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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Tips and Tricks on How to Avoid Unsustainable Debt during the Holiday Season

The first thing that comes to mind when we think of holidays is involuntary splurging on items that may not be necessary or the stuff which is beyond our budget constraint. It does not seem harmful, in the spur of the moment, to spend extra bucks to purchase some fancy stuff, in order to put yourself in the best of the festive moods.

Once the holiday season has passed and the credit card invoices show up, you end up regretting exceeding your budget. You may even accumulate unsustainable debt over your head to be repaid in the yearlong monthly instalments, which in itself is not a very enjoyable experience.

What is an Unsustainable Debt?
Unsustainable debt denotes an incapacity of the borrower to pay what is owed without availing more debt. In turn, it becomes a vicious cycle. The primary debt is usually availed at a higher amount than what the borrower is comfortable paying back. This is because a higher amount typically yields to a higher rate of return or a greater sense of satisfaction. Because the repayment of the primary debt is higher than what the borrower can set aside, said borrower then incurs more debt to pay the primary debt. Depending on the borrower’s financial management skills, this cycle could get worse.

Holiday Spending: The Smart Way
Since you would not want to regret it later, you must always do your holiday spending the smart way. Following are a few tips to avoid accumulating unsustainable debt, making the festivities memorable, but not at the expense of your peace of mind:

  1. Plan Ahead of Time
    Last minute shopping during holiday season is a bad idea. You are likely getting yourself higher prices than usual. Why wait until the last moment when you can buy good items within reasonable prices beforehand? It will also be a hassle-free and much more enjoyable experience.
  2. Make a Shopping List and Stick to It
    Have you ever noticed that you can easily keep your budget under control when you have a shopping list handy than when you don’t?
    The best way to finance holidays is by making a list of the items and products you need, versus the things that you desire. Make priorities and ensure that you buy the most important things, first.
  3. Substitute Credit Cards with Cash:
    It is always better to spend in cash because you may have a fair idea of how much you have in your hand than when making purchases on debit or credit cards. Cash is controllable and you can easily monitor how much is left in your pocket before buying something more.
  4. DO It Yourself Presents:
    There are hundreds of things that you can make at home to give as presents than buying expensive, similar gifts on the market.
    It adds a personal touch to the gifts and they become more invaluable than the expensive gifts on the stores, also preventing the burden on your budget.
  5. Book Travel Plans Beforehand
    Traveling is expensive during holidays. Booking a hotel reservation, in the nick of the moment, can also prove financially damaging. If this is on your agenda for holidays, always plan beforehand, as to where to go and where to stay. There are many attractive discount packages available for traveling, hotel booking and other recreational activities online, months before the holidays. Last minute plans cost more.
  6. You Want to Spend, Save First
    For spending, the rule of thumb is to save first. Always keep a bigger picture in front of you for the whole year and ensure that you stick to it. Working towards a goal keeps you focused and helps you avoid needless spending.
  7. Lower interest rates
    If you must use your credit card, go for a credit card that has a lower interest rate and will incur less interest over time. Choosing a credit card with less interest rate, right from the beginning, saves you a lot!

This year, celebrate the holiday season with peace of mind!

Have a great time with your loved ones!

Joe Purewal is a licensed mortgage agent, a financial advisor and debt consolidation consultant. We work with all major Canadian lending institutions on your behalf and bring a range of services at your disposal. Contact us for more details

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How important is your credit score in financing your home?

Your credit score today is vital in obtaining a new financing plan.

What is a credit score?

It is a reflection of the payments of your utility bills, credit card or any other previous financial plans that you have been granted. It also includes the number of open accounts, and the total amount of debt that you must repay, currently. It is calculated to estimate a borrower’s credibility or ability to repay the loan in the future as a safety measure exercised by the lender. It may range anywhere between 300 to 850 digits and demonstrates your financial well-being at the moment. A higher credit score endows you with a better possibility to receive a loan.

Risk of having a low credit score:

It may have been quite clear by now that having a low credit score turns you into a risk for the bank, insurer or any other lender. Therefore, it is advisable to always maintain a good financial history in order to be able to apply for a future investment or financing plan.

A lower credit score means your application for loan, a new credit card, mortgage plan or any other credit line can be rejected. It is also likely that if accepted, your financing application will still lead you to higher interest rate. It may also affect the term plan of your repayments.

This may seem strange but a number of rejected applications in the past also leads to lowering your credit score because any new lender would wish to inquire the reason behind the rejection. This is why, it is necessary to think well and conduct some research prior to applying for any loans to ensure that none of your loan application is rejected, not even once.

Kinds of credit score reports:

There are two kinds of credit score reports.

One of them is an active report of your credit history which through credit report agency’s database is visible to all potential credit providers and lenders and it determines your current and future eligibility for a loan application. This is your primary credit score.

Secondly, your new prospective lender will make an internal report, based on his own credit scoring criteria, individually assigned to your application.

Ways in which to boost your credit and make sure that your credit score stays up

  1. Timely payments:

Always make timely payments for your utility bills including water, electricity, phone and credit card etc. Some borrowers tend to make late payments, or only pay when necessary, after all it is a matter of minimal late fees, charged above the actual invoice amount.

But this is not advisable. If you are dealing with several expenses at the same time, it is better to have monthly or weekly instalment plans for paying, but a late payment shows badly on your credit score, so never go for it.

  1. Minimize credit card usage:

Keep a manageable number of credit cards. Also, minimize the usage limit and always try to go for a credit card that either does not charge you annual fees and provides you with a lower interest rate. Some credit cards also offer an initial period of no interest.

Whatever you opt for, just ensure that it does minimum damage to your credit score.

  1. Do not choose to go for several loan applications, simultaneously:

As stated above, too many loan applications spoil your credit score for any future financing plans. Therefore, never rush to apply for a loan unless you are certain that you will get it approved or be able to pay it back, timely. Do your research before making any moves.

  1. Avoid non-payment of any kind:

If you have failed to repay your previous financing plan, you are likely to get a rejection on any new application for the same because your credit file discloses it all.

  1. Avoid the red flag of identity fraud:

You may have had a change of name, location, phone number etc., while still on the term for the repayment of the previous financial plans. Any changes to your personal particulars must be reviewed and updated periodically. It is best to review on an annual basis whatever changes may have occurred to your personal circumstances and update them to avoid landing yourself into the bad books of the financial institutions.

Integrity, consistency in repayment and a constant vigilance of your personal credit score history can lead to improved possibilities of obtaining a loan in the future.

If you have any queries with regard to your current and future financing plans, it is always advisable to speak with a financial expert prior to making any decisions. Feel free to contact us.

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Is mortgage refinancing a good or bad idea?

Mortgage refinancing is a type of mortgage product offered to homeowners who have significant equity in their homes. Home equity can be calculated by subtracting your current mortgage balance from the current value of your home. However, a general rule in refinancing is that you can only take out a maximum amount of 80% of the value of your current home provided that your income services the new debt you will be taking on. This gives you a buffer of 20% if in case the market value drops.

There is no limit to the number of times you can refinance your current home. In most cases, Homeowners break their existing mortgage to get a lower interest rate. Normally, a dip in the mortgage rate by 2% is considered ideal to refinance, but many decide to break their existing mortgage even for a 1% reduction in interest rate. Another major reason for refinancing is to take out or liquidate some of the home equity accumulated in the home for debt consolidation, for home improvements or for investments (stocks, RRSP’s RESP’s or down payment for another property).

Based on the analysis of your current personal and general financial market situation, refinancing must be a well-thought-out decision. Refinancing brings you new opportunities. Some of these include either staying with your existing lender or choosing a new lender, deciding whether to go for a fixed or variable interest rate, going for a shorter or longer mortgage term, and increasing or decreasing your monthly payment via shortening or lengthening your existing mortgage amortization.

Before you decide, you must look at the pros and cons of refinancing.

Pros:

  1. Since it was the lower interest rate that interested you to refinance, you get to save money, which can now be used in managing other projects of interest.
  2. You can access equity cash in your home and assess what your home is worth now. You can easily calculate your home equity by subtracting your home value from the outstanding debt. This way, you will also have an idea of how much the total worth of your home you have already paid.
  3. Refinancing gives you the option to consolidate or combine several debts instead of paying them individually. This consolidation of debts may cover your car loan, credit card outstanding bills, lines of credit, private loans and mortgage in one payment. Since these unsecured debts are often at a higher rate of interest; pooling them together into your new mortgage will help you pay more towards the outstanding principal debt rather than just the interest.
  4. When you decide to refinance, you have the chance to again choose between a fixed or variable rate mortgage before the new mortgage is approved.

Cons:

  1. It is understood that no matter what benefits will follow in the long run, the initial consequence will always be incurring penalties, lawyer fees and sometimes appraisal fees on refinancing. Fixed mortgage rate users pay a penalty of three months interest or the interest rate differential payment (IRD), whichever is greater, whereas for variable mortgage rates it is only three months of interest. It may be possible that the penalties are higher than the savings at any given time near the maturity of the mortgage. Check your prepayment penalties/privileges before initiating the process.
  2. Consolidated debt payment can slow down or prolong the process of payment.
  3. Refinancing to access the existing equity may lead to more debt in addition to extra costs in the name of penalties.
  4. When you switch your mortgage interest type from fixed to variable or vice versa, it can lead to an increased outstanding debt payment, which may not be as per your expectations.

When should you refinance?

  1. Early:

If you must refinance, break the existing mortgage financing earlier and take a new mortgage rate with any lender of your choice.

It is important to remember that there is still a legal penalty from the bank, which is usually equivalent to three months interest payments or more. However, refinancing early puts you in a lot better situation than when you break it in the middle of the term, where it can be a very costly decision.

  1. When you are near your mortgage renewal:

If you have missed the opportunity to refinance early, you can still do so towards the end of your term. Instead of renewing with your existing lender, you can shop around and see what is out there. Often, there will be better deals offered by other financial institutions that may fit your current need than what your existing lender is offering you.

  1. When you need a home equity line of credit:

This is a more flexible access to the equity in your home. It works the same as a line of credit but with a lower interest rate because it is secured against your home. If you take out money from it, you will still have to pay monthly interest-only payments on the outstanding balance.

Speak with us to know whether it is a good idea to refinance and what solutions and options you can avail before you take this decision.

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Analysis of the 2020-21 housing market and the effects of the pandemic on house prices and mortgages

Post-Covid-19 Canadian Housing Sales Market:

Natural catastrophes and global pandemics have a direct effect on our lives, work, and growth opportunities. This also applies to the selling and buying patterns of individual consumers as well as corporations. With the onset of Covid-19 and its peak months in the last year, majority of the population had to stay indoors, limiting their outdoor access to recreational sites, their dining out patterns and realizing the necessity of working from home. This made people take notice of their small kitchen areas, tight verandas and lack of potential office space within their homes.

During the pandemic peak, the surge in buying spacious houses witnessed a record-breaking pattern. Homebuyers was willing to make room in their budgets for higher asking price in return of a more spacious and functional home.  They also realized that they had more room in their budgets because vacations and daily commutes to work suddenly became unnecessary.

However, since March 2021, the surge in house sales have started to go down as things have started to return to normal and people are taking time to analyze where the current Covid-19 situation will lead to. The numbers in house sales varied from one city to another in Canada; however, it is worth noting that it is a gradually declining slope.

This is the very reason why the current average home selling prices have gone down since the month of March 2021 with an estimate drop of about 5.3%. Furthermore, average home prices range from six hundred seventy thousand to around seven hundred thousand dollars. Despite the odds in the statistics, the Canadian housing market is still up by 26% compared to the March 2020. Overall, if you go for a yearly sales statistics, the Canadian House Sales are witnessing a growth rate with regard to every passing year.

Let’s take into account some of the cities in Canada to understand how the house sales markets are responding to post-covid-19 era since the month of March 2021.

Toronto is the most favorite market for housing sales for buyers. Here, the prices of the houses are standing at a deficit of 1% from March 2021. In Hamilton, this percentage of deficit is 2%, in Ottawa 2.6%, in Vancouver 4.6% and in Edmonton, 3.2% and for Calgary this percentage stands at 2.3%. The only city where the house sales prices have gone up is Winnipeg, with an average increase of sales prices by 4%.

Post Pandemic Mortgage Rates Situation:

The mortgage rates have remained stable since last year.

Canadian Mortgage and Housing Corporation (CMHC) reversed the increase it deemed fit to impose on mortgage insurance, credit score requirements and debt service limits this year.

On the other hand, the Mortgage Stress Test benchmark has increased in June 1, 2021.

The Mortgage Stress Test determines how much you can afford with your current income and financial circumstances to make sure you can still afford to pay your mortgage instalments, in case your current financial situation changes. The qualifying ability of the buyers may decrease as a consequence of the current requirements in the score for the Mortgage Stress Test. This may lead to a decreasing shift in the housing market of Canada.

It is always advisable to speak with the Mortgage experts to make the right decisions in the right time. Feel free to contact us.

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Six tips for financial fitness this Fall

It’s September and there is some optimism that we may be moving towards the end of life in a global pandemic. The Fall has always been a great time to go back to school on financial fitness, and this year it may be more important than ever. Here are some tips to help make sure your finances are fit and stay that way –

Many of us dealt with stressors that we didn’t even know existed, like not being able to see loved ones. That’s why we all want to live a little, but perhaps do it strategically so you don’t break the bank. Maybe have some celebratory days with a set amount that you can spend where you go out and do the things you’ve really missed.

Having a budget is one of the most important ways to achieve a solid financial future. It might not be the most thrilling task, but it’s one that will give you a clearer picture of where you stand and how much you can truly spend. You’ll also be able to determine how much money you can allocate to your “live a little” fund.

While preparing your budget, first take a new look at your monthly bills and go through them line by line. You may have signed up for services you never really use or perhaps don’t remember requesting. Look for small, unexplained charges, fees, and add-ons, and the services that you can now live without.

Your credit score is essentially your passport to financial opportunities. It can mean the difference between getting approved or denied for any kind of credit and can prevent you from getting the lowest mortgage rate. The good news is that you have a lot of control over your score. That’s why it’s important to always have good credit behaviours. The single biggest factor to having a good score is a timely bill payment history so never let a bill get past due. Be sure to know your credit limits and try not to use more than 30% of the available amount, don’t be tempted to apply for store cards just to save on your purchase that day, and before you cancel a credit card get advice.

Always keep an eye on your high interest debt and pay down your credit cards as much as possible. If you find that your debt is making things difficult, you may be able to move that debt to your lower-rate mortgage if you have enough home equity. You could save thousands in interest, have one lower monthly payment that greatly improves your cash flow, and enjoy much reduced financial stress.

We’ve all gained a new appreciation of the value of being able to spend time with loved ones in person, that it’s something to treasure. Focusing on this may keep you from spending money you might not have or might not want to spend!

There are many that weren’t very fortunate during the pandemic. Consider committing some money to giving back – charities, shop local, tip restaurant workers and others generously.

I’m here to help so please get in touch at any time. It’s my goal to help you maximize your financial fitness so you can build wealth for the long term.

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Choose the mortgage rate that best fits your need

Investing in a property, home building or renovation requires a lot of planning on your finances. You will have to compare the mortgage rates on loans to comprehend the best option for yourself, based on your needs and expectations. It is also necessary to understand which product suits your spending profile and the pros and cons between variable and fixed mortgage rates.

Variable Mortgage Rate:

The variable mortgage rate can vary over the period of your repayment based on the prime rates set by the banks, which could be revisited by the Bank of Canada multiple times a year, thus automatically readjusting your mortgage rate.

Pros:

  1. A drop on the prime rate will readily give you a plunge in the mortgage you pay to your financial institution. For example, the year 2020 witnessed a drop of 1.50% lower rate than the previous year. So, anyone opting for a variable mortgage rate has paid 1.50% less in interest year-to-date.
  2. A variable mortgage rate gives you the choice to switch to a fixed rate with usually no penalties, which may not be the case the other way around.
  3. A variable rate is seen as a lower cost option due to lower penalties you must pay should you need to break your mortgage before it matures. The penalty to break your variable rate mortgage is the interest incurred in the last 3 months.

Cons:

The Bank of Canada can increase the variable rate any time. So, any increase over the break-even point will lead to a substantial economic loss.

Fixed Mortgage Rates:

Pros:

  1. You will be paying a consistent amount towards your mortgage at least until the end of your term.
  2. If you are absolutely certain there is no reason for you to break your mortgage, then this is the option for you.

Cons:

  1. You may think that fixed mortgage rates are safe because you know how much you will pay each year. However, this may lead to paying more on interest. This can happen when the interest rates in a given year over the course of your term have gone down. You will pay what you agreed to, without benefitting from the drop in interest rates.
  2. You can never substitute a fixed rate with a variable rate plan over your agreed term because if you do, you will pay a heavy penalty set by your financial institution.
  3. A lot of circumstances like your financial or personal situation may land you into breaking a fixed mortgage rate and this can come costly to you in the future. The penalty on breaking a fixed mortgage can be 3 months of interest or the ‘Interest rate differential’ which is an interest estimated up to the maturity of the term.

Below are the variable and fixed rate percentages offered currently:

  1. Low 5 Years Variable Mortgage Rates

You can pay just 1.25% mortgage rate on an annual basis on your principal amount for a plan of payment over five years. The 1.25% mortgage rate is variable, on which standard terms and conditions apply approved by the financial institutions.

  1. The 5 Years – High Ratio Mortgage Rates

The mortgage rate can go for as low as 0.99%, however it is a promotion for purchases with less than 20% down payment and is available for a limited time. This may also be subject to an estimation of your monthly savings that are calculated as per the rates set on ratehub.ca.

  1. Short-term – Fixed Mortgage Rates

There are various options for fixed mortgage rates depending on the term that you select. Please consult our rates section for further information as rate offerings can change frequently.

It is always advisable to consult the mortgage experts. Feel free to contact us today!

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Smart ways to pay for your home renovation

Moving is a lot of work and it’s expensive when you factor in all the costs – legal fees, moving costs, real estate commission, decorating, furnishings, and so much more. Sometimes it just makes more sense to love your home instead of listing it.

If you’re thinking renovation, you’ll want to carefully look at how to finance that transformation. There are generally two financing routes – home equity and unsecured credit.

Our hot housing market has greatly increased home values, and with mortgage rates hovering around historic lows, homeowners with enough equity are seizing the opportunity to tap into that equity to create the perfect home that fits their lifestyle and to further boost long-term value.

You can access your home equity through a mortgage refinance, home equity line of credit, a second mortgage or a program called refinance plus improvements. For smaller projects, many look to unsecured credit like a personal loan, line of credit, or credit cards. Here are the benefits and considerations of each:

If the home of your dreams is one renovation away, let’s discuss which option is best for your situation. I’m here to help you maximize your bottom line and personal home enjoyment.

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