Working with the right mortgage professional can save you thousands of dollars, not to mention a huge amount of stress.  I asked my clients why they confidently refer me to their friends and family, and this is what they said:

1. 1. I work directly with you and am there for you.  In addition to getting you the best mortgage package, I provide advice throughout the buying process.  Even if you are a year away from purchasing your new home, I offer advice to get you into the best position to buy your property and meet your goal. 

1. 2. You can always call me.    I understand that my clients have to make decisions when it works for them and they cannot address these financial issues during the workday.  So I make myself available to my clients pretty much 7 days a week at all hours of the day.  And if I can’t answer the phone at the moment, I always get back to them right away.  This alone relieves a huge amount of stress for clients who are in a position to make a quick decision on something that is so important in their life.

1. 3. I do what is best for my clients.  As a broker, I have many lending options that I can offer clients:  banks, mortgage companies, credit unions, etc.  They all have different requirements, and some are easier to work with than others.  I choose the lenders that will work best for my client’s situation, not for my own gain.   As a long time broker, a good part of my day is spent answering emails when clients are looking for advice, and having conversations with clients about their situations.  Many times these conversations do not translate into financial incentive for me, but it is what the client needs at the time.  I know many of us need a sounding board sometimes so I’m happy to provide sound advice to my clients whenever they need it.

1. 4. There are no surprises.  I help you make an informed decision.  The costs associated with buying are disclosed to you, and if there is anything usual, I will tell you.  I explain things plainly and give advice my clients can trust.

When you are looking for a mortgage broker, or any real estate professional, here’s what questions you should ask yourself:

1. 1. Is this person putting my needs ahead of his or her financial gains? How do I know that I can trust him or her with one of the biggest financial decisions of my life?

1. 2. Is this person providing sound and trustworthy advice? 

1. 3. Is this person knowledgeable about banking products and qualification requirements?

1. 4. Am I dealing with this person directly?  Does he or she respond in a timely manner?  Can I be confident that if my mortgage is approved and I have questions many months later, my mortgage broker will take the time to answer them?

Don’t take my word for it – see what my clients have said about me.

Call or email me today to discuss how I can get the best mortgage for your situation!

Having reflected on the last 25 years and how mortgage rules and guidelines have changed, one thing I can say that hasn’t changed is “the basis of the mortgage application.”   In short:  what’s your story???

At the end of the day, after your income documents have been reviewed and your credit has been checked, what the lender wants to know is “what’s your story?”   Remember, the person who approves your mortgage application is usually not the same person who sits down and goes over your application with you.   Typically, its another person who does not know you, and that person needs someone to explain “your story” to them.   Although your mortgage specialist will try to describe your story through your documentation, such as with your job letter, paystubs, etc, it is always best to give your mortgage specialist the details that may not appear on paper.

Some questions that may apply to you:

• Why did you take some time off work?
• Why didn’t it work out in that line of work?
• Why did you have a huge gap in income?
• Why did your income level drop so much or go up so much, in a short period of time?
• How come your credit score went down so much in a short amount of time?
• Why do you not have a lot of history on your credit?  

These are some of the things that your mortgage specialist will need to know to do a good job for you in obtaining the best mortgage package!   Help your mortgage broker help YOU!

Contact Nazarina for more information and remember, I work for YOU, not the lenders.

Today more than ever, much of the mortgage application and subsequent approval is about the paper that goes along with it!  And more often than not, I’m finding that lenders want more than just the information that pertains to your job and the property. They are also looking for statements to confirm whether you have investments or assets, such as RRSPs, RESPs, etc.  That is in addition to statements that you will need to provide to demonstrate that you have the funds for the down payment.

Lenders will typically request: 

• a recent job letter;
• a recent paystub;
• bank statements showing you have the funds for the down payment;
• mortgage statements on any properties you own, and rental agreements on any investments properties that you have;
• and of course, the property documents.

By all means, DO NOT throw away your Notice of Assessments (NOAs) from Revenue Canada.  This is your “receipt” from the government to say that they agree or have amended your report on income and taxes owed or paid.   These are important documents and should be kept for 7 years, especially if you plan to borrow money during that period.  Want to be even more efficient? Set up an account at CRA’s website so you can access this information online.  Note: it takes 2 weeks to obtain a password from CRA, so getting this done in advance is always a good idea so that you can have this information ready when you need it.

Wondering how you can prepare for your mortgage application?  Call me today to discuss how I can help you get the best mortgage for your situation!

25 years of originating mortgages!   It really is a good time for reflection.   When I first started out, I didn’t know anything about mortgages, except that I had one and that my husband and I had to be sure we could make our payments – I shall digress briefly and tell you that we barely got approved for our first mortgage due to our incomes being so low!  But we were persistent and with good credit our “exception to qualifying ratios” was approved.

In 1991, mortgage approvals were carried out very differently.   I had my own lending limit which meant I could meet the client on a Tuesday night, run their credit check, look over their employment documentation and tell them they were approved just subject to a review of the property.   Today, it’s a much lengthier process requiring at least one, if not two, adjudicators involved in signing off the mortgage request.

The greatest thing about having been fortunate enough to survive in the mortgage business for 25 years is the people I have met along the way.   My clients are outstanding, wonderful people.   They are focused, easy to work with and I applaud their efforts to own their space in this city! Many of my clients have ventured out of the Lower Mainland to other areas of the province or Canada, and I am still in touch and still assisting them with their mortgage inquiries – these are long term relationships which I will continue to treasure.

I look forward to assisting both new and longstanding clients with the challenges ahead, such as navigating the new mortgage rules that came into effect October 17^th. I can honestly say that the mortgage business never gets old!  The Bank of Canada and the provincial and federal  governments have ensured that there will  always be something new to learn!  But the best part of being a broker? I can always find a home for what my clients need!

Thank you for your support, and cheers to more years of mortgage originating!

As you have likely heard, the Bank of Canada opted to hold the overnight rate as is, meaning there will be no change in variable rates.  In its press release, the Bank of Canada stated that “The federal government’s new measures to promote stability in Canada’s housing market are likely to restrain residential investment while dampening household vulnerabilities.”  The press release also suggested that these housing measures should mitigate risks over time to Canada’s financial system.

While variable rates will remain the same, the same cannot be guaranteed about fixed rates.   The effects of the recent federal government measures to “stress test” mortgage applicants will become apparent in the next couple of months, and I will keep you updated on changes, as well as my subsequent analyses.

In their press release, the Bank of Canada also noted that household spending is also continuing to rise, as are incomes outside of “energy-intensive regions.”

To recap on my thoughts on the recent federal government’s measures, read an earlier post: http://nazarina.com/blog_post?id=17727

Want to brush up on your mortgage terminology?  Check out my blog of Key Mortgage Terms You Should Know

Call me today!

Not every home purchase will be your forever home.  Sometimes, we outgrow our homes and look to move on to homes more suitable to our current needs.  You may outgrow your house before your mortgage term is up, which may lead you to wonder what happens to your mortgage if you sell your home before your term expires.

Can I bring (port) my mortgage to my new property?

If you are buying a new home and selling your property to which your current mortgage is tied, you may be able to port your mortgage to your new property.  Some lenders require you to close your old home and new home on the same day, so if you are not planning on buying or moving right away it is important to clarify this requirement with your lender.

Will I be charged a penalty for breaking my mortgage?

In almost all cases, penalties are charged for breaking your mortgage term early, unless you have a totally open mortgage.  If you have a fixed term such as a five year fixed rate term, your lender may charge you thousands of dollars in penalties in what is called an interest rate differential. If you are breaking a variable rate term, the penalty is typically three months interest. Some lenders may even require you to payback any rate discounts or cashbacks you received when you took out the mortgage    Even if your new mortgage term is at a better rate, the penalty may end up costing you more money in the long-run so check with your mortgage specialist to determine if it’s worth it to break your mortgage term early and what you can do to reduce the penalties.

What about open mortgages?

Open mortgages will offer you more flexibility, but they are usually only available at higher rates.

How can I mitigate the potential costs of breaking my mortgage?

If you are looking to break your mortgage before your term expires, you can try to mitigate penalties by maxing out your prepayment options, if your mortgage agreement allows for prepayments. 

What should I do?

Before signing on to a mortgage, it is important to read all the fine print.  A bank may be offering you a super low rate, but there may be stiff penalties if you are forced to break the mortgage term. What seems like a good deal now may end up costing you a lot more in the future.  A mortgage broker will make sure that you not only receive a low rate, but will also ensure that the mortgage terms fit your needs.

Call me today to discuss how I help my clients find the best mortgages to suit their unique situations.

Some thoughts on the Federal Government’s recent announcements:

Some effects are already apparent as some mortgage companies have stopped taking applications for self-employed clients and rental properties, and refinances have to close by Nov 16 so after that date, they will not be taking refinances either. Other lenders will continue to take the above applications but with a small premium in rate.   What this means is that there will be less lenders for clients to choose from which means that consumers could be looking at higher rates for those applications.  There will also be longer wait times for the lenders that will process those types of applications.

It’s unclear which mortgage companies will still do refinances, rentals, super-jumbos ($1 million+) and 26- to 35-year amortizations come December. As we’ve seen, some lenders have already announced their (hopefully temporary) withdrawal from these categories.  It’s going to be a week or two before we know the bank’s appetite. They won’t rush to load up their balance sheets with non-standard mortgages. That, we know.  The biggest issue is lack of competition, and how non-bank lenders compete in the aforementioned categories.

This is also another hit against self-employed applicants, so they are best to get their ducks in a row in terms of documentation, income reporting, financial statements, etc.  Because even if the banks are the ones who end up with this business, they are not going to want their book of business to be full of self-employed files as they are usually more risky.  So they will either just say no to the file or price it higher.   Either way, not great for the consumer.

A good portion of first time buyers will be taken out of the marketplace.  If you have less than 20% down, it may be much more difficult to qualify at 4.64%, and many applicants will not qualify.   The higher rate qualification means that consumers will qualify for about $100,000 less than with the old rules.

I agree with what Morneau is trying to do but I think that the Federal Government should have consulted with mortgage industry professionals before putting this into effect.  (FYI, mortgage brokers originate 50% of first time buyer purchases).   

Furthermore, one area that has not been addressed at all is “consumer debt”, such as credit cards, personal loans, etc.   These are the real reason consumers have credit issues…they have too much consumer debt,  it’s not the mortgage.  And yet, with all these announcements, this issue has not been addressed.   So if a client cannot refinance, they will just open up another credit card if they need assistance, which will cost them more and leave them more susceptible to higher interest rates and possible cash flow issues.   

As I’ve said before, consumers should ensure their paperwork is in order as it will be harder to get approved for financing going forward.   So income taxes should be up to date, self-employed applicants should ensure their income taxes are paid and that they have financial statements for their company.  Pay attention to your credit – how much you have, making monthly payments on time, etc and keeping your credit score high.   And in terms of property, the “odd” property will be harder to finance.   So when buying, look for a marketable property.

Consumers should ensure that they are working with a mortgage professional that can help them navigate through this uncertain time.   It is critical you have a mortgage professional who will take the time to explain some of these issues to you and who will ensure that you still get the best package in light of all the changes. 

Please see my previous blogs for details on documents required for purchasing and other tips when seeking a mortgage approval.

Here are some key mortgages terms every prospective home buyer should know.   If you have any questions about mortgage terminology, or you want to discuss what mortgage would best suit your individual circumstances, call me today!

Appraisal: a comprehensive report that determines the value of your property based on a number of valuation factors.

Adjustable-Rate Mortgage (ARM): a mortgage with a variable interest rate, which adjusts monthly, biannually, or annually. Option-arms and hybrid mortgages are also considered adjustable-rate mortgages.

Amortization: the way a loan is paid off over time in installments, detailing how much goes toward interest, and how much is paid toward principal.

Biweekly Mortgage: a mortgage where 26 half payments, or 13 full payments, are made annually.

Closed mortgage: In some cases, a closed mortgage cannot be paid off, in whole or in part, before the end of its term. In other cases, the lender may allow for partial prepayment in the form of an increased mortgage payment or a lump sum prepayment. However, any prepayment made above stipulated allowances may incur penalty charges.

Closing: the final step in the loan process when loan documents are signed in the presence of a notary, lawyer or with a title company.

Closing Costs: the amount of money that must be paid to close your loan, including lender fees and third-party charges, along with taxes and land transfer fees.

Commitment letter (or Mortgage Approval): Written notification from the mortgage lender to the borrower that approves the advancement of a specified amount of mortgage funds under specified conditions.

Compound interest: Interest calculated on both the principal and the accrued interest.

Conditional offer: An Offer to Purchase that is subject to specified conditions, for example, the arrangement of a mortgage. There is usually a stipulated time limit within which the specified conditions must be met.

Conventional Mortgage: any mortgage loan that is not insured or guaranteed by the federal government.

Credit bureau:  A company that collects information from various sources and provides credit information on a person’s borrowing and bill paying habits to help lenders assess whether or not to lend money to the person.

Credit history or Credit Report: The main report a lender uses to determine your creditworthiness. It includes information about your ability to handle your debt obligations and your current outstanding obligations.

Debt-to-Income Ratio: the ratio of monthly liabilities and housing expenses divided by the monthly gross income of the borrower.

Delinquency: Failing to make a mortgage payment on time.

Down Payment:  an upfront payment made by the home buyer toward the property purchase price, usually ranging from five to 20 percent. The remainder of the sales price makes up the mortgage loan amount.

First-Time Homebuyer: typically defined as someone who has not owned another property at any time prior to the date of the purchase, as a principal residence.

Fixed-Rate Mortgage: a mortgage with a constant interest rate that will not adjust at any point during the term of the mortgage.

Interest Only: paying just the interest portion of the mortgage payment each month.

Interest rate: The price paid for the use of money borrowed from a lender.

Mortgage Broker: an independent loan originator who works on behalf of consumers to obtain mortgage financing.  Brokers don’t represent a single bank, but rather work with numerous lenders.

Mortgage Term: the length of time you have a specified rate and type of product, usually  5 years but there are shorter and longer terms available.

Pre-Approval/Pre-Qualification: processes to determine what you can afford to ensure you can obtain mortgage financing when purchasing a property.

Prepayment penalty: This is a fee charged to borrowers who pay a loan off faster than the prescribed payment schedule. Some prepayment penalties can add up to thousands of dollars, so they’re worth asking about.

Open mortgage: A flexible mortgage that allows you to pay all or part of the principal before the end of its term.

Principal: The amount that you borrow for a loan (not including interest).

Title: A freehold title is an interest in land that gives the holder full and exclusive ownership of the land and building for an indefinite period. A leasehold title is an interest in land that gives the holder the right to use and occupy the land and building for a defined period.

Total Debt Service Ratio (TDS): The percentage of gross income that will be used for payments of principal, interest, taxes and heat (P.I.T.H.) and other debt obligations, such as car payments or payments of other loans.

Variable mortgage interest rate: Fluctuates based on market conditions.  If the rate goes up, most lenders will change your payment but this should be confirmed with each lender.

Sources:
https://www.cmhc-schl.gc.ca/en/co/buho/hostst/hostst_011.cfm
www.thetruthaboutmortgage.com/mortgage–dictionary/
http://www.bankrate.com/finance/financial-literacy/22-most-commonly-used-mortgage-terms-1.aspx

With all the different mortgage options out there, it is difficult to decide what route you should take.  On top of that, there are many mortgage terms that the average consumer may not fully understand.  Often overlooked is the repayment terms of the mortgage, meaning whether the mortgage is open or closed.

Open mortgages are a good option if you are planning on paying off your mortgage early either by selling or with cash.  With an open mortgage, you can make prepayments or even pay off your mortgage in full without any prepayment charges.  However, open mortgages often come with higher interest rates.   

Conversely, closed mortgages are a better option if you don’t have plans to pay off your mortgage soon.  Interest rates are typically lower for closed mortgages than open mortgages, but there are often charges for making prepayments over the specified limit.

It is important not to confuse open and closed mortgages with variable or fixed rate mortgages.  Open and closed mortgages refer to the repayment terms, whereas fixed and variable refer to the interest rate.

Before deciding on a mortgage, call a mortgage broker to discuss your financial goals and what mortgage terms would best help you accomplish those goals.

Call me today to discuss how I can help you accomplish your mortgage goals!

Paying off your mortgage early can be tempting.  However, there are many factors to consider before you decide to pay off your mortgage early.

When should you pay off your mortgage early?

If you have a small balance remaining on an “open” mortgage, and you are not planning on buying again, paying off your mortgage early can be a good option.

Paying your mortgage off early can also be a good choice if you have an “open” mortgage, where the lender will not charge you for making prepayments.

When should you hold off paying your mortgage off early?

 If you have a “limited open” or “closed” mortgage, paying your mortgage off early can be disadvantageous.  For these types of mortgages, there is often a limit to how much can be prepaid annually – typically 10% – 20%.  If you prepay more than this, your lender will charge you.

You should also hold off prepaying your mortgage if you have other debts, such as credit card debt, that should be dealt with first due to the higher interest rates typically charged on credit cards. 

What can you do?

There are several options available to you that can help you save money in interest payments.  For example, you can opt for accelerated bi-weekly payments instead of monthly payments.  By doing this, you make 26 half-month payments, which means an extra monthly payment every year, helping you pay off your mortgage sooner.

You can also opt to keep your mortgage payments the same, even when offered a lower rate by your lender.  By maintain the same payments, even with a lower interest rate, you can make a bigger dent in your mortgage payments.

If allowed, you could also make a lump-sum payment.  Even if your mortgage is closed, lenders will often allow you to pay up to 10% – 20% of the original principal each year without paying a penalty. Even if you cannot afford to pay the full 10% – 20%, you can still make smaller payments that will reduce your overall balance.

A mortgage broker will give you the information you need to make the right decision on what type of mortgage is best for your situation.  By going over your file and discussing your financial goals with a mortgage broker, you are equipping yourself with the knowledge and advice you need to save you money. 

Whether you are renewing an existing mortgage or have just started looking to buy, call me today to discuss your mortgage goals.