Author Archives: familylending

What are Blended Mortgages?

Blend your mortgage to improve your rate.

Quite a few people are wondering how to lower their current mortgage costs.

Generally, the mortgage penalties you incur to break your mortgage are set up as the greater of three months interest or the value of your Interest Rate Differential. If you’re going to break your mortgage, try and do it when your mortgage is sitting in the “sweet spot”– this is when your rate is not high enough to trigger IRD and thus you’re only required to pay the three months interest penalty.

Unfortunately, the sweet spot rarely comes at a convenient time. Also, most people will have trouble ever fitting into this scenario if their rate is over 4 %. If this is your situation, speak with your low mortgage rate planner about a blended mortgage. There are two options that most banks will offer:

Blend and Extend or Blend to Term

  • Under a Blend and Extend option, the bank will give you a brand new term at the current rate but ‘blend’ in your penalty to your new rate.
  • The Blend to Term option is the same idea but your term remains as is. For example, you would end up with the same two years left but at a lower rate with the penalty blended in.

If you are in that “sweet spot” a good Canadian mortgage broker will show you calculations on just how much you can save by breaking your best mortgage rate. If you’re subject to an IRD, a good planner will go over what blended options are available to you and take into account your time frame and overall goal to help you select the option that’s the best fit.

Using a Home Equity Loan for Debt Consolidation

Have you considered this popular alternative?

blue home 2The biggest debt you are going to deal with as a property owner is your mortgage. With the right approvals, you are able to borrow against the equity of your house with a home equity loan.

What is a Home Equity Loan?

This style of loan is somewhat different to a home equity line of credit (HELOC), which is a line of revolving credit with a flexible interest rate. A home equity loan is a one-time lump-sum loan. Lenders are normally worry-free when contributing to your existing low mortgage rate since they are protected by the fact that your loan is secured against your house.

A Tool for Debt Consolidation

The main benefit of a home equity loan is in its debt consolidation abilities.

How do I get a Home Equity Loan?

The best way of obtaining a home equity loan is through a Canadian mortgage rate professional.

Benefits of a Home Equity Loan

  • Money in your hands to settle outstanding high interest debts
  • By paying off outstanding debts you are going to enhance your credit score
  • The home equity loan may be spread over the lifespan of your best mortgage rate, typically as much as 25 years
    • Tax deductions are readily available

Downsides of Home Equity Loans

  • You will be jeopardizing your home if you do not have the means to pay the loan back.
  • Once you borrow against your house you lose equity or ownership in the home.

Speak to a mortgage broker today to find out if this financial product is the right choice for you.

Typical Lending Criteria For The Self-Employed

Two things to keep in mind

Self-employedMost self-employed persons have a more difficult time getting pre-approved for a mortgage. The ideal image of a borrower by most lenders is one who has a stable job and thus a consistent stream of income as part of a regular pay cheque. Self-employed individuals rarely have this luxury.

If you would like to maximize your chances of being pre-approved for a low mortgage rate loan while self-employed, here are just some of the criteria you need to look out for:

Good Credit Score

A respectable credit score will always provide a boost to your finances and enhance your chances of getting a good deal on your Canadian mortgage rate. However, self-employed individuals can benefit a great deal from a positive credit score– in some cases, a high score may even help them win the favor of some discriminating lenders. Therefore, keep close tabs on your credit. The better your score, the better your chances will be of getting the best mortgage rate, whether you’re self-employed or employed full-time.

Established Self-Employment

You need to be self-employed for a considerable period of time. Lenders are more apt to trust you with a mortgage as a self-employed borrower if you are able to show them your stability as a self-employed income-earner. Most lenders will require you to have at least a two-year track record working for yourself.

Your ability to provide sufficient documentation is also an important factor in getting a low mortgage rate. As much as possible, you need to be able to support your income records with income statements and tax returns so you can qualify for a better mortgage rate.

Should I Rent Or Buy?

Are you ready to take the leap into homeownership?

female teen girls holding notepad with pros consWeighing out the pros, cons, costs, and considerations is the best way to help you determine if you are ready to own a home.

Renting

Pros

Renting is a wonderful first step to living on your own. Given that it lacks long term commitment many rental agreements generally only last one year. Renting is an affordable and accommodating option for most people.

Cons

You’re essentially paying off someone else’s Canadian mortgage rate, as opposed to investing in your future. In addition to this, your rental agreement will have its own set of rules that you will be required to follow during your tenancy.

Buying

Pros

The current best mortgage rates enable you to borrow money cheaply right away. Furthermore, owning a home will help to provide you with a sense of security and comfort. You have freedom to update it as you please and improve on your investment.

Cons

You will need to be personally and financially prepared for homeownership. Expect your stress levels to increase given your monthly budget.

Costs

Renting

Renting provides low initial costs. Your costs are a predictable expense and thus easy to budget around.

Buying

Saving up for a down payment requires substantially more money. Also, there are hidden expenses that turn up unexpectedly. Finally, if you secure a low mortgage rate today, you will need to keep in mind that your payments may go up when it comes time to refinance.

Investment

Renting can be considered an investment if the money that you’re saving is going towards a future down payment. Buying a home can be considered a good investment only if the property value increases. It could also provide a possible source of income if you choose to rent out a room or convert the basement into an income suite.

Buying a home is a big investment. Make sure you’re ready to make the commitment. Contact a mortgage broker to learn more about the pros and cons of homeownership.

Mortgage Fundamentals: Pre-Approved Vs. Pre-Qualified

What’s the difference?

Loan AppThere are several stages of the Canadian mortgage rate approval procedure when you apply for a mortgage. It is essential to understand what they are and what they really mean.

What is Pre-Qualification?

This is the initial step of the low mortgage rate approval process wherein your mortgage broker takes a look at your overall earnings and financial obligation. The broker will determine your affordability by taking a look at your debt ratios (Gross Debt Service GDS and Total Debt Service (TDS)).

There are going to be a variety of conditions that you will need to meet in the pre-qualification before it is fully approved.

What is Pre-Approval?

Once accomplished, the mortgage broker will send your application to a lender who confirms your information with a certificate of approval. This generally includes a Canadian mortgage rate guarantee, which is typically valid for 60 and 120 days. You must comply with all the terms and conditions prior to approval.

What is Approval?

You have been fully approved for the mortgage at the best mortgage rate detailed in the agreement.

Advantages of a Mortgage Pre-Approval

A mortgage pre-approval enables you to lock in an interest rate. It offers additional security in understanding that you satisfy the initial financing requirements. It also enables any seller to understand that you are a serious buyer.

Most importantly, you understand clearly what you are able to purchase when you are buying a home.

Documents Required for a Pre-Approval

  • Personal identification
  • Income information
  • Bank accounts
  • Loans and other financial obligations
  • Proof of financial assets
  • Confirmation of the deposit and funds to pay for the closing cost

Each and every house hunt begins with a mortgage pre-approval. Start your quick online application today.