As we gear up for the approaching summer season, why not revitalize your outdoor area to bask in the warmth and embrace the sunshine? There’s a plethora of fantastic outdoor projects awaiting, whether it’s in your backyard or on your balcony, to elevate your space and maximize your enjoyment of the season.

Let’s explore some fresh ideas:

1. Introduce an Outdoor Rug: A simple yet effective trick! An outdoor rug effortlessly injects vibrancy into your space without the hassle of extensive renovations. It’s an economical choice that can remarkably enhance the ambiance.
2. Embrace a Fountain: Whether grandiose or petite, fountains add an enchanting touch to any outdoor setting. Beyond aesthetics, the gentle sound of flowing water promotes serenity, enhancing your relaxation experience.
3. Illuminate with String Lights: Transform your space with the whimsical allure of fairy lights. These versatile adornments, available in various designs and hues, are a budget-friendly way to infuse charm and create a captivating atmosphere.
4. Craft a Vertical Garden: Maximizing space is key, even in compact areas. Consider a vertical garden, featuring low-maintenance plants like succulents. With a bit of creativity, repurposed materials can yield stunning results, elevating your greenery game.
5. Adorn with a Trellis: Elevate your outdoor aesthetic with a trellis, adding architectural interest and serving as a focal point for your garden or seating enclave. It’s a simple yet impactful addition that can redefine your outdoor space.
6. Design a Garden Path: Establishing pathways enhances both functionality and aesthetics. Opt for materials like stone or gravel for easy upkeep, adding structure and a sense of seclusion to your outdoor retreat.
7. Furnish with Comfort in Mind: Transform your patio into a cozy haven with thoughtfully selected furniture pieces. From loungers to dining sets, each addition contributes to a welcoming atmosphere. Consider DIY options using wooden pallets for a personalized touch, accentuated with vibrant cushions for a pop of color.

Remember, regardless of the size or layout of your outdoor space, infusing it with your unique style can significantly elevate your enjoyment. Seize the opportunity to curate your personal oasis and savor the season to the fullest!

One of the best parts about life is that it is ever-changing. This is one reason mortgages are available on short-term contracts (such as the standard 5-year) so that you can adjust your mortgage over time to best suit your needs. However, in some cases you cannot wait until the term is up. In fact, roughly six out of ten homeowners with the standard five-year fixed rate mortgage break their terms within three years.

There are a variety of reasons to refinance your mortgage such as wanting to leverage large increases in property value or get equity out of the home for renovations. In some cases, you may be unable to wait until the term is up due to life events such as divorce, a new relationship, kids going off to college or needing to consolidate debt.

Before you refinance, it is important to understand that if you do this during your term you will be breaking your mortgage agreement and there are penalties that come with that. If at all possible, it is best to wait until the end of the mortgage term before refinancing, however some lenders can also add funds in different ways that avoid penalty such as second mortgage, or a blended rate calculation.

If a penalty is involved,  it is important to understand how your lender is going to calculate the penalty if you break a fixed-rate mortgage. The penalty will be the higher of 3 months interest or something called Interest Rate Differential (IRD). Most banks calculate IRD penalties based on the discount you were given from the posted rate at the time that you signed your mortgage agreement. The bank firstly takes their new posted rate for whatever time you have left in your mortgage – if you break a five year contract on year three, this would be two years – and apply the same discount they first gave you. The difference between the two shows them the amount of interest they would lose for the rest of the term based on your current balance. This is what then becomes the penalty for breaking your fixed-year term and, in many cases, can be quite hefty. Other lenders such as monolines will use the actual difference in their real rates to make the IRD calculation.

Beyond the penalties, there are a few other points to consider before refinancing:

• You can tap into 80 per cent of the value of your home
• You cannot qualify for default insurance on a refinance
• You would have to re-qualify under the current rates and rules – including passing the “stress test” again

So what can you do? There is an option to sign a fixed rate for a shorter term, such as three years, or you can also consider a variable rate as the penalties for breaking these mortgages are much lower.

Talking to a mortgage broker about refinancing can provide you access to even greater rates and mortgage plans to best suit your needs and what you are trying to accomplish through your refinancing strategy.

BENEFITS OF REFINANCING

Regardless of why you are looking to refinance, it can come with a host of great benefits when done properly!

1.   A Lower Interest Rate

Depending on where you are in your mortgage term, you could refinance to get a better rate – especially when done through a mortgage broker. On average, a mortgage broker has access to 90 lenders and is able to find you the best rate versus traditional banks which only have access to their own rate.

2.   Consolidating Your Debt

When it comes to debt, there are many different types from credit cards to lines of credit to school loans to mortgages. However, many types of consumer debt have much higher interest rates than those you would pay on a mortgage. Refinancing can free up cash to help you pay out these debts. While it may increase your mortgage, your overall payments could be far lower and would be a single payment versus multiple sources. Keep in mind, you need at least 20 percent equity in your home to qualify.

3.   Modifying Your Mortgage

The beauty of life is that it is ever-changing and sometimes you need to pay off your mortgage faster or change your mortgage type. Maybe you came into some extra money and want to put it towards your mortgage or maybe you are weary of the market and want to lock in at a fixed-rate for security. It is always best to do this when your mortgage term is up, but talk to a mortgage specialist about potential penalties if waiting is not possible.

4.   Utilize Your Home Equity
One of the biggest reasons to buy in the first place is to build up equity in your home. Consider your home equity as the difference between your property’s market value and the balance of your mortgage. If you need funds, you can refinance your mortgage to access up to 80% of your home’s appraised value in cash!

If you are considering refinancing your home, or wondering if it is the best option for you, don’t hesitate to reach out today for expert advice and to review all possible options.

With the anticipation of rates going down, some homeowners may be considering switching from a variable-rate mortgage to a fixed-rate mortgage to lock in their next term.

Switching from a variable-rate mortgage to a fixed-rate mortgage can offer stability in your monthly payments, protecting you from potential interest rate hikes, along with some other benefits:

• Stability in Payments: As mentioned, with a fixed-rate mortgage, your monthly payments remain consistent throughout the life of the loan, providing predictability and making budgeting easier. This stability protects you from potential fluctuations in interest rates that could otherwise increase your payments with a variable-rate mortgage.
• Protection Against Interest Rate Increases: One of the main reasons to switch to a fixed-rate mortgage is to ensure you are protected from rising interest rates in the market. If interest rates rise, your mortgage rate and monthly payments remain unaffected, providing financial security and peace of mind.
• Long-Term Planning: Fixed-rate mortgages are ideal for long-term planning and financial stability. You can accurately forecast your housing expenses over the entire loan term, making it easier to manage your overall budget and financial goals.
• Risk Management: By locking in a fixed interest rate, you mitigate the risk of future interest rate hikes, which could significantly increase your borrowing costs with a variable-rate mortgage. This risk management strategy can provide financial protection and reduce uncertainty.
• Potential Savings: In certain economic environments, fixed-rate mortgages may offer lower interest rates compared to variable-rate mortgages. By refinancing to a fixed-rate loan when rates are favorable, you could potentially secure a lower overall interest rate and save money over the life of the loan.
• Easier Financial Planning: Fixed-rate mortgages simplify financial planning by eliminating the need to anticipate and adapt to changes in interest rates. You can confidently plan for other financial goals and expenditures without the uncertainty of fluctuating mortgage payments.

Overall, transitioning from a variable rate to a fixed rate mortgage offers stability, protection, and peace of mind, making it a favorable option for many homeowners, particularly those seeking long-term financial security.

Being on the path to purchasing your first home is one of the most exciting and most rewarding moments in life! While people don’t always dream of the perfect mortgage, we do grow up thinking of a white picket fence and our dream home. Even if you imagined your dream home as a 6-bedroom mansion, we all have to start somewhere!

Regardless of whether you’re buying an apartment, townhouse, rancher or two-story family house, there is nothing quite like your first home. Not only is it an amazing accomplishment and a great sense of freedom and security, but buying your first home is also a great step into the real estate market and can provide you equity and a leg-up towards future expansion.

Are you ready to own a home?

Before you jump on in, there are some things you should ask yourself. As amazing as it is to be a first-time home buyer, it is important to remember that this is likely the largest financial decision you will ever make. There are a few questions you can ask yourself to make sure you’re ready to take this incredible leap!

1. Are you financially stable?
2. Do you have the financial management skills and discipline to handle this large of a purchase?
3. Are you ready to devote the time to regular home maintenance?
4. Are you aware of all the costs and responsibilities that come with being a homeowner? Let’s find out!

COSTS OF HOME OWNERSHIP:

There are two major costs of home ownership – let’s make sure you’re ready to take it on!

Upfront Costs: The initial amount of money you need to buy a home, including down payment, closing costs and any applicable taxes.

Ongoing Costs: The continued cost of living in a home you own, including mortgage payments, property taxes, insurance, utility bills, condominium fees (if applicable) and routine repairs and maintenance. It is also important to keep in mind potential major repairs, such as roof replacement or foundation repair, that may be needed now or in the future. In addition, if you choose a property that is not hooked up to municipal services (such as water or sewer) there may be additional maintenance costs to consider.

Buying your first home

Regardless of whether you choose a mortgage broker or traditional bank, the first step begins with your down payment.

SECURING YOUR DOWN PAYMENT

If you are ready to get your first mortgage, you will need a down payment. The minimum down payment on any mortgage in Canada is 5% on the first $500,000 in purchase price. Putting down more can be beneficial whenever possible as it will lower the borrowed amount. If you can only afford the minimum that is perfectly okay! Just remember, if you are putting down less than 20 per cent to purchase your home, mortgage default insurance is mandatory.

Ideally, individuals looking to purchase their first home will have built up a nest egg of savings that they can apply towards a down payment. However, we know this is not possible for everyone so if you don’t have it all saved, don’t worry! Besides being a vital savings plan for retirement, RRSPs can be a great resource for first-time home buyers and can be cashed in up to $60,000 individually towards a down payment. In fact, most mortgage brokers will tell you nearly half of all first-time buyers use their RRSPs to help with the payment. Those first buyers who choose this option will have 15 years to pay it back and can defer starting these payments for a time if necessary. Always remember though, deferring a payment can increase the time to pay off the loan and you will still owe the full amount!

Another option for securing your down payment is a gift from an immediate. family member. In some cases, the down payment can also be borrowed, but this does require a strong income to qualify and not all lenders/situations may be available to do this.

MORTGAGE PRE-QUALIFICATION

The first step to realizing the dream of owning your first home is pre-qualification. This process provides you with an estimate of how much you can afford based on your own report of your financial situation. The benefit of this is that it sets the baseline for a realistic price range and allows you to start looking for that perfect home within your means! Now this process is not a mortgage approval, or even a pre-approval but it helps to establish your budget. You must supply an overview of your financial history (income, assets, debt and credit score) but the real requirements come with the pre-approval process where you submit your actual documentation.

MORTGAGE PRE-APPROVAL

This is the meat of the pre-purchase process and determines the actual home price you can afford. The difference between this and pre-qualification is that pre-approval requires submission and verification of your financial history to ensure the most accurate budget to fit your needs.

Pre-Approval can help determine:

• The maximum amount you can afford to spend
• The monthly mortgage payment associated with your purchase price range
• The mortgage rate for your first term

Not only does getting pre-approved make the search easier for you, but helps your real estate agent find the best home in your price range. Temptation will always be to start looking at the very top of your budget, but it is important to remember that there will be fees, such as mandatory closing costs, which can range from 1 to 4% of the purchase price. Factoring these into your maximum budget can help you narrow down a home that is entirely affordable and ensure future financial stability and security.

While getting pre-approved doesn’t commit you to a single lender, but it does guarantee the rate offered to you will be locked in from 90 to 120 days which helps if interest rates rise while you are still shopping. If interest rates actually decrease, you would still be offered the lower rate. Another benefit to pre-approval is that, when it comes time to purchase, pre-approval lets the seller know that securing financing should not be an issue. This is extremely beneficial in competitive markets where lots of offers may be coming in.

PROTECTING YOUR PRE-APPROVAL

• Avoid changes to employment or hours worked.
• Try to avoid applying for new credit, closing off credit accounts or making large purchases until after the sale is complete
• Be prepared to show a papertrail – any unusual deposits in your bank account may require explanation. Also if your down payment comes from savings, the bank will want 90 days of statements to ensure the funds are accounted for.

FINANCING APPROVAL

You’re almost there! Financial approval is the last step to getting your mortgage and buying your first home! You will need to keep in mind that just because you are pre-approved, it doesn’t guarantee that the final mortgage application is approved. Being entirely candid with your home-buying team throughout the process will be vital as hidden debt or buying a big ticket item during your 90-120 day pre-approval can change the amount you are able to borrow. It is best to refrain from any major purchases (such as a new car) or life changes (such as changing jobs) until after closing and you have the keys to your new home!

In some cases, pre-approval may not be guaranteed for reasons outside of your control. For instance, if the home was appraised below the purchase price, is a heritage home or has safety issues like asbestos, the lender may deny financing. Find a realtor that will be your advocate while showing you homes and always utilize an appraisal and inspection from foundation to roof to ensure that you do not encounter any hidden roadblocks!

CLOSING DAY

Phew, you made it. Closing day is one of the most exciting moments where all the house hunting and paperwork really pays off! It is on this day that you will want to make use of your lawyer or a notary.

To complete the process of closing the sale, your lender gives your lawyer the mortgage money. You would then pay out the down payment (minus the deposit) and the closing costs (typically 1 to 4% of the purchase price). From there, the lawyer or notary then pays the seller, registers the home in your name and gives you the deed and the keys!

Congratulations, you are now a home owner!!

Keeping up with rising living costs can be particularly challenging when you’re on a fixed income with limited cash flow. Many Canadians are taking out loans, using multiple credit cards, and delaying significant purchases to stay financially stable in retirement. However, juggling debts from different sources with varying interest rates and payment schedules can be stressful, leading Canadians to turn to debt consolidation loans to manage their finances and reduce stress.

What is debt consolidation?

Debt consolidation involves paying off debts using a single, lower interest loan. This approach significantly reduces the interest you pay and it offers the convenience of handling just one monthly bill instead of several.

Is Debt Consolidation Right for Me?

Many Canadians consider debt consolidation for various reasons, including:

• Catching up on bill payments: Debt consolidation loans can help you pay off multiple overdue bills, such as mortgage payments, income tax, phone, internet, heating, and hydro bills, providing you with financial control and stability.
• Paying off Private Loans: Many retired Canadians rely on private high interest loans to make it through the month or handle unexpected expenses. However, these loans still require monthly payments and can lead to growing debt. Debt consolidation loans can pay off these high-interest loans, breaking the cycle of debt, and in turn, can free up more monthly income.
• Paying off Credit Card debt: High-interest credit card debt can be stressful. Debt consolidation loans can clear the outstanding balance on your credit cards and instead consolidate it into one much lower interest rate loan, making paying off what you owe easier.

Reverse Mortgage: An Effective Debt Consolidation Solution

A Reverse Mortgage is a loan secured against the appraised value of your home. It is designed exclusively for Canadian homeowners aged 55 years and better and can be an effective debt consolidation solution for several reasons, such as:

• Increase Cashflow: Access up to 55% of your home’s equity in tax-free cash, while staying in the home you love.
• No Required Interest Payments: No monthly interest payments required until you move or sell.
• Easy Qualification: No income, credit score, or health status requirements. Available to Canadian homeowners aged 55 or older.
• Preservation of Retirement Funds: Does not affect eligibility for government benefits such as CPP, OAS or other income sources.
• Protection from Market Fluctuations: The No Negative Equity Guarantee*, ensures you are protected even if your home’s value decreases.

Consolidate your high-interest debts, stay in your home, and enjoy tax-free cash to finance a more fulfilling retirement. To learn more about how a Reverse Mortgage can serve as a powerful and flexible tool for consolidating debt, contact me today.

*As long as clients keep their property in good maintenance, pay their property taxes and property insurance and their property is not in default. The guarantee excludes administrative expenses and interest that has accumulated after the due date.

If you’re seeking a mortgage, but your application doesn’t fit into the box of the big traditional institutions, you’ll find yourself in what’s commonly referred to in the industry as the “Alternative-A” or “B” lending space.

These lenders come in three classifications:

• Alt A lenders consist of banks, trust companies, and monoline lenders. These are large institutional lenders that are regulated both provincially and federally but have products that may speak to consumers who require broader qualifying criteria to obtain a mortgage.
• MICs (Mortgage Investment Companies) are much like Alt A lenders but are organized following the Income Tax Act with an incorporated lending company consisting of a group of individual shareholder investors that pool money together to lend out on mortgages. These lenders follow individual qualifying lending criteria but tend to operate with an even broader qualifying regime.
• Private Lenders are typically individual investors who lend their funds but can sometimes also be a company formed specifically to lend money for mortgages that carry a higher risk of default relative to a borrower’s situation.  These types of lenders are generally unregulated and tend to cater to those with a higher risk profile.

Managing mortgage affordability in the alternative lending landscape requires careful consideration of several factors to ensure financial stability and avoid potential risks. Here are some strategies to help:

• Assess Your Financial Situation: Evaluate your income, expenses, debts, and savings to determine how much you can afford to borrow. Consider your credit score and history, as alternative lenders may have different requirements than traditional lenders.
• Research Alternative Lenders:  I review the above alternative lending options to compare interest rates, fees, terms, and eligibility criteria to find the best fit for your financial needs and situation.
• Understand Loan Products and Terms: Familiarize yourself with different types of mortgage products offered by alternative lenders, such as interest-only loans. Pay attention to the terms of the loan, including the interest rate, loan duration, prepayment penalties, and any potential changes to the monthly payment.
• Calculate Affordability: Discuss with me to estimate your monthly mortgage payment based on the loan amount, interest rate, and term. Consider other homeownership costs, such as property taxes, homeowners insurance, and maintenance expenses, when calculating affordability to ensure you do not over-extend.
• Budget and Plan for the Future: Create a budget that accounts for your mortgage payment and other housing-related expenses while leaving room for savings and unexpected costs. Plan for potential changes in your financial situation, such as job loss, salary changes, or interest rate increases, by building an emergency fund and having a contingency plan.
• Get Pre-Approved: Obtain pre-approval through your mortgage broker to determine how much you can borrow and demonstrate your seriousness as a buyer. Be prepared to provide documentation of your income, assets, debts, and credit history during the pre-approval process.

By carefully managing mortgage affordability, whether within alternative lending or traditional, you can make informed decisions that support your homeownership goals while mitigating financial risks.

Documents Required to Qualify for a Mortgage

Mortgages can sometimes feel like endless stacks of paperwork, but being prepared in advance can save you time and stress! Getting your mortgage pre-approved is part of this prep-process, and will make things easy in the long run.

In order to get pre-approved, a mortgage broker collects and reviews all your documents before you begin house-hunting. It is important to ensure you are pre-approved before moving ahead with making an offer on a home. This should include the pre-approved mortgage amount, the mortgage term, payment information and the expiry for the pre-approval. Typically, they are valid for up to 120 days.

To prepare for the mortgage pre-approval process, there are a few must have documents that you will need to organize and have available.

1. Letter of Employment: One of the key aspects for a financing approval is employment stability. Lenders want to see a letter from your employer (on a company letterhead) that details when you started working at this company, how much you make per hour or your annual salary, your guaranteed hours per week, and any probation if you are new. This can be done by your direct manager or the company HR department – they will be used to this type of request.
   1. Previous One or Two Pay Stubs: In addition to the employment letter, you must also have your previous pay stubs. These must indicate the company name, your name and all tax deductions.
2. Supporting Documents for Additional Income: If you have any other income, such as child support, long-term disability, EI, part-time income, etc., the lender will want to see any and all supporting documentation.
   1. NOTE: If you are divorced or separated and paying child support, it is important to also bring your finalized separation or divorce agreement. In some cases, they may request a statutory declaration from your lawyer.
3. Notice of Assessment from Canada Revenue Agency: Lenders will also want to see your tax assessment for the previous year. If you do not have a copy, you can request one from the CA by mail (4-6 weeks) or you can login to your online CRA account to access it.
   1. Your Previous Years T4: Along with your tax filing and assessment notice, lenders will also want to see your previous years T4 slip to confirm income.
4. 3-Month (90 day) Bank Account History: Lastly, it is important for lenders to see 90 days history of bank statements for any funds that you are using towards the down payment. As saving up for a down payment takes time, there should be no issues providing these documents. If you received the money from the sale of a house or car, or as a gift from your family, you will need proof of that in the form of sales documents or a letter.

The above documents are required for any potential buyer who is a typical, full-time employee. But what if you only work part-time? Or maybe you are self-employed? Here is what you will need:

Part-time employee

You will still require all of the above documents (letter of employment, previous pay stubs, supporting documents for any additional income and 90 days of bank history).

If you have both a full-time and a part-time job, you can use that income too, assuming it has been at least two years.

Self-employed

If you are self-employed, the requirements for documents to lenders is slightly different. You will need to provide them:

1. T1 Generals: Also known your Income Tax Return. The last two years are needed.
2. Statement of Business Activities: This is used to illustrate the business income versus expenses and should include financial statements for your business.  This is part of your T1 Generals.
3. Notice of Assessment from Canada Revenue Agency: Similarly to part-time income, if you are self-employed you will also need to provide the previous two years of assessments.
4. If Incorporated: You will need to supply your incorporation license and articles of incorporation.

When it comes to mortgages, preparation is key. By having pre-approval in hand, it can prevent any delays or issues with subject-to-financing clauses in the mortgage agreement. While you can walk into a bank, fill in an application and get a rate for a potential mortgage, this is just a ‘rate hold’ meaning it is a quote on the rate so you can qualify for the same rate later. This is not a pre-approval and does not guarantee financing.

To save yourself the headache down the line, contact me today to start the pre-approval process!  Get fully pre-approved today to make closing that much faster when you do find that perfect home.

Did you know, approximately 60 percent of people break their mortgage before their mortgage term matures? While this is not necessarily avoidable, most homeowners are blissfully unaware of the penalties that can be incurred when you break your mortgage contract – and sometimes, these penalties can be painfully expensive.

Below are some of the most common reasons that individuals break their mortgage. Being aware of these might help you avoid them (and those troublesome penalties), or at least help you plan ahead!

Sale and purchase of a new home

If you already know that you will be looking at moving within the next 5 years, it is important to consider a portable mortgage. Not all mortgages are portable, so if this is a possibility in your near future, it is best to seek out a mortgage product that allows this. However, be aware that some lenders may purposefully provide lower interest rates on non-portable mortgages but don’t be fooled. Knowing your future plans will help you avoid expensive penalties from having to move your mortgage.

Important Note: Whenever a mortgage is ported, the borrower will need to re-qualify under current rules to ensure you can afford the “ported” mortgage based on your income and the necessary qualifications.

Utilize equity

Another reason to break your mortgage is to obtain the valuable equity you have built up over the years. In some areas, homeowners have seen a huge increase in their home values. Taking out equity can help individuals with paying off debt, expand their investment portfolio, buy a second home, help out elderly parents or send their kids to college.

This is best done when your mortgage is at the end of its term, but if you cannot wait, be sure you are aware if there are penalties associated with your mortgage contract.

Pay off debt

Life happens and so can debt. If you have accumulated multiple credit cards and other debt (car loan, personal loan, etc.), rolling these into your mortgage can help you pay them off over a longer period of time at a much lower interest rate than credit cards. In addition, it is much easier to manage a single monthly payment than half a dozen! When you are no longer paying the high interest rates on credit cards, it can provide the opportunity to get your finances in order.

Again, be aware that if you do this during your mortgage term, the penalties could be steep and you won’t end up further ahead. It is best to plan to consolidate debt and organize your finances when your mortgage term is up and you are able to renew and renegotiate.

Cohabitation, marriage and/or children

As we grow up, our life changes. Perhaps you have a partner you have been with a long time, and now you’ve decided to move in together. If you both own a home and cannot afford to keep two, then you may need to sell one of the homes which could break the mortgage.

Divorce or separation

A large number of Canadian marriages are expected to end in divorce. Unfortunately, when couples separate it can mean breaking the mortgage to divide the equity in the home. In cases where one partner wants to buy the other out, they will need to refinance the home. Both of these break the mortgage, so be aware of the penalties which should be paid out of any sale profit before the funds are split.

Major life events

There are some cases where things happen unexpectedly and out of our control, including: illness, unemployment, death of a partner or someone on the title. These circumstances may result in the home having to be refinanced, or even sold, which could come with penalties for breaking the mortgage.

Removing someone from title

Did you know that roughly 20% of parents help their children purchase a home? Often in these situations, the parents remain on the title. Once their son or daughter is financially stable, secure and can qualify on their own, then it is time to remove the parents from the title.

Some lenders will allow parents to be removed from title with an administration and legal fees. However, other lenders may say that changing the people on Title equates to breaking your mortgage resulting in penalties. If you are buying a home for your child and will be on the deed, it is a good idea to see what the mortgage terms state about removing someone from title to help avoid future costs.

Get a lower interest rate

Another reason for breaking your mortgage could be to obtain a lower interest rate. Perhaps interest rates have plummeted since you bought your home and you want to be able to put more down on the principle, versus paying high interest rates. The first step before proceeding in this case is to work with your mortgage broker to crunch the numbers to see if it’s worthwhile to break your mortgage for the lower interest rate – especially if you might incur penalties along the way.

Pay off the mortgage

Wahoo!!! You’ve won the lottery, got an inheritance, scored the world’s best job or had some other windfall of cash leaving you with the ability to pay off your mortgage early. While it may be tempting to use a windfall for an expensive trip, paying off your mortgage today will save you THOUSANDS in the long run – enough for 10 vacations! With a good mortgage, you should be able to pay it off in 5 years, thereby avoiding penalties but it is always good to confirm.

Some of these reasons are avoidable, others are not. Unfortunately, life happens. That’s why it is best to seek the advice of an expert.

In life, things rarely go as planned. This is especially true when it comes to real estate! When it comes to buying a new home, in a perfect world, most of us would like to take possession of their new residence before having to move out of the old one. This makes moving a lot easier and allows you time for painting or renovations prior to moving into your new digs. Unfortunately, this is where things get complicated.

Most people need the money from the sale of their existing property to come up with the down payment for the new house. This is where bridge financing comes in. Essentially, bridge financing allows you to ‘bridge’ the financial gap between the firm sale of your current home and the firm commitment to purchasing your new home.

WHAT ARE BRIDGE LOANS?

Bridge loans are short-term solutions that range from a few days to 3-4 months. This type of financing allows you to access some of the equity in your existing property, to put towards the down payment of your new home. However, to be eligible for a bridge loan, a firm sale agreement MUST be in place on your existing home, meaning all subjects have been removed. You will also require a purchase agreement for the new home to verify the amount required.

If you have not yet sold your home, you will not be eligible for bridge financing as the lender needs that to accurately calculate how much equity you have available and if you can afford your new home.

If you are currently looking to sell, or are in the midst of selling your home and considering bridge financing, it is important to understand that unless you can qualify and pay for two mortgages, you should always sell your existing home before purchasing a new one. There are a couple reasons for this:

• Property values are constantly changing. You won’t know how much money you have until you sell your home as a home is only worth what someone is willing to pay for it NOW. Past sales and future guesses don’t count!
• You need the proceeds from your existing home to help pay for the down payment on your new home, as well as renovations, moving costs and (if required) the size of mortgage you qualify for.

However, if you have firm sale and purchase agreements in place and are adamant about bridge financing, there are some things you should know.

Getting Fridge Financing

If you have sold your existing home but the closing date comes after the closing date of the new property you just purchased, then bridge financing will likely be your best option.

Remember – in order to qualify you must have a firm sale agreement for your current home and a purchase agreement for the new home. If you don’t have a firm selling date you may need to consider a private lender for the bridge loan.

If you do have firm sale and purchase agreements and want to move forward with bridge financing, you also need to consider the lender. Your new lender may not allow for bridge financing as not all lenders do. It is important to consider whether or not you think you need bridge financing so you can ensure you sign with the appropriate lender. Utilizing a Dominion Lending Centres mortgage broker can help you find a lender that provides the options you need.

COSTS OF BRIDGE FINANCING

It is important to mention that bridge financing typically costs MORE than your traditional mortgage. It is best to expect the Prime Rate plus 2, 3 or 4 percent, as well as an administration fee.

Also, in some cases, if you require a loan over $200,000 or a loan for more than 120 days, your lender may register a lien on the property until the loan is repaid. In order to remove this lien, you will need to consider the added costs of paying for a real estate lawyer.

PRIVATE FINANCING

If you have purchased your new home and are closing the deal, but your existing home has not yet sold, you would not qualify for bridge financing and would therefore need to consider a private loan.

Private financing is expensive, but it is generally a more affordable option versus lowering the asking price of your existing home and losing out on tens of thousands just to sell quickly. Seeking out a specialized mortgage broker who has access to individuals that lend money out privately to get the best rate and terms available to you.

COSTS OF PRIVATE FINANCING

Private loans are dependent on having enough equity in your current property to qualify and are more expensive than traditional mortgages. Private loans have a higher interest rate than traditional mortgages. The costs associated with a higher interest rate is in addition to an up-front lender fee. These amounts will vary based on your specific situation with consideration to: time required for the loan, the loan amount, loan-to-value ratio, credit, property location, etc.

When it comes to bridge financing and selling and buying of your home, don’t waste your time trying to figure it out on your own. Give a me a call and we can help you determine your best option!

In the mortgage world, a “guarantor” is someone who guarantees the mortgage on behalf of the mortgage holder in the case that the mortgage holder cannot pay back the loan.

Typically, a guarantor is used in a situation where the buyer has damaged or poor credit history or they lack sufficient income to qualify for the value of the loan. Adding a guarantor can help get these types of applications approved as this allows the lender to know they will be paid back should the mortgage holder default.

*It is important to  note that a guarantor is not the same as a co-signer.

Below are some key facts about guarantors and what makes them different from a co-signer:

1. The guarantor typically must be a spouse or immediate family member. This is not necessary for a co-signer who could be a friend or distant family member.
2. A guarantor does not have their name on the title of the property but it will be on a mortgage. In the case of a co-signer, the name is on both the title of the property AND the loan.
3. Guarantors may be impacted when qualifying for their own mortgage or other loans if they are responsible for guaranteeing a different loan.
4. They are responsible for the entire amount of the loan should the borrower default. In order to qualify, they must meet the requirements for credit check, income, liabilities and assets. Any potential guarantor should seek legal advice before signing for the loan to ensure they understand the contract.

Whether you want to be a guarantor for someone else’s mortgage, or you need one for your own, be sure to speak with me before making any decisions. I can help you review your options and explain the terms of the agreement or simply answer any questions you may have.