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Archive for March, 2010

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Do you Dream of Owning a Cottage?

Wednesday, March 3rd, 2010

The new Mortgage rules that were implemented in April do not change the current guidelines for borrowing to buy a second home, i.e. a Cottage. The dream of owning your own family getaway may be closer to reality than you think!

Now is the perfect time to buy a cottage;
-Interest Rates are still low,  (especially the variable rates)
-The HST is not yet in effect, (coming July 1st)
-Markets just before the summer in cottage country are slightly lower, and sellers more motivated to sell.

You can buy a cottage with as little as 5% down payment. The source of this down payment can be the existing equity in your own home, as well as other sources, i.e. RRSPs, gift, etc.

Mortgages for a cottage (second home) are treated the same as your primary residence and you may qualify for an interest rate as low as the current lowest posted 5 year fixed rate or Variable Rate

“As a cottage owner in Muskoka, I understand how important realizing your dream is. As a Mortgage Agent, I want to help you make your dream a reality.”, Sarah Hurson Mortgage Agent # 09002165

For more information please complete the confidential contact form below, or on our Contact Page, or email us directly mortgages@dropmyrate.ca or call toll free 1-866-712-3943

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Drop My Rate Products

Tuesday, March 2nd, 2010

Fixed Rate Mortgages 1,2,3,4,5, 7 and 10 year terms are available. Lock into a Fixed Mortgage rate for the term of your mortgage. Benefits: monthly payments are always the same (easy for budgeting), if Interest rates go up you are protected from paying more.

Variable Rate Mortgages These are for clients who do are comfortable with fluctuations in interest rates, and monthly payments. Benefit of variable rate mortgages is when rates are low your payments are lower and you pay less interest. However, if interest rates rise, you may pay more. Many lenders will allow you to lock into a Fixed Rate mortgage with no penalty. This is called an Adjustable Rate Mortgage (ARM).

Self-Employed Mortgages are available to self-employed individuals with as little as 5% down. Income qualification can be based on stated income.

Rental Properties Mortgage laws in Canada are changing regarding rental properties in Canada. Contact one of our mortgage Agents for more details.

Commercial Properties Office, retail, multi-unit residential, Industrial,investment properties. Each Commercial deal is assessed individually and our Mortgage Specialists will match each deal with the most appropriate lender.

2nd Mortgages Second mortgages are often a very good solution to take equity out of your home without paying a large penalty to refinance. Second mortgages are often also used in purchases where a lender will not go beyond a certain loan to value.

Home Warranty Program Free one year in home warranty program is available on new mortgages. “Gain access of up to $10,000 in home repair services for 12 months free” Heating & air conditioning systems, electrical systems, water heater, plumbing. **some conditions apply and only offered by certain lenders*** Ask your Mortgage Agent for details!

Drop My Rate Services

Tuesday, March 2nd, 2010

Pre-approvals All homebuyers are at an advantage when they can approach a sellers market with a pre-approval in hand. Find out how much you can afford, what your payments will be, how much your down payment will be before you start shopping. This will make you much more confident when buying your home.

First Time Home Buyers Let our Mortgage Agents help walk you through the process to buying your first home. Advice is available on budgeting, taking funds out of your RRSPs for a down payment, etc.

Refinancing Would you like to use the equity in your home to; Renovate your kitchen or basement? Purchase an investment property? Pay down some of your high interest debt?

Mortgage Renewals Your current lender will send you out renewal information on your mortgage about 6 months before the maturity date of your mortgage. We are confident that in almost every single case we can BEAT THAT RATE! At the very least you owe it to yourself and your family to confirm you are paying as little as possible on your mortgage interest. If we can’t match or beat the rate we will give you $500!! Contact us to find out how this works!

Debt Consolidation Are you feeling overwhelmed by debt? It may be possible and in your best interest to consolidate your mortgage + your high interest debt into one low monthly payment. A free Cash Flow analysis is available that will show you how much you may be able to save monthly.

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Bank of Canada maintains overnight rate

Tuesday, March 2nd, 2010

Not too much of a surprise here; most experts did not expect that the Bank of Canada would raise its overnight lending rate, and they did not.

http://www.bankofcanada.ca/en/fixed-dates/2010/rate_020310.html

Bank of Canada maintains overnight rate target at 1/4 per cent and reiterates conditional commitment to hold current policy rate until the end of the second quarter of 2010

OTTAWA — The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1/4 per cent. The Bank Rate is unchanged at 1/2 per cent and the deposit rate is 1/4 per cent.

In the statement accompanying Tuesday’s decision, Governor Mark Carney and his rate-setting panel acknowledged that growth and inflation have been hotter than policy makers estimated in their January forecast, saying the economy’s 5-per-cent growth in the fourth quarter was “spurred by vigorous domestic spending and further recovery in exports.”

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Mortgage Changes Coming in April

Monday, March 1st, 2010

A few weeks ago Finance Minister, Jim Flaherty, announced new mortgage rules will be implemented in Canada on April 19th. The reaction across the country has ranged from panic (for those investing in rental properties or flipping homes), to indifference. Overall though, I sense a lot of confusion over the announcement as many people just do not understand the changes.

I have been contacted by clients and Real Estate Agents that are confused about the new rules, and the most common question I am getting is from first time home-buyers concerned that they will need a 10 or 20% down payment. This is not the case.

Here is an overview of the changes:

1. Tighter restrictions to Qualify for a Mortgage

All ARM (variable rate mortgages) and Fixed mortgages with terms less than 5 years are to be qualified at the 5 year posted rates.

Currently most banks use the 3 year posted rate to qualify ARM clients. The current spread between a 3 and 5 year posted rate is approximately 50 bps. This will reflect higher debt service ratios many borrowers, making slightly more difficult to be approved IF the borrower has a large debt load and not enough income to cover.

2. Need to keep more Equity in your home if you Refinance your Mortgage

The maximum LTV for refinances changes from 95% to 90%. Many lenders had reduced this criterion independently over the course of the last year or so. It is designed to prevent mortgagors from “turning their houses into ATMs”. Again note that this only applies when you are REFINANCING your mortgage, NOT a new purchase, or a Mortgage Renewal.

3. More money needed as a down payment for Investment Properties

The maximum LTV for non-owner occupied houses is reduced to 80%. The intent here is to reduce the degree speculative buying that would be naturally encouraged with such low interest rates. This will affect investors that were using the CMHC insurance for rental properties to purchase either residential rental units, or purchasing homes for “flipping”, or speculating i.e. Condo buying. Furthermore, the government is only going to allow 50% of the rental income to be used to qualify the debt service ratios, so this will also make it tougher for this type of investor.

In Summary

It is estimated that these changes will only affect a very small percentage of the marketplace, and most experts agree will not have a signifigant impact on the HOT housing market in Canada. The spring market is just around the corner, and with the low inventories of homes for sale, and interest rates at all time lows, the coming months are going to prove to be a very exciting time for Real Estate Agents and Mortgage Brokers.

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