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.

What is a bridge loan?

Sometimes when you buy a home, the closing date for the home you are selling does not match the closing date of the house you are buying.   Some of the typical reasons for a difference in closing dates might be:   you want to get some renovations completed on the home being purchased before moving into it or perhaps you could not get the seller to give you the closing date that you really wanted.  So if the closing date of the home you are buying is before the closing date of the home you have sold, you will need a bridge loan.

Let’s use a real example so you can understand how a bridge loan amount is derived:

Price of the home being purchased:     $450,000

Less:     Amount being mortgaged:    $360,000

Less:     Deposit you give to the Realtor:   $10,000

Equals:     $80,000   Bridge Loan amount

The bridge loan amount is really your total down payment, less your deposit because the lender is advancing the rest of the mortgage money on the closing date for the home you are purchasing.

Using the above example, and some real dates, here is how the interest cost is calculated, for this particular bridge loan amount:

Client is buying a new house – closing date = April 30, 2009

Current home is not closing until = June 25, 2009

Clients need a Bridge Loan to cover them for 56 days until current house sells.  Bridge Loan amount required is $80,000.   Lender’s interest rate = *prime rate (2.25%) plus 4%.

Bridge loan  $80,000   X   0.0625 (interest) =  $5,000

$5,000  divided by   365 days =   $13.6986 (per diem cost)

$13.6986   X   56 days =  $767.12

For a Bridge Loan advance that is greater than a certain amount, and is greater than 45 days, the lender will sometimes ask that the bridge loan be secured by way of a collateral mortgage on the property being sold.   If a collateral mortgage is required, lawyers will often charge extra to do this (estimated at $500 and up).  Some lenders will also charge a bridge loan “set-up fee”, and some lenders do not.   Remember also that a property sale must be firm before a lender will arrange a bridge loan for the borrower(s).  And finally, lenders will not advance more than 90% of the value of the property being sold.

This article 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.

The lost art of referring business

Many good things, unless they are continually practiced and exercised, can truly be “lost”.   I believe that there is an art in the practice of referring business and that too will go by the wayside unless business owners learn to do this well.

Each year, as I work in this business, I continue to build up a database that now holds over 750 people, prospects, clients, lawyers, appraisers, lenders, realtors.  As I continue to see increasing growth in sales, I also see a rising trend in referrals that I receive from others.   This steady stream of referral business has become the main reason why I have enjoyed the growth in sales today.

Over the years, I have also been focused on gathering an established network of individuals who I “believe in”.  Each time I come across someone who might need that kind of service provider, I work very hard to ensure that the individual knows and understands that the person I am referring is excellent at what they do.  In a way, it is a mini sales job, on its own, and most times, the individual I refer ends up getting the business.  Here is an example of some of the things I have done in the past, on behalf of that individual I am referring:  tell them about a recent great job they did for me or a client of mine, let them know that I know them well and I believe wholeheartedly in their service level and I may even send them the business card of the person I am referring.   I can honestly say that I receive great satisfaction in referring others and I believe that if I expect others to refer business to me, then I must be working hard at securing business for them.

I believe that referring others must become something we do everyday IF we expect to reap the reward of constant referred business coming back our way.   It is the basic rule of giving if you expect to receive.   What a straightforward idea but yet so difficult for many to grasp…. truly a lost art.     While there are structured programs and groups out there, like networking groups, that motivate members to refer business, these groups do come with hefty membership fees and often because of the fees, members feel obligated to push leads into the group just to get their fair share of leads back….it is a pay to receive structure.   I believe true networking for referral business should not be something you “pay for”, it should be something you do naturally along with the group of business partners that you have come to know and trust….…sending business leads out and expecting business leads back.

This year has been an absolutely amazing year for me and as I continue to receive leads and pass out a high number of excellent real estate leads to realtors, I will continue to carefully monitor who is sending leads and will ensure those are the ones I refer business back to.

This article 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.

mortgage plus line of credit – is it for you?

Home owners who have lots of equity in their house, might be looking for ways to get access to that equity without having to re-finance their house, everytime a need arises.

A mortgage with a line of credit portion is a great product for some.   Here are some typical reasons why you might want to get access to your home equity:   buy investments, stocks, or RRSPs, renovate your home, education costs and more.

The diagram below breaks the mortgage into three parts

	20% cannot be financed
	$ 94,000 MAX Line of Credit portion Variable rate **Prime + 1% **2.25% + 1% = 3.25% Line of credit can be increased up to 80% of the value of the home
	Mortgage balance today $ 210,000 Variable rate 5 year term Or Fixed Rate 2, 3, 4, 5, 7, 9 and 10 year terms 5 yr fixed = 3.69% variable = **2.25% + 0.80% 3.05%

The top portion represents the percentage of your home that cannot be financed and that is 20%.   20% of your home value, must remain as firm equity and cannot be financed.    The next portion down, is your line of credit portion.   The line of credit portion can go up to 80% of the value of the home.   The final portion is your actual mortgage loan portion today, that you decide to convert over, when you move into this product.    I took, for example, a home owner who has a current home with a value of $380,000.     This client also has a mortgage balance right now, with a lender, at $210,000.   By moving into the mortgage + line of credit, the current mortgage amount of $210,000 is set up as either a FIXED mortgage rate, or a VARIABLE rate mortgage.   The borrower can then use up to 80% of the home value at anytime.   So using these numbers above, the home owner can borrow up to an additional $94,000 at anytime.

It is important to mention……. this kind of mortgage product requires a very disciplined borrower as reckless spending or improper investing strategies could have a very negative outcome, a higher debt and possibly the inability to re-pay the debt.

This blog 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

NOTE:    Mortgage rates are effective as of May 17, 2009.   **The variable rate amount can go up or down depending on current posted Prime Rate.  Mortgage rates are subject to change without notice.

Financing: bank or broker?

Are you still undecided on whether you should deal with a bank or a mortgage broker?  Here is a short summary of what some compelling truths are, around this subject.

A mortgage broker acts as a MEDIATOR or a representative between the borrower and the bank.

Here are some straight-forward questions to consider:

a) what if something goes wrong?

b) who will represent you?

c) will you be able to navigate through escalation channels to get something done?

d) will you be able to successfully negotiate what you want on your own?

e) what if the lender says no?

f) how easy will it be for you to get the deal you want from another bank and on your own?

You may be asking, so how does a broker mediate between the borrower and the bank?

If for example, an office has 50 representatives, who are actively carrying on in the business of dealing in mortgages.  Lets say that each representative has placed 2 million dollars of mortgage business with a particular lender.  The brokerage now has a combined volume of 100 million dollars of business with that particular lender.  Now that kind of business volume will make anyone sit up and pay attention, agree? So essentially the high volume of mortgage business, that a brokerage has, for a lender, will automatically secure some real benefits for the person looking for financing:

1) the lender may now pass along additional mortgage rate discounts to those brokerages who have reached a particular sales volume;

2) a large brokerage will immediately receive dedicated focus and attention from individual lenders, for example, dedicated underwriters.  A dedicated underwriter means that a submitted mortgage deal is reviewed quickly and this is essential to maintain the service level to the demands of a busy brokerage.   For the borrower, this means that a difficult situation can be escalated quickly to senior management and issues can be reviewed and approved that an individual may not easily accomplish on their own.

This blog was written by Elizabeth Blair, a licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.  Elizabeth 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::   15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.