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First Time Home Buyers

CMHC’s New Incentives for First-Time Home Buyers

By | blog, Home Ownership, Mortgage Education, Mortgage News | No Comments

Everything You Need to Know About CMHC’s New Incentives for First-Time Home Buyers

First Time Home Buyers

James Harrison, AMP
Mortgage Broker
Mortgages.ca

 

Breaking into the Canada mortgage market as a first-time homebuyer can be daunting, especially when it comes to navigating incentives, offers, and financial hurdles. Luckily, CMHC’s newest Home Buyer Incentive Plan for 2019 is full of incentives tailored perfectly for first-time homebuyers, the most important of which are broken down below:

 

Payment for Equity

As part of the latest First-Time Home Buyer Incentive Plan, CMHC will pay 5% of the purchase price for an existing home and up to 10% for the value of a new home as part of a down payment assistance program in exchange for an equity stake. This means that the Government of Canada partners with you in a Shared Equity Mortgage, taking a share of the increase (or decrease!) in the property’s market value. To qualify for this incentive, first-time homebuyers must meet a short set of criteria:

 

  • Minimum down payment amount based on mortgage amount
  • Qualifying income is $120,000 or below
  • Total mortgage is no greater than four times the qualifying income
  • Homes must be below the purchase price of $500,000

 

The government’s equity stake, otherwise referred to as a Shared Equity Mortgage, is then repaid as a percentage of the selling price, which takes into account the gain or loss in property value.

 

Taking Advantage of Your Money: RRSP Withdrawals

The Home Buyer’s Plan, a federal program that acts as a first-time homebuyer incentive, allows you to use a $35,000 RRSP withdrawal (in one year) towards your new home purchase. Making your RRSP withdrawal requires you to fill out a Home Buyers Plan Redemption Form to declare the amount that is being withdrawn, whether in a single amount or in installments. 

 

Why First-Time Homebuyer Incentives?

In today’s housing market, it can take individuals years to save up enough for the minimum down payment of 5% on a home. With the help of the First-Time Home Buyer down payment assistance incentive and the RRSP withdrawal allowance, purchasing a home can come much sooner. 

 

These incentives, developed for Canada’s real estate market and the first-time homebuyer, offer a number of benefits that help one transition into home ownership, such as: 

 

  • Purchase a home with the future in mind
  • Reduce the financial burden without delaying property purchase
  • Shared equity mortgage means interest-free down payment assistance
  • First-Time Home Buyer Incentive allows choices for repayment based on property value, not interest
  • Savings on mortgage payments of up to $3,430 per year

 

Your first home is one of the biggest, most important purchases of your life. The Government of Canada has developed a system to help first-time homebuyers comfortably acquire and pay back a mortgage, with assistance that is based on property value, rather than an established interest rate. With CMHC’s First-Time Home Buyer Incentive, buying your first home just got much easier.

 

Apply now for a mortgage with Mortgages.ca and learn more! 

Happy Couple Saving Money

How To Pay Down Your Mortgage Faster

By | blog, Home Ownership, Mortgage Education | No Comments

Paying down your mortgage will not only lower your debt, but it will also reduce the amount of money you spend on interest.

Happy Couple Saving Money

By: Scott Nazareth
Mortgage Broker

Your mortgage is one of the biggest and longest-running debts you pay. Your monthly payments can consume a big chunk of your earnings, reducing your cash flow. Paying down your mortgage will not only lower your debt, but it will also reduce the amount of money you spend on interest.

You can pay off your mortgage fast with lower interest rate loans and short amortization terms. Amortizations can range from thirty to thirty-five years. Many homeowners opt for longer time frames to lower their regular payments, but those increase the total amount of interest paid over the life of the mortgage contract. If a short timeline is not financially viable, here are some ways you can pay off a mortgage fast.

 

Lump Sum Payments

Paying a lump sum payment on your mortgage will shorten the time it takes to pay off your loan. Whether you put extra money down monthly, quarterly or yearly, the long-term savings will be substantial.

Every year, you can pay a lump sum of up to 20% of the outstanding principal. An annual lump sum payment will not only reduce the total amount of interest you pay, but it can also shave years off of the life of your mortgage.  For example, if you paid 10% of the remaining mortgage each year for five years, you will have paid 50% of the mortgage and halved the projected amortization period.

 

Accelerated Payment Plans

If your mortgage payment schedule only includes monthly payments, consider opting for an accelerated payment plan. An accelerated payment breaks your monthly bill into smaller amounts that are withdrawn weekly or biweekly. Accelerated plans with more frequent installments reduce the interest you’d pay over time. That is the equivalent of making one extra payment each year.

 

Same Payment on Lower Interest Loans

If your mortgage renewal has a lower interest rate, request to keep your monthly installments the same as they were with your previous rate. By maintaining a consistent payment plan on a lower interest loan, you will be paying more of your mortgage without impacting your budget. That will reduce the total interest you pay and the length of your mortgage.

 

Increase Mortgage Payments

When refinancing your mortgage, ask to increase your payments rather than accept the monthly rate set by the lender. Even a small increase of $100.00 more per month will lower the total interest you pay and take years off the life of your mortgage.

A home loan is typically the biggest debt most Canadians have, taking much of your hard-earned money, especially considering the interest fees. There are many simple and highly effective measures you can take to pay off your mortgage fast. Talk with a mortgage broker about the best mortgage renewal terms as well as strategies to lower debt so that you can be debt-free sooner.  

 

To find out how you can pay off your mortgage faster, contact one of our mortgage brokers for your free consultation by clicking on our ‘Apply Now’ button, emailing us at info@mortgages.ca, or by calling #647-795-8700 ext. 0 today.

 

With Mortgages.ca, you have nothing to lose and only great INSIGHTS to gain.

Calculate-Closing-Costs-Calculator

How to Budget Closing Costs for a Home Purchase

By | blog, Home Ownership | No Comments

Forgetting to budget for closing costs is one of the most common mistakes new homeowners make

 

Calculate-Closing-Costs-Calculator

 

By:
Steve Harrison,
Mortgage Broker

If you are thinking of buying a home, you’ve probably started saving for the down payment. But have you considered how much you will need to save for the closing costs? If you haven’t, you are not alone. 

What are Closing Costs?

Closing costs are all the fees you will need to pay when the sale of the home or property is finalized. Some expenses are mandatory while others are optional, but before looking for a new home, it is important to talk to a mortgage broker about all of the financial obligations that come with buying a home. Your professional mortgage broker will explain what fees you will have to pay so that you can plan your closing day budget.

Why It Is Important to Save for Closing Fees

Not planning for closing fees will create unnecessary and unwanted financial challenges. Homeowners who are unprepared for closing day fees are often surprised, frustrated, and stressed by the additional expenses they’re asked to pay. Before buying a home, ask your broker about all of the fees that you’ll have to pay in addition to the mortgage.

Financial experts recommend saving between 1.5% to 2% of your home’s total value on your final mortgage closing costs. For example, if you are planning to buy a house for $600,000.00, you will need to save between $9,000.00 to $12,000.00 for your closing costs, such as land transfer taxes and legal fees.

Mandatory Closing Costs

Mandatory costs are the fees you have to pay on the closing day, such as lawyer fees, land transfer fees, homeowner’s insurance, and mortgage insurance taxes (if applicable).

You might also be responsible for paying prorated property tax and utility bill monies to the previous owner if they have prepaid these expenses. That would be outlined by your lawyer in your statement of adjustments.

Optional Closing Day Fees

Optional mortgage fees are expenses that you might have to save for, but they are not necessities. Moving costs, some utility hookup fees, changing the locks to your new home, renovations or upgrades, purchasing household items, pest control inspections, and unexpected repairs are all considered optional closing costs.

Photo by Douglas Sheppard on Unsplash

Buying a home can be expensive from start to finish. From deposits to closing fees, home buyers must save enough money to cover all the costs associated with purchasing a property.  Speaking to a mortgage broker before you start looking for your first home can help you plan for all areas of the purchase so that you can set realistic financial goals for your home purchase.

Need Mortgage Advice?

For a free consultation, visit our website and click on the ‘Apply Now’ button. You can also contact us by email at info@mortgages.ca or by phone at 647-795-8700 x 0.

With Mortgages.ca, you have nothing to lose and only great insights to gain.

Mortgage Broker vs. Bank: Which Makes Sense For Me?

By | blog | No Comments

Purchasing a home is one of the most exciting experiences for first-time homeowners, but it can also be quite stressful.

mortgage broker meeting

Image Credit: Nik Macmillan

James Harrison, AMP
President / Mortgage Broker
Mortgages.ca

 

There are many steps to walk through before getting the keys to your new property, and a big challenge is securing a mortgage. Traditionally, most homebuyers use their own banks to finance a home purchase. In recent years, more mortgage holders have wondered if they should renew with a bank or look at other finance options. Let’s look at why more buyers are visiting brokers instead of a bank to refinance their home loan.

 

More Lenders & Options

As the cost of home ownership rises, buyers are looking for ways to save money. Bank representatives can only give homebuyers the services and rates offered by their company. On the other hand, mortgage brokers are not working for one lender but will work with 30 or more lenders from a variety of institutions, including major banks, credit unions, trust companies, and more. Your options are far more varied when working with a mortgage broker, and they do the work of researching and vetting for you.

 

Greater Knowledge of the Industry

Banks provide many different services to their clients, and while knowledgeable, representatives are not experts on mortgages and loans. Their expertise is limited to the bank’s services, policies, and loan structures.

Brokers specialize in mortgages, so they have superior knowledge of the industry as a whole. They work with tens of lenders and have an understanding of all the loans each lender provides. A mortgage broker’s job is to find the best options for loans and mortgage renewals, and they are always keeping up with the latest industry news and trends. So you can rest assured your broker can assess your needs and match you with the best mortgages.

 

A Mortgage Broker Works for You

A bank works primarily for itself, not its customers. The services are based on the institution’s gains, not on the client’s. Bankers make sure mortgage loans will not hurt their bottom line and will limit risks at all costs.  

Mortgage brokers work for their clients. Their job is to find the deal that best suits your needs. A broker looks at your situation, including your short-term and long-term goals, then helps you find a suitable mortgage from the right lender. They will go through all the pros and cons of each agency and answer your questions to ensure you have a clear understanding of the loan and lender.

Buying real estate is one of the most significant and expensive investments you will ever make, and struggling to find the right lender can add unnecessary stress. Whether you are a first-time homebuyer or you want to refinance your existing mortgage, a mortgage broker can help you choose the right lender to meet your current and future needs.  

While most consumers went to their own bank in the past, more homeowners are seeking the help of a mortgage broker. Good mortgage brokers are experts who work to find the best deal for each client. If you’re getting a mortgage or adjusting one, research different brokerages and full-time brokers that can help you. Read reviews online or ask your friends, family, co-workers, and realtor for recommendations.

 

For more information on how a mortgage broker can help you, contact Mortgages.ca today for your free, no-obligation consultation. You can contact us by phone at 647-795-8700 x 0, by email at info@mortgages.ca, or by visiting our website and clicking ‘Apply Now’ to speak to a mortgage broker today.

With a mortgage broker, you have nothing to lose and only great INSIGHTS to gain.

pre-approval consultation

Mortgage Pre-Approvals: Top 3 Common Myths [VIDEO]

By | blog, Mortgage Education | No Comments

If you’re preparing to take the next step in the home-buying process, a pre-approval consultation is a key first step that can save you time and money

pre-approvals consultation

Image Credit: Rawpixel

Pre-approvals are a CRUCIAL first step in your mortgage journey. If you’re a first time homebuyer, it’s completely normal to feel apprehensive about the process but this apprehension often stems from common myths (often learned through friends and family who are well-intentioned and eager to assist but may be misinformed). It is important to speak to a licensed and experienced mortgage broker who can provide prompt answers to your questions while understanding how home ownership fits within your long- and short- term financial goals.

 

The Pre-Approval Process

A pre-approval consultation is a very simple process that generally takes about 10-15 minutes via telephone or online application. In order to recommend the best mortgage rate and products, your broker will first need to determine your mortgage eligibility by verifying your employment and/or income (via tax returns, paystubs, and/or letter of employment).

For example:

If you are salaried/hourly, a broker will request:

  • most recent paystub
  • letter of employment
  • last two year T4s (tax returns)

 

If you are self-employed, a broker will request:

  • last two year T1 generals full
  • last two year notice of assessments (with confirmation of taxes up to date)
  • if incorporated, we will additionally ask for
    • last 2 year business financials
    • articles of corporation

 

Upon determining your mortgage eligibility, your mortgage broker will narrow down the products and rates for which you qualify and get you started on your mortgage journey.

 

Debunking the Myths

Click our video below to see James Harrison, President and Mortgage Broker for Mortgages.ca unpack 3 of the most common myths of mortgage pre-approvals:

  • Myth #1: Pre-Qualified = Pre-Approval
  • Myth #2: Pre-Approved = Unconditional Offer Time
  • Myth #3: Pre-Approvals Last Forever

 

For more information on how a mortgage broker can help you, contact Mortgages.ca today for your free, no-obligation consultation. You can contact us by phone at 647-795-8700 x 0, by email at info@mortgages.ca, or by visiting our website and clicking ‘Apply Now’ to speak to a mortgage broker today.

With a mortgage broker, you have nothing to lose and only great INSIGHTS to gain.

5-Year Fixed Rates Drop Due to Predicted Prime Rate Cuts

By | blog, Mortgage News | No Comments

What does the arrival of a dropped 5-year fixed product mean for the variable versus fixed debate? Frankly, not much.

5-year fixed products drop over anticipated prime rate cuts

Image Source: Al x

James Harrison, AMP
President / Mortgage Broker

As of this week, economists are predicting the prime rate could actually start coming down. As a result, banks and lenders have been dropping the 5-year fixed rates and removing the discounting on the variable products so as to encourage clients to go fixed.


Don’t Be Fooled: We’ve Seen This Strategy Before

The banks have been aggressively pushing the 5-year fixed rates for the past 8 months now, using the fear over the last few rate increases as reason enough to consider the switch. But lest we forget: the 5-year fixed product is the most profitable product for the banks, not you.

When the prime rate goes up, banks systematically try to convince variable clients to break their mortgage and instead lock into a new fixed rate that is generally 0.75%-1.00% higher than the current variable rate. And based on 2018’s recent Mortgage Consumer Report, this fear mongering works — noting at least 68% of Canadians are talked into a fixed rate product.

But rest assured, when our variable clients call–panicked after a prime rate increase–our answer is always the same:

Our Clients: Do we lock in?
Us: No!

An Alternative (& More Effective) Strategy

Say NO to 5-year fixed but you should increase your payments as if you did lock in! This way, you are paying off your mortgage faster without the higher interest cost and terrible terms & conditions of the bank’s 5-year fixed product.

Speak with a Mortgage Professional

Regardless, you should always work with a professional and experienced mortgage broker in making these decisions. By definition, a mortgage broker works for you, independent of the bank’s interests.

If you’re considering a switch and your bank suggests a 5 year fixed rate product, make sure to ask them “why?” Think critically and get a second opinion from a mortgage professional. It’s your hard-earned money, it should stay in your pockets.

In Summary:

  • Go variable
  • Increase your payments from day one as if you went fixed and
  • Always stay loyal to yourself first–not your bank.

Let’s Connect!

For more information, click Apply Now, email us at info@mortgages.ca, or call 647-795-8700 x 0 today for your free, no-obligation consultation.

With the help of a Mortgages.ca broker, you have nothing to lose and only great INSIGHTS to gain.

 

How to Pay Down Debt & Increase Your Cash Flow

By | blog, Mortgage Education | No Comments

Owing money can quickly become a vicious cycle when most of your earnings go toward paying creditors instead of lining your own pockets.

Pay-Down-Debt-Increase-Cash-Flow

James Harrison, AMP
Mortgages.ca

 

Many Canadians have accumulated debt to finance major milestones or to pay for smaller day-to-day items. Though debt is quite common, you should keep a close eye on your loans and think about cutting down. According to the Bank of Canada, most Canadians now owe $1.70 for every dollar they earn. As interest rates climb, homeowners are focusing on paying off debt and saving money in 2019.  

The higher your debt load, the less cash flow you have. Before your bills become too much to handle, talk to a mortgage broker about debt consolidation options and your eligibility to refinance. Mortgage brokers have the knowledge and resources to advise you on the most effective ways to pay down debt and increase your cash flow.

 

Pay High-Interest Loans First

Loans like credit cards, lines of credit, high mortgage rate loans, and private company loans are harder to pay off because a bigger portion of your payment goes toward interest. You can save money by paying off these bills first. For larger amounts that take longer to pay, consolidating debts into a lower interest secure line of credit or mortgage line of credit will help you save money so that you can repay the debt quickly.

 

Refinance Your Mortgage

You can lower your monthly mortgage payment and increase your cash flow when you refinance your home loan. Rather than continue to pay unrealistically high interest rates, you can consult a mortgage broker to find a lender that offers lower rates so that you can put more money toward the actual loan. A broker can also advise you on the best options to reduce your monthly mortgage payment so you can save more money for other things, like childcare.  

 

Consolidate Your Loans

If you have too much credit card debt or high-interest debt, consolidating them into one low-interest loan will reduce your monthly expenses to one manageable bill.

 

Save for an Emergency Fund

Saving money can be challenging when you owe creditors, but having money for unexpected emergencies will reduce your risk of going further in debt. Increase your cash flow by putting part of your earnings away each month so that you’re better prepared in an emergency.

In today’s borrowing culture, Canadian homeowners have high debt. Multiple loans and high interest rates can negatively impact your credit rating if you cannot pay your bills. Before your debt load becomes overwhelming, talk to a mortgage broker. A broker can help you find effective ways to save money by refinancing your mortgage or consolidating debt to a lower interest rate line of credit, and you can avoid lowering your credit score.

 

For more information on how a mortgage broker can help you reduce your debt, click Apply Now, email us at info@mortgages.ca, or call 647-795-8700 x 0 today for your free, no-obligation consultation.

With the help of a Mortgages.ca broker, you have nothing to lose and only great INSIGHTS to gain.