- How rising rates can affect my mortgage?
- Which mortgage features are the most important?
- Should I get a Mortgage Pre-approval?
- Should I get a mortgage from a broker or a bank?
- How can I get myself mortgage-ready well in advance?
- How can I improve my credit score?
- What can I use as a downpayment source?
- What advice can I get as a First-Time Homebuyer?
- How to be prepared for the next mortgage renewal?
- Which renovations add the most value to my home?
For homeowners with variable-rate mortgages, the effects of recent policy rate hikes will have an immediate impact as lenders increase their prime lending rate in response. Depending on the terms of your variable-rate mortgage, you may see an increase in your payment or find that a higher portion of your fixed payment is going toward interest rather than principal.
People often prefer fixed-rate mortgages for their predictability, but this usually comes at the price of higher rates. The spread (gap) between fixed and variable rates today on 5-year terms is approximately 1%. That means that even with the Bank of Canada signaling further rate hikes, it would take several increases to make a monthly payment under the variable-rate contract equal to its fixed-rate counterpart.
It’s easy to look online for a mortgage rate. But rate is only one aspect of saving money on your mortgage over the long term. It’s essential that you also consider mortgage features like Early Payout Penalties, Prepayment Privileges, Collateral charge mortgage, Porting Flexibility, Blended Mortgage, etc.
A mortgage pre approval will tell you how much you qualify for (you may be pleasantly surprised), what your mortgage payments will be, and you’ll get an interest rate that will be held for a specific time period (90-120 days). If you are purchasing a new home, then you’ll be shopping with a full wallet! You’ll know exactly what you can afford as you want to avoid reaching too far financially for a house you’ve fallen in love with.
One of the most compelling reasons to work with a mortgage broker is a choice - access to a wide range of lending sources, making it significantly easier to get a mortgage that best suits your needs. When you’re dealing directly with one financial institution, you just don’t know if you’re getting the best deal because they’ve only got their own menu of products to offer you. While securing your financing, your broker will be with you every step of the way, to answer all your questions, outline your best options, and efficiently guide you through the process. Everything relating to your mortgage can be managed around your busy schedule.
Whether you are a first-time buyer or looking to renew or refinance your mortgage with a new lender, getting a new mortgage can be stressful. That’s why you should get yourself mortgage ready well in advance. Start by polishing your credit score! Also, plan to go into homeownership with the maximum down payment possible. Get a boost from family and start a dialogue early! Get in touch early to talk about your purchase, refinance, or renewal plans, don't wait until the last minute!
You can boost your score by several points quickly with continual good credit habits. Most importantly, pay your bills on time, every time. Don’t let your credit accounts exceed 30% of the credit available. Before you cancel any credit cards, get advice. And don’t apply for a store card just to save on your purchase that day. Make a habit of checking your credit score regularly and watch how those good credit habits push your credit score skywards!
New mortgage rules might mean that you need a bigger downpayment than you expected. Here are some of the sources that can be used: A financial gift (or loan) from a parent/blood relative, RRSPs (up to $25,000 per applicant) , TFSA / Investments, Inheritance, Sale of an asset.
Determine what you can afford before you start shopping for a new home. Consider opportunities that will help you manage your housing costs. Perhaps you could rent out part of your home, or have a roommate to help offset expenses. Or if you are in a condo, possibly rent out an extra parking space if you have one. Plan for closing costs – lawyer fees, reimbursements, land transfer or similar tax, appraisal, home inspection, title insurance – so you’ll need to have some extra funds set aside to cover these costs. Generally, you can expect to pay between 1.5% and 4% of the home’s selling price in total closing costs. And most importantly, get expert advice -work with a mortgage broker to sort through all of the mortgage options and get the right combination of mortgage features, privileges and rate that is best matched to your needs!
Many homeowners accept whatever their lender offers without any negotiation to shave a few points off. While it's tempting to choose what is easiest, it's so important to have a mortgage expert give you a second opinion and start working for you as early as 9 months prior to renewal. Renewal is also a good time to decide whether you should consider a fixed or variable rate mortgage, increase or decrease your payments, or take advantage of prepayment privileges to pay your mortgage off faster. Bring your renewal notice to your mortgage broker six months prior to your renewal date. Many lenders provide a 120-day rate guarantee for pre-approved clients to protect them against a rise in mortgage rates.
According to the Appraisal Institute of Canada (AIC), the top four renovations with the highest return on investment (ROI) include: Updated kitchen, A sparkly bathroom, Fresh painting, Refreshed décor. Keep in mind that you don’t want to do renovations that will price your house right out of your neighborhood. And when you plan to sell, focus on updates that have wide-ranging appeal, and showcase the features of your home with a good declutter.