Posted in Applying for a mortgage - Lisa Alentejano services the interior, Bank VS Broker, BC Mortgages, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, Credit Scores, First Time Home Buyer Steps, fixed or variable rate or both, Fixed rates, Hombuyers Downpayment, Home Buyer Closing Costs, Home Loans, Interior home mortgage, Interior Mortgage Expert - Lisa Alentejano, Interior Mortgages, kelowna mortgage, Kelowna Mortgage Broker, Kelowna Mortgage Financing - Lisa Alentejano, Low Interest Rates, Mortgage Affordability, Mortgage by Lisa Alentejano, Mortgage Playground - Lisa Alentejano, Mortgage Consultant, Mortgage Rates, Protecting your biggest investment your mortgage, rate fixed mortgage, Save your money, Why use a mortgage broker

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

 

Posted in advice on locking in your mortgage, Applying for a mortgage - Lisa Alentejano services the interior, British Columbia Mortgages, Canadian Economy, Canadian Home Buyers Academy, Canadian Mortgage News, First Time Home Buyer Steps, Hombuyers Downpayment, Home Buyer Closing Costs, Home Loans, Kamloops broker, Kamloops First Time Home Buyer Tips, Kamloops home mortgages, Kamloops Mortgage Broker - Lisa Alentejano, Kamloops Mortgages, Mortgage Affordability, Mortgage Broker Kamloops, Mortgages - Get a second opinion, Pre Approval Mortgage, Protecting your biggest investment your mortgage, Real Estate Market, Refinance Your Mortgage, Refinancing, Save your money, Why use a mortgage broker

CANADIAN HOME BUYERS ACADEMY

Working For You!

 

 

Are you interested in making some cash when you buy or sell your next home? Maybe you simply want to learn more about Real Estate in Canada? Have You been looking for general information on buying and financing a home but cant seem to find the information in one specifac place that has consistent information.  Take a good look at this program, I think you will find alot of great information and tools for you to use.

I am proud to be a part of this worthy and valuable program.

Go check it out here http://www.canadianhomebuyersacademy.ca

Posted in BC Mortgages, Canadian Economy, Canadian Mortgage News, First Time Home Buyer Steps, Home Buyer Closing Costs, Kamloops home mortgages, Kamloops Mortgage Broker, kamloops mortgage financing, Low Interest Rates, Mortgage Affordability, mortgage financing kamloops, Why use a mortgage broker

How much can you afford?

A great article here that articulates mortgage affordability.

Newly minted professionals shopping for their first home in downtown Toronto are real estate agent Andrew Bodnar’s typical clients.

“They see home ownership as a status symbol,” says Bodnar, an agent with ReMax Condos Plus, “and an investment.”

But young people who have just entered the full-time workforce probably don’t have large amounts money to put down; they may even find the mandatory minimum down payment of five per cent of the purchase price difficult to come up with. “For a $300,000 condo, a buyer will need minimum down payment of $15,000, plus about $7,500 in closing and legal fees, which means he’ll need $22,000 in liquid cash,” Bodnar says.

And they’ll need to determine how much they can afford to service the mortgage each month.

“Before we start looking at properties with clients,” Bodnar says, “we go through a personal financial analysis including monthly income and expenses, such as car payments and entertainment, to determine how much is available for mortgage payments.”

95-per-cent financing: A homebuyer’s income level will determine whether he or she qualifies for 95-per-cent financing, and lenders look at prospective clients’ “total debt service ratio,” or TDSR, the percentage of gross family income required to cover mortgage payments and other expenses.

“The formula lenders use to arrive at this percentage is to add up the annual mortgage payments, property tax, other payments such as car and credit card payments, 50 per cent of the condominium fee and heating costs. And divide that total by gross family income,” says Feisal Panjwani, senior mortgage consultant at mortgage broker Invis Inc. in Surrey, B.C.

Prospective buyers whose TDSRs exceed 40 per cent won’t qualify for a mortgage with most lenders, although Panjwani says some individuals with exceptionally strong credit ratings may be allowed up to 44 per cent.

Changes to Canadian mortgage rules introduced by federal Finance Minister Jim Flaherty in January will make it more difficult for some people to qualify for 95-per-cent financing. The amortization period for government-backed mortgages has been lowered to 30 years from 35 years. With a lower amortization period, mortgage payments will be higher, increasing the percentage of gross family income required to cover them.

But do buyers who qualify for 95-per-cent financing feel comfortable acquiring a debt of this size?

Homebuyers should keep well under the maximum they qualify for in order to have a buffer for emergency expenses, Panjwani says. “Interest rates will likely increase in the next few years. Most economists are expecting an increase of at least per cent on the variable rate over the next two years.”

First-time homebuyers can use assets from their RRSPs to increase their down payment, he adds. Under the federal Home Buyers’ Plan, they can borrow up to $25,000 ($50,000 for a couple) from their RRSPS without having to include the withdrawal on their tax returns, but must repay the amount into the plan within 15 years. “But young people may not yet have put much into their RRSPs,” he notes.

Renting out space in the home, such as a basement suite, can augment income for those on tight budgets. “But only half of this rental income can be added to gross income to help buyers qualify for a mortgage,” Panjwani says.

“This is to allow for the fact that this space may not always be rented out.”

If 40 per cent of a homeowner’s gross income is going to service his mortgage, he’ll have very little left over for living expenses or for improvements on the home, says Peter Veselinovich, Investors Group’s vice-president, banking and mortgage operations, in Winnipeg.

“He may be taking on more debt than he’s comfortable with,” he adds. “Would-be homeowners often panic, thinking if they don’t buy now, and interest rates and house prices go up, they’ll never have a home. But first-time homeowners are typically young people who may not be prepared for life’s happenstances, such as having a family and getting laid off from their jobs.”

A home shouldn’t make its owner house-poor, Bodnar adds. “It should complement your life, not rule it.”

Veselinovich recommends looking at a mortgage as part of the family’s overall financial plan, and recommends working with a financial adviser, who will put the prospective homeowners on a savings plan tailored to the family’s goals and needs, before buying.

“The adviser may well suggest that the first home be more modest that what the client has envisioned,” he added.

100-per cent-financing still available option: Those determined to get into the housing market may be able to get financing for their down payment. Buyers with good incomes and excellent credit ratings may be able to access “free down payment mortgages” that will give the purchaser five per cent of the purchase price for a mortgage on closings.

“This is basically a cashback program for people with good credit and income, and the rate is bonused to cover the five per cent given towards the down payment,” Panjwani says.

Veselinovich cautions against 100-per-cent financing. “Buyers are taking on a huge debt at a period in the housing market when they might not realize much growth in equity for a while. And right now it’s only a matter of when interest rates will go up.

“If they can’t save the per cent needed for a down payment,” he adds, “they probably need advice on developing discipline in planning and saving for their plans. Life changes may occur that will force them to sell because they can no longer afford their home.”

 

Posted in Applying for a mortgage - Lisa Alentejano services the interior, BC Mortgages, BCMortgage, Best Rate Mortgages, Canadian Economy, Canadian Mortgage News, Home Buyer Closing Costs, HST, Kamloops Mortgage Broker, Kelowna Mortgage Broker, Mortgage Affordability, Real Estate Market, Salmon Arm Mortgage Broker, Vernon Mortgage Broker

Whats the impact of the HST when buying a home?

What’s the impact of the HST when buying a home?

The BC government’s move to introduce a harmonize sales tax, or HST, that combines the federal and provincial sales taxes into a single 12% will mean increased costs for some homebuyers.

Most importantly, new homes in BC will be subject to the 12% HST. Re-sale homes are not subject to the HST.

According to the BC Real Estate Association, “To offset the increase in costs, the BC Government is offering a partial rebate of the HST for new housing, intending that new homes up to $525,000 should bear no more tax than under the previous PST system. Homes above $525,000 will receive a flat rebate of $26,250. New home sales over $525,000 will be impacted, as buyers will have to pay an additional 7% tax less the $26,250 flat rebate.”

“On November 18, 2009 the provincial government announced the HST transitional rules on housing which includes a threshold increase from $400,000 to $525,000, moving the threshold to above the median new home price in the province.”

The British Columbia Harmonized Sales Tax of 12% HST is also applicable to any costs and fees associated with your property/home purchase including legal/notary fees, real estate commissions and other closing costs.

Posted in Applying for a mortgage - Lisa Alentejano services the interior, BC Mortgages, BCMortgage, British Columbia Mortgages, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, Fixed rates, Home Buyer Closing Costs, Home Equity, Home Loans, Interior home mortgage, Interior Mortgage Expert - Lisa Alentejano, Interior Mortgages, Kamloops First Time Home Buyer Tips, Kamloops home mortgages, kamloops mortgage, Kamloops Mortgage Broker, Kamloops Mortgage Broker - Lisa Alentejano, Kamloops mortgage consultant, kamloops mortgage financing, Kamloops Mortgages, Kelowna Mortgage Broker, Kelowna Mortgage Financing - Lisa Alentejano, Low Interest Rates, Mortgage Affordability, Mortgage Broker Kamloops, Mortgage by Lisa Alentejano, Mortgage Consultant Kamloops, mortgage financing kamloops, Mortgage Rates, Pre Approval Mortgage, Real Estate Market, Refinance Your Mortgage, Salmon Arm Mortgage Broker, salmon Arm mortgages, Salmonarm Mortgage, Tax Break, Vancouver Mortgages, Vernon Mortgage

Could bonds pull mortgage rates down even more?

 

Could bonds pull mortgage rates down even more?Falling bond yields could spur a slight drop in medium-term residential mortgage rates this summer, but bargain-hungry consumers would be foolish to count on considerably cheaper borrowing costs, experts say.

About a month ago, banks blamed soaring bond yields for two sizeable hikes to key residential mortgage rates.

Those moves drove up posted rates on five-year fixed-rate loans by 60 basis points to 5.85 per cent.

While yields have reversed course in recent weeks, banks have yet to pass on those savings to consumers. Meanwhile, there are fresh signs of life in the housing market, fuelling increased demand for mortgages.

Some economists and rate strategists believe that yields could fall a bit further and speculate that mortgage rates might follow suit. But there are no guarantees and experts surmise those potential declines would be minimal at best.

Doug Porter, deputy chief economist at BMO Capital Markets, says banks will be more inclined to tweak their rates if yields continue heading south

“Typically, they want to be convinced that it is not a flash in the pan and that any retreat in yields is sustained,” he said.

“I believe that we are probably not too far away from that point. It might take a little more of a deeper rally (in bond prices) to make it completely convincing.”

Bond yields move inversely to prices. While variable-rate mortgages are largely influenced by the banks’ prime rates, conventional fixed-rate mortgages are linked to the bond market.

Banks generally try to match maturities when they finance mortgages with bonds. That means five-year mortgages are paired with five-year bonds.

Earlier this year, banks were confronted with a sharp spike in their own borrowing costs. Yields jumped after a flurry of better-than-expected economic data. At that time, traders were also focused on the threat of inflation as governments issued massive amounts of debt to stimulate growth.

Central banks usually try to control inflation by raising interest rates and the market was betting the U.S. Federal Reserve would hike rates this year.

That sentiment, however, has since soured.

Last week’s disappointing U.S. jobs report is among a string of more recent indicators that dampened earlier expectations of a snappy recovery.

The yield on the five-year Government of Canada bond peaked at 2.82 per cent on June 10. Yesterday, it closed at 2.39 per cent. Experts say it is impossible to predict how much lower it could go.

“I think most of the juice has been wrung from this move. I would still say the risk is that yields could fall a bit further, but I think we’re well past halfway,” said Eric Lascelles, a rates strategist at TD Securities.

Benjamin Tal, CIBC’s senior economist, thinks another 5 to 10 basis-point decline in yields is likely. He agrees that might cause mortgage rates to dip but believes the discounts will be minimal and short-lived. “By the end of the year, we’ll start seeing rates rising.”

Mark Chandler, a senior fixed-income analyst at RBC Capital Markets, stressed that other factors also influence mortgage rates, including higher demand and recession-driven risk premiums.

Even if rates don’t budge, they remain near historic lows, observed Jim Rawson, Toronto regional manager at mortgage brokerage Invis.

“I know that people are so rate-conscious these days, but really when it comes down to what (falling yields are) really going to mean for you on a monthly basis – it is really nothing

RITA TRICHUR Toronto Star

Posted in Applying for a mortgage - Lisa Alentejano services the interior, BCMortgage, British Columbia Mortgages, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, Debt, Home Buyer Closing Costs, Home Equity, Home Loans, Interior Mortgages, Kamloops First Time Home Buyer Tips, kamloops mortgage, Kamloops Mortgage Broker, Kamloops mortgage consultant, Kamloops Mortgages, Kelowna Mortgage Financing - Lisa Alentejano, Mortgage Affordability, Mortgage Broker Kamloops, Mortgage by Lisa Alentejano, Mortgage Consultant Kamloops, mortgage financing kamloops, Mortgage Playground - Lisa Alentejano, Mortgage Consultant, Mortgage Rates, Protecting your biggest investment your mortgage, Real Estate Market, Refinancing, Salmon Arm Mortgage Broker, Salmonarm Mortgage, Save your money, Vancouver Mortgages, Variable rates, Vernon Mortgage, Vernon Mortgage Broker

Your line of credit just got jacked

Your line of credit just got jacked
Your line of credit just got jacked

What’s going on with your line of credit?

It is most likely rising, much to the chagrin of many Canadians who thought it would continue to track the Bank of Canada’s key benchmark rate, percentage point for point.

Edmonton machinist Neil Gordey found that out the hard way, when he got a notice last month that his line of credit was going from prime, up to prime plus one percentage point.

“Can they do this? After entering in to an agreement with them for a product at a decided rate, can they simply change the terms like they did?” asks Mr. Gordey, who had taken the remaining loan amount on his variable-rate mortgage and rolled it into a line of credit for better flexibility.

The answer to that is that it depends on your contract. But know this: The bank can change the rate and some have raised it on credit lines because their own cost of capital has gone up.

Some, such as the Canadian Imperial Bank of Commerce and the Bank of Montreal, have done just that. TD Canada Trust has chosen to “grandfather” customers whose rate was set before the credit crisis.

The good news is that with prime at 2.25%, customers with strong credit are still borrowing at 3.25% if their loan is secured by something such as a house. In the end, you might be better off because prime at most of the major banks was above 3.25% just seven months ago.

The outstanding loan amount on lines of credit has exploded over the past year, jumping by 20%. “I think consumers realize there is a deal out there that they might not be able to get later,” says Benjamin Tal, senior economist with CIBC World Markets.

Mr. Gordey is one of the unlucky ones because he had a variable-rate mortgage that was negotiated at .375 percentage points below prime, but he switched to the line of credit. Instead of borrowing money at just above 1.85%, his loan is now 3.25%.

The difference between the rules on a variable-rate mortgage versus a line of credit are subtle but important. Most consumers taking out a variable-rate mortgage agree to a term with the rate calculated based on prime. These days, that’s about 100 basis points above prime. Before the credit markets blew up, it was 60 basis points below prime.

“Historically, a lot of lines of credit have been priced right at prime,” says Gary Siegle, a mortgage broker and Calgary regional manager with Invis Inc. “The typical range has been from prime, to prime plus two [percentage points], depending on your credit.”

Mr. Siegle says credit lines are great for consumers because they operate like credit cards, but with nowhere near the same interest rates. And, unlike mortgages, you can opt to pay just the interest.

The downside? Most lines of credit are callable upon demand, even if you have not defaulted. Most mortgages are not. To keep this point in context, it is almost unheard of for a Canadian financial institution to call in a consumer line of credit that is not in default.

The major difference is your rate and the bank’s ability to change it on a line of credit versus a mortgage.

Variable-rate mortgages are tied to prime, which banks can set at any level they want. But the reality is, Ottawa has leaned on them to keep the prime rate moving in step with the Bank of Canada’s rate, regardless of the cost of debt. There were a few hiccups in the fall, but the banks played ball as rates have been lowered.

Lines of credit are a different story. At Bank of Montreal, they are calculated using what is called “the base rate,” which is a combination of the prime rate plus whatever discount or premium the bank is willing to offer customers.

Unlike consumers with variable-rate products, who have contracts that specify they get a certain discount off of prime, the rules on a credit line tend to be looser and allow the banks to raise your rate as their costs go up.

“Our base rate has been adjusted. All the banks have done it because of our cost of funds,” says Laura Parsons, area manager of specialized sales for Bank of Montreal in Calgary. “The base rate can move. It is prime plus something.”

The “something” is something to think about.

Dusty wallet Is your interest rate calculated on a daily, monthly, quarterly, semi-annual or annual basis? It can make a difference in your effective interest rate. On a 4% mortgage, if interest is calculated daily, the effective rate is 4.0808%. If it’s calculated monthly, it’s 4.074%; quarterly, 4.06045%; and bi-annually, 4.04%. How your interest is calculated becomes a much bigger issue as you get into higher rates

Financial Post

Side note: We still have variable rate mortgage available between prime plus .40 and prime plus .60 so effective rate for your variable rate mortgage is between 2.65% and 2.85%.  Line of credits are a different type of credit vehicle and not for everyone, they do have some more flexibility with things such as interest only payments and if you need credit in the future your dont have to go back to the bank to access it.    Credit lines are priced at more of a premiume at prime plus 1% and higher today.

Posted in Applying for a mortgage - Lisa Alentejano services the interior, BC Mortgages, BCMortgage, Best Rate Mortgages, British Columbia Mortgages, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, Debt, First Time Home Buyer Steps, Fixed rates, Home Buyer Closing Costs, Home Equity, Home Loans, Interior home mortgage, Interior Mortgage Expert - Lisa Alentejano, Interior Mortgages, Kamloops First Time Home Buyer Tips, Kamloops home mortgages, kamloops mortgage, Kamloops Mortgage Broker, Kamloops Mortgage Broker - Lisa Alentejano, Kamloops mortgage consultant, kamloops mortgage financing, Kamloops Mortgages, Kelowna Mortgage Broker, Kelowna Mortgage Financing - Lisa Alentejano, Low Interest Rates, Mortgage Affordability, Mortgage Broker Kamloops, Mortgage by Lisa Alentejano, Mortgage Consultant Kamloops, mortgage financing kamloops, Mortgage Playground - Lisa Alentejano, Mortgage Consultant, Mortgage Rates, Pre Approval Mortgage, Protecting your biggest investment your mortgage, Real Estate Market, Refinance Your Mortgage, Refinancing, Salmonarm Mortgage, Save your money, Vancouver Mortgages, Variable rates, Vernon Mortgage, Vernon Mortgage Broker

Dont handcuff your mortgage

Dont handcuff your mortgage
Dont handcuff your mortgage

Would you like to pay an extra $300 per month on your mortgage? Not likely.

That hasn’t stopped a number of Canadians, with the deal of a lifetime on a variable-rate mortgage, from switching over to a more expensive fixed-rate product and paying the extra freight.

A fear of rising rates is driving the rash decision. But if you’ve finally managed to pin your banker to the ground, why on Earth would you let him off the mat?

More than 28% of Canadians have a variable-rate product tied to prime, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP). If you negotiated a deal before October of last year, chances are you are now borrowing money for as little as 1.35%. That’s based on deals that at one point saw the banks giving 90 basis points off prime. Prime is now 2.25%.

The average sale price of a home last month in Canada was $306,366. Based on a 25% downpayment and a 25-year amortization, your monthly payment would be $962.61 at 1.35%. Convert that to a five-year fixed-rate term and you’re probably going to have to consider a 4% mortgage rate and a monthly payment of $1,289.04.

Rates are rising fast. Most major banks upped their five-year rate by 40 basis points this week, although discounters were still offering 4% this past week.

“It’s not a mass rush yet, but we are starting to see … people locking in. But variable rates are still so good,” says Joan Dal Bianco, vice-president of real estate-secured lending, TD Canada Trust. She stops short of questioning why a consumer would pull out of these “deals” that are no longer available on the market.

Try to get a variable-rate mortgage today and the best you can probably hope to get is 60 basis points above prime, or 2.85%.

The landscape changed dramatically in October during the credit crunch. As the Bank of Canada lowered rates, the major banks reluctantly lowered prime because of the massive amount of customers with variable-rate products negotiated under the old, higher terms.

“Bonds yields are going up rapidly and people are starting to realize the rates are going to go up,” Ms. Dal Bianco says. Throw in the fact the Bank of Canada used the weasel word “conditional”(on inflation rates)when it promised not to raise rates until June, and you can understand why some people think today’s record-low prime rate might not hold.

But if you’re someplace between 60 to 90 basis points below prime, the rate is going to have to go up pretty fast to justify locking in today at 4%, even though that is just slightly above the all-time low hit last month for a five-year term.

“I don’t understand why you would lock in,” says Jim Murphy, chief executive of CAAMP. “Sure, if they start to rise, but [Bank of Canada governor Mark] Carney says they won’t rise, so you’ve got another year at that prime-minus rate.”

Don Lawby, chief executive of Century 21 Canada, says even when rates do start to increase, they are not going to jump significantly right away. You are not going to get 4% on a fixed rate again, but double-digit rates seem unlikely. “The only logic two locking in would be for someone very sensitive to any rate change and they just want to be secure,” Mr. Lawby says.

But at what price? If you’re using the “feeling secure” logic, why not go for the 10-year fixed-rate product? Rates on that product can be locked at 5.25%, ridiculously low by historical standards. Yet fewer than 10% of Canadians consider a 10-year product.

There are some compromises you can make. For starters, there is nothing to prevent consumers from having a blended mortgage at most Canadian banks. Some banks will let you take half your outstanding debt and lock it in. Diversity is preached for stock portfolios, but few people seem to adhere to the same philosophy when managing their debt.

Consumers might want to take their cue from business. Few companies would want all of their debt coming due at the same time — it presents too much risk. The other option is knocking down principal: Make payments based on a 4% rate and have that extra $300 go straight to your principal every month.

The bottom line is if you’ve got a deal on your mortgage, why would you give it back?

 

Gary Marr, Financial Post

Note: A variable rate mortgage  historically outperforms a fixed rate mortgage.  With a variable rate you hit some peeks and valleys when prime fluctuates but overall a better rate long term.  The question again is to ask yourself are you comfortable with fluctuating payments should prime rate increase.   Merix financial is offering prime plus .40% giving you a variable rate at 2.65% (prime rate at 2.25%), one of the most competitive variable rates out there currently in the marketplace.  Merix Financial is only accessed threw an approved mortgage broker.