Mortgage

Unknown Benefits of Opting for a Home Refinance

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Home Refinance

If you own a home, there’s a good chance you’ll do a mortgage refinance at some point. Few borrowers stay with their original home loan for a full 30 years; most either refinance or sell the property long before the full term runs its course.

When the borrower on a home loan has reached a stage where the terms of the first home loan are unsatisfactory, or costlier than they need to be, given the current economy and monetary condition, the borrower at times goes for a home refinance loan. When this happens the first loan is paid off and the same loan is supplanted with a refinance loan, though the terms can either be similar or different.

Smaller Repayments

When it comes to a refinance home loan, you may have the capacity to structure the loan in such a way that you may only have to pay a smaller amount of money at regular intervals. This could be extremely useful if your situation is a little tight due to monetary constraints.

Longer Time to Repay

Another advantage of home refinancing is that you can spread out a loan over more years by customizing the time to reimburse the loan. Spreading out a similar size loan over more years implies that the interest paid will be more, yet the repayment made will be more reasonable in size for the loan holder.

Fixed Amount of Payment

One of the other advantages when it comes to refinancing your home with a fixed rate is that the repayment sum will continue to be the same. Once the loan amount is set, the installment sum continues to be the same throughout the course of the mortgage.

Pay Off Old Debts

When you get cash as part of the home refinance deal, you can use some of that money to pay off old debt (especially those with high interest rates). A refinance can also help you pay off future costs as well. An example of this might be taking care of the cost of education for yourself or relatives. This money can also help with doing repairs towards the house.

Should you get a shorter-term mortgage, make extra payments or something else?

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Mortgages London Ontario

When getting a home mortgage, if you can afford higher payments, often there is an option for a 15-year loan instead of one of 30-years. This can be very enticing, since you will be free of a mortgage in half the time and pay a lot less in interest.

Let’s use a $200,000 mortgage as an example the payment (P&I, Principal, and Interest, not including escrow for taxes and insurance) is approximately $955 at a 4% mortgage interest rate.  You’d pay a total of $343,739 over that 30 years. Using the same rate, a $200,000 mortgage over 15 years would require a P&I payment of $1,479 at the same interest rate, and you’d pay a total of $266,288 over the life of the loan.

If you can make those higher payments, you would be saving around $80,000 over the life of the mortgage of 15 years. There is also another option when it comes mortgage payments. You can cut your mortgage time by five or more years if you have your lender set up bi-weekly automated payments. This means that you would be paying every two weeks instead of one monthly payment. Since some months may have 5 weeks instead of 4, you end up paying an equivalent of an extra payment each year. This is an easy way to help save money while paying off your mortgage sooner.

Something Else

This is looking at your other debt, especially credit cards, store credit or signature loans. There is an average of $6,500 to over $9,000 for average credit card debt per household. Along with that, multiple sources report the average credit card interest rate rose to 15.59% in 2018.

Going back to the comparison between the 15 and 30-year mortgages, the difference between the two payments is around $500. One plan might be to pay off that credit card debt using this money. This could help get rid of credit card debt in around a year and then you could start working towards making extra payments toward your mortgage.

While you could be paying off your short-term higher rate debt, then using that money towards paying off your mortgage.

 

Bridge Financing, What Is It?

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Bridge Financing London, Ontario Mortgages

What is Bridge Financing?

It is a useful tool made available to borrowers when the closing date of the home they are purchasing is before the closing date of the home they are selling. This is generally common in a seller’s market, buyers often explore the idea of making a firm offer without conditions, even if they have their own house to sell.

Bridge Financing means that the lender is comfortable making an interim loan between the closing date of the new purchase and the closing date of the buyer’s own firm sale. Basically, it is closing the gap between the two firm closing dates that do not coincide.

Bridge financing is not the same as being able to carry two separate properties.

However, bridge financing is not applicable if your home is not sold firm, you are talking about carrying two properties (owning two homes). Carrying is when the buyer owns two homes simultaneously for any length of time. They are also qualified to carry the total sum of the two mortgages.

So, what is required to set up bridge financing? Your lender will ask you for a copy of your firm purchase agreement and firm sale agreement.

This is a great stress reliever and helps with leaving a buffer of time for the buyers to get settled into their new home before their own purchasers will show up on their previous home’s doorstep looking for a clean and empty property. This also give the buyer some flexibility when it comes to accepting an offer on their own home, that firms

Bridge financing is quite common and a wonderful option but its a conditional on your own home have a firm offer in place.

When it comes down to it, you should make it clear with your lender whether you are looking to mortgage two homes or bridge the gap between 2 firm sales before you firm up your financing.

My Mortgage Application Was Denied, Now What?

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Mortgage Application was denied, now what?

Owning your home is not only a dream but a financial goal for many in Canada. However, factors like housing prices, interest rates, and new mortgage rules that came into effect have made it a little more difficult to get a home.

If you have recently had your mortgage application denied you may be wondering about some of the next steps you can take. Before you put your dream on hold, here are a few things to consider

Why was your mortgage application denied?

The first thing to consider after your mortgage application was denied, was why it was rejected in the first place. Your credit report or credit history may be one of the reasons. A low credit score can sometimes act as a warning sign to your lender. It would be a good idea to check your credit report to see whether it is accurate and then get to work on improving that credit score.

Proof of income might be another reason why you may not get that mortgage. For those that are self-employed or business owners, it may be a little more difficult to get approved for a mortgage, as lenders most often associate them with unpredictable income and are a higher risk.

The amount of debt you have can also affect your ability to get approved. Lenders will look at something called your debt service ratio when considering your mortgage application. Your Total Debt Service Ratio (TDS) is calculated by adding your family’s monthly mortgage payments, property taxes, and other debt payments, then dividing it by your family’s gross monthly income.

Is it really time to buy?

If your mortgage application was denied and you have considered the reasoning behind it, it is probably a good idea to double check to see if it is an appropriate time to buy a home. If right now you find that you have a lot of debt and are having difficulty paying some bills on time, it may be worth it to pay off some of that debt and set up a budget to put towards your home purchase. If you have however gone through your finances and figured that right now is a good time to buy, you can consider other available options.

What other options are available?

It is a big misconception when it comes to big banks and mortgage loans. There are other lenders available. Not only are there other lenders out there, some of them include: mortgage companies, insurance companies, trust companies, loan companies and credit unions.

Mortgage Brokers can help

If your application was denied, an experienced mortgage broker can work with you to help determine if it is indeed a good time for you to buy a home. They can help investigate some of the alternative options available Mortgage brokers negotiate on your behalf and have relationships with various lenders. Meaning a mortgage broker can help get you approved, even if your first application was denied.

5 Important Tips for First-time Home Buyers

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first time home buyer tips

The cost of buying a home is the biggest investment you will ever make. Buying a home is one of the biggest decisions you will ever make. It can also be a bit complex, especially if you don’t know what to expect. The rising home values and stricter guidelines can also make it difficult for first-time buyers. From mortgages to tax credits, here are some tips to consider if you are a first-time homebuyer.

1) Research the area and the market

Most people looking to buy a home know which neighbourhood or community they would like to live in. Unfortunately, it isn’t really a practical option when it comes to a value-cost perspective. While you are looking at the neighbourhood it is great to check out the local amenities, quality of the neighbourhood and consider what the travel to and from work will be like. Research the area thoroughly and decide what the right compromise might be, given your lifestyle, budget and needs.

2) Work with a broker

Fewer Canadians are going straight to their bank. Instead they are heading to mortgage brokers for a better set of options that are available. There are more than just the five major banks when it comes to the mortgage industry and there is a good chance that a smaller lender will provide you with a better rate. Brokers work on your behalf and look through the market for the best rate for your situation, this isn’t always possible when using a bank.

3) Make use of government programs

There are several first-time buyer governments grants available to help make your home buying experience easier. The Homebuyers Plan allows you to purchase your first home with as little as a 5% down payment. This is a great opportunity to become a homebuyer and start building equity at a younger age. The RRSP homebuyers’ plan also allows you to withdraw up to $25,000 from your RRSP account to buy or build a qualifying home.

4) Don’t feel rushed

Certain markets can create a sense of urgency to buy a home, one that may not even meet your criteria. While it is important to have a sense of purpose when buying a home, there will always be new listings popping up each and everyday. If you set your criteria wide enough, you’ll be sure to find something that suits your needs in a reasonable time frame.

5) Calculate all the costs of homeownership

In addition to your mortgage payment, you also need to factor utilities (heat, hydro and gas), insurance and property tax. When it comes to closing costs, there are also costs associated with buying a home, luckily first-time buyers in Canada save the Land Transfer Tax and get a nice tax refund.

What’s The Deal? Needing an Appraisal with 20% Down Payment

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Need An appraisal with 20% Down Vlog

I’m Andrew Young of Mortgage Wise Financial and Community Mortgage Movement.

What’s the deal with Needing An Appraisal When You Have 20% Down?

To begin with, an appraisal is an unbiased estimate of the value of a home you want to buy or already own by a third party appraiser. It is basically an analysis of recently sold properties, active properties, terminated properties, and expired properties around your area to determine the value of your home right now. Most lenders will consider recent within the last 30 days. A lot of people ask me “Why do the lenders need an appraisal when I have 20% down or more?” This a real easy question to answer. When you have less than 20% down for a down payment, a lender has to go to CMHC, Canada Guarantee, or Genworth to get third party insurance. This then means that the onus is on the insurance company if you were to default on your mortgage. When you have 20% down or more, this means that the onus is on the lender itself. Therefore the lender wants to make sure that the value for the home, if the worst-case scenario were to happen (you were to default on your insurance). They have to go in, take the home and then sell it again on the market. This is why you need an appraisal, even if you are paying 20% or more for your down payment I’m Andrew Young and that’s the deal.

What’s The Deal? Winning

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Winning Community Mortgage Movement

I’m Andrew Young of Mortgage Wise Financial and Community Mortgage Movement.

What’s the deal with Winning?

I am proud to announce that Mortgage Wise Financial is the recipient of the 2018 Canadian Mortgage Award for Top Brokerage in Canada with fewer than 25 employees!

Don’t believe me? Head over to http://canadianmortgageawards.com/winners-finalists/2018-winners-finalists for a full list of the finalists.

the Canadian Mortgage Awards (CMA) celebrates excellence across the entire spectrum of mortgage brokering in Canada and continues to be the leading independent awards event for the mortgage industry. 21 prestigious industry awards are designed to ensure national recognition for large and small organizations and individual mortgage professionals.

Winning a CMA is a career-defining moment!

I can’t tell you how truly proud I am of my entire team at Mortgage Wise Financial, from the brokers to the agents, to the administrative staff. Everyone is so incredible! I also have to thank the Realtors, the Insurance Agents, the lawyers, everybody that is and has supported us in what we do throughout the years. We really want to thank you and for all being part of something very special!

I would also like to thank the award committee and everyone that voted for us and lastly thank you to whomever nominated us, we really appreciate the opportunity!

I’m Andrew Young and this is awesome award! That’s the deal with winning!

What’s The Deal? – Bloopers

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What's The Deal Bloopers

I’m Andrew Young of Mortgage Wise Financial and Community Mortgage Movement.

And what’s the deal with my inability to get my lines right?

Here is the deal, I can’t always get my lines right or joke around in between takes. Here are some of the bloopers while filming. While working on these videos I have compiled some footage of me forgetting some of my lines, playing around with “what’s the deal” and trying to figure out which one would work best.

Looking for help with refinancing or renewing your mortgage? Feel free to reach out and I’ll make sure I find an option that is suitable for you and your needs!

For those of you who don’t know me, I am a leader in the mortgage industry and in the London, Ontario community. Not only do I help with finding a suitable solution to my clients needs I also help with supporting the London, Ontario Community. I am involved in several London, Ontario not for profits and on multiple boards and committees in the London, Ontario and surrounding areas.

Myself and Community Mortgage Movement is a group of caring and compassionate advocates who are creating a cooperative approach to funding community initiatives. Not only do I want to help grow the London, Ontario community, I want to help develop sustainable funding to support local businesses and community partners.

For your viewing pleasure, I’m Andrew Young and that’s the deal!

What’s The Deal? Low-rate Mortgage Offers

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London Ontario Low-rate mortgage offers

I’m Andrew Young of Mortgage Wise Financial and Community Mortgage Movement.

What’s the deal with super low-rate mortgage offers?

I just want to go over a few different things before you lock yourself into something you don’t really want or something you don’t really need. What I want you to understand is what are you sacrificing to get a very low interest rate? Here are a couple things you should watch out for on low-rate mortgage offers.

Low-rate Basic Mortgages

These are low-rate mortgages that sometimes may include a reinvestment fee. A low rate basic mortgage will offer you an unbelievably low interest rate. So, what are you sacrificing with this type of mortgage? One of the main things you are giving up is your flexibility. Let’s say you were to break your mortgage after the first five years, there is generally a percentage of a penalty you will pay. So, if you break your mortgage early, you will generally have to pay a penalty (this is normally around 3%). These mortgages need to make their money somewhere! So, let’s say you have a mortgage of $400,000 that is a $12,000 penalty fee!

Reinvestment Fee

Some lenders are adding reinvestment fees into their mortgages. Some of the mortgages that we have seen here have these reinvestment fees added into their mortgage, they have a gradual decline over the five-year period, some dropping by .25% each year.  If you are 99% percent sure that you are going to stay at this property for five years it might be worth it to just wait it out, if not you should start considering other options.

What I like to do is a suitability analysis. We try not to sell rates as much as possible, I would prefer to find out what you need first before I come up with a solution.

I’m Andrew Young and that’s the deal!

What’s The Deal? The Posted Rate Hike

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Posted Rake Hike London Ontario

I’m Andrew Young of Mortgage Wise Financial and Community Mortgage Movement.

What’s the deal with the recent posted rake hike?

So, what is a posted rate? Well posted rates have been around since before I was born. The posted rate is an intricate sales tactic to lure you into a bank. Back in the day you would walk into a bank and you would see a posted rate on one of their walls. Following that you would then move into an office and talk with the banks’ mortgage specialist. They would then offer you a discounted rate (because you are such a good customer). Let’s say the posted rate is 6% and because you are such a “great” client, they give you a rate of 4.5%.

One of the reasons why a posted rate exists still is to help calculate a penalty. Higher posted rates equal higher penalties. So, what the banks are trying to do is eliminate those people who are trying to secure lower interest rates in going elsewhere. This is a problem with a lot of the banks nowadays, as there are some better variable rate mortgages available elsewhere. So, in short, a lot of people are now leaving banks to go chase a better rate. Therefore, the major banks are increasing their posted rate.

A lot of the lenders (non-banks) that we work with don’t use the traditional bank way of coming up with penalties. Instead they use their regular rates also known as straight rates or discounted rates. It could be advantageous for you to deal with a monoline lender, rather than a major bank. Another interesting fact is that banks do deal with brokers, but these are deals through different channels.

Now is the best time to have a look at your mortgage and make sure it is the best mortgage for you. I’m always here to help.

I’m Andrew Young and that’s the deal!