There are no silly questions.
Listed below are a variety of questions to think about when speaking to your mortgage broker:
How long have you been working in the mortgage industry?
Years of experience is essential when it pertains to taking care of challenging mortgages.
What type of education or licensing do you have?
You need to confirm that your mortgage broker is licensed by consulting the Canadian Association of Accredited Mortgage Professionals.
On what do you base your suggestions?
You should make sure that they are providing recommendations for the right reasons. A mortgage broker works for you, and nobody else.
Are there any special conditions that apply to this deal?
Bear in mind any undisclosed costs or unfavorable conditions attached to a no-frills low mortgage rate.
What fees/costs are connected with the rate you have estimated me?
Do not let concealed costs creep up on you. Regularly ask your mortgage broker to break out any charges and fees so you are appropriately notified.
Can I please see the lender’s letter of commitment?
If you are assured a certain rate, be sure to request a letter from the lender verifying that the reviewed rate is undoubtedly locked in.
What is your area of expertise?
Brokers typically facilitate more loans of one form than another. If you are} purchasing a home, make certain you are dealing with a residential expert.
Are you affiliated with any mortgage associations?
Membership to some mortgage associations can possibly be a sign of the broker’s oath to provide} the best Canadian mortgage rate available.
Can you provide me with references?
Ask for names of current clients or real estate agents with whom they have actually worked.
A combination of extensive research and appropriate inquiry should certainly assist you to narrow down your pool of prospective mortgage brokers for the best mortgage rate.
Bridge the gap between one mortgage and the next.
What happens if you find your perfect home the day after you put your current home on the market? Like many people, you probably get excited. Don’t worry! There is an answer– bridge financing.
What is Bridge Financing?
Bridge financing is short term financing that’s based on the equity you have in the home you are selling. The current home is used as collateral and the bridge loan is used to pay closing on the new home prior to selling the current home.
- Bridge Financing: a short-term, high interest loan that “bridges” the gap between the purchase of a new home and the sale of a current or existing home, allowing a seller to purchase a new property before selling an existing property.
Equity is calculated by taking the sale price and subtracting the debts you currently owe on the home– the Canadian mortgage rate, secured line of credit (including prepayment penalties), real estate commissions, and legal fees. The net total is the basis for your bridge loan.
In 2010, homeowners borrowed $26 billion in additional equity from their homes. 15 percent of homeowners withdrew equity, averaging $30,000. (Source: CAAMP).
Generally, the interest on the best mortgage rate for this style of loan is considerably higher (1 to 3 percent above prime), and at times there is an administration fee tacked on. Be sure to ask your lender, and they might waive the fee for you.
Some bridge loans are structured to pay off the entire existing low mortgage rate at the bridge loan’s closing, while other variations of the loan add the new debt to the old debt. Bridge loans typically include six month terms.
Think you are ready to be a homeowner? Here’s exactly how you can tell!
1) You have a budget
Factor in homeowner’s insurance coverage, property tax, fees, upkeep costs, and the best available home mortgage rate.
2) You have a sizeable down payment.
Generally, you’ll need a down payment worth 20 % of the house price.
3) You have a reliable source of income.
Getting a home is a long-term financial dedication, so you’ll require a steady income to cover those month-to-month mortgage payments.
4) You have an emergency savings fund.
If you have enough money to cover three to six months of your living expenses, you’re one step closer to being prepared.
5) You have your financial obligations under control.
Lenders like to ensure you’ll have more than enough money each month to pay your living expenses. Before they’ll give you a low mortgage rate, they take a look at your debt-to-income ratio.
6) Your credit report is in good condition.
You don’t have to have best credit to become a homeowner; however a good history can help you lower the interest payments on your Canadian mortgage rate.
7) You can make a long-term commitment.
Are you prepared to stay put for a minimum of three to five years? Normally, that’s how long you’ll have to keep the house in order to recoup your trading expenses.
8) You are prepared to become your own property owner.
Don’t buy simply because you can. You have to ensure you’re ready.
Should you refinance early in order to benefit from low rates?
Are you considering refinancing your mortgage? Early refinancing has become a bit of a trend; not surprisingly though, everybody is aiming to save money where they can. Securing a new loan with far better interest rates for your home might mean saving money on monthly low mortgage rate payments, or utilizing the extra money on other ventures like remodeling or making investments.
Does Everyone Profit from Refinancing?
The decision to break an existing mortgage should not be taken lightly. Despite what the advantages appear to be on the surface, there are penalties associated with refinancing; penalties that could potentially leave less change in your pocket than you had anticipated.
34% of those who recently renewed or renegotiated their best Canadian mortgage rate did so prior to their term expiring. The average time to pay off a mortgage is 7.4 years less than the original amortization. (Source: CAAMP).
Do Your Research and Speak with a Low Mortgage Rate Specialist
If now is not the time to refinance, bear in mind that mortgage brokers can review your best mortgage rate at any time, so it is always possible to do something about your mortgage when you are prepared. Request your broker to conduct a mortgage analysis to find out if renewing your loan at a lower rate is worth it.
Determine What Your Penalties Are
Until recently, the main penalty you would likely ever need to pay was 3 month’s interest. If you have a fixed rate, financial institutions now also take a look at the Interest Rate Differential (IRD) and will charge the greater of the two.
Find out If It’s Worth It
Penalties can surely get expensive, however that does not suggest it is not worth exploring. In order to keep your company, financial institutions can take 15 % off the balance of your mortgage to calculate the penalty, as opposed to using the full amount, leading to a lower overall penalty fee.
In many cases, banks will provide a blended rate for the remainder of your mortgage period. Your penalty will depend on your lender and how well you can negotiate.
It merges your present mortgage at its existing rate with any additional money you borrow at the current rates. Doing this enables you to benefit from existing lower rates without needing to pay a penalty. Nevertheless, some banks could use the posted rate, as opposed to the lower rates to determine your new blended rate.
What You Will Need to Qualify
In order to qualify for refinancing you will need to have at least 10 % equity in your house. Both you and your mortgage advisor are able to find out if long term savings outweigh the penalty.