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BANK VS BROKER

Buying your first home and getting your first mortgage can be an overwhelming experience.

If this is your first home buying experiencing, applying for a mortgage can be the most intimidating part of the process , so where do you start?

In the past, the home buyer turned to their banks for their mortgage needs, but now you have more options at your disposal with over 40% of consumers turning to mortgage brokers for their mortgages needs instead of the banks.

Mortgage brokers are provincially licensed and regulated by CMBA .   They can help you with all aspects of a mortgage, from figuring out how much you can truly afford, to determining the best mortgage product for you, to finding ways to save you money and pay off your mortgage faster.

Many lenders’ rates and mortgages can only be accessed through a mortgage broker. Not having the selection of lenders, and simply choosing to get a mortgage with a bank, can mean choosing harsher prepayment penalties for breaking your mortgage in the future, as well as a higher interest rate; which can cost buyers thousands upon thousands of dollars over the life of their mortgage.

A mortgage broker is also able to better tailor a mortgage product to your specific needs, whether that be working with a lender who is more flexible when it comes to self-employed income; one who has more flexible prepayment terms; or one that has more options for consumers that possibly have suffered some credit challenges in the past.  Because mortgage brokers have access to more lenders, they’re better able to find a lender and a mortgage based on your specific needs and financial situation to get you the lowest mortgage rates today.

Mortgage brokers offer convenience, which lets you meet around your schedule, not the banks hours.

Mortgage brokers also operate on commission and are paid by the lenders who ultimately grant you your mortgage, so there is no cost to the consumer.   Referrals are the life blood of our business so it is in our best interest to serve you as best we can.

Bottom line,  using a mortgage broker gives you the freedom of CHOICE and comparables to consider, using a bank gives you no other choice but ONE, theirs.

Feel free to contact me with any questions you may have at 1-888-819-6536 or lisa@mortgageplayground.com

 

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Posted in Bank of Canada, Bank of canada rates, BC Mortgages, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, Debt, Home Loans, Interior Mortgage Expert - Lisa Alentejano, Jim Flaherty, jim flaherty mortgage rules, mark carney, Mortgage Affordability, Mortgage Broker Kamloops, Mortgage Language, Mortgage Rates, new mortgage rules canada, Protecting your biggest investment your mortgage, Refinance Your Mortgage, Renewing your mortgage

New Mortgage Rules Coming Effective July 9, 2012

Some changes that will come into effect on July 9, 2012.   How will this affect homebuyers or home owners in terms of dollar amounts… Heres a quick snapshot below;

Payments based on a 25 year amortization vs a 30 year amortization would cost the borrower  a difference of $52.48 per month per 100K in mortgage.   In terms of borrowing power the homeowner that could buy a home for $300k would now only be able to afford a $266K home, a difference of approximately $34k based on the above changes from 30 year amortization to 25 year.  If your in the market for a mortgage or a refinance, I would consider firming those details up before July 9, 2012 to take advantage of our current options.

READ ON; After speaking in Halifax just hours after Finance Minister Jim Flaherty announced a series of changes that come into effect next month, Mr. Carney reiterated his concerns about the effects that his ultra-low interest rates have had on the behaviour of both borrowers and lenders, warning the economy cannot “depend indefinitely” on debt-fuelled spending, especially as incomes stagnate.

At the same time, Europe’s growing crisis is expected to keep the central bank on hold for a long time yet, leaving regulation as the only real avenue for reining in housing-related investment, which Mr. Carney said now makes up “an unusually elevated share” of the economy.

“In this context, Canadian authorities are co-operating closely to monitor the financial situation of the household sector, and are responding appropriately,” Mr. Carney, who was almost certainly involved in Mr. Flaherty’s decision, said in a speech to the Atlantic Institute for Market Studies.

“Today, federal authorities have taken additional prudent and timely measures to support the long-term stability of the Canadian housing market, and mitigate the risk of financial excesses.”

Last week, Mr. Carney and his policy team warned that Europe’s worsening drama could slam Canada with a “major shock” if it is allowed to spread out of control and further infect healthier regions, particularly the still-fragile U.S. economy. They also warned that more Canadian households could find themselves under water with their debt payments if a big unemployment shock were to result, and sharpened their warnings about Toronto’s booming condo market.

Some investors are betting that the situation in Europe and the failure of the U.S. economy to gain more traction could force the central bank to cut interest rates from the current 1-per cent level sometime later this year. However, in his speech, Mr. Carney strongly hinted that he is not even considering a reduction in rates, echoing much of the language on the economy from his last interest-rate statement on June 5, indicating his domestic outlook hasn’t shifted much since then.

“Despite these ongoing global headwinds, the Canadian economy continues to grow with an underlying momentum consistent with the gradual absorption of the remaining small degree of economic slack,” said Mr. Carney, whose next decision is scheduled for mid-July. “To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.”

Still, Mr. Carney left himself the same wiggle room from recent statements, saying that the “timing and degree” of any rate hikes would depend on how things play out.

There’s good reason for him to be cagey, and not just outside of Canada’s borders. Despite the worries about consumers over-borrowing, recent economic data suggest the housing market is already slowing down, and a report from Statistics Canada today showed that in April, retail sales fell – both in terms of prices and volumes.

Some analysts have already warned that the mortgage moves could be too effective and spark a slowdown in a key area of strength before the economy is ready for it.

Earlier Thursday, Mr. Flaherty confirmed that Ottawa will reduce the maximum amortization period to 25 years from 30 years, and will cut the maximum amount of equity homeowners can take out of their homes in a refinancing to 80 per cent from 85 per cent. Also, the availability of government-backed mortgages will be limited to homes with a purchase price of less than $1-million, and the maximum gross debt service ratio will be fixed at 39 per cent, and the maximum total debt service ratio at 44 per cent. All the changes will take effect on July 9.

Mr. Carney’s speech, meanwhile, was largely a re-hash of his views on what is needed to foster the more balanced and sustainable global economy on which export-heavy Canada’s fortunes largely depend, including an “open, resilient” financial system. The central banker, who is also chairman of the Group of 20-linked Financial Stability Board, again warned against delaying the implementation of reforms designed to make international finance safer for the global economy.

“The current intensification of the euro crisis has only sharpened our resolve,” he said, adding that a system that restores confidence will need to “rebalance” the relationship between government regulation and financial markets, and in which policy makers realize they must help do what’s good for the world rather than taking a simply national approach.

Posted in advice on locking in your mortgage, Bank of Canada, Bank of canada rates, BC Mortgages, Benchmark interest rate, Canadian Economy, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, Debt, Mortgage Affordability, Mortgage Broker Kamloops, Why use a mortgage broker

Bank of Canada Hold Key Rate “household debt” remains biggest risk

OTTAWA — The Bank of Canada kept its key interest rate on hold Thursday, as expected, but said while the outlook for the Canadian economy has “marginally improved,” household debt “remains the biggest domestic risk.”

The central bank acknowledged, in the statement accompanying its rate decision, that “heightened uncertainty around the global economic outlook has decreased,” since its monetary policy report in January.

“With tentative signs of stabilization in European bank funding and sovereign debt markets, conditions in global financial markets have improved and risk aversion has decreased,” it said.

“However, the global economy is still expected to grow below its trend rate as the deleveraging process in advanced economies proceeds.”

The Bank of Canada said the outlook for the domestic economy “is marginally improved” since its January report. “Although the economy will likely grow faster than forecast in the first quarter due to temporary factors, underlying economic momentum remains around trend, balancing domestics strength and external weakness.”

As for inflation, the bank said “the profile . . . is somewhat firmer than previously anticipated as a result of reduced economic slack and higher oil prices.”

“After moderating in the second quarter, total inflation is expected, along with core inflation, to be around 2% over the forecast horizon, . . . “

The central bank has held its benchmark lending rate at a near-record low 1% since September 2010, in an effort to bolster the economic recovery from the 2008-09 recession.

But cheaper borrowing costs — especially for mortgages — have led to record high consumer debt. Bank of Canada governor Mark Carney, along with Finance Minister Jim Flaherty, has urged consumers not to borrow beyond their needs, as interest rates will eventually begin rising again.

“Canadian household spending is expected to remain high relative to GDP as households add to their debt burden, “which remains the biggest domestic risk,” the bank said Thursday.

The Bank of Canada’s next interest rate decision will be on April 17.

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TD, RBC End 2.99% Mortgage Deals Early

After a crazy month fielding calls about rates and competitive rates from the major banks, they have put a hault on them.  Although the product that were attached with them were limited and badly disclosed to consumers, there are still amazing rates to be had in the mortgage market.  The problem with banks is that they can choose to give one rate today and a different rate tomorrow.  All I can suggest be informed and do your homework and ask questions when shopping for a mortgage.  Its not always about rate its about having a mortgage plan that suits your needs and someone that can show you ways to save money on your mortgage long term!  If your interested in learning more about how to save money on your mortgage , no tricks no catch good ole information for you from me  http://bit.ly/AfD2RR    Here’s the article below;

After briefly offering record-low rates of less than 3% on some of its mortgages in response to its rivals, Canada’s two biggest banks have pulled back their offers prematurely.

Toronto-Dominion Bank, Canada’s second-largest bank, raised its special four-year closed fixed rate mortgage 40 basis points to 3.39%, effective Wednesday, while also introducing a special five-year closed fixed rate mortgage at 4.04%.

The bank also hiked its five-year closed mortgage 10 basis points to 5.24%.

TD had said it would offer the special rates until Feb. 29.

The moves put TD back in line with Royal Bank of Canada, which made the same rate decisions on Monday, coming into effect Wednesday.

RBC had also initially planned to keep its special rates available until Feb. 29

 

The only difference is RBC already had the special five-year closed fixed rate mortgage product, which it increased 10 basis points to 4.04%.

RBC had first cut its rate to 2.99% in January in response to a similar cut from BMO.

Matt Gierasimczuk, a spokesman with RBC, said the bank had to end its special prematurely because of rising funding costs.

“Our long-term funding costs have gone up considerably due to global economic concerns and, while we have held off in passing on these rate changes to our clients, it is now necessary for us to increase this mortgage rate,” he said in an interview with Bloomberg News on Monday.

With household debt-to-income ratios at at historic highs and still on the rise, the Bank of Canada has repeatedly voiced its concerns over the past year that Canadians are living beyond their means.

“We have expressed on numerous occasions our concerns about rising household indebtedness,” senior deputy governor Tiff Macklem said in a question-and-answer session following a speech in Toronto Tuesday. “The simple fact is that consumers are consuming more than they’re earning.”

With files from Reuters and Bloomberg News

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Calculating your mortgage penalty…

Todays market is bringing alot of questions about whether you should consider refinancing your mortgage for a better rate.  There are many different reasons people might re-negotiate their current mortgage.   You may be considering using some of the equity in your home you have built up and use it to buy a rental property,  Make and RRSP contribution or investment, pay off some high interest rate debt or just renegotiate your current rate for a better more competitive rate and lower monthly payment.

Below are some ways in which you can get a good idea on what kind of penalty you may be faced should you want to refinance your current mortgage.  Again these are used simply as a guideline and are in no way exact.   The lending institution you are currently dealing with will give you the exact amounts relating to your specifac situation.

Calculating Payout Penalties & Interest Rate Differentials (IRD)

Many closed mortgages include a clause stating that the payout privilege on the mortgage will be a three-month interest penalty, or interest differential, whichever is greater.

For the calculations below,  using the following scenario:
  • $300,000 remaining on the mortgage
  • 3 years into a 5-year fixed term at 5.5%
  • Today’s interest rate: 3.5%

We’ll just be using the simple interest amount – the actual amount of the penalty could be a little less than the amount quoted in the examples.

Three Month Interest Penalty :

Mortgage Balance X Interest Rate X 3 months

Plugging in the variables above, we would get:

=   $300,000   X   0.055    X   0.25                (5.5% = 0.055,  3/12 = 0.25)

= $4125.00 would be the 3 month interest penalty

Now we have to calculate the interest differential – and that’s where penalties can be quite substantial – especially since interest rates have dropped considerably lately.

Interest Differential Penalty:

Current Mortgage Balance  X Interest Rate Differencial  X Time remaining

=$300,000 X 0.02  X 2

(0.02 = 2% which is the difference from 5.5%-3.5%, and 2 years left in term)

=$12,000.00 would be the Interest Differential Penalty

In the example above, the bank would then use the Interest Differential Penalty since that amount is the greater of the two. Remember that the way banks calculates their penalties sometimes is a mystery to me and can be greater than the figures above so make sure you ask.

Please remember that its not always about RATE,  although important,  there are other important steps you need to take into consideration when considering paying a penalty and shopping for a mortgage.  Let a mortgage expert, put strategic steps and the right product in place that will ultimately make sure its in your best interest to pay a penalty and that your saving money.

I would also invite you to take a look at this link.  I am part of a community of mortgage brokers that created a forum to get our best ideas together a create a simple and educational strategy  showcased here on this website.    A program I implement with all my clients, wherever they are in the mortgage process.  Its a program created in mind to help consumers pay more attention to their mortgage and implement simple easy steps to save thousands of dollars.   When was the last time  your bank phone you up at any time to show you how to save money on your mortgage.  I think i know the answer…..Please click the link and learn something valuable  today then contact me to get started.

http://www.moneyinyourmortgage.com/af/194/lisaalentejano/about

I am a licensed mortgage broker with years of financial experience,  able to help you with your mortgage  any where in Canada and Alberta. Remember my services are free and never should you feel there is any obligation.   So please pick up the phone and contact me directly I would love to hear from you 1-888-819-6536. If your more comfortable with email please feel free to email me your questions at lisa@mortgageplayground.com

Expert, unbiased advice is what i offer to all of my clients.

Author, Lisa Alentejano

Posted in Bank of Canada, Bank of canada rates, BC Mortgages, Benchmark interest rate, Canadian Economy, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, First Time Home Buyer Steps, fixed or variable rate or both, Fixed rates, Jim Flaherty, Kamloops broker, Kamloops First Time Home Buyer Tips, Kamloops Mortgages, Kelowna Mortgage Broker, Low Interest Rates, mark carney, Mortgage Broker Kamloops

No evidence of housing bubble:Flaherty

NEW YORK – The Vancouver housing market is attracting unusually strong demand but Canada as a whole does not face a housing bubble that requires government action, Finance Minister Jim Flaherty said on Wednesday.

Mr. Flaherty and Bank of Canada Governor Mark Carney have paid close attention to Vancouver housing prices, and they have warned Canadians not to take on so much debt that they will not be able to service it when interest rates rise.

Asked at a news conference in New York what it would take for Canada to act again to cool the market, he said: “It will take clear evidence of a bubble in the housing market in Canada, which we have not seen.”

Given low interest rates, the level of housing demand in Canada is not surprising, Mr. Flaherty said. But he added: “We have seen in the past year some softening in the Canadian housing market, in part due to the tightening of the insured mortgage market rules that we did earlier this year… That’s an appropriate result from that tightening.”

The International Monetary Fund said in a report on Wednesday that private credit remains strong in Canada and that the government might need to consider further measures to prevent households from taking on too much debt.

“Developments on the housing front require increased vigilance, and consideration may need to be given to additional prudential measures to prevent a further buildup in household debt,” the lender said in its Western Hemisphere outlook.

A survey released on Wednesday by Canada’s leading real estate broker showed the average price of detached one- and two-story homes in Vancouver has risen by about 17% in the past year to more than $1-million — about three times the national average.

Home resale prices for Canada as a whole have risen between 5.7% and 7.8% over the past year, the report said.

Asked what would constitute evidence of a bubble, Mr. Flaherty said: “If we saw dramatic surges in prices in some part of the country. There’s some demand in Vancouver in particular, particularly from the Asian people coming to Canada who are investing in real estate. So there’s some demand there that is unusual in terms of the entire country, but overall across the country there’s been some moderation, which is good.”

The government has tightened mortgage rules three times since 2008, most recently in January.

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Mark Carney signals long pause in rate hikes

Bank of Canada Governor Mark Carney held his benchmark interest rate at 1 per cent Wednesday and suggested his year-long pause will last much longer as a bleaker outlook for the global economy quashes any urgency to make it harder to borrow and spend.

In explaining the decision to leave borrowing costs alone for an eighth meeting, as expected, the central bank said it believes Canada’se conomy is growing again after stalling in the second quarter, but painted a troubling picture for the United States and Europe, and said exports will be a “major source of weakness.”In light of slowing global economic momentum and heightened financial uncertainty, the need to withdraw monetary policy stimulus has diminished,” the central bank said.

“The Bank will continue to monitor carefully economic and financial developments in the Canadian and global economies, together with the evolution of risks, and set monetary policy consistent with achieving the 2-per-cent inflation target over the medium term.’’

Without doing so explicitly, the central bank also left the door open for an interest-rate cut should the external backdrop deteriorate further, in part by reiterating it is less worried about inflation than just weeks ago when policy makers hinted they might raise rates by the end of the year.

Still, the Canadian dollar made a small gain against the U.S. currency after Mr. Carney’s decision. And economists generally interpreted his language as suggesting he will stay on hold until mid-2012 or later, but reckoned he will eventually need to raise rates if the rebound survives the current turmoil.

“Once again, the tug-of-war between offshore and internal factors is holding the Canadian economy and Bank of Canada policy in limbo,’’ Michael Gregory, a senior economist at BMO Nesbitt Burns, said in a note to clients. “We still judge (as does Carney & Co.) that at least modest growth will resume in(the second half of 2011) and push the Bank’s policy bias back to the tightening side.’’

Policy makers did not include new projections for growth and inflation in their statement, tracking closely to comments Mr. Carney made on Aug. 19, when he appeared with Finance Minister Jim Flaherty before an emergency meeting of the House of Commons finance committee. The recovery has likely resumed, the bank said, after gross domestic product shrank at a 0.4-per-cent annual rate in the second quarter, and growth will be led by business investment and household spending.

However, policy makers said, “lower wealth and incomes will likely moderate the pace of investment and consumption growth,” even as the supply and cost of credit for both businesses and households “remain very stimulative.”

Financial conditions have tightened some and could continue to do so should the global situation worsen, the bank said. Plus, net exports – the difference between what Canadians buy from overseas and what they sell abroad – will be a big drag on the economy, both because of weaker demand around the world and because of “ongoing competitive challenges” like a currency that, while weaker in recent weeks, is still near parity.

Several of the “downside risks” the central bank has identified for the global rebound’s trajectory have come to fruition, policy makers said.

“The global economic outlook has deteriorated in recent weeks,” the bank said. “The European sovereign debt crisis has intensified, a broad range of data has signalled slower global growth, and financial market volatility has increased sharply.’’

The fiscal and financial strains linked to Europe’s crisis have caused upheaval in markets as investors shy away from risk, and “could prompt more severe dislocations” in global markets.

Resolving those strains, the bank said, “will require additional significant initiatives by European authorities,” – an obvious yet significant comment given that in July the central bank said its outlook for the economy at that point assumed that Europe would be able to contain the crisis.

South of the border, Canada’s main export market will see weaker growth than the central bank was anticipating, policy makers said, and household spending “will be even more subdued in the face of high personal debt burdens, large declines in wealth and tough labour market conditions.”

Moreover, the stimulus spending that propped up the U.S. recovery from its worst downturn since the Great Depression will soon give way to restraint and cuts that will undoubtedly crimp U.S. growth.

And although growth in emerging markets like China and India is still “robust” and commodity prices will remain “relatively high,” as those rapidly-expanding economies lift the rest of the world, they too will be affected by sluggishness in the developed world, as consumers and businesses everywhere retrench.

The global recovery’s decline in momentum will keep Canadian inflation in check, the bank said, as energy and food prices ease, wage growth “stays modest” and Canadian companies improve their productivity in the face of the slowdown.

The central bank’s decision comes in a potentially pivotal week that features a bevy of central bank policy meetings, a major speech by U.S. Federal Reserve chairman Ben Bernanke and a nationally televised address by U.S. President Barack Obama before a joint session of Congress, where he is expected to unveil a $300-billion (U.S.) plan to kick-start hiring in the world’s biggest economy.

The week concludes with a gathering of finance ministers and central bankers from the Group of Seven nations in Marseille, France, on Friday and Saturday.

Mr. Carney’s next interest-rate decision is scheduled for Oct. 25, and he will release an updated forecast for the Canadian and global economies the following day.