Sign up via our FREE e-mail subscription service to receive notifications when new INTEREST RATE information is available. Lenders are constantly changing their rates, or offering us special deals. Let us do the leg work for you, and keep you up to date on Interest Rate changes.

Get Email Updates · Ask a Question · Apply Now

Archive for March, 2010

« Older Entries

Insurance – Mortgage Default Insurance

Wednesday, March 31st, 2010

There are two types of Insurance to learn about relating to mortgages. The first one I am going to discuss is Mortgage Default Insurance. (also known as Mortgage Loan Insurance) This insurance is used by banks to protect themselves if you default (do not pay) on your mortgage payments.

The most common provider of Mortgage Default Insurance is “CMHC” The Canadian Mortgage and Housing Corporation. This is a government run company that supplies the Lender, usually at your cost, insurance on your mortgage in case you default. Default insurance is the “vehicle” that allows you to borrow up to 95% of the value in your home. Without access to default insurance, a lender will not go higher than 80% loan to value.

Other insurance companies in Canada that provide Mortgage Default Insurance include Genworth Financial, and AIG

Once a lender approves your mortgage; they then will submit it to an insurance company for acceptance. If the insurance company will not support the deal then it is likely the lender will turn it down.

Mortgage Insurance premiums are calculated on the total loan amount, and range anywhere from 0.5% to 6%.

On a $200,000 home with 5% down a typical CMHC premium would be 2.75%

Purchase Price $200,000

Downpayment $10,000 (5%)

Mortgage $190,000

CMHC Premium $5225

Total Mortgage Owing $195,225

You can save paying the Mortgage Default Insurance premium if you have 20% or more as a downpayment.

Tags: , , , ,

How will the HST affect Buying a Home?

Wednesday, March 24th, 2010

What is the new HST?

Effective July 1st, 2010 the Government is implementing the Harmonized Sales Tax in Ontario. This means that services that are currently NOT subject to Provincial Sales Tax of 8% will now be taxed. ….at a rate of 15% which is a combination of the current GST of 7% + Provincial Sales Tax of 8%.

How does this affect Buying a Home?

Services that are part of the Home Buying process; Home Inspection, Appraisal, Real Estate Fees, Legal Fees, Moving costs etc; are currently only taxed at 7% GST. Starting July 1st these services will all be taxed at 15%. As a buyer you are going to be paying more for all of these services.

What about Buying a NEW home in Ontario after July 1st 2010?

Yes; you will pay HST on the purchase of a new home……but……

Buyers of new homes will receive a rebate of up to $24,000 regardless of the price of the new home.

This rebate ensures that buyers of homes priced up to $400,000 (about three-quarters of new homes built in Ontario) will, on average, pay no more – or possibly even less – tax than under the PST system.

For a full list of services that are affected CLICK HERE

Tags: , ,

Buying a Rental Property

Friday, March 19th, 2010

Are you consider purchasing a Rental Residental property with 1-4 units?

I have been investing in Rental properties for the past 7 years. I would like to share with you at this time HOW I evaluate a residential rental property that I am considering buying.

I will use the following property as an example: 319 Broadway Ave, Orangeville Ontario as listed on 519Property

(See my calculations below). What I look for:

a) property should be cash flow positive

b) Return on Investment; I like to be higher than 10%, the calculations below do not include ROI for increase in property value; which would increase the ROI even more

c) there is room for a second mortgage so that I do not need to come up with the entire 20% down payment

Based on this evaluation; this is an excellent investment. Other things to consider when buying a rental property;

-who pays the utilities; tenant or landlord?

-what is the “Curb” appeal of the property (how it looks from the outside can have a great impact on quality of tenants)

-is it currently rented and if so what are the terms of the leases (one year, month to month)

CMHC is implementing new regulations in April that are tightening up lending on Rental Properties. They will not insure a mortgage more than 80% loan to value, and they are only going to use 50% of the rental income to qualify the debt ratios. There are other options available to Investors than going through CMHC insurance. I would be happy to talk to you on how you can still buy a property with less than 20% down. If there is a property that you are interested in I will prepare free of charge a complete analysis like the one below for you.

sarah@dropmyrate.ca

319 Broadway Supplimentary Mortgage Information
Monthly Annual
Rental Income $ 3,100 $ 37,200
Less Expenses:
Insurance $ 250 $ 3,000
Prop Tax $ 300 $ 3,600
Net Income $ 2,550 $ 30,600
Mortgage Info:
DownPayment 20% $ 83,800
Mortgage amount 80% $ 335,200
Interest Rate 4%
Monthly Pmts (35 yr am) $ 1,484
***OAC
Monthly Cash Flow $ 1,066
Annual Cash Flow $ 12,792
Annual ROI 15.26%

Tags: , ,

Time to Renovate Your Home?

Monday, March 15th, 2010

Welcome to spring Homeowners. If you are like me, there is ALWAYS a renovation project for your home either in progress or on your “to do” list. A few years ago I wanted to finish my basement to add a playroom and a spare bedroom. Last year my Windows needed to be replaced. This year it is the roof. I doubt it will ever end.

When faced with the question of how to pay for all of these renovations, I was thankful that I had a good mortgage professional to work with me and help me get the Funds I needed by using the equity in my home.

Now that I am a Mortgage Agent, I hope I can return the favor to you my fellow homeowner and help you turn your renovation dreams into reality.

-New Gourmet Kitchen

-Finish your basement

-Add a swimming pool

-Energy efficient furnace

-New windows, new roof

What is on your list this year?

Sarah Hurson Mortgage Agent#09002165

sarah@dropmyrate.ca

For more information please complete the confidential contact form below, or on our Contact Page, or email me directly sarah@dropmyrate.ca

Tags: ,

Expecting a Baby?

Friday, March 12th, 2010

As a Mortgage Broker, and a mother of 3, I would like to congratulate you on your upcoming arrival.

For you, the coming months will be filled with planning, shopping, doctor’s appointments, and a total overload of information!

What I found was missing when I was pregnant was information & help to plan for the Financial changes that I was about to experience. Maternity Leave benefits cut my income drastically, and on top of that the added expenses of diapers, baby clothes totally overwhelmed me. I did not know that had I taken a few easy steps before I had my baby, that the first 5 years of my family would have been much less stressful financially.

Have you thought about your finances for the coming years?

I would love the opportunity to show you what can be done NOW to make the coming years less stressful financially, so you can spend more time enjoying your new baby!

Sarah Hurson Mortgage Agent#09002165

sarah@dropmyrate.ca

For more information please complete the confidential contact form below, or on our Contact Page, or email me directly sarah@dropmyrate.ca

How to Keep your Credit in Good Standing

Thursday, March 11th, 2010

Here are a few tips to keep in mind to ensure your credit is in good standing:

Pay your bills on time: always pay your credit cards, lines of credit, car leases, store credit cards etc. on time. Even if you make the minimum payment each month make sure you pay it on or before the due date. Never let any other items go into collections.

Check your credit report for accuracy and often-at least once a year request from Equifax or TransUnion a copy of your own credit report. Make sure that there are no items that you do not recognize. Unfortunately Identity Theft is a real problem in Canada; so you want to make sure that there are no accounts being opened in your name that you are not aware of.

Keep your credit card balances in check; never go over your maximum balance and wherever possible only use 75-80% of the available credit.

If you have no credit, or have a previous bankruptcy you will need to rebuild your credit score. But how can you do that if the bank will not approve you for a credit card? You can actually get a pre-paid credit card that will help you rebuild your credit. Ideally you want to have a few credit cards/store cards with approx $2000-$2500 of available credit which you are making the monthly minimum payments each month on time for about a year after bankruptcy to then start thinking about a mortgage.

Tags: , ,

How Mortgages work for a First Time Buyer

Tuesday, March 9th, 2010

Are you considering buying your first home? Or perhaps you are re-entering the housing market? If you are currently paying rent, there is a good chance you can afford a mortgage.

Buying a home does not need to be a stressful time, it should be exciting and fun. If you have excellent professionals on your side they will glide you through the process effortlessly. Find the right Real Estate Agent and Mortgage Agent and they will be able to help you through the rest.

How Much Down Payment Do I Need?

You only need to have a 5% down payment to purchase a home. You should also make sure that you have a little extra for closing costs; for example Land Transfer Tax, your Lawyers Fees, etc.

The 5% can be withdrawn from an RRSP. It can also be borrowed from another source, i.e. a credit card or line of credit. Your downpayment could also come from a Gift from a family member or friend.

What is a Pre-Approval?

A Pre-Approval is when your Mortgage Broker processes a Mortgage Application for you and gets you pre-qualified to purchase a home. This is beneficial in so many ways most importantly:

-tells you how much you can afford so you know what price range of home you should be shopping for

-gives you a competitive edge when placing an offer over another bidder who is not pre-approved

What is the First Time Home Buyers Tax Credit?

Visit the Government of Canada website for more information and speak to your Tax Accountant to see if you qualify

What type of Mortgage should I choose?

Speak to your Mortgage broker about the benefits of each type of mortgage. You probably will have a choice between a Fixed Rate Mortgage, and a Variable Rate Mortgage. With some lenders a Variable Rate mortgage can be converted at any time to a Fixed Rate, so you can have the benefit of both. Many first time homebuyers feel more comfortable with a Fixed Rate Mortgage, so they can easily budget their monthly payments.

How do I get started?

Complete our confidential contact form (below) or on the CONTACT page

We will email you a Mortgage Application Form. This gives us your basic financial information and will allow us to complete a free confidential assessment for you, to tell you IF you qualify for a mortgage and for HOW MUCH.

(*all information is O.A.C. and subject to income & debt qualification ratios)

Tags: , ,

Self Employed? Changes to CHMC Mortgage Insurance

Monday, March 8th, 2010

Policy Changes to CMHC Self-Employed

CMHC is also announcing policy changes to the CMHC Self-Employed Product Without Traditional Third Party Validation of Income. Effective April 9, 2010, self-employed borrowers with more than 3 years in the same business and commissioned-income borrowers will be required to confirm their income and will not be eligible for the Self-Employed Product Without Traditional Third Party Validation of Income. This product is intended for a small portion of borrowers who find it very difficult to document income – in particular, recently self-employed borrowers. For the majority of self-employed borrowers, income validation is readily available through financial statements, contracts, T4s and other third party income validations. The changes will ensure that self-employed borrowers with third party income validation will benefit from a lower premium. Furthermore, the maximum loan-to-value ratio available under the CMHC Self-Employed Product Without Traditional Third Party Validation of Income will be reduced from 95% to 90% for purchase transactions and from 90% to 85% for refinance.

Tags: , , ,

Mortgages for Commercial Property

Friday, March 5th, 2010

Commercial lending can be a very challenging arena to enter. There are a limited number of Lenders that will consider Commercial deals. A deal is generally considered to be commercial if it is a Multi-residential building with more than 4 units, an office or retail building, industrial condo’s or buildings, and any other type of income generating property that is NOT residential.

Once a Property is considered Commercial, a few things change when looking into Financing the property. Generally you will require more money as a down payment. Anywhere from 15% to 50% depending on the type of property. The interest rate on the Mortgage will be higher than current posted Residential Rates. And you may require private lending as opposed to a traditional bank.

Your best approach to financing a commercial property is to work with a Mortgage Broker who has access to Multiple Lenders, and will have experience placing many different types of commercial properties. Mortgage Brokers usually have contacts in private lending also, that may give you some flexibility. For example if a Lender on an office building is only willing to loan up to 65% Loan to Value, your Mortgage broker may be able to find Private funds for a second mortgage up to 75% or even 85% so you need to invest less of your own funds.

If the building is being purchased by a corporation, generally the lender will require the Personal Gaurantee of the principals behind the Corporation.

To apply for a commercial mortgage the following information will be reviewed:

Typical Information Required to Obtain Detailed Loan Proposal
• Loan Amount Required and Purpose
• Rent Roll or Leases
• Project Operating Statements
• Ownership Details
• Pictures / Property Description
• Details of Registered Debt or Purchase and Sale Agreement

For more information about Commercial Lending please contact us by using our contact page or the comment form below, and one of our Licensed Mortgage Agents will be in touch with you within 24 hours.

Tags: , , ,

Feeling Overwhelmed by Debt?

Wednesday, March 3rd, 2010

Are you feeling overwhelmed by debt? Struggling each month to meet your minimum payments?

See the demonstration below…………many people really benefit from Refinancing to pay off some of their high interest debts, and rolling everything into one payment.

How much could you save???

Imagine what you could do with an extra $1000 + per month!

Refinance Demonstration:
Debt Amount Monthly Payment Interest Rate
current situation:
Mortgage $ 155,000 $ 946 5.50%
Car Loan $ 20,000 $ 396 7.00%
Credit Cards $ 20,000 $ 524 19.50%
Total $ 195,000 $ 1,866
proposed refinance:
New Mortgage $ 202,000 $ 930 4.29%
Car Loan paid off zero n/a
Credit Cards paid off zero n/a
total mnthly pmt $ 202,000 $ 930
MONTHLY SAVINGS $ 936
OVER THE TERM (5YR) $ 56,160
includes a $7,000 fee to break the old mortgage, apprisal, and legal fees may be additional
all figures and rates are hypothetical and subject to change. OAC.

FOR A FREE, NO OBLIGATION ASSESSMENT, USE THE confidential CONTACT FORM BELOW AND one of our Mortgage Agents will get in touch with you within 24 hours to see how much YOU may qualify to SAVE! or email mortgages@dropmyrate.ca

Tags: , ,

« Older Entries