Many people don't have thousands of dollars in the bank to make a deposit for the purchase of a home. The deposit forms part of the down payment. The problem for many people is that they need to sell their current home first to get the down payment.
The deposit is made upfront upon subject removal even though they might not own their new home for a couple of months! In the meantime, they have not received money for the sale of their current home; and they were planning on using the equity in their home to make the down payment including the deposit. Don't ran away screaming....there is a way out!
Solution: a deposit loan.
*One of the deposit loans that I offer is very simple.
Flat fees only, no extra interest.
Loan size:
Up to $25 000 cost $500
$25 000 - $50 000 cost $750
$50 000 + cost $1000
If you own your own home and want to move, don't let the deposit be a barrier. Give me a call with no obligation.
There are so many things to think about when you want to sell your home and purchase a new one! In working with a good mortgage broker and a good realtor, you don't have to think of everything yourself. A strong team will makes things possible!
*Fees are subject to change without notice and subject to conditions.
Thursday 18 May 2017
Wednesday 26 April 2017
What Every Home Buyer Needs
The best mortgage service that a new buyer can get is a full mortgage pre-qualification, and preparation process. The term "pre-approval" is often used to describe this process but the term "pre-approval" is misleading, and the pre-approval process needs to be sharpened for a competitive real estate market.
1. A pre-approval can give a buyer a false sense of security. Some online pre-approval applications don't require full disclosure from the applicant. The borrower might be able to get a rate hold, but the rest of the application is not really of value.
2. Many pre-approvals don't require supporting documents from the borrower. Documents are only required after the buyer has made an accepted offer. This does not set up the buyer for highest possible chance of success in the purchasing process. An example of the importance of upfront document collection was a client who had to request a job letter three times from her employer to get the correct letter for her mortgage. In a competitive real estate market, delays in getting documents can really hold a buyer back.
3. Some pre-approvals don't qualify for the maximum mortgage allowed. Sometimes there are more options available when the deal goes "live" - meaning you have made an accepted offer. A simple pre-approval does not necessarily give you all of the information that you need. A comprehensive pre-qualification process will give you the information you need.
4. Many buyers don't qualify for a pre-approval because their mortgage will be in the Alt-A mortgage category where there are no pre-approvals. Since the new mortgage rules came into affect, over the last few months, more people are in the Alt-A category. There are slightly higher rates in Alt-A and slightly easier rules. A pre-qualification process is designed to explore many options.
A better system:
A home buyer gets a final pre-qualification based on supporting documents. The documents (job letter, pay stub etc.) ensure accurate numbers. All mortgage types are explored because different types of mortgage can alter decisions.
When the pre-qualification process is done, a rate hold can be obtained. A rate hold is what is often called a pre-approval. And it does what it sounds like it does. It holds an interest rate for you even if interest rates are rising. Most often a better mortgage can be obtained when the deal is live. The rate hold is just a back up plan in my opinion.
There is no doubt that "pre-approval" is the language that buyers are used to. It is an effective word used in advertising and is a hook! However, a home buyer is better off with a full pre-qualification and preparation process.
Better Advice, More Choice, and Peace of Mind!
Remember M for Mortgage!
1. A pre-approval can give a buyer a false sense of security. Some online pre-approval applications don't require full disclosure from the applicant. The borrower might be able to get a rate hold, but the rest of the application is not really of value.
2. Many pre-approvals don't require supporting documents from the borrower. Documents are only required after the buyer has made an accepted offer. This does not set up the buyer for highest possible chance of success in the purchasing process. An example of the importance of upfront document collection was a client who had to request a job letter three times from her employer to get the correct letter for her mortgage. In a competitive real estate market, delays in getting documents can really hold a buyer back.
3. Some pre-approvals don't qualify for the maximum mortgage allowed. Sometimes there are more options available when the deal goes "live" - meaning you have made an accepted offer. A simple pre-approval does not necessarily give you all of the information that you need. A comprehensive pre-qualification process will give you the information you need.
4. Many buyers don't qualify for a pre-approval because their mortgage will be in the Alt-A mortgage category where there are no pre-approvals. Since the new mortgage rules came into affect, over the last few months, more people are in the Alt-A category. There are slightly higher rates in Alt-A and slightly easier rules. A pre-qualification process is designed to explore many options.
A better system:
A home buyer gets a final pre-qualification based on supporting documents. The documents (job letter, pay stub etc.) ensure accurate numbers. All mortgage types are explored because different types of mortgage can alter decisions.
When the pre-qualification process is done, a rate hold can be obtained. A rate hold is what is often called a pre-approval. And it does what it sounds like it does. It holds an interest rate for you even if interest rates are rising. Most often a better mortgage can be obtained when the deal is live. The rate hold is just a back up plan in my opinion.
There is no doubt that "pre-approval" is the language that buyers are used to. It is an effective word used in advertising and is a hook! However, a home buyer is better off with a full pre-qualification and preparation process.
Better Advice, More Choice, and Peace of Mind!
Remember M for Mortgage!
Friday 21 April 2017
Financing a Home Renovation
The cost of renovations of a home are often better bundled into a mortgage rather than paying the high interest rates of a consumer loan. It sounds straight forward?
Yes, but you need a to know your full mortgage options.
Real life example:
I am currently arranging a renovation mortgage for clients whom I assisted two years ago when they bought their first house. They recently approached me asking for a refinance. A refinance would involve breaking the old mortgage and paying the penalty and then getting a new mortgage with a higher balance. Before proceeding with their request, we explored all options first.
1. The refinance they originally requested would involve over $6000 in penalty costs; and the new mortgage would be at a slightly higher rate than the original mortgage. This option is doable and while there are costs, it is still reasonable.
2. A second mortgage at 3.8% fixed rate would be a better option. They would not have the penalty to pay because they would leave the first mortgage intact. The rate is excellent for a second mortgage and because the amount they need for the renovation is about $50 000, the slightly high rate would not cost them a lot in dollars.
3. A second mortgage as a home line of credit was my recommendation. The rate worked out to be 3.2% (P=0.5%) and the great thing is that they only borrow money as they need it. For example, if stage one of the renovation costs $10 000, then they will only withdraw $10 000 from the line of credit until they need more. The line of credit is also larger than their anticipated costs. This gives them the opportunity to access the line of credit if they decide to do other renovations in years ahead.
Not surprising, the clients agreed that option three was their choice. They were not aware that they had this choice before doing our consultation.
The beauty of the process is that at no point were these home renovators pressured into doing anything. Making an inquiry to have your mortgage options explored, can only be beneficial.
Better Advice, More Choices and Peace of Mind!
Yes, but you need a to know your full mortgage options.
Real life example:
I am currently arranging a renovation mortgage for clients whom I assisted two years ago when they bought their first house. They recently approached me asking for a refinance. A refinance would involve breaking the old mortgage and paying the penalty and then getting a new mortgage with a higher balance. Before proceeding with their request, we explored all options first.
1. The refinance they originally requested would involve over $6000 in penalty costs; and the new mortgage would be at a slightly higher rate than the original mortgage. This option is doable and while there are costs, it is still reasonable.
2. A second mortgage at 3.8% fixed rate would be a better option. They would not have the penalty to pay because they would leave the first mortgage intact. The rate is excellent for a second mortgage and because the amount they need for the renovation is about $50 000, the slightly high rate would not cost them a lot in dollars.
3. A second mortgage as a home line of credit was my recommendation. The rate worked out to be 3.2% (P=0.5%) and the great thing is that they only borrow money as they need it. For example, if stage one of the renovation costs $10 000, then they will only withdraw $10 000 from the line of credit until they need more. The line of credit is also larger than their anticipated costs. This gives them the opportunity to access the line of credit if they decide to do other renovations in years ahead.
Not surprising, the clients agreed that option three was their choice. They were not aware that they had this choice before doing our consultation.
The beauty of the process is that at no point were these home renovators pressured into doing anything. Making an inquiry to have your mortgage options explored, can only be beneficial.
Better Advice, More Choices and Peace of Mind!
Monday 6 March 2017
Seismic Shifts in Mortgage Market
The last 6 months have seen seismic shifts in how Canadian mortgages are done. This follows a period of about 8 years of almost continuous tightening of mortgage guidelines. The public has generally only known the tip of the iceberg of these changes.
3 Big-Picture Shifts
1. Your proof of income is more important than ever. Long gone is the option to qualify without proof of income if the applicant had 35% down payment. Added to that is the recent introduction of the stress test. The stress test ensures that applicants have more than enough income to qualify for their mortgage.
2. The rate of interest now depends heavily upon the down payment size. Surprisingly, a person with 5% down payment will often get a smaller rate than a person with 20% down payment! And the person with 25% down payment will get a smaller rate than the person with 20% down payment, but probably not as small as the person paying 5% down payment. Determining interest rate will be even more complicated than that, but the examples give you an idea.
3. Credit Score is emphasized more in determining interest rate.
High Score = Lower Interest Rates
Low Score = Higher Interest Rates
Rates have always been influenced by credit scores, but moving forward, the credit scores will play an even bigger influence upon interest rate at the individual level.
Complicated? Absolutely!
The whole process can be made easier with a trusted guide. It is the job of the mortgage broker to guide you through this maze to get you the best mortgage possible with your unique circumstances.
Please feel at ease to give me a call to have a confidential discussion about your mortgage options.
3 Big-Picture Shifts
1. Your proof of income is more important than ever. Long gone is the option to qualify without proof of income if the applicant had 35% down payment. Added to that is the recent introduction of the stress test. The stress test ensures that applicants have more than enough income to qualify for their mortgage.
2. The rate of interest now depends heavily upon the down payment size. Surprisingly, a person with 5% down payment will often get a smaller rate than a person with 20% down payment! And the person with 25% down payment will get a smaller rate than the person with 20% down payment, but probably not as small as the person paying 5% down payment. Determining interest rate will be even more complicated than that, but the examples give you an idea.
3. Credit Score is emphasized more in determining interest rate.
High Score = Lower Interest Rates
Low Score = Higher Interest Rates
Rates have always been influenced by credit scores, but moving forward, the credit scores will play an even bigger influence upon interest rate at the individual level.
Complicated? Absolutely!
The whole process can be made easier with a trusted guide. It is the job of the mortgage broker to guide you through this maze to get you the best mortgage possible with your unique circumstances.
Please feel at ease to give me a call to have a confidential discussion about your mortgage options.
Thursday 16 February 2017
Credit Check Primer
An important
part of a successful mortgage application is the credit check.
A credit
check is a report from one of the credit bureaus in Canada – either Equifax or
Transunion. The report lists a person’s debts
and monthly payments. The report
includes
· credit cards,
· lines of credit,
· student loans
· personal loans
· car loans
A credit report will also have a
score based on how well a person has managed their debts.
Please be prepared to discuss
your credit history with your mortgage broker in the first
meeting. You don't need a credit check in advance, but be prepared
to discuss your overall credit situation. The discussion is confidential
and it is critical to helping you be successful in buying your home.
The mortgage broker will tell you
the impact of your credit history. If everything is good, you will be
confident in making an offer for a home. If you had some difficulties
with your credit history, the mortgage broker can strategize with you to
overcome the issue. Credit reports are complicated, and you will benefit
from professional analysis.
The two credit bureaus in Canada are Equifax and TransUnion. For your reference you can go online to www.equifax.ca and www.transunion.ca.
The two credit bureaus in Canada are Equifax and TransUnion. For your reference you can go online to www.equifax.ca and www.transunion.ca.
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