi-weekly payments, or increase your monthly payments by any % within your pre payment options on your mortgage.  See my two examples below:
1. An accelerated re payment schedule is a monthly payment divided by 2 and paid 26 times in the year.
eg. Instead of making your payments monthly, ask the lender to go accelerated biweekly and on a $350 000.00 mortgage at 3.25% you can SAVE approx. $9300.00 in the first five years of your mortgage.

2. Take a $350 000.00 mortgage amortized over 25 years, based on the rate being 3.25%.
Increase your payments by 10% using your pre payment options:
Your payment will go from $1701.58 to $1871.74 and you will shave approx. 10 years off your mortgage and save just over $62 000.00 in interest.


Monday, April 16, 2018

Tips to save you interest on your mortgage!!!!!



1. Shop around and not just for the lowest rate
Of course, you should get the lowest interest rate that you can. But rates aren’t the only thing to consider when comparing options. With your mortgage the lowest rate does not equal the best mortgage.
Your mortgage should have:
  • Prepayment privileges: As interest rates rise, a bigger chunk of your mortgage payments will go toward interest rather than the principal. That’s why it’s important to get a mortgage that will allow you to make large lump-sum contributions and increase your monthly payments if you decide to pay down your debt faster. Mono line lenders might both lower rates and offer more generous prepayment privileges than the big banks. “Mono Line lenders with a solid track record are worth considering, especially if it means paying down your mortgage sooner,” Mono line lenders have lower overhead costs because they are online and can pass that savings onto you!  

  • Penalties: What would happen if you were to break your mortgage? That’s a question every mortgage applicant should ask. People wind up having to break their mortgage for any number of reasons: They move, they get divorced, they lose their jobs. And that can cost them thousands of dollars in mortgage penalties, which is why it’s important to look at the fine print. In Canada, if you have a variable-rate mortgage, the penalty is generally three months’ interest. If you have a fixed rate, however, you could get dinged for much more than you think. That’s because you’ll have to pay the greater of either three months’ interest or something called the interest rate differential (IRD), which is based on current mortgage rates and your remaining mortgage balance. If you’re going for a fixed-rate mortgage, it’s important to ask your lender whether the IRD is calculated based on their discounted rate or their considerably higher posted rate. “The big banks calculate fixed-rate penalties using their posted rates,”  Mono-line lenders calculate their  penalty using their discounted rate, please see one example from my mono-line lender First National Bank.
  • This is an exceptional example from Frist National on penalty savings


  • Portability: Speaking of mortgage penalties, one way to avoid them, have a portable mortgage,(If you move the mortgage moves with you). This means you can transfer your mortgage to your new home and combine it with a new loan, if necessary. Another great feature that could save you thousands of dollars in penalties is having an assumable mortgage. That would allow you to leave your mortgage behind for another qualified buyer instead of breaking it.
Stay tuned for more tips to come this week!

Friday, March 23, 2018

Spring Into Action: Refinance Your Mortgage With the Help of a Mortgage Broker

Spring Into Action: Refinance Your Mortgage With the Help of a Mortgage Broker


We sprung forward last earlier this month by changing our clocks one hour ahead. For some, their microwave and oven clocks are once again displaying the correct time since the last time we needed to adjust our clocks (in the Fall). Patience is a virtue – except for when it comes time to refinance a mortgage!
The Spring is a busy time for mortgage brokers across the country. We welcome this change in season knowing that we are in the best position to give families mortgages that make sense for them.
This is the time of year that banks begin to send out their mortgage renewal notices. Some people will simply sign the documentation sent over from their bank and take on a new mortgage at the rate the bank has suggested. However, this may not be the best rate for which you and your family can qualify.
What is a Mortgage Renewal?
A mortgage renewal is when the current terms of your mortgage come to an end and you sign on for a new mortgage term.
The time is now to spring into action, up to three months ahead of your mortgage renewal deadline. By shopping around for the best mortgage rate for your financial circumstances, you may save yourself thousands of dollars. To do that, you may want to consider working with a seasoned professional – your local mortgage broker.
The benefits of working with a mortgage broker to help find a mortgage solution that works best for you are three-fold.
A mortgage broker gives you a second opinion.
While your current mortgage lender claims to have your best interest at heart, getting a second opinion on your financial situation does not hurt. There may be new options and products available for you that your current lender is forgetting or unable to offer. A second opinion on your changed financials may be able to save you money or highlight some new options that may be better suited to your needs.
A mortgage broker does the work for you, at no cost.
Some people are still concerned that hiring a seasoned professional to look at your finances and find new mortgage rates will cost a lot of money. This is a myth! Mortgage brokers provide their services at no charge (yes, free!) and take a fee from the lending institution, not the client. So, let us look around for the best mortgage rates available to you on your behalf – all at no cost to you.
A mortgage broker does ONE credit check but can check MULTIPLE lenders without lowering your credit score.
One of the biggest advantages to having a mortgage broker shop around on your behalf is having them conduct one credit check and then using that information to shop around among several different lenders. If you wanted to shop around on your own, you would have to allow each institution to run a credit check and, as a result, lower your credit score. Working with a lender also means a lot less paperwork for you, too!
In short, a Dominion Lending Centres mortgage broker does the legwork on finding the best mortgage rate for you, at no cost and with only one credit check. Be sure to spring into action this Spring to and get a jump on your mortgage renewal process.

Thanks Max Omar with DLC for this blog post

Monday, March 19, 2018

What Is a “Monoline” Lender?

What Is a “Monoline” Lender?


What usually follows once someone hears the term “Monoline Lender” for the first time is a feeling of suspicion and lack of trust. It’s understandable, I mean why is this “bank” you’ve never heard of willing to loan you money when you’ve never banked with them before?
In an effort to help you see the benefits of working with a Monoline Lender, here is some basic information that will help you understand why you’ve never heard of them, why you want to, and the reason they are referred to as lenders, not banks.
Monoline Lenders only operate in the mortgage space. They do not offer chequing or savings accounts, nor do they offer investments through RRSPs, GICs, or Tax-Free Savings Accounts. They are called Monoline because they have one line of business- mortgages.
This also plays into the reasons you never see their name or locations anywhere. There is no need for them to market on bus stop benches or billboards as they are only accessible through mortgage brokers, making their need to market to you unnecessary. The branch locations are also unnecessary because you do not have day-to-day banking, savings accounts, investment accounts, or credit cards through them. All your banking stays the exact same, with the only difference of a pre-authorized payments coming from your account for the monthly mortgage payment. Any questions or concerns, they have a phone number and communicate documents through e-mail.
Would it help Monoline Lenders to advertise and create brand awareness with the public? Absolutely. Is it necessary for them to remain in business? No.
Monoline Lenders also have some of the lowest interest rates on the market, the most attractive pre-payment privileges, and the lowest pre-payment penalties, especially when compared to a bigger bank like CIBC or RBC. If you don’t think these points are important, ask someone whose had a mortgage with one of these bigger banks and sold their property before their term was up and paid upwards of $12,000 in penalty fees. An equivalent amount with a Monoline Lender would be anywhere from $2,000-$4,000 in fees.
Monoline Lenders are not to be feared, they should be welcomed, as they are some of the most accommodating and client service-oriented lenders around! If you have any questions, don’t hesitate to call Amy Wilson - 780-919-0475 or amy@yourmortgagegirl.ca
Thanks Ryan Oake from DLC for this Blog Post

Wednesday, March 14, 2018

Refinancing in 2018

Refinancing in 2018


Recently there were changes to the mortgage rules yet again, and one of the rule changes was regarding refinancing your home. At one point in the last 10 years you could refinance your home all the way back up to 95% of its current value, which in many cases has put that property what we call under water or upside down. Basically, real estate markets ebb and flow and if you refinanced to 95% when we were at the crest of a market wave then as markets rolled back you were underwater… clever huh.
Fast forward a few years and the government said ‘what a minute, that is dangerous’, and it was. Clients now had no options for that property except to keep it, hoping values came back or turn it into a rental and hope to break even. At this point the government now said you can only refinance your home to 80% of the value which of course meant you needed to have equity in the property of at least 20% to make a change. This was an insurable product for many of our monoline lenders at this point, so it was something that was competitive in the market.
Welcome to 2018 and today you can still refinance your home to 80% but the Office of the Superintendents of Financial Institutions (OSFI) and CMHC now say that as a lender you can no longer insure this product. What does that mean for the average consumer? First off, it means that lenders across the board are not offering the same rate for insured mortgages as they are for refinances. The point spread between insured and uninsured mortgages has grown to, on average, .30% higher for 5-year fixed rates and it is .55% higher for variable rates.
To add to this extra cost, the new rules of qualifying at 5.14% which is currently the benchmark rate, applies to all mortgages including refinancing. Overall, the changes make it tougher to refinance and forces Canadians to seek alternative options to take equity out of their homes. In many cases this will mean looking to the private sector at higher rates when they need that money. If you have any questions about refinancing, contact your local Dominion Lending Centres mortgage professional.

Thanks Len Lane for the article