Household cleaning tasks:
To clean deodorant stains on clothes: Mix a past of baking soda and a small amount of water, then work it into the stain and allow it to sit for a few hours. Brush away and repeat as necessary. Alternatively, try lemon juice with a liberal sprinkling of salt. Scrub with an old toothbrush, and let dry in direct sunlight.
To clean burnt pots and pans: Mix baking soda with water, bring to a boil, let cool, then scrub with a non-abrasive scouring pad. White vinegar is also an option (instead of baking soda) but this can create a rather strong odour. Tough stains may call for a detergent paste or even oven cleaner, but try milder solutions first.
To get gum out of carpeting: Apply an ice cube wrapped in a thin towel or plastic bag to freeze the gum, and then chip it away with a spoon or dull knife. The smaller bits can be loosened with a degreasing product, cooking oil or even peanut butter, but these could stain your carpet, so always test first.
Note: Always test any cleaning solution on an inconspicuous area or surface before using.
Thursday, November 29, 2012
Thursday, November 22, 2012
Why it's SO important to talk to a Mortgage Professional
In the last couple weeks I have begun to feel really bad for a couple of my trusted realtor partners.
They have had clients whom have gone to their bank for financing and have been given the green light to go out shopping. Well, in these few cases all of them were unable to purchase.
This being the best and worst case. Clients go into the branch, (I wont mention the actual bank as I've heard it happening at others) sits down with the supposed 'mortgage specialist' and the person behind the desk says this... From looking at what you've told me for income etc. I believe you can purchase for the $300k you are looking for. Clients say great, can we have a pre-approval to be certain. We don't do pre-approvals, we tell you yes and go write an offer and then we'll get everything going, is what they were told.
Well they went out shopping and wrote an offer. The realtor finally convinced them to talk to me, which was a good thing. First off, what they were being offered in terms of product and price, was way offside of current market conditions. Secondly, if this person at the branch would've done his homework up front, i.e pull credit and check income, he would've found out that there was a concern with credit and they were NOT financeable. So ALL that work, writing offers, seeing homes, was for not. Again, he didn't even pull their credit, nothing!
I see this happening more and more these days. As banks ramp up their 'mortgage specialists' to try and get rid of us, Mortgage Professionals. They're hiring people that really don't have a true clue. Of course by all means, this is not everyone. Just seems to be the norm. There are some really good bank reps and I have relationships with them. And don't get me wrong, there are some misguided brokers out there too!
Remember, we as Mortgage Professionals have to go to school and educate ourselves all year round to stay on top of the industry. Well, most of us do anyway! More often than not, the person at the bank has done his duty and gets pulled to a different position within 6 months, and to be a 'mortgage specialist' they do NOT need any real education etc. How can you really trust anyone that has no education, real guidance, or only has the small couple products to sell to you, with your biggest financial purchase? In my opinion it's very hard!
I hope more and more people will start getting the word out and help the general public understand that we are professionals and do this day in and day out. I've been here for 8 years and have no reason to go elsewhere! It's my passion and I LOVE helping people!
Side notes: Remember that bank employees are generally paid a base salary and a commission on how high of a rate they charge you. This is why in the example above their offer was a lot higher. Once the bank knows a broker is involved they all of a sudden come down. Well, why wouldn't they offer you this to begin with???
If it wasn't for us we'd all be paying posted rates or rates much higher than they are today. We are competition and have access to lenders that ONLY do mortgages. So they are able to provide MUCH better products and services.
There's my rant for the day! Something that's been on my chest for a couple days.
They have had clients whom have gone to their bank for financing and have been given the green light to go out shopping. Well, in these few cases all of them were unable to purchase.
This being the best and worst case. Clients go into the branch, (I wont mention the actual bank as I've heard it happening at others) sits down with the supposed 'mortgage specialist' and the person behind the desk says this... From looking at what you've told me for income etc. I believe you can purchase for the $300k you are looking for. Clients say great, can we have a pre-approval to be certain. We don't do pre-approvals, we tell you yes and go write an offer and then we'll get everything going, is what they were told.
Well they went out shopping and wrote an offer. The realtor finally convinced them to talk to me, which was a good thing. First off, what they were being offered in terms of product and price, was way offside of current market conditions. Secondly, if this person at the branch would've done his homework up front, i.e pull credit and check income, he would've found out that there was a concern with credit and they were NOT financeable. So ALL that work, writing offers, seeing homes, was for not. Again, he didn't even pull their credit, nothing!
I see this happening more and more these days. As banks ramp up their 'mortgage specialists' to try and get rid of us, Mortgage Professionals. They're hiring people that really don't have a true clue. Of course by all means, this is not everyone. Just seems to be the norm. There are some really good bank reps and I have relationships with them. And don't get me wrong, there are some misguided brokers out there too!
Remember, we as Mortgage Professionals have to go to school and educate ourselves all year round to stay on top of the industry. Well, most of us do anyway! More often than not, the person at the bank has done his duty and gets pulled to a different position within 6 months, and to be a 'mortgage specialist' they do NOT need any real education etc. How can you really trust anyone that has no education, real guidance, or only has the small couple products to sell to you, with your biggest financial purchase? In my opinion it's very hard!
I hope more and more people will start getting the word out and help the general public understand that we are professionals and do this day in and day out. I've been here for 8 years and have no reason to go elsewhere! It's my passion and I LOVE helping people!
Side notes: Remember that bank employees are generally paid a base salary and a commission on how high of a rate they charge you. This is why in the example above their offer was a lot higher. Once the bank knows a broker is involved they all of a sudden come down. Well, why wouldn't they offer you this to begin with???
If it wasn't for us we'd all be paying posted rates or rates much higher than they are today. We are competition and have access to lenders that ONLY do mortgages. So they are able to provide MUCH better products and services.
There's my rant for the day! Something that's been on my chest for a couple days.
Tuesday, November 13, 2012
Vancouver Daily Province - February 23, 1920
This past weekend I was cleaning out an old barn on a property I have. In the barn I came across a Vancouver Daily Province newspaper dating back to 1920.
The article that stood out was the one I'm showing here. This was a marketing technique used by someone in real estate. It's very interesting and made me smile!
In case you can't see the wording in the picture, here's what it says.
You have property to sell. You know that somewhere in the city is a man to whom that property would appeal strongly. Perhaps there are many such men - but in the group of 'possible buyer's for your property there is ONE MAN to whom it would be especially valuable. To this man it would represent the successful end of his search. It is what he wants, what he needs, what he is going to keep on looking for until he finds it.
If you knew who this man is you could make a prompt sale of your property. But you don't know him. You have no clue. So far as you are concerned he is lost in the crowd. There is one chance in a million that he may happen to find out about your property through somebody else. It is too long a chance. YOU MUST FIND HIM.
He reads the real estate advertisements - of that you may be sure. He may have read an advertisement of YOUR PROPERTY - but failed to have identified it as WHAT HE IS LOOKING FOR through your own failure to describe it adequately.
You can find him by making it easy for him to find you. It will not be easy for him to find you unless you tell him all about your property - answer, in your advertisement, all of his probably questions about it. If you do that, in your advertisement, you will find yourself in DIRECT COMMUNICATION WITH HIM.
The article that stood out was the one I'm showing here. This was a marketing technique used by someone in real estate. It's very interesting and made me smile!
In case you can't see the wording in the picture, here's what it says.
You have property to sell. You know that somewhere in the city is a man to whom that property would appeal strongly. Perhaps there are many such men - but in the group of 'possible buyer's for your property there is ONE MAN to whom it would be especially valuable. To this man it would represent the successful end of his search. It is what he wants, what he needs, what he is going to keep on looking for until he finds it.
If you knew who this man is you could make a prompt sale of your property. But you don't know him. You have no clue. So far as you are concerned he is lost in the crowd. There is one chance in a million that he may happen to find out about your property through somebody else. It is too long a chance. YOU MUST FIND HIM.
He reads the real estate advertisements - of that you may be sure. He may have read an advertisement of YOUR PROPERTY - but failed to have identified it as WHAT HE IS LOOKING FOR through your own failure to describe it adequately.
You can find him by making it easy for him to find you. It will not be easy for him to find you unless you tell him all about your property - answer, in your advertisement, all of his probably questions about it. If you do that, in your advertisement, you will find yourself in DIRECT COMMUNICATION WITH HIM.
Wednesday, November 7, 2012
BC First time, new home buyers bonus
BC First-Time New Home Buyers' Bonus - a one-time payment worth up to $10,000 for BC residents who are first-time home buyers and who purchase an eligible new home.
BC Resident - if you file a 2011 BC resident personal income tax return, or if you move to BC after Dec. 31, 2011, or you file a 2012 BC resident personal income tax return (you will not be eligible for the bonus if you move to BC after Dec. 31, 2012)
First-time home buyer - an individual who has never previously owned a primary residence anywhere in the world. If multiple buyers, each must be a first-time home buyer (unlike PTT).
Primary residence - generally a house that you own, jointly or otherwise, that you intend to live in on a permanent basis.
An eligible new home includes new homes (i.e. newly constructed and substantially renovated homes) that are purchased from a builder and that are owner-built.
Other conditions:
- Contract of purchase and sale is entered into on or after February 21, 2012;
- HST is payable on the home;
- no one else has claimed a bonus in respect of the home;
- construction of the home is complete, or the home is occupied, before April 1, 2013
Bonus will be reduced if income is too high:
- for individuals, bonus reduced by $.20 for every $ in net income over $150,000 (bonus is reduced to zero at $200,000 net income),
- for couples, bonus reduced by $.10 for every $ in family net income over $150,000 (bonus is reduced to zero at $250,000 family net income).
Is the bonus taxable? No. The bonus is a refundable personal income tax credit, meaning it will not be added to your income on your tax return.
Information from http://www.bcrealestatelawyers.com
Tuesday, October 23, 2012
Bank of Canada holds steady, again
The Bank of Canada is keeping its trendsetting policy interest rate
at one per cent for a while longer, and likely a whole lot longer.
The central bank said the Canadian economy continues to expand, but that housing activity is starting to decline and exports remain weak.
Still, the bank said growth will average 2.2 per cent this year, one-tenth more than it had projected in July.
Analysts had been expecting bank governor Mark Carney to soften his hawkish tone about future interest rate hikes and he obliged, saying modest withdrawal of stimulus will be required over time.
That suggests the time may be a long way off.
The bank also notes it will consider the health of the household sector in setting monetary policy, something it hasn't done in previous interest rates announcements.
Source: The Canadian Press
The central bank said the Canadian economy continues to expand, but that housing activity is starting to decline and exports remain weak.
Still, the bank said growth will average 2.2 per cent this year, one-tenth more than it had projected in July.
Analysts had been expecting bank governor Mark Carney to soften his hawkish tone about future interest rate hikes and he obliged, saying modest withdrawal of stimulus will be required over time.
That suggests the time may be a long way off.
The bank also notes it will consider the health of the household sector in setting monetary policy, something it hasn't done in previous interest rates announcements.
Source: The Canadian Press
Monday, October 22, 2012
Flaherty: No more room for rule changes
Brokers have heard it before, but the Finance minister is saying it again – this time with more conviction – arguing the government simply has no more room to play with the mortgage rules in order to curb household debt.
“We’ve done enough,” Flaherty said during a weekend interview. “I do not intend to do anymore.”
If true, that's good news, say most mortgage brokers.
Many of them complained that the guidelines and rule changes introduced by the Conservative government this summer in order to slam the brakes on an overheated housing market were too harsh. Flaherty himself had earlier conceded that the economy could take a beating with the changes, but called the tighter mortgage rules around amortization and LTV for refinances necessary to prevent a housing bubble.
During Saturday’s interview, the minister said he was pleased by signs of a slowdown in vital segments such as condo markets in white-hot centres Toronto and Vancouver.
One broker, who operates in one of the regions where the rule changes has paved the way for a broker cull, said the revamp has effectively slowed down the market.
While he welcomed Flaherty’s remarks, Michael Marini, Toronto-based broker for Dominion Lending Centres Funds, said it could also be that the newly introduced rules are here to stay.
“I take it to mean that he (Flaherty) is satisfied with what the rule changes have accomplished,” he said. “We may not see any more tightening, but it’s also unlikely that the rules will be reversed.”
Source: http://www.mortgagebrokernews.ca
“We’ve done enough,” Flaherty said during a weekend interview. “I do not intend to do anymore.”
If true, that's good news, say most mortgage brokers.
Many of them complained that the guidelines and rule changes introduced by the Conservative government this summer in order to slam the brakes on an overheated housing market were too harsh. Flaherty himself had earlier conceded that the economy could take a beating with the changes, but called the tighter mortgage rules around amortization and LTV for refinances necessary to prevent a housing bubble.
During Saturday’s interview, the minister said he was pleased by signs of a slowdown in vital segments such as condo markets in white-hot centres Toronto and Vancouver.
One broker, who operates in one of the regions where the rule changes has paved the way for a broker cull, said the revamp has effectively slowed down the market.
While he welcomed Flaherty’s remarks, Michael Marini, Toronto-based broker for Dominion Lending Centres Funds, said it could also be that the newly introduced rules are here to stay.
“I take it to mean that he (Flaherty) is satisfied with what the rule changes have accomplished,” he said. “We may not see any more tightening, but it’s also unlikely that the rules will be reversed.”
Source: http://www.mortgagebrokernews.ca
Wednesday, October 17, 2012
Interest penalties
Interest penalties between a big bank and a mortgage only lender. There is a huge difference as the calculations are much different.
Remember, it's not always about rate. That number you see is not the deciding factor. It should be what's behind that rate and what commitment your broker will give you to manage your mortgage for the foreseeable future.
Here's an email conversation used for one client comparing the penalty between RBC and MCAP, a lender we use.
Remember, it's not always about rate. That number you see is not the deciding factor. It should be what's behind that rate and what commitment your broker will give you to manage your mortgage for the foreseeable future.
Here's an email conversation used for one client comparing the penalty between RBC and MCAP, a lender we use.
RBC takes your “discount” off their
original posted rate and compares it to the term remaining to calculate a
penalty. Therefore, if you got 3.09% with RBC today, that would be a
2.15% discount off their posted 5 year rate. If we assume rates are the
same as today in 3 years when you pay your mortgage off, they take the 2 year
posted rate and deduct your 2.15% discount. Today’s 2 year posted rate is
3.35%. Leaving you a 1.20% comparison rate to your 3.09%
contract rate. That’s a difference of 1.89% to calculate an IRD.
The bigger this number (or spread) the bigger your penalty. That’s a bad
thing.
What
MCAP does is take your contract rate, and compare it to their current contract
best rate for a comparable term. In the same scenario as above, they’d
compare your 3.09% contract rate to their 2 year rate of 2.79%. That’s
only a spread of .30%, meaning IRD wouldn’t apply. Only a 3 month
interest penalty would occur.
For
real numbers on your mortgage, assuming you owed $230,000 it could end out
like this using the above scenario:
RBC
penalty: almost $7,871
MCAP
penalty: $1,776
That’s
a $6,095 difference. I’m not saying you will ever need to pay your
mortgage off, but it’s nice knowing that if you did, the numbers would be
reflective to your benefit if the situation did occur.
What I’m saying – isn’t it great to get a great interest rate, but also a great mortgage!?
What I’m saying – isn’t it great to get a great interest rate, but also a great mortgage!?
Here’s
some calculators. Info on how each institution calculates their IRD
penalties are available on these sites as well. Of course the RBC one is a bit harder to plug in the right numbers as you'd need to know what your discounted rate was.
Monday, October 1, 2012
Renewing with First Line now CIBC and in general
I've been a First Line mortgage holder for the last five years and am coming up to renewal.
First Line is owned by CIBC and as of a few months ago have made the decision to stop all mortgage dealings through this channel. It still stumps me as to why, as it was the largest mortgage broker channel for a long time!
One quote, (not exact words but you can get the idea) from a head at CIBC, we want to start building a stronger relationship, in house, with our clients so we don't have to discount rates so much. BMO did this a few years ago and it has done nothing to their share of mortgages in Canada.
I have included a picture of my renewal from CIBC, which comes with about 3 weeks to renewal. If you're not pro-active you can definitely feel stranded not knowing what to do. Which in turn can make you easily sign on the dotted line. You can see from this that they try and offer rates that aren't even close to market rates that we can get as mortgage brokers.
The transition from First Line to CIBC comes with a few changes as well.
Quotes from my 20 page renewal agreement:
-For a new variable product 'The interest rate will change every time there is a change in the CIBC Prime Rate. Even though the interest rate will change from time to time, your regular payments stay the same unless you change them" "These changes will occur without you being notified"
This poses the threat of negative amortization, which when prime is at it's lowest today, will happen later on. This will make your amortization increase and in some cases, by a lot. The fact that they do not notify you is a tactic as you will in the end pay them much more than needed. I do not allow any of my clients to get involved in such a mortgage as I've seen the bad happen, a number of times. If anything changes, you are notified that day by me and we can strategize about the future.
-Annual lump sum payment changes to a measly 10% from 25% which is significant.
At least you can still do it as many times a year as you wish. Minimum $100 a time. I believe you'll have to go to a branch to do this. First Line allowed you to do this by phone and on the web which most other lenders I deal with do as well.
-IRD calculations are much more in favour for CIBC.
In a recent study done by a very respected individual in the business and a huge sampling of lenders, (banks and broker only lenders) the IRD calculations were all much higher at the banks.
-Converting your mortgage (from variable to fixed): "You must apply in person. You must pay any admin and processing fees. You must pay all legal expenses related to a conversion"
Honestly, I'm not too sure about this, however, it's written in the agreement. In the past all we would do is call in, get a piece of paper faxed, sign it and the next payment is converted. There was no costs to this at all
The reason for going to the branch all the time is so they can cross sell you in to as many other products as they can.
In the end what we must all do is not simply agree with what's there. There are SO MANY options and features that you should know about. Both good and bad.
The best way I can sum it up is this: You may do 4 maybe 5 mortgages in your lifetime. I do them day in and day out, it's my passion. I've seen people take what they believe is good from this guy over here, however, down the road it's the worst thing they could've done. Even after the advise I give them in some cases. Unfortunately, I hear stories later on. I'm completely unbiased and work for you. I'm not pushing one product as that's all that I have. There are options out there and let someone who knows them work for you! Support your mortgage brokers as if we weren't around we'd all be paying much higher rates!!!
First Line is owned by CIBC and as of a few months ago have made the decision to stop all mortgage dealings through this channel. It still stumps me as to why, as it was the largest mortgage broker channel for a long time!
One quote, (not exact words but you can get the idea) from a head at CIBC, we want to start building a stronger relationship, in house, with our clients so we don't have to discount rates so much. BMO did this a few years ago and it has done nothing to their share of mortgages in Canada.
I have included a picture of my renewal from CIBC, which comes with about 3 weeks to renewal. If you're not pro-active you can definitely feel stranded not knowing what to do. Which in turn can make you easily sign on the dotted line. You can see from this that they try and offer rates that aren't even close to market rates that we can get as mortgage brokers.
The transition from First Line to CIBC comes with a few changes as well.
Quotes from my 20 page renewal agreement:
-For a new variable product 'The interest rate will change every time there is a change in the CIBC Prime Rate. Even though the interest rate will change from time to time, your regular payments stay the same unless you change them" "These changes will occur without you being notified"
This poses the threat of negative amortization, which when prime is at it's lowest today, will happen later on. This will make your amortization increase and in some cases, by a lot. The fact that they do not notify you is a tactic as you will in the end pay them much more than needed. I do not allow any of my clients to get involved in such a mortgage as I've seen the bad happen, a number of times. If anything changes, you are notified that day by me and we can strategize about the future.
-Annual lump sum payment changes to a measly 10% from 25% which is significant.
At least you can still do it as many times a year as you wish. Minimum $100 a time. I believe you'll have to go to a branch to do this. First Line allowed you to do this by phone and on the web which most other lenders I deal with do as well.
-IRD calculations are much more in favour for CIBC.
In a recent study done by a very respected individual in the business and a huge sampling of lenders, (banks and broker only lenders) the IRD calculations were all much higher at the banks.
-Converting your mortgage (from variable to fixed): "You must apply in person. You must pay any admin and processing fees. You must pay all legal expenses related to a conversion"
Honestly, I'm not too sure about this, however, it's written in the agreement. In the past all we would do is call in, get a piece of paper faxed, sign it and the next payment is converted. There was no costs to this at all
The reason for going to the branch all the time is so they can cross sell you in to as many other products as they can.
In the end what we must all do is not simply agree with what's there. There are SO MANY options and features that you should know about. Both good and bad.
The best way I can sum it up is this: You may do 4 maybe 5 mortgages in your lifetime. I do them day in and day out, it's my passion. I've seen people take what they believe is good from this guy over here, however, down the road it's the worst thing they could've done. Even after the advise I give them in some cases. Unfortunately, I hear stories later on. I'm completely unbiased and work for you. I'm not pushing one product as that's all that I have. There are options out there and let someone who knows them work for you! Support your mortgage brokers as if we weren't around we'd all be paying much higher rates!!!
Wednesday, September 19, 2012
Household cleaning tasks
To clean deodorant stains on clothes: Mix a past of baking soda and a small amount of water, then work it into the stain and allow it to sit for a few hours. Brush away and repeat as necessary. Alternatively, try lemon juice with a liberal sprinkling of salt. Scrub with an old toothbrush, and let dry in direct sunlight.
To clean burnt pots and pans: Mix baking soda with water, bring to a boil, let cool, then scrub with a non-abrasive scouring pad. White vinegar is also an option (instead of baking soda) but this can create a rather strong odour. Tougher stains may call for a detergent paste or even over cleaner, but try milder solutions first.
To get gum out of carpeting: Apply an ice cube wrapped in a thin towel or plastic bag to freeze the gum, and then chip away with a spoon or dull knife. The smaller bits can be loosened with a degreasing product, cooking oil or even peanut butter, but these could stain your carpet so always test first.
Note: Always test any cleaning solution on an inconspicuous area or surface before using.
To clean burnt pots and pans: Mix baking soda with water, bring to a boil, let cool, then scrub with a non-abrasive scouring pad. White vinegar is also an option (instead of baking soda) but this can create a rather strong odour. Tougher stains may call for a detergent paste or even over cleaner, but try milder solutions first.
To get gum out of carpeting: Apply an ice cube wrapped in a thin towel or plastic bag to freeze the gum, and then chip away with a spoon or dull knife. The smaller bits can be loosened with a degreasing product, cooking oil or even peanut butter, but these could stain your carpet so always test first.
Note: Always test any cleaning solution on an inconspicuous area or surface before using.
Monday, September 10, 2012
Stop stressing yourself out
Sometimes, you are
your own worst enemy when it comes to stress. Susan Fletcher, a
practicing psychologist and stress management expert, teaches these
valuable techniques to help alleviate stress in your life:
Don't read into things so much. "Sometimes a look is just a look and a dirty coffee cup is just a dirty coffee cup. It's not a passive-aggressive way to say you are not appreciated," Fletcher says. Don't make things bigger than they need to be—with people or work. Some people make a project bigger than it needs to be in an effort to increase their own value, but they are increasing their own stress as a result.
Learn how to transfer trust. "I really like Stephen M.R. Covey's stuff from his book Speed of Trust. He says people have to be able to trust before they feel it. Just like with your kids when you give them a little rope. And with someone who works for you, you have to let them fail because failure is feedback," Fletcher says. "Don't just say, 'It's easier to do myself.'"
Recognize when you are being inefficient. "People who are stressed get stuck answering e-mails for two hours at the expense of higher-value items that need to be taken care of," Fletcher says. "Don't get lost in inefficient behavior. Ask yourself, 'What's my ultimate outcome I want here and what do I need to get there?'"
Find an accountability partner to help you meet goals. "Choose a friend or a family member—probably not someone who lives with you because you don't want to muddy the waters. It has to be someone you will listen to but who will hold you accountable."
Say no sometimes. "You have to say no to things you might enjoy, but are not in line with where you are professionally or personally at the moment," Fletcher says. Then you can spend your time on what matters to you most.
from "Seeds of Success"
Don't read into things so much. "Sometimes a look is just a look and a dirty coffee cup is just a dirty coffee cup. It's not a passive-aggressive way to say you are not appreciated," Fletcher says. Don't make things bigger than they need to be—with people or work. Some people make a project bigger than it needs to be in an effort to increase their own value, but they are increasing their own stress as a result.
Learn how to transfer trust. "I really like Stephen M.R. Covey's stuff from his book Speed of Trust. He says people have to be able to trust before they feel it. Just like with your kids when you give them a little rope. And with someone who works for you, you have to let them fail because failure is feedback," Fletcher says. "Don't just say, 'It's easier to do myself.'"
Recognize when you are being inefficient. "People who are stressed get stuck answering e-mails for two hours at the expense of higher-value items that need to be taken care of," Fletcher says. "Don't get lost in inefficient behavior. Ask yourself, 'What's my ultimate outcome I want here and what do I need to get there?'"
Find an accountability partner to help you meet goals. "Choose a friend or a family member—probably not someone who lives with you because you don't want to muddy the waters. It has to be someone you will listen to but who will hold you accountable."
Say no sometimes. "You have to say no to things you might enjoy, but are not in line with where you are professionally or personally at the moment," Fletcher says. Then you can spend your time on what matters to you most.
from "Seeds of Success"
Wednesday, September 5, 2012
Bank of Canada sticks to rate-hike message
As expected the Bank of Canada has held steady again. May be another year still until we see any hikes.
OTTAWA (Reuters) - The Bank of Canada doggedly stuck to the message on Wednesday that it may have to raise interest rates despite a global slowdown, predicting the domestic economy would gain momentum this year and next and inflation return to target within a year.
The central bank held its key overnight rate at 1 percent, as expected, extending a two-year freeze on borrowing costs. In 2010 it became the first Group of Seven country to lift rates from emergency lows following the recession.
But as the U.S. Federal Reserve and other global central banks contemplate further rounds of easing, Canada repeated on Wednesday what it has been saying for months - that the time for removing stimulus could be near.
"To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 percent inflation target over the medium term," the bank said in a scheduled policy announcement, using language identical to its last two rate statements.
The Canadian dollar trimmed losses against the U.S. dollar after the rate announcement. The currency strengthened to C$0.9874 versus the U.S. dollar, or $1.0128, shortly after the announcement. It was trading at C$0.9884, or $1.0117 just before the bank's statement.
There was no sign of backpedaling by Bank of Canada Governor Mark Carney even as he highlighted the weak U.S. recovery, the European debt crisis and decelerating growth in China and other emerging economies.
"(The bank) retains a hawkish bias, with really quite limited changes since July, so those that were expecting a significant shift and more dovish tone are going to be disappointed," said Camilla Sutton, chief currency strategist at Scotiabank.
SKEPTICS IN THE MARKET
Still, analysts believe the bank will put off raising rates until the second quarter of 2013, according to a Reuters poll of financial institutions released on August 28.
That view is likely intact.
"There wasn't much meat on these bones ... And I think that's exactly what the bank wants. I don't think they were trying to send any big message here," said Doug Porter, deputy chief economist at BMO Capital Markets.
Despite the bank's rate-hike bias, markets reduced their bets of an increase this year slightly following the bank's statement, according to overnight index swaps, which trade based on expectations for the policy rate.
"We've had some interesting periods over the last few months where what Governor (Mark) Carney has said in terms of a hawkish bias has been totally discounted by markets in the sense that the market just doesn't believe he'll have the ability to tighten policy. I would suspect we continue to see a bit of that," Sutton said.
The bank judges the economy's underlying momentum to be roughly in line with its growth potential.
The bank has said the economy's growth potential is about 2 percent, despite being held back by global headwinds and growing only by an annualized rate of 1.8 percent in the second quarter.
"Economic growth is expected to pick up through 2013, with consumption and business investment continuing to be its principal drivers, reflecting very stimulative financial conditions," the bank forecast.
Since the economy is operating near its potential, the bank said it sees core inflation, softer than expected in recent months, returning to its 2 percent target over the next 12 months along with total inflation. Core inflation was 1.7 percent in July and total inflation was 1.3 percent.
Household spending is showing tentative signs of slowing, the bank said, although the overall household debt burden continues to rise. The bank has raised the alarm over a record high household debt-to-income ratio, which has been fueled in part by high housing prices and cheap lending rates.
Source http://money.ca.msn.com
OTTAWA (Reuters) - The Bank of Canada doggedly stuck to the message on Wednesday that it may have to raise interest rates despite a global slowdown, predicting the domestic economy would gain momentum this year and next and inflation return to target within a year.
The central bank held its key overnight rate at 1 percent, as expected, extending a two-year freeze on borrowing costs. In 2010 it became the first Group of Seven country to lift rates from emergency lows following the recession.
But as the U.S. Federal Reserve and other global central banks contemplate further rounds of easing, Canada repeated on Wednesday what it has been saying for months - that the time for removing stimulus could be near.
"To the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 percent inflation target over the medium term," the bank said in a scheduled policy announcement, using language identical to its last two rate statements.
The Canadian dollar trimmed losses against the U.S. dollar after the rate announcement. The currency strengthened to C$0.9874 versus the U.S. dollar, or $1.0128, shortly after the announcement. It was trading at C$0.9884, or $1.0117 just before the bank's statement.
There was no sign of backpedaling by Bank of Canada Governor Mark Carney even as he highlighted the weak U.S. recovery, the European debt crisis and decelerating growth in China and other emerging economies.
"(The bank) retains a hawkish bias, with really quite limited changes since July, so those that were expecting a significant shift and more dovish tone are going to be disappointed," said Camilla Sutton, chief currency strategist at Scotiabank.
SKEPTICS IN THE MARKET
Still, analysts believe the bank will put off raising rates until the second quarter of 2013, according to a Reuters poll of financial institutions released on August 28.
That view is likely intact.
"There wasn't much meat on these bones ... And I think that's exactly what the bank wants. I don't think they were trying to send any big message here," said Doug Porter, deputy chief economist at BMO Capital Markets.
Despite the bank's rate-hike bias, markets reduced their bets of an increase this year slightly following the bank's statement, according to overnight index swaps, which trade based on expectations for the policy rate.
"We've had some interesting periods over the last few months where what Governor (Mark) Carney has said in terms of a hawkish bias has been totally discounted by markets in the sense that the market just doesn't believe he'll have the ability to tighten policy. I would suspect we continue to see a bit of that," Sutton said.
The bank judges the economy's underlying momentum to be roughly in line with its growth potential.
The bank has said the economy's growth potential is about 2 percent, despite being held back by global headwinds and growing only by an annualized rate of 1.8 percent in the second quarter.
"Economic growth is expected to pick up through 2013, with consumption and business investment continuing to be its principal drivers, reflecting very stimulative financial conditions," the bank forecast.
Since the economy is operating near its potential, the bank said it sees core inflation, softer than expected in recent months, returning to its 2 percent target over the next 12 months along with total inflation. Core inflation was 1.7 percent in July and total inflation was 1.3 percent.
Household spending is showing tentative signs of slowing, the bank said, although the overall household debt burden continues to rise. The bank has raised the alarm over a record high household debt-to-income ratio, which has been fueled in part by high housing prices and cheap lending rates.
Source http://money.ca.msn.com
Thursday, July 12, 2012
Stop trying to force credit on me
Last night I received yet another call from my local CIBC branch trying to push credit on me.
It is the 4th time the same person has contacted me and the fourth time I have told him to leave me alone. I will not obtain any more unsecured credit nor do I want anything from you.
Here's kind of how the conversation went:
I'm calling today as you've been a loyal client of ours for 13 years and people with good credit like yourself, we are offering you a line of credit and a different option on you Visa.
Sorry sir, I do not need or want anything from you. I've been a Visa holder for 13 years and I do not want to deal with CIBC.
Well we could look at getting your mortgage switched over or investments.
No sir, I'm a mortgage broker and I have very close contacts in the financial planning side of things and am set up far better than CIBC could ever do for me. Now please, do not call me again and please, I do not want anything.
Well then, I beleive you have kids, how about some RESP's.
No, I do not want anything *click
When will the banks stop doing this. This was toned down a bit and made shorter. I can't tell you how forecful he was. Our country has a huge amount of unsecured debt, however, the problem as our law makers tell us, is that we take out too many mortgages and are all high in mortgage debt. This is smoke and mirrors. It's the unsecured debt that's the problem in my opinion. Having mortgage debt is to a lot, good debt as you have an asset to back that debt.
The banks make a killing of this unsecured debt and I swear they have some butt kissing they do to the law makers in Ottawa that says we'll allow you to change the mortgage rules and do this and that, however, you can not touch our unsecured debt!
Anyways, that's my rant for the day. I just seriously wish the feds would step up and talk to us in the trenches and make realistic changes. Yeah right, who am I kidding!
It is the 4th time the same person has contacted me and the fourth time I have told him to leave me alone. I will not obtain any more unsecured credit nor do I want anything from you.
Here's kind of how the conversation went:
I'm calling today as you've been a loyal client of ours for 13 years and people with good credit like yourself, we are offering you a line of credit and a different option on you Visa.
Sorry sir, I do not need or want anything from you. I've been a Visa holder for 13 years and I do not want to deal with CIBC.
Well we could look at getting your mortgage switched over or investments.
No sir, I'm a mortgage broker and I have very close contacts in the financial planning side of things and am set up far better than CIBC could ever do for me. Now please, do not call me again and please, I do not want anything.
Well then, I beleive you have kids, how about some RESP's.
No, I do not want anything *click
When will the banks stop doing this. This was toned down a bit and made shorter. I can't tell you how forecful he was. Our country has a huge amount of unsecured debt, however, the problem as our law makers tell us, is that we take out too many mortgages and are all high in mortgage debt. This is smoke and mirrors. It's the unsecured debt that's the problem in my opinion. Having mortgage debt is to a lot, good debt as you have an asset to back that debt.
The banks make a killing of this unsecured debt and I swear they have some butt kissing they do to the law makers in Ottawa that says we'll allow you to change the mortgage rules and do this and that, however, you can not touch our unsecured debt!
Anyways, that's my rant for the day. I just seriously wish the feds would step up and talk to us in the trenches and make realistic changes. Yeah right, who am I kidding!
Tuesday, June 26, 2012
What going from 30 years to 25 years means
Here's is a rough idea of what going back to 25 years as opposed to 30 years will do in regards to purchase power and payments.
This is based on the assumption of good credit and no outside debt.
In the past four years my average mortgage amount is roughly $291,000 (this is kind of the norm south of the Fraser)
You would need an income of $48,500 to qualify for this amount of a mortgage. The payment based on today's 3.09% would be $1,241 with a 30 year amortization.
A 25 year amortization will need an income of $53,000 to qualify for this same amount. It will also increase your payment by roughly $150/m
If you have the income of $48,500 you would now only qualify in the amount of $259,000 which means, $32,000 less of a home.
I'm not entirely for or against the reduced amortization. There's pro's and con's to both and honestly when I started out, all we had was 25 years! Yes, I'm starting to become one of the seniors.
Please note: the above numbers are not perfectly accurate however, are deemed to be very close. Everyone is slightly different and there are other variances that can change the numbers i.e. Insurance premiums, actual property tax payments and strata payments etc.
This is based on the assumption of good credit and no outside debt.
In the past four years my average mortgage amount is roughly $291,000 (this is kind of the norm south of the Fraser)
You would need an income of $48,500 to qualify for this amount of a mortgage. The payment based on today's 3.09% would be $1,241 with a 30 year amortization.
A 25 year amortization will need an income of $53,000 to qualify for this same amount. It will also increase your payment by roughly $150/m
If you have the income of $48,500 you would now only qualify in the amount of $259,000 which means, $32,000 less of a home.
I'm not entirely for or against the reduced amortization. There's pro's and con's to both and honestly when I started out, all we had was 25 years! Yes, I'm starting to become one of the seniors.
Please note: the above numbers are not perfectly accurate however, are deemed to be very close. Everyone is slightly different and there are other variances that can change the numbers i.e. Insurance premiums, actual property tax payments and strata payments etc.
Thursday, June 21, 2012
OSFI Toughens Mortgage Underwriting
OSFI’s final mortgage underwriting guidelines are out, sooner than expected.
There are significant changes on the way for a variety of borrowers. TD’s chief economist Craig Alexander told BNN that the impact of these guidelines is equivalent to “well over a percentage point (increase) in mortgage rates.”
However, these guidelines are less concerning than OSFI’s original draft (which proposed things like requalification on renewal). Moreover, in many ways this news isn’t as market-shaking as today’s Department of Finance announcement.
That said, here is what’s changing (Note: this applies to federally regulated lenders only):
There are significant changes on the way for a variety of borrowers. TD’s chief economist Craig Alexander told BNN that the impact of these guidelines is equivalent to “well over a percentage point (increase) in mortgage rates.”
However, these guidelines are less concerning than OSFI’s original draft (which proposed things like requalification on renewal). Moreover, in many ways this news isn’t as market-shaking as today’s Department of Finance announcement.
That said, here is what’s changing (Note: this applies to federally regulated lenders only):
- HELOCs: The maximum loan-to-value on a HELOC will drop from 80% to 65%. That will sting borrowers who leverage HELOCs for productive purposes (e.g., as substitutes for open mortgages, or as a low-cost borrowing source for income-generating investments or small business). However, lenders can still provide a 15% amortizing mortgage on top of a HELOC, for 80% loan-to-value total. OSFI tells us: “Existing HELOCs are not affected, but future offerings are subject to the limits.”
- Qualifying Rates: The qualifying rate is being toughened for conventional mortgages. For variable rates and fixed terms less than five years, it will be “the greater of the contractual mortgage rate or the five-year benchmark rate published by the Bank of Canada.” This will push a small number of borrowers into 5-year fixed mortgages because they won't qualify for shorter terms.
- Stated Income: Going forward, all self-employed borrowers must provide “reasonable” income verification (e.g., a Notice of Assessment). Most lenders already have such policies. It appears that true “no-income documentation” stated income mortgages are officially a thing of the past at mainstream lenders.
- Down Payments: “Cash back should not be considered part of the down payment,” says OSFI. This effectively eliminates 100% financing, and is one of the most common sense guidelines of them all.
Federally regulated lenders have until “no later than fiscal year-end 2012” to comply with these guidelines. That ranges from October 31, 2012 for major banks to March 31, 2013 for other institutions). However, OSFI expects them to comply sooner if possible, so we may see some of these changes within a few months, if not weeks.
There’s no telling yet if provincial regulators will impose the same guidelines on the lenders they regulate (like credit unions).
Information directly from http://www.canadianmortgagetrends.com
Tuesday, June 12, 2012
Canadian Home Income Plan - CHIP
So, what is CHIP, why CHIP, and why now?
What is CHIP?
- The Canadian Home Income Plan (CHIP) is a reverse mortgage giving seniors access to as much as 40% of their equity, with NO PAYMENTS for as long as they live in the home. Instead of paying monthly, the interest is simply added to the mortgage balance that becomes due when the home is sold.
- CHIP is designed for clients that are 55 or older, lack cash flow, and don’t want to move.
Why CHIP?
- There is no credit check, and no debt servicing. The approval is simply based on the client’s age and the property.
- There are many reasons to take a CHIP mortgage:
-A traditional
mortgage requires a monthly payment that many simply can’t afford, so they
can’t access their equity without selling the home they love. Even an LOC
will eventually run out of the ability to pay itself, still
leaving the client with a payment they truly can’t afford.
-One spouse
has passed away, leaving the survivor with the same monthly debts, but half the
monthly income. CHIP can give the cash flow needed to keep on going.
-The money can
be used for anything: Investing to increase cash flow, paying out of
foreclosure, paying property taxes, debt consolidation, early inheritance so
they can enjoy giving the money without the worry of paying for it, higher
quality of life, etc.
- With a 15 year average home appreciation of 6% in Canada, and the reverse mortgage typically going no higher than 40% LTV, history has shown that equity erosion is really not something to be worried about.
Why now?
- CHIP received bank status in Oct 2009, lowering cost of funds, and allowing the product to be offered at a much more reasonable interest rate. CHIP offers, variable, 6 month, 1, 3 & 5 year terms. Call or email for details.
- The baby boomers are reaching retirement years, and many have arrived with more debt and less income than they had planned for.
- 84% of seniors want to stay in their home, but with limited cash flow, monthly debts, and a dwindling retirement fund, many are forced to sell the home they love and downsize to live.
- Ever tightening mortgage qualification rules are making it harder for people to access their equity, so no credit checks and no debt servicing makes this an appealing product.
Wednesday, June 6, 2012
OSFI nixes requalifying guideline
From CAAMP’s mouth to OSFI’s ear. The federal regulator issued a
letter Wednesday clarifying its position on re-qualifying borrowers at
renewal -- effectively maintaining the status quo and confirming
CAAMP's understanding.
“The following provides a brief description of OSFI’s decisions on key issues, which will be reflected in the final Guideline,” writes the regulator in a letter sent to federally regulated financial institutions Wednesday. “Re-qualification at Renewal – current practice regarding residential mortgage renewals has served FRFIs well. OSFI agrees, for example, that having a good payment record is one of the best indicators of credit worthiness. OSFI, therefore, expects that FRFIs themselves will remain responsible for deciding what level of review to place on borrowers’ qualifications at the time of renewal.”
The letter confirms the message coming from CAAMP CEO Jim Murphy, the association leader telling MortgageBrokerNews.ca last week that OSFI was prepared to hold its fire on the most contentious component of its draft guidelines for mortgage underwriting.
At the same time, the message confirms that the regulator will uphold its guideline reducing the
the maximum loan-to-value ratio for HELOCs to 65 per cent.
Still, brokers appeared most concerned about the possibility of lenders having to re-qualify clients at each and every renewal.
The OSFI decision may leave some room for lenders to do just that, however.
"FRFI renewal practices should be articulated in internal policies governing their underwriting of residential mortgage loans," writes OSFI. "FRFIs, however, will be expected to refresh the borrowers’ credit metrics periodically (not necessarily at renewal) so that FRFIs can effectively evaluate their credit risk.”
http://www.mortgagebrokernews.ca
“The following provides a brief description of OSFI’s decisions on key issues, which will be reflected in the final Guideline,” writes the regulator in a letter sent to federally regulated financial institutions Wednesday. “Re-qualification at Renewal – current practice regarding residential mortgage renewals has served FRFIs well. OSFI agrees, for example, that having a good payment record is one of the best indicators of credit worthiness. OSFI, therefore, expects that FRFIs themselves will remain responsible for deciding what level of review to place on borrowers’ qualifications at the time of renewal.”
The letter confirms the message coming from CAAMP CEO Jim Murphy, the association leader telling MortgageBrokerNews.ca last week that OSFI was prepared to hold its fire on the most contentious component of its draft guidelines for mortgage underwriting.
At the same time, the message confirms that the regulator will uphold its guideline reducing the
the maximum loan-to-value ratio for HELOCs to 65 per cent.
Still, brokers appeared most concerned about the possibility of lenders having to re-qualify clients at each and every renewal.
The OSFI decision may leave some room for lenders to do just that, however.
"FRFI renewal practices should be articulated in internal policies governing their underwriting of residential mortgage loans," writes OSFI. "FRFIs, however, will be expected to refresh the borrowers’ credit metrics periodically (not necessarily at renewal) so that FRFIs can effectively evaluate their credit risk.”
http://www.mortgagebrokernews.ca
Thursday, May 31, 2012
Report: OSFI has the wrong end of the stick
A new report is backing up broker concerns OSFI is about to fix what
ain’t broke – this new research identifying already-reduced
amortizations, low arrears and high levels of homeowner equity.
“Mortgage borrowers are making significant efforts to accelerate repayment, such as voluntarily increasing their regular payments (23 per cent) and making lump sum payments (19 per cent), with some borrowers (10 per cent) doing both,” finds CAAMP's spring consumers' report, released Wednesday. "And approximately 50 per cent of borrowers pay $100 per month (or more) above their required payments.”
The report relies on an online survey of 2,000 Canadians, including 800 homeowners with mortgages. It was conducted by Maritz Research and adds weight to the findings of a CMHC report issued last week.
It also suggests that recent buyers expect amortization periods will be about 20 per cent shorter than their contracted length, mirroring the current reality for many Canadian homeowners.
To boot, the report also suggests 83 per cent of Canadians have at least 25 per cent equity in their homes. Separately and collectively, those findings point to a mortgage market well positioned to handle the challenges of a correction in the housing market and to protect the investment of the vast majority of homeowners.
Brokers are also hoping the findings will encourage OSFI to reconsider some of the underwriting
guidelines it will likely bring into force next month.
Those measures – from re-qualification at renewal to slashing the maximum loan-to-value on HELOCs – are meant to throw up a firewall around Canada’s housing market.
Brokers haven’t been convinced of the need for it.
The position is garnering support outside of the CAAMP research, with the official opposition in Otttawa registering the same concerns as brokers.
"We just need to make sure that people are protected in some of these temporary situations (where they may have lost a job),” said Peggy Nash, the federal NDP’s finance critic, “if they have a good credit record and have never had a problem making their payment."
OSFI has floated the idea of forcing mortgage-holders to re-qualify at renewal, although exactly what that involves remains unclear.
Brokers, and their professional associations, were among the first to balk at the suggestion, arguing it could create the kind of market crisis the proposals aim to overt.
Nash appears to agree, with her party most worried Canadians temporarily out of work could possibly lose their homes. She’s asking the Harper government to back off.
But OSFI has suggested it has little intention of backing down, Its manager of policy developing expressing concern about the country’s ability to meet a significant housing correction head on.
http://www.mortgagebrokernews.ca
“Mortgage borrowers are making significant efforts to accelerate repayment, such as voluntarily increasing their regular payments (23 per cent) and making lump sum payments (19 per cent), with some borrowers (10 per cent) doing both,” finds CAAMP's spring consumers' report, released Wednesday. "And approximately 50 per cent of borrowers pay $100 per month (or more) above their required payments.”
The report relies on an online survey of 2,000 Canadians, including 800 homeowners with mortgages. It was conducted by Maritz Research and adds weight to the findings of a CMHC report issued last week.
It also suggests that recent buyers expect amortization periods will be about 20 per cent shorter than their contracted length, mirroring the current reality for many Canadian homeowners.
To boot, the report also suggests 83 per cent of Canadians have at least 25 per cent equity in their homes. Separately and collectively, those findings point to a mortgage market well positioned to handle the challenges of a correction in the housing market and to protect the investment of the vast majority of homeowners.
Brokers are also hoping the findings will encourage OSFI to reconsider some of the underwriting
guidelines it will likely bring into force next month.
Those measures – from re-qualification at renewal to slashing the maximum loan-to-value on HELOCs – are meant to throw up a firewall around Canada’s housing market.
Brokers haven’t been convinced of the need for it.
The position is garnering support outside of the CAAMP research, with the official opposition in Otttawa registering the same concerns as brokers.
"We just need to make sure that people are protected in some of these temporary situations (where they may have lost a job),” said Peggy Nash, the federal NDP’s finance critic, “if they have a good credit record and have never had a problem making their payment."
OSFI has floated the idea of forcing mortgage-holders to re-qualify at renewal, although exactly what that involves remains unclear.
Brokers, and their professional associations, were among the first to balk at the suggestion, arguing it could create the kind of market crisis the proposals aim to overt.
Nash appears to agree, with her party most worried Canadians temporarily out of work could possibly lose their homes. She’s asking the Harper government to back off.
But OSFI has suggested it has little intention of backing down, Its manager of policy developing expressing concern about the country’s ability to meet a significant housing correction head on.
http://www.mortgagebrokernews.ca
Friday, May 4, 2012
Collateral charge mortgages
Here's another great article I read about collateral mortgages. I'm a huge advocate that we as consumers of mortgages, need to know about these and the potential down falls that come with them.
Few products ignite broker debate like collateral charge mortgages. For Gord McCallum, who will be part of panel of industry leaders discussing the subject at the upcoming Mortgage Summit, the need for broker education on every facet of these complicated deals is key.
“They have their place, but proper disclosure is an important aspect in terms of consumer protection,” says McCallum, broker/president of First Foundations Residential Mortgages in Edmonton.
“What concerns me are the more recent developments where they’re being used across the board for all mortgage products as opposed to lines of credit.”
Collateral charges have been used for lines of credit before, but the ah-hah moment for brokers came when TD began registering all of their mortgages as collateral charge in 2010.
“Some of us saw that as contractual handcuffs at renewal for clients because it took away a lot of the client’s leverage in terms of being able to transfer that mortgage at renewal to another institution,” says McCallum. It also plays a role in renewal pricing, he says. “If you don’t have any leverage the lender will price things less competitively at renewal.”
Collateral charge mortgages also seriously hinder a client’s ability to get secondary financing.
“Clients can’t secure a second mortgage against their property because the collateral charge is registered to 100 per cent of the value,” says McCallum.
Many people don’t know the difference or aren’t being told about how collateral charge mortgages differ from traditional mortgages and what the implications might be, he says.
“It might be a case of finding out too little too late and then being in a position of having to sell your home.”
There are alternatives to collateral charge mortgages, say McCallum, but he would be worried if these products became more popular across the board. “It would be a challenging environment.”
“[Collateral charge mortgages] limit choice and as a broker I can’t be in favour of anything that limits choice for people. I have to value competition and choice,” says McCallum.
“I don’t mind lenders doing things differently, but I think people have to be properly educated about it.
“Is it truly for their benefit or is this seen as a retention tool and margin improvement for the lenders. If it truly benefits the client, brokers will choose it.”
article is from www.mortgagebrokernews.ca
Few products ignite broker debate like collateral charge mortgages. For Gord McCallum, who will be part of panel of industry leaders discussing the subject at the upcoming Mortgage Summit, the need for broker education on every facet of these complicated deals is key.
“They have their place, but proper disclosure is an important aspect in terms of consumer protection,” says McCallum, broker/president of First Foundations Residential Mortgages in Edmonton.
“What concerns me are the more recent developments where they’re being used across the board for all mortgage products as opposed to lines of credit.”
Collateral charges have been used for lines of credit before, but the ah-hah moment for brokers came when TD began registering all of their mortgages as collateral charge in 2010.
“Some of us saw that as contractual handcuffs at renewal for clients because it took away a lot of the client’s leverage in terms of being able to transfer that mortgage at renewal to another institution,” says McCallum. It also plays a role in renewal pricing, he says. “If you don’t have any leverage the lender will price things less competitively at renewal.”
Collateral charge mortgages also seriously hinder a client’s ability to get secondary financing.
“Clients can’t secure a second mortgage against their property because the collateral charge is registered to 100 per cent of the value,” says McCallum.
Many people don’t know the difference or aren’t being told about how collateral charge mortgages differ from traditional mortgages and what the implications might be, he says.
“It might be a case of finding out too little too late and then being in a position of having to sell your home.”
There are alternatives to collateral charge mortgages, say McCallum, but he would be worried if these products became more popular across the board. “It would be a challenging environment.”
“[Collateral charge mortgages] limit choice and as a broker I can’t be in favour of anything that limits choice for people. I have to value competition and choice,” says McCallum.
“I don’t mind lenders doing things differently, but I think people have to be properly educated about it.
“Is it truly for their benefit or is this seen as a retention tool and margin improvement for the lenders. If it truly benefits the client, brokers will choose it.”
article is from www.mortgagebrokernews.ca
Monday, April 30, 2012
Education and learning
I beleive education is very important both personally and professionally. I came across this read and thought to share!
Formal education will make you a living; self-education will make you a fortune.
We must learn to apply all that we know so that we can attract all that we want.
Learning is the beginning of wealth. Learning is the beginning of health. Learning is the beginning of spirituality. Searching and learning is where the miracle process all begins.
If someone is going down the wrong road, he doesn’t need motivation to speed him up. What he needs is education to turn him around.
Don’t see the mind for more than it is, but don’t misread it for all that it can be.
Sharpen your interest in two major subjects: life and people. You will only gather information from a source if you are interested in it.
Education must precede motivation.
While you are in school, make sure you get the information. What you think about it, that’s up to you. What you are going to do with it that will soon be up to you. But while you are there, make sure you get it. In fact, my advice is, don’t leave school without it!
Never begrudge the money you spend on your own education.
If you step up the self-education curve, you will come up with more answers than you can use.
Formal education will make you a living; self-education will make you a fortune.
We must learn to apply all that we know so that we can attract all that we want.
Learning is the beginning of wealth. Learning is the beginning of health. Learning is the beginning of spirituality. Searching and learning is where the miracle process all begins.
If someone is going down the wrong road, he doesn’t need motivation to speed him up. What he needs is education to turn him around.
Don’t see the mind for more than it is, but don’t misread it for all that it can be.
Sharpen your interest in two major subjects: life and people. You will only gather information from a source if you are interested in it.
Education must precede motivation.
While you are in school, make sure you get the information. What you think about it, that’s up to you. What you are going to do with it that will soon be up to you. But while you are there, make sure you get it. In fact, my advice is, don’t leave school without it!
Never begrudge the money you spend on your own education.
If you step up the self-education curve, you will come up with more answers than you can use.
Wednesday, April 25, 2012
Bank of Canada takes aim at home equity lines of credit
John Samuel - Financial Post
The Bank of Canada sounded the alarm on growing household debt on Wednesday, taking aim in particular at the growing tendency of Canadians to take out lines of credit using home equity.
While the Bank has repeatedly warned on household debt levels in the past, on Wednesday it provided more detail about the type of debt Canadians are taking on, including its concerns about the rapid growth of so-called HELOC’s (home equity lines of credit).
The issue, as with any debt, is if these innovations or this access to debt is taken too far “Like any financial innovation, home equity lines of credit have both positives and negatives associated with them,” Bank of Governor Mark Carney said during a press conference in Ottawa.
“The issue, as with any debt, is if these innovations or this access to debt is taken too far.” He pointed to the concerns raised by the country’s banking regulator, the Office of the Superintendent of Financial Institutions, which said earlier this year that some lenders were too lenient in providing home equity loans. Mr. Carney’s comments build upon the release of the Bank of Canada’s Monetary Policy Report on Wednesday, a quarterly economic overview compiled by the central bank.
The report highlights the explosive growth of HELOC’s and mortgage refinancings in the past decade, which have surged to $64-billion as of 2010 from $8-billion in 2001. Canadians appear to be using such loans for two primary reasons, the Bank said. They are either paying down other higher interest loans, such as credit card debt, or using the money for everyday spending.
The Bank of Canada sounded the alarm on growing household debt on Wednesday, taking aim in particular at the growing tendency of Canadians to take out lines of credit using home equity.
While the Bank has repeatedly warned on household debt levels in the past, on Wednesday it provided more detail about the type of debt Canadians are taking on, including its concerns about the rapid growth of so-called HELOC’s (home equity lines of credit).
The issue, as with any debt, is if these innovations or this access to debt is taken too far “Like any financial innovation, home equity lines of credit have both positives and negatives associated with them,” Bank of Governor Mark Carney said during a press conference in Ottawa.
“The issue, as with any debt, is if these innovations or this access to debt is taken too far.” He pointed to the concerns raised by the country’s banking regulator, the Office of the Superintendent of Financial Institutions, which said earlier this year that some lenders were too lenient in providing home equity loans. Mr. Carney’s comments build upon the release of the Bank of Canada’s Monetary Policy Report on Wednesday, a quarterly economic overview compiled by the central bank.
The report highlights the explosive growth of HELOC’s and mortgage refinancings in the past decade, which have surged to $64-billion as of 2010 from $8-billion in 2001. Canadians appear to be using such loans for two primary reasons, the Bank said. They are either paying down other higher interest loans, such as credit card debt, or using the money for everyday spending.
Tuesday, April 17, 2012
No changes to Prime today at the BoC
The Bank of Canada did not increase the overnight lending rate, otherwise known as prime, today. As expected.
Some of the words Mr. Carney said though has led some experts to beleive that we may have a rate hike sooner than expected.
Only time will tell!
Here's the article from the BoC website.
Ottawa, Ontario -
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The profile for global economic growth has improved since the Bank released its January Monetary Policy Report (MPR). Europe is expected to emerge slowly from recession in the second half of 2012, although the risks around this outlook remain high. The profile for U.S. growth is slightly stronger, reflecting the balance of somewhat improved labour markets, financial conditions and confidence on the one hand, and emerging fiscal consolidation and ongoing household deleveraging on the other. Economic activity in emerging-market economies is expected to moderate to a still-robust pace over the projection horizon, supported by an easing of macroeconomic policies. Improved global economic prospects, supply disruptions and geopolitical risks have kept commodity prices elevated. In particular, the international price of oil has risen further and is now considerably higher than that received by Canadian producers. If sustained, these oil price developments could dampen the improvement in economic momentum.
Overall, economic momentum in Canada is slightly firmer than the Bank had expected in January. The external headwinds facing Canada have abated somewhat, with the U.S. recovery more resilient and financial conditions more supportive than previously anticipated. As a result, business and household confidence are improving faster than forecast in January. The Bank projects that private domestic demand will account for almost all of Canada’s economic growth over the projection horizon. Household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk. Business investment is projected to remain robust, reflecting solid balance sheets, very favourable credit conditions, continuing strong terms of trade and heightened competitive pressures. The contribution of government spending to growth is expected to be quite modest over the projection horizon, in line with recent federal and provincial budgets. The recovery in net exports is likely to remain weak in light of modest external demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.
The Bank projects that the economy will grow by 2.4 per cent in both 2012 and 2013 before moderating to 2.2 per cent in 2014. The degree of economic slack has been somewhat smaller than the Bank had anticipated in January, and the economy is now expected to return to full capacity in the first half of 2013.
As a result of this reduced slack and higher gasoline prices, the profile for inflation is expected to be somewhat firmer than anticipated in January. After moderating this quarter, total CPI inflation is expected, along with core inflation, to be around 2 per cent over the balance of the projection horizon as the economy reaches its production potential, the growth of labour compensation remains moderate, and inflation expectations stay well-anchored.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments.
Some of the words Mr. Carney said though has led some experts to beleive that we may have a rate hike sooner than expected.
Only time will tell!
Here's the article from the BoC website.
Ottawa, Ontario -
The Bank of Canada today announced that it is maintaining its target for the overnight rate at 1 per cent. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.
The profile for global economic growth has improved since the Bank released its January Monetary Policy Report (MPR). Europe is expected to emerge slowly from recession in the second half of 2012, although the risks around this outlook remain high. The profile for U.S. growth is slightly stronger, reflecting the balance of somewhat improved labour markets, financial conditions and confidence on the one hand, and emerging fiscal consolidation and ongoing household deleveraging on the other. Economic activity in emerging-market economies is expected to moderate to a still-robust pace over the projection horizon, supported by an easing of macroeconomic policies. Improved global economic prospects, supply disruptions and geopolitical risks have kept commodity prices elevated. In particular, the international price of oil has risen further and is now considerably higher than that received by Canadian producers. If sustained, these oil price developments could dampen the improvement in economic momentum.
Overall, economic momentum in Canada is slightly firmer than the Bank had expected in January. The external headwinds facing Canada have abated somewhat, with the U.S. recovery more resilient and financial conditions more supportive than previously anticipated. As a result, business and household confidence are improving faster than forecast in January. The Bank projects that private domestic demand will account for almost all of Canada’s economic growth over the projection horizon. Household spending is expected to remain high relative to GDP as households add to their debt burden, which remains the biggest domestic risk. Business investment is projected to remain robust, reflecting solid balance sheets, very favourable credit conditions, continuing strong terms of trade and heightened competitive pressures. The contribution of government spending to growth is expected to be quite modest over the projection horizon, in line with recent federal and provincial budgets. The recovery in net exports is likely to remain weak in light of modest external demand and ongoing competitiveness challenges, including the persistent strength of the Canadian dollar.
The Bank projects that the economy will grow by 2.4 per cent in both 2012 and 2013 before moderating to 2.2 per cent in 2014. The degree of economic slack has been somewhat smaller than the Bank had anticipated in January, and the economy is now expected to return to full capacity in the first half of 2013.
As a result of this reduced slack and higher gasoline prices, the profile for inflation is expected to be somewhat firmer than anticipated in January. After moderating this quarter, total CPI inflation is expected, along with core inflation, to be around 2 per cent over the balance of the projection horizon as the economy reaches its production potential, the growth of labour compensation remains moderate, and inflation expectations stay well-anchored.
Reflecting all of these factors, the Bank has decided to maintain the target for the overnight rate at 1 per cent. In light of the reduced slack in the economy and firmer underlying inflation, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate, consistent with achieving the 2 per cent inflation target over the medium term. The timing and degree of any such withdrawal will be weighed carefully against domestic and global economic developments.
Thursday, April 12, 2012
3 year variable cap mortgage
There`s a neat product that was introduced a short time ago that I think is interesting and could be an option for some.
It is a variable product, however, payments are based on the current 3 year term (3.99%) and if prime continued to rise over the length of the term, you would be capped at the 3.99%
At the forefront prime is currently at 3%, so the extra payments will go directly to principal which in turn saves you a ton in interest and pays down your mortgage much sooner. With the predictions of variable not moving upwards in the near future, this is a good forced savings plan.
This product is eligible for purchase at any loan to value up to 95%, refinances and transfer in.
It is a variable product, however, payments are based on the current 3 year term (3.99%) and if prime continued to rise over the length of the term, you would be capped at the 3.99%
At the forefront prime is currently at 3%, so the extra payments will go directly to principal which in turn saves you a ton in interest and pays down your mortgage much sooner. With the predictions of variable not moving upwards in the near future, this is a good forced savings plan.
This product is eligible for purchase at any loan to value up to 95%, refinances and transfer in.
Wednesday, April 4, 2012
Collateral charges: Why banks like them
By Rubina Ahmed-Haq | Sun Apr 01 2012 | http://www.moneyville.ca
If you’re buying a house and are shopping for a mortgage this spring you may come across something called a collateral mortgage. This home financing tool has been around for a while, but mainly in the background. Now it’s going mainstream with both TD Bank and no-frills ING Direct abandoning the conventional mortgage in favour of this type of financing exclusively. Other big banks make collateral mortgages available, but for now offer both kinds.
Many consumers hunting for a mortgage would be hard pressed to explain the difference between the two, but here it is:
With a conventional mortgage, you and your lender agree on how much you can borrow, the length of the term and the interest rate. As an example, say the house you’re buying is worth $200,000. With 20 per cent down you would borrow $160,000. You might select a fixed-rate, five-year term, which this week is between 3 and 4 per cent.
With a collateral mortgage, you still have an agreed interest rate and term, but the bank registers a charge of up to 125 per cent the value of your home, provided you have at least 20 per cent equity in it. In this example the charge would be $200,000 plus up to another $50,000.
That’s because a collateral agreement assumes you will want to borrow more in the future and so makes this extra amount available now. As long as you maintain 20 per cent equity in your home, you borrow up to 80 per cent of its value.
So a collateral mortgage can be a great product for homeowners who want that extra borrowing ability along with their mortgage. Doing all the paperwork while applying for the mortgage saves fees that would apply later if a homeowner tried to apply for a credit line.
This is important:
The advantage to the bank is that a collateral agreement makes it harder for you to leave because it interlocks your lending. As Toronto real estate lawyer Mark Weisleder, a Moneyville columnist, points out, a collateral mortgage secures all debt held with that lender under one agreement. So a line of credit, a credit card, car loan or any personal loan will all be secured by the same agreement.
Most banks do not allow transfers of collateral mortgages because they are tied to other consumer loans (even if you don't have any). This means that at the end of your five-year term, you have to pay discharge fees to get out of one mortgage and additional fees to register a new one at another financial institution. On the other hand, a conventional mortgage is easy to transfer when the term is up.
Another difference is that in a conventional agreement your rate cannot be increased during the term, even if you default or fall into arrears with your payments.
With a collateral mortgage, if you go into arrears or default, the bank has the right to raise your interest rate by up to 10 percentage points.
This is because a collateral mortgage is registered at a charge of prime plus 10 per cent. Senior TD Bank mortgage official Farhaneh Haque says this higher rate is charged to protect customers from incurring more legal and administration fees when they want to borrow more. Without this, the bank would have to reregister the loan when you want to borrow more. Since the loan is already registered at this higher rate, when you qualify, the bank can offer it to you with no questions asked, even if the loan is 10 points higher.
Tom Hamza, president of Investor Education Fund, a consumer agency funded by the Ontario Securities Commission, says it’s clear why collateral agreements are attractive to the banks.
“The fact that people can access money more easily and the fact that they won’t leave are two pretty compelling reasons for financial institutions to offer these,” he says.
Hamza says collateral mortgages are good for homeowners who have a lot of debt in a lot of different places, or those who “frequently need to access to cash”. But for all others it may not be the right product.
If you don’t want the extra money and want the freedom to move your business elsewhere when the mortgage matures, a collateral agreement is probably not the best option. It’s a classic case of buyer beware, before you sign up for a collateral agreement make sure it’s the product that suits you and your lifestyle.
If you’re buying a house and are shopping for a mortgage this spring you may come across something called a collateral mortgage. This home financing tool has been around for a while, but mainly in the background. Now it’s going mainstream with both TD Bank and no-frills ING Direct abandoning the conventional mortgage in favour of this type of financing exclusively. Other big banks make collateral mortgages available, but for now offer both kinds.
Many consumers hunting for a mortgage would be hard pressed to explain the difference between the two, but here it is:
With a conventional mortgage, you and your lender agree on how much you can borrow, the length of the term and the interest rate. As an example, say the house you’re buying is worth $200,000. With 20 per cent down you would borrow $160,000. You might select a fixed-rate, five-year term, which this week is between 3 and 4 per cent.
With a collateral mortgage, you still have an agreed interest rate and term, but the bank registers a charge of up to 125 per cent the value of your home, provided you have at least 20 per cent equity in it. In this example the charge would be $200,000 plus up to another $50,000.
That’s because a collateral agreement assumes you will want to borrow more in the future and so makes this extra amount available now. As long as you maintain 20 per cent equity in your home, you borrow up to 80 per cent of its value.
So a collateral mortgage can be a great product for homeowners who want that extra borrowing ability along with their mortgage. Doing all the paperwork while applying for the mortgage saves fees that would apply later if a homeowner tried to apply for a credit line.
This is important:
The advantage to the bank is that a collateral agreement makes it harder for you to leave because it interlocks your lending. As Toronto real estate lawyer Mark Weisleder, a Moneyville columnist, points out, a collateral mortgage secures all debt held with that lender under one agreement. So a line of credit, a credit card, car loan or any personal loan will all be secured by the same agreement.
Most banks do not allow transfers of collateral mortgages because they are tied to other consumer loans (even if you don't have any). This means that at the end of your five-year term, you have to pay discharge fees to get out of one mortgage and additional fees to register a new one at another financial institution. On the other hand, a conventional mortgage is easy to transfer when the term is up.
Another difference is that in a conventional agreement your rate cannot be increased during the term, even if you default or fall into arrears with your payments.
With a collateral mortgage, if you go into arrears or default, the bank has the right to raise your interest rate by up to 10 percentage points.
This is because a collateral mortgage is registered at a charge of prime plus 10 per cent. Senior TD Bank mortgage official Farhaneh Haque says this higher rate is charged to protect customers from incurring more legal and administration fees when they want to borrow more. Without this, the bank would have to reregister the loan when you want to borrow more. Since the loan is already registered at this higher rate, when you qualify, the bank can offer it to you with no questions asked, even if the loan is 10 points higher.
Tom Hamza, president of Investor Education Fund, a consumer agency funded by the Ontario Securities Commission, says it’s clear why collateral agreements are attractive to the banks.
“The fact that people can access money more easily and the fact that they won’t leave are two pretty compelling reasons for financial institutions to offer these,” he says.
Hamza says collateral mortgages are good for homeowners who have a lot of debt in a lot of different places, or those who “frequently need to access to cash”. But for all others it may not be the right product.
If you don’t want the extra money and want the freedom to move your business elsewhere when the mortgage matures, a collateral agreement is probably not the best option. It’s a classic case of buyer beware, before you sign up for a collateral agreement make sure it’s the product that suits you and your lifestyle.
Monday, March 12, 2012
Collateral charge
This past weekend I sat down with some clients who have a mortgage with a local credit union. Of course, as do all credit unions and a lot of the bigger banks do, their mortgage was registered as a collateral charge.
The lender will say it's a bonus. I say it's a huge negative especially when there's no real difference in product with any other lender not doing this.
When I received these clients 'land titles Form B' I had noticed that the 'registered mortgage amount' was $700,000. Let's keep in mind the clients purchase price was a mere $315,000 (original mortgage balance of about $240k or so). I almost fell off my chair as this amount is massive. They're essentially tying you up for life unless you pay legal fees to get out.
For full explanations on these style of mortgages read a couple past blogs here and here
The lender will say it's a bonus. I say it's a huge negative especially when there's no real difference in product with any other lender not doing this.
When I received these clients 'land titles Form B' I had noticed that the 'registered mortgage amount' was $700,000. Let's keep in mind the clients purchase price was a mere $315,000 (original mortgage balance of about $240k or so). I almost fell off my chair as this amount is massive. They're essentially tying you up for life unless you pay legal fees to get out.
For full explanations on these style of mortgages read a couple past blogs here and here
Thursday, March 8, 2012
Bank of Canada holds rate but says outlook improved
OTTAWA (Reuters) - The Bank of Canada held its key interest rate unchanged on Thursday, as anticipated, but issued a more upbeat outlook for the Canadian and global economies that suggests it is starting to think about an eventual rate hike.
The central bank maintained its overnight lending rate target at 1 percent for the 12th straight time. It said the Canadian economic outlook was "marginally improved", uncertainty around the global economy had decreased and the profile for inflation was somewhat firmer than it had foreseen.
It also added a line about the dangers of high household debt levels in a sign of increasing worry about the consequences of ultra-low borrowing costs.
"Canadian household spending is expected to remain high relative to GDP (gross domestic product) as households add to their debt burden, which remains the biggest domestic risk," the bank said in a statement.
The bank repeated that there was "considerable monetary policy stimulus" in Canada but made no mention of the need to eventually withdraw that stimulus, language that it used in May and July of last year.
It tempered its more optimistic tone by noting that while it expected the economy to perform better in the first quarter than forecast, it would be due to temporary factors. Exports will contribute little to growth despite stronger U.S. demand because of persistent Canadian dollar strength and competitive challenges, it predicted. (Reporting by Louise Egan; Editing by Randall Palmer)
Tuesday, February 21, 2012
BC First Time New Home Buyers Bonus of up to $10k.
Requirements to Qualify for the Bonus ELIGIBLE FIRST-TIME NEW HOME BUYER
You will qualify as a first-time new home buyer if:
»» You purchase or build an eligible new home located in B.C.;
»» You, or for couples, you and your spouse or common law partner, have never
previously owned a primary residence;
»» You file a 2011 B.C. resident personal income tax return, or if you move to B.C.
after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);
»» You are eligible for the B.C. HST New Housing Rebate; and
»» You intend to live in the home as your primary residence. ELIGIBLE NEW HOME
An eligible new home includes new homes (i.e., newly constructed and substantially renovated homes) that are purchased from a builder and
that are owner-built. The bonus will be available in respect of new homes purchased from a builder where:
»» A written agreement of purchase and sale is entered into on or after February 21, 2012;
»» HST is payable on the home (e.g., HST will generally be payable if
ownership or possession of the home transfers before April 1, 2013 – see
further details below); and
»» No one else has claimed a bonus in respect of the home.The bonus will be available in respect of owner-built homes where:
»» A written agreement of purchase and sale in respect of the land and building is
entered into on or after February 21, 2012;
»» Construction of the home is complete, or the home is occupied, before April 1, 2013; and
»» No one else has claimed a bonus in respect of the home. A substantially renovated home is one where all or substantially all of the interior
of a building has been removed or replaced. Generally, 90% or more of the interior of the house must be renovated to qualify as a substantially renovated home (90% test).
Amount of the Bonus
MAXIMUM AMOUNT
The bonus is equal to 5% of the purchase price of the home (or in the case of owner-built homes, 5% of the land and construction costs subject to
HST) to a maximum of $10,000.
PHASE-OUT FOR HIGHER INCOME EARNERS
The bonus will be reduced based on an individual’s/couple’s net income (line 236 of your income tax return) using the following formula:
»» For single individuals, the bonus is reduced by 20 cents for every dollar in
net income over $150,000 (bonus is reduced to zero at $200,000 net income).
»» For couples, the bonus is reduced by 10 cents for every dollar in family net
income over $150,000 (bonus is reduced to zero at $250,000 family net income).
APPLICATION PROCESS
Individuals must apply for the bonus through the B.C. government. Individuals can apply once
application forms have been posted on the B.C. Ministry of Finance website later this year. Applicants will be required to submit documentation demonstrating eligibility for the bonus.
ELIGIBLE NEW HOME
The bonus is available in respect of new homes (i.e., newly constructed and substantially renovated homes) where HST is payable. HST will generally be payable on homes purchased from a builder where ownership or possession transfer before April 1, 2013.
Potential buyers should consult with the builder to determine if the home will be subject to the HST.
For owner-built homes, the bonus will be based on land and construction costs subject to the HST. Eligible new homes will include:
»» Detached Houses, semi-detached houses, duplexes and townhouses,
»» Residential condominium units,
»» Mobile homes and floating homes, and
»» Residential units in a cooperative housing corporation.
For examples by property price click here
You will qualify as a first-time new home buyer if:
»» You purchase or build an eligible new home located in B.C.;
»» You, or for couples, you and your spouse or common law partner, have never
previously owned a primary residence;
»» You file a 2011 B.C. resident personal income tax return, or if you move to B.C.
after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);
»» You are eligible for the B.C. HST New Housing Rebate; and
»» You intend to live in the home as your primary residence. ELIGIBLE NEW HOME
An eligible new home includes new homes (i.e., newly constructed and substantially renovated homes) that are purchased from a builder and
that are owner-built. The bonus will be available in respect of new homes purchased from a builder where:
»» A written agreement of purchase and sale is entered into on or after February 21, 2012;
»» HST is payable on the home (e.g., HST will generally be payable if
ownership or possession of the home transfers before April 1, 2013 – see
further details below); and
»» No one else has claimed a bonus in respect of the home.The bonus will be available in respect of owner-built homes where:
»» A written agreement of purchase and sale in respect of the land and building is
entered into on or after February 21, 2012;
»» Construction of the home is complete, or the home is occupied, before April 1, 2013; and
»» No one else has claimed a bonus in respect of the home. A substantially renovated home is one where all or substantially all of the interior
of a building has been removed or replaced. Generally, 90% or more of the interior of the house must be renovated to qualify as a substantially renovated home (90% test).
Amount of the Bonus
MAXIMUM AMOUNT
The bonus is equal to 5% of the purchase price of the home (or in the case of owner-built homes, 5% of the land and construction costs subject to
HST) to a maximum of $10,000.
PHASE-OUT FOR HIGHER INCOME EARNERS
The bonus will be reduced based on an individual’s/couple’s net income (line 236 of your income tax return) using the following formula:
»» For single individuals, the bonus is reduced by 20 cents for every dollar in
net income over $150,000 (bonus is reduced to zero at $200,000 net income).
»» For couples, the bonus is reduced by 10 cents for every dollar in family net
income over $150,000 (bonus is reduced to zero at $250,000 family net income).
APPLICATION PROCESS
Individuals must apply for the bonus through the B.C. government. Individuals can apply once
application forms have been posted on the B.C. Ministry of Finance website later this year. Applicants will be required to submit documentation demonstrating eligibility for the bonus.
ELIGIBLE NEW HOME
The bonus is available in respect of new homes (i.e., newly constructed and substantially renovated homes) where HST is payable. HST will generally be payable on homes purchased from a builder where ownership or possession transfer before April 1, 2013.
Potential buyers should consult with the builder to determine if the home will be subject to the HST.
For owner-built homes, the bonus will be based on land and construction costs subject to the HST. Eligible new homes will include:
»» Detached Houses, semi-detached houses, duplexes and townhouses,
»» Residential condominium units,
»» Mobile homes and floating homes, and
»» Residential units in a cooperative housing corporation.
For examples by property price click here
Tuesday, February 7, 2012
CMHC - Stated Income Programs - BIG CHANGES
There’s a growing air of uncertainty in the mortgage industry, one we haven’t sensed since the tail end of the credit crunch.
Regulators, media and politicians are waving the caution flag on housing and mortgages, and the foundation of our market (CMHC) is suggesting they’re running out of insurance room.
This has much of the industry in a risk minimization (“risk-off”) mode. In turn, mortgages that are not insurable, income-qualified and owner-occupied are now attracting more scrutiny.
Here’s what we’re hearing…
On CMHC’s $600 billion insurance cap…
CMHCThe consensus among industry executives we spoke with is that CMHC will not receive near-term approval to write more than $600 billion worth of mortgage default insurance. Political and risk concerns are the most cited reasons for this.
That may change if CMHC approaches parliament with urgency to lift its cap. (We don’t have enough information to judge this probability, so we won’t.)
“The government doesn't want lenders insuring low loan-to-values,” one capital markets expert told us, on condition of anonymity. Insuring low LTV mortgages suggests banks are abnormally concerned about risk and eager to find a way around OSFI’s capital guidelines (buying mortgage insurance lowers banks' capital costs in many cases).
Lenders are reportedly disproportionately relying on low-ratio insurance to cover themselves on mortgages in Toronto and Vancouver where price risk means 80% LTV is less security than in most cities.
“There is a false comfort in loan-to-values.” It’s often better to have more room to service debt, than more equity, said the above source. “If I’m choosing between an 80% LTV with a 42% TDS and a 95% LTV with a 30% TDS, I’ll take the latter.”
We’ll find out how close CMHC is to its present $600 billion cap when it issues its 4th quarter financials (due by month’s end).
On covered bonds…
Pressure to increase the $600 billion ceiling may wane if the government decides it will no longer guarantee covered bonds. (We could hear more about that in the next 30-60 days when new covered bond legislation is rumoured to be due).
Covered bonds used up roughly $24 billion of insurance capacity in 2011.
The government’s position is that covered bonds don’t need to rely on insurance, and that’s true in some cases.
The Covered Bond Report cites evidence that RBC’s covered bonds (which are backed by uninsured conventional mortgages) demand yields as low as five basis points above insured covered bonds. (That’s a tight spread. Albeit, other issuers would likely pay more than RBC, given its strong credit rating.)
Our key source above told us: “The Feds are going to have to increase the covered bonds limit if they're serious about not harming liquidity.”
On lenders' backup plans…
Word is, a slew of lenders have been on the phone with Genworth and Canada Guaranty. They’re looking for a replacement to the bulk insurance they can no longer buy in size from CMHC.
We spoke with other knowledgeable sources who speculate that private insurers may only be able to fill demand for a year or so before hitting their own insurance limits.
Another question is, what cost premium will investors demand from lenders in order to buy mortgages backed by private insurers (who have a 90% government guarantee versus CMHC 100% guarantee). At the consumer level, a 10 basis point interest rate disadvantage is a turnoff in today’s competitive mortgage arena.
Non-bank lenders have been calling “every available liquidity source” one lender executive told us yesterday.
Another lender said: “Investors' appetite for private insurance will dictate how much conventional business monolines do…Banks can withstand this because they will put it on their balance sheet....with no conventional rate premium.”
On CMHC portfolio insurance limits…
The ramifications of CMHC nearing its $600 billion insurance cap are potentially great. The most noticeable outcome so far has been CMHC’s first-ever bulk insurance rationing system. Depending on how CMHC allocates bulk insurance to lenders, it could:
adversely impact smaller lenders who rely on portfolio insurance for liquidity OR provide an advantage to certain smaller/newer lenders (depending on whether their cap on buying bulk insurance is based on an industry average [which could be relatively large for a small lender])
adversely impact major banks that use portfolio insurance for capital relief.
adversely impact consumers by way of fewer product options and higher rates on low-ratio mortgages
Ron-SwiftRon Swift, CEO of Pacific Mortgage Group Inc., told us yesterday: “The result of these restrictions ultimately means there will be an impact on liquidity in the market place. I think this will first impact products that have the higher insurance costs, such as stated income & self-employed. They will either be stopped or the rates charged to these clients will have to be significantly increased. Either way, tightening liquidity, reducing mortgage options or increasing the costs will take some buyers out of the market, which will affect all of us.”
Thus far, we’ve seen a handful of non-bank lenders announce higher conventional (<=80% LTV) mortgage rates. More are expected to follow.
On stated income mortgages…
OSFI, Canada’s bank regulator, has been concerned about stated income mortgages for months.
firstlineFirstLine, a major lender and one of CIBC’s mortgage divisions, dropped a bombshell on brokers Tuesday. It announced that it’s suspending stated income approvals effective immediately. (Refis and switches among CIBC’s own brands are not impacted.)
We’ve already heard of other lenders either terminating their stated income programs or upcharging the rates.
As a side note: CIBC says its “changes affect FirstLine only,” which will really tick off brokers. It seems that CIBC’s decisions to: a) apply this policy only to brokers, b) severely undercut brokers on renewal, and c) apply rate favouritism to its retail channel, are destroying FirstLine’s long-standing goodwill among brokers. We hate saying that because we have all the respect in the world for the BDMs, underwriters and management we have had the privilege of knowing at FirstLine. This decision obviously comes from above their heads.
This information came from http://www.canadianmortgagetrends.com
Regulators, media and politicians are waving the caution flag on housing and mortgages, and the foundation of our market (CMHC) is suggesting they’re running out of insurance room.
This has much of the industry in a risk minimization (“risk-off”) mode. In turn, mortgages that are not insurable, income-qualified and owner-occupied are now attracting more scrutiny.
Here’s what we’re hearing…
On CMHC’s $600 billion insurance cap…
CMHCThe consensus among industry executives we spoke with is that CMHC will not receive near-term approval to write more than $600 billion worth of mortgage default insurance. Political and risk concerns are the most cited reasons for this.
That may change if CMHC approaches parliament with urgency to lift its cap. (We don’t have enough information to judge this probability, so we won’t.)
“The government doesn't want lenders insuring low loan-to-values,” one capital markets expert told us, on condition of anonymity. Insuring low LTV mortgages suggests banks are abnormally concerned about risk and eager to find a way around OSFI’s capital guidelines (buying mortgage insurance lowers banks' capital costs in many cases).
Lenders are reportedly disproportionately relying on low-ratio insurance to cover themselves on mortgages in Toronto and Vancouver where price risk means 80% LTV is less security than in most cities.
“There is a false comfort in loan-to-values.” It’s often better to have more room to service debt, than more equity, said the above source. “If I’m choosing between an 80% LTV with a 42% TDS and a 95% LTV with a 30% TDS, I’ll take the latter.”
We’ll find out how close CMHC is to its present $600 billion cap when it issues its 4th quarter financials (due by month’s end).
On covered bonds…
Pressure to increase the $600 billion ceiling may wane if the government decides it will no longer guarantee covered bonds. (We could hear more about that in the next 30-60 days when new covered bond legislation is rumoured to be due).
Covered bonds used up roughly $24 billion of insurance capacity in 2011.
The government’s position is that covered bonds don’t need to rely on insurance, and that’s true in some cases.
The Covered Bond Report cites evidence that RBC’s covered bonds (which are backed by uninsured conventional mortgages) demand yields as low as five basis points above insured covered bonds. (That’s a tight spread. Albeit, other issuers would likely pay more than RBC, given its strong credit rating.)
Our key source above told us: “The Feds are going to have to increase the covered bonds limit if they're serious about not harming liquidity.”
On lenders' backup plans…
Word is, a slew of lenders have been on the phone with Genworth and Canada Guaranty. They’re looking for a replacement to the bulk insurance they can no longer buy in size from CMHC.
We spoke with other knowledgeable sources who speculate that private insurers may only be able to fill demand for a year or so before hitting their own insurance limits.
Another question is, what cost premium will investors demand from lenders in order to buy mortgages backed by private insurers (who have a 90% government guarantee versus CMHC 100% guarantee). At the consumer level, a 10 basis point interest rate disadvantage is a turnoff in today’s competitive mortgage arena.
Non-bank lenders have been calling “every available liquidity source” one lender executive told us yesterday.
Another lender said: “Investors' appetite for private insurance will dictate how much conventional business monolines do…Banks can withstand this because they will put it on their balance sheet....with no conventional rate premium.”
On CMHC portfolio insurance limits…
The ramifications of CMHC nearing its $600 billion insurance cap are potentially great. The most noticeable outcome so far has been CMHC’s first-ever bulk insurance rationing system. Depending on how CMHC allocates bulk insurance to lenders, it could:
adversely impact smaller lenders who rely on portfolio insurance for liquidity OR provide an advantage to certain smaller/newer lenders (depending on whether their cap on buying bulk insurance is based on an industry average [which could be relatively large for a small lender])
adversely impact major banks that use portfolio insurance for capital relief.
adversely impact consumers by way of fewer product options and higher rates on low-ratio mortgages
Ron-SwiftRon Swift, CEO of Pacific Mortgage Group Inc., told us yesterday: “The result of these restrictions ultimately means there will be an impact on liquidity in the market place. I think this will first impact products that have the higher insurance costs, such as stated income & self-employed. They will either be stopped or the rates charged to these clients will have to be significantly increased. Either way, tightening liquidity, reducing mortgage options or increasing the costs will take some buyers out of the market, which will affect all of us.”
Thus far, we’ve seen a handful of non-bank lenders announce higher conventional (<=80% LTV) mortgage rates. More are expected to follow.
On stated income mortgages…
OSFI, Canada’s bank regulator, has been concerned about stated income mortgages for months.
firstlineFirstLine, a major lender and one of CIBC’s mortgage divisions, dropped a bombshell on brokers Tuesday. It announced that it’s suspending stated income approvals effective immediately. (Refis and switches among CIBC’s own brands are not impacted.)
We’ve already heard of other lenders either terminating their stated income programs or upcharging the rates.
As a side note: CIBC says its “changes affect FirstLine only,” which will really tick off brokers. It seems that CIBC’s decisions to: a) apply this policy only to brokers, b) severely undercut brokers on renewal, and c) apply rate favouritism to its retail channel, are destroying FirstLine’s long-standing goodwill among brokers. We hate saying that because we have all the respect in the world for the BDMs, underwriters and management we have had the privilege of knowing at FirstLine. This decision obviously comes from above their heads.
This information came from http://www.canadianmortgagetrends.com
Thursday, January 19, 2012
It pays to check the fine print on low-rate offerings
Here's an article I read that makes a lot of sense.
It was a top news story last week. One of the major banks offered the lowest five-year fixed interest rate in Canadian history at 2.99 per cent. As a licensed mortgage agent, I had to quickly attain as much information as I could on the actual contract before I could recommend it to my clients. You know the old saying “if it is too good to be true …”
My research revealed that many of these low-rate mortgages have such restrictive contracts that they could get you into trouble down the road. Before you sign up for that great rate, make sure you are not signing up for something that could handcuff you financially down the road. You need a mortgage that will be flexible should you experience life changes. I have seen many clients brought to the financial brink because of the penalties and restrictions written into their mortgage contract.
Work with an expert and check under the hood. Not all mortgage contracts are created equal.
One of the scariest mortgages created in the last two years by the major banks is what mortgage broker’s are nicknaming the “mousetrap mortgage.” Mousetrap mortgages are so named because once you are in, you are trapped. The cheese is the initial great rate, but the trap comes in the form of extremely restrictive charges in the contract. I call them Hotel California mortgages because “you can check out anytime you like, but you can never leave…”. The technical term for a “mousetrap mortgage” is a collateral mortgage.
Unlike the traditional mortgage, which uses the property as security and will lend out up to 95 per cent of the home’s value, the collateral mortgage is a loan that is attached to a promissory note and is backed by the collateral security of a mortgage on a property. Because the security on a collateral mortgage is a promissory note with a lien on the property, the lender is free to register as much as 125 per cent of the value of the property, even though they are only advancing maximum 80 per cent to the borrower.
It is similar to a revolving line of credit allowing borrowers to increase their loan without the inconvenience or cost of refinancing. How nice. You have an amazing rate for the next five years and you can conveniently refinance anytime.
The major caveat with collateral mortgage is that the lender is free to change the interest rate on the contract under certain circumstances. Something as small as a missed or late payment can trigger an interest-rate increase. Some contracts are so restrictive that changes to your debt held with other institutions can also trigger an increase in rates of your mortgage contract.
One of these low-rate mortgages states that you must remain with the lender for the five years of the contract. As long as you stay with them you can refinance, and they even state that if you move, you can take their mortgage with you to the new property. But what are the conditions? Will a refinance with them trigger a change of rate? Will a port of your mortgage to a new property trigger a rate increase? What happens to your mortgage if you need to get a car loan with another lender? What happens at the end of the contract? Are there penalties if you don’t renew with them? These questions need to be asked.
It is imperative that you ask the right questions, get independent legal advice and have a licensed mortgage agent thoroughly go through the contract with you in detail. Your mortgage agent should be able to answer your questions by referring directly to the contract. While the big banks will offer to cover legal fees if you use their clearing house, I would suggest contacting your lawyer and paying to have them take a second look.
For most people, sticking it out for five years is not a big deal; especially at 2.99 per cent. But you never know what life might throw at you. You may experience a divorce, or get a job transfer or need to refinance so you need to be very clear about what will happen to your mortgage should you need to make changes. Remember costly surprises will wipe out a lot more than a few points of interest savings.
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We never want to imagine a change in our lives negatively that would make us need to redo the mortgage in the less than five years, however, in my 7 years in doing mortgages, it's very rare that a mortgage goes to term due to something in life coming up. Just today I had to turn away 2 people asking for a second mortgage (to buy a thriving business and to pay a lawyer for a divorce) and both were denied due to a collateral charge registered on their mortgage eating up any available equity. Life changes!
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