Category: Mortgage Information

You’ve saved for your down payment, you’ve crunched the numbers and you’ve decided on the Kamloops neighbourhood where you want to live – but are you really ready to start shopping around?

Buying your first home is one of life’s most exciting milestones, but there are lots of steps on the way to crossing the threshold as an owner for the first time. To make sure this process goes smoothly, you’ll need to get financing advice right from the get-go and do some work in advance.

Get your down payment and deposit ready. A down payment must come from your own resources, and in most cases must have been held in your account for at least 90 days. Using a gift from your parents or other family member for a down payment?  You’ll need a letter stating that it is actually a gift and does not need to be re-paid. These funds will likely need to be deposited in your account two weeks before your purchase closing date.

The Home Buyers’ Plan is another financing option for first-time buyers. It allows you to withdraw up to $25,000 ($50,000 per couple) from your RRSP to buy or build a home.

Keep in mind that when placing an offer, a deposit is usually required. It can be all, or part, of a down payment.

Figure out what you can afford. The best way to do this is by talking to a mortgage expert and getting pre-approved for a mortgage. A mortgage consultant can provide examples of what monthly payments and home buying costs will be, to eliminate surprises.

Get in touch with the professionals. Think of home buying as a team sport – a mortgage consultant can help you find a good real estate agent, real estate lawyer, home inspector and home insurance agent. Be sure to get in touch with these professionals early in the buying process to avoid last-minute scrambles.

Come up with an offer strategy. It’s easy to get caught up in the emotion, so it is important to decide on a maximum price before bidding and to stick to it.

Choose your mortgage strategy. Ask yourself: Do I want the stability of a fixed-rate mortgage or am I comfortable with the potential rewards and risks of a variable-rate loan? A mortgage expert can help you decide which one makes the most sense for your financial situation, as well as help you understand your payment options and the other features of various types of mortgages.

Get ready to close. When buying a home, it pays to learn about closing costs, which can represent up to 3 per cent of the purchase price, including land transfer tax, lawyer’s fees, appraisal fees, title insurance and home inspection fees.  A mortgage professional can help estimate how much these will cost and offer ideas for how you can cover these costs.

A lot of first-time buyers can’t wait to get out there and house hunt, but they need to understand that this is not a decision to enter into lightly. But with careful planning and expert advice, you can make your first home – and your first mortgage – work well for you in the long term.

Brenda Colman, Mortgage Consultant, Invis Kamloops

P. 250-318-8118  E. ac.sivninull@namlocadnerb W. www.BrendaColman.ca

The Bank of Canada is expected by many economists to raise short-term interest rates in June or July, prompting many Kamloops home buyers and mortgage holders to ask whether a variable-rate mortgage or a fixed-rate mortgage is best for them.

How, exactly, are mortgage rates offered by lenders determined?  Many Canadian mortgage holders are surprised to learn that the pricing for variable-rate and fixed-rate mortgages are determined by two different means.

First, let’s look at the pricing of variable-rate or “floating rate” mortgages.  The rate for these mortgages is tied directly to the Prime rate, which is set by the Bank of Canada, usually through regularly scheduled announcements.  A competitive variable rate mortgage is now commonly available at Prime (now at 2.50%) minus 0.60%, or even lower in some cases.  Those with variable rate mortgages need to keep an eye on the Prime rate and should keep in contact with a mortgage professional, who can explain interest rate trends.

Pricing for fixed rate mortgages follows a separate dynamic, and is a bit more complex.  Fixed-rate mortgages are priced in relation to the bond markets, as bonds are the main competing investment to mortgages for investors.  Mortgages are priced higher than bonds, usually between about 1.20% and 1.90%, to account for higher risk of default and administration costs incurred by investors who hold mortgages as opposed to relatively hassle-free bonds.

The most popular type of mortgage in Canada is currently the five year fixed-rate mortgage.  Discounted rates for this type of mortgage (available through a mortgage broker) have been trending upwards in recent weeks and currently stand at about 4.29%.

With rates for both variable and fixed mortgages relatively low, consumers must decide based on their own preferences and unique circumstances. A mortgage broker can help consumers evaluate their mortgage options and make an optimal choice.

Brenda Colman, Mortgage Consultant, Invis Kamloops

P. 250-318-8118  E. ac.sivninull@namlocadnerb W. www.BrendaColman.ca

Will the new mortgage regulations affect Kamloops real estate? On February 16, 2010 the Government of Canada announced a series of regulatory changes to support the long-term stability of Canada’s housing market.  The Government has now provided the following details in relation to these changes.

Effective April 19, 2010 Qualifying Interest Rate Guidelines Will Change

• Fixed Rate Mortgages of terms less than 5 years and all Variable Interest Rate Mortgages: applications will be adjudicated based on the greater of the 5 Year Bank of Canada Benchmark Rate**, or the actual customer rate (inclusive of any customer discretion).
• Fixed Rate Mortgages of terms 5 years or greater: applications will be adjudicated based on the actual customer rate.
• This change applies to both conventional and insured mortgages.

The three key changes associated with this announcement are:

• Borrowers will need to be able to afford a five-year fixed rate mortgage, even if they choose a mortgage with a shorter duration.
• Investors, who want to buy a home that they don’t plan to live in, will have to make a minimum down payment of 20%.
• Canadian home owners will only be able to withdraw 90% of the value of their homes in a refinancing, down from 95%.

The good news is that buyers still can purchase a home with 5% down and can still go up to a 35 year amortization.  The reason for the changes is the Government of Canada is wanting to make sure that if interest rates go up, purchasers will still be able to afford their mortgage payments.  With regards to refinancing your home, the Government of Canada is trying to discourage people from borrowing against their home for a quick fix for their financial problems.  They are trying to have home owners use their home as a savings tool and not just an easy way to keep consolidating their debt.

Please call me if you have any further questions on the changes or if you would like to go through a free no obligation mortgage information session.  We can look at pre-qualifying you for a mortgage, rate hold guarantees, even refinancing or renewing an existing mortgage.  I look forward to hearing from you!

Brenda Colman, Mortgage Consultant, Invis Kamloops

P. 250-318-8118  E. ac.sivninull@namlocadnerb

**The Bank of Canada Benchmark Rate is defined  as the Chartered Bank – Conventional Mortgage 5-year Mortgage rate, published by the Bank of Canada each Monday.

Purchasing a home in Kamloops is one of the biggest purchase most of us will ever make, and a mortgage can also be a powerful financial tool. No surprise then that a growing number of Canadians have started to ask some smart questions about their mortgage when considering purchasing real estate. In fact, more than 40% of all Canadian mortgages are now arranged through mortgage brokers. Why?  Read on;

Choice. A broker has access to mortgages from a huge range of lenders – so their clients have by far the best choice of rates and mortgage options.  With partners in a vast network of over 30 lending institutions, including banks, credit unions, trusts, national and regional lenders, and non-traditional lenders, your broker can help design the perfect mortgage for you.

Independence and objectivity. A mortgage broker actually works for you, not for any one lender. That kind of objectivity means that you – the client – are the focus. They fit the mortgage to the client, not the other way around.  You’ll get the best rate for your situation.

Promotions. You may not realize it, but there are sales and promotions in the mortgage world, too. Lenders often offer special rate promotions, for example. Your broker will know about these special offers, and whether they might work in your situation.

Expertise. With 35-year amortizations, re-advanceable mortgages (mortgage combined with a line of credit), no income documentation products for the self employed, credit repair and debt consolidation solutions, today there are mortgages for almost any situation. And your independent mortgage broker knows them all.  That’s what you want: someone who’s focused on the mortgage marketplace and your needs.

Rates. Getting a lower rate can potentially save you thousands of dollars. That’s why more homeowners are more likely to call a mortgage broker to check out their options for their first mortgage and at renewal. Call early; your mortgage broker can usually guarantee an interest rate for 90-120 days.

One credit inquiry. Rate-shopping on your own can actually be hazardous to your credit. Every time a lender checks your credit, the credit bureaus take notice. Too many inquiries and your credit rating can weaken, possibly affecting the rate and terms of your mortgage. Your broker does one inquiry only, regardless how many lenders you’re looking at.

No cost to you (o.a.c). As a rule, the winning lender pays compensation to your broker for the services and solution provided.

Personal attention. You need a mortgage plan that is a custom fit for you, and a broker who keeps in touch with you during your mortgage years. Keep in mind that their business is built primarily through referrals from satisfied customers, so your positive mortgage experience is essential for their ongoing business growth.

Your mortgage is a big decision and a powerful financial tool.  For your next mortgage contact me anytime. I am a local Kamloops mortgage broker who is trained and ready to help you achieve your financial and home ownership goals.

Brenda Colman, Mortgage Consultant, Invis Kamloops

P. 250-318-8118  E. ac.sivninull@namlocadnerb W. www.BrendaColman.ca