CANADIAN MORTGAGE VIEWS

Is It Time To Refinance? When people take on a mortgage the majority opt for a 5 year one usually because they intend to stay in the residence and they know their payments for the next 5 years. However life sometimes throws a curveball at us and we have to make hard financial decisions. Perhaps an illness occurred or 1 person was laid off or a divorce occurs and suddenly you can't pay for anything in cash anymore and resort to using credit cards. As we well know credit cards companies love this because the amount of interest you are paying increases. Perhaps you took a 5 year mortgage out several years ago You now look at how you can lower your payments and because mortgage rates are at a historical low these days it makes sense to look at breaking your mortgage and taking on a new one at a lower rate.  Paying off credit cards at 20% + interest looks attractive when you can get a new mortgage under 4% these days. Before you do anything you need to know what it will cost to b

As the deadline for banks to disclose their penalty calculations draws closer, this topic of penalties will be more prevalent. As clients become more aware, will it be a new area of competition forcing lenders to change standard charge terms and all play on the same level field? Breaking your mortgage: Understanding the rules You can pay a high price to refinance a mortgage before maturity. Lenders will soon have to give more information on what to expect. By Ellen Roseman Mortgage rates are falling. You want to break your closed mortgage and get a new five-year loan at 2.99 per cent. Hold on. Take a deep breath. Talk to your lender first. Find out how much you will have to pay to get out of your mortgage early. The penalty could wipe out all your profit on the deal. Mortgage penalties come as a big surprise to borrowers who aren’t prepared for them. Banks are often unprepared as well, since the information is buried in the fine print of a mortgage contract. As a result,

A good explainatory article by Robert McLister of Canadian Mortgage Trends explaining the pros and cons of Bank of Montreal's just announced 5 year 2.99% rate: BMO Cranks Up the Heat Again BMO is dead-set on winning mind share among consumers. It's coming back to the market with two new deep-discount rate promos: A 5-year fixed at 2.99% (which starts Thursday, March 8, 2012) A 10-year fixed at 3.99% (which starts Sunday, March 11, 2012) Both of these specials are low-frills, meaning: A Lower Maximum Amortization: 25 years versus 30-40 years elsewhere Less Lump-sum Pre-payment Ability: 10% maximum per year (i.e., 1/2 of the 20% that BMO normally allows) A Smaller Payment Increase Option: Up to 10%, once per year (again, 1/2 of the 20% that BMO normally allows) A Locked Term: The Low-rate Mortgage is fully closed unless you sell the property, refinance (with BMO only), or early renew into another BMO mortgage. In other words, unle

The Bank of Canada is warning of an impending housing price correction, putting Canadian mortgage holders at risk. In a four-part series of papers, economists at the bank said a drop in home prices could also impact overall consumption and the Canadian economy. In one of the reports, authored by Brian Peterson and Yi Zheng, the bank cautioned that the risk for fluctuations in house prices has “increased markedly.” The authors noted that house prices have risen sharply in most parts of the country over the past decade, with house prices reaching a historically high level in relation to income. The percentage of household debt to income has risen from 110% in 1999 to 153% currently. “These facts (rising debt and house prices) are interrelated, since rising house prices can facilitate the accumulation of debt,” said guest editor Graydon Paulin, introducing the four papers. “Households could therefore experience a significant shock if house prices were to reverse.” The bank also sugges

A peek behind deeply discounted 5-year rates. A major bank has offered a record low 5 year interest rate. However it is a 2 week special only. Is it as good as it appears to be on first glance. Let’s look a little deeper. When considering a deeply discounted 5-year rate, keep in mind that cheapest isn’t always best. Strangely, we know that’s true when we’re shopping for anything else - but we still tend to believe that lowest rate is the one and only factor in choosing a mortgage. But, that low-rate mortgage could actually cost you more in the long run. An amazing cut-rate mortgage could have you locked in to a very rigid contract filled with financial “trip lines” that could work against you down the road. That’s why it’s important to check the fine print. For instance, is the mortgage fully closed? That means you’re not leaving the lender unless you sell your house, so your options are limited and you have no negotiating power if your needs change in the next 5 years. Low or no prepa