Thursday, April 26, 2018

8 Things You Can Do To Get The Best Renewal

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 Angel Calla from DLC Angela Calla Mortgage Team for this blog post!

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!