Month: June 2021

Mortgage seem to be the most intricate and daunting process especially for people with little or no experience in borrowing or dealing with debt.

When searching for a new home, you may begin by counting rooms, windows and bathrooms. But other important elements need to be taken care of to avoid the biggest mortgage mistakes when buying the property. 

For example, a small mistake or error like Paying even 0.5% higher in interest on a mortgage amount can end up costing big money over the entire mortgage term.

So, it is imperative not to make a mistake and do some research before wading into the world of financing.

Understanding these mistakes is crucial: If you avoid them, you will be able to uplift the odds that your mortgage application moves smoothly through the process. If you don’t avoid them, you will either probably slow the process or you will even scuttle your chances to even be eligible for the mortgage.

Dodging the numbers whether for income or debts is never a good idea. New numbers can lead to a delay and you might never be eligible for the mortgage. So be upright and truthful throughout the process. Also, mistakes made before or during the process can lead to a higher interest rate or not getting approved for the mortgage.

To save yourself money, time and headaches, and avoid making a financial mistake that can plague you for decades. Start your journey to homeownership and secure a financially sound mortgage by avoiding these most common mortgage mistakes;

1. Shopping for a house before a mortgage

It is thrilling to look for homes, visiting various properties and dreaming about homeownership than to focus on finances. But this is a common mistake that can be costly in the long run. It is not a smart decision to not learn about the amount you can borrow before finalising the property as it can lead to rejection at a later stage. So, get your pre-approval letter to know the estimated amount you can borrow before finalising the home. It will show the sellers that you are a serious buyer.

2. Not checking credit reports or score and Erroneous Information. 

If you are planning to buy a house, pull your credit report and score well in time to know where you stand. As borrowers with higher credit scores tend to get a low-interest rate and those with a bad credit score will have to make changes to improve their credit score. So, it is best to get the full picture well in time. Also, scout for erroneous or incorrect information in your credit report that might have slipped through the cracks as with these mistakes you will end up paying more interest rates and shelling our money from the pocket!

3. Applying for additional credit before closing

The period while you have applied for a mortgage is the most critical, try and leave your credit alone during this time. Applying for a new credit card even though you don’t use it or buying a new car etc. can hamper your credit score thereby affecting the mortgage process.

Though it is true new credit cards can be alluring and enticing but it could be an admonishment to the lenders that can lead to further sinking of the credit score.

4. Changing Jobs/Employment

Steady employment most probably a job for two years is considered as financial stability by the lenders to be eligible for the mortgage. New job opportunities can have a myriad of benefits but a change in job or employment can affect your mortgage deal so avoid shifting or changing your job before closing.

5.Waiting Too Long After Finding a Good Rate

Though homeownership is a critical decision and one should not hastily decide but once you get a good rate that suits you it is imperative to bring it to a conclusion well in time before the rates change. As mortgage rates tend to change over the months, so embrace it before the situation changes and opportunity vanishes.

6.Not Shopping Around

Many people are fearful and apprehensive of shopping or exploring too many lenders. Though there are slight drawbacks but it is not wise to miss out on a bag full of benefits for minor shortcomings. As even the slightest or fraction of a lower interest rate can save you boatloads of money over the years (till the mortgage term). Trust us, a cluster of inquiries and exploring different lenders will not hurt your credit score as much as the hard pull for monthly credit card payments.

7. Overlooking the other hidden costs of homeownership

As we all know homeownership is a life-changing decision and includes countless expenses but most of us fall into the trap that by applying for a mortgage, we only need to bear the expenses of down payment and the rest all will be taken care of. This is another major mistake made by homeowners as apart from down payment be prepared for expenses like home inspection, appraisal, title fees on top of the down payment. Apart from these expenses like routine maintenance, utility bill payments etc. should also be calculated as these will also need your attention soon after the purchase.

Purchasing a home is a decision that needs to be pondered, calculated and planned a bit before jumping to the conclusion. Make sure to contact My Mortgage Consultant, we have lenders and financial advisors to see the correct options that suit your specific financial situation.

Purchasing a home in 2021 is not like the same during pre-covid times as well as it is quiet difficult to qualify for the purchase. With fuming and blazing pandemic, instead of open houses, galore people chose to use a virtual listing of the houses and panoramic 3d tours and this is to continue in 2021 too.

A global pandemic has ignited the Canadian Housing market with pent-up demand and all-time low supply.

Unfortunately, things don’t end here, there are more aspects to tussle with, like finding the correct home in your price range and much more. Despite seeing a surge in mortgage rates in early 2021, it has been predicted that the rates will still be comparatively low. However, the situation is getting better, as per the economists the disposable income has increased from 2019, as people constrained their spending and benefited from government plans.

Buying a home is one of the biggest purchases of life. It can be an exciting, thrilling and nerve-racking experience.

However, getting a mortgage to purchase a home is easier if you pay attention to some crucial aspects which will help you to qualify for purchase a home.

If you are planning or preparing to pull the trigger of a home purchase, be sure to employ the following tips that will help you to stay organized and be prepared to navigate the tricky market and qualify for the purchase;

1.Keep your Credit Score in Check and make necessary improvements to enhance it

Credit history and credit score can help in determining your mortgage future. A credit score above 680 is considered a good and accepted credit score. Mortgage lenders look into your payment history of bills, credit cards, and your score before qualifying for the home purchase.

Make sure to pay your bills on time, avoid late payments, conflicts with the creditors, etc.

2. Job Stability

Having a stable, consistent job and income are major factors that increase your chances of eligibility for the mortgage. Having a constant and unfluctuating job for more than 2 years is beneficial, whereas in the case of non-salaried or self-employed income of 2 years is considered by the lenders.

3. Pre-Approval

With a pre-approval, you will be in a better position to qualify. It makes you more confident, gives you the ability to negotiate for a better offer on the home. With pre-approval in hand, you will be better equipped and fit to commence your house search. Get Pre-approval today, with MMC. 

4.Know your limits with Calculator

Too high a mortgage leads to dwindling incomes, thereby late payment of bills and bad credit score. It is wise to find out your affordability using MMC’s mortgage calculators to estimate your monthly costs, down payment etc. Make sure you are comfortable with the costs and numbers. Borrowing capacity is a priority of the lenders during qualifying for the mortgage; this can be determined with income, assets and liabilities and mortgage calculators can help you make the right decision.

5. Don’t rush the Process

There is a spike in eagerness to purchase homes in 2021 due to historically low mortgage rates, but that doesn’t mean that you have to rush through the process and make a decision in haste.

Take ample time, analyse the pros and cons, and then make the decision that is right and appropriate for you. As purchasing a home is a life-changing decision, don’t settle for something that is not for you in the rush of finalizing things.

Buying a home is likely to be complicated and tricky in 2021. 

With COVID-19, uncertainties have multiplied for the homeowners and buyers like housing prices, income, tight market and much more. Follow these tips, guidelines that can help you soften the process and end up with a home you enjoy and can afford with ease.

Contact My Mortgage Consultant today for advice from a qualified and experienced agent. With our help, you can utilize a historic opportunity of record-low rates to save thousands on your mortgage, as low-interest rates are not going to be low for decades.

Homeownership is a life-changing decision, if you are a homeowner or looking to be an owner of a home, you need to pay heed to an ugly proposition that has been peeping since the prices of the home are rising. The proposition states to have a tax on the capital gains on the selling of the main residency (i.e., the primary place, you live in)!

It has been agreed by most that if approved, it would be the most unpopular and despised tax, but simultaneously it is suggested that the tax-free gains made by current sellers are worth discussing.

Currently, the selling of the main residence is spared or exempted from the capital gains tax. This is reasonable and logical due to many reasons, foremost being having your own home gives stability and security, which is the linchpin of retirement planning. Keeping this in mind, the federal government has refused to change the current policy, but despite this proposition or ideas like these keep rearing their ugly head.

“A capital gains tax is a type of tax that needs to be paid on the profits or gains earned on the sale of an asset like movable property, immovable property, shares, funds, etc. In Canada, this tax is exempted on sale of primary residence”

It is true that no one likes or enjoys taxes, but this is a loophole in the tax code which motivates Canadians to invest or reserve more money into housing or real estate. Housing prices have ascended up to 270% since 2000. It has been estimated by the Department of Finance that by skipping taxes on the selling of main residency, the Government of Canada has lost approx. $7.1 billion alone this year. On the contrary, this tax relief has been beneficial for those with massive finances as the gain of $200,000 on the sale of a $300,000 home is tax-free, and massive profit of $10-million on the sale of a $15-million home is also tax-free.

Everyone has a different perception of this idea, while some suggest that If homeownership didn’t involve such attractive and beneficial schemes, people would shift to staying on rent and would not be motivated to buy their own home, thereby fewer Canadians would invest their money in homeownership. Whereas some feel that If the government would attempt to adopt and approve this tax, they will have to face a conflagration of community’s criticism from exasperated homeowners.

While some who are in favor of the tax say that even though the consequences can be dire, this doesn’t reduce the fact that it is worth discussing and pursuing as they believe bigger repercussions imply a better idea. They further believe that this a medicine to cure the red-hot housing markets but as per Toronto Regional Real Estate Board adequate supply of houses for sale should solve the problem of housing affordability rather than an extreme step like imposing taxes on the sale.

It is worth remembering that homeowners already are thumped with continuous taxes like land transfer tax, property tax which costs thousands of dollars to them. Burdening them with more taxes like capital gain tax would mean crushing them with unnecessary expenses.

What do you think? If you need more updates, strategies or free guidance in making financial decisions or on taxes related to the purchase or selling of the house, talk to our experts at My Mortgage Consultant!

The Vancouver real estate market is comparatively relentless when it transpires to the young and lower income buyer. One of the tremendous hits by home prices is the millennials, those aged 23 to 38 who are missing out on the market. People are living to ripe old ages, which in turn keep their homeownership off the market. 

Here are some of the most authoritative facts affecting millennials and the trends which are changing their idea of home ownership. 

1. The Age Of First-Time Home Buyers Has Risen: Today the average age for a first-time home buyer is 36, much elevated than generation before. Most homeowners today were just 30 when they brought their homes. In Vancouver, millennials have a twofold jinx affecting their home buying abilities. It takes them extensive time to save for a home due to towering prices, and the pay have not grown much through the years of employment 

2. Parents Are Helping With Purchases: According to the BC Notaries Association, about 90%  of the first time home buyers in BC were shoplifted or were provided with the money from their parents so that they could qualify for the mortgage. This has a lot to do with the stress test instigated by the federal government to make it furthermore gruelling for buyers to qualify for a mortgage. Millennials have limited equity due to salary stagnation, their parents are the bank of choice today, at least when it comes to raising money for their down payments.

3. To Move Or Not To Move: Many millennials have to choose whether they stick to Vancouver or move to a more affordable city. If they are not inclined to give up the urban lifestyle they are used to, surprisingly Toronto provides a sparkle of hope. The price to income ratio is a one-third as compared to Vancouver and it has seen plenty of job growth as well. 

Multi Generational Living Saving Days: According to the Millennial Report, one thing that might be saving millennials from going broke, in the meantime they are also reducing their need to buy a home, in a multi-generational living. It has become a trend amongst the millennials that either they stay with their parents or they should move back to their parents house.

Mortgage Brokers: An Overview

When shopping for a mortgage, many home buyers sign up for the services of a mortgage broker to find them with the best terms as well as rates. In the wake of the real estate market crash in 2008, however, the business enactment of brokers came under audit, and the question of whether they act in customer’s best interests was raised.

Operating with an experienced, competent mortgage broker can help you find the right mortgage rates. There are various advantages of having a mortgage broker.

Some of the advantages of Mortgage brokers have been discussed as follows:->

1. A Broker Have A Greater Access: There are various lenders wholly with mortgage brokers and trust on them to be the guards to bring them apt clients. You possibly are not able to reach out to some lenders directly in order to get the retail mortgage. Brokers may also be proficient to get noteworthy rates from the lenders due to the capacity of the business produced might be lower than they can get on their own.

2. A Broker May Save Your Legwork: Mortgage brokers have consistent association with a variety of lenders, some of whom you may not have heard of. A broker in addition navigates you away from particular lenders with onerous payment terms engulfed in their mortgage contracts.

So it is said that it is beneficial to do some analysis prior to meeting any of the brokers. A trouble-free way to swiftly acquire a recognition of the average rates within easy reach for the type of mortgage you are applying for is to find the rates online and then use the mortgage calculator.

3. A Broker May Be Able To Manage Your Fees:-> Several different kinds of fees can be complicated on proceeding with a new mortgage or operating with a new lender, including origination fees, application fees, and appraisal fees. In some cases, mortgage brokers conceivably are apt to get the lenders to renounce some or all of these fees, which can save you hundreds or thousands of dollars.

Above mentioned are some of the advantages of having a mortgage broker or mortgage consultant. For any advices related to services please feel free to connect with us.

Some homeowners come to a halt in a circumstance where they do not have any other feasible way to elevate money for their daily living expenses. In a way, they may want to take out a reverse mortgage.

Anyhow, this is not a decision to be made easily because it has probably taken years of hard work to accumulate your home equity; taking out a reverse mortgage means spending a significant part of that equity on loan fees as well as interest.

1. A Solution For Long Term Problems: To qualify for a reverse mortgage, you must either own your home at once or be close to paying it off. You need to have sufficient equity that a reverse mortgage will leave you with a decent reserve fund for monthly payments or line of credit after paying off your existing mortgage balance provided you still have one.

Explore how much you could get with each of the payment options available for reverse mortgages. If none of them can anticipate liquidity or the large up-front sum you require, you are likely to avoid the complicated mortgage. There may be a better financial solution to your current situation.

2. You Do Not Move To Plan: You ought to plan on abiding in your home for the near future if you take out a reverse mortgage. To start with, a reverse mortgage transpires with high up-front costs.

Upfront mortgage insurance is equal to either 0.5% or 2.5% of your home’s appraised value, depending on the reverse mortgage payment plan you have chosen. And then there are the closing costs, such as title insurance, a home appraisal, and a home inspection. 

3. You Can Afford Ongoing Costs: Keeping up with your property taxes, homeowner’s insurance, and home maintenance is essential if you have a reverse mortgage. If you fall behind, the lender can declare your loan due and payable. 

If you don’t pay your property taxes for long enough, the country tax authorities can place a lien on your home, take possession , and sell it to recuperate the taxes owed. The tax authority’s claim to your property supplants the lender’s.  So, if you do not pay your property taxes, you are putting the lender’s collateral at risk. 

4. No Plans To Entrust Your Home: Some people don’t choose to leave their home to anyone, except their spouse if  they are married. If you don’t have children – or your kids are financially successful and inheriting your home would not make a meaningful difference in their lives – then you probably have no specific plans bequeathing the home.

Reverse Mortgage is extensively criticized, and for a good reason. It is not the ideal financial choice for everyone. For the best mortgage advice connect with My Mortgage Consultant today.

The variation of  considerations can retain you from qualifying for a mortgage. The major ones include a low credit score, insufficient income for the size of the loan you require, insufficient down payment and excessive debt. All of these factors are in control, primarily. 

Let’s checkout the options to get the better off for any liabilities you may have as a borrower.

1. Repair Your Credit And Increase Your Scare: To lenders, your credit score speaks for the likelihood that you will make your mortgage payments in full and timely every month. Accordingly, with most loans, the lower your credit score, the higher your interest rate will be to compensate for the increased risk of granting you money. If your credit score is beneath 620, you will be considered subprime and will have difficulty getting a loan at all. On the other hand, if you have a credit score which is above 800, you will easily be able to get the best interest rate available which is also known as the par rate. 

Steps one can take to improve your credit score proportionately swiftly includes paying down resolving consumer debts, such as credit cards or auto loans, using your debit cards instead of your credit cards for future purchases as well. It also includes paying off the monthly bills on time and correction of the errors on your credit report. However , some flaws, like sternly late payments, coollections, charge-offs, bankruptcy, and foreclosure, will only heal with time.

2. Get A Higher Paying Job: If lenders say that your income is not high enough, question your lender how much extra you need to earn so that you can qualify for the loan amount you want. Then make an effort to perceive a new job in your existing line of work where you’ll be able to earn more money.

Because lenders like to see the stable employment history, you’ll need to stay in the same line of work for this strategy to work efficiently. This can be disheartening news for the borrowers, as switching professions entirely might offer the best chances for an increment in salary. Anyhow, changing jobs altogether might offer the best chances for a salary increment. However, switching companies can also be a good way  to get a remarkable boost in income. Crucial raise from the current employer is not very common, but a new employer knows he will have to offer something special to get you to make the switch.

Unfortunately, getting a part time job on top of your full time job may not bring forth what lenders scrutinize as qualifying income. The part-time job is feasibly viewed as temporary, and since it may likely take you 15 years to pay off your mortgage, lenders are looking for you to have long term income-stability.

3. Save Like Crazy: The greater your down payment, the smaller the loan you’ll need. Also, the lower your loan-to-value ratio (LTV ratio), the less risky lenders will consider you. Both of these factors will make you more likely to qualify for a loan. Be well informed that you may have to reach a certain down payment threshold, like 10% or 20% (with 20% being the most conventional) before a larger down payment will help you qualify for a loan.

4. Don’t Pay More Than The Bank’s Appraised Value: The bank will not want to lend more than the house is worth because they could be on the losing end of the deal, you must foreclose and owe more than the bank could get it. A 20% down payment also becomes far less valuable if the house is valued 20% less than the purchase price. Collateral value is predominant for the lenders, so it should be kept in mind while making an offer to purchase a property.

5. Reduce Your Debt: According to a lender, what adds up to unrestricted debt is not a set number – it is a total monthly mortgage payment which is too high for you to be in a position to manage the monthly debt payment you’re asking for. When deciding how much mortgage you qualify for, then lenders will look at what’s called the front-end ratio, or the percentage of your gross monthly income that will be taken up by the house payment plus your other monthly obligations, such as student loans, credit cards, and car payments.

Qualifying for a mortgage isn’t always easy. Lenders make a certain set of requirements that all applicants should meet certain financial tests as well as guidelines and allow a limited amount of flexibility within those rules. For prompt advice on Mortgages contact My Mortgage Consultant today.

When it comes to the term Mortgage, according to the survey done by the government, the outcome for that survey was that most of the Canadian’s don’t know their basic terms from their amortization.

A survey was conducted for the Financial Consumer Agency of Canada and the Bank Of Canada and it has been made public. When it comes to simple mortgage phraseology like “term” and “amortization” most Canadians are hopelessly confused.

According to the survey marginally, over half of the consumers failed to identify what “mortgage term” means correctly. Only 49% offer entirely accurate reply like “ the years you have a debt / contract term,” “the length of time you are committed to a mortgage rate,” or “the length of time before renewal”

Canadians have even more doubtful latch on to what basically “amortization” means. While, only 28% of the general population perhaps provide a proper definition of the word. They also provided certain points which made it clear that they do not exactly know what they are talking about.

So basically, the amortization period is the length of time it will take you to completely pay off a debt which generally is 25 years while the mortgage term is the length of time you apply to a specific mortgage rate and condition with the lender which usually is 5 years..

While the above feedback from the survey reviewed the debt knowledge of the general public, even those people precisely selected in the survey who have a home owner’s loan or plan to buy property in the near future had a pretty better understanding of mortgage basics.

“The responses indicate that there is a significant lack of knowledge about mortgage terms among both the general population and the target audience,” wrote the author of the survey. The survey, which was published, was conducted by Ipsos Public Affairs and involved interviews with more than 5,000 Canadians.
To get the best advice from our mortgage specialist, feel free to contact MMC  today.

The past few months have been a rollercoaster ride for real estate as well as the mortgage industry.Covid-19 has impacted the Canadian economy, just like it has affected other economies across the world. 

The Canadian government took swift steps to launch emergency relief measures to protect the country from the blow that many households and businesses were going to face.

However, most of these measures are now approaching an epilogue. For instance, the Canada Emergency Response Benefit (CERB) was extended for another two months in July 2020 and is now coming to an end for most Canadians.

Similarly, the Canada Emergency Wage Subsidy (CEWS) for business was available only till the end of December 2020

Economic Outlook And New Regulations

In the recent press release the Bank Of Canada made an announcement that the overnight rate was being maintained at the effective lower bound of 0.25%.

Economists and the analysts in the financial clique are in agreement that the interest rates in Canada will continue to remain low in the anticipated future, in order to smooth economic recovery and vitalize investment.

Though, when it comes to the mortgage industry, Canada Mortgage and Housing Corporation (CMHC) implemented a tightening of mortgage rules in Q3.

Real Estate Market Outlook

According to the recent report by CMHC, this means that sales and home prices would not recover to pre-Covide levels until 2022

CMHC further stressed that the timing and comprehensiveness of improvement will vary from region to region. For instance, Toronto, Montreal, and Ottawa are expected to recover sooner than other regions in Canada. 

While the CMHC predictions may seem windswept, many real estate organisations are assertive that the bounce back will happen soon.

Mortgage Rates Are Extraordinarily Low

There have been remarkable developments in the mortgage industry.

We noticed that now lenders are providing exceptionally low rates. HSBC Canada, for example, was offering a 5-year fixed default mortgage for 1.99%. It is expected that the other lenders are also following the same suit.

The lower interest rates which are currently in trend are expected to encourage all the potential homebuyers to apply for a mortgage as well as homeowners to look into refinancing options.

What are your thoughts on where the real estate market is headed? We would love to know your thoughts.

Get in touch with us to stay up to date of the always changing mortgage industry.

Mortgage rates are all-time low, it is time for Canadians to decide whether 2021 is good for locking in fixed rates or go for variable rates or simply save, get out of debt or invest.

Canada’s economy is only expected to recover fully by 2022, with vaccination rollout permitting and people completely getting back to their work. So 2021 is going to be a financially challenging year, with Canadians struggling with their sinking financial health.

Since 2020, mortgage rates have been continuously dropping due to the Covid crisis but since the beginning of 2021, five-year fixed mortgage rates have been showing an ascent while variable mortgage rates are still lower.

Fortunately, if you are currently in the market, you are lucky as despite the increase, rates still remain historically low. Currently, you can easily get a five-year fixed mortgage for as low as 1.5-2%.

Historically, people who have always opted for variable rates in the past decade have saved the money and maximized their savings. But this might not continue, as rates are already remarkably low and can only see a rise in the coming months.

With fixed rates rising, is it time for changing the game plan?

Well, it depends. It is essential to choose a mortgage plan that suits your needs. 

The decision of selecting variable vs fixed mortgage rate is one of the major choices that a borrower will make as it can affect them for years to come and could lead to a difference of thousands of dollars of interest cost.

The sudden rise in the rates has led to the widening of the gap between these two options, which makes it a good time to re-think and re-analyze on the age-old question of fixed vs. variable.

FIXED-RATE VS VARIABLE RATE

Fixed-rate mortgages:

In this type of mortgage, the interest rates remain the same over the term of the mortgage. The rate is locked for a period of time, usually 5 years.

The rate is a bit higher but offers a sense of stability, consistency in mortgage payment for years to come.

However, there is a volatile and dangerous penalty for breaking the mortgage term called Interest Rate Differential Penalty.

It is not possible to switch a fixed rate into a variable rate without breaking the mortgage.

VARIABLE-RATE MORTGAGES:

These can be of two types where rates can vary with market interest rate generally known as “Prime rate”

1.Adjustable-rate mortgage – In this, the rate automatically adjusts with changes in prime rate, maintaining the original amortization schedule.

2.Variable-rate mortgage – In this total payment amount remains fixed and increasing or decreasing of the prime rate leads to either payment of mortgage interest or principal amount.

In this type of mortgage;

The rates float or changes with time, due to decisions from the Bank of Canada.

The rate is often set using a discount off of the Prime Rate (ex. Prime minus .50%).

Mostly the variable rate is lower than the fixed-rate but can involve the risk of being higher anytime.

With warnings about rising inflationary pressures, bond yields have surged, which has led to a spike in fixed rates too. While variable rates are still nailed to the floor, a lot of people are planning to convert their variable rate to a fixed-rate before the costs parachute rises higher.

As variable rates despite the benefits come with the risk of rising or changing anytime.

So, people who can tolerate some uncertainty and still sleep well can go for variable rates, whereas those looking for certainty and cannot worry about the rising costs should prefer a fixed rate.

So for figuring out how to pivot, adjust mortgages in 2021, it is highly desirable to consult a qualified and experienced mortgage mentor like My Mortgage Consultant who can run through your calculations and advise you what is best.