Tag Archives: mortgage approval

What the new mortgage rules mean for homebuyers – There are two scenarios new buyers can anticipate

mortgage math

 

Source: MoneySense.ca – by  

 

 

Today, the Office of the Superintendent of Financial Institutions (OSFI) introduced new rules on mortgage lending to take effect next year.

OSFI is setting a new minimum qualifying rate, or “stress test,” for uninsured mortgages (mortgage consumers with down payments 20% or greater than their home price).

The rules now require the minimum qualifying rate for uninsured mortgages to be the greater of the five-year benchmark rate published by the Bank of Canada (presently 4.89%) or 200 basis points above the mortgage holder’s contractual mortgage rate. “The main effect will be felt by first-time buyers,” says James Laird, co-founder of Ratehub.ca. “No matter how much money they put down as a down payment, they will have to pass the stress test.” The effect of the changes will be huge, resulting in a 20% decrease in affordability, meaning a first-time homebuyer will be able to buy 20% less house, explains Laird.

MoneySense asked Ratehub.ca to run the numbers on two likely scenarios and find out what it would mean for a family’s bottom line. Here’s what they found:

SCENARIO 1: Bank of Canada five-year benchmark qualifying rate

In this case, the family’s mortgage rate, plus 200 basis points, is less than the Bank of Canada five-year benchmark of 4.89%.

According to Ratehub.ca’s mortgage affordability calculator, a family with an annual income of $100,000 with a 20% down payment at a five-year fixed mortgage rate of 2.83% amortized over 25 years can currently afford a home worth $726,939.

Under new rules, they need to qualify at 4.89%
They can now afford $570,970
A difference of $155,969 (less 21.45%)

SCENARIO 2: 200 basis points above contractual rate

In this case, the family’s mortgage rate, plus 200 basis points, is greater than the Bank of Canada five-year benchmark of 4.89%.

According to Ratehub.ca’s mortgage affordability calculator, a family with an annual income of $100,000 with a 20% down payment at a five-year fixed mortgage rate of 3.09% amortized over 25 years can currently afford a home worth $706,692.

Under new rules, they need to qualify at 5.09%
They can now afford $559,896
A difference of $146,796 (less 20.77%)

If a first-time homebuyer doesn’t pass the new stress test, they have three options, says Laird. “They can either put down more money on their down payment to pass the stress test, they can decide not to purchase the home, or they can add a co-signer onto the loan that has income as well,” says Laird. The stress test will be done at the time of refinancing as well, with one exception. “If on renewal you stay with your existing lender, then you don’t have to pass the stress test again,” says Laird. “However, if you change lenders at mortgage renewal time, you may have to pass the stress test but it’s not crystal clear now if this will be the case for those switching mortgage lenders.”

So if you’re a first-time homebuyer, it may mean renting a little longer and waiting for your income to go up before you’re able to buy your first home. Alternatively, some first-time buyers will buy less—maybe a condo instead of a pricier detached home. Or, the new buyers may opt to get a co-signer to qualify under the new rules.

But whatever you do, if you’re a first-time buyer, make sure you understand what you qualify for using the new regulatory rules, and get a pre-approved mortgage before you start house-hunting. “This shouldn’t be something that shocks you partway through the home-buying process,” says Laird.

And finally, do your own research and run the numbers on your own family’s income numbers. You can use Ratehub.ca’s free online mortgage affordability calculator to calculate the impact of the mortgage stress test on your home affordability.

mortgage math

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10 most common bankruptcy myths

 

“The Act permits an honest debtor, who has been unfortunate…” to “…make a fresh start…”.

So reads page two of the 1,841 page annotated Bankruptcy and Insolvency Act (BIA) regarding a person who files bankruptcy. The legal process of bankruptcy effectively assumes one’s ‘innocence’ and is intended to be financially rehabilitative rather than punitive in nature. The days of debtor’s prisons have been assigned to the scrapheap of history.

Yet bankruptcy—and legal insolvency generally—is one of the more mercurial and misunderstood areas of personal finance. Recently I wrote an article arguing that unsustainable debt loads have become the new normal in Canada, in which I drew on my first hand experience with people struggling with debt trouble. As such, I have personally met with thousands of clients and have fielded every type of question imaginable about debt, assets, income, investments, businesses, taxes and just about anything else you could conjure up.

Myths about bankruptcy abound. Licensed insolvency trustees and their staff, such as ours, spend a lot of time dispelling misinformation when we are asked about what is involved with bankruptcy.

From what I’ve seen there are three possible explanations for the myths that exist about bankruptcy. Firstly, the majority of people will simply never have any personal involvement with it; secondly, our proximity in Canada to our giant neighbour, the U.S., from which we get most of our TV, film and even news consumption, means we hear tales of “Chapter 7” or “Chapter 13,” yet Canadian bankruptcy law differs greatly from the U.S. Bankruptcy Code. And thirdly, we have that font of unending opinion masquerading as fact known as the Internet.

Faced with such formidable competition for legal knowledge, it’s worth taking some time to address the most common bankruptcy myths in Canada, ones we hear on a daily basis in our offices. Canadians should be aware of their rights and options in the event of financial trouble.

Here are the top 10 bankruptcy myths (in no particular order):

1. I will lose my home

Very few people who file bankruptcy in Canada actually lose their homes these days. The net equity in your home is what is of interest to the creditors, specifically. And there are even exemptions for this depending on the province you live in ($10,000 in Ontario).

If there is non-exempt equity in your house when you file for bankruptcy,  you make a settlement payable to the estate (via the Trustee). Upon discharge, the trustee would release its interest in the property. Or you could file a Consumer Proposal as an alternative to bankruptcy (in which case your assets are yours to keep, anyway). Either way, you would keep your home. Or you can choose to have the Trustee sell the home and use the proceeds to pay the creditors only the amounts they are owed by proven claims.

2. I will lose my possessions

Personal effects, furniture and household goods are exempt in bankruptcy. Exceptions would be made if you had items of extraordinary value such as fine art, which you would be asked to declare on your sworn Statement of Affairs to the creditors. You can exempt one car with a net value of $6,600 or less. So if you have a fully encumbered car (financed or leased), keep it if you wish, provided you continue to make the payments in the normal course of business. Keep your stuff.

3. I will lose my job

It is illegal for an employer to terminate employment simply for filing a bankruptcy. In fact, unless there is a wage garnishing order in place, your employer will not be informed of your filing. Some professions have rules in place precluding your filing a bankruptcy, such as having a broker’s license in which trust accounts are managed. In that case, a proposal could be filed instead as it does not include such restrictions.

4. I will go to jail

Laugh if you like but we get asked this a lot. I hesitate to even mention it, but it is possible to be imprisoned under s. 198 of the BIA for Bankruptcy Offenses, but it is rare and you’d have to work hard to get there. Example: fraudulent sworn statements or conveyances (transfers of property) without disclosure. In well over two decades of practice, we’ve never had a bankrupt person go to jail.

5. My spouse’s credit will be affected

An almost universal question for married people who file bankruptcy. You cannot affect another person’s credit by filing a bankruptcy, period. If you have joint debts with your spouse and he or she does not also file, they are 100 per cent liable for those debts and only those debts.

6. I will not be able to get future credit/buy a house

As stated earlier, bankruptcy is intended to be rehabilitative in nature, not punitive. It would not be fair to punish someone forever for filing a bankruptcy, so the record of it stays on your credit report for six years following discharge for first-time bankrupts. After that, it is gone. Your ability to buy a house will always be governed by your financial circumstances: your income, your assets, your spending and obligations. Many former bankrupts have been taught budgeting by their Trustee as part of the process and are now, of course, debt-free. So on paper, as long as they have the downpayment, many look pretty attractive as a lending risk. Even while the bankruptcy is still on your report when you apply for a mortgage, most still get approved in our experience. CMHC will guarantee a mortgage within three years of your discharge from bankruptcy depending on your financial situation.

7. I will not be able to renew my mortgage

Everybody who has an existing mortgage has asked this, and we’ve never had one client not get renewed, provided they remain with their existing lender and are current with the payments. Most are set up for auto-renewal.

8. I cannot include the taxes I owe in bankruptcy

Absolutely untrue. All taxes owing are unsecured debts fully dischargeable by bankruptcy (and proposals). This includes not just personal income tax but HST and, in the case of a business, payroll tax, which is a director liability and would trail you personally. The myth about taxes not being dischargeable in bankruptcy likely derives from the U.S. Bankruptcy Code, in which only certain tax debt for specific periods are dischargeable and only in certain situations. Canadian bankruptcy law discharges all tax debt universally, unless the Canada Revenue Agency has taken steps to secure it (a lien on a property) or in the case of fraud or tax evasion.

9. I will not be able to keep any lottery winnings

Despite how few people actually win the lottery, almost everyone asks about this. Any unexpected windfall of money during a bankruptcy is considered a non-exempt cash asset of the estate that vests in the Trustee for the general benefit of creditors. In normal parlance: the Trustee would pay out all proven claims by unsecured creditors in the bankruptcy in full, and the remaining lottery winnings would be returned at the time of discharge.

10. My trustee will restrict the income I can make

The bankruptcy act sets out surplus income standards, updated annually, which govern the portion of the bankrupt’s income which should be paid to creditors. The standards are based on the number of people in a given household. So a bankrupt is technically not restricted in what they can make, but they must pay more if they make more above these levels. The bankruptcy would also be longer (before discharge) if there is surplus income.

Bonus Myth (11): Mortgage shortfalls can’t be included in bankruptcy in Canada

Wrong. Mortgage shortfalls certainly can be included in a bankruptcy (or consumer proposal). But it only matters in the provinces with power of sale legislation: Ontario, Newfoundland, New Brunswick and PEI. Let me explain by way of some background.

In Canada, certain provinces have power of sale legislation in place. In that system, a lender will commence proceedings when the homeowner defaults on their mortgage. The borrower remains responsible for any losses the lender may incur from the sale, and the lender will then commence legal action to recover the shortfall.

By contrast, a foreclosure (also the prevailing law in the U.S.) is undertaken by a lender when the homeowner defaults on their mortgage, but in this case the borrower is not liable for any loss incurred by the lender. In the U.S., many homeowners walked away from their properties during the 2008 housing crisis and were not liable for the shortfalls.

A bankruptcy (or a consumer proposal) stops or prevents any legal action taken against a homeowner for the shortfall incurred by the lender. It becomes a debt fully dischargeable in bankruptcy or via a completed proposal. This includes any type of mortgage (first, second, HELOCs, privates). The secured debt gets paid out as much as possible from the property’s sale, and any shortfall is unsecured, and therefore eligible for discharge in any insolvency proceeding.

So if you are upside down on your mortgage (you owe more than the home’s value), you could file a bankruptcy or proposal and include that shortfall amount amongst your other unsecured debts in that insolvency. That is a sizeable advantage to a debtor versus being on the hook for any loss in a foreclosure.

Source: MoneySense.ca – Scott Terrio is an estate administrator at Cooper & Co. Ltd, a licensed insolvency trustee in Toronto. Follow him on Twitter at @CooperTrustee

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The real estate math mistake we all make

real estate math

Most financial choices boil down to simple math. Add up the gains, subtract the costs, and you should get a number that helps you draw a conclusion. Those numbers are particularly useful when trying to make a major life decision, such as whether or not to sell the family home.

Given how hot big city markets like Toronto are these days, the math would certainly make a compelling case to sell. Yet according to the April sales data from the Toronto Real Estate Board, listings are down 27% year-over-year in the GTA. Despite brisk sales and skyrocketing prices, most homeowners living in semi-detached and detached homes are choosing to stay put. (A similar lack of inventory is plaguing Vancouver, Halifax, Ottawa and nearly every large city in Canada.)

TREB’s rationale for the dearth of listings? A widespread aversion to the high cost of land transfer. Other people have surmised that the scarcity is a symptom of our fear of paying a premium on the next property. After all, while you may sell high, you’re also forced to buy high—a proposition that leaves some feeling like prisoners to the status quo. But I think there’s another reason people aren’t selling as many homes these days, and it’s buried deep inside our brains. More precisely it has to do with how we process gains and losses.

According to Nobel-prize winning professor Daniel Kahneman, we’re hardwired to overvalue a loss and undervalue a gain. “The aggravation that one experiences in losing a sum of money appears to be greater than the pleasure associated with gaining the same amount,” is how he puts it.

To appreciate what Kahneman means, consider the case of Larry and Laura. Retired for three years, the Toronto couple have a comfortable debt-free life, funded by modest pensions, savings and government income programs. Thing is, they could have more money in the bank if they sold their home—let’s say they bought it 15 years ago for $250,000. But Larry and Laura can’t wrap their heads around selling and downsizing in such a crazy market, even though they could probably sell it for $750,000 or more.

The math says they’d be ahead by as much as half a million. But that calculation isn’t entirely accurate, at least not from an economist’s point of view. To understand how they’re undervaluing their gains, you have to consider the difference between sunk costs and opportunity costs. Sunk costs are anything spent that cannot be recovered. For Larry and Laura, that would mean the money they paid into the mortgage, the time and money it took to maintain their home and the emotional and mental energy they invested in raising a family in the house.

The opportunity cost, on the other hand, is what’s incurred from not taking the next best alternative. This is a fancy way of referring to all the ways Larry and Laura could be spending their time and money if it weren’t tied up in their family home.

Pretty straightforward, right? Only Larry and Laura aren’t as rational as they think. The idea of dismissing all the money, time and energy they poured into their family home feels like the emotional equivalent of losing their investment, a perceived loss that prompts them to overvalue their sunk costs. Economists would say this is irrational. They would explain our refusal to dismiss these irretrievable expenses as a “behavioural error” or an action that doesn’t conform to rational choice theory (a principle that assumes we always make the prudent and logical decision that provides us with the greatest benefit).

If Larry and Laura were truly rational, their real gain for selling their debt-free family home would be closer to $750,000 (the sale price minus transactional costs). Even if they chose to repurchase in the same market, it would likely be something smaller and less expensive; they’d still have money left in the bank to spend on travel, explore new hobbies or give to their kids and grandkids. So does that mean Larry and Laura should sell? Yeah, maybe. Since each person values a future gain slightly differently, it’s important to ask yourself the following questions:

1. What are the intangible and tangible sunk costs so far?

2. Am I willing to accept that these sunk costs will never be returned to me?

3. If so, can I see what I may be missing if I overweight costs that are irretrievable?

4. Finally, what would I actually gain if I were to sell and move now?

It’s totally understandable if you answer these questions and still choose to pass up the opportunity for a large financial gain. Sometimes the math used to determine a home’s value ignores the intangibles—factors that can outweigh even the most compelling balance sheet surplus. But going through an exercise like this will help anyone make a more informed, more rational decision. It’s better than feeling trapped in the status quo, a prisoner in a surprisingly expensive home.

 

Source: MoneySense.ca – by  

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Proposed mortgage rules aim to reduce financial risk in Canada’s hot housing markets

Vancouver has one of the hottest housing markets in Canada. New mortgage rules proposed by OSFI aim to mitigate the financial risks.

New rules proposed by the federal government to curb financial risks associated with the country’s hot housing markets could make it more difficult to secure a mortgage.

The Office of the Superintendent of Financial Institutions’ new guidelines proposed Thursday include stress tests for uninsured mortgages — loans secured with a deposit of at least 20 per cent on the value of the home.

Those homebuyers will now have to show that they can withstand a two per cent increase on their contractual mortgage rate. This would apply to variable and fixed-rate mortgages, regardless of term.

Using a million-dollar home as an example, buyers looking to secure a mortgage with a 20 per cent down payment at a three per cent interest rate would have to prove they could pay up to $4,652 per month instead of the $3,786 on their contract — a difference of $866 per month.

The changes come as the Bank of Canada looks set to increase interest rates as soon as next week for the first time in seven years.

CANADA-HOUSING/

The B.C. and Ontario governments have been using different tactics to try to cool housing prices in major cities. (Mike Cassese/Reuters)

“Persistently low interest rates, record levels of household indebtedness, and rapid increases in house prices in certain areas of Canada (such as Greater Vancouver and Toronto), could generate significant loan losses if economic conditions deteriorate,” OSFI wrote in a public letter.

But those working in and studying the real estate market say those changes aren’t likely to make a difference, especially given that those uninsured mortgages tend to be less risky because owners have already proved they have access to capital for a down payment.

What experts say will have a greater effect on housing markets is the office’s proposal to ban co-lending arrangements, or bundled mortgages, that sidestep rules designed to clamp down on risky lending.

The regulator said it is considering “expressly prohibiting co-lending arrangements that are designed, or appear to be designed, to circumvent regulatory requirements.”

Fear of a housing bust

Reuters reported in January that regulated mortgage providers were teaming up with unregulated rivals to circumvent rules limiting how much mortgage providers can lend against a property.

The arrangements have proliferated as Canadian regulators tightened lending standards to shield borrowers in case a decade-long housing boom goes bust.

“Bundled” or co-lending agreements with an unregulated entity can enable lenders to offer combined mortgages worth up to 90 per cent of a property’s value. Under federal rules, regulated lenders in Canada are not allowed to lend more than 65 per cent of the value of a home to borrowers with bad or nonexistent credit records.

They also cannot lend more than 80 per cent of a property’s value — even to borrowers with solid credit — without obtaining government-backed insurance.

city of vancouver empty homes

B.C. recently implemented a tax on foreign homebuyers as part of an attempt to reduce real estate demand and prices. (Rafferty Baker/CBC)

Under rules rolled out last October, that insurance requires the banks to run income stress tests on borrowers.

“When you’re looking at excited housing markets, you’re really concerned about where the capital is coming from,” said Tsur Somerville, a senior fellow with UBC’s Centre for Urban Economics and Real Estate.

“In terms of trying to cut down on the flow of capital in the housing, in particular in Toronto and Vancouver, cutting down on the bundling is probably the most important piece.”

Somerville guessed the intention behind the new regulations is likely a mix of wanting to cool those hot housing markets and mitigate risk in the financial sector.

Mortgage brokers concerned

Grant Thomas, founder and partner with The Mortgage Group, said he was concerned about the proposed changes — especially in big-city markets where homes often sell for millions of dollars.

Thomas said bundled mortgages are probably less than a third of all mortgages, but are often used when homeowners are financing the construction of a new home or are in between selling and buying a home.

Mortgage delinquency rates in Canada remain low even in cities like Toronto and Vancouver, he points out.

“The government has been intrusive in our industry in the last three years, and they continue to be so at a rate that is probably unnecessary,” he said.

“I’m not overjoyed whenever the government involves itself in business.”

Affordable housing in Nova Scotia.

Canadian regulators have tightened lending standards to shield borrowers in case a decade-long housing boom goes bust. (Robson Fletcher/CBC)

Thomas said his company and Mortgage Professionals Canada are planning to spend the next few days examining the proposed changes.

The Office of the Superintendent of Financial Institutions is accepting comments until Aug. 17. It said it will finalize the guidelines and set an effective date for implementation later in 2017.

The office said the proposed changes would be guidelines that federally regulated financial institutions would be expected to follow.

 

Source: Maryse Zeidler, CBC News

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Canadian housing bear warns proposed mortgage rule changes may close the Bank of Mom and Dad

A former MP and popular finance blogger is warning a federal watchdog’s proposed changes to the mortgage qualification process could have a dire impact on housing markets across Canada.

Garth Turner, whose Greater Fool blog has ruffled more than a few feathers, suggests a move to “stress test” all uninsured mortgages, rather than just insured mortgages with downpayments of less than 20 per cent, will curb demand considerably.

“It’s been seven years since we’ve had consistently rising interest rates and we’ve never had this kind of stress test before,” Turner tells BuzzBuzzNews.

“I just can’t in honesty tell people, that ‘Oh, you know, go to Cambridge or Montreal or Halifax or Edmonton for a bargain property because I think properties are going to be feeling a downward tug,” he continues.

SEE ALSO: The Bank of Mom and Dad: the ways Toronto parents help theirs kids buy homes

Last month, the Office of the Superintendent of Financial Institutions published a draft of its reworked Guide B-20 — Residential Mortgage Underwriting Practices and Procedures, which included the broader stress test proposal.

By stress testing all mortgages, Turner suggests a large chunk of the prospective-homebuyer population will be pushed to the sidelines as they will no longer be able to finance their purchase, thus reducing demand and, ultimately, leading to outright price declines.

It’s a regulatory change that Turner is convinced will take place before the end of the year.

“We all have the same mortgage rates coast to coast, we all have the same mortgage approval regulations coast to coast, so these are universal changes that are going to affect every buyer in Canada,” Turner says.

Currently, a homebuyer can go to an alternative or sub-prime lender or even the Bank of Mom and Dad to borrow money to boost their downpayment to 20 per cent or more, avoiding any stress test. But the new regulations would close this loophole.

“Credit is going to be drying up somewhere between 17 and 20 per cent simply because of the stress test alone, and that’s a pretty significant number of people to take out of the market,” he adds.

“The only workaround is going to be the people who get mortgages from non-bank lenders,” says Turner, citing provincially mandated credit unions as an example.

He refers to some credit unions as “time bombs,” estimating a number of them have 90 per cent of their assets tied up in residential mortgages.

“Talk about risk: it’s flashing red.”

Source: BuzzBuzzHome.com –  

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Ontario’s 16 new housing measures

Houses are seen in a suburb located north of Toronto in Vaughan, Canada, June 29, 2015.

The Ontario government has announced what it calls a comprehensive housing package aimed at cooling a red-hot real estate market on Thursday. Here are the 16 proposed measures:

  • A 15-per-cent non-resident speculation tax to be imposed on buyers in the Greater Golden Horseshoe area who are not citizens, permanent residents or Canadian corporations.
  • Expanded rent control that will apply to all private rental units in Ontario, including those built after 1991, which are currently excluded.
  • Updates to the Residential Tenancies Act to include a standard lease agreement, tighter provisions for “landlord’s own use” evictions, and technical changes to the Landlord-Tenant Board meant to make the process fairer, as well as other changes.
  • A program to leverage the value of surplus provincial land assets across the province to develop a mix of market-price housing and affordable housing.
  • Legislation that would allow Toronto and possibly other municipalities to introduce a vacant homes property tax in an effort to encourage property owners to sell unoccupied units or rent them out.
  • A plan to ensure property tax for new apartment buildings is charged at a similar rate as other residential properties.
  • A five-year, $125-million program aimed at encouraging the construction of new rental apartment buildings by rebating a portion of development charges.
  • More flexibility for municipalities when it comes to using property tax tools to encourage development.
  • The creation of a new Housing Supply Team with dedicated provincial employees to identify barriers to specific housing development projects and work with developers and municipalities to find solutions.
  • An effort to understand and tackle practices that may be contributing to tax avoidance and excessive speculation in the housing market.
  • A review of the rules real estate agents are required to follow to ensure that consumers are fairly represented in real estate transactions.
  • The launch of a housing advisory group which will meet quarterly to provide the government with ongoing advice about the state of the housing market and discuss the impact of the measures and any additional steps that are needed
  • Education for consumers on their rights, particularly on the issue of one real estate professional representing more than one party in a real estate transaction.
  • A partnership with the Canada Revenue Agency to explore more comprehensive reporting requirements so that correct federal and provincial taxes, including income and sales taxes, are paid on purchases and sales of real estate in Ontario.
  • Set timelines for elevator repairs to be established in consultation with the sector and the Technical Standards & Safety Authority.
  • Provisions that would require municipalities to consider the appropriate range of unit sizes in higher density residential buildings to accommodate a diverse range of household sizes and incomes, among other things.

Source: The Canadian Press – April 20, 2017

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Things You Should Know About Mortgages

Things You Should Know About Mortgages

House hunting can be both exciting and stressful and it’s one of the biggest purchases most people make in their lives. When it comes to financing your home or business, Northwood Mortgage can answer all your mortgage questions, taking the edge off an exasperating experience.

What does a mortgage broker do?

A mortgage broker secures financing for you. He or she can steer you in the right direction and provide guidance on what would be most beneficial to your personal situation. A broker knows the marketplace and is constantly in touch with banks and other lenders to get you the best mortgage possible. Mortgage agents work for mortgage brokers who hold licences.

Who pays them?

The bank or lender is responsible for paying the broker’s commission. That amount depends upon how much you’ve borrowed.

Fixed mortgage

You’ll be paying the same amount in principal and interest for the term of your mortgage no matter what interest rates do. Many homebuyers prefer this type of mortgage because they know what to expect even though there’s a chance interest rates may drop. It’s a tradeoff for stability.

Variable mortgage

Keep an eye on the prime rate because with a variable mortgage you’ll be paying according to what interest rates do. There is a chance you may have to pay more if the rate increases, but on the other hand, you’ll shell out less if rates drop.

Open versus closed rates

An open rate can be variable or fixed. It’s generally more flexible and has a higher rate of interest than a closed mortgage. You can pay it off or make more payments with any penalty. A closed rate can also be variable or fixed. Most folks opt for closed rate mortgages since the rates are lower, but you can only pay on the principal as stated. Paying it out early will net you penalties.

What about the Canadian Mortgage and Housing Corporation (CMHC)?

This government corporation gives residential homebuyers default loan insurance, providing assistance to those who find it financially cumbersome when it comes to buying a house. This insurance will cost you anywhere from 1.75 to 2.95 per cent of the entire amount of your mortgage. It gives banks and lenders protection in case you can’t pay your mortgage. You must be a Canadian citizen to take advantage of what CMHC offers.

Northwood Mortgage is one of the largest mortgage brokerage firms in the Greater Toronto Area and we know the ins and outs of the lending world and will be able to answer any queries you have. Not only do we arrange mortgages for homebuyers, but we also work with investors and those in the industrial and commercial sectors to arrange loans in the millions of dollars.

With all there is to know about mortgages and all the terms that come with that information, your best course of action is to call Northwood Mortgage. One of more than 200 experts available will tell you about their exemplary services.

Source: http://www.NorthwoodMortgage.com

 

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