RENEWING YOUR MORTGAGE

I was contacted yesterday by a new potential client, who had just received her renewal letter from her current lender.  She was being offered a 5-year fixed at 2.99%.  Being aware that current rates are not that high, she reached out for a second opinion to see if I could do better!

She had great income, beacon score was over 700 and her debt ratios were in line for a lending rates, so why was her current lender offering her a crappy rate? Continue reading

Choices & Rights of Borrower

As a mortgage agent, I not only arrange first mortgages but in many cases second mortgages and in very rare cases third mortgages as well. I can go to non-bank lenders or private individuals who want to lend their own funds. The difference is in the risk that is being undertaken.

As mortgage agents and brokers, it is our job to prove that the borrower can manage the interest only payments and that they have a low risk of defaulting on the loan. Continue reading

time to invest

It’s that time of year again when we get inundated with messages about topping up our RRSP’s or investing for the long run for our retirement, but how do you choose what to invest in?

The markets are down, the dollar is down and according to the press it’s doom and gloom on the horizon. But how do you as a savvy investor, cut through the headlines to figure out what is the best bet for your dollars? Continue reading

Rule of 72

The ‘Rule of 72′ is a simplified way to calculate how long an investment will take to double, given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to double.

Let’s look at some examples of how long it would take to double our money in each of the following instances: Continue reading

fixed-or-variable

At present thousands of homeowners across Canada are eyeing their options with more than a little trepidation. The majority of Canadians after all, are risk averse and when it comes to our mortgage options many of us have traditionally chosen fixed rather than variable interest rates, in order to allow us to avoid sudden hikes in the Canadian Prime. In fact, even just the idea of being stuck on a variable rate after a hike in the prime leaves many of us on edge. Yes, we can lock the rate in if we think the prime is getting too high, but who is to say we’ll manage to do that right at the right moment? Rate hikes after all, can leave homeowners not just paying less off their principle, but them facing paying more interest over the long run.

All that said, recent studies have demonstrated that historically at least, homeowners on variable rates have actually saved more in the long term when compared to more risk averse homeowners opting for locked in rates. These being the case, between 2008 and the present, variable rate mortgage options have experienced something of resurgence in popularity. Moreover, those who have been part of this resurgence have made significant savings. The Canadian prime has consistently fallen since 2008 in tandem with Central Bank instigated economic recovery measures. This being the case, those who elected for fixed rate mortgages back in the 2000-2008 (supposed) boom years, have been left feeling a little cheated to say the least. Continue reading

syndicated mortgages

Over the past few months I’ve penned a number of articles on this blog looking at the benefits of non-traditional ways to invest equity, namely syndicate mortgages. However, how do you really know when you should be investing equity in syndicate mortgage options, and when it might be best to invest in a more traditional buy and hold property?

Firstly then, any kind of investment needs to be accompanied by solid research. Syndicate mortgages for example, are shied away from sometimes due to perceptions of high risk and insecurity. However, in reality, 90% of people who invest in syndicate mortgages make stable 8-10% returns per annum. Often as well, they profit from 2-4% annual bonuses and 90% of syndicate mortgage investors actually decide to re-invest in syndicate mortgages in the future. The key quite simply, is to do your own research and make sure to have as knowledgeable as possible a mortgage agent on your side. Moreover, this is even more important for people who choose to invest in buy and hold property. Continue reading

ID-10048101

Last week a colleague and fellow investor called me seeking a mortgage for a property she wanted to purchase in Amherstburg, Ontario, which is just outside of Windsor.  As part of her financing, she wanted to include a VTB (Vendor Take Back).  A VTB is when the seller offers financing on their own property they are selling.  For instance you might have 75% LTV from the lender or bank; a 15% VTB from the seller and 10% from your own funds.

Sellers do this in a tough market, or as an incentive when they can’t sell their property or even to help the buyer when they have a shortfall in funds.  Most of all a seller looks for tax deferral as they don’t have to pay capital gains until the portion lent is fully repaid. Continue reading