Helping your child unlock the door to their first home

Owning a home is a dream for most Canadians, and as parents, we want to provide the best opportunities for our children to achieve this milestone. Helping your children buy a home is not only a significant financial decision but also an emotional investment in their future.

Homeownership is a symbol of financial maturity and stability, and an investment that pays off in the long term with a more secure financial future. However, buying a home is a challenge for first-time buyers who do not have the benefit of a large down payment, enough income, or established credit history.

Not surprisingly, an increasing number of parents are helping their children achieve their homes. A study conducted by OREA (Ontario Real Estate Association) revealed that nearly 90% of Ontario’s parents agree that it is more difficult to buy a home today as compared to when they were of a similar age and looking to buy their first home. The study uncovered that about 40% of young Ontario homeowners received financial help from their parents when buying their homes. Abacus Data which conducted the survey for OREA found that gifting parents gave an average of $73,605, while parents that provided a loan gave an average of $40,878.

For parents, the desire to help their children achieve this goal is natural, but it can be tricky to determine all the ins and outs of the many options available. Here we’ll explore how parents can support their children in achieving homeownership while minimizing their own risk and ensuring the best outcome for their children.

Challenges Facing First-Time Homebuyers

The challenges facing first-time homebuyers in Mississauga, Toronto, and the GTA are many and complex. One significant obstacle is the persistent lack of housing supply, with new construction failing to keep pace with the increasing influx of immigrants to our area. This scarcity of available homes contributes to rising prices, making it difficult for first-time buyers to find affordable options.

Government regulations and stringent mortgage qualification criteria pose further hurdles, as they require potential homebuyers to meet strict financial requirements and pass a stress test to get approved.

High levels of student loan debt and the need for substantial down payments further compound the challenges for first-time buyers. And the high cost of living in Mississauga, Toronto, and the GTA makes it difficult to save up for a down payment. Other challenges include credit history or debt issues, which can impact a buyer’s ability to qualify for a mortgage or secure favorable interest rates.

The competitive nature of the real estate market and bidding wars can add to the frustration and obstacles faced by those looking to purchase their first home. Additionally, rising interest rates and increasing property taxes add even more financial strain to an already challenging process.

All these factors add layers of difficulty for first-time buyers, making it difficult for them to enter the housing market without parental assistance.

Ways Parents Can Help

Fortunately, there are several options available to parents who want to help their children achieve homeownership. Let’s explore common approaches: down payment assistance and co-signing. We’ll also look at the newly launched First Home Savings Account.

Gifted Down Payment: A gifted down payment involves parents providing funds to their children to cover a portion or the full down-payment on a home. This option can significantly reduce the financial burden on your children and increase their chances of qualifying for a mortgage. The only requirement is that the lender will want a signed gift letter that says the funds are a gift and there is no repayment requirement. A gifted down payment can help your child enter the housing market sooner, allowing them to start benefiting from appreciation in the property’s value. However, it’s important to ensure that the child is personally ready for homeownership before giving a large gift. Additionally, if the child is married, there could be property law issues to consider.

Another way to provide a gift is to help with monthly mortgage payments. This is a good option if it’s difficult to come up with a lump sum, although sometimes it’s that initial large down- payment that is the most pressing need.

Providing a loan: There are advantages to structuring your assistance as a loan vs an outright gift. You decide whether it should be an interest-free loan or with a specified interest rate, and you place a lien on the property. The loan agreement will protect funds from creditors in the event of a small business failure should that be applicable.

A documented loan amount is also more advantageous in the event of a divorce as a gifted downpayment is part of the matrimonial home and is subject to 50% division, whereas a documented loan isn’t. The loan can later be repaid upon the matrimonial home sale and these funds can then help your child purchase a new home. It’s important to note that if a loan agreement is crafted, it will be considered a loan by lenders, which means it will be added to the liabilities section of the application and could have an impact on mortgage qualifying.

Co-signing: If you become a co-signor on your child’s mortgage application, you assume joint responsibility for the loan and agree to be responsible for the mortgage payments if the child defaults. This can help increase the child’s borrowing capacity and improve their chances of securing a mortgage with favorable terms.

However, co-signing comes with risks, as it ties the parents’ credit and finances to the child’s mortgage and can impact their financial stability. It’s crucial to understand the potential implications and have open and honest conversations about financial responsibilities and contingencies. That’s why it’s essential to consider your own financial stability and credit score before agreeing to co-sign.

First Home Savings Account: If you’re thinking about supporting your child’s home-buying journey in the future, consider contributing to the new First Home Savings Account. You can contribute up to $8,000 per year ($40,000 in total), giving your child a bonus tax deduction for those contributions, which can further bolster their downpayment savings – a big win for their future as a homebuyer!

Factors to Consider When Determining Your Child’s Preparedness

While parents may have the means to assist their children financially, it’s equally important to assess the child’s readiness for the responsibility of homeownership. Factors to consider include their financial stability, employment status and income, credit score, and ability to handle mortgage payments and homeownership responsibilities. Honest conversations about the financial commitment, maintenance, and potential challenges of homeownership will help ensure that your child is prepared for this significant step. For some children, renting may be a better option until they are more financially stable.

Personal Financial Situation

It’s crucial to consider your own financial situation when deciding how to help your child purchase a home. While you may want to give a generous gift or co-sign the mortgage, it’s important not to jeopardize your financial stability. Consider your retirement plans, debt obligations, and long-term financial goals. Ensuring your financial stability is vital to provide meaningful support to your children without jeopardizing your future.

Marriage and Property Law Issues

If your child is married or in a common-law relationship, it’s essential to consider the implications of property law. Understanding spousal rights, potential separation scenarios and legal agreements can help protect everyone’s interests. Consulting with a family lawyer specializing in real estate matters can provide valuable guidance.

Family Harmony

Finally, it’s essential to consider how assisting your child with homeownership could impact family harmony. It’s not uncommon for financial transactions between family members to cause tension or strain in relationships. It’s important to communicate openly about expectations and ensure that everyone is comfortable with the arrangement.

Government Incentives

In addition to parental assistance, several government incentives are available to first-time homebuyers. These include rebates on land transfer taxes, first-time buyer tax credit, grants for energy-efficient upgrades, and more. Parents can help their children navigate these programs and ensure they take advantage of all available benefits. A detailed overview can be found here.

What’s the bottom line?

Opening the door to homeownership for your children is a significant milestone that requires careful consideration and planning. By understanding the challenges faced by homebuyers in Mississauga, Toronto, and the GTA, exploring available ways you can help, assessing your child’s readiness for homeownership, and navigating potential legal and financial complexities, you can provide meaningful support while mitigating risks for all involved.

Remember to prioritize open communication, consider your personal financial situation, and seek professional advice when needed.

Joe Purewal, Mississauga Mortgage Broker, and Team are here for you and your child and can act as your guide as you navigate this first home purchase, answering any questions you may have and achieving the best mortgage deal possible. Working together, we can ensure your children achieve their dreams of owning a home and lay the foundation for their future financial stability. After all, we have been providing the best mortgage advice and solutions for first-time buyers and their parents in Mississauga, Toronto, and the GTA for over 20 years!

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A Complete Guide to Financial Incentives for First-Time Homebuyers

Welcome to our comprehensive guide on incentives for first-time homebuyers in Mississauga, Toronto, and GTA. Buying your first home is an exciting milestone, but the financial aspects can often seem challenging, that’s why it’s a good idea to be aware of the financial incentives that can help. These incentives can make a significant difference in achieving homeownership, both before and after your purchase. Here’s an overview of the key programs –

  1. First Home Savings Account (FHSA)

The FHSA is an excellent way for aspiring homeowners to save and achieve their dream of owning a home. First-time qualified homebuyers can contribute $8,000 annually and up to $40,000 in total for an individual or $80,000 for couples. Contributions are tax-deductible like an RRSP, while withdrawals, including investment growth, are non-taxable like a TFSA. You can carry forward $8,000 in unused contributions to the next year.

Parents who are gifting funds to their children for a home purchase should consider contributing to an FHSA on their behalf. This gives their children the bonus of a tax refund for those contributions.

Unlike the RRSP Home Buyer’s Plan (HBP), the FHSA has no repayment obligation.

The program allows for transfers from your RRSP to your FHSA. This strategy gives you a tax-free RRSP withdrawal, although you don’t get a tax deduction for the transfer, and this does not affect your RRSP contribution room.

Should you not buy a house, you have the option to withdraw your balance as taxable funds or move it to your RRSP tax-free and unlock additional contribution room.

More information including how to strategically use the FHSA can be found here.

  1. RRSP Home Buyer’s Plan (HBP)

An effective strategy to help you realize your homeownership dreams is to utilize your RRSPs for a downpayment boost. First-time buyers can receive a tax-free withdrawal of up to $35,000 from their RRSP ($70,000 per couple). This amount can serve as a significant portion of the down payment and help you reach the 20 percent down threshold required to avoid mortgage default insurance premiums.

To further bolster your downpayment, if you have the contribution room, consider contributing up to $35,000 to your RRSP account at least 90 days before closing. You could put your existing downpayment funds to work for this short period. With this contribution, a sizeable tax refund can be triggered which can help cover many of the costs associated with your purchase. The withdrawn funds will need to be kept in the account for a minimum of 90 days before they can be withdrawn. To not be required to pay taxes, you’ll need to repay the RRSP withdrawal within 15 years according to the repayment plan. Or, 1/15th of the amount withdrawn will be added to your taxable income each year.

Note: Both the FHSA and the HBP can be used for the same home purchase. This means that up to $150,000 could be available to help a couple with their downpayment.

  1. First-Time Home Buyer Tax Credit

New homebuyers can receive up to $1,500 in federal tax relief through the $10,000 first-time home buyer tax credit. This tax credit can be claimed on your personal tax return for the year of purchase and can assist with many of your first home expenses.

  1. Land Transfer Tax Rebate

In Ontario, homebuyers are subject to land transfer tax upon purchasing a property, which is calculated as a percentage of the property price. First-time homebuyers in Brampton, Toronto, and GTA are often surprised by the substantial land transfer tax they must pay. However, you may qualify for a partial or full rebate of up to $4,000. Purchasing a home in Toronto could entitle you to an extra rebate of up to $4,475.

  1. HST New Housing Rebate

When buying a new construction home or making significant renovations to an existing one, you may be eligible to recover some of the HST that you paid if certain criteria are met. The Ontario government will provide a 75% refund of their portion of the HST on the first $400,000 of your home’s value, which is $24,000.

You must apply within two years of the closing date and utilize the home as either yours or an immediate family member’s primary residence. Ensure that only immediate family members are on the title, or you won’t qualify. If you think you may qualify, check out the CRA’s GST/HST New Housing Rebate guide.

  1. CMHC Eco Plus or Sagen Energy-Efficient Housing Program

If you purchase an energy-efficient home with a CMHC or Sagen-insured mortgage, you may qualify for up to a 25 percent refund of the mortgage insurance premium you paid, which can be quite significant savings. This refund also applies to those who choose to buy a home and make it more energy efficient. Canada Guaranty has a similar program called Energy-Efficient Advantage Program.

  1. Enbridge Home Energy Rebate

Ontario homeowners who want to make their home energy efficient can get up to $10,000 in rebates for eligible retrofits such as home insulation, windows, doors, and renewable energy systems. This applies to all homeowners and not just first-time buyers.

Enbridge Gas along with Natural Resources Canada (NRCan) have joined together and made it easier to apply for the Canada Greener Homes Grant. Ontarians who are not Enbridge customers continue to be eligible to receive up to $5000 in Canada Greener Homes Grant. More details are available from Enbridge.

A Note on the First-Time Homebuyer Incentive

This program is a shared equity program with the federal government that was designed to help first-time buyers get into the market by providing 5 percent of the cost of an existing home, or 10 percent of the purchase price of a new home. This has not been a popular program because homebuyers do not want to share their equity gains with the government, especially if they invest in renovations. Homebuyers look at homeownership as a strong long-term investment and sharing equity gains goes against that objective.

The government has extended this program to March 31, 2025, and is considering ways to make it make more acceptable to first-time homebuyers because usage of the program has been exceptionally low.

Contact Joe Purewal, Mortgage Broker

Navigating the world of incentives and understanding which ones you qualify for can be complex. As a Mortgage Broker with extensive experience in the Mississauga, Toronto, and GTA markets, Joe can guide you through the process and help you take advantage of the incentives available to you.

Contact us today to schedule a consultation. Together, we’ll explore your eligibility for incentives, discuss your financial goals, and develop a personalized strategy to help you achieve homeownership. Don’t let the challenges of buying your first home hold you back. Let’s work together to unlock opportunities and make your dream of owning a home a reality.

Now that you’ve checked out financial incentives, consider some common mistakes to avoid as a first-time homebuyer.

Looking at homes before getting preapproved: Getting pre-approved helps you understand how much you can afford to spend on a home. Without knowing your budget range, you may look at homes that are outside your financial reach, leading to disappointment. Or you may even qualify for more than you think.

Sellers often prefer working with buyers who have been pre-approved for a mortgage. It shows that you are a serious buyer who has taken the necessary steps to secure financing. Having a pre-approved mortgage can give you an advantage during negotiations and increase your chances of having your offer accepted.

Overall, a pre-approval helps you set realistic expectations, strengthens your position as a buyer, and increases your confidence when making an offer on a property.

Jumping in without talking to a Mortgage Broker about key preparation like credit score improvement: Working with a Mortgage Broker before starting the home buying process is essential for first-time buyers. A Mortgage Broker can help you understand your financial situation and provide guidance on what type of mortgage you can realistically afford.

Your Mortgage Broker will also guide you on all the ways you can improve your financial situation, so you qualify for the best rates. Ultimately, working with a Mortgage Broker can make the home-buying process smoother, less stressful, and more successful.

Ignoring the importance of a real estate agent: A knowledgeable and experienced real estate agent can provide valuable guidance throughout the home-buying process. They can help negotiate the best price, navigate paperwork, and protect your interests. If you don’t have a realtor, we can refer you to the best realtors in Mississauga, Toronto, or the GTA.

Overlooking hidden costs: Beyond the purchase price, there are additional costs involved in buying a home, such as mortgage default insurance and closing costs. Failing to budget for these costs can lead to financial strain. Homeownership also comes with ongoing expenses such as property taxes, maintenance, repairs, and utility bills. Make sure to budget for these costs to avoid financial pressure after purchasing your home.

Skipping the home inspection: A home inspection is crucial to uncover any underlying issues with the property. Skipping this step can result in unexpected and costly repairs down the line. Always insist on a professional home inspection.

Not considering future needs: Think about your future plans and how the home will accommodate them. Consider factors such as the size of the property, number of bedrooms, proximity to schools or amenities, and potential for resale value.

By avoiding these common mistakes and approaching the home-buying process with careful planning and research, you can increase your chances of a successful and satisfying home purchase.

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Get Pre-approved for Your Mortgage: A Guide to Home Buying for First-Time Buyers

Buying your first home is an exciting milestone in your life, but it can also be a daunting process, especially when it comes to navigating the complex world of mortgages. There are so many factors to consider, making it stressful to know where to start. Fortunately, you don’t have to face the process alone. We’re here to guide you and help you make informed decisions.

By taking a few key steps and understanding some important considerations, you can become a successful home buyer. One of the most important preliminary steps before entering the market is getting pre-approved for your mortgage.

What is a Mortgage Pre-approval?

A pre-approval is the cornerstone of any successful purchase strategy and one of the most important considerations for any aspiring homeowner. It’s a conditional commitment from a lender that they will provide you with a mortgage up to a certain amount. This pre-approval is based on your financial information, including your employment and income, credit score, and debt load.

Being pre-approved does not mean that your mortgage application has been approved; it just means that if all goes according to plan, it should be approved once all paperwork has been assessed and submitted. Additionally, your lender cannot give you a final mortgage commitment unless they assess the property you are buying to make sure it meets their guidelines.

Why is Mortgage Pre-approval Important?

Getting a mortgage pre-approval is essential for first-time homebuyers because it provides you with a realistic idea of how much home you can afford. With a pre-approval, you can set a realistic budget for your home search and avoid the disappointment of falling in love with a home you can’t afford. You’ll also learn what your monthly payment will be and get a rate guarantee for up to 120 days.

Getting a  pre-approved may give you increased leverage during negotiations and help ensure that your offer is taken seriously by sellers. The seller will want to know that you have the financing in place to complete the sale and may be more likely to negotiate. However, this does not guarantee that your offer will be accepted or that you won’t have to compete with other potential buyers.

Other Important Considerations for First-Time Buyers

While mortgage pre-approval is a crucial factor in the home-buying process, there are other important considerations you should keep in mind –

  1. Your downpayment: One of the most significant home expenses is the downpayment. The minimum down payment in Canada is 5% of the purchase price for homes up to $500,000. For homes between $500,000 and $1 million, the minimum down payment is 5% on the first $500,000 and 10% on the remainder. Homes $1 million or more require a minimum down payment of 20% of the purchase price.
  2. Downpayment assistance – Making your dream of owning a home more achievable may begin with support from loved ones. A parent or grandparent could provide a monetary gift towards your downpayment. They will need to provide a signed ‘gift letter’ that the funds are a true gift, with no need for repayment.The Federal Home Buyers’ Plan (HBP) can give you a significant downpayment boost. It allows first-time buyers to withdraw up to $35,000 ($70,000 for couples) tax-exempt from their RRSPs, if the funds have resided in the retirement plan for 90 days. The funds need to be repaid over 15 years or the money becomes taxable.
  3. Help with qualifying – An option for boosting your chances of getting a mortgage approval is to get a consignor, which typically is a family member. This involves adding their credit history and income to your application to strengthen your position. As a result, the co-signer is equally responsible for the mortgage and will be listed on the home’s title.
  4. Home inspection: It’s highly recommended to have a professional home inspection done before purchasing a home to identify any potential issues. Home inspections typically cost between $500-$1,000.
  5. Closing costs: There are several fees associated with finalizing the sale of a home, such as legal fees, appraisal fees, title insurance, and land transfer taxes. Closing costs can add up to 2-4% of the purchase price of the home. Be sure to have this extra amount set aside, along with your moving expenses.
  6. Recurring monthly expenses: Also remember to budget for your monthly homeownership expenses like taxes, utilities, maintenance and repair costs, and insurance premiums, all of which must be factored into the cost of ownership.

From obtaining a pre-approval through understanding closing costs —there are plenty of steps you must go through before settling into their perfect place—but by taking care of business early on—you’ll end up better prepared than most when confronting competition from other buyers who may not have done their homework!

The bottom line is that buying your first home doesn’t have to feel overwhelming! Doing research beforehand and understanding all aspects involved with purchasing property will help ensure that the process goes smoothly and without any major hiccups along the way. When you know what goes into becoming an educated and successful first-time homebuyer — you’ll have no problem finding that perfect place at the right price!

For first-time buyers in Mississauga, Toronto, and the GTA, remember that you are not alone, we will be your guide along the way and with you every step of the way. Joe Purewal and Team specialize in helping first-time buyers. They have access to lower rates and will get you quotes from multiple lenders, and they’ll advise on downpayment strategies and the documentation you will need to gather. Joe Purewal is ready to start answering your questions and get your preapproval started!

FAQs

Q: Can I still get preapproved for a mortgage if I have a low credit score?

A: Getting preapproved with a low credit score may be more challenging, but it’s possible. Lenders will consider other factors such as your income and debt-to-income ratio when making their decision. We can give you advice on how to improve your credit score.

Q: What is mortgage default insurance?

A: Making a downpayment of less than 20% comes with an added cost: default mortgage insurance. This insurance is mandatory and designed to protect the lender in case of financial loss. The premium is typically rolled into your mortgage amount, increasing your monthly payment. If you put down 5%, the premium will be 4%, 10% down will require 3.1% premium, and 15% down requires a 2.8% premium. However, if you can make a downpayment of 20% or more, you can skip default mortgage insurance altogether.

Q: Can I change my mortgage type after I’ve been preapproved?

A: Yes, you can change your mortgage type after preapproval, but it’s essential to understand that this may impact the terms of your mortgage, including the interest rate and monthly payment.

Q: Should I work with a real estate agent?

A: Yes, you should. A real estate agent can provide you with access to listings, offer advice on the home-buying process, negotiate on your behalf, and provide guidance on neighbourhoods and market trends. They can also help you navigate legal and financial considerations.

Q: What is a financing condition?

A: A financing condition should be part of your offer to purchase. It ensures that if you don’t get a final mortgage commitment, you can get out of the deal. It gives you the necessary time and space to secure your mortgage approval, ensuring you have the funds you need to successfully purchase your home. So, before you sign on the dotted line, make sure you add this crucial precaution to your offer.

Q: What are some tips for negotiating when buying a home?

A: Some tips for negotiating include doing research on the property and neighbourhood, being flexible on the closing date, being prepared to walk away if the negotiations are not going in your favour, and working with an experienced real estate agent who can help you negotiate effectively.

Q: What are some common mistakes to avoid?

A: Common mistakes include not getting pre-approved for a mortgage, not doing enough research on the property and neighbourhood, not budgeting for all the associated costs, and not having a home inspection done before purchasing.

Q: How can I make my offer more competitive when buying a home?

A: Some ways to make your offer more competitive include offering a higher price, being flexible on the closing date, offering a larger deposit, and having a pre-approval letter from a mortgage broker or lender.

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Debt consolidation is a great way to spring-clean your debt

Wouldn’t spring cleaning be less tedious and more gratifying if there was an envelope full of cash hidden amongst your clutter? Suddenly, the idea of spring cleaning doesn’t seem so daunting, does it?

A good spring clean doesn’t have to be limited to your home. By putting some time and attention into spring cleaning your financial house, you might just find that envelope of cash, especially if you are weighed down by persistent debt from credit cards, lines of credit, unsecured loans, and possibly tax bills.

Carrying multiple debts month after month can quickly turn into an unwieldy mess. Not only can it be bewildering to try to untangle, but it can also be a bit of a financial black hole. It may also be negatively affecting your credit score.

With the arrival of spring, now is the perfect time to tidy up your debt situation and get things back on track. So, roll up your sleeves, and let’s get to work on decluttering your finances!

Benefits of debt consolidation

Once we make a list of your high-interest debt, we can look at the possibility of rolling that debt into a new mortgage through a mortgage refinance. Mortgage rates have been falling and are considerably lower than your credit cards and other unsecured debt. So instead of having several payments with high-interest rates, through debt consolidation, you will have just one payment at a lower rate.

There are many benefits to consolidating debt into a new mortgage –

  1. improved cash flow
  2. big interest savings
  3. no more multiple debt payments each month
  4. one manageable monthly debt payment to simplify your life and ensure you don’t have an overdue payment or miss one
  5. easier budgeting
  6. improved credit score
  7. a mortgage is designed to be paid off while credit cards don’t have a set timeline for paying the balance off (only minimum payments are required)
  8. you can become mortgage-free faster; pay off more principal and interest!

And you’ll get yourself on track to start building wealth.

To consolidate your debt into a new mortgage, your current mortgage is replaced with a new one. You may wonder about the fee to break your existing mortgage. That’s why it’s important to see the numbers and the opportunity that may be available to you. Here’s an example – mortgage, car loan, and credit cards total $550,000. Roll that debt into a new $557,000 mortgage, including a fee to break the existing mortgage, and look at the payoff:

5.7% current variable mortgage, 4.79% new 3-year fixed-rate mortgage, 25-year am. Credit cards 19.9% and car loan 8%, both at A 5-year am. New mortgage includes $7,000 to break the current mortgage. OAC. Subject to change. For illustration purposes only.

That’s a big monthly savings of $1,093. Your monthly total debt payment has been reduced, you’re saving big on interest charges, and all your high-interest debts are gone. Imagine if you funneled some of that newfound cash flow back into paying down your mortgage, or investing in RRSPs, TFSAs, or RESPs!

You’ll want to be disciplined with your finances after completing your refinance. You won’t want to rack up the balances on your credit cards again and find yourself in the same situation you were in before, and this time with more debt!

Use our handy mortgage calculator to run some monthly payment scenarios and get an idea of how much you can save before we meet.

When can you consolidate debt into a mortgage?

If you have had your mortgage for close to a year or more, have equity in your home, and are finding that your high-interest debt is choking your cash flow, it can make good financial sense to refinance your mortgage.

If your credit score has improved significantly since you obtained your current mortgage, then refinancing will be a very attractive option because your improved credit score will help you qualify for the best rate possible. By reducing the amount owed overall and paying down the balances more quickly than usual, you show lenders that you are responsible for your money, which increases your likelihood of better rates in the future.

Allow me to analyze your situation and outline your spring-cleaning options. How gratifying will it be to be able to breathe a little easier and have more money to put toward your life and financial goals?

What if this isn’t right for you?

If you don’t have the required amount of equity in your home, which is a minimum of 20%, then you won’t qualify for a mortgage refinance. We could look at other options like a second mortgage. We could also consider a second mortgage if you feel that the fee to break your current mortgage is too high. As your Mortgage Broker, I have access to multiple lenders, including private lenders, so I can always find the best solution to fit your current financial situation.

Enjoy a fresh beginning

So, as you clear out your closets, drawers, and garage, don’t forget the most rewarding task of all: spring cleaning your debt. Debt consolidation can be an effective way to reduce monthly payments and simplify the repayment process for multiple unsecured debts. When done correctly, refinancing can also lead to significant savings in both money and time as well as improved credit scores over time.

If you’re a homeowner in Mississauga, Toronto, or the GTA, let’s get the application process started to simplify and streamline your finances today. You’ll hit the reset button on your debt and your financial house will enjoy a fresh beginning.

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What are the implications of the US Bank Failures?

In simplest terms, the swift collapse of Silicon Valley Bank (SVB) and Signature Bank in the U.S. was a direct result of higher rates and the speed at which those rates were implemented. It was a true Black Swan event – no one saw it coming. In fact, Jerome Powell, chair of the Federal Reserve of the U.S., testified just days earlier that the banking system was safe.

It all started when SVB’s clients began withdrawing funds to meet their own liquidity needs. This caused SVB to raise funds by selling a $21 billion dollar fixed income portfolio, which had dropped significantly in value because prices drop when yields rise. SVB did not hedge the risk of this very large bond portfolio even though rates had climbed throughout the last year. SVB then found itself in a position of having to raise new funds.

Soon after announcing their situation, there was a bank run at SVB and fears of contagion in the banking sector. However, the US federal government quickly came out stating that all depositors will be protected, stabilizing the system, and sending a strong and much-needed signal to the marketplace.

While Powell had recently stated that rates would need to be higher for longer, this Black Swan event is expected to thwart efforts by the Fed to tighten interest rates. Goldman Sachs has now changed its expectations for the Federal Reserve’s next meeting on March 21/22., which they had previously predicted would be a 0.25% increase. They now expect a rate pause.

While Goldman Sachs expects the US could still raise rates this year, it sees “considerable uncertainty about the path.” It is now possible there will be rate cuts to protect the financial system, although the decisive decision to protect all depositors may give the Fed leeway to still increase rates by 0.25% later this month. The U.S. inflation number comes out on March 14 and will be a factor in what happens next.

The failure of Silicon Valley Bank and Signature Bank has significant implications for the banking sector in the US, but the fallout will also be felt here in Canada.

>>> Once the events began to unfold, yields began to tumble hard. Fixed mortgage rates are based on the bond market so these dropping yields could influence fixed mortgage rates here in Canada. We will have to wait and see how the Banks react.

>>> Even if the Fed does raise rates at the end of this month, it’s very likely that here in Canada our rate pause will be maintained. Our inflation is not as strong as in the U.S. and rate hikes here have a swifter impact because of higher consumer debt loads.

>>> The Canadian banking section is not considered at risk because of how they are regulated. They are required to maintain certain liquidity ratios and hold adequate liquid assets on their balance sheets.

If you have any questions, please get in touch.

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The lowdown on the NEW Tax-Free First Home Savings Account

Looking to become a new homeowner in Mississauga, Toronto, or the GTA? The Tax-Free First Home Savings Account (FHSA) is here to help! Combining elements of both an RRSP and TFSA account, the FHSA is an ideal savings vehicle for your first home.

We’ve compiled all the information you need on this new program, including eligibility, opening an account, and how it works when contributing or withdrawing funds.

Starting April 1, 2023, Canadians will have access to this new tax-efficient savings plan. It allows you to save up to $40,000 on a non-taxable basis. You can contribute an annual maximum of $8,000 and benefit from tax deductions like those offered by Registered Retirement Saving Plans (RRSPs). And withdrawals are similarly comparable with Tax-Free Savings Accounts (TFSAs): no taxes on withdrawals. Any income/gains within the account are not taxable, which applies to both RRSPs and TFSAs. Unlike an RRSP though, any unused contribution amounts within the first 60 days of a new year can’t be attributed back to the previous tax year.

Eligibility

To open an FHSA, you are required to be a Canadian resident, 18 years of age or older, and meet the definition of a First-Time Buyer for this program, which is –

“A first-time homebuyer is defined as someone (you or your spouse/common-law partner) who has not owned a home in which they lived at any time during the year before the account is opened or at any time in the preceding four calendar years.”

You can have more than one account but need to stay within your annual and maximum contribution amounts. Your maximum participation period starts when you open your first FHSA. Once you use your FHSA to buy your home, you cannot open another account later.

Eligible institutions that can offer this account include Banks, trust companies, life insurance companies, and credit unions.

Contributions

By contributing to an FHSA, you benefit from tax deductions like those available through RRSPs. You include the contribution amount when you file your tax return, and you can choose which year you’d like your deduction applied in, providing you with flexibility since you want to use your deductions when you are in the highest tax bracket possible.

Unused amounts can be carried forward to the following year up to a maximum of $8,000. Say in 2023 you contribute $5,000. In 2024 you’ll be eligible to contribute $11,000 – the $3,000 you carried forward and the $8,000 limit for 2024. You’ll need to make sure that you don’t exceed your annual and total contribution limits.

Five years will be the shortest amount of time to fully fund your FHSA to your maximum of $40,000.

Note: your contribution room doesn’t start accumulating until you open an account, which is different from RRSPs and TFSAs. And like a TFSA account, if you over contribute you will be subject to a penalty of 1% of the excess each month until withdrawn.

Withdrawals

Any withdrawal from an FHSA must meet certain criteria to be non-taxable –

  • you must be a Canadian resident and a first-time home buyer at the time of withdrawal.
  • you must have an agreement in writing to buy or build a qualifying residence before October 1 of the year following the year of withdrawal and intend on occupying that new property as your primary place of residence within one year after buying or building it.
  • you can also make a withdrawal up to 30 days after you purchase the home.

If these requirements are not met, taxes will apply on your withdrawal in the same tax year as the withdrawal was made. In other words, you can always withdraw the funds as taxable cash.

Note: You can make both an FHSA withdrawal and an RRSP Home Buyers’ Plan withdrawal for the same qualifying home purchase. When the FHSA was first announced, it was stated that you couldn’t use both but that has changed. The Home Buyers’ Plan (HBP) allows you to withdraw $35,000 per person ($70,000 per couple) to help with the purchase of your new home. Under the HBP, you need to repay the funds to the RRSP over 15 years while you don’t have to repay with the FHSA.

Eligible Investments

Within an FHSA, the types of investments you can invest in are the same as those eligible for a TFSA, including – GICs, mutual funds, exchange-traded funds (ETFs), bonds, and stocks.

Closing an account

After December 31 of the year when either 15 years have passed since originally opening the account or the end of the year that you turn 71 years old, your savings will no longer qualify as an FHSA and should be transferred tax-free into an RRSP or Registered Retirement Income Fund (RRIF). This also applies to the year after your qualified home purchase.

If you make a qualifying withdrawal before these time periods, any unwithdrawn funds can still be moved without taxation to an RRSP or RRIF up until the end of the next calendar year, at which point the account is then closed. Any transfers to an RRSP do not limit your RRSP contribution room. Also, note that withdrawals and transfers do not replenish your available FHSA contribution room, as is the case with TFSAs.

Strategically using the FHSA

Here are interesting strategies to consider:

  1. You can receive free $40,000 RRSP contribution room. Those that don’t have earned income do not build RRSP contribution room. If you use this account and don’t buy a home, you can transfer your $40,000 to your RRSP.
  1. Always contribute to your FHSA first, then to your RRSP. If you already have an RRSP, consider transferring from your RRSP to your FHSA up to the annual and lifetime limits. The great news with this strategy is that withdrawals to buy a home will be tax-free, which means you are making a tax-free RRSP withdrawal! The downside is that you don’t get a tax deduction.
  1. If you want to gift money to your adult kids, you could open and fund an FHSA for them. They can then use the deduction when it makes the most sense for them i.e. when they are in a higher tax bracket.
  1. You can fund a spouse’s FHSA, and any withdrawals will not be attributed back to you for tax purposes.
  1. If you use both the HBP and the FHSA between you and your spouse, you could have $150,000 for your downpayment i.e., $70.000 HBP and $80,000 FHSA.
  1. If you bought a rental property but never a primary residence, you may qualify as a first-time home buyer.

What’s next?

If you are in the saving up stage of buying your first home, congratulations! The FHSA could be a tremendous help. It still pays to get in touch early to discuss your plans. We are experienced at giving the type of early advice that can make an enormous difference in how successful you are in purchasing your dream home in Mississauga, Toronto, and the GTA. We love working with first-time buyers, just check out our over 500 5-star google reviews!

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Don’t be a housing market bear. Here’s why.

The housing market in Brampton, Toronto and the GTA has withstood the test of time and is not in danger of crashing like the US did back in 2008 despite higher mortgage rates and an economic slow down.

I can honestly say I don’t believe there will be anything close to a housing market melt down. I am in fact purchasing when I see opportunities and believe you should not let your fears be bigger than your dreams!

The Canadian housing market has been through its ups and downs in the past. Today we are seeing a market correction, but the overall market remains stable with excellent long-term potential thanks to several key factors. With these reassuring facts and when you are financially prepared, you can be confident you can embark on an exciting journey into homeownership.

Here’s why we can expect long-term housing market stability and strength:

A chronic lack of supply

Despite the increasing demand for housing in recent years, the actual supply of housing available has not kept pace. We’re even seeing housing projects being cancelled because of higher rates, higher cost of materials, and labour shortages.

CMHC last year forecasted that 3.5 million new housing units was necessary by 2030 to improve housing affordability, which is significantly more than the current rate at which housing units are being built. In fact, CMHC recently noted that housing starts fell when comparing 2022 with 2021.

Our chronic lack of supply is a primary reason our housing market isn’t heading towards a significant downturn and will cause housing to remain unaffordable for many Canadians.

Immigration

Canada welcomed a record number of immigrants in 2022. Over 430,000 new permanent residents arrived in Canada last year, up from more than 400,000 new arrivals in 2021. And the federal government has even more ambitious plans for immigration in the coming years, with 465,000 new permanent residents targeted for 2023, followed by 485,000 in 2024 and eventually 500,000 new arrivals each year starting in 2025. This is great news because immigration is so vital for our economy’s long-term success. We welcome all newcomers to Mississauga, Toronto and the GTA.

Toronto continues to be one of the most popular destinations for immigrants to Canada, with 115,775 new permanent residents making the GTA their home in 2022, according to Immigration and Citizenship Canada.

While most new immigrants arriving in the area typically do not have the resources to immediately buy a home, we do see that after about two- or three-years homeownership becomes a possibility. With increasing immigration targets, over the long term the result will be continued pressure on our housing supply.

Distressed selling will not have a big impact

Yes, there will be some distressed selling, but arrears are expected to remain low. Arrears for Canadian mortgages has been around a very low 0.14% and is projected to go no higher than 0.25%.

Economic downturns do put some homeowners in a tough situation that results in them selling their home when they must and not when they want. Some investors will not be able to carry all their properties and may look to sell for whatever price they can get.

History hasn’t shown a meaningful correlation between higher mortgage rates and defaults. In fact, job losses are much more highly correlated with mortgage defaults, and while our very tight employment market may lose some momentum this year, we’re a long way from the kind of unemployment spike that would trigger a surge in mortgage defaults.

Most of the impact of our rising rate environment is being felt by homeowners with variable rate mortgages, which is about 30% of borrowers. While they have been stress tested at a higher rate than their mortgage contract rate, there still will be some financial stress felt by higher payments. The good news is that our lenders are working diligently and proactively with these clients, offering solutions to help them manage their situation and keep their homes.

Fixed-rate borrowers, the largest group of homeowners, don’t feel the effects of higher rates until the end of their terms. When they reach that point, they will be renewing a lower mortgage balance than when they initially took out their mortgage. Regular mortgage payments pay both interest and principal, and many use their prepayment privileges to further pay down their mortgage, which builds an important safety buffer.

Government regulation

The Canadian mortgage market is much more conservatively regulated than the US market. Whether we like it or not, the government has played a key role in keeping the housing market stable by regulating mortgage financing. The mortgage qualifying stress test is one such example along with ensuring Canadians have 20% equity in their homes before being able to refinance.

It’s possible that new regulations coming this spring or summer will make it even tougher to qualify for a mortgage as the government worries that all the factors mentioned here will cause the housing market to take off, something they don’t want to see especially since the purpose of higher rates was to cool the market off.

The great wealth transfer

Over the next few years, it is estimated that about a $1 trillion intergenerational wealth transfer from the Baby Boomers to succeeding generations will continue to unfold. Some of this money will be used as downpayment funds particularly since many Boomers want their children and grandchildren to benefit from long-term property appreciation and they often want to participate in such a happy occasion.

According to a poll conducted by the Ontario Real Estate Association (OREA) in 2022,  about 40% of parents helped their children financially when they purchased a home, and that on average, the amount of money gifted to buy a home was $73,605.

Rates will eventually decline                       

The Bank of Canada recently announced another rate increase of .25%, taking the policy rate to 4.5%. The Bank is resolute in its fight against inflation and bringing it back to the target of 2%, currently at 6.3%. They are certainly making headway in this fight, with the Bank expecting inflation to move down to around 3% in the middle of this year and back to the 2% target in 2024. The Bank indicated it will now look to pause rate hikes while assessing the impact of their eight consecutive increases, which will likely include a recession, and recessionary times bring rates down. We don’t know when rates will start to decline, but we do know inflation is heading downward and there are signs of economic softening, eventually leading. to lower rates.

What’s the bottom line?      

There is no question the current economic climate has put a strain on our wallets and caused prospective homebuyers to be anxious about their financial security and hesitant about entering the housing market. However, there are multiple factors working together to keep Canada’s housing market stable. While prices may soften further, the combination of tight inventories, high immigration, low projected arrears, prudent regulation, and eventual lower rates are creating an environment of long-term prosperity for those entering the housing market.

Don’t be a housing bear! Look beyond the current correction and consider why it might be important to take advantage of today’s lower home prices. History has shown us that it pays to be ahead of the curve! We all want to buy low and sell high but because emotion plays such a big role in our decision making, we often miss out and have significant regrets after the fact.

The upcoming spring market could be an important moment of opportunity for purchasing real estate and benefiting from long-term home price appreciation in Mississauga, Toronto and the GTA. Don’t miss out if you are financially ready. If you are not prepared or don’t know how to be, I can guide you on the best strategies to become financially fit for homeownership.

Let me help you achieve your homeownership dreams. I have the expertise and experience to help you navigate today’s complex and confusing marketplace. Let’s talk!

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Secure your dream home and build long-term wealth!

Last week OSFI unveiled proposed new mortgage rules that could take mortgage qualifying beyond the current stress test. The proposed new rules, which are currently out for pubic consultation until April 14th, will include loan-to-income and debt-to-income limits, new interest rate affordability stress tests and debt-service coverage restrictions for uninsured mortgages.

What does all this mean? If these changes go into affect, they will primarily affect CMHC-approved lenders and limit the ability of some homebuyers and owners to qualify for their mortgage.

Mortgage Brokers will have a very integral role in guiding those affected through this shift – offering advice on how best to navigate their way into homeownership, which could include accessing a lender not affected by the OSFI changes.

Now more than ever, you should turn to a Mortgage Broker experienced in navigating such a complex environment and get invaluable advice when it matters most!

I’m proud to have over 500 5-star Google Reviews and counting! My business thrives off word-of-mouth referrals from delighted customers like yourself, so let me help you get on track with a free consultation.

Secure your dream home and build long-term wealth!

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After a year of rising rates, what’s next?

What happened to mortgage rates and the real estate market in 2022 caught everyone by surprise. In fact, it was downright shocking. We started the year with the overnight rate at 0.25% and the Bank of Canada projecting three 0.25% hikes. Well, we ended the year at 4.25% which means we saw 16 of those 0.25% hikes and not three! Inflation soared and the Bank of Canada took a very aggressive stance, continually stating that the fight will not be over until we are back to 2% target inflation.

At the end of the year, we did get some hopeful news. On December 7th, the Bank stated that another rate hike is possible but not definite, a welcome departure from previous statements that said rate hikes were going to happen.

Economists are mixed on whether the Bank will stop at their current rate of 4.25%. If we do see another increase, it will likely be a modest .25% on January 25th with another potential .25% increase taking the overnight rate to 4.75%. Could it go higher? If we learned anything from last year is that yes anything is possible. However, most Canadians can’t tolerate significantly higher rates and the Bank of Canada knows the precarious financial situation Canadians are finding themselves in.

While we may see rate hikes stop in 2023, rates likely won’t revert downward until the end of 2023 or 2024 given how high we are seeing core inflation.

So, what’s next for homebuyers and homeowners in Mississauga, Toronto and the GTA? It all depends on your specific situation, so let’s review how various scenarios should be handled:

Should you lock in your variable mortgage? At this point, it isn’t the best move given that we expect rate declines in 2024. The best answer is not the same for everyone so if you are considering locking in your variable mortgage, please get in touch for a review of your situation and a discussion of the best options for you.

Need to consolidate debt? Debt consolidation mortgages have been an important financial strategy over the years. If you’ve wracked up large credit card bills, you don’t want to pay 19.99% when you could move that debt to a lower rate mortgage. So, what’s changed? Consolidating debt requires a new mortgage and that brings in the stress test, a hurdle many are finding difficult. Additionally, if you currently have a low-rate mortgage, it likely doesn’t make sense to break that mortgage and give up a coveted rate.

Not to worry, there are other options like a second mortgage, which allows you to keep your current mortgage rate and get the funds you need to pay off the high interest debt that is draining your cash flow. Second mortgages do have a higher rate than first mortgages but are still considerably lower than what credit cards are charging. It’s an excellent short-term strategy. When your first mortgage renews, we can look to roll both first and second into one new mortgage.

Renewing your Mortgage? Those wonderful years of renewing your mortgage at the same or lower rate has ended. It was a great ride but one that history told us would not last forever. We must deal with the cards we’re dealt with and focus on finding the best renewal deal in today’s market.

If you want to move your mortgage for a better deal than what your current lender is offering, you’ll need to requalify with today’s tough stress test. Unfortunately, this will limit some people’s ability to move their mortgage to save money. Yes, that doesn’t make sense, but we must live with it. If you can’t move your mortgage, I can help you negotiate with your lender.

Whether or not you can move your mortgage, you still must decide what mortgage to take. The best option is to look at 1 to 3 year fixed or go variable and benefit from those rate declines that will eventually happen. If you go fixed, it’ll be particularly important to choose a fair prepayment penalty lender because breaking your new fixed mortgage could have a very steep prepayment fee should you need to get out of your mortgage. I know all the fair prepayment penalty lenders and believe this to be a very important consideration in 2023.

Can’t make your mortgage payments? It can sometimes be easy to try and just deal with this kind of situation for as long as possible and just get by. But the reality is that you should contact your lender as soon as possible. They have options available that can help because they certainly don’t want you to default on your mortgage. To help your lender needs to hear from you so reach out if you need to.

Looking to buy in 2023? If you are financially ready, then good for you! I believe this could be a generational opportunity to get into the GTA, Toronto and Mississauga housing markets at fantastic prices. Canadian immigration totals have increased, and we have not moved the needle at all on our very tight housing supply. The long-term outlook for our housing market continues to be very positive. Buyers will be in the driver’s seat:

  1. Crazy bidding wars are over. When you are the only one putting in an offer, you can negotiate!
  2. You regain the ability to put conditions in your offer. Buying with no conditions was a very tough situation for buyers in 2020 and 2021. Having a financing condition ensures we have the time to get your financing solidly in place. A home inspection is another important condition. If something shows up during the inspection that you don’t want to live with, you can get out of the deal.
  3. You now need a much lower downpayment for the same house you were looking at last year. And if that house is now priced under $1 million, you can qualify for a lower rate insured mortgage.

Yes, you still must face the stress test to qualify for your mortgage financing. I come across buyers who are struggling with this every single day. There are strategies that can help, like getting a gifted downpayment or adding your parents as co-signors, which adds their financial strength to your application

If you simply can’t find a way to get past the stress test, I have access to lenders that don’t use the stress test. This is one of the advantages of working with a Mortgage Broker with years of experience and industry influence. While your rate will be higher, if may only be short term and you’ll gain in the long run through property appreciation and the joy that comes with being in your own home.

Trying to time the market? It would be nice to know exactly when the bottom of the housing market is in. The reality is that it is exceedingly difficult to time the market perfectly. Just keep in mind that 2023 could be a substantial moment of opportunity, especially if you have stable employment. If you are financially ready, be confident in the long-term prospects of real estate and that you and your family will have a prosperous future. Then it doesn’t matter if you found the exact bottom.

Experience matters! When you’re feeling stressed about an uncertain future, that’s when you need the steadiest and most experienced hand you can find. Work with a Mortgage Broker who has excelled in all types of uncertainty, who has worked with thousands of clients, has priority relationships with lenders, and works relentlessly to get the best mortgage deal each and every time.

I have been a Mortgage Broker for over 20 years and my volume puts me at the top or near top of all Brokers in Canada. I am the national #1 Broker at my brokerage every single year. I’m only mentioning this because I have the expertise you need, and I work tirelessly to get the job done, have a stellar reputation, and I have lenders clamouring for more business. Above all, I love what I do and there is nothing I enjoy more than helping my clients get their dream home, save thousands on their new mortgage, and achieve a brighter future through a strong cash flow management strategy.

If you are in Mississauga, Toronto or the GTA and need a new mortgage or just want a frank discussion of your options, please get in touch. I am working the longest hours I ever have so I can give each person the time they need. Let’s have that conversation!

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Buying your first home is not so difficult in Canada

Canada is inviting many immigrants every year from India, Pakistan, Bangladesh, China, Philippines and from all over the world. If you are new to Canada and are looking to purchase your own home, it can be challenging. You would have to do your research well and find the experts to get you your dream home with affordable payment options. However, there are several things to consider before making a choice to purchase a property in Canada.

  1. Check Your Affordability

Affordability is the basic rule that applies to every kind of shopping. When making a move to purchase a house, you must first evaluate your financial standing and how much you can afford. You will have to consider renovation costs, on top of the purchase price and the costs for making minor amendments to the house facilities. You should contact a mortgage broker to understand how it works and what your current affordability is. After considerations and consultations with the experts, set your ceiling purchase price, accordingly.

  1. Decide what you are looking for in a house:

First, you should decide the size of your home; the number of bed and baths, kitchen, dining and living space etc. Consider your special needs as well such as hobby and storage spaces, workspace, swimming pools and others. Decide if you would like to move into a city or a suburb, how far you are willing to commute for work, schools you would like your children to be registered with and if you would want to move close to specific cultural community centers. You may also want to seek the help of a real estate agent to help you make better choices in terms of suitability of location, house size requirements and price negotiation. MLS.ca (Multiple Listing Service) is a nifty site to check out to see the current housing market situation.

  1. Decide the type of home:

You can opt for a condominium, townhouse, semi-detached, single/detached or a duplex/triplex house. A condominium (condo) is a less expensive option and very attractive to first time buyers. A point worth noting is that there are monthly condo fees due to condo corporations, which is utilized for the maintenance of the building as and when required. Townhouses are a series of homes, whereas semi-detached houses have a separate land. Both have separate entrances, but are attached wall-to-wall with other houses. Single detached homes can be expensive because they stands separate and free, so you own the house and the land. You are also responsible solely for all costs involved. A duplex/triplex is a single home with multiple units. You own the property and can also rent out the additional units.

  1. Make a Purchase offer

Once you have found the house according to your budget and your lifestyle, it is time to put your Offer to Purchase. This can be done with the help of a real estate agent, or you may also do so with the help of a lawyer or a notary. The document generally includes the purchase price offered, amount of the deposit, chattels (that includes refrigerator, stove, washer and dryer that you are additionally purchasing from the seller) and the closing date for possession of the house, (which is usually 30 to 60 days from the day the purchase offer is made), request for survey of the land and property, the date when the offer becomes null and void, mortgage financing and home inspection conditions that go with the offer.

  1. Financing the home:

You typically seek the help of a financial institution such as banks and credit unions to help you pay the purchase price via a loan. The loan termed as a mortgage can be repaid by you through regular payments over a period of time, typically around 25 to 30 years, termed as amortization period. Your regular payments will be topped up with additional interest rates that you need to pay on top of the principal amount. However, to avail the loan, you need to have good credit history. Therefore, finding the right mortgage broker is crucial for you to be able to get pre-approved. A pre-approval does not bind you. It still leaves you open to pursue other arrangements.

  1. Find a mortgage broker:

You need mortgage advice. They secure you the best mortgage terms and conditions. The amount of your mortgage is calculated based on the price of the home subtracting the initial down payment. If the down payment is less than 20% of the value of your new home, your lender (i.e. the bank) will require Mortgage Loan Insurance. For availing the mortgage, you must have credit and stable (valid) source of income. You must open a bank account and use it regularly. Pay your bills on time, including insurance payments. Apply for small loans to prove you pay on time and apply for a credit card as well. If you stay with the same employer for an extended time period, it is also a very good history that will add up to availing mortgage easily. Also, remember that the minimum down payment for purchase of a property in Canada is 5% of the actual home price for purchases up to 500,000.00 CAD. In case of less than 20% down payment, your bank requires you to purchase mortgage default insurance through either CMHC, SAGEN, or Canada Guaranty (CG).

For more information and personal advice, contact Joe Purewal, who have been offering expert mortgage solutions for 20 Years and have been Rated the Top Individual Mortgage Agent Canada-wide in 2021 under Invis Mortgage Brokerage.

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Another Feather in the cap of Joe Purewal

Rated the Top Individual Mortgage Agent by Invis Mortgage Brokerage in 2021

We are very excited to share this great news with our customers. We have been recognized as “1ST PLACE Canada-Wide” in the Individual Mortgage Agent category by Invis Mortgage Brokerage for the year 2021.

Invis Mortgage Brokerage is the biggest network for mortgage brokers from all over Canada. This appreciation and recognition mean a lot to us and it brings forth our dedication and commitment that we have extended to our customers, especially in the midst of very difficult and unusual circumstances.

We are extremely honored having received this recognition and thank all our customers for all their trust in Joe Purewal Mortgages and the support they extended in the last year.

Your trust has not only made us the most reputed mortgage agent in Mississauga and in the Greater Toronto Area (GTA) Region, but all over Canada within the brokerage. It gives us a renewed energy and motivation to continue the good work and to help and support customers like you, in your mortgage and other financial needs.

Joe Purewal Mortgages has over 20 years of experience in the mortgage industry. Having seen every possible financial constraint and problem, we have always tried to get you the best, tailored-fit solutions.

With our experienced team, rest assured, you are in good hands. Our specialists get you the very pulse of the current mortgage rules in your specific area, and negotiate the lowest possible rates for your situation. This is why, hundreds of customers have put their trust in our services in 2021 and made us the “Top Individual Mortgage Agent” in the country.

Once again, our humble thanks to everyone who supported us and trusted in our services.

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Banks vs. Mortgage Brokers

Banks vs. Mortgage Brokers

Banks are obviously the direct lenders. They are the financial institutions that offer loans with interest rates based on your financial situation.

Mortgage brokers, on the other hand, act as an intermediary between lenders and borrowers with an understanding of the expectations on both ends.

Key Differences when you get your mortgage done through a bank versus a mortgage broker

If you are in the middle of the decision to apply for a mortgage directly through a bank or a mortgage broker, here are a few major differences to take into account to help you make up your mind:

  1. Strong VS Weak Application

Get your mortgage done through a bank if you have: strong credit, income, and assets. You must submit your application followed by necessary documentation and wait for the approval. Even then, if the bank does not find some requirements being met, your application can get rejected and the bank may or may not disclose the reason for doing so.

A mortgage broker, on the other hand, will take into account your past and current history and provide you the best possible solution to maximize your chances to get your application approved, especially for the financial areas you need help with.

  1. Different Mortgage Products

Mortgage shoppers are mal informed about which banks offer a certain type of mortgage. The several types of mortgages are conventional, fixed-rate, variable, open and closed mortgages.

You may also not have an idea which mortgage type works best for you.

A mortgage broker can guide you to a specific kind of bank that readily accepts loan requests that fit your current need. Without this information on the table, you may end up getting preemptively rejected by a bank.

  1. Different Interest Rates

A bank offers you only what is on its portfolio and may also not be flexible on interest rates.

If you must go through a bank, do the homework for comparing the interest rates offered by various direct lenders and choose the one which offers the best rates. The role of the mortgage broker thus becomes vital. They have a fair idea of the multiple mortgage plans and offers that different banks currently offer. So, you get lower interest rates, suitable terms and benefits, customized to your financial needs.

  1. Multiple Quotes for Loan

Mortgage brokers look up the best solutions for you and thus do the basic research on your behalf, so you get several best quotes from multiple banks. A direct lender may not provide multiple choices in this regard.

  1. Complete Details:

If you are looking for good consultation and advice for documentation, you receive advice on closing rates, loan types or loan programs by direct lenders all year round. They even outline their compensation fees on your closing statement, so there are no hidden charges and you have a clearer idea of your repayment, completely.

A bank will also require from you to submit necessary documents as proof of yout current and past financial situation, but may not provide you all the information about any advantageous loan programs. A bank can also reject you, without information of why it did.

Assistance in loan processing by a mortgage broker from beginning to its finalization can minimize the hassle and time consumption and prove financially beneficial for you in the long run.

Joe Purewal has over 20 years of experience in the mortgage industry. They have seen every possible problem and has always given the best solution to their clients.

With Joe Purewal and its team, rest assured, you are in good hands. Their specialists will get you the pulse of current mortgage rules in your area, and the lowest rate for your situation.

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