Update

The latest rate news has the Bank of Canada looking very hard at raising the Bank rate by .25% in September, but there are many detractors who say that the incredible rise in the Canadian dollar is going to be the dampening factor on the economy, not interest rates. The longer term rates are holding steady. The news in the States has the rates staying where they are (less pressure on Bank of Canada, more pressure on our currency to rise).

Co-Borrower or Guarantor?

What should I do?I was raised the question the other day from a great client: "What exactly is the difference between a guarantor and a co-borrower?" since many people use the term interchangeably.I replied with the answer. "Guarantors are required to sign for the mortgage, but are not on title to the property. While co-borrowers are required to sign for the mortgage AND be on title to the property. In the event of default, the lender/insurer can take immediate action against all borrowers, including co-borrowers, which is not always the case with guarantors."Just a little note. Guarantors can usually be taken off the mortgage within one year of the term. Only if there is a good re-payment history in this first year.

Fixed rates

I guess we couldn't be blessed for such low rates any longer! Generally speaking though, rates are still quit low.

With the increase in the Canadian Dollar, and the rise of bond rates and other factors, the fixed rates have gone up by over half a percent in the last little while. I go away for a short honeymoon to come back to higher rates! The five year posted rate is at 7.20% today. We're not too sure what's going to happen with the fixed rates, however, the way things are going today they may go up a little more. Hopefully the Canadian dollar will lose some momentum and start to come back down, which is not the prediction by CIBC world markets. They expect the dollar to be on par with the USD by the years end.

Variable rate mortgages are looking even better these days.

80% Conventional?!

Welcome to a new age of mortgage borrowing. All the rules have been thrown out and the new ones are being written every day, after years of the same lender attitudes that kept many people from home ownership.
The Bank Act has been amended as of April 23, 2007 to change the conventional financing ceiling from 75% to 80% of the value of the property. This means that no longer will borrowers be paying high ratio mortgage premiums provided they have either a 20% downpayment or 20% equity in the property. This will save thousands of dollars in fees that otherwise cut into a homeowners equity.
This new rule also applies to revenue property financing although lenders are a little bit slower to announce that they are willing to go the full 80%. Remember that Canadian lenders tend to run pretty conservative (read tight) when it comes to Canadians trying to make some money at Real Estate investing.
Note also the new relaxed rules regarding borrowers who are newer to Canada and who might not yet have a long career track record. With good credit the waiting time to qualify for a mortgage has been drastically reduced. It is immigration that will be driving the net growth in this part of the world and the lending community is recognizing this.
It is about time that the mortgage world became reflective of today's borrower. New Canadians, Self Employed, and people with smaller downpayments can all buy and afford a home today like never before. The mortgage lenders are rewriting the rules and the winners are the borrowers.

US Sub-Prime Market

As this is extremely interesting news as we depend on a good US economy.
More and more people in the sub-prime market are defaulting on their payments making things extremely complex. With more and more defaults, and lenders straying away from lending to this market, there is an influx of property's on the market which is causing for drastically lower home costs. We can only wait to see what happens in the next few months. In our market up here, the Sub-Prime lenders are joining on board at a fast pace as we are still in a strong market. Hopefully we don't follow suit with our partners of the South.

How much can you afford?

To answer the comment posted by 'anonymous'...
With some great new rules that have come out in the past few months, you can qualify for a minimum of 12% more of a mortgage with good credit. Longer amortizations up to 40 years, increases this number even more.
There is so much competition out there that it's creating more and more mortgage solutions for everyone. To get into a lot of detail would take too long. I can definately answer your specific questions on email or by phone, just let me know.

Introduction

This is my first blog to make sure all works well.

If you need any questions regarding mortgages and so forth answered, please let me know here or by email christos@gitersos.com