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Using a Guarantor

Using a guarantor or co-signer will assure payment responsibility if the primary borrowers default. This will enable the applicant to qualify for a mortgage, if on their own; the applicant(s) have to poor credit and/or insufficient income. A guarantors name may be on the loan but not the property. Conversely, a co-signers name will appear on both title and the loan.

Co-Signor Risks

There is a significant amount of risk involved in agreeing to be a guarantor or co-signer. If the borrower defaults, they are responsible for the full amount of the mortgage. So, lenders require them to qualify as if they were the sole applicants for the loan. Like a primary applicant, the lender will require a credit check and discloses of income, liabilities, and assets. Further, a guarantor or co-signer will want to consider how this would affect their ability to qualify for a loan in the future. Important to consider, this loan will be treated as if they have sole liability and included in their debt servicing calculations.

A Guarantor must consent to having their credit checked and provide evidence of income that will meet mortgage-lending policy. With this in mind, it’s important to remember that guarantors are taking on responsibility if the borrowers don’t make payments.

home under renovation

Mortgages after Purchase

You have purchased your home with your new mortgage; what do you do with it down the road? Well, there are options to refinance, renew, or transfer. All of these options will occur at any point throughout the term of your mortgage. These are Mortgages after Purchase.

Refinance

Say you have been in your home for a few years now. The value has increased and you have paid off a portion of your mortgage. Why add to your mortgage? Perhaps you wish to do some renovations or other debt with higher interest rates you wish to pay off. Well you have additional equity that you can access that you can receive in cash now. This will be added you your existing mortgage amount for you to pay back with interest.

Renewal

Now, say you committed to a 5 year term and that time is now passed. You still owe the remaining balance of your mortgage. Your current lender will contact you with a renewal offer with the interest rate they can offer you on the remaining balance and amortization. Unlike the initial approval process, the renewal process is much less extensive – no pre-approval, less required documents and application processes as mortgages after purchase.

Transfers

Instead of re committing with your currently lender, you find a competitive rate or more extensive product offerings at a different lender. All other factors (mortgage amount, home, ownership, etc) will remain unchanged except who the interest is paid to. You will them be transferring your mortgage from one lender to another, another example of mortgages after purchase.

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How to Get Your Credit Report

How to get your credit report is so important as Lenders look to credit reports to assess the risk of a given borrower. Your score is a number from 300 to 900 that reflects how you have handled your finances in the past. The lower the number, the more risky you appear to lenders, so you are likely to be offered higher rates. It is always recommended to keep an eye on your credit. In Canada, you can receive a free copy of your credit report once a year from both Equifax and TransUnion.
The bureaus refer to your credit report as “client file disclosure” and “consumer disclosure” respectively. Ordering your “free report by mail” does not effect your score. Check your report for errors inconsistent with your true financial history and balances such as late payments; amount owing; or missing accounts. If you do find an error, report it it to the credit bureau to be corrected. We are happy to connect to answers all of your credit related questions. With over 25 years experience in the mortgage industry, we have seen it all. And we have the tools and guidance to handle any credit building (or rebuilding) needs you may. With this in mind, navigating today’s marketplace and credit takes expertise. Call us today.

Interest Rates: Fixed vs Variable

Fixed Interest Rates

Interest Rates: Fixed vs Variable. Fixed rates are often viewed as the safest choice – no surprises. You can rest easy knowing exactly how much interest you are paying and that regardless of fluctuations in the prime rate (for better or worse), you interest will remain unchanged.

Fixed interest rate can be taken on 1, 2, 3, 5, 7 and even 10 year terms. Note the distinction between term and amortization, term is when your mortgage is up for renewal while amortization is the total time it will take to payoff your debt.

Now, say you committed to a 5 year term, but three years in you want to take advantage of a different lenders product. To do this, you will need to beak your mortgage. THERE WILL BE A PENALTY. The size of penalty varies depending on the lenders current rate, the rate you held, the length remaining on your term, and balance outstanding. Lenders charge a penalty using the greater of the Interest Rate Differential (IRD) or three months interest.

Variable Interest Rates

For those of us that are comfortable with uncertainty, Variable rates provide potential for interest saving and term flexibility.

Variable rates are based on a lenders prime rate; plus or minus a set premium of discount. These rates are mostly available on 5 year terms. However, unlike fixed interest rate, the penalty is only a 3 months interest calculation. With this in mind, breaking the mortgage will likely be significantly less costly in understanding Interest Rates: Fixed vs Variable.

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Top 4 Tips for Being Prepared to Buy

1. Here is 1 of the Top 4 Tips for Being Prepared to Buy. Strengthen your credit rating. It’s pretty simple: the higher your credit score, the lower your mortgage rate will be. Spend the time now to improve your credit. Check your credit report. Many credit reports have errors, so you need to ensure that your credit bureau is current and correct. Always pay every single one of your bills on time. Set up automatic payments if you have had any late payments over the last couple of years. Spend only 30% of credit limits on credit cards.

2. Find a Mortgage Broker and figure out how much you can afford to spend. The home buyer’s mantra: Get a home that’s financially comfortable. Get Pre-Approved sooner than later!

3. How much home do you need? Buying a cheaper, smaller home might sound like a good place to start, but could end up costing you more if you need to move due to changes in your lifestyle, including a growing family. Then again, buying more house than you currently need will cost you more with higher mortgage payments, higher maintenance, energy and tax costs. Prioritize your housing wish list. The 3 most important things to think about when buying are home are location, location, location.

4. Closing costs #4 of Top 4 Tips for Being Prepared to Buy. While you’re saving your down payment, you need to save for closing costs too. They’re typically 1.5% of the purchase price and due on the completion date. Transfer Tax, Legal Fees, Insurance and Home Inspection are all considered part of Closing Costs.

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Mortgage Amortization

\Selecting the length of your mortgage amortization period — the number of years it will take you to become mortgage free — is an important decision that will affect how much interest you pay over the life of your mortgage.

While the lending industry’s benchmark amortization period is 25 years, and this is the standard that is used by lenders when discussing mortgage offers, and usually the basis for mortgage calculators and payment tables, shorter or longer timeframes are available up to a maximum of 35 years.

Advantages Of Shorter Mortgage Amortization

The main reason to opt for a shorter amortization period is that you will become mortgage-free sooner. Since you’re agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced.

A shorter amortization also affords you the luxury of building up equity in your home sooner. Equity is the difference between any outstanding mortgage on your home and its market value.

While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. Because you’re reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you’re paid commission or if you’re buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be the best option for you.

We will help you choose the amortization that best suits your unique requirements and ensures you have adequate cash flow. If you can comfortably afford the higher payments, are looking to save money on your mortgage, or maybe you just don’t like the idea of carrying debt over a long period of time, we will discuss opting for a shorter amortization period.

Advantages Of Longer Amortization Period

Choosing a longer amortization period also has its advantages. For instance, it can get you into your dream home sooner than if you choose a shorter period. When you apply for a mortgage, lenders calculate the maximum regular payment you can afford. They then use this figure to determine the maximum mortgage amount they are willing to lend to you.

While a shorter amortization period results in higher regular payments. A longer amortization period reduces the amount of your regular principal and interest payment by spreading your payments out over a longer timeframe. As a result, you could qualify for a higher mortgage amount than you originally anticipated. Or you could qualify for your mortgage sooner than you had planned. Either way, you end up in your dream home sooner than you thought possible.

Again, this option is not for everyone. While a longer amortization period will appeal to many people because the regular mortgage payments can be lower than paying rent. As a result, it does mean that you will pay more interest over the life of your mortgage.

Switching Amortization

The amortization selected when you apply for your mortgage, is not set for the life of your mortgage. You can easily choose to shorten your amortization, and save interest by making extra payments when you can. (or an annual lump-sum principal pre-payment). If making pre-payments (in the form of extra, larger or lump-sum payments) is an option you’d like to have, I can ensure the mortgage you end up with will not penalize you for making these types of payments.

It makes good financial sense for you to re-evaluate your amortization strategy at time of mortgage renewal. That way, as your income increases you can choose an accelerated payment option. (making larger or more frequent payments) Also, simply increase the frequency of your regular payments. Both of these will take years off your amortization period and save you interest throughout the life of your mortgage.

If you have questions about which mortgage amortization is best for you or how to pay off your debt faster. Give us a call to discuss your options with one of our professional mortgage brokers.

Signing mortgage contract

Mortgage Life Insurance

Who Does Insurance Protect?

Mortgage life insurance is simply a life insurance policy on the homeowner which will allow their family or dependents to pay off the mortgage on their home should something tragic happen to them. This is not mortgage default insurance, as lenders require this coverage if you have less than 20% equity in your home. MLI is better coverage to protect the family of a homeowner and not the mortgage lender itself.

How Much Does Life Insurance Cost?

If you were to pass your mortgage would be paid off, is it necessary for you to pay for this service? You may already have an adequate amount of life insurance then the answer might be no.

Assuming you are the primary breadwinner in your home and your death would leave your family without the means to pay for the mortgage, then mortgage life insurance might be a good option.

How To Apply for Mortgage Life coverage?

When looking at insurance policies, it’s important to know if the policy is portable, and backed by a large organization. A professional mortgage broker will take you through the ins-and-outs of insurance. By evaluating what you really need, and the differences in coverage and costs, you can make the best decisions for you and your loved ones.

Benefits to using a Mortgage Professional

Benefits of Using a Mortgage Professional

There are generally two ways to get a mortgage in Canada: These are the Costs, Fees & Benefits, from a bank or from a licensed mortgage professional.

While a bank only offers the products from their particular institution, licensed mortgage professionals send millions of dollars in mortgage business each year to Canada’s largest banks, credit unions, trust companies, and financial institutions; offering their clients more choice, and access to hundreds of mortgage products! As a result, clients benefit from the trust and security they are getting the best mortgage for their needs.

Whether you’re purchasing for the first time, taking out equity from your home for investment or your mortgage is up for renewal. It’s important that you are making an educated buying decision with professional unbiased advice. It’s in your best interest to connect with an experienced mortgage professional today.

Costs of Using a Mortgage Professional

Mortgage professionals work for you, and not the banks; therefore, they work in your best interest. From the first consultation to the signing of your mortgage, their services are free.

A fee is charged only for the most challenging credit solutions, and it’s especially under those circumstances that a mortgage professional can do for you what your bank cannot.

Home Equity

Many people find that one of the easiest and most affordable ways to access money is through the equity that they have accumulated in their home. This is a very popular option, especially when you have an excellent first mortgage in place.

Canadians purchase homes for a variety of reasons. Some want the stability of owning their own home, while others also look at home ownership as an investment vehicle. No matter what the reason, the truth is that home ownership has proven itself to be a good stable investment over time, and one which many Canadians are profiting from.

Putting Your Home Equity to Work For You

While many people have chosen to purchase their first home during these times of lower interest rates, there has also been a large movement to refinance home loans and pull out funds for home improvements, investments, college expenses, and even high interest debt consolidation. Canadians have been borrowing against their home in record numbers, taking out billions of dollars in cash each year.

In years past, many saw their homes as a shelter of safety, yet today, they are more willing to borrow against the cash available in their homes to further their investment portfolios, get out of debt, send their children to university, make improvements to their home, or even boost their RRSP contributions. Where home equity was once sat upon, today it is often used to one’s advantage.

While removing equity from your home can be a good idea, you should do so with caution and fully understand the benefits and possible risks.

The best thing you can do is to consult a licensed mortgage broker professional and financial planner to discuss opportunities to make your home’s equity work for you.

Community Involvement

Are you looking to be a more involved, conscientious member of your community? Have you recently become a homeowner and are wondering how to make the most out of being part of a larger neighborhood? Then incorporating community involvement into your daily life is definitely something worth considering. From volunteering at local events, attending city council meetings or even taking part in charity drives such as food donations for struggling families — there are endless ways that today’s millennial homebuyers can actively engage with the world around them. Let’s dive deeper into this topic and discover some positive steps towards strengthening our overall sense of purpose within society!

Growing up in Victoria BC, Community Involvement means to give back to my community wherever possible. I was on the receiving end of the volunteerism our beautiful city is known long before I became a Mortgage Broker. Whether it was in the form of coaches who guided me in team sports, fundraised to support teams, and generally made sure I was on the right track.

As a father of four, I take these values to heart and continue the tradition of volunteerism, community involvement. This includes coaching local soccer. Also, fundraising for both the Canadian Cancer Society and BC Children’s Hospital whenever possible. It builds threads with other families and encourages others to be actionable in the same vein to give back. As it has been said before, it takes a village!

It’s easy to give back to a community that gave me so much while growing up. It’s these values I work to instil in my own children. They too volunteer in the local community soccer associations as coaches and referees.