Mortgage Brokers are your personal shopper when it comes to mortgages. Brokers will have access to many lenders, each of them servicing a certain type of borrower. Brokers can present your application to the right lender, knowing which one will be a great fit. Using established relationships with lenders and presenting the file to them can save time. Timing is everything in a purchase situation; brokers will present the deal to the right lender to get an approval. Many of the lenders brokers use are only accessible through the broker channel.
It seems like not a week goes by that a major news story doesn't rock the Canadian real estate market regarding mortgage rates. While it's true that mortgage rates are an important factor when it comes to homebuying, it's even more essential for Canadians to understand exactly how mortgage rates work, and how they can affect home loans.
What are mortgage rates?
A mortgage rate is a term used to describe the interest on a home loan. For most individuals, obtaining a mortgage is a necessary part of buying a home. Mortgage rates are figured on the principal balance of a home loan, meaning how much money is still owed before the loan has been fully repaid. Since a higher balance means more interest, mortgage rates are typically more expensive at the beginning of a loan. As the balance is paid off, less interest is able to build up. This is also why homebuyers spend so much time searching for low rates, as lower interest means less money owed. Continue reading
When considering financing options for home buying, borrowers have two options: a bank or a mortgage broker.
According to the Eastern Morning Herald, Canadians are looking for the best possible mortgage rates. The statistics show that as Canada's housing market continues to recover from the global recession in 2008, mortgage brokers are favored for helping people with financing needs for their homes.
In one year, the National Bank Composite House Price Index was up 2 percent in April 2013. That's the smallest increase in 15 years. With the slow growth, tighter requirements and low interest rates, the mortgage market in Canada is becoming competitive. Continue reading
Cash back mortgages allow borrowers to receive money back after the closing of a home loan. These types of mortgages are perfect for borrowers who could use extra cash during the mortgage process. Contact Canadian Equity to take advantage of a cash back mortgage.
What is a cash back mortgage?
A cash back mortgage is a type of home loan that gives borrowers money back after the loan has been closed. It is possible to obtain a cash back mortgage on either a purchase loan or a refinance. The money you receive from a cash back loan can be in the form of a lump sum or instalments. There is no rule for what the money must be used for, but many borrowers use cash back mortgages to help pay for any fees that may arise during the home loan process, as well as for the costs of moving into and renovating a new home. Continue reading
Who says Canadians can't save?
According to an article from The Globe and Mail, the Canadian personal savings rate is twice that of our neighbors to the south, and nearly six times higher than it was 10 years ago.
"All the talk about the Canadian household being tapped out or out of shape is a bit overdone," Doug Porter, chief economist at BMO Nesbitt Burns, told the news source.
Data from Statistics Canada shows that the savings rate during the first quarter of 2013 was 5.5 percent, up from 5.4 percent during the final three months of 2012. That may not seem like a large improvement, but it's important to keep in mind that the original forecast for the savings rate during the fourth quarter of last year was 3.8 percent, according to Statscan. Continue reading
According to the Bank of Canada, buyers who stick with their current mortgage lender when it comes time for renewal may be cheating themselves out of a discount.
Data from Discounting in Mortgage Markets, a study conducted by three economists for the Bank of Canada regarding insured mortgages, found that homeowners who switch banks when it comes time to renew their mortgage get better deals than existing customers.
As the Toronto Star puts it, when it comes to mortgage lenders, loyalty doesn't pay off.
"The economists found that people who switch banks get a better deal than existing customers, because new customers offer the banks an opportunity to sell more products," Adam Mayers writes for the news source. "Existing customers assume they will automatically get a better deal because they're loyal, but don't. They don't bother to shop around because they assume they'll get the best rate so, lacking ammunition, the discount may not be much." Continue reading
Data from a Canadian Mortgage Professional poll provides a special insight into what issues facing the current real estate market most concern mortgage brokers.
"No, the sky isn't falling, say the majority of brokers responding to CMP's fifth-annual Sentiment Poll, but their answers – recorded over a six-month period ending early March – suggest headroom is getting tight," reads the report. "Even with interest rates falling instead of rising, broker worries have grown right along with economic uncertainty and the creeping slowdown in home sales more stringent mortgage rules have ushered in."
Figures from the poll show that 66 percent of brokers are concerned with the stricter underwriting guidelines put in place by Finance Minister Jim Flaherty, an increase from 56 percent during 2012. Meanwhile, 42.33 percent of respondents said home sales were their chief worry, with another 32 percent pointing to falling home prices. Continue reading
New data from Scotiabank reveals that homeowners are feeling more confident in their ability to pay off their mortgages faster.
Figures from Scotiabank's Mortgage Landscape Study, which surveyed 1,000 Canadian homeowners between February 14 and February 25, 2013, show that nearly two-thirds of mortgage holders (67 percent) say it's possible to pay off their home loans faster. What's more, they say it's possible to do so without impacting their lifestyle.
Meanwhile, a majority of mortgage holders (59 percent) said that adding $20 per month to their home loan payments would have no impact on their finances. Continue reading
New data from the Bank of Montreal is shedding light on homebuyer habits, particularly those concerning first-time homebuyers.
Figures from the BMO First-Time Home Buyer's Report, which surveyed 2,000 Canadians 18 years old or older between February 25 and March 5, shows that first-time homebuyers are twice as likely to choose fixed-rate mortgage over variable rate mortgages. In fact, many first-time homebuyers who believe mortgage rates will decrease over the next five years still plan on opting for fixed-rate mortgages.
"Buying a home is one of the most important financial decisions one can make," said Laura Parsons, mortgage expert at the BMO. "It's crucial that those planning to enter the market are well prepared – not only to manage their costs, but also to pay off their mortgage as soon as possible. Determining what your mortgage payments and overall costs of homeownership will look like, and then living in that financial reality for a year before entering the market, can be an effective strategy." Continue reading
The results of a new survey from CIBC reveal that Canadian homeowners aren't expecting to be mortgage-free until they're 57 years old. This is a two-year increase when compared to the same survey results last year.
"Our view would be that Canadians are taking a look at their broader finances and are working to pay down other debts first to reduce their interest costs," Colette Delaney, executive vice president of mortgage, lending, insurance and deposit products at CIBC, told The Canadian Press. "Those with a growing amount of non-mortgage debt are less likely to be taking extra steps to pay down their mortgage, and this can lead to a longer payback period."
Not all the negative sentiment is related to mortgages costs, however, as half of those surveyed said that other debt, including credit cards, could impact their ability to pay of their mortgages quicker.
Canadian mortgages are constantly shifting, but generally speaking, the more you can allocate toward a down payment, the less you will have to pay in monthly installments. Speak with a mortgage adviser today to learn more about your options within the Canadian housing market.