CategoryMortgage Products

Posted February 2, 20181 Comment Money saving tips

Why I started this site… 400+ articles later

I’m often asked why I started this site. It’s simple: I was tired of reading misinformation and twisted truths about mortgage brokering in Canada.

Back in 2009 when I created the site, there were some new blogs reporting on mortgage trends and offering ‘expert’ advice. (I use the term ‘expert’ loosely.) In reality, these sites were full of misinformation. The information was even damaging to the mortgage brokering landscape, in many cases… yet, they were being quoted by our largest newspapers and TV news channels. Wow! How can the major newspapers print this stuff?? It made me angry.

At the same time, there were rate shopping sites being launched. You know the ones… they compare bank, credit union and mortgage broker rates. These sites promised to compare rates, with no strings attached and tell you which provider has the lowest rate. They were supposed to be totally unbiased. They were supposed to be market neutral. Hey, don’t get me wrong, everyone loves to compare, shop and save, right? Comparing is part of being a smart consumer… but there is this huge problem… These sites are NOT unbiased or neutral. These sites are NOT run or owned by independent people.

You would expect a product review site to be neutral and unbiased, right? I mean, it just makes sense. If I want to compare hotels or vacation destinations, I’ll go to a site like TripAdvisor or Booking.com. We can clearly view the best available price and past customer experiences. We wouldn’t expect TripAdvisor or Booking.com to own the hotels or airlines they were advertising. That would be a conflict of interest.

Continue reading “Why I started this site… 400+ articles later”

Posted February 20, 2017 Mortgage News

Coming soon…Higher CMHC premiums March 17, 2017

This is not a recording. CMHC is increasing their premiums for the 3rd time in 4 years. Here’s what it will look like.

Loan-to-Value Ratio	Standard Premium (Current)	Standard Premium (Effective March 17, 2017)
Up to and including 65%	0.60%	0.60%
Up to and including 75%	0.75%	1.70%
Up to and including 80%	1.25%	2.40%
Up to and including 85%	1.80%	2.80%
Up to and including 90%	2.40%	3.10%
Up to and including 95%	3.60%	4.00%
90.01% to 95% – Non-Traditional Down Payment	3.85%	4.50%

Wondering why they need to increase the premiums? It’s not about trying to discourage homebuyers. It’s to “preserve the returns on capital”, according to Steven Mennill, SVP CMHC. Yup, the Crown corporation wants to focus on profit. (show me the money). At least they’re being honest about it. The overall amount of mortgages insured by CMHC has dropped in the past 4 years. Down from $576billion to around $512billion. So, it’s about maintaining profits while their book of business is shrinking.

Having said that, CMHC has lowered, increased and lowered their insurance premiums before. We can expect them to change and adjust again.

In case you are wondering why the overall volume is going down when house prices are going up, it’s because the Fed govt has changed the mortgage rules so that it becomes more difficult to qualify for a mortgage. Therefore, the amount of mortgages CMHC can insure is going down.

Now for some good news..

The overall cost to your mortgage is minimal. Oh yeah, one more thing…without CMHC, we would all be digging deeper into our pockets to come up with 20% or 25% down, like the old days. And while some may think that is how it should be, those days are long gone. First time homebuyers don’t have $100k, or $200k sitting around to buy a home. They need help.. And what’s wrong with helping our youth that are ambitious enough to want to own a home?

CMHC is a necessary evil.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca

Posted November 16, 2016 Money saving tips

Bridge loans explained… your bank hates them but they are extremely useful

Bridge loans are short-term loans that bridge the gap between two different closing dates. More commonly used when an existing homeowner sells their home, and buys another home, with two different closing dates. But bridge loans have become a very popular way to take possession of that new home while it’s empty for 2 or 3 weeks to allow for renos. Best of all, it’s really inexpensive!

THE OLD WAY

In the past, most homebuyers would have their selling and buying dates match. It’s always been a bit of a juggling act as you have to pack your moving truck and unpack it, all in less than a day. Somehow, everyone manages to get it done… but you talk about one of the most stressful days in your life….moving ranks right up there! Throw in some kids, maybe a dog, and a house full of stuff and you have a real chore on your hands….

THE NEW WAY… Continue reading “Bridge loans explained… your bank hates them but they are extremely useful”

Posted May 31, 2016 Interest rates

Should you look at 10 year fixed rate mortgages?

Today, right now, we are experiencing all-time record low fixed mortgage rates. Great news if you need a mortgage. And some of you may be thinking of locking into a longer term mortgage. Let’s take a look at that option.

Going longer could be an option for some. The Best 5 yr fixed is around 2.59%.. some special deals exist for larger mortgages or faster closings… but let’s use 2.59% for now. Does it make sense to pay 0.30% more for the first 3 years of your mortgage, just for the benefit of knowing what your rate will be for the last 2 years?

(a warning… you’ll see lower rates advertised.. but be careful. There are so many NO FRILLS products or products that carry inflated penalty calculations, limited repayment options and other hidden fees.. stay away from those)

Continue reading “Should you look at 10 year fixed rate mortgages?”

Posted May 26, 2016 Debt

I have 2.39% for 5 yrs fixed available…but I wont sell it.

It’s true. I have access to this great rate. It’s around 0.20% lower than the best rate today. And you won’t see me recommending it to my clients.

That’s right, I’m recommending they don’t take it.

Why? It’s simple. No, I don’t want my clients paying more on their mortgage. I want to see them PAY LESS to own their homes. This is one of those products that carries an inflated prepayment penalty. Should the homeowner need to get out of their mortgage early, they will be hammered with a ridiculous exit cost. We’re talking 10, 12, even 16 months worth of interest penalty.

Statistics clearly show we are paying or changing our mortgages every 3 years. So, chances are, you will have to pay this penalty. On a $300,000 mortgage, your penalty could be $9,000 or more. Compared with $1,943. That’s a $7,000 difference.

That 0.20% savings on the rate equals $600 per year.. You still think that 2.39% rate is great??

The next time you hear or see something that sounds too good to be true, it probably is. If you aren’t sure, call me or an experienced Mortgage Broker for unbiased advice.

Your best interest is my only interest. I reply to all questions and I welcome your comments. Like this article? Share with a friend.

Steve Garganis 416 224 0114 steve@mortgagenow.ca