Choosing the right fixed mortgage

If you looking to buy or refinance in the near future then it's not a bad idea to take a closer look at what mortgage term your considering. The big banks have spent a lot of advertising dollars to attract us to sign on for shorter term mortgages (1, 2, 3 and even 4 years). I'd argue given current economic circumstances this may not be the ideal strategy.

Clearly no one knows where the economy and rates are headed but there is some consensus that recovery will arrive in the next two years or so. If you buy into a short term fixed rate then you may be re-signing as rates begin to rise again. That may not be ideal. Currently the seven and ten year fixed rates are very attractive and not much higher than the five year fixed rates. Clearly it’s important to think ahead whether you’re planning on hanging onto the house for the next five years or more.

More and more Canadian statistically break their mortgage before their mortgage term is up. Here are some penalty tips to keep in mind. If take a seven or ten year fixed and you sell or refinance your home five years into your term then penalty to break would only be three months interest penalty. This rule applies to all banks at its part of the Interest Act of Canada. If you think you will break your term before five years then it may be wise to take at least a five year term or less.

If you have a mortgage, debt-related questions or would like to share an experience, feel free to contact me.  Have a great week.

Mortgage conference in Montreal

@ a mortgage conference today in Montreal hosted by all the lenders I work with. I try to attend these things as much as I can. Believe it or not the mortgage industry changes regularly, maybe not daily but often! It's also a good way to spend time with my banks and the people behind the scenes that make my mortgages happen

Quick mortgage and buying tips for first time buyers

Are you thinking of upgrading your home? Are you tired of renting? Wellit’s definitely not too late as the buying season is upon us. Here are couplequick tips to keep in mind:

Tip #1: Make a personal budget. If you’ve been renting all yourlife and now looking to buy then it’s not a bad idea to put pen to paper andget an idea your monthly expenses.

Tip #2: Get a mortgage pre-approval with a mortgage broker.  A mortgage pre-approval will give you a good ideaof your buying power. Look closely at your future mortgage payments, taxes,heating, and new home insurance costs. Ask yourself, does this make sense? Doesthis fit within your personal budget?

Tip #3:  Save for a downpayment. Try to save at least 5-10% of your purchase price. You also canconvert your RRSPs to help you with that down payment. Did you know you can useup to $25,000 per applicant? If you only have a little aside but not enough fora full 5% then consider a "cash back mortgage" but look at the fine print.

Tip #4:  Build good credit.Credit is very important. As a first time buyer it’s a good idea to have atleast two major trade lines for good two years. Hmm I think I've said this before...pay your credit cards on time. Watch your limits. And keep those creditinquiries in check. Too many can definitely effect your credit score.

If you have a mortgage, debt-related questions or would like to sharean experience feel free to contact me.  Havea great week.

Genworth and CMHC Mortgage Assistance Coordinates

Hey everyone, I had a quite a bit of feedback and calls in response to my blog post related to Home Owner Assistance Programs. Thanks for the feedback and glad to hear that the information was useful. I got a couple calls requesting Genworth's and CMHC's mortgage assistance coordinates. I thought I'd post them in case others might need them too. If you don't remember if you are insured with the CMHC or Genworth then simply call your bank and ask. They will know.

Genworth Financial Canada
1-800-511-8888
http://www.homeownerassistance.ca

Canadian Mortgage and Housing Corporation (CMHC)
1-866-358-9999 and ask for a default agent or "agent gestion défaut"

Tips on how to improve your credit score

Managing your personal debts is often on our minds but have you thoughtabout your credit report? I met with a client over the weekend who told me he’snever seen his credit report. So we pulled it together and had a look. To hissurprise his score was in the 640s which is decent but clearly he could havebeen over 750. The credit system in Canada is an algorithm that tracks ourconsumption of credit. This “points system” ranges from 300 to 900 points. Ideally,to get mortgage with a top bank, meaning best rate but also favourable conditionsshould be generally above 650.

Tip #1: Watch your credit limits. In this gentleman’s particularcase he had maxed out all his lines of credit personal and secured. I am not afan of lines of credit as it’s very easy to spend the money and once you exceed50% of your limit then your score begins to drop over time.

Tip #2: Watch out for those pesky credit checks. Every time you applyfor a cell phone, satellite TV, a retail card, and even your contractor maypull a credit check on you. They need your permission but they don’t alwaysask! Too many checks in a concentrated period of time can drop your scoresignificantly.

Tip #3: Pay on time and pay at least your minimum. Sounds simplebut pay all your credit cards, car lease, lines of credit and even that cellphone bill on time. Remember even a wire transfer of funds can take 3-5business days to clear. The credit report tracks payment history for 6-9 years. If you have any collections take care ofthem ASAP.

If you keep all three factors in check then your score will increase butkeep in mind positive results are not real time rather can take 2-4 months adjuston your report. If you have a mortgage, debt-related questions or would like toshare an experience feel free to contact me. 

Are you new to Canada and looking to buy here?

I hope everyone’s had a great week. The days seem to fly by don’t they? No doubt havinga mild winter helps. Lately, I’ve come across new immigrants andindividuals on work permits that have been looking to buy in Canada. Oftentimes it is not straight forward to find a mortgage. Using a mortgage brokercan help to quickly access your situation and choose the right mortgageproduct. Often times such families or individuals have no or little credithistory in Canada, or may be on be on contract rather than full time salariedemployment.

Some banks have issue with contract employment but don’t get discouragedas options do exist.  In cases like this youmay be required to put between 15% and 35% down depending on your specificcredit and employment circumstances. Something to keep in mind, if you aremoving down payment funds from abroad to Canada you will want to have the fundshere in Canada prior to having an accepted offer on a property. In most cases,you will not receive a final mortgage approval until the funds are in aCanadian bank account. Simply demonstrating that you have the funds abroad maynot be sufficient and you run the risk of losing that property.

If you have a mortgage, debt-related question or would like to share anexperience feel free to contact me.