Brad Compton – Weekly Mortgage Update – April 30th, 2012

This Week’s Great Low Rates!

Variable: 2.80% – (prime less .20)
6 mos: 2.89%
1 Year: 2.75%
2 Year: 2.74%
3 Year: 2.99%
4 Year: 3.19%
5 Year: 3.09%
7 Year: 3.99%
10 Year: 3.99%
all rates are based on approved credit and are subject to change without notice. All rates may not be available in all provinces

Rates have started to inch up in the past week with some lenders, but there are still some deals to be found with others. Many times these deals will not apply to pre-approvals and will require a 30-60 day closing. You will also notice the 10 year rate has crept up to 3.99% from 3.89%. Although we have seen some small upward movement, rates are still very attractive and should remain around current levels for the foreseeable future.

Zero Downpayment Could Be A Limited Time Opportunity

Zero-down payment can help get Canadians into their homes faster, saving potentially thousands in rent, and giving them a jump start on building wealth.

A cash-back mortgage that provides the cash upfront is one zero down option, another is to secure the downpayment through a loan or unsecured line of credit.

Zero down could be a limited time opportunity. Cash back options will no longer be available if the proposed OFSI (Office of the Superintendent of Financial Institutions) rules are implemented. Right now these new rules are just a proposal and out for comment, although it’s quite possible they will be implemented.  As a result, qualified homebuyers should take a look at these opportunities now while they are still available.

A zero-down mortgage is certainly not for everyone, but if you have stable income, good credit and the ability to comfortably handle your monthly mortgage payment and ongoing housing expenses, a well-designed zero-down plan can get you in your home sooner.  I can review your situation and help you determine if zero down is the right financial decision for you.

Talk to me today if you want to explore how you can purchase now without waiting.

From My Blog

Unfortunately I was unable to keep my promise from last week’s email and did not get any new content up on my Blog….so I am posting a video from last summer on the difference between a refinance and a switch. Sometimes people use the terms interchangeably, but they are very different…..most importantly, one is free to the client and the other isn’t. CLICK HERE to read for yourself.

In The News

A very interesting article ran in the Toronto Star over the weekend about variable vs. fixed interest rates. It is interesting for 2 reasons; first, I contributed to the article and second, it gives some compelling information on why are current low rates may not be around much longer. CLICK HERE to read the full article.

I Can Help With:

- First Time Homebuyers
- Mortgage Renewals
- Real Estate Investors
- New to Canada
- Self Employed
- Poor Credit
- Vacation Property
- Debt Consolidation / Refinance
- Reverse Mortgage

Check out my Facebook Fan Page for more great information and be sure to “Like” it while you are there!
www.Facebook.com/YourLowMortgage

Drop by my website for Rate Updates, Mortgage News and Video Blogs
www.YourLowMortgage.ca

Follow me on Twitter
www.Twitter.com/bcomp123

This email is meant to inform and not annoy. If you would like to be removed from my mailing list at any time, please REPLY with “Unsubscribe” in the subject line.

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• CMHC could be pulled out of mortgage insurance business, Flaherty says(business.financialpost.com)

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Brad Compton – Weekly Mortgage Update – April 2nd, 2012

This Week’s Great Low Rates!

What a difference a week makes! After several weeks of artificially low mortgage rates in Canada, we are finally seeing some upward movement in fixed rates. The rate specials the big banks began offering about 3 weeks ago came to an end last Thursday. All lenders breathed a sigh of relief and raised their rates 20 to 40 basis points, back to a level where they are making their required margins again.

That being said, Canadian mortgage rates are still at historically low levels and now is still a great time to get your mortgage pre-approval. The experts predict we will see mortgage rates hover around this level atleast for the summer months.

Improving prepayment penalty disclosure

For many Canadians, it can be to their advantage to pay a prepayment penalty and get out of their mortgage, particularly if they need to refinance to consolidate debt or want to lock in a lower mortgage rate. For others, it may not be worth the costs involved. Whether advantageous or not, many homeowners have found it a frustrating experience to simply determine what their penalty is, and how it is calculated.  That’s why it’s great news that the federal government just announced measures that will improve the disclosure of how mortgage prepayment penalties are calculated.

While these new measures don’t standardize penalty calculations, they do require that federally regulated institutions implement the following over the next six to twelve months:  

• Show on an annual basis how customers can pay off their mortgages faster without incurring prepayment charges.
• If a penalty applies, advise customers in writing of the applicable prepayment penalty with a description of how the charge was calculated.
• Improve overall borrower awareness by providing enhanced information pertaining to prepayment penalties.
• Provide mortgage penalty calculators on their websites.
• Have a toll-free phone line so customers can talk to knowledgeable staff about mortgage prepayment penalties and find out the actual charge that would apply to them.

This greater clarification of prepayment penalties is certainly welcome news, although not a replacement for professional mortgage advice.  If you have any questions on refinancing and prepayment penalties, talk to me.  I can review the terms of your current mortgage and help you make a realistic assessment of your situation.

From My Blog

Condos continue to be a very popular option with buyers across Canada. The purchase price tends to be slightly more affordable and they provide a care free lifestyle without the hassles of mowing lawns and shovelling snow. You have probably noticed more condos and lofts being labelled as “Live/Work”. Most of the time this is just a trending label used to sell more units, but there can be some hidden issues that will affect your ability to get a mortgage. CLICK HERE to view one of my past blogs on the subject.

In The News

A recent article in the financial post about the pros and cons of interest rates increasing. With Canadians holding historically high amounts of personal debt, the cons are obvious….Canadians will fill the pinch of higher monthly debt payments. However, the author makes an argument for the benefit to investors and the stock market that higher rates would bring. CLICK HERE to read the full article.

I Can Help With:

- First Time Homebuyers
- Mortgage Renewals
- Real Estate Investors
- New to Canada
- Self Employed
- Poor Credit
- Vacation Property
- Debt Consolidation / Refinance
- Reverse Mortgage

Check out my Facebook Fan Page for more great information and be sure to “Like” it while you are there!
www.Facebook.com/YourLowMortgage

Related articles

• Why are mortgage rates hitting record lows? (cbc.ca)

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Brad Compton – Weekly Mortgage Update – March 5th, 2012

This Week’s Great Low Rates!

Variable: 2.80% – (prime less .20)
6 mos: 2.89%
1 Year: 2.89%
2 Year: 2.95%
3 Year: 2.95%
4 Year: 2.95% – 60 day rate hold
5 Year: 3.09%  - 60 day rate hold
7 Year: 3.99%
10 Year: 3.99%
all rates are based on approved credit and are subject to change without notice. All rates may not be available in all provinces

Not much has changed in the past week with regards to rates or the economy. This coming week has no scheduled economic data releases in the US or Canada so we should see rates hold fairly constant. I’m hearing from many people that buyers are having a hard time finding properties due to limited inventory on the market. Many are holding their breath that the home sellers will be ready to list their homes once they return from March break.

Let’s keep our fingers crossed for a strong spring market!

Buy And Renovate For The Perfect Home

Many homebuyers looking at older properties find themselves in a common predicament: they’ve found a property that suits them, but it needs some costly and immediate upgrades. Increasingly, buyers are adding the costs of those immediate renovations into their mortgage, instead of racking up credit card bills or selling investments to pay for the upgrades. Known as a “purchase plus improvements” mortgage, this type of mortgage covers the sale price of the home, plus any renovations that would increase the value of the property, with as little as 5 per cent down.

If you’re buying a home but want to add a second storey, finish a basement or redo a kitchen, it can make a lot of sense to add those costs to your mortgage. That way you can spread your payments over the life of the mortgage and have a cost-effective way to get your dream home. You can also use your pre-payment privileges to pay the renovation off faster. The process is quite simple:

• Obtain cost estimates for the upgrades
• Get your appraisal – for the value of the property “as is” and the estimated value of the property once the improvements are completed
• Renovation costs are included in your mortgage
• Complete your upgrades
• Renovation funds are released by your solicitor upon completion

Be sure to consult with me to learn about the full range of options available to you when purchasing a fixer upper.

From My Blog

Credit is one of the main things a lender looks at when underwriting your mortgage. Having damaged or poor credit can limit your mortgage options and your access to the lowest rates. The key is to act fast to repair or re-establish your credit once you notice yourself sliding down that slippery slope. CLICK HERE to view one of my past blogs on repairing your damaged credit.

In The News – Mortgage Rules to tighten this spring

The Finance Minister has intervened in the housing market four times since 2008 and it looks like 2012 might see the fifth. It has been rumoured that Jim Flaherty will be tightening lending rules for mortgages once again. Canada’s healthy housing market helped pull us out of the financial crisis that began in 2008, but now there are fears that Canadians are over levereged when it comes to their real estate. It remains to be seen what changes we will see, but any changes could make purchasing a home more difficult for Canadians. CLICK HERE to read the full article.

I Can Help With:

- First Time Homebuyers
- Mortgage Renewals
- Real Estate Investors
- New to Canada
- Self Employed
- Poor Credit
- Vacation Property
- Debt Consolidation / Refinance
- Reverse Mortgage

Check out my Facebook Fan Page for more great information and be sure to “Like” it while you are there!
www.Facebook.com/YourLowMortgage

Drop by my website for Rate Update, Mortgage News and Video Blogs
www.YourLowMortgage.ca

Follow me on Twitter
www.Twitter.com/bcomp123

Related articles

• Weekly Mortgage Newsletter – Feb 27 2012 (yourlowmortgage.ca)
• Weekly Mortgage Newsletter – Feb 20 2012 (yourlowmortgage.ca)

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Brad Compton – Weekly Mortgage Update – Feb 27th, 2012

This Week’s Great Low Rates!

Variable: 2.80% – (prime less .20)
6 mos: 2.89%
1 Year: 2.89%
2 Year: 2.95%
3 Year: 2.89%
4 Year: 2.99%
5 Year: 3.19%
7 Year: 3.89% – not available for pre-approval
10 Year: 3.89% – not available for pre-approval
all rates are based on approved credit and are subject to change without notice. All rates may not be available in all provinces

Rates have remained unchanged since last week, however, most lenders have started to increase their fixed rates reflecting a recent increase in the yield of Canadian Government Bonds.

We also saw some disappointing durable goods orders coming out of the US this week. I’m not sure if this is signalling a slow down in the recovery or just an anomaly. A slow down in the recovery would probably mean mortgage rates would continue at their current low levels.

More data out of the US shows that despite increased housing activity, home prices continue to fall and actually ended 2011 at an 8 year low.

It appears the world economy is not out of the woods yet and that means Canadian home buyers will continue to enjoy low mortgage rates!

Good Debt VS Bad Debt

Not all debt is created equal – and not all debt is bad. In fact, you need some debt to establish a good credit rating. Being a responsible borrower means knowing which types of debt can help you reach your financial goals and which types leave you further behind.

Good debt includes any investment or purchase that helps improve your overall financial position. Mortgage loans are considered good debt because they offer low rates on property that appreciates in value over the long term.  You also build equity as you pay down your mortgage. Borrowing to invest is also considered good debt.  Often, the interest expense on money borrowed for investments is tax deductible. And when borrowing to maximize your RRSP, you’re investing in your future and benefiting from tax sheltered investment growth.

Bad debt involves purchases where the value becomes lower than the original cost, and which can carry a high rate of interest, making them harder to pay off. Types of bad debt include high-interest credit card debt, car loans, deferred purchases, and cash advances.

If you’re unsure about your debt situation, let’s set up a meeting. I can take you through your finances and advise how you can use your home equity to trade bad debt for smart debt, and give you some financial breathing room. The right refinancing package can help put an end to the monthly squeeze of too much credit card debt or too many loans, and help you get back into your financial comfort zone.

From My Blog

I had a conversation with a client this morning about how happy she was with the lender I put her with. She didn’t mention the rate once in the conversation…..although she did have a very attractive rate as well. I have always said there is more to a mortgage than just a low rate and you should always review the conditions of the mortgage carefully before signing to make sure the low rate you are getting is not attached to a mortgage with terms that will set you up for failure.

This reminded me of a blog post I made last year. CLICK HERE to view.

In The News

The Bank of Canada and the Finance Minister are growing concerned about the popularity of Home Equity Lines of Credit and the overall debt levels of Canadians. Did you know that Canadians 31-35 years of age carry 60% more debt than people the same age did just 10 years ago? Should we be concerned? CLICK HERE to read the full article.

I Can Help With:

- First Time Homebuyers
- Mortgage Renewals
- Real Estate Investors
- New to Canada
- Self Employed
- Poor Credit
- Vacation Property
- Debt Consolidation / Refinance
- Reverse Mortgage

Check out my Facebook Fan Page for more great information and be sure to “Like” it while you are there!
www.Facebook.com/YourLowMortgage

Drop by my website for Rate Update, Mortgage News and Video Blogs
www.YourLowMortgage.ca

Follow me on Twitter
www.Twitter.com/bcomp123

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Brad Compton – Weekly Mortgage Update – Feb 20th, 2012

This Week’s Great Low Rates!

Variable: 2.80% – (prime less .20)
6 mos: 2.89%
1 Year: 2.89%
2 Year: 2.95%
3 Year: 2.89%
4 Year: 2.99%
5 Year: 3.19%
7 Year: 3.89% – not available for pre-approval
10 Year: 4.89% – not available for pre-approval
all rates are based on approved credit and are subject to change without notice. All rates may not be available in all provinces

I’m back! It has been way too long since my last rate update. Quite a bit has changed with my business since my last email. As you may or may not know, I have moved to Halifax. Not to worry, I am still offering the same great rates and level of service in Ontario…as well as Halifax.

Rates have remained at historical lows over the past 6 months, with certain lenders briefly offering 5 year fixed rates at less than 3%. Longer term mortgages (7-10 yrs) are now offering rates below 4%. For the first time since I have been brokering mortgages I feel comfortable suggesting certain clients consider a longer term mortgage.

The one story that has changed since my last update is variable rates mortgages. We have seen discounts to prime disappear and be replaced with premiums. No longer are you looking at prime less .90, you will most likely be looking at prime plus .20%. In some cases you can lock in for 5 years at less than that. For those that already have a great variable rate, you will be enjoying it for some time to come, but for those looking for a mortgage, I would stick to fixed.

Helping New Canadians Get A Home Of Their Own

New Canadians are making their numbers felt in the housing market, as they get settled and make the transition from renter to owner, with mortgage brokers helping to make that transition as easy as possible.

The most important considerations for new Canadians are credit history and downpayment. If you are new to Canada and do not have any established credit, you can qualify for a mortgage with three months of employment history and by demonstrating credit worthiness to your lender in other ways:

• Proof of timely rent payments confirmed by your landlord (non-family member) and bank statements
• Bank statements showing pre-authorized payments for 12 months for regular payments such as utilities, telephone, cable, insurance premiums, along with a bank reference letter
• A credit report from your country of origin

Even though it is not required, it is a good idea to start establishing credit in Canada as soon as you can.  A downpayment of five percent is the minimum, although a larger down payment may be required.

If you are a new Canadian, I can streamline the mortgage process for you, from counseling on credit, to obtaining credit references from foreign banks, to confirming foreign income. I advise you on the paperwork you need to assemble to apply for a mortgage, and then present your financial history to the lender or lenders that can best meet your needs.

Call me to discuss your options.

From My Blog

Unfortunately, my blog posting has fallen behind along with my weekly newsletters. Look for new posts and videos in the near future!

In The News

At this time of year I always get asked “Should I pay down my mortgage, or put more money in my RRSP?”. The answer will usually depend on each individuals situation. Here is a great video from John Heinzl at the Globe and Mail with a few things to think about when making this important decision. CLICK HERE to view the video.

I Can Help With:

- First Time Homebuyers
- Mortgage Renewals
- Real Estate Investors
- New to Canada
- Self Employed
- Poor Credit
- Vacation Property
- Debt Consolidation / Refinance
- Reverse Mortgage

Check out my Facebook Fan Page for more great information and be sure to “Like” it while you are there!
www.Facebook.com/YourLowMortgage

Drop by my website for Rate Update, Mortgage News and Video Blogs
www.YourLowMortgage.ca

Follow me on Twitter
www.Twitter.com/bcomp123

Related articles

• Mortgages were ‘most affordable’ in 2011 (moneyviews.com)

I saw some interesting facts on the US National Debt over the weekend that I thought would be worth sharing. Many people, including the US Government were up in arms a couple of months ago when the S&P announced they were downgrading the US debt rating.  After all how could a super power like the United States, long known as the land of opportunity, possibly have a bad credit rating. It is interesting how similar a country and an individual can be when it comes to credit worthiness. As somebody who sees the credit of individuals from janitors to doctors, I have learned that a decent salary and prominent job do not necessarily equate to strong credit. It’s not the amount of money you make, it is how you spend it.

How Bad is The US National Debt Situation?

Let’s get back to the US debt for a moment. Below are a few interesting numbers:

US Tax Revenue: $2,170,000,000,000

Federal Budget: $3,820,000,000,000

New Debt: $1,650,000,000,000

Current National Debt: $14,271,000,000,000

Recent Budget cuts: $38,000,000,000

That’s quite a few zeros and is a little hard to comprehend. Let’s pretend this is a family budget and remove a few of those zeros

Annual Family income: $21,700

Money they spent: $38,200

New credit card debt: $16,500

Total credit card debt: $142,710

Total spending cuts: $380

Now we can see why the US had their debt rating decreased. If your family was spending almost twice as much as it earned in a year, how long do you think you would be able to keep that up? Do you think cutting your expenses by only $380 would help your family reduce its debt load? Most clients I see in a situation like this would have to declare bankruptcy or enter a consumer proposal to wipe the slate clean and start again. Unfortunately for the US Government , that is not a solution anyone wants to see.

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The Internet has given us unlimited access to information. As a small business owner, the Internet has also provided an affordable way to effectively market to millions of people. One of the ways some Mortgage Agents choose to market on the Internet is through lead generation sites. If you have searched for a mortgage rate on-line chances are you have visited one of these sites. They usually offer a choice of rates from several different Lenders/Brokers.

This can be great for getting an idea of the best mortgage rates out there, but I caution most people when they are looking at these sites. There is much more to a mortgage than just a low rate. These sites do a good job of presenting several rate options, but they do not let the consumer know the terms and conditions associated with that rate. Mortgage rates have unfortunately turned into a commodity where lower is always perceived as better. Imagine you were shopping for a car and all the info the sites gave you was the price……wouldn’t you have questions about the details of the car? Is it a Hyundai or a Mercedes?

Buying a home is most likely the biggest purchase you will make in your life and the decisions you make regarding your mortgage will affect you and your family for years to come. Flexibility in your mortgage is key and I personally feel paying .1% more for a flexible mortgage will pay off many times over in the long run if you ever need to make an unexpected change to your mortgage. I have several clients a year who come to me looking for help to get out of a very restrictive mortgage. The rate looked great at the time, but they were not made aware of the conditions of the mortgage and how it might affect them down the road.

Here are a few questions you should be asking your mortgage professional when it comes time to sign up for your mortgage:

1. What are the pre-payment allowances and when during the year can it be made.
2. How is the mortgage registered against the property
3. How is the interest compounded
4. Is it portable to a new property
5. Can it be assumed by another party
6. How is the penalty calculated if you need to get out of the mortgage early

A competitive rate should always be a consideration when looking for your next mortgage. Just be sure you are also aware of the terms that accompany that rate. Ask your mortgage professional to calculate the difference in monthly payment between the lowest rate and the rate with the best terms. I think you would be surprised how little of an impact the slight rate difference will have.

Related articles

• Mortgage Rates Hover Near All-Time Lows (online.wsj.com)

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A renewal occurs at the end of your mortgage term. Your lender will send you a renewal notice and you will have the option to sign it for a new term…..or if you are smart you will speak with your broker to see if there is a better offer available. Most likely there will be a more attractive offer available and you will “switch” your mortgage to a new lender. A mortgage switch is when you move your mortgage to a new lender with all of the terms intact…..the only thing that changes is the rate. The amortization and mortgage amount remain the same. A switch is free to the client. The new lender covers any legal or appraisal costs that arise. The only possible expense to the client would be the small discharge fee from the current lender….which may also be covered in part or whole by the new lender.

When is a mortgage renewal a mortgage refinance?

In short if you change any of the terms of the mortgage (increase mortgage amount, increase mortgage amortization…etc) it is now a refinance. Unlike a switch, the new lender does not usually cover the expenses associated with a mortgage refinance. You can expect to pay about $1,000 for legal and appraisal fees.

I have had many conversations with clients about there renewal and after I have finished telling them it is a free process they mention they need extra money to consolidate debt. I then have to explain the difference. However, if you are considering consolidating debt, a renewal is the right time to do it. Your mortgage is open at that point so you do not have to pay the penalty to break the mortgage.

If you have any questions please feel free to contact me. I would be happy to speak with you about your mortgage needs!

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What you need to know when buying your rental property

The first thing you need to remember is to stay objective. You are not going to be living in this property so you do not need to “love” it. It is all about the numbers and whether or not it makes sense from an investment point of view. You need to ask yourself “will I make money on this purchase”

You also need to be aware of the costs associated with purchasing a building over 4 units. You can expect everything to cost more:

• CMHC will charge you a per unit application fee, plus a higher premium
• You will have higher legal fees, plus you will most likely be required to pay for the lender’s legal fees as well
• You will most likely have a lender fee and be expected to pay some of it up front as good will
• There might be an environmental report required
• The appraisal on a multi-unit building can be $1,000-$2,000 depending on the location

All of tis adds up to a more expensive transaction than when you purchased your home. Keep in mind most of these expenses can be written-off and you have to take them into account when looking at the profitability of your investment.

Most important of all is to be sure you are working with an experienced team. Your Realtor, Mortgage Broker and lawyer should all have experience in larger investment properties and be able to guide you through the process.

Related articles

• Top 10 features of a profitable rental property (theglobeandmail.com)
• What is property rental yield (wiki.answers.com)
• Why did I think being a landlord was easy money? (moneyville.ca)

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Really, there were not many surprises. By this point we all know mortgage rates only have one place to go and that is up. When we will start to see this increase is up for debate, but most “experts” agree it will be before the end of this year. Originally variable rates were predicted to start moving by July, but several bank economists have recently come out saying it will now be early fall. That is great news for those of us with variable rates.

So how high will mortgage rates climb?

It is hard to see the future without a crystal ball, but Genworth feels by the end of 2012 we will see prime rate around 6% and 5 year fixed rates around 7%. Keep in mind the 5 year fixed is the posted rate  and most lenders discount the posted rate by about 1.5%.

Genworth also felt there would be a slight increase in housing starts in 2012 and for those of us that live in the Greater Toronto area you won’t be surprised to hear most of those new homes will be condos. There is still a healthy demand for condos in Toronto as people are looking for an affordable solution for living in the city.

The moral of the story is get your mortgage pre-approval or approval while rates are still low. If you have a mortgage renewing within the next year or so you might want to consider renewing early to avoid the higher rates. You might have a penalty, but in the long run the interest savings might be worth it.

If you would like to explore your early renewal options, please contact me to discuss how you might be able to save some money.

Thank you for visiting www.YourLowMortgage.ca