The 10-year Versus 5-year Mortgage: Which is Better?

Mortgage debates used to centre around whether to go fixed or variable but the discussion these days is not whether to lock in a rate but for how long? Variable rate mortgages have slumped in popularity over the last few months as discounts off of the 3% prime rate are either shrinking or disappearing. At the same time, financial institutions have dropped rates to as low as 2.99% for terms as long as four or five years. But there is a new entrant to the marketplace — the 10-year mortgage. The Canadian Association of Accredited Mortgage Professionals says 10-year mortgages are about 1% of the marketplace but that may change as rates for the decade-long term have dropped to an all-time low with some lenders said to be offering an interest rate of 3.84%.

Read More

Mortgage Rules Remain Unchanged - For Now

The irony that bankers dangling some of the lowest rates in history are also asking Ottawa to tighten mortgage rules hasn't been lost on the Finance minister, now suggesting he'd rather sit pat. "I find it a bit off that some of the bank executives are taking the position that the Minister of Finance or the government somehow should tell them how to run their business," Jim Flaherty told reporters just outside Ottawa Thursday. "It's their market. It's not my market. "They decide what they want to charge in interest rates." While analysts are still parsing through those comments, a consensus is emerging that the government will hold off on further tightening of the country's mortgage rules, at least for now. TD's chief economist, among others, had urged Flaherty to use his budget address next week to announce one of three moves to slow demand for housing. On Thursday, the Minister hinted at none of those – a shorter amortization, a higher minimum down payment or new stress tests for borrowers. "With respect to tightening up the mortgage insurance market we've done it three times," he said. "If we have to tighten it some more we will," he said. "I'd like the market to correct itself, quite frankly, if it can." We have been hoping the government would let the current bull market exhaust itself rather than rein it in, potentially boxing in the country's housing industry. "The new housing market produces a lot of jobs in Canada so there's a balance that needs to be addressed," Flaherty said.

Renovations That Will Boost Your Home Value!

With the popularity of home-decorating shows like Trading Places soaring, suddenly everyone's an interior designer. But from a real expert's point of view, where are home-owners' renovation dollars best spent? "Kitchens and bathrooms are the best place to start," says Toronto's Howie Track, owner of Traxel Construction, which specializes in high-end residential and commercial renovation and construction. "Kitchens and bathrooms are the first places people look, and if a new buyer sees that the kitchens and bathrooms have been done, then there's less for them to do." Figures from the Appraisal Institute of Canada support Track's claim. According to the Ottawa-based property-valuation association, bathroom and kitchen renovations continue to be the most popular on the list of perennial home improvements, with a recovery rate of between 75 and 100 percent. Read more ...

Refinancing: is it worth it?

Fixed-rate mortgages are at historic lows but if you are locked in to a contract with your bank, those benefits may be yet elusive. First you have to do the math to see if breaking your contract is worth the penalties you may face. "There is no grey area," says Cindy David, a certified financial planner at Dupuis Langen Financial Management Ltd. in Vancouver. "It's either worth it or it's not." The big five banks are offering four and five year mortgages at just 2.99%. "We're even seeing 10-year fixed rate mortgages at 3.99%," says Ms. David. "Think about that: Interest and principal at 3.99% for 10 years. From a financial planning perspective if any client approached me and said 'Should I look into breaking my mortgage?' My answer would be yes." Step one comes down to meeting with your financial institution and doing the math to determine whether or not the cost of breaking your mortgage is worth the anticipated savings from the lower rates. The fact is the penalty for breaking a mortgage can be thousands of dollars and in many cases, the cost and the future savings cancel each other out, in which case you may be wise to wait until your mortgage is up for renewal.

Read More

Good news...your mortgage prepayment penalty can be tax deductible!

There's one piece of good news about mortgage prepayment penalties: The cost of the penalty can be used as a tax deduction if you're breaking your mortgage to move 40 km or more to be closer to work. The Canada Revenue Agency has a provision that allows you to deduct the costs of moving if you're doing so for a job or for full-time study at a university, college or other type of course at a post-secondary level. You can claim other costs associated with selling your old residence as well: advertising, notary or legal fees, real estate commission as well as that dratted mortgage penalty "when the mortgage is paid off before maturity." Keep the receipts and fill out form T1-M Moving Expenses Deduction. For tax purposes, the mortgage penalties get lumped under "other selling costs, specify" on Line 16 of the T1-M form.  Click here to read more.

Interest Rate at a Record Low

BoC turning hawkish? What the analysts say

The Bank of Canada kept its benchmark interest rate at a record low Thursday, but surprised with slightly cheerier commentary that has economists wondering whether the central bank has brightened up enough to entertain a rate hike sooner rather than later. Mark Carney, governor of the Bank of Canada, highlighted an improving near-term outlook in pretty much every category of concern in his January rate decision, including the European credit crisis, the U.S. economic recovery, global financial markets and the health of the Canadian economy. "The heightened uncertainty around the global economic outlook has decreased in the weeks since the Bank released its January monetary policy report (MPR)," the bank said in a release explaining its rate decision. "Recent developments suggest that the outlook for the Canadian economy is marginally improved from the January MPR." Mr. Carney said the economy will likely grow faster than forecast in the first quarter due to temporary factors, but underlying momentum still points to an expected year of middling growth.

Read More

Goodbye to three irritating bank practices

Three annoying things that banks do to customers are about to become history. Following up on commitments made in the past two budgets, the federal government has announced measures that will stop banks from mailing unsolicited credit card convenience cheques to customers, and that will reduce the holding period on newly deposited cheques. The banks will also have to stop being so secretive about the penalties clients must pay when they want to get out of a mortgage early. Read more

Become Mortgage Free Faster

Regardless of how long you've had your mortgage or how large or small the current balance is, there are a variety of ways to make prepayments work for you to pay down your mortgage faster and, therefore, pay less interest throughout the life of your mortgage. After all, each extra payment amount will reduce your principal balance, which, in turn, reduces the amount of interest you'll have to pay on your borrowed mortgage amount. Most lenders allow you to make a lump-sum payment of anywhere between 10% and 25% of the value of your mortgage per year. The lump-sum payment is based on either the original amount you borrowed or the amount currently outstanding. Since mortgages decrease with each payment, it's best to negotiate a lump-sum payment option based on the original amount you borrow. That way, if you come into an inheritance, a bonus or save some extra money, you can pay down the largest amount possible. Another factor to consider is when you can make a lump-sum payment. Some mortgages allow prepayments throughout the year, while others permit them only on the anniversary date. Still others allow you to make prepayments on the day you make your regular payment. If you can't pay the maximum prepayment amount, it's still worth your while to at least make some form of extra payments, even if it's a few thousand dollars each year. That will still save you thousands of dollars in interest payments throughout the life of your mortgage. Another prepayment option involves taking advantage of flexible payments. Most lenders allow you to increase your regular payment up to a set maximum, such as 15%, while others allow you to double up your payments. If, for instance, you have a $1,000 per month mortgage payment and increase it by 15% to $1,150, you could shave off as much as five-and-a-half years on a $200,000 mortgage. Even rounding up your mortgage payments a few dollars each payment can help make your balance decline sooner. If you round up your mortgage payment from, say, $766 to an even figure such as $800, you can feel confident in knowing that every extra bit goes toward your principal. You can also pay off your mortgage faster by moving to a different payment schedule. Instead of making monthly payments, make them biweekly or even weekly. Using an accelerated mortgage payment plan – where you make payments every two weeks as opposed to twice a month – you actually make one extra payment each calendar year. By paying more and paying faster, you reduce your principal earlier, which lowers the amount of interest you pay. As always, if you have questions about paying your mortgage off quicker, or other mortgage-related questions, I'm here to help!

Examining the Canadian Housing Economy

Because the mainstream media can often mislead borrowers with its doom-and-gloom headlines regarding the Canadian housing and mortgage industries, as well as consumer debt, it's important to get the facts straight from the mortgage brokering industry. The Canadian Association of Accredited Mortgage Professionals (CAAMP) released a new report in mid-February on employment impacts of housing and related mortgage activity that describes the impact of jobs in Canada related to the housing and mortgage sector. The Canadian housing economy is safe and stable. At the peak of the US housing boom, approximately 20% to 25% of all US housing sales were for investment purposes. In contrast, CAAMP estimates that only 2% to 3% of Canadian home sales nationally are investment properties. The reason why this is important is that lenders assume borrowers will pay the mortgage on their primary residence ahead of any investment properties. The latest CAAMP report also shows that home equity is growing rapidly, and Canadian mortgage holders are repaying their mortgages more quickly than is required. This is great news as, not only are Canadians paying less overall interest throughout their courses as mortgage holders, but they're also becoming mortgage-free faster as a direct result. The biggest threat to the health of the Canadian housing and mortgage industry is a recession that results in job losses. The best way to support the housing and mortgage industry, and to sustain its positive impact, is to pursue policies that continue to create jobs. At the same time, it's important that qualified buyers have choice when seeking mortgages to finance or refinance their homes. The mortgage brokering industry offers more choice to borrowers than any other channel – including bank branches and bank mobile mortgage specialists – as brokers have access to multiple lenders (banks, credit unions, trust companies, etc) and can truly match each borrower with the ideal mortgage product and rate catered to their unique needs.

Housing Sector Major Economic Driver

There's no doubt that the Canadian housing sector is a significant economic driver for our country. In fact, housing and mortgage activities create significant employment in Canada. They could account for more than 1.35 million direct and indirect jobs (about 8% of total Canadian employment). The housing and mortgage industry has been particularly important to job creation over the past five years. From 2006 to 2011, it's estimated that 18% of all job creation occurred as a direct and indirect result of growth in the housing and mortgage sector. Rising home values lead to greater consumer spending and, therefore, a stronger economy. CAAMP estimates that rising home values from 2006 to 2011 have led to $17 billion in additional economic activity, or about 1.2% of total gross domestic product (GDP) in Canada. Click here to read the entire CAAMP report.

Interest Rates Keeping Buyers Active

While prices are higher this year, lower interest rates will keep buyers active, according to a new forecast. The Canadian Real Estate Association (CREA) said today that home sales activity in Canada will remain relatively unchanged in 2012 from last year, although average prices will be lower in two years than they are now.

National resale housing activity will gain 0.3% from the 457,305 sales last year to reach 458,800 this year, said the CREA. Rising demand in Alberta, Saskatchewan, and Nova Scotia will offset declines in British Columbia, Ontario and New Brunswick, said the report. "The continuation of low interest rates is good news for housing and for the economy," said Gary Morse, CREA's president. In 2013, a similar picture will play out, according to the CREA forecast, with sales slipping 0.3% to reach 457,200. In terms of price, however, the CREA sees the big gains of 2011 coming to a halt this year. The CREA report showed the average home price gained 7.1% last year to reach $363,116. But by the end of this year, it is predicted to dip 1.1% to $359,100, followed by a 0.9% gain in 2013 to $362,300. But in a turbulent global economic environment, the CREA offered no guarantees.

Read More

Buying Versus Renting

At some point in their lives, most Canadians have probably asked themselves whether it is better to buy or rent a home. And purchasing a home is one of the biggest decisions most people ever make. Ultimately, the decision is a personal choice, but it helps to look at the pros and cons of buying to determine whether home ownership is right for you.

Some advantages of buying a home

Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family. Each month when you make your mortgage payment, you are building equity in your home. Equity is the portion of the property that you actually build through your monthly payment versus the portion that you still owe the lender. At the beginning of your mortgage, more of your payments go toward paying off the interest and less toward paying off the principal. But the longer you stay in your home and the more mortgage payments you make, the more principal you pay off and the more equity you accumulate. Most mortgages also offer you the option of making additional monthly or annual payments to reduce your principal faster. Some prepayment privileges, for instance, enable you to pay up to 20% of the principal per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money. There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate – or increase in value – as time passes, building more equity. As you build up equity, it's usually easier to upgrade to a more expensive home in the future thanks to the profit you'll make when selling your current home. As an owner, you can also decorate and improve your home any way you like. Ownership tends to give you a sense of pride and can offer you and your family stronger ties to the community. If you do decide that home ownership is right for you, it's important to choose a home you can afford. If you can't afford to buy your dream home, purchasing a more modest home can be a great place to start building equity that one day may allow you to buy the home of your dreams. Since we're currently in a buyer's real estate market and interest rates have been dropping, now may be an ideal time to enter into home ownership for the first time.

Some disadvantages of buying a home

Since it's easy to get caught up in the excitement of buying a home, it's important to remember that home ownership has some additional responsibilities as well. For one thing, a home can be expensive. Chances are, your monthly payments will be more than what you are currently paying in rent when you factor in such things as your mortgage, property taxes, repairs and general maintenance. Owning a home ties up some of your cash flow and is likely to reduce your flexibility to move to a new location or change jobs. While your home might increase in value as time goes by, don't expect to get a big return quickly. There are no guarantees that your home will increase in value, particularly during the first few years. In the beginning, you could actually lose money if you sell because your home may not have appreciated enough to cover the real estate fees, and moving, renovation and other selling costs. Real estate is, however, usually considered a good investment over the long term.   When making the decision about whether to buy or rent, it's important to carefully choose a home you can afford, and then weigh the pros and cons. Millions of people enjoy the rewards of home ownership but, ultimately, it's a personal decision based on your own priorities. If you're thinking of buying your first home, the Kupina Mortgage team can answer all of your mortgage-related questions. Feel free to contact us with any questions or concerns.

Treasure hunters coming to Grimsby

Roadshow to set up at Casablanca Winery Inn. The show runs Tuesday to Friday from 9 a.m. to 6 p.m. and Saturday from 9 a.m. to 4 p.m. at the Casablanca Winery Inn, 4 Windward Drive, Grimsby. Specialists on a world treasure hunt are headed for Grimsby. THR's Treasure Hunters Roadshow will set up at the Casablanca Winery Inn for five days and invite community members to bring in their treasures. More than 1,200 residents are expected to bring in their rare and unusual collectibles Tuesday, March 13 to Saturday, March 18. Patrons will have an opportunity to talk to world-renowned antique and collectible representatives free of charge during this event.

Read More

TIFF comes to Grimsby

Library, art gallery team up for new film club. See the world through film with the Grimsby Public Library and Art Gallery. The two entities are teaming up to present a new film club, which will premiere Thursday, March 8 at 7 p.m. with the showing of My Week with Marilyn.

Read More

Grimsby Lincoln News

The Grimsby Lincoln News is a full-colour, free circulation, tabloid weekly newspaper delivered on Wednesdays and Fridays to every home in the region. The News is included in Niagara This Week's circulation. With 165,000 copies printed each week, Metroland's newest publication has the largest press run of any community newspaper in Canada.

Website

Stoney Creek News

Stoney Creek has coined the phrase "A Great Place to Live, A Great Place to Grow." This reflects the diversity, both rural and urban that defines this historic community. Its strategic location has attracted major employers and it has links with the rest of Canada and the United States that are second to none. The Stoney Creek News was established in 1948 and has grown as the community has grown. The dedicated staff covers all types of news from hard hitting stories to special goings-on in schools, home and churches. It is the only news medium dedicated to covering Stoney Creek. In 2008, the Stoney Creek News celebrated its 60th anniversary as the only dedicated print media in the community.

Parking Meters for Stoney Creek, Flamborough Expire

Stoney Creek and Flamborough's controversial on-street parking meters have expired. Councillors, in a 10 to 2 vote, agreed with a motion introduced by Stoney Creek councillor Brad Clark, and Flamborough councillor Judi Partridge to remove them 20 months after being installed. The recommendation is scheduled to be debated at the March 7 council meeting. "The meters have not been a success," said Clark. He said people are more inclined to shop at Eastgate Square, or some other nearby strip mall where the parking is free. He points out some businesses have left Stoney Creek's downtown area because of the extra cost of the metered parking, while other potential businesses looking to locate to Stoney Creek, decided to set up shop in some other area without metered parking.

Read More

New Winona Elementary School Officially Opens

On Monday, Feb. 27, the Winona Elementary School located on Barton street in Stoney Creek officially opened its doors to its new facility. The Ministry of Education in 2008 approved the Hamilton-Wentworth District School Board's business case to rebuild the Winona school. Hamilton-Wentworth District School Board representatives say construction of the new Winona Elementary School was ahead of schedule.

Read More