Posts Tagged ‘best rates’
This incredible mortgage rate!
If you are shopping around for mortgage rates on the internet and notice some huge discrepancies on available “best rates”……beware.
A recent inquiry came from an individual who came across a mortgage brokerage advertising a 1 year fixed rate at 2.29%. I searched through my rate sheet, as well as other rate sheets I use to compare mortgage rates only to find that there really was no lender offering this rate nor was there any particular mortgage rate special being offered in the mortgage brokerage community.
Why would a mortgage brokerage advertise a rate that is really not available? The reason is plain and simple. Companies will sometimes do what it takes to make the phone ring and once they have you really interested in that offer, they might just get your business. Most mortgage brokerages who are guilty of this practice know exactly what they are doing. Follow me on an example of how this would be played out…… Once the mortgage brokerage receives a mortgage inquiry that leads to a mortgage application and a corresponding credit check, and receive all the relevant paperwork from the applicant, job letters, pay stubs, a notice of assessment, etc, the applicant is usually then encouraged to “avoid shopping around for a mortgage, as shopping around could negatively affect their credit score”. At this point, the applicant has fulfilled all of the lender’s requirements to get this “super great advertised mortgage rate” quoted on the website. But the bad news now comes out…….”oh so sorry, that mortgage rate, you saw, is no longer available as the lender has just changed their rate”. How can the applicant prove otherwise? After all, they do not have access to lender rate sheets, that the brokerage has, and there is always that small footnote, at the bottom of the website that you did not see……”mortgage rates are subject to change without notice”. An applicant who has already invested much time and effort, may just go ahead with the application resenting the thought of going through all of this painful application process again (and this is exactly what steps the brokerage planned to take you through when they advertised that mortgage rate, that really does not exist).
The practice of advertising a product (or a mortgage rate) that really is not available to the consumer is considered a “Bait and Switch” tactic. The practice of using Bait and Switch is forbidden by the “Canadian Code of Advertising Standards”. The advertising standards document can be viewed at this link:
http://www.adstandards.com/en/standards/canCodeOfAdStandards.pdf
What can you do to really ensure you are not being deceived by some “amazing rate” that you find that seems too good to be true? Research it and check it out against some other reliable sources like:
1. https://www.cannex.com/canada/english/
2. http://www.financialpost.com/personal-finance/rates/mortgage-closed.html
If you see no other brokerage that is even close to this advertised rate, that is probably a good indication that the rate you see on the website is set up to lure you in.
What can you do, if you think you have found misleading advertising? You should take the time to file a complaint. You can find the information and complaint process under the Competition Bureau website:
http://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/02776.html
This article written by Elizabeth Blair on August 25, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit any of her websites at:
http://www.burlington-mortgage.ca
http://www.oakville-mortgage.com
http://www.streetsville-mortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca
Lic # M08005880 / Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
Land Transfer Tax / Property Transfer Tax in Canada
If you decide to purchase a property, in Canada, you will be required to pay a tax to the Ministry of Revenue/Finance, in the province where you are buying.
This tax is commonly referred to as the “Land Transfer Tax” or the “Property Transfer Tax”.
The tax is usually paid to the Ministry of Revenue, within the Province and the tax is calculated based on the fair market value of the property, using a certain formula. The formula used to calculate the land transfer tax portion varies greatly from province to province. I used Ontario’s formula, as an example. Here is how the Land Transfer Tax is calculated for a property purchased in Ontario:
The first $55,000 is taxed at 0.5%
The next $195,000 is taxed at 1%
The next $150,000 is taxed at 1.5%
And the remaining $250,000 is taxed at 2%.
So if you purchased a home for $300,000 in Ontario, your Land Transfer Taxes payable would be calculated as follows:
The first $55,000 is taxed at 0.5% or 0.005 * $55,000 = $275
The next $195,000 is taxed at 1% or 0.01% * $195,000 = $1,950
The next $150,000 is taxed at 1.5% or 0.015 * $50,000 = $750
And the remaining $250,000 is taxed at 2% or 0.02 * $0 = $0
The total Land Transfer tax payable is: $275 + $1,950 + $750 = $2,975
If you decide to purchase a property in Ontario, and within the City of Toronto, you will be required to pay an additional tax, called the Toronto Municipal Land Transfer Tax and this is calculated as follows:
The first $55,000 is taxed at 0.5%
The next $345,000 is taxed at 1%
And 2% on the entire portion over $400,000.
So using the above formula, a home valued at $300,000 will result in an additional tax of:
The first $55,000 is taxed at 0.5% or 0.005 * $55,000 = $275
The next $345,000 is taxed at 1% or 0.01% * $245,000 = $2,450
And 2% on the entire portion over $400,000 is taxed at 0.02 * $0 = $0
The total Toronto Municipal Land Transfer Tax payable is: $275 + $2,450 = $2,725
Land Transfer tax payable $2,975 + Toronto Municipal Land Transfer Tax payable is $2,725 = $5,700 !!
I decided to do some research to just compare all of the provinces and territories to see which provinces/territories had the highest and which provinces/territories had the lowest land transfer taxes.
The table below is based on a $300,000 purchase price and the data was collected as of July 31, 2010.
I was very surprised (well actually not) that the results show Ontario (Toronto buyers) are paying the HIGHEST land transfer taxes, compared to any other city in the country!!
| Provinces and Territories | Estimated Land Transfer Tax Payable |
| Home Purchase Price = $300,000 | |
| Ontario (city of Toronto area*) | $5,700 |
| Nova Scotia (Halifax county) | $4,500 |
| British Columbia | $4,000 |
| Manitoba | $3,150 |
| Prince Edward Island | $3,000 |
| Quebec | $3,000 |
| Ontario (not the city of Toronto) | $2,975 |
| Newfoundland | $1,250 |
| Saskatchewan | $915 |
| New Brunswick | $805 |
| Yukon | $750 |
| Northwest Territories | $490 |
| Alberta | $335 |
| Nova Scotia (not Halifax county) | $150 |
Information gathered as of July 31, 2010. This information is not guaranteed and therefore should not be relied upon without verification. E.&O.E. * Those who purchase in the City of Toronto, are also required to pay the Toronto Municipal Land Transfer Tax
This article written by Elizabeth Blair on July 31, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit any of her active websites at:
http://www.burlington-mortgage.ca
http://www.oakville-mortgage.com
http://www.streetsville-mortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca
Lic # M08005880 / Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
Buying a home, renting it all out, or just a portion of it
Buying a home, renting it all out, or just a portion of it
I have run into this question a few times, over the years, and decided that I should sit down and write about it. When you purchase a home, as the mortgagor, you will come across some questions around whether the home you are buying is going to be your primary residence (you will be living there yourself) OR whether you have intentions of renting out ANY portion of the house.
1. Is this your primary residence?
This question will be asked of you, at the mortgage application stage. It is important to specify exactly what your intentions are with this new home you are buying. If you are planning on renting out the home, you must state this. Your answer will determine how your mortgage application is underwritten. If you purchase a home and it will be your primary residence, you may purchase a home in Canada with a minimum down payment of 5%. However, if you purchase a home and have intentions of renting it out, your down payment must now be 20% per Department of Finance new borrowing guidelines introduced on April 19, 2010.
The question will also be asked of you, at the lawyer’s office. The lawyer will require you to sign a legal affidavit stating that this is your primary residence and it is not intended for use as a rental property. If the client even hints that they will be renting out any portion of the house, the lawyer cannot and should not commission the affidavit.
2. Is ANY PORTION of the house to be rented out?
This statement will appear in your mortgage commitment and applies if this is your primary residence. You may be wondering why would it be a concern to my lender if I decide to just rent out a PORTION of my house?
Here is likely the most apparent reason why a lender would not allow this. Should the mortgage go into default, how quickly can they (the lender) get a tenant out of the house, as opposed to the owner? At one time, when someone was about to go into default, they might immediately sign a lease with a friend and then the mortgagee would have to go through a cumbersome process to evict them. While it is now easier to evict a tenant, there is always concern about delays that might occur getting a tenant out. Also, it is important to mention, that since the tenant does not own the home, they may not take the same care of the property, that an owner would.
In summary, some very important things to consider:
If you purchase a home, and you have indicated that it is your primary residence, the lawyer is instructed, by the lender, to prepare a legal affidavit stating that this is your primary residence and that you do not have intentions of renting out the home. Remember that if the borrower even hints that they will be renting out any portion of the house, the lawyer CANNOT commission the affidavit.
Also remember that if this is your primary residence you should not even rent out a PORTION of your home UNLESS you have notified your lender. If your lender finds out, EVEN IF you are not in default on any other provision, there will most certainly be a default coming if you do not disclose the new rental arrangement and the lender finds out. You may be thinking, well how can the lender find out…….easier than you think. A disgruntled neighbor, family member, or even worse, your tenant! I recently met a mortgage applicant who shared their intention of reporting their current landlord for renting out an illegal basement apartment to them as a way of retaliating for raising the rent! So a word of caution if you are thinking of doing this or even are in this situation now…..lenders can find out.
Be absolutely sure to disclose up front, to the bank, or your broker, exactly what your intentions are with the property at the time you are planning to buy, OR, if you make any changes to your plans after you move in.
This blog post was written by Elizabeth Blair on June 24, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit any of her websites at:
http://www.burlington-mortgage.ca
http://www.oakville-mortgage.com
http://www.streetsville-mortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca
Lic # M08005880 / Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
Get CASH to break your fixed rate mortgage
If you are wondering about the recent drop in variable mortgages, there might be a great solution for you available. Now, you can get some cash on closing day to help you cover some of the mortgage penalty you may be facing, if you break your fixed mortgage prematurely.
Here is what you can expect to receive on a cash back, if your mortgage balance is $300,000:
| Mortgage Amount | $300,000.00 | |
| Mortgage Rate | 120 day closing | Cashback on closing day |
| 2.20 | 0.72% | $2,160.00 |
| 2.15 | 0.60% | $1,800.00 |
| 2.10 | 0.48% | $1,440.00 |
| 2.05 | 0.36% | $1,080.00 |
| 2.00 | 0.24% | $720.00 |
| 1.95 | 0.12% | $360.00 |
| 1.90 | 3.80% | $0.00 |
| Illustration above is based on a $300,000 mortgage balance. | ||
| Mortgage rate listed here is effective on June 11, 2010 | ||
| Note that mortgage rates are subject to change without notice
This blog post was submitted by Elizabeth Blair on June 11, 2010. Elizabeth is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area. You can contact Elizabeth directly by phone at (905) 510-5785 by email at eblair@mortgageedge.ca or you visit her websites at: http://www.burlington-mortgage.ca http://www.oakville-mortgage.com http://www.streetsville-mortgage.ca Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca Lic # M08005880 / Brokerage Lic # 10680 Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada. |
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Changes to Insured Stated Income programs
Borrowing Guidelines for Insured Stated Income Programs in Canada are about to change
The borrowing guidelines for insured Stated Income Programs are about to undergo some major changes and these changes will be implemented effective April 9, 2010.
The changes are being announced by CMHC (also known as Canada Mortgage and Housing Corporation). CMHC’s changes, as well as those announced by Finance Minister Jim Flaherty effective on April 19, 2010 are all attempts to help cool off the heated housing market which is now being driven by record-low interest rates. More importantly, these new measures are required to protect borrowers from taking on more debt than they can afford especially as interest rate hikes are imminent. While Canada still allows Stated Income programs here, they are becoming very rare in the U.S. The massive number of defaults and foreclosures reported by the U.S. after the 2008 credit crisis were attributed mostly to Stated Income programs that were used to place under-qualified borrowers into mortgage loans that they could not afford.
While Canadian lenders continue to use the Stated Income programs here, customized for commissioned and self-employed borrowers, CMHC will now be scrutinizing those same applications using tighter underwriting criteria making the CMHC Self-Employed mortgage insurance program a little harder to access.
What exactly does Stated Income mean?
Stated Income means exactly that. When a mortgage application is created, for a self-employed or commissioned applicant, and the entire income amount is not verifiable in traditional documents, for example a Notice of Assessment, the applicant may apply under the Stated Income program to allow an income adjustment to help qualify them for a home purchase or re-finance. A real example might look something like this:
Mr.Thomas works as a Systems Analyst in Toronto. He is purchasing a house based on his earnings alone as his wife is currently not working. He earns $77,000 gross annually and his employment status is considered self-employed as he works as an independent contractor and bills the company directly for his time. He is not on payroll. He has worked in various departments for this same government organization, as a Systems Analyst, for the last two years. To buy the home they want, this couple would need an income of $85,000 to qualify for the purchase. On a traditional mortgage application, the couple would be declined and would not be able to purchase the home. However, by utilizing the Stated Income program, the couple can qualify to buy this home with a 5% down payment and the income placed on the application would be “stated” on the application at a higher amount. The couple has no other savings or funds available to them. The income to qualify the applicants, would be entered at the amount of $85,000 instead of his actual income of $77,000, in order to qualify the buyers.
Here is an outline of the changes that will be implemented on any applications called Stated Income applications which pass through CMHC as an “insured” mortgage AFTER April 9, 2010 and how these changes would affect the particular applicants described above:
1. Downpayment: those who are purchasing a home, and who have applications classified as a Stated Income application, will be required to put down 10% rather than the 5% minimum required today.
Mr.Thomas and his wife, after April 9, 2010 must have a down payment equal to 10% of the purchase price, along with enough funds to cover closing costs.
2. Tenure: those who have been working in the same business for greater than three years, would not be eligible for the Stated Income program and therefore those in this category would have to provide proof of their income, for example, a Notice of Assessment.
Because Mr.Thomas had only been working as a Systems Analyst for the past two years in total, they could still apply under the Stated Income program and be eligible. Had Mr.Thomas been working three years and 6 months, as a Systems Analyst, they could not qualify for the home they wanted.
3. Documents: documents will be requested and viewed by the lender to help determine the length of self-employed which are not always requested today. The documents a lender may ask for: a business license, proof of GST registration, articles of incorporation (if incorporated).
4. Commission: those who are collecting commission would no longer be eligible for the Self-Employed program.
Mr.Thomas is not paid on a commission basis, therefore, after April 9, 2010, he could still utilize the Stated Income program.
5. Limits: a re-finance will be limited to 85% loan-to-value instead of the current limit of 90% used today.
If Mr.Thomas decides to re-finance his home, in the coming years, while he is within the insured status range and assuming self-employed income is still their primary income, they will only be able to re-finance up to 85% of the value of their property.
It is important to mention that these program changes only affect those mortgages that are “insured” by the lender therefore, those mortgages that are not insured, could be reviewed differently from lender to lender and each lender would specify their underwriting criteria on a case-by-case basis.
© 2010 This article was written by Elizabeth Blair at Mortgage Edge on March 11, 2010. Elizabeth Blair services mortgage clients primarily in Mississauga and all over the Greater Toronto area
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca
Lic # M08005880 / Brokerage Lic # 10680. Head Office: Park Place Corporate Centre, 15 Wertheim Court, Suite 210, Richmond Hill, ON, L4B 3H7, Canada.
Value of Home Improvements
You may be thinking about those spring-time projects that you will need to tackle this year, like landscaping the garden, rebuilding a patio or fence, changing older windows and doors, a new roof, or even remodeling your basement, kitchen or bathroom. If you tune in to some recent popular TV programs like “Extreme Makeover – Home Edition”, you will surely catch the home makeover bug. If you live in a freehold house, you should be spending an average of 1% of your home value annually, on maintenance, just to keep it in good repair and to prevent it from declining in value, according to “Home Buying for Dummies” by Eric Tyson and Ray Brown.
Renovating a home, may also be an important consideration for you in 2010, if you are thinking of listing your home for sale. Remember that the right renovations can help you to maximize the resale value of your home. The renovation payback statistics were extracted directly from the Appraisal Institute of Canada’s website and the data is current as of January 2010:
To see the table, please click on the link:
You can check your renovation investment plans using the Appraisal Institute of Canada’s on-line tool. The name of this tool is RENOVA and it is an excellent resource for homeowners. You may visit the site by going to this website:
http://component.aicanada.ca/e/resourcecenter_renova_all.cfm
Remember that the referenced website link is only a guide, and you should always carefully consider that proper appraisal values and returns can be provided by an accredited appraiser holding a CRA or AACI designation. It is also important to mention that an appraiser will also assess other factors, about the home to complete accurate appraisal results, for example, the neighborhood, recent real estate activity, lot, location, etc.
Canada AM has been running an informative real estate market series that commenced on January 25, 2010. Featured on Tuesday’s program was Mr. Ed Saxe of Edjline Appraisal Services. Mr. Saxe is a certified Canadian Residential Appraiser as well as the President of the Ontario Association of the Appraisal Institute of Canada. Mr. Saxe discusses that the number one investment returns come from kitchen and bathroom renovations, however, as a homeowner, he advises that discretion is required when spending. Mr. Saxe advises homeowners to carefully consider just how much they are spending and where they are spending. For example, he mentions that you would not be wise to spend $50,000 on a kitchen renovation if you are living in a home that is only worth $200,000. A home renovation should be relative to the market and the neighborhood in which you live. You can view the current live video clip at the following link:
http://watch.ctv.ca/news/top-picks/added-value/#clip259603
This blog was written by Elizabeth Blair of Mortgage Edge.
Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Lic # M08005880 / Brokerage Lic # 10680
What is a “closed” or “open” mortgage?
When you are shopping for a mortgage, you may hear the terms, CLOSED or OPEN mortgage. Let me explain the difference between these two options so you can determine which one is better for you.
OPEN MORTGAGE An “open” mortgage means that the mortgagor (the borrower) can pay the mortgage off, fully, at any time, without a mortgage penalty. A fully open mortgage is suitable for the following types of borrowers:
a) a property investor buys a property and has intention of selling it in a very short timeframe;
b) a borrower sets up this mortgage because they are expecting a large sum of money (for example, an inheritance or a work bonus) and will use that money to pay off the full mortgage loan amount;
c) a borrower who might be required to move on notice (perhaps due to a work relocation requirement) and would need to pay the mortgage off in full when the house sells.
d) you receive regular large bonus amounts, as an employee of your company, and you wish to apply these amounts to your mortgage anytime without the restrictions that might come on a lender’s regular pre-payment terms.
e) or perhaps you do not want to be locked into any term, for your mortgage loan.
Note that, the mortgage rates, for fully OPEN mortgages are higher than those given for “closed” mortgages. For example, effective today November 24, 2009, a fully open variable mortgage rate, is available at Prime Rate Plus 0.80% = 3.05%
CLOSED MORTGAGE A closed mortgage means that the mortgagor (the borrower) is given a contract “term”. If the borrower breaks the mortgage, before that contract term is up (known as the renewal date), the borrower must pay the mortgagee (lender) a full three months of interest penalty to get out of the contract (or IRD penalty). Variable mortgage contract terms are available for 3 year terms and 5 year terms, right now. A closed variable, 5 year term, mortgage rate is priced right now at between Prime Rate Minus 0.10% = 2.15% up to Prime Rate Plus 0.10% = 2.25%. A closed variable, 3 year term, mortgage rate is priced at Prime Rate Minus 0.25% = 2.00%.
So you can see that there are specific reasons why a borrower would choose a closed mortgage over an open mortgage.
This post was written by Elizabeth Blair on November 24, 2009, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients all over the Greater Toronto Area.
You can contact Elizabeth by phone: (905) 510-5785
Or email: eblair@mortgageedge.ca
Visit her website at: http://www.missmortgage.ca
Elizabeth Blair is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca
Lic # M08005880 / Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, L4B 3H7
HOT News: Lenders slashing variable discounts
Hot news for those who are looking for variable rate mortgages. Here is the best deal available today:
Prime Rate plus 0.15%. —> 2.40%
Wow, this is an excellent rate and is only available for mortgage terms of less than 3 years.
You pick a renewal date between March 19, 2012 and May 31, 2012.
This blog post was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca Lic # M08005880 Brokerage Lic # 10680 Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
3.59% on a 5-year fixed rate
Canadians…..mortgage rates just keep on coming down!
Realtors: if you have a client who needs financing, please call me for details on this great mortgage rate.
Elizabeth Blair, Mortgage Edge
Direct: (905) 510-5785
Email: eblair@mortgageedge.ca
website: http://www.missmortgage.ca
License # M08005880
3.99% on a 5-year fixed rate!
Effective March 19, 2009, I can obtain 3.99% on a 5-year fixed rate from a top Canadian mortgage lender.
Rates are looking great and buyers are feeling great about this mortgage market.
This notice was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: http://www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) http://www.imba.ca
Lic # M08005880
Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
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