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Posted Mortgage News

CMHC’s Ontario Housing conference 2014 highlights: the news is good!

CMHCA few weeks ago, I attended CMHC’s Ontario Housing Market Outlook conference.  This annual conference provides Financial experts with an insight into some of the best data available.    Now, in case you didn’t know it, CMHC probably has the largest database of information in Canada.  So when they publish stats and make forecasts, we need to listen.

This year’s speakers included Ted Tsiakopoulos, Regional Economist CMHC, Ed Heese, Senior Market Analyst CMHC, Dave McLean, President Mattamy Homes (Canada’s largest home builder) and Peter Zimmerman, Director of Development Freed Developments (highrise condo builders).   I really enjoyed hearing Ted speak.  His presentation was backed up by a wealth of stats.   Let’s see if you agree about the forecast. Continue reading “CMHC’s Ontario Housing conference 2014 highlights: the news is good!”

Posted Mortgage News

Federal Govt’s rrsp Home Buyer’s plan nets this couple a $15,000 tax refund.

RRSP home buyers planAround 20 years ago, the Federal govt introduced the RRSP Home Buyer’s Plan.   The goal was to stimulate a depressed housing market in the early ’90s.   The plan is really quite simple.   First time homebuyers could borrow up to $20,000 from their RRSP to be used towards the purchase of a home.   Buy with a spouse or your common-law spouse and you’ve doubled the amount to $40,000.

There really is no catch.  You simply have to pay it back to your RRSP plan over a 15 year period.   The minimum payment is 1/15th of the amount that you withdrew payable each year.  That’s it.

Today, the plan still exists with a slightly higher limit and more flexibility.   You can now withdraw up to $25,000 per person… still capped at 2 people max per purchase (married or common-law spouse).   You can also participate in the Home Buyer’s plan if you haven’t owned a home in the last 5 years.  This can work to your advantage if you previously owned but sold.  click here for the full guidelines and qualifications. Continue reading “Federal Govt’s rrsp Home Buyer’s plan nets this couple a $15,000 tax refund.”

Posted 1 Comment on Long term is almost always more expensive. Mortgage News

Long term is almost always more expensive.

long term contractsEver 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 down about 4 years ago, thousand of borrowers in fixed rate mortgages wanted to get out of their higher rates and start benefiting from the record low interest rates.

But borrowers were shocked to hear of unbelievably high early prepayment penalties…   Penalties of $15,000, $20,000, $30,000.    One recent situation had CIBC charging a $33,000 penalty on a $500,000 mortgage.  I’ve seen dozens and dozens of situations like this.   Almost all of these high penalties were from one of the BIG SIX BANKS…    Continue reading “Long term is almost always more expensive.”

Posted Money saving tips

Tips on how to reduce your mortgage penalty

break your mortgage

Interest rates are still near record low levels. You’ve heard your co-workers,  friends or family brag how lucky they were to renew into these once in a lifetime rates.

But how you do you take advantage?  If you break your fixed rate mortgage then you face an enormous prepayment penalty…we’ve seen reports of $10k, $15k, $20k and even $30k in penalties….Wow!

Well, here’s a few tips…

-first, if you are in a 10 year fixed rate mortgage, and your are at least 5 years into the term, then the maximum penalty is 3 months interest  (this is a little known fact… Section 10 of the Interest Act of Canada).

-One more way to reduce the penalty is to utilize the annual prepayment privilege that’s within the mortgage.  Most mortgages have between 15% and 25% prepayment privileges which equates to a 15% to 25% reduction in the penalty…. Continue reading “Tips on how to reduce your mortgage penalty”

Posted Mortgage News

You heard it here first!… Rule of thumb for choosing Variable over Fixed.

First For the past few years, the Bank of Canada has warned us about the imminent interest rate hikes.   Reminds me of the boy that cried wolf.    “Interest rates are going up…  soon!…  real soon…. really, really soon!!”   But last week, the new Bank of Canada Governor, Stephen Poloz, surprised many experts when he said rates would remain low for quite a while.

This announcement prompted many advisors to jump on the Variable Rate bandwagon and start recommending Variable rate over Fixed rate.   I agree…  Variable rate is the obvious choice for most of us today.   But I also noticed a familiar rule of thumb being quoted in the media.   So I wanted to set the record straight. Continue reading “You heard it here first!… Rule of thumb for choosing Variable over Fixed.”