Tag Archives: mortgage brokers can help

Breaking a mortgage can cost more than you expect

(NC) Thinking of breaking your current mortgage before the end of its term to take advantage of lower interest rates elsewhere?

Many Canadians believe their current lender can only charge three months’ interest—usually just a few thousand dollars—to break an existing mortgage.


That’s not necessarily the case, and far too many homeowners who have broken their mortgage contracts have been shocked by penalties amounting to tens of thousands of dollars.


“All homeowners want the best mortgage interest rate available, so switching lenders to improve your rate can be very attractive,” says Lucie Tedesco, commissioner of the Financial Consumer Agency of Canada. “But proceed with caution before you switch lenders.”


“It’s important to recognize that a mortgage is a binding contract. If you want out of one mortgage to switch to another, the penalties and fees for doing so could drastically reduce (in some instances) the financial benefit of the new rate. You can avoid nasty surprises by reading your mortgage contract and talking to your current mortgage lender before deciding to switch.”


Mortgage penalties


Your contract may provide for a prepayment penalty of just three months’ interest or it may specify a very different calculation. Many mortgage contracts give the lender the option of charging you an amount very close to what you would have paid in total interest if you had kept your mortgage to the end of the term. This amount can potentially be significantly greater than three months’ interest.

Remember, there may also be other costs associated with switching a mortgage, such as legal, appraisal, administrative and other fees.


Understand your mortgage


Every mortgage contract contains different terms and conditions. Federally regulated financial institutions are required to provide key information in a box at the beginning of your mortgage agreement, including information about prepayment privileges and charges.


Banks must also include in mortgage documents a toll-free number you can call to speak to a knowledgeable person for detailed information on prepayment penalties.


As a consumer, you have the responsibility to read your mortgage agreement. If you want to switch to another lender and you do not understand the cost of paying off your mortgage early, visit your banker, ask questions, get answers and make an informed decision.


More information is available at itpaystoknow.gc.ca.


Source: newscanada.com

10 Reasons why a mortgage is declined – From Jackie Woodward Edmonton Mortgage Broker

Qualifying for a mortgage should not be complicated, and there are numerous articles written about how to get approved. This week I want to cover a few reasons why a lender could decline a mortgage application. If only one of the below applies, it’s very likely you can still get a mortgage. However, when your financial profile fits under more than two of the categories below, it could be more challenging for you to obtain mortgage financing approval.

  1. Thin credit

A reliable indicator of a good solid credit score is two years history of reporting on at least two debts. If an individual is short on reporting accounts, some lenders may consider alternative documents to support positive repayment habits. Six months of cell phone payments, car insurance or utility payments could be requested to demonstrate credit. If unable to show any history of past debt repayment, you may have to provide a larger downpayment or be asked to bring on a strong co-signer.

  1. Poor repayment habits

If a borrower has weak repayment skills, the potential lender will be looking for strength in other areas of the application to confirm mortgage payments will be made in a timely manner. Dependable income source(s), a larger investment through increased downpayment, and/or a co-signer can all add strength to an application with a bruised credit component.

  1. Downpayment source

Lenders become a little wary of borrowers purchasing a home using a downpayment solely sourced from gifted or borrowed funds. The rationale behind it seems to be that it is easier to walk away from a property when there is no investment of personal cash into it. It’s not surprising when a lender requests a portion of the downpayment come from the borrowers own resources before an approval will be extended.

  1. Lack of supporting documents

Mortgage lenders must have sound lending practices and one way they do this is through the collection of documents proving a borrower adequately qualifies to successfully repay mortgage financing extended to them. If a borrower cannot provide paperwork confirming their financial picture that is acceptable to the lender, they are usually referred to an alternative or private lender that has fewer requirements.

  1. Borrowing too much

Too much mortgage is not a good thing. Lenders have preset qualifying guidelines which prevent lending borrower’s amounts where they can’t afford the payments. If attempting to borrow more than they can repay, a lender may request a larger downpayment to make the mortgage amount more manageable or decline the application for lack of affordability.

  1. They don’t like the property

Unique properties tend to create problems in the eyes of a lender as they are looking to lend on properties that appeal to larger demographics. Age restriction, partial commercial component, previous grow-ops, black mold and mobile homes are features that could prevent a property from getting the stamp of approval. If you’re interested in a property that does has some unique features, run it by some potential lenders before you submit an offer to ensure there are financing options available to you. 

  1. They don’t like the location

A property located in an isolated area far away from a major city center can also present some financing challenges as not all lenders like all locations. If looking to buy in a remote area or community, ensure all other features of your mortgage application are strong.

  1. Overextended

Owning a home can be expensive, there are closing costs when you buy, potential repairs after you own and ongoing maintenance which keeps costing you money. As a result of this, lenders will be looking for a borrower to have the ability to cover these expenditures. If maxed out on all available credit lines and using up all savings for downpayment, the lender may be concerned about the lack of funds leftover after purchasing a home. Increase the likelihood for mortgage success by always keeping some money in a savings account, and make sure to avoid an unmanageable debt load.

  1. Lack of home equity

When purchasing a home to owner occupy, a minimum of 5% downpayment is required and 95% of the purchase price can be financed. However, if you are considering refinancing a property you already own, you can only borrow up 80% of the home value less any existing outstanding mortgage balances. Having said that, there are some private or alternate lenders who may lend you more than 80% of the current value though the interest rate will likely be higher and there could be upfront fees charged as well.

  1. Honesty is the best policy

Intentionally falsifying documents or application details will most often result in an immediate decline from the mortgage lender. Whether it’s at the beginning of the transaction, or days before closing when signing documents at the lawyer’s office, the lender has the right to withdraw their financing approval if any misrepresentation is discovered at any stage of the mortgage process.
It’s not difficult to get a mortgage if your financial profile fits into the right boxes as there is a combination of guidelines that must be met in order for a borrower to be eligible for a mortgage approval. Property, income, credit, net worth, and mortgage amount compared to home value, are just a few of the most important details considered when reviewing a potential mortgage application.
Increase chances of an approval by being a low risk borrower with a strong financial profile. Working with an experienced mortgage professional who has access to multiple mortgage lender options also increases the likelihood of a positive response.
Are you looking for mortgage information? Contact Jackie at 780.433.8412 or info@mortgagegirl.ca. Stay in the loop by following on Twitter @mortgagegirlca.
Source: Jackie Woodward Mortgage Broker

Message from Realtor Rosalie Drysdale

Coming to the end of your term with your mortgage, needing to resign for the next five years. Contact one of the Mortgage Brokers from my website


Contact one of the Mortgage Professional below to help you with the progress and let the Mortgage Broker know who referred there services to them.

10 mortgage mistakes to avoid

If you’re thinking about getting a new mortgage or making changes to your existing one, avoid these costly mortgage mistakes

Financing a home is a process most borrowers only go through a few times in their life. We know from experience it isn’t easy to stay on top of all the of the ins and outs of the financing requirements with all of the changes being mandated by the government over the past few years and potentially more changes being suggested. If you’re thinking about getting a new mortgage in the near future, or making a change to the financing you already have, below you will find ten things that should help you avoid costly mortgage mistakes.

10 of the biggest mortgage mistakes to avoid

1. Not reviewing your condo documents


Most condo buyers don’t understand all of the documentation provided by the seller and should defer to their real estate lawyer to explain the pertinent details or at the very least, their realtor if experienced in condo’s. If possible, take the time to read through the minutes of the last year’s meetings of the condo association prior to removing your purchase agreement condo document conditions. These minutes provide not only details about the financial health of your condo fund, but also happenings around your complex too such as what unit is hosting loud parties or who isn’t picking up after their dog . You will also be able to see if there are any upcoming renovations required or more importantly, whether there will be any special assessments due to limited funds accumulated in the condo reserve fund. A special assessment could result in cash out of your pocket, so do ensure you are clear on what is in your condo documents before committing to purchasing the property.


2. Choose the right professional for you


Your home will likely be one of the largest debts you will ever have so it’s important to ensure you are getting proper guidance about all of the products and services available to you before you make a commitment. Ask friends and family for referrals and if you are looking online, be sure to read any of the online reviews posted about that person. If you aren’t comfortable with the advice or opinions of any of the professional involved in the home buying process, don’t be afraid to get a second opinion. A trustworthy professional should send you in the right direction even if you are just making a preliminary inquiry and I don’t believe you should have to provide a detailed credit application if you’re just looking for general information. That can wait until you are 100% ready to proceed and know exactly who you want to work with. Nothing wrong with being upfront and honest in stating you are still in the “shopping” stage of who you want to work with. Once you are comfortable that you have found the right person for you, then be prepared to provide extensive details about your financial position along with supporting documentation.


3. Paying attention to the wrong details


Rate is important, yes, but so are the payout penalties, the pre-payment privileges and the actual monthly payment amount. When it comes to borrowing a large amount, like a mortgage, it is imperative you read the fine print of all documents before you sign on the dotted line. Take the time to go through all the details with your mortgage professional and ensure you have a thorough understanding of the commitment you’re making.


4. Ignoring your credit


I can’t stress enough how important a good credit rating is. Not only does it qualify you for best rates on everything from car loans, credit cards, and mortgages, even landlords are looking at your credit before renting you a place. Ask for a credit consultation from a qualified professional, by that I mean, if you want to get a mortgage, talk to a mortgage professional about how your credit needs to look in order for you to qualify for a mortgage at best rates. If you are not there yet, ask what you need to do and make a plan that you can commit to. If your credit needs extensive rehabilitation, determine your end goal and talk to a professional that shares that vision. You can obtain your credit rating by visiting Equifax.ca.


5. Not getting a pre-approval


There’s nothing worse than putting in an offer on a home and then not qualifying for the financing.  Avoid the disappointment by getting a pre-approval. And further to that, when rates are on the rise it makes sense to get an interest rate held for you for up to 120 days.  Do be advised even if you are pre-approved, you still need to get the property and supporting documentation approved by your lender as well as the insurance company if you are putting down less than 20% of the purchase price and require a “high ratio” mortgage.


6. Don’t throw out your important documents


If you plan on applying for any financing soon, be prepared to provide documentation confirming the details you stated on your credit application. Most importantly, income documents such as pay stubs, or tax returns and Notice of Assessments. Also important are any documents that have to do with your credit. If you’ve cleared up any derogatory credit such as collections or judgments, always keep the documents confirming that in case your credit report isn’t updated by the time you want to apply for a new loan. By having these documents on hand and accessible, you avoid having to track the paperwork down at a later date.


7.  Avoid excessive transferring between bank accounts


There are a few ways to obtain a downpayment in order to purchase your new home and this tip applies when you are saving up your own downpayment. Under the Canadian Anti-Money Laundering Act you are asked for confirmation the downpayment is from your own resources. To do that, you need to provide a 60 to 90-day history of the funds to show they have accumulated over that period of time, or have simply been in your possession for at least that period of time and not just all deposited at once. Be aware if you are moving money around between various accounts, you will be asked for transaction histories from ALL of your accounts.

If you are unable to provide sufficient supporting documentation for any larger deposits, those funds MAY NOT be used towards your downpayment. If you are unsure, do disclose ALL details of where your downpayment is coming from to the mortgage professional prior to proceeding with your home purchase.


8. Over-estimating your income


One of the most important requirements of obtaining a mortgage approval is the qualifying income. Before you begin the process of applying for mortgage financing, make sure your mortgage professional is fully informed of exactly how you earn your income. This is especially important when you are self-employed, paid bonuses or overtime, on contract or paid by commission. This will ensure your personal information is accurate from the get-go and there will be no unpleasant news after you believed your mortgage would be approved.


9. Low appraisal value


An appraisal may be required when you are purchasing a home or considering a mortgage refinance. An appraisal confirms the value of the home by comparing it to recently sold similar homes in the area. If the appraised value does not support the purchase price or estimated value of the home, your mortgage approval could be reduced or withdrawn, or in the case of a purchase, if you still want to proceed a larger downpayment may be required if the seller is not prepared to negotiate. If you do have any questions or concerns about the value of the subject home prior to proceeding with financing, talk to your mortgage professional about an automatic evaluation in lieu of an appraisal, as some lenders are now offering that option.


10. Tight timelines


A mortgage, like home buying is a process and should not be rushed. This is a big commitment that is going to impact the lifestyle you lead and you should avoid getting pressured into making quick decisions without being fully aware of all the financing options available these days. In order to not jeopardize your physical health and well being with unneeded stress, we suggest you have ample time to remove financing conditions for a new home purchase if at all possible ; and given there are a lot of other parties involved in the mortgage registration process it is also advisable to set a reasonable closing date to ensure you can actually close on the possession date. Include a chat about timeline expecations when you’re going through the preliminary process with your Mortgage Professional. This will allow you to shop smart come time to house hunt. If you’re mortgage is up for renewal soon, it’s not a bad idea to get a head start on the search for a better option, if there is one available.


Getting approved for a mortgage can be quite stressful, however, educating yourself on the mortgage process and knowing what to expect can prepare you for any situation that arises. I hope this article will act as a prevention checklist for you to ensure your bases are covered and set up for a home run.  As always, I recommend you contact your favourite mortgage professional to ask any specific questions you may have about your own mortgage options in order to ensure you’re getting accurate information that applies to you.


For all of your mortgage needs, contact the Mortgagegirl at 780.433.8412 or email info@mortgagegirl.ca. Stay in the loop by following us on Twitter @mortgagegirlca.

Source: Jackie Woodward Mortgage Broker


Message from Realtor Rosalie Drysdale


If you live in the Edmonton Alberta area and are needing a mortgage to purchase or refinance your property. Call Jackie Woodward


If this Mortgage Information is providing you interest and are needing a mortgage broker in Winnipeg Manitoba, Please Call me Rosalie Drysdale and I will help you find the mortgage broker that will work with you to get the best rate .

Lenders want the full picture on bruised credit

No one likes to talk about how they wound up with a poor credit rating, but brokers need to break through the silence and get the full story, so that lenders aren’t left in the dark.
“Brokers need to understand the story behind bruised credit,” says Gleb Ioussoufovitch, director of sales and marketing with XCEED Mortgage Corporation. “Most of the time it is a result of an unfortunate life event, however sometimes people just get carried away by excessive spending. In either scenario alt lending can be a solution and a shortest way to repair and/or rebuild bruised credit, brokers just need to know the details of the situation and clearly convey them to lenders in the deal notes.”
Understanding how a client’s credit became bruised is the first step to bringing them back on the road to recovery – and taking them into the prime space, says Ioussoufovitch.
“It is critically important,” he says, “as alt lending is essentially a ladder which will bring such clients’ credit back up to prime lending space.”
Bruised credit is a growth market for brokers, especially in the last five years, says Ioussoufovitch, with more providers entering the alt lending space.
With more competition in the space, it is more important than ever before for both brokers and lenders to up their game, and provide financial planning solutions for clients, to lead them to the promised land of prime lending.
“Financial planning is the cornerstone of such solutions – there should be a clear plan to repair bruised credit within a specific time frame with the ultimate goal to move such clients back into prime rate environment,” says Ioussoufovitch. “Solutions can differ by term – most gravitate towards shorter terms of one and two years, features, pricing, etc. – but in any case the clean and healthy credit profile of the borrower is the ultimate destination.”
Usually the loans are designed for debt consolidation within the alt space, and should be followed up with broker advice that instills disciplined credit usage after such consolidation.
“This tactic repairs credit relatively fast,” he says, “and in one to two years, clients have their credit ‘healed’ and back into prime.”
Source: MortgageBrokerNews.ca

Mortgage Rates for July 21, 2015 — By Peter Paley


Peter Paley - Your Home and Mortgage Peter Paley

Come visit Realtor Rosalie Drysdale Website each week for my weekly Mortgage Rates.

Whether you are looking to purchase, refinance, or renew, we can help you decide whether a fixed or variable-rate mortgage will work best for your situation. Call today!

At Invis, we are always aware of the current environment and resulting implications, so at any time we can recommend a mortgage that gives you an edge and meets your current needs and future goals.

We regularly receive short-term rate promotions that are not posted online, which means our rates change frequently. Please contact us for these unpublished rate specials.


Posted Rates

Our Rates

























Rates are subject to change without notice. OAC E&OE

Prime Rate


5 yr variable


Looking at Purchasing that New Home, Needing a Mortgage,

Whatever your need is today – first or next home, renewal, refinance, renovation financing, equity take out, business–for-self mortgage, investing in property or a second/vacation home, contact us for a review of your situation, and the advice you need to achieve your homeownership dreams. After all, the right mortgage can build your wealth and save you thousands of dollars

Every single day we’re making homeowner dreams come true. And we’re here to help you.

Contact Peter Paley at Invis Mortgage


Peter Paley Mortgage Associate Send an EmailVisit Website


10 Things You Need to Know About Appraisals

Appraisals are a valuable part of the real estate transaction and they are different than a market valuation provided by a real estate professional.

  1. What is an appraisal?

An appraisal is an unbiased estimate of what a buyer might expect to pay (or a seller to receive) for a parcel of real estate. It is basically an analysis of sold properties around your area to determine the value of your home right now. Most lenders will accept an appraisal if it is done within the last 30 days. Appraisals are also used frequently in mortgage refinances to determine the homes current value as this will impact the maximum mortgage amount you can access as you can refinance to a maximum 80% of your appraised value.

  1. What do appraisers do?

An appraiser is the professional with recognized accreditation who will provide an educated opinion on quality, value and utility (use) of a specific property. They use their experience and knowledge of the local real estate market to arrive at a fair market value.

  1. How are appraisers qualified to make valuation decisions?

Appraisers must complete a university or correspondence course in order to obtain an appraisal designation. These courses can take up to 4 years to complete.

Appraisers, like mortgage brokers, must comply with rules set out by an associated governing body. Appraisers are governed by one of three professional associations: the Appraisal Institute of Canada (AIC); the Canadian National Association of Real Estate Appraisers (CNAREA); and Ordre des Evaluateurs Agrees du Quebec (OEAQ). The function of these associations is to provide professional standards and educational requirements that appraisers must meet and maintain in order to be in good standing.

  1. Where does an appraiser get the information used to estimate home equity value?

One of the Appraiser’s main roles is to gather information that aids in determining the current value of a property. There are basically 2 types of data they are looking for, specific or general.

Information specific to the property is gathered from the property itself- location, condition, amenities and size. This information is collected when the appraiser views your property.

General Information is gathered from a number of sources and this data is used to compare to your homes data. Some sources appraisers use include, but is not limited to:

-The local MLS data on current listings and recently sold homes that might be used as comparable sales and provide a sense of what the market is paying for similar homes in your neighbourhood;

-Tax records and other public documents for verification of actual sale prices in a market; and

-In addition and most importantly, the appraiser leverages general data from his/her past experiences creating appraisals for other properties in the same market.

  1. Who actually owns the appraisal report?

My favorite question; the appraisal report is owned by the financial institution, which is the institution that requests the appraisal report. While the borrower may pay for the report, the lender retains the right to use the appraisal report or any information contained within. If the appraisal report is not addressed to the lender requesting it, you could be charged for the appraiser to generate a letter of transmittal allowing your potential lender to use the report.

  1. What should I have available for the appraiser when they come?

If available, please have the following documents ready:

  • Recent Property Tax Assessment Bill
  • A survey of your property; and
  • If renovations have been completed, a list of renos and costs to complete them


  1. What are the steps of the appraisal process?

> Setting the appointment: Expect a call from the appraiser within 24 hours to set up a time to inspect your property. Usually your mortgage professional orders the report and provides the appraiser with your contact information to arrange payment for the report.
> Property inspection: The inspection of the property should take approximately 15 to 20 minutes to do. At the inspection, the appraiser will ask questions regarding the property such as its age, recent updates and perhaps age of the roof. In most cases, the appraiser will be required to take photos of the interior and exterior of your home as well as your neighbourhood.
>Completing the report: Once the appraiser returns to their office, data collection regarding the subject property continues. The appraiser will do an extensive review of MLS information in an effort to find the most appropriate comparable sales to establish market value. They will also collect other information in order to make any adjustments to the value, for example, if your house has a double garage and one of the comparable properties only has a single garage. Once all the information regarding the subject property and the most appropriate comparables is obtained, the appraiser reconciles the information in their report to arrive at a well reasoned final value of your property.
>The final report: Once complete, the appraiser will send a copy of the report to your lender as per their request. You may or may not receive a copy of your appraisal report, talk to your Mortgage Professional to find out.

  1. When are appraisals required?

A Lender can technically request an appraisal no matter what type of mortgage financing you’re looking for. Based on my experience, lenders almost always request an appraisal in the following scenarios;

– Private Sale (when property you’re purchasing is not MLS listed)

– Family-to- Family sale/purchase



– Purchases with a 20% downpayment or higher

  1. Are there alternatives to obtaining an appraisal?

Some lenders will use an “Automated Valuation System” to determine the property value in lieu of an appraisal, though not all lenders offer this service. This is commonly used when transferring your mortgage at renewal to a new Lender.

  1. How much do appraisals cost?

Residential appraisals can range from $325 and higher depending on the location and type of property. Commercial appraisals are much more detailed and cost much more.

As always, the Mortgagegirl is here to answer any mortgage questions you may have or, we can always refer you to one of our trusted appraisers. Call 780.433.8412 or email info@mortgagegirl.ca. Stay in the loop by following on Twitter @mortgagegirlca
Source: Jackie Woodward Mortgage Broker
Message from Realtor Rosalie Drysdale

If you are living in the Edmonton Alberta Area , needing to refinance or needing a new mortgage for your home, Contact Jackie Woodward to help you get the best rate for your needs.

Should you switch your mortgage ?

Canada finds itself in uncharted territory with historically low interest rates. This has a lot of people wondering if it is worthwhile trying to get out of their existing mortgage and converting into one with a lower interest rate.
We wish we could give you an easy answer and say yes – but unfortunately, it is a case-by-case situation. Yes, rates are historically low and yes you can, in many instances, lower your mortgage payments significantly by converting your current mortgage. But in doing so, you will be faced with what the banks call a ‘pre- payment penalty.’

Pre-payment penalties

Banks create pre-payment penalties to recoup the money they expect to lose by renegotiating your arrangement. Borrowers have to remember that when you sign a mortgage, you’re essentially entering into a ‘contract’ with the bank. You are contractually obligating yourself to pay ‘x’ dollars a month over the next ‘x’ number of years. (Our mortgage calculator can give you a more specific figure). In essence, your mortgage payment contract represents an ‘annuity’ or payment stream to a bank which it in turn can sell to a third party investor. This is particularly true for non-traditional banks which ‘securitize’ their funds through the market. So when you come along and decide you want to renegotiate this contract, the bank has to calculate how much it stands to lose in the process and then create a pre-payment penalty to offset the loss.
This penalty can range from three months worth of interest to a much higher amount based on what is called the ‘interest rate differential’ or IRD. The IRD can be a complicated calculation and differs from bank to bank, but in essence it simply calculates the differential between what you were going to pay if you continued with your current mortgage versus what the bank can resell that money for in the current market.
For example, if you have three years left on your current five-year mortgage at 5.79% and you find a better deal with a different lender, your current bank will take the balance of the money owing, determine what rate they can sell that for in today’s market (for example, a three-year term at 4.5%) and then calculate your penalty based on the ‘deemed lost revenue.’ Again, this will be done on a case-by-case basis, and in some circumstances where it is a large mortgage with a lot of time left, the IRD penalty can be significant.

Worth switching?

In many instances, it is still worth paying the penalty because the lower rate creates a significant savings, but again, it is case by case.
It is important to note that when we talk about interest rates, there are two different types of ‘rates’ – floating (variable) and fixed. The variable rate mortgage (VRM) is priced based on the prime rate, and the prime rate is affected by the Bank of Canada decisions. Currently, the prime rate is below 3% and is expected to stay there for the balance of 2009. Alternatively, the fixed rate mortgage is priced based on the bond yield. The bond yield is not tied directly to the Bank of Canada and can have more fluctuations.
Today’s market environment presents an excellent opportunity for anyone who is currently in a fixed rate mortgage over 5% with a few years still remaining to switch to a variable rate mortgage below 3.5%. What is particularly intriguing is that there is strong speculation that the bond yields have room to soften over the coming months, which will result in a further lowering of the long-term rates. The key point for borrowers to remember, when trying to compare apples to apples, is that a variable rate by definition is ‘floating’. In other words, you may look at the current prime rate and think it’s fantastic, but remember – prime will not stay that low for five years. It will fluctuate with the market and rise once the Bank of Canada shifts its focus back to inflation.
However, this doesn’t mean that converting to a variable mortgage today has to represent a risk. Virtually all variable rate mortgages (VRMs) allow you to convert to a fixed rate mortgage at no cost at any point in your mortgage term. If predictions hold true, we may very well see the long-term rates hit historic lows within the next year. This will present investors with the opportunity to take a VRM today and get immediate savings over your current fixed-rate mortgage, and then convert into a fixed-rate product (typically locked in at three years) within the next year if they come down any lower – thus locking in your savings.
Of course, everything comes down to the amount of the penalty, and there will definitely be situations where it makes no sense to pay a high fee to switch. Other property owners may be concerned about having to pay the penalty upfront. Even if you do stand to save $20,000 on your mortgage over the next four years, what if you don’t have an extra $10,000 available to pay the penalty today? If you find yourself in that situation, simply capitalize your penalty into your new mortgage – in other words, add the amount of the penalty onto your new mortgage.
Let’s say, for example, the penalty on your existing mortgage is $10,000, and you don’t have that kind of cash kicking around. In many cases, the rates are so low that even if you increased your mortgage by another $10,000 (to cover the cost of the penalty), both your monthly payments and the balance at the end of the term would be lower. If you can afford to keep your payments at their current level, adding the penalty to the new mortgage and lowering the rate will invariably lower the balance at the end of term and may shave years off your mortgage. The only caution with capitalizing your mortgage penalty is that if you switch lenders and change the actual dollar amount on the loan, you may have to have the mortgage re-registered at land titles, and this will trigger legal fees. But again, it may well be worth it.

What to do next?

The bottom line is that with rates this low, it is well worth analyzing your current mortgage to determine if you’re in a position to consider switching. The first step is to call your current lender and ask them how much the penalty would be if you sold your house and paid off the mortgage today.
If you were to perform such an analysis and investigate the options with a broker, they would need the following information:

  • Amount of your penalty
  • Balance of your mortgage
  • Current interest rate
  • Current term and how much time is remaining on that term
  • Current monthly payments
  • Balance owing at the end of your current term

So, take the time to determine this information, and at least have the discussion. It’s worth a quick call. You never know – it could save you a lot of money.
Peter Kinch is a mortgage broker in Port Moody, BC and author of The Mortgage Minute and co-author of 97 Tips for Canadian Real Estate Investors.
Source: WhichMortgage.ca

Applying for a fixed-rate mortgage ? Why you need to do your homework

Decoding the mortgage market

When mortgage shopping, take a minute to understand your lender’s rate-drop policy before you send in your application

Applying for a fixed-rate mortgage ? Why you need to do your homework

Robert McLister
Special to The Globe and Mail
Published Last updated
Recently sold house at 592 Manning Ave., Toronto March 04, 2014. (Fernando Morales/The Globe and Mail)
Imagine you’ve applied for a five-year fixed-rate mortgage. Then, before you close, the lender drops its best five-year fixed interest rate. You’d expect that new lower rate, right?
Most people in this position would. But with some lenders, that’s not the way it works.
If you’re going mortgage shopping, take a minute to understand your lender’s rate-drop policy before you send in your application. Too many people don’t and it ends up costing them.
How rate drops normally work
Typically, if you’ve been approved for a mortgage and the lender drops its rates before your closing date, the lender will lower your rate as well. Every lender has its own policies, though. For instance:

· Some lenders allow you only one rate drop. Others allow multiple.
· Some lenders only permit rate reductions up to seven days before you close. Others give you their best rate right up until your closing date.
· Some lenders automatically lower your rate. Others require your banker or mortgage broker to manually request the rate adjustment. In this latter case, you better have a reliable mortgage adviser or keep tabs on rates yourself.
The best-case scenarios are those lenders with “look-back” policies. This means they’ll look back and give you their lowest rate from the time you applied until the time you closed. Those lenders are few and far between but any good broker knows who they are.
How other lenders operate
More and more lenders are adding “no-float-down” clauses to their fixed mortgage rates. This is particularly true with certain non-bank lenders.
“No float down” means your rate cannot be adjusted lower if that lender comes out with a better deal. Those lenders make those lower rates available for “new business only.”
Now, you may be thinking, “I’m a good client, why should a new customer get a better rate than me?” The answer, lenders say, is profitability. When you get a fixed mortgage, the company funding your mortgage generally “hedges” that rate, meaning it pays for an expensive form of rate insurance. This ensures the lender doesn’t lose big if rates jump and it has to honour the lower rate it promised you.
If rates fell and the lender didn’t have a “no float-down” clause, it would incur the cost of that rate hedge and have to give all of that rate savings back to you, the customer. But with mortgage competition so fierce and margins so tight, some lenders can’t afford to do that anymore.
When rate drops matter
If fixed rates are rising or going sideways, “no-float-down” policies shouldn’t hurt you. If fixed rates are in a downtrend, however, it pays to have that rate-drop option, other things being equal.
I say “other things being equal” because float-down privileges are rarely the deciding factor when choosing a mortgage. A lower upfront rate or better mortgage features can often negate the disadvantage of no-float-down restrictions.
Moreover, the odds of rates dropping decline the closer you are to your closing date.
In case you’re curious, fixed mortgage rates drop from one month to the next about 38 per cent of the time. That’s been the case since 1951 at least, according to Bank of Canada data.
Historically when rates have dropped – versus the prior month – the average decrease has been 0.23 percentage points. Even if you ignore 1973 to 1993, a volatile period of surging and plunging rates, the average decrease was still 0.17 percentage points. On a $200,000 five-year mortgage, a 0.17 percentage point rate drop would save you about $2,500 in interest.
If your mortgage does come with a rate-drop feature, contact your mortgage adviser about 10 days before you’re scheduled to close. Don’t take it for granted that someone will notify you automatically if rates are lowered. Ask if your lender has offered cheaper rates since you applied for your specific term and rate hold period. (Those last three words are important because lenders generally don’t let you have their lowest 30-day “quick close” rate if you originally applied for a 60, 90 or 120-day rate.)
Make it a point to understand your lender’s rate-drop policy. Every tenth of a per cent matters and you never know when interest costs will dip.
There are 300-plus lenders to choose from in this country. If you pick one with a “no-float-down” policy, be sure the rest of the mortgage terms make up for it.
Robert McLister is a mortgage planner at intelliMortgage Inc. and founder of RateSpy.com.
Source: The Globe and Mail

Mortgage Rates for September 22 , 2014 — By Peter Paley


Peter Paley - Your Home and Mortgage Peter Paley

Looking at Purchasing that New Home, Needing a Mortgage,

Contact Peter Paley at Invis Mortgage


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Renovation Mortgage First Time Home Buyers

By on March 18, 2014
Are you are out looking for a home and just can’t seem to find the perfect home, do you keep looking or look with a different viewpoint?
1)  First time home buyers are in need of more options when it comes to homes they want to purchase
2)  Homes are in Winnipeg’s suburban neighborhoods are aging
3)  First time home buyers need all their money for their down payment.
4)  Home improvement shows tease first time buyers with all they can to make their homes “shine”
Canadian Home Renovation Plan
Yes, there is solution to all these if you are a home buyer in Winnipeg.  This little known plan allows you to finance improvements on to your mortgage at time of purchase up to 10% of the purchase price to a maximum of $40,000.  You may start to see some for sale signs around Winnipeg with another sign stating that the Canadian Home Renovation Plan is available with purchase of this home.  The realtor and mortgage broker have teamed up to assist home buyers make improvements to their home.
For home buyers, renovations can be made to your new home before you move in without the cost of financing the whole project.  This is done by adding the cost of the improvements to the purchase of your home and making your down payment based on this improved value.  All improvements must be approved and certain conditions apply.  It is really important that home buyers involve real estate professionals and mortgage professionals who have experience and knowledge of this program.
For home sellers, this program exposes your home to buyers who are looking at the possibilities of what your home can be rather than everything they see as what is wrong for them.  For the buyer that loves your home but wants hardwood flooring, bingo it can be done.  New windows, roof, kitchen, bathroom, no problem it can be done.  As we enter a balanced market (number of buyers and sellers are proportionate), your home will look different than all the others.  Marketing and promoting your home with these options will get more eyes on your property for the right reasons.
If you have questions or want more details on this program, please contact me anytime.
Sources:  CMHC First Time Home Buyers Survey
Canada Research Chair in Urban Change and Adaptation
Source: Daryl Harris Mortgage Broker