Ontario Mortgage News – Types of Mortgages Part 2: Variable Rate Mortgage

Are you getting ready to buy a home and obtain mortgage financing? Knowing your options before jumping in is important. This is part 2 of a 4 part series that gives you important Ontario mortgage news and information about the various types of mortgages available in Ontario. Getting a mortgage does not have to be stressful, and knowing what mortgage types are available to you can help keep the search for your perfect home stress-free.

This second Ontario mortgage news blog will focus on the variable rate mortgage. What is a variable rate mortgage? A variable rate mortgage is a type of mortgage financing that fluctuates according to rising or falling interest rates. This means that, when your mortgage broker finds a lender to approve your variable rate mortgage, your payment is not static and may change if interest rates change. There are many advantages to this type of mortgage.

Firstly, if you tend to follow the philosophy that no risk means no reward, you understand that taking some risks could equal major savings in the long run. A variable rate mortgage can provide this. Since it is based on the rate of interest, if this decreases, so does your monthly payment. If it decreases substantially, then this could equal big savings for you.

Another big benefit to a variable rate mortgage is the fact that variable rate mortgages usually offer the lowest mortgage rates available. Since the bank or lender approving your mortgage recognizes the risks that are inherent in a variable rate mortgage, they offer the lowest rate to you. This means that even if the interest rate does increase slightly over the term of your mortgage, you will likely not feel the sting.

It is important to remember though that as the Canadian economy improves, interest rates may increase if the prime lending rate is increased by the Bank of Canada. That being said, many lenders do provide options with variable rate mortgages that will allow you to lock in your variable rate mortgage if interest rates do increase.

Why choose a variable rate mortgage. If you are not afraid to take a bit of a risk in exchange for the chance to save, or if you are planning of staying in your house for a very short period of time, a variable rate mortgage may provide the best financial solution for you. However, if your plans are more long-term, you may want to discuss the option of a fixed rate mortgage with your mortgage broker.

Mortgages don’t have to be complicated, and you should avoid getting stuck in a mortgage you don’t understand by visiting a mortgage broker and getting them to explain all of the different options available to you.

For more Ontario mortgage news or to find out more about the benefits of a variable rate mortgage, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com.

Ontario Mortgage News– Types of Mortgages Part 1: Fixed Rate Mortgage

Are you getting ready to buy a home and obtain mortgage financing? Knowing your options before jumping in is important. This is part 1 of a 4 part series that gives you important Ontario mortgage news and information about the various types of mortgages available in Ontario. Getting a mortgage does not have to be stressful, and knowing what mortgage types are available to you can help keep the search for your perfect home stress-free.

This first Ontario mortgage news blog will focus on the fixed rate mortgage. The fixed rate mortgage is often the most popular, but what is a fixed rate mortgage? Well, a fixed rate mortgage is a type of mortgage financing loan where the interest stays the same throughout the entire loan period, as opposed to other mortgage loans where the interest rate may adjust. This means that your interest rate is ‘fixed’ and that it does not fluctuate over the course of the term.

There are many benefits to this type of mortgage, and many things to consider when looking for the best mortgage financing rates to suit your needs.

Firstly, a fixed rate mortgage offers you the convenience of a set monthly payment that does not change. Set at the beginning of the mortgage loan period, a fixed rate mortgage will not increase or decrease as interest rates change. This means that there are never any unwelcome surprises when it comes to that monthly withdrawal.

A second, and arguably even more attractive benefit, is that, since a fixed rate mortgage will not change even if interest rates change, that you are protected in case of a dramatic interest rate hike. So, even if two years from now the interest rate skyrockets, your rate will remain the same throughout the entire term of the mortgage, ultimately saving you a great deal in terms of interest fees.

What is the normal length for a fixed rate mortgage? Although term lengths differ from lender to lender, the most common length for a fixed rate mortgage is 5 years. However, most lenders will offer a one year term mortgage, two year term mortgage, three year term mortgage, four year term mortgage, and some lenders may even offer a ten year term mortgage. The term you choose will largely depend on your future financial goals and all options should be discussed with your mortgage broker.

Why choose a fixed rate mortgage? As mentioned, the convenience of a set monthly mortgage payment and a never changing interest rate make a fixed rate mortgage ideal for many. Compared to a variable rate mortgage, a fixed rate mortgage may be a bit more expensive, but it also involves a lot less risk to you (since a variable rate mortgage fluctuates depending on an ever changing interest rate). No hassle means less stress for you!

For more Ontario mortgage news or to find out more about a fixed rate mortgage, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com.

How to Consolidate Debt by Refinancing Your Mortgage

If you are a homeowner with substantial debts you may be asking yourself ‘should I refinance my mortgage in order to consolidate debt?.’ Getting rid of debt by refinancing your mortgage can often be a smart financial option to consider to eliminate those pesky interest fees that often leave you paying very little of your overall debt load.

With current mortgage rates at an all-time low, refinancing your mortgage to consolidate debt can mean big savings to you. Rather than continuing to carry those other debts (credit cards) with high interest rates, accessing the equity in your home by refinancing your mortgage allows you to pay them off and save with a much lower mortgage interest rate.

What is mortgage refinancing? Mortgage refinancing means paying off your current mortgage, as well as other debts that you want to get rid of, by setting up a new mortgage. Basically, your old mortgage is paid off with your new one – rather than getting a second mortgage and tacking it on top of the original one.

A second advantage of refinancing your mortgage to consolidate debt is that it gets rid of all of those individual monthly payments and leaves you with one tidy monthly payment. Trying to keep track of all of those payments (many of which are primarily interest) can get you into trouble as far as your credit score, and so consolidating payments into one leaves you with less stress and more time (not to mention more free cash flow)!

Yet another benefit of refinancing your mortgage to consolidate debt is that you can change the type of mortgage or get a new interest rate. Depending on your financial goals, switching from a fixed rate mortgage to a variable rate mortgage or an adjustable rate mortgage, or vice versa, can end up saving you money on interest. Refinancing your mortgage gives you this opportunity, so not only can you save interest by consolidating debt, you can also save by switching mortgage types.

So how can you go about refinancing your mortgage to consolidate debt? There are a few things you need to do/know before you go to your mortgage broker for approval.

1.       Make sure that your credit score is up to par – if it is low, you may not be able to secure mortgage refinancing, so clean it up (a mortgage broker can help you with this).

2.       Be truthful – if you are refinancing to consolidate debt, be upfront with your mortgage broker so that they are able to provide you with the options that best suit your individual needs. There are several reasons that people refinance, so make sure that your mortgage broker knows so that they can provide you with the right services.

3.       Seek mortgage refinancing through a mortgage broker rather than through an individual bank. A good mortgage broker will have access to several different lenders and financial institutions and thus will be able to secure you the best rate for your mortgage refinancing.

Refinancing your mortgage to consolidate debt is a smart financial solution that can save you thousands on interest. Working with a mortgage broker to find the best rates and find the mortgage refinancing solution that meets your needs is crucial.

To find out more about refinancing your mortgage to consolidate debt, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com.

Ontario First Time Home Buyer? The Importance of a Mortgage Affordability Calculator

Are you getting ready to buy your first home but asking yourself ‘what mortgage can I afford?’ Don’t worry; there are some great resources out there for the Ontario first time home buyer, one of which is crucial: the mortgage affordability calculator. Before setting out to get a mortgage or making an offer on that perfect home, use a mortgage affordability calculator to make sure that you can afford and feel comfortable with the amount that you are spending on a mortgage.

What is a mortgage affordability calculator and how will it answer the question ‘what mortgage can I afford?’ A mortgage affordability calculator is a program that inputs both your monthly income and monthly output and calculates what an affordable monthly mortgage payment would be. By using a mortgage affordability calculator you can quickly determine what a maximum monthly payment would be and then decide how much you would actually be comfortable spending.

What criteria does a mortgage affordability calculator use to determine what mortgage you can afford? The equation is based on a number of factors, both actual and anticipated.

Actual: Actual factors include both input and output. Input refers to your gross monthly household income – or how much money you bring in every month. Subtracted from this is your actual monthly output, which refers to all financial obligations you are required to make on a monthly basis. This includes all debt (credit card, personal loans, etc.), car payments, etc.

Anticipated: Anticipated payments are all of those payments that you will likely have to make once you move into the house. Although you can often get a pretty close estimate, these may fluctuate, but having at least a somewhat accurate figure will let you use the mortgage affordability calculator to get a good idea of what you can afford. These anticipated payments may include insurance, property taxes, condominium fees, heat and hydro fees, etc., and are usually things that cannot be avoided (unlike things like cable or internet which are not included).

The mortgage affordability calculator then looks at your borrowing details – your down payment on a house, your mortgage interest rate, and your mortgage amortization period – and gives you a calculated result. These results will tell you 3 very important things: your maximum house price, your maximum mortgage (your maximum house price minus your down payment) and your maximum monthly mortgage payment.

As an Ontario first time homebuyer, a mortgage affordability calculator is an important tool to take advantage of. It allows you to get a clear picture of what your monthly payments would total as well as how much you will be able to afford once that house is in your possession. Instead of going to see a Mississauga mortgage broker with no idea of how much you are comfortable spending, or no idea about how to determine this figure, prepare yourself for the process and use a mortgage affordability calculator.

For more information about the benefits of a mortgage affordability calculator or other resources if you are an Ontario first time home buyer, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com.

Know Before You Go: What to Do Before Buying a House in Ontario

Since the Canadian Mortgage and Housing Corporation guidelines changed in July, Ontario housing sales have dipped. If you are in the market and looking at buying a house in Ontario in the near future, this is good news for you. Since housing sales have dropped, so too will house prices. But what do you need to do before buying a house in Ontario or obtaining mortgage approval?

Firstly, before buying a home in Ontario, you need to figure out how much you are willing to pay and how much you can afford (sometimes these two numbers will not match)! Working with a Mississauga mortgage broker will help you calculate your monthly bills and using a mortgage affordability calculator will help you determine how much you can actually afford to spend on a monthly mortgage payment. Sometimes buying a house in Ontario at the top of your affordability price range may feel snug, so make sure you also figure out how much you are comfortable spending on a monthly basis. A Mississauga mortgage broker will also help you calculate your monthly carrying costs and all of those other monthly fees that come with buying a house in Ontario.

Securing a down payment on a house is also an important necessity. There is no point in going to seek approval for a mortgage if you do not have a down payment (or access to secure one). Your down payment, which needs to be at least 5% of the total value of the house, can come from various different sources, not just savings. Saving up the cash, receiving a gift from a family member, using investments, or obtaining a zero down payment mortgage are all options. First time home buyers can even use part of their RRSP’s. It is important to discuss these with your Mississauga mortgage broker prior to buying a house in Ontario.

Another important thing that your Mississauga mortgage broker will teach you before buying a house in Ontario is what to expect as far as closing costs. Closing costs are those costs that you are presented with on your closing date – and you need to be prepared for them. These costs typically include lawyer’s fees, home inspection costs, land transfer tax, insurance, and property tax adjustments. Many of these closing costs associated with buying a house in Ontario are mandatory, and so your Mississauga mortgage broker can tell you which ones you will need and how much to have on hand.

There are many things to think about before you actually go out and find that perfect house. Putting in an offer only to find out that you can’t really afford it is disappointing, and entering into a contract that makes you feel uncomfortable or ill prepared can have devastating impacts. Before buying a house in Ontario, speak to a Mississauga mortgage broker to find out all you need to know to make the best decision possible.

For more information about what to know before buying a house in Ontario, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com

How Working With a Mississauga Mortgage Broker Can Get You The Best Canadian Mortgage Interest Rates

One of the first things that many people think about when they are applying for a mortgage is the current interest rate and how it will affect their monthly payment, as well as how much money they will end up spending over time. Although interest is avoidable if you are able to buy your house outright, most of us are unable to do this and interest becomes a necessary evil, one that can’t be avoided. However, by working with a Mississauga mortgage broker, you have a chance to save yourself on interest by obtaining the best Canadian mortgage interest rates possible – all while maintaining a good credit score.

Since a credit check is unavoidable when going for mortgage approval – indeed it is often the first thing a mortgage broker will ask to see – making sure that these checks don’t harm your credit is very important. Rather than going from bank to bank to find out the best Canadian mortgage interest rates and applying to see if you qualify, which will result in numerous credit checks thereby negatively impacting your credit score, working with a Mississauga mortgage broker allows you to research various different lenders for the best Canadian mortgage interest rates all using the same credit check.

So how does a Mississauga mortgage broker help you save on interest? There are a few important things to keep in mind.

As mentioned, a Mississauga mortgage broker has the ability to check with a number of different lenders to find the best Canadian mortgage interest rates for you. Instead of going from bank to bank, which will often only give you access to one or two interest rates, a Mississauga mortgage broker with access to multiple lenders can do the research for you and go to the different banks and private lenders to find you the best Canadian mortgage interest rates out there.

Another way to save on mortgage interest is by having your Mississauga mortgage broker search out a mortgage with adjustable rate mortgage interest. If you are willing to take a bit of risk, you can reap great rewards. What is a mortgage with adjustable rate mortgage interest? An adjustable rate mortgage is a type of mortgage in which the interest rate changes to reflect changing interest rates. Typically the rate is set for a specific period of time for the beginning of the mortgage, and then changes (either increasing or decreasing) as Canadian mortgage interest rates change. This can end up saving you thousands on interest because if the interest rates go down, you are not stuck with a rate that is higher – as would be the case with a fixed rate mortgage. Additionally, the interest rate on an adjustable rate mortgage is already lower than a fixed rate mortgage because of the risk involved.

Instead of going from bank to bank, which can negatively impact your credit score while only giving you a few different rates, working with a Mississauga mortgage broker can give you the freedom to look at many different Canadian mortgage interest rates while still keeping your credit in check.

For more information about Mississauga mortgage brokers and how they can help you get the best Canadian mortgage interest rates, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com

Self-employed or on 100% commission: A Mississauga Mortgage Broker Can Help You Get the Best Mortgage Rates

Buying a home is an exciting time. Whether you are a first time home buyer, are moving up or down-sizing, buying an investment property or looking to refinance your home, getting a mortgage gives you the ability to search within your price range for the perfect property. However, if you are self-employed or on 100% commission, you may be finding it far more difficult to obtain mortgage financing compared to someone with a regular salaried income – unless you work with a Mississauga mortgage broker.

Statistics show that almost 20% of all Canadian income earners secure their primary source of income from either a personal business or from a job that pays based on commission. Even though this represents a substantial portion of the Canadian population, it remains clear that self-employed and 100% commission paid individuals have much more difficulty obtaining mortgage financing. Why is this and how can you get a mortgage if you are self-employed or on 100% commission?

Why is it so tough? Since most big banks provide mortgage approval based on your average monthly income, easily visible through past paystubs, those who run their own business or work on 100% commission know that the process is far more complex. Monthly income often varies from one month to the next, and a yearly income can often be hard to determine as far as how it differs from year to year. Another issue for big banks is that many self-employed business owners minus expenses in lieu of surplus income, which is something that banks often refuse to recognize, whereas a Mississauga mortgage broker may not.

When applying for a mortgage when self-employed or if you are working on 100% commission, lenders often want a great deal more income verification and information compared to those with traditional income sources. An outline of projected profits for the upcoming years is often considered far less guaranteed when compared to salary, regardless of how your business may have been performing over the last few years. Working on 100% commission poses the same problem, as even if your profit margins and sales have been strong, they are not necessarily guaranteed to stay that way.

So what can you do if you find yourself in this position? Working with a Mississauga mortgage broker rather than going through a big bank, often provides you with far more options if you are self-employed or on 100% commission and looking for mortgage approval. A Mississauga mortgage broker, one with access to a wide portfolio of lenders, can ensure that you are able to receive mortgage funding even if you are not a regular salaried employee. Working with both banks and private lenders, the right Mississauga mortgage broker will be able to obtain the best rates for your mortgage regardless of your employment situation.

If you are self-employed or on 100% commission and looking for a mortgage, find out how a Mississauga mortgage broker can help you by contacting Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com

Ontario First Time Home Buyer? What You Should Know About Your Down Payment on a House in Ontario

As you start out on the road to purchasing your first home, you will quickly realize that there are several different things that need to be considered and done before you make an offer on the perfect house.  As an Ontario first time home buyer, one of the things that you should be thinking beforehand is your down payment on a house.

What is a down payment on a house? A down payment on a house is the total amount of money you are required to pay upfront when you purchase a home. The minimum down payment required in Canada is 5% of the total purchase price. So, for example, if you are purchasing a home for $300 000, the down payment on a house, at the 5% minimum, would be $15 000. However, 5% is just a minimum, and you are able to put down any percentage you would like after that.

What is a down payment on a house for?  The main purpose of a down payment on a house is to protect the lender in case the borrower defaults on the loan. It reduces the lender’s risk as the down payment is used as collateral and if defaulted, the lender is able to recover at least partial funds from the loan.

As an Ontario first time home buyer, the purpose of a down payment on a house for you is to pay some of the mortgage up front. Whatever the amount of your down payment is, that amount is taken off of the total mortgage price, meaning that you are required to pay less over time.

So what are the benefits of a bigger down payment on a house? There are a few. The first, and most obvious, is that a bigger down payment means a lower monthly payment. If you are an Ontario first time home buyer this can be crucial because it decreases your overall monthly carrying costs – which can mean a higher chance of mortgage approval and less financial strain in the future. It also means that, since you are borrowing less, you are not paying as much interest. A further benefit of a bigger down payment on a house is that your CMHC insurance premium, calculated as a percent of your mortgage amount, decreases as your down payment increases.

So where can the money for your down payment on a house come from? As an Ontario first time home buyer you have many different options as far as putting together a down payment on a house. Obviously saving a certain amount from every paycheque is a valid option – but it is not the only one. One of the ones that is quite appealing for Ontario first time home buyers is to take advantage of the RRSP Home Buyers’ Plan, which allows Ontario first time home buyers to use up to $25 000 from their Registered Retirement Savings Plan, tax free. Another source is a gift from a family member – but it has to be a gift, it cannot be a loan.

As an Ontario first time home buyer, getting ready to purchase a house is an exciting time. Being prepared is crucial if you want the process to run smoothly. Knowing how much of a down payment on a house you will need and where it will come from is just one of the many things that you will need to consider.

For more information about a down payment on a house and other things to know as an Ontario first time home buyer, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com

Canadian Mortgage News - CMHC Mortgage Amortization Changes and How They Will Impact You

The second half of this year has been big for Canadian mortgage news. In July, the Canadian Mortgage and Housing Corporation (CMHC) amended its guidelines and mortgage amortization rules in an effort to try and decrease the debts of current and future homeowners in Canada. These guideline changes have had some significant impacts, particularly for those individuals seeking mortgages of over 80% financing.

The most significant change is with regards to the mortgage amortization period. Any mortgage contract prior to July 9^th provided the option to choose a 30 year amortization period. After July 9^th though, this mortgage amortization period has changed from 30 to 25 years. This will, on average, increase monthly mortgage payments by about 12%.

There are some pros and cons depending on your current financial situation that accompany these mortgage amortization period changes, especially for first time home buyers. Firstly, these changes make it a bit tougher to get approved for a mortgage.  Since one of the goals of these changes overall is to ensure that the individual seeking the mortgage is better prepared for home ownership, a shorter mortgage amortization period may affect your approval. When a lender assesses an individual’s ability to financially manage a mortgage, they usually calculate the maximum amount that is financially manageable. Since a shorter mortgage amortization period increases the monthly mortgage payment, this may negatively impact your ability to receive approval for a mortgage.

At the same time, if a small increase puts you over the threshold of affordability, perhaps it is time to rethink the amount that is being sought.

On the flipside, the positive aspects relate to the decreased interest that you will pay thanks to a shorter mortgage amortization period. Knocking 5 years off of your mortgage term can save you significant interest in the long run, and leave you mortgage free 5 years sooner.

Another result of the CMHC guideline changes impact mortgage refinancing. Mortgage refinancing, originally maxed at 85% of the value of the home, has been reduced to 80%. This change, like the altered mortgage amortization period, is meant to promote saving through home equity and to decrease the debt load for current homeowners.

Since these changes are due largely in part to the high amount of debt being carried by average Canadians, it is no surprise that yet another change to CMHC guidelines is in respect to individual gross debt service ratio. Gross debt service ratio, which refers to all of your property-related costs (mortgage payments, property taxes, heating, condo fees, etc.), must not exceed 39% of your total income. This has been decreased from 44%.

Another CMHC change aside from a shortened mortgage amortization period, lower mortgage refinancing, and a lower gross debt service ratio, includes the banning of government-backed mortgage insurance on those properties costing over $1 million – although this is less of an impact for most of the population that the other changes.

For more Canadian mortgage news or to find out more about CMHC guideline changes including a shorted mortgage amortization period, please contact Paul Mangion of The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com

How to Get Out of Debt Fast

Do you find yourself struggling to make those monthly bill payments because you have a lot of debt? Are you conscious of the fact that many of those monthly payments go only to interest while paying off very little of your actual outstanding balance? There are ways to get out of debt fast out there, but sometimes it is difficult to know which ones are best for you. 

Do you constantly hear those offers on the radio that talk about debt consolidation and find yourself thinking about them as an option for solving your debt problems?  These options are being provided by bankruptcy trustees or debt counsellors – but they are often not the best option, especially for homeowners. Firstly, these solutions come in the form of a consumer proposal or bankruptcy. Although they can help you get out of debt fast, these options can have devastating long term impacts on your credit, negatively impacting your ability to secure financial funding in the future. Your ability to purchase a new home, refinance your mortgage, or even buy a car can be severely reduced when you have a consumer proposal on your credit report.

So how do you get out of debt fast? If you are a homeowner, refinancing your mortgage is a much safer financial option for getting out of debt fast. By consolidating your debt through refinancing your mortgage, you eliminate the various minimum monthly payments – much of which are primarily interest - into one manageable payment.

Additionally, not only is this single monthly payment much smaller than what your various others combined were, having it combined into a refinanced mortgage ultimately saves you thousands of dollars in interest long term. It is also far likelier that you will be able to pay off the mortgage sooner than if you had kept all of the credit card balances going and paying only the minimum payments.

Banks vs. mortgage brokers – how do they fare when you are trying to get out of debt fast? Have you been to the bank and discussed your options regarding how to get out of debt fast, but failed to receive approval? This is often because banks stand to gain from your continuing to pay only the interest on your credit cards – think about who controls many of those cards in your wallet! The longer you pay only the interest instead of paying the cards off outright, the longer the bank makes money off of you. Also, banks tend to work with fewer lenders and follow stricter guidelines when it comes to who qualifies.

Mortgage brokers on the other hand work with a much more diversified portfolio of lenders and are able to cast a much wider net. This means that the options available to you for getting out of debt are much more numerous when working with a mortgage broker. Rather than focusing solely on your credit score, a mortgage broker can often secure you financing at a good rate when the bank has continually refused.

There are many options out there to help you get out of debt fast, but if you are a homeowner, refinancing your mortgage is usually the best choice! For more information on how to get out of debt fast, please contact Paul Mangion at The Mortgage Centre by calling 416 204 0156 or visit www.themortgagecentretoronto.com

Refinancing Your Mortgage in Ontario – Top 3 Mortgage Refinancing Tips from the Mortgage Centre Mississauga

Refinancing your mortgage in Ontario can be the perfect solution to various financial issues you may have, including getting rid of debt or paying for things such as home renovations or your child’s tuition. Mortgage refinancing can get you the capital you need to finance these things. 

Are you thinking about refinancing your mortgage but unsure about the path to take? Use these three important mortgage refinancing tips from The Mortgage Centre to help you decide which route best suits your current and future financial goals. 

Mortgage Refinancing Tip #1: Develop a strong relationship with your local mortgage broker. In the past, banks were the major financial institutions that most people went to for financial advice and assistance. However, today there are so many different options out there that it is crucial to explore. One of the greatest sources for financial security and freedom is a mortgage broker, and once you have found one it is a great idea to establish a good relationship with them. Their expertise can help in so many different areas, be it the acquisition of your first mortgage, paying off debt, or refinancing your mortgage. 

In the case of mortgage refinancing, it is often your mortgage broker – not the bank – that can and will secure you the best interest and mortgage rates, as well as finding alternative sources of funding if the bank chooses not to approve you.  It is beneficial to depend on a professional mortgage broker when your financial best interests are at stake.

Mortgage Refinancing Tip #2: Get a credit report check. Before applying for mortgage refinancing, it is a good idea to know where you stand as far as your credit. If your credit score is great, your mortgage broker will have no problem securing you great rates when refinancing your mortgage. When refinancing your mortgage in Ontario, a credit score of 680 is considered good.

If however, you have less than perfect credit, your mortgage broker will go through your various options and not only find you funding, but help you rebuild your credit. Being prepared by knowing your credit score will help you to understand that you may be paying a higher interest rate, and to know that you should ask for help with budgeting and debt payment strategies.

Mortgage Refinancing Tip #3: Using an online mortgage calculator, evaluate different amortization periods and assess how they impact mortgage payments.  Rather than going into the bank and taking the first offer you are given – which is usually based on an amortization period of 25 to 30 years - being prepared and knowing what different terms offer can save you thousands of dollars in interest. A shorter amortization period may carry slightly higher monthly payments, but in the end you are paying it off much quicker and saving your money.

Being prepared before refinancing your mortgage in Ontario can mean the difference between money in your pocket and money in the bank’s. You work hard for your money, so take the time and do your homework. Use these tips to guide your search for the best mortgage refinancing you can get.

For more information on mortgage refinancing in Ontario or to get more mortgage financing tips, please contact Paul Mangion at The Mortgage Centre by calling 416 204 0156 or visit www.themortgagecentretoronto.com

How to Stop Foreclosure Beginning with Dealing with Mortgage Arrears

Are you finding yourself struggling with your monthly bills? Are you worried that there is a chance that you may fall behind or default on your mortgage payments? Do not ignore these concerns. Dealing with mortgage arrears and learning how to stop foreclosure before it happens is very important. 

There are ways to stop foreclosure and deal with mortgage arrears before they happen. To avoid losing your home through foreclosure due to defaulted mortgage payments, it is crucial to devise a plan to get your finances back on track. There are several options available to you, but some are definitely better than others!

When you are threatened with the fact that you may be unable to pay your monthly bills and mortgage arrears and foreclosure are looming overhead, it is first essential to examine why? The high cost of living coupled with high credit card or personal debt can be detrimental. A great way to fix this is to decrease your debt. But how can this be achieved?

Currently there are countless companies out there offering ways for you to reduce the amount of debt you owe or reduce your monthly debt payments. However, these usually come in the form of debt consolidation loans and consumer proposal plans that, although disguised to help you, actually carry with them devastating impacts for your credit. Avoiding them at all costs is a really good idea.

Instead, working with your mortgage broker to stop foreclosure and avoid mortgage arrears is much more effective. By using the equity in your home and taking on a second mortgage, you can pay off your debt and avoid foreclosure by making your monthly payments more manageable. This option will help you keep your credit in check and ultimately saves you thousands in interest versus trying to continue the monthly payments that were bogging you down in the first place!

What if you have already gone into arrears on your mortgage? Your options may be greatly reduced. Often creditors are less willing to approve applications for funds if mortgage payments are in arrears. Since most lenders will only offer financing if your mortgage payments have been made in full, your only choices may rest with equity only financing. This means that lenders use the equity in your home – and this means that you will need to have a bit more equity established in order to qualify.

Working with your mortgage broker once your mortgage payments are in arrears is a must in order to stop foreclosure.  They will be able to help you develop strategies to firstly, pay off the existing payments owed, and secondly to build a financial budget to allow you to maintain your current bills. This will help you stop foreclosure and avoid going into arrears on your mortgage in the future.

If you find yourself facing mortgage arrears and the potential foreclosure of your home and want more information about how to stop it and bring your mortgage payments back in check, please contact Paul  Mangion at The Mortgage Centre by calling 416 204 0156 or visit www.themortgagecentretoronto.com

Property Tax in Canada and What to Do If You Have a Property Tax Lien on Your Home

Have you found yourself in the uncomfortable position of having a property tax lien placed on your home because you have been unable to pay your property tax? Are you asking yourself what to do if you have a property tax lien on your home? This can be an inconvenient occurrence, but it is not the end of the world.

Property tax in Canada is a mandatory requirement, and there are consequences to be faced if you default on your taxes. One of these consequences is a property lien on your home.

So what is a lien? A lien is a claim on an item of your property (in this case, your house) that assures the settlement of a debt. What is a property tax lien? A property tax lien is a claim on your home that ensures payment of the debts owed to the Canada Revenue Agency (CRA) for unpaid property taxes.

What does this mean? It usually means that the balance owed becomes a forced payment that comes before any other – even your mortgage. This can be detrimental as it can impact your ability to pay other bills, thus damaging your credit score. Additionally, a property usually cannot be sold, and banks typically refuse to refinance a property, if there is a lien on it, therefore impacting your ability to sell your home or refinance your mortgage.

So what do you do if you have a property tax lien on your home? The best way to solve the problem of having a property tax lien on your home is to pay off the outstanding debt. This may seem difficult, but there are options.

The best option is to refinance your first mortgage or take out a second mortgage through your local mortgage broker. This will allow you to use the equity in your home to pay off the property tax lien, in turn saving you the interest you would have been forced to pay had you just continued to pay the monthly lien payments. A longer amortization period often means that your monthly payment increase is minimal and therefore your ability to pay is increased.

Sometimes your mortgage broker will voluntarily pay the off the lien, meaning you are then required to pay them back. This may seem like a great option, however, this could result in your house being put up for power of sale if you default on your payments to the mortgage broker. This option is probably best avoided.

Another seemingly viable option is to apply for a credit line or loan to eliminate the debt and get rid of the property lien. Again, this may just cause more problems as it is just another monthly payment for you to struggle with.

Want to avoid going into arrears on your property taxes in the future? A good way to do this is to get your mortgage broker to roll your property taxes in with your mortgage. Having one monthly payment may be much more manageable, and your property taxes will not default – thereby avoiding a property tax lien.

For more information about property tax liens and what to do if you have a property tax lien on your home, please contact Paul Mangion at The Mortgage Centre by calling 416 204 1256 or visit www.themortgagecentretoronto.com

Should I Refinance? Blog Series Part 4 – How to Get a Mortgage with Bad Credit

Are you a homeowner that is asking yourself “should I refinance” but know that your credit is in bad shape? Know that there are funds that you need but afraid your credit will prohibit you from accessing them? Don’t worry. There are many lenders out there that are willing to work with you even though your credit may not be perfect, and show you how to get a mortgage with bad credit.  

Credit can be bad for any number of reasons. Things like job loss or divorce can leave you in a financial position that has you struggling to pay your monthly bills. Some things are unavoidable, but this doesn’t mean you don’t deserve to have a roof over your head and the financial ability to survive. Thankfully, many lenders recognize and appreciate this and can help you get a mortgage with bad credit! 

Has poor credit forced you to claim bankruptcy or obtain a consumer proposal in the past? Chances are, you are trying your best to rebuild that less than perfect credit. This is all taken into account when you approach a mortgage broker. Your changing payment history will reflect these efforts, so know that lenders can see it.

Don’t know if you have bad credit? One major thing to think about that impacts your credit is your payment history. Have you habitually made late payments, or failed to make payments on a regular basis? Are you continually at the max on numerous credit cards, or are you going over your credit card limit? If you answered yes to these, chances are your credit is in less than perfect shape.

If you think you might have bad credit, or know that you do, again, don’t worry. Banks are no longer the only institutions– or even the institutions with a strong monopoly- in the area of mortgage refinancing. There are many different lenders that are willing to help you and approve your application for refinancing, and your mortgage broker can help you find them and access these funds.

Although the interest rate on refinanced mortgages obtained with bad credit is higher, it can be a good motivator to get the mortgage paid off faster. Knowing that you will end up paying more interest the longer it takes to pay off the mortgage, getting a mortgage with bad credit might be incentive enough to make you pay off the mortgage faster!

Also important when considering applying for a mortgage with bad credit is that your mortgage broker can work with you by going through your finances and can help you work on a plan to rebuild your credit. Setting up a budget and looking at different strategies and approaches to paying off debt and helping you in achieving and maintaining a high credit score is  something that a professional mortgage broker is trained to do.

Refinancing your home to cover various different costs in an important decision, but as a homeowner you should be able to access the value in your home.

For more information about what your answer to the question “should I refinance” might be, and how to get a mortgage with bad credit, please contact Paul Mangion at 416-204-0156 or visit www.themortgagecentretoronto.com

Should I Refinance? Blog Series Part 3 – Refinancing Your Mortgage to Consolidate Debt

Are you a homeowner with substantial debts? Have you asked yourself “should I refinance” and use that money to pay off my debt? Refinancing your mortgage to consolidate debt might be a good solution and could save you a lot of money.  

Paying credit card debt by refinancing your mortgage means that you are accessing the equity in your home – using the value of your home – to borrow against. This can mean that a substantial amount of money is available for you to use to pay off your debt. So what are the benefits of doing this? 

Firstly, say for example you owe 40 000 in credit card debt. All cards have minimum monthly payments that you are required to make – but these do not in their entirety go onto your outstanding balance. Monthly payments are usually made up of interest and payment on the balance, however, the majority of this goes to interest, meaning that you are actually only putting a tiny amount onto the outstanding debt. That 40 000 dollars can take way too long to pay off!! Since credit card interest is often very high, refinancing your mortgage to consolidate debt allows you to save a lot of that interest.

Secondly, refinancing your mortgage to consolidate debt allows you to lower you monthly payments considerably in order to avoid the accumulation of more debt. If you are struggling to make the minimum payments, chances are your debt isn’t actually decreasing at all, and you may just be increasing it through continued use. By consolidating your debt you are able to reduce your monthly debt payment and take control of your financial situation. Furthermore, since your required monthly payment is lower, you will have extra monthly cash flow and when able, can just pay more directly to the balance owed.

Another good reason to refinance your mortgage to consolidate your debt is to improve your credit. Even if you make the minimum required payment on each of your credit cards, having several cards with high balances can negatively impact your credit rating. High balances make it seem as though you are unable to manage your finances in relation to your monthly income, and therefore you may seem like a high risk investment. By refinancing your mortgage and using the value of your home to pay off debt, you can fix this problem.

Banks versus a mortgage broker – which option is best? Since this is a financial issue, your first thought might be to go to the bank and try to get a consolidation loan. However, as a homeowner, there are far better options available to you. Since banks are often the financial institutions that control your credit cards, it is in their best interest to keep you paying the minimum monthly payment (much of which is just interest). It means way more money for them if you just continue to pay interest. Banks are also often much stricter when determining who qualifies for a loan, and so going to a mortgage broker means a better chance of getting the money you need to get those debts under control.

There are many things to consider when asking yourself “should I refinance.” Refinancing your mortgage to consolidate debt can be an important solution to getting control of your debt and saving money.

 For more information about what your answer to the question “should I refinance” might be, and how refinancing to consolidate debt can work for you, please contact Paul Mangion at 416-204-0156 or visit www.themortgagecentretoronto.com

Should I Refinance? Blog Series Part 2 - What is a Second Mortgage or a Second Mortgage Loan?

Are you thinking of paying off some of your debt, or need some money for major renovations or other financial needs? Are you asking yourself “should I refinance?” Well a second mortgage might be the best option for you.

Firstly, what is a second mortgage? A second mortgage, also known as a second mortgage loan, is a home equity loan that lets you borrow from your home’s equity while avoiding refinancing your first mortgage. This is important because a second mortgage lets you continue payments on your existing mortgage uninterrupted, allowing you to pay off your debt quicker, ultimately saving you interest.

Because a second mortgage is based on your home equity, the amount is based on the difference between the appraised value of your home and the amount still owing on your first mortgage. This can be a significant amount of money, and refinancing by taking out a second mortgage can be a good option for getting some much needed capital.

So what are the benefits of a second mortgage? Often, second mortgages can be important sources of income, and a lot of income. Because it is based on the value of your home, it is easy to access thousands of dollars.  An easy way to estimate the amount you might qualify for is to have an appraisal done on your home – which will be necessary once you apply.

What can they be used for? Really anything. Paying off debt is one of the most common usages of a second mortgage loan. Because the interest rate on a second mortgage loan is often far lower than a credit card, paying one off with the other can ultimately save you thousands of dollars in interest. 

Using a second mortgage to pay for a child’s tuition is also common. Chances are you have built up substantial equity in your home by the time your child goes off to college or university, and so a second mortgage can prove to be a sure-fire way to secure funding for this. For the same reason, obtaining a second mortgage loan to pay for home improvements or to open a small business is an important consideration when asking “should I refinance.”

Why not just refinance by adjusting your first mortgage? This can be an option, but often the interruption can mean a longer amortization period resulting in more interest being paid by you in the long run.  This is where a mortgage broker comes in. Let them go through all of the options available to secure the best mortgage product to suit your current financial needs and goals.

As a homeowner, you have worked hard to make a dent in your existing mortgage and have thus created equity. This home equity can be an important source of income when it comes to a second mortgage loan. 

For more information about what your answer to the question “should I refinance” might be, and what a second mortgage is, please contact Paul Mangion at 416-204-0156 or visit www.themortgagecentretoronto.com  

Should I Refinance? Blog Series Part 1 – How to Get the Lowest Mortgage Rates

With interest rates currently very low in Canada, refinancing to get the lowest mortgage rate may seem like the best idea to save yourself some money. The benefits from refinancing your mortgage can range from getting a better, lower interest rate, to shortening the length of the loan period. However, when asking yourself “should I refinance,” there are several different things that need to be considered, not just the rate of interest, to ensure that you are getting the lowest mortgage rates! 

There are many different reasons that refinancing your mortgage may be a good idea, and a lower interest rate is not necessarily the best one. Switching from a variable rate to a fixed rate mortgage or adjusting the length of your mortgage term are two important examples. These can significantly impact your mortgage interest rate.

Should you refinance? Of course, a lower interest rate can mean the lowest mortgage rate for you. Obviously, if your rate is significantly higher than those now being offered, it may save you thousands to refinance based solely on the current interest rates.

Has your credit improved significantly since you first got your mortgage? If it has, you may find that refinancing your mortgage is a good way to secure the lowest mortgage rate possible. Chances are, if your credit was not the best that it could have been when you were first approved, you are currently paying a higher rate of interest. Coupled with a lower interest rate, refinancing because of improved credit can definitely mean getting the lowest mortgage rates.

Switching from a variable rate to a fixed rate mortgage is a great way for people to get the lowest mortgage rates. If you currently have a variable rate mortgage, then your rate is not locked in, and once the interest rate goes up you will end up paying more. By switching to a fixed rate mortgage when interest rates are super low, you can ensure that you are getting the lowest mortgage rate. Taking advantage of low interest rates in this way can mean that refinancing will get you the lowest mortgage rate.

Shortening the amortization period of your mortgage can also significantly reduce your mortgage rates. For example, if the length of your loan is 30 years, you will pay a great deal more interest than if it was 25 or 20 years long. Even if you are getting the best possible interest rate, having a loan term of 30 years does not necessarily mean you are getting the lowest mortgage rates! If you have the financial ability to pay the higher monthly payment that accompanies a shorter amortization period, you can save yourself thousands in interest. In this case, the answer to the question ‘should I refinance’ might definitely be YES!

As you can see, just having the lowest interest rate does not necessarily mean that you are getting the best mortgage rate – especially when you are looking long term. You work hard for your money, and securing a mortgage that gets you the best mortgage rates can be achieved through mortgage refinancing.

For more information about what your answer to the question “should I refinance” might be, and how to get the lowest mortgage rates, please contact Paul Mangion at 416-204-0156 or visit www.themortgagecentretoronto.com.

Buying a Home in Toronto (G-T-A) Blog Series Part 4 – Best Canadian Mortgage Rates and Approvals

When you are setting out to buy a home in Toronto, there are many different things that need to be considered. One of the most important – arguably the most important – is your mortgage. Right now, interest rates are historically low, and so getting the best Canadian mortgage rate shouldn’t be a difficult task.

Getting a low interest rate on your mortgage is very important, as it can significantly reduce the amount of your monthly mortgage payment. Getting the best Canadian mortgage rate will allow you to get the most house for your money, while still allowing you to remain financially stable, even if other financial requirements should arise.

Prior to applying for a mortgage, it is essential to work out how much you can afford a month. This will ensure that you are prepared when seeking the best Canadian mortgage rate and buying a home. Making sure that you have factored in all monthly costs, such as house insurance, utilities, etc. will mean you know exactly how much you feel comfortable spending on a monthly mortgage payment.

When buying a house in Toronto and searching for the best mortgage rates in Canada, it helps knowing what different types of mortgages are available to you.  Which one you choose depends on various factors, such as the amount of down payment you have to put down or your future financial goals.

If you have 25% of the purchase price of the home or more to use as a down payment, you can apply for a conventional mortgage. If you have less that 25% but at least 5% however, you will need a high-ratio mortgage, which then has to be insured by CMHC. If you don’t have at least 5%, you have the option of applying for a no down payment mortgage, which allows you to buy a house even if you have not saved up the 5% down payment. However, be sure to keep in mind that this type of mortgage usually bears a higher rate of interest, and so getting the best Canadian mortgage rate means having a down payment.

What about an open mortgage compared to a closed mortgage option when looking for the best Canadian mortgage rates and buying a home. An open mortgage allows you to make additional payments on your monthly payment, or to pay off the entire mortgage, without any penalties. This means that if you have extra cash on hand, you do not need to worry about being charged additional fees when paying off your mortgage.

A closed mortgage (or fixed rate mortgage) is a mortgage that has an interest rate locked in for a set period of time – meaning that your rate does not change. It also means that you don’t plan on making additional payments as you would with an open mortgage. These are the most popular mortgages, as they are usually the ones that carry the best interest rates in Canada.

Knowing the different types of mortgages available to you when buying a home in Toronto and getting mortgage approval will help you to determine what you want to get from your mortgage.

For more information about buying a home in Toronto and getting the best Canadian mortgage rates available, please contact Paul Mangion by calling The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com

Buying a Home in Toronto (G-T-A) Blog Series Part 3 - Information for First Time Home Buyers

Buying your first home is a very exciting process, but it can also be a very overwhelming and stressful one. Help eliminate this stress and make buying a home in Toronto a smooth and trouble-free process by following these steps for first time home buyers:

Know how much you can afford and how much you qualify for before you even start looking.  Finding a house and falling in love with it before you know how much of a mortgage you can afford and qualify for can mean heartbreak – either for you or your pocket! Set out your monthly budget and figure out what an affordable, manageable monthly mortgage payment would be.

Now it is time to get the funds to buy a house. Find a mortgage broker so that you know that you are going to get the best mortgage at the lowest interest rate. A mortgage broker will work with the different banks in order to secure this for you! They will also explain the different types of mortgages available to first time home buyers, and the advantages of each.

Make sure that you have thought about – and saved – a down payment. “No down payment” mortgages are available, but in order to secure a low interest rate and to decrease the amount of your monthly mortgage payment, having a down payment is essential when buying a house. Look at the different options available to you in order to amass that down payment, including saving or the RRSP Home Buyers’ Plan, which allows first time home buyers to use up to $25000 tax free from your RRSP to purchase a home.

Secure the services of a real estate agent. These professionals will be able to help take the hassle out of buying a house that meets your needs/wants, and save you the time of having to wade through all of the real estate listings out there. Go to open houses and look at different properties, and always keep in mind that as a first time home buyer no house may seem perfect – but it may be the perfect house for you!

Know the costs associated with a real estate closing. A down payment and a mortgage are not the only costs associated with buying a home in Toronto. First time home buyers need to be aware of the various other fees that come with buying a house.  These other costs are important to remember:

-              Home Inspection – a home inspector will inspect the house to make sure that it is safe and to let you know of any repairs that are required.

-              Real Estate Lawyer – your real estate lawyer will go through all of the legal paperwork and make sure you understand your rights and responsibilities as a homeowner.

-              Land Transfer Tax – this tax is calculated based on the value of the property. There are substantial rebates on this for first time home buyers.

-              Home Insurance – required by the bank, this will protect your home and property from incidents such as fire or theft.

Buying a home – your first home – should be a very exciting experience. Just keep in mind that it is a complex process that involves some important steps that you cannot ignore. By using these easy tips to guide you in your home buying process, you can save yourself time, money and stress. Being a first time home buyer does not need to be intimidating – it should be fun – so just be prepared and take advantage of the services available to you to make it so!

For more information about what you need to know as a first time home buyer in Toronto, please contact Paul Mangion by calling The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com

Buying a Home in Toronto (G-T-A) Blog Series Part 2 - Estimating Real Estate Closing Costs

Buying a home can be a very exciting experience. However, it is important to keep in mind that there are certain real estate closing costs that you need to be aware of – and prepared for! Not knowing what other costs are associated with buying a house can be a major hassle – and may negatively impact your ability to close! Here is a list of the real estate closing costs you should be prepared for when buying a house in Toronto.

The first real estate closing cost you need is a down payment. Although there are “no down payment” mortgages available, these are often obtained at a higher interest rate, and therefore trying to save a down payment is a good idea. If you do not opt for, or cannot qualify for, a “no down payment” mortgage, you will be required to have at least 5% of the total cost of your home in the bank, and usually for 3 months, in order to secure a mortgage and buy a house. 

A second real estate closing cost that comes with buying a house in Toronto is the fee for a home inspection. Buying a house without a home inspection is a bad idea. Hiring a home inspector means that you are aware of any repairs that need to be done to the house and their expected costs.  Be sure to account for the inspection fees prior to buying a house in Toronto.

A third real estate closing cost that comes with buying a house is the legal fees charged by your real estate lawyer. A real estate lawyer is responsible for ensuring that all legal documentation is prepared and that you are protected in all contracts that you sign.  They also make sure that there are no issues, such as outstanding liens on the house, which can inhibit your ability to close. Being prepared for the costs of their services is essential!

Land transfer tax is a fourth real estate closing cost that you should be aware of. In Ontario, the cost of land transfer tax is:

-              Land/property under $55 000 = 0.5% of value

-              Land/property $55 000 - $250 000 = 1% of value

-              Land/property over $250 000 = 1.5% of value

-              Land/property over $400 000 = 2% of value

In Toronto, there is an additional land transfer tax, so be prepared for this as well.  However, new home buyers do get a substantial rebate on land transfer tax.

A fifth real estate closing cost is homeowners insurance. This insurance protects your home and property in the case of unforeseen incidents, such as fire or theft. It is usually paid on a monthly basis, but just be aware that acquiring homeowners insurance at the time of closing is a good idea, as it protects you the minute you take possession of your home! Be sure to shop around to find the best policy to suit your needs.

Being financially prepared for the costs associated with a real estate closing is very important. In order to make the home buying process a smooth and simple one, knowing your real estate closing costs is essential.  Make sure you know the costs associated with the home buying process when buying a house in Toronto and you will be able to find, buy, and close without any hassle or financial restraints!

For more information about buying a home in Toronto and the real estate closing costs you will need to be aware of, please contact Paul Mangion by calling The Mortgage Centre at 416-204-0156 or visit www.themortgagecentretoronto.com