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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

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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 BC Mortgages, Canadian Mortgage News, Fixed rates, fixed term mortgages, Interior home mortgage, Kamloops First Time Home Buyer Tips, Kamloops Mortgage Broker, Kamloops Mortgage Broker - Lisa Alentejano, Kamloops mortgage consultant, kamloops mortgage financing, Kamloops Mortgages, Kelowna Mortgage Broker, Low Interest Rates, Mortgage Broker Kamloops, Mortgage Consultant Kamloops, mortgage financing kamloops, Mortgage Playground - Lisa Alentejano, Mortgage Consultant, Mortgage Rates, Mortgages - Get a second opinion, Protecting your biggest investment your mortgage, Refinance Your Mortgage, Refinancing, Renewing your mortgage, Save your money, Vancouver Mortgages, Why use a mortgage broker

Do your homework first… read the fine print – Rate of 2.99 to good to be true?

Although you will never hear any bank say that publicly, this is what is going on. Recently there has been some industry chatter about a few banks offering a sub 3% 5 year fixed product. One particular institution is bragging about their 6 billion dollar portfolio under administration, this product, and how great it is. At first glance you might think ” WOW, that’s awesome!” However as with all mortgages, you have to dig a bit deeper to find out the real nuts and bolts of this sub 3% offer. It’s a great offer alright for the bank, not for you; the consumer.

Based on an average mortgage size of $250,000, that’s 24,000 Canadians that negotiated directly with the bank who will feel ripped off once they find out about their terms and conditions. I am very pro client / consumer, and my job is to look out for their best interests so I simply can’t endorse this product. Consumers though need to know why they shouldn’t either. This product is priced well below the market average for 5 year product, and does not come without it’s “catches”. It’s definitely buyer beware and the bank will not tell you this.

Some of the features (or non-features you might say) are:

Minimal or no pre-payment privileges

This product has extremely low pre-payment features. On a monthly increase basis this could mean nothing to less than half of what the industry norm is. Lump sum payments may also be nothing or less than half the industry norm and if allowed only once per year. Pre-payment features are extremely beneficial and allow for strategies to be put in place. Lack of strategy means lack of interest savings for clients and consumers.

Fully Closed

When I say fully closed, I mean just that. A borrower cannot get out of the mortgage, unless they sell their place if at all. Who wants to sell their place if they want to refinance? I don’t know too many people that would. If borrowers do sell their place, a substantial penalty such as a 6 month interest penalty typically applies.  Borrowers may be offered  a reduced penalty (3 month) if they choose to refinance with that same bank however this still does not offer a borrower access to the entire mortgage market. It also confines them to more inferior product. If a borrower is going to pay a penalty, they rightfully should have the opportunity to entertain superior product. The average mortgage is in place roughly 3 years before being paid out or refinanced. Life just happens. More than likely a borrower will need to do something with their mortgage during their current mortgage term.  To be locked down by these terms and clauses makes absolutely no sense.

No guarantee of best rates upon renewal or refinance

Banks know that consumers may not know the mortgage market at any particular point in time. What’s happening in the mortgage world is usually not on the forefront of people’s minds. When it comes time to renew or refinance borrowers can be offered a rate as high as 1% above the market norm and not realize it. When a borrower asks the bank to do better, they may be offered a discount further however that .5% “special” discount doesn’t look so good when the rest of the market is priced much lower. This amounts to more interest the borrower has to pay over the course of their mortgage. This is more money for the bank that should be staying with you.

Your mortgage will also be registered as a collateral charge.

Beware of this one as it is a very sly practice among banks. What does a collateral charge mean to a borrower? The bank will instruct the lawyer to register the title as a running account. More than likely you running account will have a global limit of the property value itself. This doesn’t mean you are going to get this money, it just means that your property is fully tied up. If you choose another lender at renewal, legal fees apply. A second mortgage or Line of Credit can’t be put behind this product because the bank has tied up ALL of your equity. No matter which way you turn, the bank has shackled you to more costs and fees.

The lesson here is that rate is not everything. Product and Strategy is. Borrowers need flexible product to execute strategy.

Contact me for more information or apply online at http://www.mortgageplayground.com

 

 

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Mortgage Rates – How to protect yourself when they increase – Video message!

Heres a video I personally did on how to take a proative approach to protect and prepare yourself with rising interest rates in the future and save thousands of dollars! Click below to view video

Inflation Hedge Strategy - Learn to protect yourself from rising rates

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.

Posted in Applying for a mortgage - Lisa Alentejano services the interior, Bank of canada rates, BC Mortgages, British Columbia Mortgages, Canadian Economy, Canadian Housing Market - Lisa Alentejano, Canadian Mortgage News, Interior home mortgage, Interior Mortgages, Kamloops First Time Home Buyer Tips, Kamloops home mortgages, Kamloops mortgage consultant, kamloops mortgage financing, Mortgage Affordability, Mortgage Broker Kamloops, mortgage financing kamloops, Mortgage Playground - Lisa Alentejano, Mortgage Consultant, Refinance Your Mortgage, Refinancing, Save your money

Bank of Canada will most likely hold key interest rate

Canada’s strong economic growth in the first quarter is likely a temporary blip that will give way to more moderate expansion during the rest of the year.

While most analysts agree that should keep interest rates on hold when the Bank of Canada announces it latest policy stance on Tuesday, a number of others are getting nervous about the central bank’s slow pace in normalizing monetary conditions, saying it increasingly runs the risk of fueling higher inflation and destabilizing the economy.

“In order to control prices and avoid wild swings in the economy, we are of the opinion that the Bank of Canada should be more aggressive in the normalization of its monetary policy than what the market expects,” Pierre Lapointe, a global macro strategist at Brockhouse Cooper, said in a note to clients on Monday.

Canada’s gross domestic product expanded at an annualized rate of 3.9% during the first three months of the year, its fastest pace since the first quarter of 2010 when the economy grew 5.6%, according to Statistics Canada.

Falling just shy of the 4% expected by economists, the country’s latest GDP figures were aided by strong growth in the mining and oil and gas industries as almost all major sectors with the exception of retail, and arts, entertainment and recreation.

Business investments in plants and equipment were up 3.2%, the fifth straight increase, while exports were up 1.6% in the first quarter, and imports rose 2.2%.

Jim Flaherty, Canada’s Finance Minister, said the GDP numbers were encouraging when asked about them during a news conference at a Chrysler plant in Etobicoke on Monday morning.

“We knew the first quarter was going to be strong, and it is strong,” he said. “It’s in line with expectations. I’m particularly encouraged by the fact that government capital spending is a smaller part of the growth.”

But Mr. Flaherty, who said he plans on tabling “essentially the same budget” as the one in March that was rejected by the opposition to spark the recent federal election, also acknowledged that Canada’s growth for the rest of the year would be more modest.

Several economists, including David Madani of Capital Economics, agreed that the country’s economic pick-up is not sustainable.

With the temporary boost to growth from higher energy and auto production already realized, Mr. Madani expects second-quarter growth as a low as 1.5%.

He said Canada faces several headwinds and forecasts that slower US economic growth and the strong Canadian dollar will continue to restrain exports, particularly in industries dependent on auto sales and housing construction in the US.

“More importantly, Canadian domestic demand appears increasingly vulnerable to a shaky housing market, where still rising prices test the limits of housing affordability and already high household debt levels,” he said in a note to clients.

Under those circumstances, Mr. Madani said the Bank of Canada is unlikely to raise interest rates anytime soon. Consensus estimates, meanwhile, predict the central bank only raising its key lending rate 25 basis points to 1.25% by the end of the third quarter and to just 1.75% by year-end.

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Bank of Canada holds key rate

OTTAWA — The Bank of Canada said Tuesday the economy is growing at a “slightly” faster pace than expected as signs emerge of a recovery in exports – although that remains at risk due to a high dollar and poor productivity.

Strength in commodity prices, which is a driving factor behind the Canadian dollar, could get a further short-term boost from recent unrest in north Africa and the Middle East, the central bank added.

As expected, the central bank kept its benchmark rate unchanged at 1%. In a five-paragraph statement, it acknowledged conditions in Canada are strengthening, a day after Statistics Canada reported the economy grew at a 3.3% annualized clip in the fourth quarter — or a full percentage point above the central bank’s forecast. Part of this is due to U.S. economic activity that is “solidifying.”

 

Furthermore, the central bank said early signals suggest a necessary transition is underway, from an economy powered mostly by consumers to business investment and exports.

The Canadian dollar weakened to C$0.9730 to the U.S. dollar after the bank’s statement.

“The recovery in Canada is proceeding slightly faster than expected,” the central bank, led by governor Mark Carney, said, “and there is more evidence of the anticipated rebalancing of demand.”

In its last rate decision on Jan. 18, the central bank said economic recovery in Canada was headed for a period of “more modest growth,” with 2.4% expansion expected in 2011. At the time, Mr. Carney said the country would be hard pressed to “fully benefit” from an upswing in U.S. prospects due to a lack of competitiveness. But the 2011 outlook is near the low end of expectations compared with private-sector economists, who upgraded their forecasts further after the release of fourth-quarter GDP data.

At present, the Bank of Canada said in its Tuesday statement, domestic demand continues to expand although household spending is “moving” in line with growth in disposable income. Over the past year the central bank has raised myriad concerns about the record levels of debt households are carrying, prompting the federal government to move twice to toughen mortgage-lending standards.

In the Bank of Canada’s view, business investment continues to “expand rapidly” as companies take advantage of low interest rates and the need to boost competitiveness. And an anticipated comeback by the trade-oriented sector appears to be unfolding.

“There is early evidence of a recovery in net exports, supported by stronger U.S. activity and global demand for commodities,” it said, although warning: “The export sector continues to face considerable challenges from the cumulative effects of the persistent strength in the Canadian dollar and Canada’s poor relative productivity performance.”

Prior to the rate statement’s release, the Canadian dollar touched another 40-month high, as the loonie hit US$1.0309, up from Monday’s close in the US$1.029 range. The Canadian currency shot upward after the release of the GDP data, on the anticipation the Bank of Canada may begin raising rates earlier than previously believed.

Traders have priced in 100% odds of a rate hike in July, once the U.S. Federal Reserve completes its US$600-billion asset-purchase plan. But some analysts say the GDP report tilts the balance back in favour of an interest rate increase in May.

Derek Holt at Scotia Capital, however, told clients prior to the Bank of Canada release that he expected Mr. Carney to highlight concerns about the loonie.

“Don’t expect the Bank of Canada to abandon its commitment to arguing that over the full cycle, Canada’s lackluster productivity gains and an elevated currency will constrain the extent to which Canada leverages up the U.S. recovery just because one quarter’s worth of data counsels otherwise,” he said.

The Canadian dollar rise is powered by the country’s relatively sterling fiscal fundamentals, economic prospects, and a rise in commodity prices — highlighted by oil prices cracking the US$100 a barrel level last week on concern about Libya.

In the rate statement, the central bank said robust demand from emerging economies is driving the strength in commodity prices, “which could be further reinforced temporarily by supply shocks arising from recent geopolitical events.” That was the only reference to the potential risks posed by a growing wave of protests across north Africa and the Middle East.

Global inflation pressures are rising due to higher energy and food costs. But in Canada, the central bank said inflation is in line with its expectations – the core rate, which strips out volatile-priced items, stood at 1.4% in January – and pricing pressures remain subdued, reflecting “considerable slack” in the economy.