The main objective of any mortgage borrower is to pay down there mortgage as soon as possible. Naturally coming up with the money to do this is not that easy. Two ways to chip away at your mortgage is to take an accelerated payment frequency and take advantage of the automatic payment increase allowed on your mortgage by your mortgage lender. Here is an example.
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Why choose an accelerated weekly or bi weekly mortgage payment
News from Canadian Mortgage and Housing Corporation (CMHC) on mortgage insurance.
CMHC announced that it will pull back on its growth of insured mortgage funding over the next 5 years. With total mortgages insured by CMHC close to 557 billion by the end of the year the government has put pressure on CMHC to start to slow down on amount of mortgages they insure.
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Information on Mortgage Renewals
At mortgage renewal time your mortgage is completely OPEN. This means the contract with your current mortgage lender is over. You do have the option to either stay with your existing lender or move too another lender for better terms and conditions. Moving to a new lender will require you to re-qualify, however if the terms and conditions are much better then what the existing lender is offering, it makes sense.
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New Mortgage Rules Simplified
There has being a tremendous amount of chatter and media news over recent mortgage rules changes implemented by Government of Canada and Superintended of Financial Services. Yes these new rules seemed to have possibly effected the market or maybe it is just bad timing (the market had to slow down at some point). Below is a simplified review of the changes. As you will see it is not the end of the world and some mortgage products never changed at all.
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Subprime and Private Lending in Canada
Subprime (B) and private lending options available to clients in Canada
In Canada there are three lending tiers. The top tier or A lending as it sometimes called refers to clients who can qualify based on income and credit score to support the mortgage. This type of lending would represent the majority of mortgage lending in Canada. There are however two other lending options available to consumers, Subprime (B) and private lending. This source of lending represents a large portion of the overall Canadian mortgage lending market.
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Secured Lines of Credit could be reduced to 65% of property value.
We have seen more regulatory changes to the mortgage financing industry over the past couple of months and pretty much every year for the past four years. One other change that is in the works is a reduction on the maximum loan to value allowed for Secured Line’s of Credit. Right now a Secured Line of Credit can go up to 80% of a property value. This could be cut to 65%. With generally mortgage refinancing now at 80% (it was 95% four years ago) regulators are trimming back how much equity a borrower can pull out of their properties.
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Sources of Down Payment
Typically sources of down payment have to come from the borrower’s own resources . These would include:
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What is mortgage amortization?
Mortgage amortization is the length of time that a mortgage loan is set up for. In other words this is the maximum amount of time a borrower has to pay out the loan based on the initial mortgage payment set up. Currently the longest amortization in Canada based on Government rules is 30 years.
Renters and Rate Influence
More than 1 in 4 renters are planning to buy a home in the next two years according to recent study commissioned by The Mortgage Group (TMG). This could translate to about 12% growth in ownership. Of those surveyed, more than 54% said they would likely buy sooner if they expected interest rates to rise 2% or more in the next year. While the fear of future rate hikes often drives consumers psychology, a budding homebuyer may also want to consider:
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Long Term Fixed Mortgage Rates
Long term mortgage rates for both 7 year and 10 year are now under 4%. Having a mortgage locked in under 4% for next 7 to 10 years is an amazing option especially on a investment property.