29 Oct

WHAT THE ELECTION RESULTS MEAN FOR YOUR MORTGAGE

General

Posted by: Moreen Perimal

 

 

With all the news we have seen on the election, I thought I would sum it up from a mortgage industry perspective.

What the liberal win means for your mortgage:

1. We will see the continuation of the First Time Home Buyers’ Incentive. Check out the link for more information here: https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive

2. Property Transfer Tax modifications were on the platform, so we will await the date that change is applicable.

3. Consumers will still be able to withdraw up to $35,000 from their RRSPs as part of the government’s Home Buyers’ plan.

4. Bank of Canada Rates may not decrease as expected this year – unless there is a significant downtown in the market suddenly- based on the snapshot of recent activity that doesn’t appear as likely.  It certainly makes it easier for the lenders not to pass the decrease down the line to the consumer.

5. We will likely see a national housing tax implemented in addition to the provincial ones already in place.

For items 1, 2 & 5, here is a link.

It doesn’t appear we will see any of the changes to the stress test or amortization hoped for by many.

Stay tuned for more updates and what the BOC decides to do Oct. 30 and Dec. 4.

While the constant in our market will always be changing, Dominion Lending Centres mortgage professionals are here at the frontlines to help you navigate the market to your advantage and save you money.

Please reach out to me with any mortgage questions on how I can help you or those you care most about.

22 Oct

MORTGAGE RENEWALS WITH THE SAME LENDER ARE ON THE RISE, BUT SHOULD YOU JUST SIGN ON THE DOTTED LINE?

General

Posted by: Moreen Perimal

 

MORTGAGE RENEWALS WITH THE SAME LENDER ARE ON THE RISE, BUT SHOULD YOU JUST SIGN ON THE DOTTED LINE?

If you’re in a mortgage that’s coming up for renewal in the coming months and you’re considering just staying with your current lender, you wouldn’t be alone.
According to the Canadian Mortgage and Housing Corporation’s (CMHC) Residential Mortgage Industry Report released in the summer, in 2018, the number of mortgage renewals with the same lender increased by 16 percent over the previous year.

The report suggested one of the factors that may have contributed to large increases in loan renewals with the same institution is the tighter approval criteria.  In other words, people are worried they may not qualify for a new mortgage if they switch lenders, so they’re staying put.

You’ll remember in the fall of 2017, OSFI, (the Office of Superintendent of Financial Institutions) the agency that regulates the financial industry, announced tighter rules on mortgages.  The biggest change is related to uninsured mortgages, or homebuyers with 20 percent or more for a down payment.  These people are now required to go through a “stress test” or qualify using a minimum qualifying rate.

The changes came a year after a similar stress test was introduced for insured mortgages.

If the tighter mortgage rules still have you stressed as you face a mortgage renewal, the CMHC report noted the approval rate for the same lender renewals remained stable at 99 percent.  Renewals are not specifically subject to the new stress test and are more likely to meet current lender criteria, the reported noted.
So, does that mean you should just automatically renew your mortgage with the same lender when your term is up?  Not necessarily.  You need to reach out to a mortgage professional to get the best advice.

For starters, most lenders, especially the big banks, will send you a renewal letter when there are about three months left on the term.  Sometimes that letter could come with six months left.  Typically, the lender will offer you a rate at that time and all you’ll have to do is sign at the bottom line to rollover your mortgage.
But beware, lenders often offer a higher rate than a new client because they’re hoping the ease of renewal will keep you from seeking out a new lender and lower rate.

In some cases, it may be best to just sign and rollover your mortgage.  There are a few things to consider.  If you decide to change lenders, you’ll basically have to go through an approval process again.  That entails getting all your documents, lawyer’s fees, and appraisals.

You’ll have to ask yourself, is it worth the effort to save a few bases points off your rate or a few hundred dollars over a term to make the switch?

For some, it won’t be.  But, if a switch can lead to saving thousands of dollars, it would certainly be something to consider.  While everyone’s situation is different, the larger the mortgage, the bigger the savings will be if you can find a lower rate.

Often, homeowners will just use a bank their parents recommend for their first mortgage.  But they might find themselves not happy with the service or terms of the mortgage and may just want to switch to a different lender as the mortgage comes up for renewal.

If that’s a situation you find yourself in, you have options, and I can help you make the best decision.

9 Oct

5 MISTAKES FIRST TIME HOME BUYERS SHOULD AVOID

Latest News

Posted by: Moreen Perimal

 

Buying a home might just be the biggest purchase of your life—it’s important to do your homework before jumping in!  We have outlined the 5 mistakes first-time homebuyers commonly make, and how you can avoid them and look like a Home Buying Champ.

1. Shopping Outside Your Budget
It’s always an excellent idea to get pre-approved prior to starting your house hunting.  This can give you a clear idea of exactly what your finances are and what you can comfortably afford.  Your Mortgage Broker will give you the maximum amount that you can spend on a house but that does not mean that you should spend that full amount.  There are additional costs that you need to consider (Property Transfer Tax, Strata Fees, Legal Fees, Moving Costs) and leave room for in your budget.  Stretching yourself too thin can lead to you being “House Rich and Cash Poor” something you will want to avoid.  Instead, buying a home within your home-buying limit will allow you to be ready for any potential curveballs and to keep your savings on track.

2. Forgetting to Budget for Closing Costs
Most first-time buyers know about the down payment but fail to realize that there are a number of costs associated with closing on a home. These can be substantial and should not be overlooked.  They include:
• Legal and Notary Fees
• Property Transfer Tax (though, as a First Time Home Buyer, you might be exempt from this cost).
• Home Inspection fees
There can also be other costs included depending on the type of mortgage and lender you work with (ex. Insurance premiums, broker/lender fees).  Check with your broker and get an estimate of what the cost will be once you have your pre-approval completed.

3. Buying a Home on Looks Alone
It can be easy to fall in love with a home the minute you walk into it.  Updated kitchen + bathrooms, beautifully redone flooring, new appliances…what’s not to like?  But before putting in an offer on the home, be sure to look past the cosmetic upgrades.  Ask questions such as:
• When was the roof last done?
• How old is the furnace?
• How old is the water heater?
• How old is the house itself?  And what upgrades have been done to electrical, plumbing, etc?
• When were the windows last updated?

All of these things are necessary pieces to a home and are quite expensive to finance, especially as a first- time buyer.  Look for a home that has solid, good bones.  Cosmetic upgrades can be made later and are far less of a headache than these bigger upgrades.

4. Skipping the Home Inspection
In a red-hot housing market, a new trend is for homebuyers to skip the home inspection.  This is one thing we recommend you do not skip! A home inspection can turn up so many unforeseen problems such as water damage, foundation cracks and other potential problems that would be expensive to have to repair down the road.  The inspection report will provide you a handy checklist of all the things you should do to make sure your home is in great shape.

5. Not Using a Broker
We compare prices for everything: Cars, TV’s, Clothing…even groceries.  So, it makes sense to shop around for your mortgage too!  If you are relying solely on your bank to provide you with the best rate, you may be missing out on great opportunities that a mortgage broker can offer you.  They can work with you and multiple lenders to find the sharpest rate and the best product for your lifestyle.

Remember, when you are buying a home, you are not alone!  The minute you decide to work with a Dominion Lending Centres Mortgage Broker you are bringing on a team of individuals who are there to help you through the process from start to finish.