Liens on Property – How to Deal with a Property Tax Lien

There are many different types of liens that can end up on an individual’s property. The liens on property can include; Canada Revenue Agency Tax liens, condo fee liens, liens that result from a judgement and property tax liens. A property tax lien, Canada Revenue Agency tax lien and a condo fee lien do not require a court order to be placed on your property. Whereas in Ontario if a private individual or company who wants to file a lien on your property first has to obtain a judgement against you through the Superior Court of Justice. 

Property tax liens in Canada are very serious because they take priority over all other liens and mortgages. When you have property tax arrears in Canada, you owe money to the government or the Queen. When a Municipality files a property tax lien against your property, it takes priority over even your mortgage. 

A property cannot be sold or refinanced with a property tax lien on it. In Ontario, a property tax lien is filed on the Province of Ontario Land Information System online and a bank or potential buyer of a property can find out if there is a property tax lien on your property at the click of a mouse. 

A property tax lien can grow at an alarming rate and falling into arrears on your property taxes has a real snowball effect. Liens on property once filed will be subject to interest and legal charges. Even if you come up with the money to pay off the debt that is associated with a property tax lien, the interest and legal fee will have to be paid in order for it to be removed. 

A property tax lien filed on a property by a municipality will result in a notification being sent to any mortgage holders. Because of the severity of a property tax lien and the position on title it will hold, many mortgage lenders once notified of a property tax lien may pay it on your behalf and then demand to be repaid in full. If you do not repay the mortgage lender, they could force your property into power of sale. 

The best thing to do if you have property tax arrears or liens registered on property that you own it to come up with a plan to pay the property tax arrears off. Easier said than done right? There are options. If you have some equity in your home, it is a better choice to refinance your home to come up with proceeds to pay off a property tax lien than to see your mortgage lender involuntarily do it on your behalf. 

Refinancing your first mortgage or taking out a new second mortgage is the best way to eliminate property tax arrears because the mortgage amortization will result in very little difference in increase to your mortgage payment. Using a line of credit or loan is less advisable because payments will be higher and you will still have your monthly property tax obligation so it may cause strain to your budget. 

Finally, it is always best to ask your first mortgage lender to collect your property tax payment with your mortgage payment. Doing so will feel like one less payment on a monthly basis and will reduce the opportunity for you to fall behind on your property taxes, ending up with a property tax lien. 

For more information about liens on property and how to deal with a property tax lien please contact Paul Mangion at GTA Mortgage Matters by calling 416 204 0156 or visit www.gtamortgagematters.com.

Mortgage Arrears! What You Can Do If Your Mortgage Payments are in Arrears?

The past few years have been very tough for many Ontario homeowners. Skyrocketing costs of food, gas, home heating, in addition to credit card and personal debt has left many families strapped for cash and wondering how they will make ends meet each month. 

The absolute last thing you want to have happen is to have your mortgage payments fall into arrears. When mortgage arrears occur you can become at risk of losing your home. Also, when mortgage arrears compound they can become so high that they become difficult to pay up to date. 

Before you can deal with your mortgage payment arrears you must first explore what led to the arrears in the first place. The tools that you can use to deal with mortgage arrears are the same tools that you can use to deal with other financial problems that are fuelling the issue. 

If your mortgage arrears were caused because your personal expenses to maintain your home have increased and that combined with payments to credit cards and loans have become impossible to pay each month, will be crucial to come up with a strategy to reduce your overall monthly payments.

Bankruptcy trustees and debt counsellors promote Federal Government programs and debt consolidation to reduce interest on debt and monthly payments. The problem is that the vehicle used to achieve this is often a debt settlement or consumer proposal which will have a devastating impact to your credit and will permanently destroy relationships with creditors that you have built up over the years. 

If you want to reduce your monthly payments and reduce relationships with your creditors and preserve your credits, you must pursue debt consolidation options that honour your obligations to your creditors but also reduce your monthly payments. 

If you do not yet have mortgage arrears but know that things are headed in that direction, you must act fast because your options will change once your mortgage payments are in arrears. 

Using your home is the fastest and most affordable way to consolidate debt and reduce monthly payments. You may be thinking that your bank has already said no but the bank is not the only option. There are many other lenders like trust companies, credit unions, mortgage investment companies and even private lenders that will offer mortgage financing when the bank won't. A good Mortgage Broker will have access to these financial resources. 

Once your mortgage payments are in arrears your options will be less. Most mortgage lenders will require that your mortgage payments are up to date before they will extend mortgage financing. The only lenders that will make a concession in this scenario are lenders who offer equity only mortgages. This means that they will lend to you based on the amount of equity you have in your home, not based on your personal credit. In this case, you will require a little bit more equity in your property. 

If you are in this situation, the best thing you can do is take the steps to resolve your mortgage arrears or impending mortgage arrears before you put your house at risk. For more information about mortgage arrears and what you can do if your mortgage payments are in arrears, please contact Paul Mangion at GTA Mortgage Matters by calling 416-204-0156 or visit www.gtamortgagematters.com

What is a Closed Variable Rate Mortgage?

A variable rate mortgage is a mortgage that bears an interest rate that floats with the prime rate set by the Bank of Canada. If mortgage interest rates go down, so does the mortgage rate of a client who has a variable rate mortgage. Likewise if mortgage interest rates go up, so does the mortgage rate of a client who has a variable rate mortgage.

In the past several years mortgage interest rates in Canada have been at historic lows and so many Canadian homeowners continue to maintain variable rate mortgages.

A closed variable rate mortgage is a mortgage that offers a variable rate but is also closed. Banks generally offer closed variable rate mortgages over 1, 3 or 5 years.

Choosing a closed variable rate mortgage means that you will be guaranteed that your mortgage interest rate discount from the banks' prime rate (if you have negotiated a discounted rate) will remain the same throughout the term of your mortgage. The same is true of you don’t have a discounted interest rate and you are paying at prime or even one or two percent above prime.

Some variable rate mortgages are re-calculated immediately while others are recalculated monthly or even every three months. A closed variable rate mortgage (just like an open variable rate mortgage) could mean that your monthly payment would be fixed throughout the term. This would mean that if the Bank of Canada's interest rate changed (up or down) the amount of your payment that is allocated to principal and interest would be adjusted accordingly. In other cases and if you select a changing payment schedule, your actual mortgage payments would increase or decrease according to whether the Bank of Canada's lending rate has been increased or decreased.

All variable rate mortgages enable you to lock in anytime to a fixed mortgage interest rate. Generally, you can amortize your mortgage payments up to 30 years. You can select a monthly repayment schedule that is monthly, semimonthly, weekly or biweekly.

So how can you determine if a closed variable rate mortgage is right for you? Typically you would select a closed variable rate mortgage if you anticipate that the prime lending rate is going to go down. You have to be sure that you can accept the risk that if the prime lending rate goes up, so will your mortgages interest rate.

Primarily the world economy will dictate what happens with national lending rates. If you are going to choose a variable rate mortgage product pay attention to the news. Signs that the world's economy is improving will generally result in interest rates going up. Alternatively, signs of a weakening world economy will generally signal that mortgage interest rates will stay the same or even go up.

Staying informed will be the best way to forecast what is going to happen with your mortgage, otherwise a fixed rate mortgage product may be better for you. For more information about closed variable rate mortgages please contact Paul Mangion at GTA Mortgage Matters by calling 416-204-0156 or visit www.gtamortgagematters.com.

Home Mortgage Refinancing in Ontario – Top 3 Mortgage Financing Tips

Home mortgage refinancing in Ontario is a very viable option that more and more homeowners have come to rely upon to raise much needed capitol. The most common reason that homeowners refinance their homes are:

1.       To negotiate a lower interest rate on their mortgage

2.       To consolidate debt

3.       To finance big ticket purchases like home renovations, children's education and expensive home furnishings/appliances, just to name a new.

The reason that home mortgage refinancing in Ontario has become so popular is because consolidating debt and big ticket purchases is much cheaper when leveraging home equity. A mortgage or home equity loan is much less interest than credit cards, lines of credits and personal loans. There is also much more flexibility with monthly payments, and monthly payments are generally much lower.

Here are our top 3 mortgage financing tips if you are thinking of applying for home equity refinancing in Ontario.

Mortgage financing tip #1 – Establish a relationship with a local Mortgage Broker. This will increase your borrowing power and ensure that you obtain a competitive deal on your new mortgage. Mortgage Brokers in Ontario arrange mortgages through all the major banks, plus they have access to alternate funding sources like trust companies, credit unions, mortgage investment corporations and private lenders.

Often times when your bank won't approve mortgage refinancing or won't offer you a better mortgage interest rate, a Mortgage Broker will be able to secure the financing. Also, when you go directly to your bank there is no competition. You will only be offered what they want to offer you and each time you apply for credit it results in another inquiry on your credit report, which can impact your credit score. A Mortgage Broker will request your credit report in a single instance and use the credit report to shop your deal around.

Mortgage refinancing tip #2 – Check your credit report before looking for financing. Request your credit report to ensure that there is nothing improperly reported and so that you know your credit score before looking for a mortgage. Your bank will generally approve credit based on your credit score. The lower it is, the higher the interest rate they may offer you. Sometimes it pays to see and work on having a good credit score before looking for mortgage refinancing in Ontario. Generally in Ontario a 680 beacon score is considered good.

Mortgage refinancing tip #3 – Use an online mortgage calculator to compare mortgage payments based on different amortizations. By default, most banks will quote your new mortgage repayment based on a 25 or 30 year amortization. This is no way to get your house paid off quickly and will mean that you end up paying more interest in the long run. Shaving years off of your amortization often results in very little increase to your mortgage payment.

All in all mortgage refinancing could result in you getting the most competitive deal, so it is important to do your research and be prepared for when that time comes you are ready! For more information about mortgage refinancing in Ontario and our mortgage financing tips please contact Paul Mangion at GTA Mortgage Matters by calling 416-204-0156 or visit www.gtamortgagematters.com.