As this came up again today and is putting an extra damper on all parties involved, I thought I'd write a little blog about it.
When you're purchasing a home and you're married, have a common law, or a partner that you'd like to put on title remember one thing. They can not just go on title at the time of completion.
You can not be on the asset (the home) and not be on the liability (the mortgage). The opposite is allowed. This would be called a guarantor or co-signor.
You also want to make sure that you're mortgage approval and purchase contract is written up with the other persons name on it. This can cause big problems when you're about to complete as I'm experiencing today. All the documents need to be rewritten and there needs to be an addendum drawn up for the sellers to sign. They may not always be willing, which I've experienced.
Moral of the story, be up front right from the start and be certain of whom will go on title so no major hiccups happen later on.
Tuesday, March 1, 2011
Tuesday, February 15, 2011
Benchmark rate at 5.44%
If you want a 1 to 4 year fixed term or a variable you're qualifying at 5.44% as of yesterday morning.
This is a high rate and does put a variable, my favourite product, out of touch for some people.
If you want a 5 year fixed or higher i.e 7 or 10 year, then you qualify on the contract rate. Which today is in around the high 3's to low 4's. Big difference from the 5.44%
If you are going conventional, putting 20% or more as a down payment, the non bank lenders will allow you to still qualify for the 1-4 and variable at their discounted 3 year rate. Which is mid to low 3's today.
This with the new changes to 30 year amortization, could definitely put some people out of the market.
I'm only sure better times are ahead. Once confidence is back, a little more lax on lending policies will follow.
This is a high rate and does put a variable, my favourite product, out of touch for some people.
If you want a 5 year fixed or higher i.e 7 or 10 year, then you qualify on the contract rate. Which today is in around the high 3's to low 4's. Big difference from the 5.44%
If you are going conventional, putting 20% or more as a down payment, the non bank lenders will allow you to still qualify for the 1-4 and variable at their discounted 3 year rate. Which is mid to low 3's today.
This with the new changes to 30 year amortization, could definitely put some people out of the market.
I'm only sure better times are ahead. Once confidence is back, a little more lax on lending policies will follow.
Friday, February 4, 2011
A rate hike seems imminent
Looks like the days of under 4% five years are going away soon. The bond yields keep creeping up which means the banks need to keep their margins in tact to keep profits up.
This can be a good thing for some and a not so good thing for others.
The reason it can be a good thing for some with a fixed rate is, if you're looking to make a change in respect to your mortgage, i.e refinance or move, then you can look at getting yourself booked with a rate right now for 120 days, wait for rates to go up, and then order a discharge statement at the lawyers and there you go, you've just decreased your penalty and received the lower pre rate increase interest rate!
The bad news is, if you're wanting to get in the market in the Spring, you'll have a possible harder time obtaining the home you want. Due to higher rates and the cut from a 35 year amortization to a 30 year amortization.
Best thing is to get a rate hold now for 120 days. Even if you're not 100% certain you'll be ready in that time frame.
Call me today!
This can be a good thing for some and a not so good thing for others.
The reason it can be a good thing for some with a fixed rate is, if you're looking to make a change in respect to your mortgage, i.e refinance or move, then you can look at getting yourself booked with a rate right now for 120 days, wait for rates to go up, and then order a discharge statement at the lawyers and there you go, you've just decreased your penalty and received the lower pre rate increase interest rate!
The bad news is, if you're wanting to get in the market in the Spring, you'll have a possible harder time obtaining the home you want. Due to higher rates and the cut from a 35 year amortization to a 30 year amortization.
Best thing is to get a rate hold now for 120 days. Even if you're not 100% certain you'll be ready in that time frame.
Call me today!
Pension Incomes
Just some interesting info. on the amounts paid out for pensions.
Maximum Income Security Benefits Effective January 1, 2011
CANADA PENSION PLAN (JANUARY - DECEMBER 2011)
Retirement Pension (at age 65) $960.00
Disability Pension $1,153.37
Death Benefit (maximum lump sum) $2,500.00
Survivor's Pension (under age 65) $529.09
Survivor's Pension (age 65 and over) $576.00
Children of Deceased or Disabled Contributor $218.50
Combined Pensions
Survivor\Retirement (retired at age 65) $960.00
Survivor\Disability $1,153.37
Yearly Maximum Pensionable Earnings (YMPE) for year 2011 $48,300.00
OLD AGE SECURITY PROGRAM (JANUARY – MARCH 2011)
Basic Old Age Security pension $524.23
Guaranteed Income Supplement (GIS)
Single $661.69
Spouse of non-pensioner (does not receive OAS) $661.69
Spouse of pensioner (receives an OAS pension) $436.95
Spouse of Allowance recipient $436.95
Spouse's Allowance (SPA)
Regular $961.18
Widowed $1,065.45
OAS 15% clawback commences with an income above $67,688. The full OAS pension is eliminated when a pensioner's net income is $109,607 or above.
The Spouse's Allowance stops being paid at $29,376, while the GIS stops being paid at $38,112.
Further information can be found on the Service Canada website at the attached link:
http://www.servicecanada.gc.ca/eng/isp/statistics/rates/pdf/janmar11.pdf
Maximum Income Security Benefits Effective January 1, 2011
CANADA PENSION PLAN (JANUARY - DECEMBER 2011)
Retirement Pension (at age 65) $960.00
Disability Pension $1,153.37
Death Benefit (maximum lump sum) $2,500.00
Survivor's Pension (under age 65) $529.09
Survivor's Pension (age 65 and over) $576.00
Children of Deceased or Disabled Contributor $218.50
Combined Pensions
Survivor\Retirement (retired at age 65) $960.00
Survivor\Disability $1,153.37
Yearly Maximum Pensionable Earnings (YMPE) for year 2011 $48,300.00
OLD AGE SECURITY PROGRAM (JANUARY – MARCH 2011)
Basic Old Age Security pension $524.23
Guaranteed Income Supplement (GIS)
Single $661.69
Spouse of non-pensioner (does not receive OAS) $661.69
Spouse of pensioner (receives an OAS pension) $436.95
Spouse of Allowance recipient $436.95
Spouse's Allowance (SPA)
Regular $961.18
Widowed $1,065.45
OAS 15% clawback commences with an income above $67,688. The full OAS pension is eliminated when a pensioner's net income is $109,607 or above.
The Spouse's Allowance stops being paid at $29,376, while the GIS stops being paid at $38,112.
Further information can be found on the Service Canada website at the attached link:
http://www.servicecanada.gc.ca/eng/isp/statistics/rates/pdf/janmar11.pdf
Wednesday, January 26, 2011
Changes effective March 18, 2011
CMHC was just in my office updating me on the new rule changes brought down by the Ministry of Finance for March 18, 2011.
The main thing to know is that if you have written a purchase contract prior to this date, you are still eligible for the 35 year amortization.
On a refinance, if you have a committed application with the lender, and is set to close past the March 18th date, then you're ok. So you're still allowed to refinance to 90% if needed.
-------
To clarify the new most important changes.
The maximum amortization for high ratio, and most like conventional (still hasn't been confirmed however, the head at CIBC told me the other day it's most likely for both) will go from 35 years to 30 years.
The maximum equity you can take out on your property for a refinance is a mere 85%. If your home is worth $400k. The most you can take is $340k
--------
Why I don't like these changes.
90% of my clients that have been put into a 35 year amortization do NOT need it. We use it as a strategy. Do one of two things: Keep the payments higher to whatever AM you'd like and in case something was to ever happen, you can always reduce your payments to increase your monthly cash flow.
Or you can take the extra, whatever amount, and start building your investment portfolio. At the end of the year, you should reduce your tax amount and/or receive a tax credit back which you can either reinvest or put on your mortgage as a lump sum to reduce your over amortization.
For the refinance- I don't like it as, a lot of clients that I have refinanced to 90% or 95% now or in the past, do not do it for debt reduction, they do it as they can take advantage of a lower rate and ONLY roll in their penalty to their existing balance. This doesn't allow those people to do this now which in turn is telling the client they have to pay higher and more interest. Doesn't seem fair to me.
The main thing to know is that if you have written a purchase contract prior to this date, you are still eligible for the 35 year amortization.
On a refinance, if you have a committed application with the lender, and is set to close past the March 18th date, then you're ok. So you're still allowed to refinance to 90% if needed.
-------
To clarify the new most important changes.
The maximum amortization for high ratio, and most like conventional (still hasn't been confirmed however, the head at CIBC told me the other day it's most likely for both) will go from 35 years to 30 years.
The maximum equity you can take out on your property for a refinance is a mere 85%. If your home is worth $400k. The most you can take is $340k
--------
Why I don't like these changes.
90% of my clients that have been put into a 35 year amortization do NOT need it. We use it as a strategy. Do one of two things: Keep the payments higher to whatever AM you'd like and in case something was to ever happen, you can always reduce your payments to increase your monthly cash flow.
Or you can take the extra, whatever amount, and start building your investment portfolio. At the end of the year, you should reduce your tax amount and/or receive a tax credit back which you can either reinvest or put on your mortgage as a lump sum to reduce your over amortization.
For the refinance- I don't like it as, a lot of clients that I have refinanced to 90% or 95% now or in the past, do not do it for debt reduction, they do it as they can take advantage of a lower rate and ONLY roll in their penalty to their existing balance. This doesn't allow those people to do this now which in turn is telling the client they have to pay higher and more interest. Doesn't seem fair to me.
Tuesday, January 11, 2011
Variable rates to stay low through 2011
Variable mortgage rates:
The Bank of Canada will hold off on increasing interest rates during the first half of 2011. This means variable mortgage rates will also remain at low levels during this time and then gradually increase from there. As the Canadian economy continues to recover, the sluggish progress in the US and the frailty of the EU, tasks the Central Bank with maintaining a tricky balancing act.
"Governor Carney and his people will be trying to thread the needle on interest rates trying to balance the rising loonie against low interest rates that encourage further consumer indebtedness", says Dr Ian Lee, Director of MBA Program, Sprott School of Business, Carleton University.
Fixed mortgage rates:
The decreased demand for mortgages and relatively stable bond yields, leads us to believe that fixed mortgage rates will remain unchanged for the month of January. However, this outlook is susceptible to change with additional defaults in Europe or poor results on upcoming US economic indicators.
Also, ultra low interest rates for the past few years have fueled a borrowing frenzy creating concern about mounting debt levels for Canadian consumers. It wouldn't be a surprise if the government made a policy change to address the debt problem by adjusting the mortgage rules, likely spurring a change in fixed rates as well.
The Bank of Canada will hold off on increasing interest rates during the first half of 2011. This means variable mortgage rates will also remain at low levels during this time and then gradually increase from there. As the Canadian economy continues to recover, the sluggish progress in the US and the frailty of the EU, tasks the Central Bank with maintaining a tricky balancing act.
"Governor Carney and his people will be trying to thread the needle on interest rates trying to balance the rising loonie against low interest rates that encourage further consumer indebtedness", says Dr Ian Lee, Director of MBA Program, Sprott School of Business, Carleton University.
Fixed mortgage rates:
The decreased demand for mortgages and relatively stable bond yields, leads us to believe that fixed mortgage rates will remain unchanged for the month of January. However, this outlook is susceptible to change with additional defaults in Europe or poor results on upcoming US economic indicators.
Also, ultra low interest rates for the past few years have fueled a borrowing frenzy creating concern about mounting debt levels for Canadian consumers. It wouldn't be a surprise if the government made a policy change to address the debt problem by adjusting the mortgage rules, likely spurring a change in fixed rates as well.
Tuesday, December 7, 2010
No change to prime
As we thought the Bank of Canada did not do anything to the overnight lending rate.
Here's the full article from CTV.ca
Bank of Canada Governor Mark Carney kept the central bank's trendsetting interest rate unchanged in an announcement Tuesday morning.
The rate remains steady at 1 per cent and will stay there until next year at the earliest.
Carney raised the benchmark rate three times over the summer, but since then the economy has slowed and he has put the increases on hold.
The bank said Canada's economic outlook is not as bright as it was when it issued its last forecast in October. As a result, any interest rate increases would be carefully considered.
In one piece of positive news, the bank said household spending has been stronger than anticipated. But overall, there is room for improvement.
"Governor Mark Carney said there remains significant slack in the Canadian economy -- things are not banging on all cylinders as it were," said BNN's Michael Kane.
"The takeaway from all of this is the recovery is underway, the recovery is taking place, but at a moderate pace."
According to the most recent economic data, Canada's economic growth skidded to 1 per cent in the third quarter of this year. In the second quarter economic growth was double that rate.
On the employment front, November saw a slight rise in part-time work, but a drop in good full-time jobs.
Those numbers came as fewer Canadians were looking for work, meaning the actual numbers might be even higher than the 7.6 per cent on the books.
Manufacturing is also struggling due to the high Canadian loonie, which makes exports less affordable for foreign markets -- one of the factors the central bank said is slowing the economy.
Ahead of the announcement most analysts warned Carney would risk doing major damage if he were to raise the interest rate and it was more likely he would lower expectations for future growth instead.
Here's the full article from CTV.ca
Bank of Canada Governor Mark Carney kept the central bank's trendsetting interest rate unchanged in an announcement Tuesday morning.
The rate remains steady at 1 per cent and will stay there until next year at the earliest.
Carney raised the benchmark rate three times over the summer, but since then the economy has slowed and he has put the increases on hold.
The bank said Canada's economic outlook is not as bright as it was when it issued its last forecast in October. As a result, any interest rate increases would be carefully considered.
In one piece of positive news, the bank said household spending has been stronger than anticipated. But overall, there is room for improvement.
"Governor Mark Carney said there remains significant slack in the Canadian economy -- things are not banging on all cylinders as it were," said BNN's Michael Kane.
"The takeaway from all of this is the recovery is underway, the recovery is taking place, but at a moderate pace."
According to the most recent economic data, Canada's economic growth skidded to 1 per cent in the third quarter of this year. In the second quarter economic growth was double that rate.
On the employment front, November saw a slight rise in part-time work, but a drop in good full-time jobs.
Those numbers came as fewer Canadians were looking for work, meaning the actual numbers might be even higher than the 7.6 per cent on the books.
Manufacturing is also struggling due to the high Canadian loonie, which makes exports less affordable for foreign markets -- one of the factors the central bank said is slowing the economy.
Ahead of the announcement most analysts warned Carney would risk doing major damage if he were to raise the interest rate and it was more likely he would lower expectations for future growth instead.
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