| Rate | Payment Int. | Cost (term) | Balance (end of term) | Increase cost over #1 |
| 1. 3.19% | $1,207.63 | $36,918.05 | $214,460.25 | |
| 2. 3.38% | $1,232.40 | $39,167.47 | $215,223.47 | $2,249.42 |
| 3. 3.59% | $1,260.09 | $41,658.85 | $216,053.45 | $4,740.80 |
Wednesday, 7 November 2012
Why you Need to Visit a Broker for your Mortgage Renewal!
We hear countless stories of people willing to pay hundreds of dollars in cancellation fees to switch cell phone, cable or even home security providers yet when presented with an opportunity to save thousands of dollars, some mortgage holders don't seem to want explore their options. When you add in the fact that banks routinely charge higher interest rates to existing clients than they do to new ones, mortgage holders may be better served by shopping around at renewal time. Clearly, the best way to shop for rates is by using the services of a mortgage broker, yet 73% of Canadians choose not to, even though, on average, the ones who did, saved 19 basis points on their mortgages. Those who renewed or renegotiated with a mortgage broker reported an average rate decrease from posted of 1.4 basis points, compared with 1.0 points among all renewers. While 48% of first-time buyers used a mortgage broker only 27% of those refinancing and 21% of those renewing used one. At renewal, 88% of consumers remained loyal to their lender. So, with a discrepancy of up to 40 basis points at renewal, why are so many staying loyal to their existing lenders? It might make sense to stay with your original lender, but not always. After all, your mortgage broker offered you the best mortgage and interest rate at the time of purchase. But some lenders such as FirstLine have now left the market, while others, including your existing lender may have changed their pricing strategies. To know whether changing lenders is right for you it is vital to understand the process and the costs. The number one cost or "friction" is the need to re-qualify. Most lenders will automatically offer their good customers a renewal. If you need additional funds or plan on transferring or switching to another lender, that new lender will first have to re-qualify you. When you switch lenders you or the new lender will request a payout statement -- in many cases your mortgage broker can assist you with this. There may be a discharge fee, perhaps a penalty on your existing mortgage and an appraisal may be required. In some instances the new lender will pick up the cost of legal fees and appraisal costs. There are no penalties when a mortgage reaches maturity, however, if you transfer or refinance your mortgage prior to maturity there may be contractual penalties. The most common are the Interest Rate Differential (IRD) for fixed rate terms and three months interest for adjustable/variable rate mortgages. So let's assume that financially it makes sense to switch –now let's look at the numbers. Assuming a mortgage balance of $250,000 on a 5-year fixed rate and an amortization of 25 years, here is a comparison of three scenarios: $250,000 mortgage, 5 year fixed, monthly payments, 25 year amortization (numbers are used for illustrative purposes only)
The savings identified above are after tax dollar savings, which can be significant. It is worth it to consult with a mortgage broker. Reviewing options with a broker does not negate an offer to renew with your existing lender. In the end the broker may advise you to stay where you. However, it's worth finding out whether or not you can financially benefit by switching. Cost and rate aside, mortgage brokers can lessen the "friction" by facilitating the process on your behalf. With a single application and credit review they can navigate the market on your behalf, assessing options from multiple lenders. They will advise on product features including prepayment options and penalty calculations to match you with the right product for your unique circumstances. Call us today at 1.888.955.9011
Tuesday, 6 November 2012
Homebuilding to Slow in Canada
The pace of homebuilding in Canada will continue to moderate in the last quarter of 2012 and into 2013, while existing home sales should hold steady and prices climb at or just below the inflation rate, Canada Mortgage and Housing Corp says. The federal housing agency's forecast on Monday for a weaker, but still healthy, housing sector echoed a string of data that has shown Canada's recently red-hot real estate market cooling, but without signs of a crash landing. Long convinced the country's housing boom would never end in a crash, Canadians have watched this autumn as a sharp slowdown in real estate spreads across the country, leaving would-be home buyers hopeful and sellers scared. A weaker outlook for global economic conditions and the waning of the effect of pre-sales from late 2010 and early 2011, which contributed to support multi-family starts this year, will bring moderation in housing starts next year," MathieuLaberge, deputy chief economist at CMHC, said in the agency's fourth-quarter outlook. "Nevertheless, employment growth and net migration will help support housing starts activity going forward," he added. Canada's housing market, which roared higher in 2011 and the first half of 2012 aided by low interest rates, started slowing after the government tightened rules on mortgage lending in July in a bid to cool things down and prevent home buyers from taking on too much debt. Statistics Canada data released on Monday showed the value of building permits fell by an unexpectedly large 13.2% in September from August, dragged down by a major drop in the non-residential sector, but with housing permits holding steadier. The overall fall in permits – the biggest since a 23.7% plunge in April 2011 – was far greater than the 3.0% decrease forecast by market operators. Statscan revised August's advance to 9.5% from an initial 7.9%. But the value of residential permits climbed by 0.4% after two monthly decreases. Single-family dwellings advanced by 3.4%, while multi-family dwellings dropped by 3.8%, suggesting some strength remains on the housing side. "On the year, residential permits remain up 19%, highlighting the booming homebuilding sector that continues to thrive under a low-rate environment," CIBC World Markets economist EmanuellaEnenajor said in a research note. Still, the tighter mortgage lending rules that took effect in July are expected to continue to help to rein in the market. "Although the value of residential building permits increased slightly in September, the effect of tighter mortgage lending regulations announced by the government in July will likely put a damper on new residential construction over the near term," Deutsche Bank economist JohnClinkard said in a research note. Permits in the non-residential sector plummeted 30.8% in September after increasing 27.7% in August. Industrial and institutional permits posted particularly steep drops. In its quarterly outlook, the CMHC said housing starts will be in the range of 210,800 to 216,600 units in 2012, with the most likely outcome 213,700 starts. Homebuilding should slow further in 2013, with starts in the range of 177,300 to 209,900, and a most likely outcome 193,600, the agency said. Economists at CIBC World Markets said last week they see a slowing in housing starts to 180,000 a year by 2014, down sharply from the 220,000 range today. In that scenario, the impact on growth in gross domestic product would be a drop of 1 to 1.5 percentage points, CIBC said. The Bank of Canada has forecast economic growth of just 2.3% in 2013 and 2.4% in 2014. The CMHC forecast existing home sales to slow to a range of 449,200 to 465,600 in 2012, with the most likely outcome of 457,400. In 2013, sales are expected to rise to 433,300 to 489,700, with the most likely outcome 461,500. Price gains are expected to slow in 2012 but regain some strength in 2013. CMHC's forecast for the most likely average price calls for a 0.2% gain to $365,100 in 2012and a 1.5% gain to $370,500 for 2013. "A weaker outlook for global economic conditions and the waning of the effect of pre-sales from late 2010 and early 2011, which contributed to support multi-family starts this year, will bring moderation in housing starts next year," MathieuLaberge, Deputy Chief Economist for CMHC, said in the federal agency's fourth-quarter outlook. "Nevertheless, employment growth and net migration will help support housing starts activity going forward," he said. © Thomson Reuters 2012
Wednesday, 31 October 2012
How Your Self-image Determines Your Level of Wealth
Strange as it seems, the reason we don't get what we want is because we're actually getting exactly what we want! The trouble is, we set our sights very low, convince ourselves that's all we want, and end up getting exactly that. To attract more wealth, we have to WANT that level of wealth. But just "wanting" isn't enough; you also have to believe you are worthy and capable of achieving that level of wealth. That means developing a wealthy self-image. If we appreciate ourselves as one-of-a-kind human beings with unique strengths and abilities, we begin to value who we are. We feel worthy of the goals we set for ourselves, which makes it easier to achieve them. Unfortunately, 90% of people don't believe they are worthy or capable of much success. So 90% go around not getting much out of life. Ever notice how wealthy the top 10% of society is? Not only do they have positive self-images, they recognize how little the other 90% expect out of life. It's pretty easy to succeed when you're surrounded by people who have "I can't" as their mantra! But you don't have to settle for being among the 90% of under-achievers. Start recognizing and focusing on your strengths today. Delegate your weaknesses. Be grateful for the wealth you already have. Start feeling wealthy. Eventually, you'll start behaving like a wealthy person. Soon you'll be attracting even more wealth because you know you deserve it. Remember, your net worth will rarely exceed your self-worth!
Beyond Rates: What the Banks won't tell you about choosing the Best Mortgage
Choosing the best mortgage from all the available lenders out there can be complicated. There are so many terms, features, restrictions and potential penalties to keep in mind. But at least mortgage rates are easy to compare—all you have to do is choose the lowest one, right? Think again! Choosing the lowest rate is only straightforward if all the rates are stated the same way and include the same things. Fortunately, lenders are required to use the Annual Percentage Rate (APR) as their posted rate. So on lender websites, ads and window posters, the rate that's quoted should be APR. The Annual Percentage Rate is a compound rate, so it's applied to original principal plus accumulated interest. This gives you a more accurate picture of the actual cost of the loan. To make the APR even more realistic, it not only includes all the interest costs of your loan, it also includes non-interest costs that lenders charge. Depending on the lender, this can include appraisal fees, closing costs, loan fees, loan origination fees, mortgage default insurance, creditor life insurance, legal fees and more. It's that "depending on the lender" part you have to watch. The only way to accurately compare APRs is to look into each lender's fine print and see what's included in the rate it's quoting. Or, you could take the easier, faster, less frustrating route, and simply call me! As your local independent mortgage consultant, I have access to more lenders than you could possibly find on your own, and I fully understand all their products, terms and rates. I'd be happy to do a no-charge analysis of your needs, and then discuss which options work best for you. And I'll make sure you don't get fooled by a really low mortgage rate that could actually cost you more in the long run because of all the restrictions and penalties it includes. Let me help simplify your life—call today!
Tuesday, 30 October 2012
Weekly Rate Minder
October 30, 2012: This edition of the Weekly Rate Minder has the latest, best rates for Canadian mortgages. At Dominion Lending Centres, we work on your behalf to find the mortgage that suits your needs. Best of all — our service is free.* It's the selected lender that pays us and YOU get the best rate. Please note that rates shown are subject to change without notice. The rates shown are posted rates and the actual rate you receive may be different, depending upon your personal financial situation. Check with us for full details and to determine what rate will be available for you.*(O.A.C., E.&O.E.) Explore Mortgage Scenarios with Helpful Calculators at http://www.KupinaMortgage.com
Rates are subject to change without notice. *OAC E&OE Prime Rate is 3.00% Variable rate mortgage from as low as Prime - 0.35%
Current Mortgage Rates
| Term | Bank rates | Our Rates |
| 6 Month | 4.00% | 3.95% |
| 1 YEAR | 3.00% | 2.65% |
| 2 YEARS | 3.14% | 2.69% |
| 3 YEARS | 3.70% | 2.69% |
| 4 YEARS | 4.64% | 3.09% |
| 5 YEARS | 5.24% | 2.99% |
| 7 YEARS | 6.35% | 3.69% |
| 10 YEARS | 6.75% | 3.89% |
Thursday, 11 October 2012
Potentially Flawed data used by Banks and Lenders bump up House Prices
Flaws in a national databank that helps determine the value of houses across Canada have helped fuel inflation in home prices, putting mortgage lenders and borrowers at greater risk, key players in the housing sector have warned. Documents obtained by The Globe and Mail detailing confidential statements from banks, appraisers and mortgage insurers show rising worry over the use of a database operated by the Canada Mortgage and Housing Corporation (CMHC). The documents suggest the data are flawed and help push home prices up. Introduced in 1996 as a way for the CMHC, banks and other lenders to quickly and inexpensively determine how much money can be lent against a residential property, the database known as Emili is relied upon too heavily by lenders, the documents suggest. Emili is an automated system that uses figures such as recent sales of nearby homes to gauge values, without sending an actual appraiser to the address. However, the potential margin of error in calculations may pose significant problems. For home buyers, or homeowners with home-equity lines of credit, an inaccurate valuation by the database could allow them to overpay or borrow much too heavily for the home, industry members argue. For banks, it could mean the collateral they have against the mortgage is not worth as much as believed. "Although it provides very rapid responses, this automated approval system has significant shortcomings," says one industry respondent in the documents, which were obtained by The Globe and Mail through access to information requests. Because the database does not evaluate a specific property, but uses generalities to determine the risk level of a mortgage, "CMHC insured loans are often granted without truly taking into account the property's market value," the respondent says. "This poses a real danger of altering housing market data." CMHC is the largest mortgage insurer in the country. The documents, from May, were part of a process by the federal banking regulator, the Office of the Superintendent of Financial Institutions (OSFI), to determine whether Canada's mortgage lending rules needed to be tightened. Though it is not possible to know who is responsible for each comment, since the names of each industry player are redacted to comply with privacy laws, numerous parties flagged concerns about the accuracy of Emili data in gauging home values. Groups who responded to the call for comments include the country's major banks, real estate associations, representatives of the appraisal industry, mortgage insurers, and mortgage brokers. OSFI advised banks this summer to take a closer look at how they determine housing values, and to make more effort to do more in-person appraisals. However, when those new guidelines were announced, there was no indication of the extent of the concerns raised in private by industry, and the heightened level of concern over the accuracy of Emili data. Known as an automated value model (AVM), Emili is used to estimate whether a mortgage or a refinancing is risky or not. When financial players, including CMHC, use Emili, they submit a proposed value to the database, which then responds by saying whether the value fits within the range for that community or not. However, the database can not tell whether the actual property is worth that much. "It allows people to pay too much for a property," Rick Sieb, president of Intercity Appraisals Ltd. in Vancouver, said in an interview. "If the property is worth $300, and somebody comes through and the realtor has convinced him to pay $330, so he's 10 per cent out, and they submit it through Emili or another AVM, it will just say 'yeah, that's fine for that area," Mr. Sieb said. "So the lender still lends the money, the guy still buys it, and the only person hurt in the whole deal is the person who paid too much." The Canadian housing market has been on a tear for much of the past decade but is now showing signs of petering out. During that time, consumers took on record-high levels of mortgage debt, a situation that has troubled Finance Minister Jim Flaherty, who sought to cool the housing market to prevent it from overheating any more and ultimately crashing. His goal has been to steer it towards a so-called soft landing. The latest market data suggest house sales have been falling since he tightened the rules. During a hot housing market, a wider margin of error on estimated values was less of a concern, since there is smaller likelihood a mortgage or loan refinancing will end up under water. But if the market starts to fall, as some economists expect, the accuracy of appraisals becomes paramount. When a lender is forced to liquidate a home in the event of a default, it could incur a loss. In the case of CMHC, the federal government would be left picking up the tab. Automated systems such as CMHC's Emili emerged because they are a fast and inexpensive way to gauge the value of a property, instead of paying for an appraiser. When CMHC launched Emili, it said the move would move "application approval times from days to seconds." Emili is also used by banks on mortgages where the down payment is over 20 per cent. Asked about the documents, a spokesperson for the CMHC said in an e-mailed statement on Wednesday that the corporation uses appraisals "where appropriate." The spokesperson added that Emili "relies on a number of different factors and models beyond home resale data" to determine risk, but did not elaborate. The documents also suggest blunt estimates on home valuations may have resulted in higher CMHC premiums paid by consumers on insured mortgages. The Globe and Mail | Oct 11, 2012
- - Housing starts fall less than expected in September
- - No large pop for Toronto real-estate market, observers say
- - Housing market weakens, more softening seen
Tuesday, 2 October 2012
Fire Prevention Planning
Canadian families are injured or put at risk every year because they have not taken the time to consider what to do in an emergency. The fall is a great time to re-evaluate your fire prevention plan. There are many quick and easy steps that you can take to prevent fires in your home. There are also measures you can take to prepare yourself in the event of a fire or emergency. Be prepared. Prepare a fire evacuation plan and make sure everyone in your home knows how to get out in case of a fire. Following are some important questions that will help determine if you're prepared:
- Do you have appropriate smoke detectors and fire alarms?
- Are you able to hear the fire alarm from all rooms in your house?
- Are you aware of what you should do if a fire occurs?
- Do you and all of your family members know what to do in an emergency?
- Are you able to evacuate independently?
- Have you made the necessary arrangements if you need assistance to evacuate?
- Have you made a fire safety plan?
- Do you need backup power for an elevator or a ventilator?
- Are you able to communicate easily during an emergency situation?
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