Monday, January 29, 2018

8 Things You Can Do To Get The Best Renewal

With 47 per cent of homeowners scheduled to renew their mortgages this year, 2018 is a year of change for lots of Canadians.

Here are the top 8 things you can do to get the best renewal:

1. Pull out your mortgage renewal now, and start early. When you are proactive instead of reactive you can see if there is anything on your credit score or lifestyle that we can modify to ensure you are positioned for the best renewal. You are only in a position to do this when you start early- in the last year of your mortgage you will have the most amount of options available. For example, there can be an inaccuracy in your credit report or you may be considering an income/job change that would impact your options. We can look at timing accordingly for you.

2. Do not just sign the renewal offered. Lenders can change the terms of your mortgage, and the renewal you are signing can cost you up to four per cent of your equity if you are with the wrong lender for your current life stage.

3. Most people think the best rate is the best renewal – WRONG. The terms are most important and with all terms moving or selling is the only reason most people think they would ever break a mortgage- THIS is simply not the case, a change in the interest rate market, divorce, health, job change, investment opportunity and many other reasons would contribute to a future modification being beneficial for a consumer.

4. Take into consideration lender history. The lender can have a higher prime then anyone because they know the cost to leave outweighs staying the course. The lenders are very smart with their calculated risks- and this is not something they have an obligation to disclose.

5. Remember your lender has a bias – their job is to handcuff you so they can make as much profit off you as possible- don’t be a victim.

6. Do not shop each lender on your own, it takes points off of your credit score. All lenders have different rates based on your score and you want to position yourself to get the best. By using a mortgage professional, they can shop multiple lenders protecting your credit using only one application, while the rate variation can be on average a half a percent!

7. Don’t get sucked into the online rate shopping- any monkey can post a rate online and you can drive yourself crazy looking at something that does not exists. In today’s complex mortgage market there are significantly different rates based on – insured mortgage vs uninsured mortgage, switch vs refinance, purchase or renewal, principal residence vs rental, salary or self-employed, 600 credit score or 700 credit score, amortization of 20 years to 30 years, type of property condo vs house, and leased land or freehold. The variations can mean a difference in thousands of dollars. Like diagnosing a medical condition, you can’t go online, you do have to put in the appropriate application and supporting documents to verify which options are available to you that will result in the lowest cost in borrowing.

8. Remember your mortgage is the largest debt and investment most of us have, when you contact an independent mortgage professional, we are going to invest all the work and expertise and advise you in your best interest regardless if we get your business. We may after our review advise you to stick with your existing lender, or make another recommendation for you. We are only here to enhance your finances and save you money, and there is no cost for our service.

Thank-you Angela Calla for this article with DLC


Thursday, January 18, 2018

Mortgage qualifying rate is increasing again!

Coming off the Bottom



Are the good times really over for good?

Recently, for the first time since 2012 we have seen the 5-year bond market climb back up over 2.0%. Based on amazing employment numbers and the likelihood that the Bank of Canada will raise rates on January 17, the bond market has continued a climb out of the basement and maybe running full steam uphill in response to a better economy.
Let’s look at the last 10-years of bonds and how they correlated to the 5-yr. fixed mortgage rate because it is still the choice of most Canadians as it is a stable place to build your home budgets around. In 2007 the 5-year bond was at 4.13% and the 5-year benchmark rate 6.65%. Follow the melt down that started to happen in 2008 the bond slowly but surely began to sink and by 2012 the 5-yr. bond was at 1.25% and the bench mark 5 yr. rate was at 5.29%. But wait we weren’t done; in 2015 the bond sunk all the way to .65% but the bench mark rate was still at 4.74%, if you took that rate at the branch you really paid too much as we were almost at 2.25% for standard feature 5 year fixed at that time.
So now turn the corner and we see that the bond is on its way back up. We come into 2018 with it having climbed all the way back to 2% almost an 8-year high and of course Governor Poloz has already had the bench mark at 4.99%. Effective midnight January 21/2018,  benchmark will increase to 5.14%. Will it be long before the new qualifying numbers are 6% again, still some factors to watch, NAFTA, employment, world markets, price of tea in China, price of oil in Alberta.

I am available for any questions you may have and I am happy to get your approval submitted today!
Contact Amy Wilson
780-919-0475
amy@yourmortgagegirl.ca

Monday, January 15, 2018

Bank Broker vs. Mortgage Brokers

Bank Broker vs. Mortgage Brokers

Here's the Scoop

Ask any mortgage broker and they can tell you that there are a handful of misconceptions that the public has about working with a mortgage broker. From questioning their credentials (we all are regulated and licensed with in our own province, and are constantly re-educating ourselves) to assuming that the broker does not have access to the same rate as the banks (we do in fact—plus access to even more lending options) mortgage brokers have heard it all!

With the recent changes to the B-20 guidelines taking full effect as of January 1, 2018 the mortgage landscape is changing and I firmly believe in keeping my clients educated and informed. With these changes, there have been a number of misconceptions that have come to light regarding mortgage professionals and their “limitations” and I feel it is time to address them:

Myth 1: Independent Broker’s don’t have access to the rates the banks do.

Fact: Not true. Brokers have access to MORE rates and lenders than the bank. The bank brokers only have access to their rates-no other ones. A mortgage professional has access to:
• Tier 1 banks in Canada
• Credit Unions
• Monoline Lenders
• Alternative Lenders
• Private Lenders

This extensive network of lender options allows brokers to ensure that you are not only getting the sharpest rate, but that the mortgage product is also aligned with the client’s needs.

Myth 2: The consumer has to negotiate a rate with a lender directly.

Fact: Not true at all! Your mortgage professional will shop the market to find the best overall cost of borrowing for the client. Broker’s will look at all angles of the product to ensure that the client is getting one that will suit their unique and specific needs. Not once will the client be expected to shop their mortgage around or to speak to the lender. This is different from the bank where you are limited to only their rates and are left to negotiate with the bank’s broker—who is paid by the bank! We don’t know about you, but we would much rather have a broker negotiate on our behalf. Plus, they are FREE to use (see myth #6)

Myth 3: A Broker’s goal is to move the mortgage on each renewal.
Fact: A Mortgage Broker’s goal is to present multiple options to consumers so they can secure the optimal product for their specific and unique needs. This entails the broker looking at more than just the rate. A broker will look at:
• Prepayment options
• Costs of borrowing
• Portability
• Penalty to break
• Mortgage charges
And more. If the Broker determines that the current lender is the most ideal for their client at the time of renewal, then they will advise them to remain with that lender. The end goal of renewal is simple: provide clients the best ongoing, current advice at the time of origination and at the time of renewal

Myth 4: The broker receives a trailer fee if the client remains with the same lender at renewal.
Fact: This is on a case-to-case basis. At times, there is a small fee given to the broker if a client opts to renew with their current lender. This allows for accountability between the lender, broker, and customer in most cases. However, this is not always the case and the details of each renewal will vary.

Myth 5: If a Broker moves a mortgage to a new lender upon time of renewal then the full mortgage commission is received by the broker, allowing the broker to obtain “passive income” by constantly switching clients over.
Fact: Let’s clarify: If a client chooses to move their mortgage at renewal after a broker presents them with the best options, then it is in fact a new deal. By being a new deal, this means that the broker has all the work associated with any new file at that time. It is the equivalent of a brand-new mortgage and the broker will have to do the correct steps and work associated with it.
A second point of clarification-although the broker will earn income on this switch, the income (in most cases) is paid by the financial institution receiving the mortgage, NOT the client.

Myth 6: It costs a client more to renew with a mortgage broker.
Fact: Completely false. Clients SAVE MONEY when they work with a mortgage broker at . A broker has access to a variety of lenders and can offer discounts that the bank can’t. Additionally, most mortgage brokers offer continuous advice and information to their clients. Working with a broker is not a “one and done” deal as it is a broker’s goal to keep their clients informed, educated, and well-versed as to what is happening in the industry and how it will affect them. When you work with a broker instead of the bank, you not only get the best mortgage for you, but you also have access to a wealth of industry knowledge continuously.
Mortgage Brokers are a dedicated group of individuals who work directly for the client, not the lenders or the bank. Brokers are problem-solvers, advisors and honorable individuals. We work hard to give our clients the best that we can in an industry that constantly is evolving and changing.

Wednesday, January 10, 2018

Mortgage rates are going to Rise!!!!

 Image result for mortgage rates increase Bond Market Hits 2%..fixed rates ready to rise!!!!!


For those of you who have seen this formula before I apologize but it is crucial to understand where our rates are coming from.

The Canadian 5 yr bond this morning climbed to 2% meaning that 5 year rates are moving up and moving quickly.

The simple formula : 2% plus 1.70%,  so the 5 yr rate is set to move up to the mid 3.5% mark depending on when the institution bought into the bonds as they climb.

Scotia already bumped their numbers this week in anticipation of the increase coming, this is coupled with our dollar being back above 80 cents on the idea that Bank of Canada will increase their rate by .25% on January 11th/2018.


So please be prepared, fixed and variable rates will most likely be going up!!!!

The time to get your mortgage is NOW!

Amy Wilson

C:780-919-0475
E:amy@yourmortgagegirl.ca
Website: www.yourmortgaegirl.ca

Tuesday, January 9, 2018

2018 OSFI's New Stress-Test Rules broken down

OSFI stress test


The most wide-reaching change announced by the Office of the Superintendent of Financial Institutions (OSFI) is the establishment of a new minimum qualifying rate, or “stress test,” for borrowers making a down payment of more than 20% of the home’s value.

Previously, stress test requirements only applied to insured mortgages (those with down payments of less than 20%) and most variable mortgages and terms less than five years.

The stress test requirement, which came into effect on January 1, 2018, is buyers with uninsured mortgages (mortgages with greater than 20% down) will need to prove that they can afford payments based on the greater of the Bank of Canada’s five-year benchmark rate (currently 4.99%) or their contract mortgage rate plus two percentage points. Average today is 3.29% plus 2% = 5.29%

Note: Conventional purchases ( greater than 20% down) can still be done using the benchmark rate set November 2016, you just need to ensure you contact me to figure out how!

Below are some ways examples to see how we can overcome the new stress test in place!

Examples:

Purchase of a new home - With 20% down the banks will require you to qualify at contract plus 2%,, this could reduce your purchasing power, however, I can also amortize a mortgage over 30 years instead of 25 years to offset the debt to income ratios and most likely get the approval.

OR

as a broker I have access to mono-line lenders - this is lenders who have just as much clout as the banks, but they don't have the overhead costs of a bank.  They are 100% online and specialize wholly on mortgages, not to mention, fantastic to deal with!  If you have 20% down and meet all the insurer guidelines we can call your mortgage insurable and qualify you at benchmark which today is 4.99%, increasing your purchasing power, only through a mortgage broker.

OR

You can take 15% of your 20% down payment and put it down to get a high ratio or insured mortgage at lower rates ( with my mono line lenders).  This means you only have to qualify at benchmark! Then, once the mortgage funds or you move in, you take advantage of your pre-payment options and put the other 5% down direct on the principal of your mortgage loan.  Over the term of 5 years, the money you have saved in interest pays for the small insurer premium you paid to get the home in the first place.  Mono-line lenders offer lower rates on insured mortgages as they don't carry the same risk as the loan is insured against default from the customer.

OR

If it is a refinance, this is where you wish to take equity from your home to pay off debt, invest, go on a trip, or do whatever you wish as it your equity, I  have options here too! I can extend the amortization from 25 years to 30 years or consider lenders who don't need to follow the new government rules.  Private lenders can be an excellent option and are being utilized more and more to get equity out of homes or to make purchases.

Bottom Line:  Don't listen to the all the negativity that comes with any change.  Change is inevitable and with the right mortgage broker reviewing your mortgage, you have options!

Contact Amy Wilson, amy@yourmortgagegirl,ca or visit my website at www.yourmortgagegirl.ca




Insured, Insurable & Uninsurable vs High Ratio & Conventional Mortgages

Insured, Insurable & Uninsurable vs High Ratio & Conventional Mortgages

Insured, Insurable & Uninsurable ss High Ratio & Conventional Mortgages You might think you would be rewarded for toiling away to save a down payment of 20% or greater. Well, forget it. Your only prize for all that self-sacrifice is paying a higher interest rate than people who didn’t bother.
Once upon a time we had high ratio vs conventional mortgages, now it’s changed to; insured, insurable and uninsurable.
High ratio mortgage – down payment less than 20%, insurance paid by the borrower.
Conventional mortgage – down payment of 20% or more, the lender had a choice whether to insure the mortgage or not.
vs
Insured –a mortgage transaction where the insurance premium is or has been paid by the client. Generally, 19.99% equity or less to apply towards a mortgage.
Insurable –a mortgage transaction that is portfolio-insured at the lender’s expense for a property valued at less than $1MM that fits insurer rules (qualified at the Bank of Canada benchmark rate over 25 years with a down payment of at least 20%).
Uninsurable – is defined as a mortgage transaction that is ineligible for insurance. Examples of uninsurable re-finance, purchase, transfers, 1-4 unit rentals (single unit Rentals—Rentals Between 2-4 units are insurable), properties greater than $1MM, (re-finances are not insurable) equity take-out greater than $200,000, amortization greater than 25 years.
The biggest difference where the mortgage consumers are feeling the effect is simply the interest rate. The INSURED mortgage products are seeing a lower interest rate than the INSURABLE and UNINSURABLE products, with the difference ranging from 20 to 40 basis points (0.20-0.40%). This is due in large part to the insurance premium increase that took effect March 17, 2017. As well, the rule changes on October 17, 2017 prevented lenders from purchasing insurance on conventional funded mortgages. By the Federal Government limiting the way lenders could insure their book-of-business meant the lenders need to increase the cost. We as consumers pay for that increase.
The insurance premiums are in place for few reasons; to protect the lenders against foreclosure, fraudulent activity and subject property value loss. The INSURED borrower’s mortgages have the insurance built in. With INSURABLE and UNINSURABLE it’s the borrower that pays a higher interest rate, this enables the lender to essential build in their own insurance premium. Lenders are in the business of lending money and minimize their exposure to risk. The insurance insulates them from potential future loss.
By the way, the 90-day arrears rate in Canada is extremely low. With a traditional lender’s in Canada it is 0.28% and non-traditional lenders it is 0.14%. So, somewhere between 99.72% and 99.86% of all Canadians pay their monthly mortgage every month.
In today’s lending landscape is there any reason to save the necessary down payment or do you buy now? Saving may avoid the premium, but is it worth it? You may end up with a higher interest rate.
By having to wait for as little as one year as you accumulate 20% down, are you then having to pay more for the same home? Are you missing out on the market?
When is the right time to buy? NOW.
Here’s a scenario is based on 2.59% interest with 19.99% or less down and 2.89% interest for a mortgage with 20% or greater down, 25-year amortization. In this scenario, it takes one year to save the funds required for the 20% down payment.
  • First-time homebuyer
  • Starting small, buying a condo
  • 18.9% price increase this year over last
Purchase Price $300,000
5% Down Payment $15,000
Mtg Insurance Premium $11,400 (4% as of March 17, 2017)
Starting Mtg Balance $296,400
Mortgage Payment $1,341.09
Purchase Price $356,700 (1 year later)
20% Down Payment $71,340
Mtg Insurance Premium $0
Starting Mtg Balance $285,360
Mortgage Payment $1,334.40
The difference in the starting mortgage balance is $11,040, which is $360 less than the total insurance premium. As well, the overall monthly payment is only $6.69 higher by only having to save 5% and buying one year sooner. Note I have not even built in the equity that one has also accumulated in the year. The time to buy is NOW.

Contact Amy Wilson at 780-919-0475, I am happy to  help!