CategoryMortgage Tips

Posted October 30, 20174 Comments Consumer Debt

Review your mortgage NOW! Next year may be too late.

It’s begun. The message is starting to sink in. The new mortgage rules could eliminate 15% of Canadians from qualifying for a mortgage after January 1st, 2018. The mad rush has started as mortgage inquiries are up significantly.

WHO WILL BE AFFECTED?

Anyone that has a mortgage renewal in next 12 to 20 months.
Anyone thinking of buying in the next 12 months.
Anyone that is needs or is thinking of refinancing their mortgage in the next 12 months.
Rental property owners. Yes, you too.
Future retirees with lots of home equity (newsflash..the new rules don’t take into consideration how much equity you have in your home.. your net worth is also irrelevant… it’s all about how much income you earn and declare…)

All of these borrowers will be affected. If you’re not getting the message, anyone with a mortgage should be getting a review done NOW. Don’t wait until next year. You may not qualify for a mortgage.

EXPECT HOME SALES TO SPIKE UP TEMPORARILY Continue reading “Review your mortgage NOW! Next year may be too late.”

Posted July 28, 20171 Comment Mortgage News

Rates went up, so now what do you do?

fear On July 12^th, for the first time in seven years, the Bank of Canada increased the overnight rate by .25%, withdrawing some of the stimulus that was needed after the oil price collapse and 2008 financial crisis. Variable rate mortgages and lines of credit will see higher rates and modest payment increases. Fixed-rate mortgage – which are based on the bond market – had already been trending slightly upward, although if you have a fixed mortgage, you aren’t affected until it’s time to renew. Keep in mind that this is a very small increase, and we’re still in an ultra-low rate environment and an incredibly stable market. We’ve also seen increases before to only see them decrease again. But rates have risen, so here are answers to the questions I’m getting:

Should I jump into the market now? Actually, my advice is always the same: buy when you are financially ready. Don’t jump the gun just because rates “may” go higher. But by all means, if you’re thinking about buying, I can arrange a pre-approval so you’re protected from rate increases while you shop around.

Should I lock in my variable rate mortgage ASAP?
Continue reading “Rates went up, so now what do you do?”

Posted July 22, 20172 Comments Consumer Debt

Banks pass on rate hikes but not the savings.. Shame on the BANKS!

On January 2015, the Bank of Canada cut the prime rate by 0.25%. But the BIG SIX BANKS didn’t cut the Prime rate as they normally do. Instead, they waited a week… tried to justify why they couldn’t cut the rate… and finally caved in and cut it.. but ONLY by 0.15%.

That’s right, they pocketed the remaining 0.10%. And in case you haven’t heard, the BIG SIX BANKS have been posting record profits, year after year after year after year after year. In 2016, the 5 most profitable corporations were:

RBC
TD
SCOTIABANK
BMO
CIBC

Continue reading “Banks pass on rate hikes but not the savings.. Shame on the BANKS!”

Posted May 9, 2017 Consumer Debt

Long term contracts have a price… nothing has changed from 2010

Originally posted in 2010…. some things never change.. enjoy and beware.

Here’s a great article written by consumer advocate, Ellen Roseman. She points to different industries where signing in for the long term protection can be very costly and expensive.

Ever wanted to change cell phone providers? How about internet providers? Move your investments or rrsps? Cancel that hydro or gas contract because you moved?

And how about mortgages? When interest rates started heading downward about 12 months ago, thousands of borrowers in fixed rate mortgages wanted to get out of their higher rates and start benefitting from the record low interest rates we have been seeing.

But they were shocked to hear of unbelievably high early prepayment penalties… the example Ellen uses is about a $46k penalty on a $530k mortgage with a major bank… I’ve seen dozens and dozens of situations like this.

Beware of long term mortgages… with the average person moving or refinancing about every 3 years, choosing a 5 year fixed rate term is usually not the best option. It could cost you more than you think… always seek professional advice from a reputable mortgage broker before selecting your mortgage.

(Just a personal note… It sure would have been nice to see some mortgage relief given to the average homeowner during the recession. CMHC used to cap their penalties to 3 months interest but removed this cap in 2000…quietly, all financial institutions are free to charge a higher penalty…and they all do.. the longer the term, the greater the penalty…)

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 February 27, 2017 Bank News

Another example of BIG SIX BANK inflated penalty calculation.. $13,634.00! Wow!

If you still think your local BANK is your best friend, think again. Last week, one of my client’s discovered it would cost them $13,634 to exit their mortgage early. Compared with only $2736 if they had chosen a BETTER mortgage Lender.

Here’s the details.. The clients had a $395,000 mortgage balance remaining. Renewal date was October 2018. Original term was 5 yrs and their rate was 2.77%. The rate is competitive, but not any better than what I could have offered at that time. There had to pay the mortgage out.

Penalty quote is $13,634. That’s equal to over 14 months interest!! Wow! Incredible. $13,634 compared to $2736.

I’ve shared many examples similar to this in the past. It’s really simple. DON’T FOCUS ON THE RATE!. There is so much more to choosing a mortgage than just rate. The average Canadian changes their mortgage ever 3 years. And there are many reason this happens.. change of job, marital status, family issues, health issues, etc.

And if you are expecting your Banker to show you other products to compare, well, that’s just not gonna happen. It’s like expecting Ford to send you to Toyota for a new car. Not gonna happen. Do yourself a favour and speak with an unbiased, neutral professional. Speak with an experienced Mortgage Broker that deals with dozens of Lenders. You’ll be glad you did.

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