CategoryMortgage Tips

Posted April 15, 2014 Consumer Debt

Slow credit or poor credit? There’s a mortgage solution.

Life doesn’t always go according to plan. You’ve heard that saying before. When you have financial trouble, it can affect your credit score. Today, that makes qualifying for a loan or mortgage very difficult….. but not impossible.

With all the new mortgage rule changes over the past 5 years, its made borrowing at reasonable rates almost impossible. Many of us have been forced to borrowing on our high interest credit cards or finance loan companies. These credit facilities carry huge interest rates and short amortization periods resulting in very high monthly payments. (by the way, isn’t it ironic that the Federal Govt has tightened mortgage rules every year for the past 5 yrs but they haven’t touched the higher interest credit card companies and finance companies! Who owns the credit card companies and finance companies? That’s right.. the BANKS! Who’s interest are they looking out for?)
Continue reading “Slow credit or poor credit? There’s a mortgage solution.”

Posted April 4, 20142 Comments Case study

Is your banker giving you their best rate?

EVEN THE BANK OF CANADA SAYS MORTGAGE BROKERS WILL GET YOU A LOWER RATE.

The Bank of Canada did a study a few years ago called Competition in the Canadian Mortgage Market. The study concluded that consumers get a lower interest rate through brokers. They also said that higher income earners were actually paying higher rates because they are less likely to spend the time to shop around for lower rates.

Last week, I did an interview for the news media about what a broker does. They also interviewed one of my clients. This client owns more than one property, he’s an experienced real estate investor and a senior manager for a major corporation. He uses my service because I save him time and money. He trusts my advice. It’s that simple. Here’s a link to the article.

IS YOUR BANKER GIVING THE BEST RATE?

A simple question. How many of us can truly answer, yes? You walk into your branch, you see a posted rate. Then your banker shows you the “special rate” or “discounted rate”. And then maybe they tell you they can do a little better. But how much better? And why aren’t they giving this up front? Don’t loyal customers deserve the best? Does this game sound familiar?

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Posted March 25, 2014 Money saving tips

Paying over list price has become normal.. but still requires a cool head.

Here’s a recent article in The Star where I provided some advice and comments on bidding wars.

The trend continues. Properties are selling for above asking price in hot markets across the country. In Toronto, it’s becoming the norm. Some say an epidemic.

Last month I reported on sales that sold for 128% and 138% of list price. We’re talking about selling prices of $1,035,000 and $1,150,000.

A few days later, we saw a home sell for $1,308,808. That’s $479,880 above asking price or put another way, 158% of list price. Sale prices this much above asking are either a clear case of listing too low, in the attempts of attracting multiple offers, with the hope of getting a higher than normal selling price… or, someone is paying way above market value for reasons beyond my understanding.

Continue reading “Paying over list price has become normal.. but still requires a cool head.”

Posted March 7, 20146 Comments Interest rates

Stay away from mortgage cashback offers!

It’s the Spring market… ok, the weather isn’t saying this but the real estate market is. You’re gonna start seeing and hearing more ads on TV, radio, news sites, even finance blogs. So here’s a some quick words of advice. STAY AWAY FROM TODAY’S CASH BACK OFFERS!

There are a few different types of mortgage cash back offers. The most common offer is one where the Bank or Lender gives you 5% of the mortgage balance on closing. That’s right they give you 5% back in cash. For example: a $400,000 mortgage would get you back $20,000 in cash.

This type of cash back does serve a purpose. If you are a young home buyer with little or no down payment, but you have a good job and don’t want to wait to save up that down payment, then this isn’t a bad way to get in the market. Just ask those that did this 5 years ago. With real estate values up by around 35% to 50% in that time, this isn’t a bad deal. Continue reading “Stay away from mortgage cashback offers!”

Posted February 3, 2014 Case study

Lower rate = Lower payment and a Lower balance in 5 years!

We all know that a lower interest means a lower monthly payment. But did you know that a lower interest rate means you will also owe less when your mortgage comes up for renewal? This has been overlooked by consumers and experts alike. I haven’t seen any articles covering this. And it should change how you choose your next mortgage product.

It all has to do with the effects of compounding interest. Let’s take a look at 2 borrowers, each with a $400k mortgage. Borrower 1 is Mary. Borrower 2 is Dave. Mary has today’s 5 yr fixed rate of 3.29%. Dave has the more normal rate of 5.50% (the rate most experts think we will see in the next 3 to 5 yrs). We’ll amortize both mortgage over a 25 yr term.

Dave’s mortgage has monthly payments of $2441 and a balance owing of $356,749 at the end of 5 years. Mary’s mortgage has monthly payments of $1953 and a balance owing of $343,728 at the end of the first 5 years. Notice the difference in the balance owing after 5 years. We are talking about a $13,021 difference. That’s the effects of compounding interest. Continue reading “Lower rate = Lower payment and a Lower balance in 5 years!”