Posts Tagged ‘tax credit’
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.
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
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.
Canadian government federal budget to help the housing industry
Anxious Canadians have waited to see how our government would tackle a monstrous world economic crisis and its spill-over effects into Canada. It was a year ago, in January 2008, that some economists optimistically announced Canada would experience some pain however we would be immune to any kind of recession here. As the mouse slept beside the elephant, the elephant did roll over and we were also smothered by its weight.
It was in the last quarter of 2008, that the story changed. The housing market continued to slow down, vehicle sales fell and Canadian exports to the USA dropped. Many Canadian companies began to see a decline in their own business and forced many to downsize. As companies began to cut back on their workforce, the overall job losses in Canada have continued to climb. It is estimated that Canada will lose approximately 170,000 jobs, this year alone.
Canada is most certainly in a recession and desperately awaits an injection of hope. In response to this economic crisis, Canadians must now place their faith in the new federal budget which was tabled in the House of Commons, by the Honourable Jim Flaherty, Minister of Finance on January 27, 2009. This very detailed 360-page report entitled: “Canada’s Economic Action Plan – Budget 2009” is available for review at the following link:
http://www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf
Recognizing that the Canadian housing industry is a significant contributor to our economy and its growth and stability, a swift move to stimulate the housing industry was critical. Canada’s housing industry has experienced a drop in new building permits, housing starts, and a decline in housing sales and home prices. Along with the slow-down has come stricter lending and financing guidelines which have also resulted in many mortgage defaults and foreclosures. The Economic Action Plan promises to provide a total of $7.8 billion in tax relief and funding. The objective is to give much needed support and stimulation to this very important industry where thousands of jobs in real estate, financing, construction, trades, and housing industry suppliers are in jeopardy now.
As the Action Plan is now official, here are some highlights of the Economic Action Plan, of interest to Canadian home owners:
1. Canadians who want to make their homes more energy efficient are able to receive grants from the Federal and Provincial governments. These grants can total, up to $10,000 for energy-saving approved and compliant upgrades. The Action Plan outlines an additional $300 million that will be allocated to this program, over a 2-year period. The program is already known as the “ecoENERGY Retrofit” initiative. You may visit the government website at ecoaction.gc.ca and follow the links to the ecoENERGY Retrofit, or call 1-800-622-6232 to find out how you, as a homeowner, can apply to receive available grants through the program.
2. First time home buyers, will be able to receive a $750 tax credit to offset closing costs. The tax relief will be extended to those first time buyers who acquired a home after January 27, 2009. This is a great incentive especially considering that the Ministry of Revenue extended a refund on the Land Transfer Tax, to buyers of resale homes, back in December 2007. This allowed first-time home buyers to apply for a refund, for up to a maximum of up to $2,000 on the land transfer taxes paid. Details on this previous notice can be found at the following link: http://www.rev.gov.on.ca/english/taxes/ltt/
3. A Home Renovation Tax Credit is being introduced. For eligible home renovation expenses, performed after January 27, 2009 and before February 1, 2010, individual home owners may claim a tax credit up to a maximum of $1,350. The credit must be claimed on your 2009 income tax return and the renovation expenditure must be greater than $1,000 but not more than $10,000 to receive the maximum credit of $1,350.
4. The Canada Revenue Agency Home Buyers’ Plan (HBP) will also be revised to allow first-time home buyers an opportunity to withdraw from their Registered Retirement Savings Plan (RRSP) avoiding the requirement to pay tax on the withdrawal but at a new higher amount. The new withdrawal limit is $25,000 compared with the previous limit of $20,000. An individual, or an individual and their spouse, or common-law partner can combine their maximum limit to make a total HBP withdrawal of $25,000 each, thus bumping the maximum allowed HBP withdrawal to $50,000 for the pair.
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 Financing Clause
If you have been through the process of purchasing a home, you may have remembered a clause, at the back of your purchase agreement, that states something like this:
“ This offer is conditional upon the Buyer arranging financing within FIVE (5) banking days from acceptance of this Offer.”
Sometimes the financing timeframe is extended beyond five banking days, but more often, I typically see a 5-day window assigned.
The requirement to get your mortgage financing sorted out, within a set number of business days, is a very important time for the purchasing clients and for the real estate agents who represent both sides of the transaction, the buyer of the home and the seller of the home. Without financing, the purchase offer would be become null and void and the buyer’s deposit money is returned to the buyer.
As I have carefully navigated through several purchase deals and have organized financing for several clients, let me assure you that the time assigned to obtain the financing is often fully utilized and can even be a tight timeline to fulfill depending on factors which are often out of my own control. Let me take you through an outline of exactly what transpires during this very important timeframe so that you can clearly understand why the process can take this much time. I have allocated the financing process into a 10-step process.
Click here to review the 10-step process.
1. If the buyers have not yet started a mortgage financing application, they will need to make arrangements to provide full disclosure on a formal mortgage application. This would include their residential status, marital status, employment status, income, disclosure of current debts, and all other financial obligations, that the buyers may already have. The application is created and a credit report is retrieved.
2. Once the application is complete, it is then forwarded electronically, along with the attached credit report, directly to the chosen bank/lender.
3. The application is received by the lender and will be assigned to the lender’s underwriter. It is important to mention that underwriters receive many applications and so therefore the timeframe to receive attention on a submitted deal can be a day or two.
Once the underwriter has accessed the application, it is here that the application is carefully reviewed and considered. If the application has been carefully prepared, and there is no missing information, and details regarding the applicants have been carefully and properly documented, and a proper determination was made on the applicant’s ability to receive financing, the application would then receive approval by the underwriter.
4. The underwriter will prepare a mortgage commitment for the applicant(s).
5. Within the mortgage commitment, the underwriter will assign a list of conditions. These conditions will be outlined, within the mortgage commitment. A sample of these conditions might be:
a) applicants to provide proof of income;
b) applicants to provide recent pay stubs;
c) request for a full appraisal on the property;
d) confirmation of proof of downpayment…..etc.
6. Once the mortgage commitment is forwarded back to me, it is at this point that the clients are informed of the list of criteria that the lender has provided. The list of conditions would have to be carefully reviewed and as long as each item can be fulfilled, the possibility of the full approval is almost near. While it is preferable to gather documents before buyers enter into a purchase position, it is not always something the buyers fulfill up-front.
7. All documents required by the lender, per the mortgage commitment, are then forwarded to the lender for review.
8. The lender’s fulfillment administrator, will then carefully review all submitted documents.
9. If the lender’s fulfillment administrator has approved each document, then an approval on the documents would be provided.
10. It is only when the above items have been fulfilled that a decision is made to waive the financing condition, in the purchase document.
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) www.imba.ca
Lic # M08005880
Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
Mississauga – What exactly is mortgage loan insurance?
As a first time home buyer, you may have heard that you may have to pay a mortgage insurance premium.
You will have to obtain mortgage loan insurance when you purchase a home and if your downpayment is LESS than 20%. Remember that lenders do reserve the right to insure your mortgage even if your downpayment is greater than 20% and this decision is often based on the risk associated with the financing. The key players that provide mortgage insurance in Canada today are CMHC, Genworth and AIG United Guaranty. The newest insurer to join is AIG United Guaranty. There may be more mortgage insurers joining the industry who may apply to the OFSI (Office of the Superintendent of Financial Institutions) to become mortgage insurers in Canada. More competition will result in more choice and lower premium costs for Canadians who want to purchase a home.
Here is a sample breakdown to help you understand how a mortgage insurance premium is calculated for a buyer who wants to purchase a home with a 5% downpayment.
|
Price of home being purchased |
(A) $242,000 |
|
Your saved 5% downpayment |
(B) $12,100 |
|
Price less downpayment (A) – (B) = |
(C) $229,900 |
|
Insurance Premium calculated for a 5% downpayment is 2.75% of amount $229,900
Total mortgage loan insurance premium is à |
(D) $6,322.25 |
|
Total amount advanced to you by the Lender total mortgage amount (C) + (D) = |
$236,222.25 |
|
The lender who is reviewing your mortgage application will include the mortgage insurance premium (on your mortgage commitment) as part of your total mortgage loan and this is repaid over the term of your mortgage loan. You can also pay this premium up-front, on closing date, if you prefer.
|
|
It is also important to point out that the mortgage loan insurance premium (calculated in example above) is also subject to provincial sales tax and this tax amount is not included in the total loan amount therefore you would have to pay this sales tax on your closing date.
Here below is a table that gives you an idea on what the typical mortgage loan insurance premiums are, but you should go directly to the various insurer websites to check the current insurance premiums when you are ready to buy.
The mortgage loan insurance premium charges are calculated as follows:
|
Financing Needed on the Purchase |
Insurance Premium
|
|
Up to and including 65%
|
0.50 %
|
|
Up to and including 75% |
0.65 %
|
|
Up to and including 80% |
1.00 %
|
|
Up to and including 85% |
1.75 %
|
|
Up to and including 90%
|
2.00 %
|
|
Up to and including 95%
|
2.75 %
|
You may be asking, so why do I need mortgage loan insurance, is it mandatory, and who does it protect?
Why do I need mortgage loan insurance? It is the lender who requires the mortgage loan to be insured. The mortgage lender passes along the cost of insuring that mortgage, along to the consumer.
Is mortgage loan insurance mandatory? No. There are a few mortgage lenders, on the market, who may provide you with mortgage financing without mortgage loan insurance but there will most certainly be a much higher interest rate offered as well as other administrative fees that could be added to the mortgage loan amount. These other mortgage lenders can be accessed through the mortgage broker community.
Who does mortgage loan insurance protect? Mortgage loan insurance is required by the mortgage lender because it protects the lender, if, the borrower, for some reason, cannot pay their mortgage.
This blog was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services 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: 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) www.imba.ca
Mississauga – Pay off high interest debts
If you are already a home owner, you will likely have equity in your home. Using that equity to pay off your consumer debts may be an option that will ease some of the stress of paying high interest debts over a long term. Instead of paying your credit card debts at 18 – 28% interest, you may be able to consolidate that debt into your mortgage and pay it off at less than 6%.
|
Current Debt Position |
Balance |
Monthly Payment |
|
1st Mortgage at 5.7 % (amortization 19 years) |
$220,000.00 |
$1,573.78 |
|
2nd Mortgage at 14% |
$40,000.00 |
$469.55 |
|
Car Loan and Credit Cards |
$18,857.00 |
$915.71 |
|
Total Mortgages + Car Loan + Credit Cards |
$278,857.00 |
$2,959.04 |
|
|
|
|
|
New Debt Position |
Balance |
Payment |
|
New Mortgage at 5.25% (amortization 19 years) |
*$278,857.00 |
$1,926.60 |
|
2nd Mortgage at 14% |
$0.00 |
$0.00 |
|
Car Loan and Credit Cards |
$0.00 |
$0.00 |
|
Total Mortgage + Car Loan + Credit Cards |
$278,857.00 |
$1.926.60 |
|
Total Monthly Saving: $2,959.04 – $1,926.60 = |
$1,032.44 |
|
|
*CMHC insurance fees and cancellation penalties may apply. This example is illustrative only. Interest rates are subject to change without notice. |
||
Consider above, a recent client with a mortgage balance of $220,000, a second mortgage at $40,000 and other debts totalling $18,857. By consolidating the two mortgages, the car loan and the high interest credit cards, the client was able to reduce monthly payments and save $1,032.44 per month. It is important to note that for this exercise to bear real financial fruit, this monthly saving should be applied to either an investment or as additional principal payments against the new mortgage. All too often, the additional cash flow is consumed resulting in a similar crisis a few years down the road.
Such a consolidation will not only reduce monthly debt load but will improve and protect your credit rating, a major consideration for any Canadian seeking future loans. Missed or late payments are not the only factors that can reduce your credit rating in the eyes of financial institutions, credit cards and lines of credit that are “maxed out” have the same negative impact. You should always know, validate and protect your credit rating as much as your SIN number and credit cards. When it comes time to renew your mortgage finance, you will be glad you kept your credit rating in good standing.
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: 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
Keeping up with your growing list of contacts
When I decided to move into the mortgage financing business, I realized very quickly that there were a good number of people that I would be interacting with, on a daily basis……..lenders, clients, prospects, lawyers, appraisers, lenders, property inspectors, financial planners.
It was after my first year, that my husband asked me how I was keeping track of everyone. I pulled out the piles of business cards that I had been collecting over that first year and my husband shook his head in disbelief. He told me that we were going to purchase a database management software program to help me get organized and I must admit that I was delighted to know that my own memory was going to finally get a break.
We purchased a software called ACT. I went ahead and downloaded their 30-day trial version and by the 2nd week of utilizing the software, I was hooked. It was no longer a “nice to have” but moved to a “must have”. Now in my third year of business, I know that I could not have possibly managed the contacts I have today. I now have just over 600 contacts in my database and each day I add another name or two. The software has allowed me to organize the data to retrieve customized reports and also help me to keep in touch with business partners, clients and prospects.
As my business continues to grow, I know that it was one of the best purchases I have ever made for my own business.
This blog was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth Blair 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
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