About Linda Klein

Selling your current home and moving into a new one can be stressful enough, let alone worrying about your current mortgage and whether you’re able to carry it over to your new home.

Porting enables you to move to another property without having to lose your existing interest rate, mortgage balance and term. And, better yet, the ability to port also saves you money by avoiding early discharge penalties.

It’s important to note, however, that not all mortgages are portable. When it comes to fixed-rate mortgage products, you usually have a portability option. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current interest rate.

With variable-rate mortgages, on the other hand, porting is usually not available. As such, upon breaking your existing mortgage, a three-month interest penalty will be charged. This charge may or may not be reimbursed with your new mortgage.

Porting conditions
While porting typically ensures no penalty will be charged when you sell your existing property and buy a new one, some conditions that may apply include:

• Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day. Other lenders offer a week to do this, some a month, and others up to three months.
• Some lenders don’t allow a changed term or force you into a longer term as part of agreeing to port your mortgage.
• Some lenders will, in fact, reimburse your entire penalty whether you’re a fixed or variable borrower if you simply get a new mortgage with the same lender – replacing the one being discharged. Additionally, some lenders will even allow you to move into a brand new term of your choice and start fresh.
• There are instances where it’s better to pay a penalty at the time of selling and get into a new term at a brand new rate that could save back your penalty over the course of the new term.

Courtesy of :Starr L. Webb AMP
Franchise Owner / Mortgage Expert

Phone: 250-574-0115

Like many aspects of your life, obtaining financing on a new or existing home can be a lot less stressful and a whole lot more straight-forward if you’re prepared. But if you’re not prepared, there are many common mistakes you can make. Most of these mistakes are easily avoidable with some preparation and informed advice – feel free to call or email with any questions/concerns!

Below are the Top 5 Mortgage Mistakes people make when trying to secure financing for their home:

1. Failing to choose the best product for their situation
2. Automatically renewing their current mortgage with their existing lender
3. Signing documents without reading them
4. Taking it to the limit – running up credit
5. Not planning for your mortgage application

1. Failing to choose the best product for your situation
There are many different types of loans out there. There are fixed- and variable-rate products, hybrid and no-frills mortgages, lines of credit, term options, amortization choices, and more.

And although choice is great, it can be quite overwhelming without expert advice. While one person would benefit from a variable-rate product, their neighbour may be better suited to a fixed-rate product. The key is to always explain your current situation and future goals in detail so we can select a product that best meets both your current and longer-term needs.

2. Automatically renewing with your existing lender
Although you may feel an allegiance with the current financial institution that holds your loan, they may not be able to offer you the best choices. When refinancing or renewing, it’s important to always shop the market for your best available option, much like you did when

securing your first mortgage. This ensures you end up with the best mortgage rate and terms customized to your unique situation. In many cases your bank will offer you the posted rate in hopes that you’ll simply sign and return the commitment without shopping around. Make sure you do your due diligence when refinancing and renewing. After all, this is your home, your mortgage and your money!

3. Signing documents without reading them
Never sign documents without reading them. If you’re unsure about something, always ask for clarification. Remember that you’re the one entering into the agreement, so you need to understand and agree with that commitment.

4. Taking your credit to the limit
Make sure that your credit balances are in your favour when it comes to your mortgage application. Lenders are looking for an appropriate debt-to-income ratio. In other words, you need to have more income than you have debt. Avoid running up a balance on your credit cards and pay down existing debts as much as possible.

5. Failing to plan ahead
If you know that you’ll need to obtain, renew or refinance a mortgage, it’s essential to plan for it by ensuring your credit is in order. If it’s not, start preparing. Don’t make any purchases on your credit cards that you can’t pay off and if you carry a balance on your credit cards, start paying them down. Refrain from making any large purchases before securing your mortgage. If you’re planning to buy a car, wait until after you have secured financing, as your debt-to-income ratio will rise and you don’t want this to occur while trying to secure a mortgage.

Understanding how the mortgage process works and how lenders qualify your loan will help you avoid the above mistakes.

Fewer Canadians are paying down their mortgages

Pay down my mortgage, I’d rather take a vacation

A new CIBC poll finds there has been a significant decrease in the number of Canadians using the low interest rates to pay down their mortgages faster.  While over half of Canadians with mortgages (55 per cent) are taking one or more actions to pay their mortgages down sooner, a similar poll last year had the figure at 68 per cent. However, while the numbers increasing payment value or frequency has dropped, there is an increase in the numbers making a lump-sum repayment. The new report also says that Canadians are expecting to 58 years old before they are mortgage-free.  So, if we’re not paying down out home loans, where is any spare money going? The report has shown a large increase in spending on home renovations (up 30 per cent) and vacations (up 20 per cent). “A mortgage is the largest debt most Canadians will take on in their lifetime, and being mortgage-free is an important goal for many,” says Barry Gollom, Vice President, Secured Lending and Product Policy, CIBC.  “With current low interest rates, this may be an opportune time to make progress against your mortgage – even a few small changes can make a big difference in the length of time it takes to pay off your mortgage and the amount you pay in interest charges.”

The government has done a lot to try to drive down the housing bubble that’s said to be happening in certain parts of Canada. They introduced new mortgage rules in an attempt to deter new home buyers this year.

The constant growth in house prices has increased the wealth of home owners because home owners’ equity has risen. The investment in property has proved to be quite lucrative for home owners, and this has proved to be quite attractive to new home buyers.

It is shown that in  the last 2 years, 61% of home buyers have made their purchases with down payments less than 20%.

The answer to this question is most likely the low interest rates available now, and that have been available in the recent past. The savings that come with the low mortgage rates available outweigh the cost of mortgage insurance. Low interest rates don’t last forever, and many Canadians are doing what they can to qualify for a low interest mortgages now with the goal of avoiding the risk of seeing the mortgage market enter a high-interest rate cycle.

What does this mean for the real estate market?

Low-interest rates driving home sales are a no-brainer, but what do the recent mortgage trends mean for the real estate market given the new mortgage rules? There is no concrete answer to this question yet. The Financial Post has has been reporting that the new rules have indeed slowed the housing market, but many critics disagree. Preliminary data has shown house prices have not fluctuated, but it is said that sales have slowed.

One thing is for certain, real estate is a cyclical industry. There are periods periods of high activity and periods of low activity. Market’s change from a “seller’s” market to a “buyer’s” market. Low interest rates will always help drive the market, but the new mortgage rules do present home buyers with serious blockage. It is unclear yet to see how things will pan out, but it will be interesting to see how things will develop in Canada’s ever-changing mortgage and real estate market.
By Cristobal Ravazzano