Month: March 2017

Are you looking to make improvements or renovations to a new home you are purchasing?

Consider Purchase plus improvements, as you can add the costs of improving or renovating your home to the mortgage!

How it works

When you submit your mortgage application, you provide a written quote from a licensed contractor that details the renovations/improvements along with the estimated costs. Your application is then submitted and approved for a mortgage with the purchase plus improvements.

After this is complete, the lender will inform your lawyer to hold the amount of renovation work. After the work has been completed and confirmed by an appraiser,  the lender will then inform the lawyer to release the amount of money for the improvements to pay the contractor.

Here is an example to help better demonstrate how this process works.

You have found a house for $300,000, you have a 5% down payment and would like to add 25,000 worth of improvements to the house.

Purchase price of house= $300,000

Contractual estimate of renovations = $25,000

Lender and insurer agree that improvements to the house will increase the value of the house from 300,000 to 325,000.

Total mortgage = 325,000 X 95% = 308,750 plus applicable insurer premium

Your lawyer will then register your mortgage for the amount mentioned above, but be instructed to hold on to $25,000.

Your contractor then completes the work within 90 days.

After the work is complete, an appraiser will then confirm completion of the improvements and your lawyer will then be instructed to release the $25,000 hold, back to you to pay the contractor.

Purchase plus improvements make everyone a winner! The lender is happy, as they now have a mortgage on a recently improved house; and the purchaser will be happy because they had $25,000 worth of improvements done to the house!

According to an Angus Reid survey, one of the biggest expenses Canadians are paying for is their mortgage payment! The same survey also found that almost 27% of Canadians automatically renew their mortgage instead of trying to look around for a better deal.

Here are 6 tips to help with your mortgage renewal and to, hopefully, lower your mortgage payments.

1. Get Going Early

Start shopping around for a better mortgage rate. Your best option is to start around 4 to 6 months before your mortgage renewal.

2. Do Your Homework

Before negotiating, start shopping around and see what other lenders are offering. Plenty of lenders offer their rates online. These rates can vary widely depending on the type of mortgage you are looking for. Always make sure to look at what others are offering before you decide on which rate.

3. Change Lenders

Though some Canadians might just renew their mortgage, some do not think about changing lenders. There is no penalty if you do switch your lender at renewal time, as there are probably better options out there that you should consider.

4. Never Accept the Banks Posted Rate

Banks might be more willing to lower their mortgage rates if you decide that you want to transfer over more accounts, like an RRSP. Therefore never accept the first offer the banks will give you, and try to negotiate a better rate.

5. Negotiate on other options

Don’t be fixated on the interest rate! The flexibility of  the payment schedule, the amortization period, the rate type (fixed or variable) can all be crucial to the overall cost of your mortgage. Always make sure to look at the other variables in your mortgage renewal before making a final decision.

6. Mortgage Broker

If you don’t like doing the negotiating, you can hire a mortgage broker like me!  I will do the legwork for you. I get be paid a commission by the lender and you won’t get charged a thing. Plus a portion of my commission is put into the Community Mortgage Movement’s Endowment Fund, and helps your community.

Something to think about (Bonus tip)

Saving even half a percentage point on your mortgage rate can earn you a savings of up to $10,000 over 25 years (This figure itself is based on a 150,000 mortgage).

Looking to escape from the city during the summer season?

If you do not have the money, on-hand, to buy the property outright, you will need to borrow the money. While the basic process of applying for, and qualifying for, a cottage mortgage are the same, lenders will look at many more variables when assessing the property before lending the money. It is important to start looking for mortgage options before you can fully enjoy the ducks and docks of your cottage paradise!

One thing that insurers and lenders will look at is the type of cottage you are planning to buy. To help simplify this, we’ve broken the types of cottages into two groups, A and B:

Cottage A  properties, are those with permanent foundations (installed below the frost line), year-round access, a permanent heat source, and potable water – whether it be from municipal services, a well or treated lake water. These properties are zoned residential and are for personal use.

Cottage B properties, are those with wood stoves or fireplaces, sitting on blocks or piers, having only seasonal access, and/or no potable water source. These types of properties are not sought after by most Canadian banks to mortgage. This means for this type of property you should approach an alternative lender professional.

Other things to keep in mind, are:

• If you are putting down less than 20%, you will need mortgage default insurance just like a home purchase.
• Does it fit within your overall financial plan? No matter how you choose to finance your purchase, for the lender it is always about whether you can repay the debt.

If you do plan on purchasing a Cottage and are looking into a Cottage mortgage, it is a decision that does require very thoughtful planning process. Contact me if you have any questions!

Let me begin with saying I am not an appraiser.  After many years in the real estate business as a Mortgage Broker and a House buyer, I have developed an understanding of the valuation of Real Estate, but cannot provided exact housing appraisals.

Over the last 3 years, it has become increasingly difficult to anticipate the value of homes.  This has hindered refinances, debt consolidations and sometimes purchases.

Values will change with the Real Estate market and with the economy.  As the banks tighten up their lending guidelines, more often than not, real estate values drop accordingly.  It is common to find that values drop in a “slow economy” like we are experiencing currently.

How do appraisers establish a value for your house?  Glad you asked.

Age of the home

Condition of the home

Layout

Size (square footage)

Garage size (how many cars / size)

Land size (frontage / depth)

Recent sales of comparable homes in similar neighborhoods

Appraisers use their knowledge of neighborhoods and resale

Many times, people mistake the value of their home as what they could sell it for on the market.  The real estate sales market is not always indicative of the real value of the home.  For instance, just because the house down the street went multiple sale and went $25k over asking price does not make your $200k home worth $225k.   That is a result from a market condition.

It is important to seek out an experienced appraiser.  You can just ask me and I can get a great one for you!

Bottom line, “before you buy, sell or renew, speak with Andrew!

For the younger buyer…..How to get prepared for your first home!

“Hey Andrew Young, I’m younger and I want to be prepared to buy a house in a couple of years, what do I need to do?”

There are usually four major components to getting you approved for a mortgage:

1. Employment – We need to prove that you have a source of regular income. In general, after you start your new job, you will need to be employed by the same company for a minimum of 3 months or until you pass probation.
2. Down payment – We need to see how much down payment you have and prove the source of the funds. The minimum down payment amount is 5% of the purchase price of the home. For down payment proof, we will need 90 days record of your bank account, RSP’s or TFSA. Also, you can obtain your down payment as a non-repayable gift from a direct family member.
3. Credit – We need to prove your identity and show that you repay your debts in a timely fashion. We do this by collecting your name, address and Social Insurance Number. We access your credit bureau via Equifax or Transunion. These companies track your payments, balances and repayment history.
4. Affordability – We perform a calculation to discover your Total Debt Service Ratio (TDSR). It’s a calculation that takes your monthly ‘must pay’ items (credit card, line of credit, car loan or student loan) and we divide that by your gross monthly income (income before taxes). From that we have a ratio that indicates how much of a mortgage payment you can afford.

Here are some tips for you…

Manage your credit

Do yourself a favor – if you borrow it – pay it back! Credit cards debt is not free money. Pay more than the minimum balance on your credit card debt every month or it will cost you a fortune and take you many years to pay it back.

Keep the correspondence from your student loan provider(s). There are often mistakes on credit bureaus that can be cleared up with the proper paperwork.

Don’t take on more than 2 credit cards. It is redundant to have more than 2. Beware of the ‘in-store’ credit cards. If you don’t pay the balance off monthly, you could be charged 18-28% interest on the balance. The less debt you have, the higher the mortgage amount you could be approved for.

Save your money

Set up an account (High interest savings or TFSA) and make regular contributions. It may be easier to setup a regular deposit amount through your bank. It is best to use the power of interest to help you save for a house. You can use the Home Buyers Plan (HBP) where you can contribute into an RSP and use that money as down payment. Over a 15 year period You do have to pay that money back into your RSP. You get a 2 year grace period where you don’t have to make payments.

In closing;

1. Pay your debt on time and often
2. Keep records of the debts you incur
3. Don’t take on more credit than you truly need
4. Set up a savings account and make regular deposits

If you follow these simple steps, you will be in great financial shape to buy a house.

How do you choose the right mortgage broker? We already know the answer to this question.  It’s me.  Why? What’s the difference?

The majority of homebuyers start off by speaking with their banks when shopping for a mortgage.  Not a bad place to start.   They are the people that handle your day – to – day transactions, Visa’s, lines of credit, TFSA’s, safety deposit boxes, etc.   There in lies the problem.  Most of the bankers out there are “Jacks of all trades,” and masters of none.   As a matter of fact, they do not require a license to give advice to people on what is generally the largest purchase of their lives.  Coming from the Banking world, I experienced this first hand.  As a broker, we do need to be licensed.  We also need to renew our professional licenses and memberships annually.

EXPERTISE

You don’t go to a mechanic for a nice steak, and you don’t ask your butcher to change your alternator.  So why would you trust your mortgage to an institution that has limited options?  Choice is power.

EXPERIENCE

As a broker, we offer you options.  Our responsibility is to look at your entire financial situation and match you with the best lender.  We don’t try to put a square peg in a round hole.  Before I became a mortgage specialist with the banks, I was an insurance and investment broker.  I have the knowledge and experience to deliver the best advice for now and the future.

OPTIONS

We have access to more than 20 lenders including many of the Canadian Chartered Banks.  We have access to Credit Unions and companies called Mortgage Backed Security companies.  MBS’ specialize in mortgages and some offer Homeowner Lines of Credit.

SAVINGS

How do we get great rates?  Easy.  The lenders do not pay for our location or expenses. They don’t pay us a salary.  Unlike the bank, we do not create overhead costs for the banks and lending institutions.  They reward us with great rates.  We often get rate specials that banks do not have access to.

PERSONALITY

Why not have a great time while getting a great mortgage?  Somehow I get invited to a lot of my client’s weddings…. Weird. Awesome.

CONVENIENCE

We have a convenient location or I can come to you.  We work around your schedule. You are not limited to the operating hours of the bank.

ACCESIBILITY

Cell – 519.630.5905

Office – 519.433.5013

Email – Andrew.Young@MtgWise.ca

Twitter – @MTGmovementLDN

Website – www.communitymortgagemovement.com

In person – 259 Wellington Rd. London, Ontario N6C 4N7

Facebook – You can find me

COMMUNITY FOCUS

For every deal funded, I make a donation to the non-profit organization of your choice.  This directly affects your community and perhaps the people you care about the most.

When I am not working on getting people the best mortgages possible, I serve on the program board and centre board for Merrymount Children’s centre.  I have recently volunteered my time to the planning committee for the Comedy Night in support of Merrymount Children’s Centre coming up on November 7^th, 2013.

So if you appreciate EXPERTISE.

Looking for someone with extensive EXPERIENCE.

Wishing to explore your OPTIONS.

Enjoy SAVING your money.

Understand the value of CONVENIENCE.

Admire ACCESIBILITY.

Appreciate someone that gives back to the COMMUNITY.

You don’t need to look any further.

Thank you for your continued support through your referrals.

Thanks for visiting an AWESOME approach to MORTGAGES.

Over the last number of years the focus on mortgages has been rate.  Who is offering the most competitive rate?  A lot of people have overlooked the products themselves in search of the best rate.  There is a lot more to packaging a mortgage than simply rate.

Some things to consider when discussing the best mortgage product for your particular situation are:

1. How long will you be staying in the property?

If you intend on moving in certain length of time, matching the term may be the best option for you.

2. Do you intend on making extra payments on the mortgage? If so, how many extrapayments will you be making and how much extra will you be paying off per year?

If you are in a position to make extra payments on your mortgage, the prepayment options on your mortgage should be paramount to you.  Prepayment privileges change from lender to lender.  In addition to prepayment, the type of mortgage you choose will affect your ability to repay your mortgage faster.

3. Are you comfortable with a fluctuating payment to potentially maximize interest rate savings?

A variable rate mortgage is sometimes beneficial in certain rate environments.  There is a risk that your payments could increase, but you may be able to save money compared to other fixed rate products.

4. Are you looking to purchase additional properties in the future?Will you require access to the equity in your home to do so?

If you are looking to purchase additional properties and you will need to access the equity in your home, a long-term fixed rate may present an obstacle.   The term and rate that you choose will affect the penalty to break or add to the mortgage.

These are only a few items to consider when structuring your mortgage.  There are many different terms and rates to choose from.  Matching the best product at the best rate is a job left to an experienced mortgage agent.

People often ask me about the different ways I can help their friends and families.  As a mortgage professional, I get a number of calls from past clients, realtors, friends and families about how I can help their friends / clients / family members, etc.

People often ask me “Do you do mortgages for;” followed by an example of the potential clients situation, credit experience and employment.  Based on the information I receive, I match them up with the best products and companies to match their needs and situation for the present and the future.

In order to best help anyone you know, I have created a list of the different ways I can help the people you may know.  Here is a list of the different types of mortgage products and solutions I offer:

Purchases across Canada

Rental and Investment properties

Renewals

Refinances

New Builds

Cottages and vacation properties

New to Canada program

Self – Employed

Homeowner lines of credit

Private mortgages

“B” Deals

Zero-down mortgages

Commercial properties

A lot of these deals can be combined to create a customized financing solution for almost anyone.

 

When it comes to making decisions about lender, term, amortization, rate and what kind of mortgage is best for your situation; who is advising you?  Where are you getting your advice?  Who are you getting your advice from?

There are so many sources of information that are readily available at the push of a button.  When it comes to making important decisions about your financial future, you deserve the best advice.  You can find advice from websites, friends, family and other organizations.

Specifically, when it comes to your mortgage, who can you trust?  Who is looking out for your best interest?

Many institutions make a significant profit from lending money to people.  Whether it is credit card, automobile, student loans, lines of credit, RSP loans or mortgages, many institutions want you to be in debt.  That is the very nature of their business.  As a mortgage agent, my view is very different.  Our goal is to ensure you have a great experience so that you tell everyone you know about us.  That is how we grow our business.   My goal is to deliver the best advice and product to you, not to keep in you in debt to reach targets or maximize the profit for the organization I work for.

Some things to consider when choosing who you are going to accept advice from about one of the largest investments you will make in your life:

What are their qualifications?

Are they licensed to give you mortgage advice?

How much experience do they have?

Have they ever had a mortgage or purchased a home?

Do they have access to many types of mortgages and mortgage solutions?

Over the last 8 years I have worked in the mortgage industry.  I started my career as a Mortgage Specialist with a large Canadian bank. After 2 and-a-half years I moved to another bank thinking that they would have better solutions for my friends, family, neighbours and clients. Finding much success, I was introduced to an influential Mortgage Broker in London.  Following many conversations I realized that becoming a Mortgage Agent gave me the ability to deliver the best options for the clients that I had helped already and any client that I would help in the future.  After 8 years and closing several hundred mortgages, I can confidently say that I can deliver you the best advice, products and service available in the industry.

Experience is key when giving advice.  On top of helping hundreds of people across the country with the purchase of their homes, renewals, cottages, investment properties, stores, restructuring their debt, borrowing to invest, saving them from bankruptcy, I have also purchased homes.  I have bought and sold houses, so I know the processes and what to expect.

At Community Mortgage Movement, we have access to many lenders that provide multiple solutions that can be used to create a customized solution for any of your mortgage lending needs.