Sunday, June 23, 2019

Why Use a Mortgage Broker?

When buying a home, the two most important resources are your real estate agent and your bank, right? Not necessarily.
While your bank is certainly equipped to help you finance your home purchase, there are other options available. In fact, according to Mortgage Professionals Canada, the country’s largest broker association, its members originate more than 35% of all mortgages in Canada and 55% of mortgages for first-time home-buyers.
So, if you’re considering buying a home you might be thinking: Which option is the best for securing financing?
To help you answer that question, let’s take a look at why you should use a mortgage broker.
To start, mortgage brokers are, well, pros. We dedicate our entire careers to becoming experts in one particular financial instrument: Mortgages. We know the ins and outs of hundreds of different offers from dozens of lenders; no two mortgages are alike and we pride ourselves on our ability to help home-buyers find the best possible mortgage for their individual situation. We also explain the myriad mortgage rules and rule changes, such as the recent mortgage stress test.
We can help you get the best mortgage rate. We can also help you determine how much mortgage you can afford.
Of course, rates are only one part of the mortgage picture.
We also have access to – and are able to offer – mortgages from dozens of different lenders. Want a mortgage with no pre-payment penalties? We have access to those. How about a portable mortgage? You guessed it: We have access to those as well. Another advantage is we have access to alternative lenders; we are able to serve certain home-buyers the banks turn away, such as those with bruised credit, new Canadians, or the self-employed.
We also make sure to go over all the terms and conditions of your mortgage so there won’t be any surprises if your home ownership situation changes or you decide to renew with a new lender. The same can't always be said about bank mortgage specialists.
This means we can be unbiased; we aren’t beholden to one particular lender. Which means we are more likely to find a mortgage tailored to fit every individual. And that add-on sales speech bank customers are all too familiar with (insurances, lines of credit, credit cards, and other financial products)? we aren’t incentivized to offer ancillary products in the same way bank specialists are.
Finally, we offer a completely online and over the phone experience; meaning you can go through the entire process of securing financing from your own home. 

Wednesday, February 13, 2019

OSFI Facing Pressure to Ease Mortgage Stress Test

Article by Steve Huebl

"Canada’s financial regulator is facing growing pressure to tweak its mortgage stress test, and no longer just from the mortgage industry.

On Monday, Calgary city councillor George Chahal filed a motion asking for the mayor to call on the federal government to amend the stress test implemented by OSFI (the Office of the Superintendent of Financial Institutions) on January 1, 2018.

Chahal argues the stress test is designed for the Greater Vancouver and Toronto markets, where prices have soared in recent years, and that slower-growth cities, such as Calgary right now, are suffering the wide-ranging consequences. One of those, which he addressed in his motion, is that many borrowers who don’t pass the stress test are being forced to turn to private, unregulated lenders that typically charge higher rates.

“I think we need to have a made-in-Alberta solution based on local economic indicators and which reflects the needs of Calgary and our local economy,” he told The Calgary Star.
Alberta Conservative Party Leader Jason Kenney also spoke out against the stress test last week, vowing to fight it should he be elected premier.

“If you elect a United Conservative government, we are going to go to bat for [those]…who are being pushed away from home ownership because of the prejudicial, regional, unfair stress test imposed by the Canada Mortgage and Housing Corp.,” he said in a speech to Calgary real estate agents.

In January, Mortgage Professionals Canada released its annual report, which addressed the negative effects of the stress test and reiterated calls for changes. Key among them being that any stress test be based on a “relevant” interest rate and factor in income growth and principal repayment; stop subjecting renewals to the stress test; and making it easier for borrowers at alternative lenders to transfer to more liquid and lower-cost lenders.

Canada’s big banks too, which at one time welcomed the stress test, are now voicing their own concerns in the face of a 17-year low in mortgage growth.

“The damage caused by the central bank’s premature bullishness was reversed quickly [with a pause in interest hikes]. What hasn’t been reversed yet is the damage to the housing market due to OSFI’s B-20 rules,” CIBC Deputy Chief Economist Benjamin Tal wrote in a research note, adding that he does not view the introduction of the 200-bps stress test as an error. “Some Canadians needed to be saved from themselves. But given where we are in the cycle, and with policy rates up by 75 basis points since the introduction of the new measures, is 200 basis points still the right number? Not taking a position here… just asking.”

In an interview with the Huffington Post, he added: “It’s not something that has to be set in stone. It should be more dynamic,” he said of any stress test. “You have to assess the damage to the housing market, whether that damage is too severe, and what other forces in the market are leading to slower growth.”

Friday, August 31, 2018

Top 5 Reasons to Refinance


For many Canadians, their home is a terrific repository of wealth. Home equity can build nicely by chipping away at payments and through increasing home values. Accessing home equity through a refinance (min 20% home equity) has for years been an easy, low-cost way to get needed funds. Various new mortgage rules and “stress-testing” has made refinancing more complicated, but it’s a strategy that continues to make good financial sense for certain homeowners that qualify. Here are five reasons why:
  1. Fresh start. If you have too much high-interest debt, you may be able to roll everything into one manageable monthly payment on a low-interest mortgage. Then you get a financial re-set, and can potentially save thousands of dollars in interest.
  2. Dream home. If you’ve found the perfect cottage, chalet, or the retirement home of your dreams, refinancing may be the way to make that purchase happen now if you’re not quite ready to sell your primary residence.
  3. Renovate. Renovating your home is often a less expensive option than moving. And the right renovations can improve the quality of your life and increase the value of your home.
  4. Wealth building. A rental property can give you a great wealth building opportunity and a source of retirement income. Or you may want to invest in a new business venture.
  5. Large expenditures. You may be able to get the funds you need for major expenses (tuition, wedding etc.): a much better strategy than loading it all onto high-interest credit cards.