HW Advantage https://www.hwadvantage.com Your Mortgage Specialist Wed, 03 Jun 2020 13:05:01 +0000 en-CA hourly 1 https://www.hwadvantage.com/wp-content/uploads/2013/11/favicon-apple.png HW Advantage https://www.hwadvantage.com 32 32 Managing Your Mortgage During COVID 19 https://www.hwadvantage.com/mortgage-education/managing-mortgage-deferral-during-covid-19/ https://www.hwadvantage.com/mortgage-education/managing-mortgage-deferral-during-covid-19/#respond Wed, 20 May 2020 12:54:23 +0000 https://www.hwadvantage.com/?p=1264 This has been a trying time both emotionally and financially for many people who may have seen their income reduced or eliminated entirely as a result of the COVID 19 pandemic. Mortgages are often the largest bill you have to pay each month, and therefore can be particularly worrisome. Most mortgage lenders are on board […]

The post Managing Your Mortgage During COVID 19 appeared first on HW Advantage.

]]>
This has been a trying time both emotionally and financially for many people who may have seen their income reduced or eliminated entirely as a result of the COVID 19 pandemic. Mortgages are often the largest bill you have to pay each month, and therefore can be particularly worrisome. Most mortgage lenders are on board with offering “assistance” to those who need it, but should you take it? What if your mortgage is coming up for renewal. Do you have a reason to worry? In this blog, we will cover only the basics of mortgages in the COVID 19 world and the various options to consider including mortgage deferral. Call us if you have any questions or concerns about new or existing mortgages. 

Mortgage Payment Deferral

In March 2020, mortgage lenders and banks began to allow borrowers to defer their mortgage payments for up to six months. It happened at a time when a lot of people were facing job uncertainty and much of the financial relief coming from the government to help businesses keep their employees was not yet in place. What was missing in the bank’s announcement was that mortgage deferral would come with an additional cost. Many homeowners were surprised to learn that while they were receiving relief from their payment, interest continued to incur which lengthens the total amortization of the mortgage and also increases the total cost of borrowing. Ultimately, the mortgage deferral option is helping many Canadians who are out of work, but because of the significantly increased cost to the borrower, we recommend it only be utilized as a last resort. Before making a decision it is important to discuss your options with your trusted mortgage broker. 

Pausing Accelerated Payments

One option to consider may be to simply adjust your mortgage payment frequency and type to make it more manageable. Making accelerated bi-weekly or weekly mortgage payments help you pay down your mortgage principal faster and this can be a great option for people that are paid regularly, bi-weekly or weekly, by their employer. However, if you are out of work or self-employed, changing your payment frequency for even a short time to ‘regular monthly’ may help by slightly lowering your monthly mortgage cost and improving cashflow.

Property Tax Relief

Many municipalities are allowing interest-free deferred property tax payments. This can save hundreds of dollars per month and help with cash flow for the short term. While you will eventually need to pay your property taxes back up to date and may incur additional interest costs, the costs will be significantly lower than deferring your mortgage payment. For example, the interest on annual property tax of $3000, $5000, even $10,000 a year will be significantly lower than the interest you’ll incur by deferring your payment on a mortgage balance of $300,000, $500,000, or even $1,000,000.

Lower Interest Rates

Borrowers with variable interest rate mortgages will benefit from reduced interest rates, in most cases, causing their mortgage payments to drop. The Bank of Canada quickly cut the prime interest rate by a total of 1.5% as the economy began shutting down. That meant that by the beginning of April, many borrowers had seen a similar drop in their interest rates, translating to lower mortgage payments. Also, fixed rates have decreased significantly over the past six months so we recommend looking into switching your mortgage to get the lowest rate possible and help with lowering mortgage costs. Contact us today to see if this is possible.

Refinancing, Re-amortizing, or adding a Secured Line of Credit

While considering all of your options it may be the best decision to refinance, re-amortize, or add a secured line of credit to your mortgage. To do this, you need to “income qualify” however it’s worth having a discussion with your broker about the pros and cons of these options before making a decision.

 Mortgage Renewals

Renewing a mortgage requires a much less rigorous approval process than applying for a new one. If your mortgage is up for renewal and you are currently unemployed you still should have nothing to worry about (as long as you are in good standing with your lender). Changes to employment status happen all the time and people don’t lose their homes over it. The downside of having to renew with your existing lender is that you do not get to shop around for the best mortgage rate or term available.

Get in touch with HW Advantage if you are concerned about your ability to make your mortgage payments or to qualify for a mortgage renewal. You may have more options than you know about, and we are here to help by phone or virtual appointment. 

The post Managing Your Mortgage During COVID 19 appeared first on HW Advantage.

]]>
https://www.hwadvantage.com/mortgage-education/managing-mortgage-deferral-during-covid-19/feed/ 0
Now There is Less to Stress About the Mortgage Stress Test https://www.hwadvantage.com/mortgage-education/less-to-stress-about-mortgage-stress-test/ Thu, 27 Feb 2020 15:40:34 +0000 https://www.hwadvantage.com/?p=1240 What Changes to the Minimum Mortgage Stress Test Rate Means to Potential Homebuyers Getting a mortgage in Canada is about to get a little bit easier when the Department of Finance’s criteria for mortgage approval (the mortgage stress test) changes in April. This is good news for people getting into the housing market or renegotiating […]

The post Now There is Less to Stress About the Mortgage Stress Test appeared first on HW Advantage.

]]>
What Changes to the Minimum Mortgage Stress Test Rate Means to Potential Homebuyers

Getting a mortgage in Canada is about to get a little bit easier when the Department of Finance’s criteria for mortgage approval (the mortgage stress test) changes in April. This is good news for people getting into the housing market or renegotiating mortgages. Stay with me here for an explanation, but first, some background.

Before 2018, when you applied for a fixed mortgage, your likelihood of being approved depended on what you could realistically afford at that snapshot in time. That meant assessing your ability to meet the financial obligation of the mortgage at the interest rate offered to you at that time. Neither lenders nor homeowners looked past the future of the offered term to estimate whether that mortgage would be affordable in the future, should interest rates rise.

What is the Mortage Stress Test?

With interest rates certain to fluctuate, the ‘stress test’ was implemented to try and better protect homeowners from getting themselves into situations where future higher rates would make their mortgage unaffordable, effectively pricing them out of their houses and default. The stress test rate (or qualifying rate) is the minimum interest rate that lenders must use to qualify you for a mortgage. If you are deemed able to handle your mortgage payments at the stress test rate or higher, then you are more likely to be approved.

When first put in place, the stress test took a lot of people, especially younger, first-time buyers out of the housing market. But it was helpful in reducing the risk of people losing their homes because they could no longer afford their mortgage payments at higher rates. It’s the method used to set the qualifying rate used in the stress test that is changing on April 6.

Ultimately, Good News for Homebuyers

Without going into the nitty-gritty of how the stress test rate was and will be set, suffice to say that the rate is expected to decrease with the new method. Previously it was based on an average of the 5-year mortgage rates published by the Big 6 banks. But the general consensus is that published rates are not a realistic measure since the financial institutions rarely offer their published rates, keeping the stress test artificially high. Beginning April 6th, 2020, the minimum stress test rate will be based on the rates reported in ACTUAL mortgage applications in Canada, making it less arbitrary and more in tune with the market. The minimum stress test rate will be set weekly and posted on the Bank of Canada website. The bottom line is that with a lower rate, more people will pass the stress test and qualify for mortgages. Good right?

It is good, especially for younger people who may not have qualified before. There could be a downside though, in that with an increase in the number of potential buyers comes an increase in housing prices. But according to the Department of Finance news release, one of the reasons for the change is to help stabilize housing prices from continued high growth. So what now?

As it turns out, the new method also allows the Minister of Finance some flexibility in adjusting the minimum stress test rate by adding a buffer to the calculated average rate. Increasing or decreasing the buffer changes the stringency of the stress test when it is deemed necessary to put the brakes on a hot market or to stimulate a cooling one.

Ultimately, the new method of determining the stress test minimum rate is going to allow more people who may not have qualified under the old test, to buy the home they want which is a positive change. So far, the changes coming in April only apply to insured mortgages, where the down payment is less than 20% of the value of the home. However, consultations are ongoing to also rework how the stress test is calculated for uninsured mortgages.

Need a Mortgage Broker?

Contact HW Advantage mortgage broker in Burlington, Oakville, and Hamilton to further unpack how the changes to Canada’s mortgage stress test affect you. We can help find the best mortgage rates and the perfect mortgage product for you. If you are applying for a mortgage for the first time, re-applying or looking for a second mortgage we can help. Call HW Advantage at 905-541-6961, schedule an appointment on our website or fill out the form below to get in touch.

The post Now There is Less to Stress About the Mortgage Stress Test appeared first on HW Advantage.

]]>
Get Your Mortgage Pre-Approval and Be Ready For The Spring Market in Burlington, Hamilton and Oakville https://www.hwadvantage.com/mortgage-education/get-your-mortgage-pre-approval-and-be-ready-for-the-spring-market-in-burlington-hamilton-and-oakville/ Thu, 06 Feb 2020 14:37:49 +0000 https://www.hwadvantage.com/?p=1232 Why a Mortgage Pre-Approval is an Important First Step As the real estate market heats up in Burlington, Hamilton, and Oakville this spring, be prepared to see more homes for sale (inventory) but also more people looking to buy (competition). If you’re planning to purchase a new home and want to be prepared for this […]

The post Get Your Mortgage Pre-Approval and Be Ready For The Spring Market in Burlington, Hamilton and Oakville appeared first on HW Advantage.

]]>
Why a Mortgage Pre-Approval is an Important First Step

As the real estate market heats up in Burlington, Hamilton, and Oakville this spring, be prepared to see more homes for sale (inventory) but also more people looking to buy (competition). If you’re planning to purchase a new home and want to be prepared for this market the first step in the buying process should be determining your budget and obtaining a pre-approval. This will provide you with an understanding of what you can afford, qualify for and give you the confidence to make a competitive offer. I can’t stress this enough: Do this before you start house shopping to avoid the disappointment of losing out on the perfect home!

Benefits of a Mortgage Pre-Approval

  1. Know your budget
  2. Lock in your interest rate for 120 days in case they rise
  3. Estimate your mortgage payments and plan accordingly
  4. Sort out any issue’s involving credit, income, downpayment up front
  5. Shop for your dream home with confidence

The Mortgage Stress Test in 2020

The mortgage stress test was launched in 2018 to ensure potential home owners could afford to make mortgage payments if interest rates were to increase or if their income decreased. At the time, the policy made sense. However, we’ve since learned that it’s causing future home owners to qualify for their mortgage at a higher interest rate despite receiving lower rates, which decreases mortgage affordability. This means that house shoppers are finding it more challenging to enter the real estate market then it should be for them. Prime Minister Justin Trudeau has requested his federal Finance Minister to review stress test qualifications and many are anticipating it to be lowered in 2020.

You’re in Good Hands With HW Advantage

Prepare yourself to shop in the competitive Burlington, Hamilton, and Oakville market by partnering with the industry leading HW Advantage team to get your pre-approval started. Preparation will pay off in the end and we make the no-obligation application process quick and easy. 

We offer:

  • Personal, Local Service (Hamilton, Burlington, Oakville, Mississauga, and surrounding areas)
  • Access to the Big Banks, Credit Unions, Mono-line Lenders, and Private Lenders – all in one place!
  • Preferred Lender Rates
  • Private Lending
  • Expert advice to guide you through the entire process
  • Connections to preferred Real Estate Lawyers, Realtor’s, Appraiser’s, Home Inspectors

Take the smart first step in the home buying process and turn to HW Advantage for personal and boutique mortgage advice.

Want to get started? Fill in our pre-approval form HERE or contact us by filling out the form below or by calling us a905-541-6961

The post Get Your Mortgage Pre-Approval and Be Ready For The Spring Market in Burlington, Hamilton and Oakville appeared first on HW Advantage.

]]>
The Advantage Beyond the Mortgage Close https://www.hwadvantage.com/mortgage-education/the-advantage-beyond-the-mortgage-close/ Mon, 02 Dec 2019 20:42:41 +0000 https://www.hwadvantage.com/?p=1216 How our team is committed to supporting our clients beyond the close of business As in any industry you will meet the good, the bad and the indifferent; and yes, that unfortunately does include the mortgage arena. However, when you meet a mortgage broker who truly cares and understands the value of working for the […]

The post The Advantage Beyond the Mortgage Close appeared first on HW Advantage.

]]>
How our team is committed to supporting our clients beyond the close of business

As in any industry you will meet the good, the bad and the indifferent; and yes, that unfortunately does include the mortgage arena. However, when you meet a mortgage broker who truly cares and understands the value of working for the client, you will never go without one again.

HW Advantage isn’t just our name, it’s our way of thinking. We look to provide advantages to our clients from their very first email or call and well beyond signing the final mortgage papers. We believe that when you close on your mortgage, that is only the start of our relationship. Unlike the big banks, it is our mission to save you the most amount of money and frustration over the lifetime of the mortgage.

The HW Advantage Promise When It Comes to Your Mortgage Close and Beyond

Getting the best mortgage for you is step one. Step two is making sure that your mortgage is working for you and your financial future. Here’s where our HW Advantage team differs:

Ongoing Management: We manage your mortgage in the same way a good financial planner manages your assets… constantly looking at new ways to save you money. Whether we recommend taking advantage of pre-payment options, accelerating your payments to pay down more principal each year, or consolidating higher interest debt, our number one goal is your financial health.

Access. We are available for a consultation or mortgage check-ups for all clients at any time.
Invest in Your Future. We track changes to the market and recommend ways to save on interest and / or use equity for investments.

Support. Life happens and we are on your team. We help clients manage mortgages and debt through challenging times, including separation, health problems, job loss, credit problems, etc… We are here for you.

Credit Improvement Strategy. Credit scores are so important in many areas of your life. We provide the advice and strategy you need to improve credit and eventually qualify for better rates, mortgages and more.

My Thoughts: If your mortgage broker or team is simply helping you get the mortgage you want and then you never hear from them again, that’s a red-flag that they don’t have your best financial health in mind. Find a broker who values your business enough to put in the work after you’ve signed.
 
Want to investigate a new mortgage close or renewal strategies? Contact us by filling out the form below or by calling us at 905-541-6961
 

Contact Us
Sending

The post The Advantage Beyond the Mortgage Close appeared first on HW Advantage.

]]>
Where Key Federal Parties Stand on Housing https://www.hwadvantage.com/mortgage-education/where-key-federal-parties-stand-on-housing/ Tue, 22 Oct 2019 18:02:08 +0000 https://www.hwadvantage.com/?p=1199 Know more before you vote on Monday, October 21st There is no argument that this Canadian Federal Election is one of the most contentious in recent history. With arguably two key parties vying for control, the key issues that Canadians care about most are often left unsaid, opting to attack character rather than discuss policy. […]

The post Where Key Federal Parties Stand on Housing appeared first on HW Advantage.

]]>
Know more before you vote on Monday, October 21st

There is no argument that this Canadian Federal Election is one of the most contentious in recent history. With arguably two key parties vying for control, the key issues that Canadians care about most are often left unsaid, opting to attack character rather than discuss policy.

We are here to help you look at each parties’ housing platform before you go into the voting booth on Monday. Here’s what the party leaders have released with regards to the Canadian housing market:
 

Liberal Platform

With a platform based on helping the middle class retain more of their money and climate change, the Liberal Platform, led by Justin Trudeau, has a combination of tax breaks and energy efficient bonuses for Canadian families. They pledge to:

  • Provide tax cuts that will save the average person another $292 / year
  • Expand the first-time home buyer incentive for people in Victoria, Vancouver and Toronto, expanding the value of a qualifying home from $500,000 to nearly $800,000
  • Increase first-time home buyers’ access to RRSPs for down payments up to $35,000
  • Crack down on property speculation with a consistent national tax on foreign-owned vacant properties, and a joint effort with provinces to combat financial crimes in real estate
  • Build 100,000 affordable homes over the next 10 years
  • Retrofit 1.5 million homes with energy efficient upgrades
  • Make Energy Star certification mandatory for all new home appliances, as of 2022
  • Give interested homeowners and landlords a free energy audit
  • Create a low-cost national flood insurance program
  • Offer interest free loans of up to $40,000 for Canadians looking to implement weather-based upgrades
  •  

    Conservative Platform

  • A little harder to pin down as they have not released their full platform, but this is what we know that Andrew Scheer is saying will benefit Canadian home buyers and home owners, specifically younger Canadians:
  • Remove federal GST from home heating fuels
  • Increase mortgage amortization from 25 years to 30 years for first time home buyers
  • Review the Liberal-introduced Stress Test and remove for renewals altogether
  • Combat money laundering in Real Estate
  • Implement 20% “Green-Homes” tax credit for up to $20,000 over two years for energy-saving home upgrades
  • Make federal real estate available for housing developments
  •  

    NDP Platform

    A party for the people, Jagmeet Singh has been vocal about advancing the needs of middle and lower-class families. In housing, they would look to:

  • Create 500,000 affordable housing units over 10 years and
  • Introduce 30-year amortization period for first-time home-buyers
  • Double the Home Buyer’s tax credit to $1,500 for first time buyers
  • Waive the federal portion of the GST/HST on new affordable rental units
  • Implement a national 15-per-cent tax on home purchases by those who aren’t citizens or permanent residents
  • Support communities to increase the building of co-ops, social and non-profit housing; amount not specified
  • Invest $40 million in the Shelter Enhancement Program over the four-year term
  •  

    Green Party Platform

    With a strong position on climate change and Canada’s role, the Green Party, led by Elizabeth May, is campaigning on a vision of Canada where homes are powered by renewable energy by 2030. Similar to the NDP, their families-first approach

  • Legislate housing as a legally protected fundamental right
  • Eliminate the recently introduced first-time home-buyer grant with a possible replacement
  • Restore tax incentive for the building rental housing
  • Build 25,000 affordable units and renovate 15,000 more every year
  • Create a dedicated federal housing minister position to tailor long-term affordable housing solutions within each province
  •  

    My Thoughts:

    There is a clear delineation between the left and the right when it comes to building affordable housing, green energy rebates/incentives, and the regulation or de-regulation of the mortgage/banking system. Depending on where you stand on these issues should help you determine which party to support. All sides seem to agree on wanting to make it a little easier for first-time home buyers to enter the market (likely after witnessing the results of the stress test), which I think is positive. However, what politicians say and what they do is any one’s guess. Don’t forget to VOTE!
     
    *Sources: BNN Bloomberg, CBC, Globe and Mail, Macleans.ca
     
    Want to investigate mortgage or renewal strategies? Contact us by filling out the form below or by calling us at 905-541-6961

    The post Where Key Federal Parties Stand on Housing appeared first on HW Advantage.

    ]]>
    New Government Shared Equity Plan… What is the Risk? https://www.hwadvantage.com/mortgage-education/new-government-shared-equity-plan-what-is-the-risk/ Thu, 19 Sep 2019 14:08:40 +0000 https://www.hwadvantage.com/?p=1190 The Government of Canada recently introduced an incentive program for first-time home buyers that has many people outside the industry wondering if it’s a good move to help the next generation get into a home, or if it doesn’t really quite fill the need. Essentially, the government is providing a first-time home buyer incentive in […]

    The post New Government Shared Equity Plan… What is the Risk? appeared first on HW Advantage.

    ]]>
    The Government of Canada recently introduced an incentive program for first-time home buyers that has many people outside the industry wondering if it’s a good move to help the next generation get into a home, or if it doesn’t really quite fill the need.

    Essentially, the government is providing a first-time home buyer incentive in the form of a Shared Equity Plan. This means that the government will have a shared interest in your home and benefit from any increases in value or lose from any dips. They say this is to help first time buyers qualify for a home and reduce some of the expenses related to mortgage and closing costs.

    The parameters to qualify for this shared equity incentive are as follows:

  • Available for those with a combined income of $120,000 or less and who have never purchased a home before
  • It will provide first time home buyers with an additional 5% of purchase price for standard home or up to 10% from those purchasing new construction
  • Regardless of type of home, borrowers must have their own minimum 5% down payment
  • Total down payment amount (home buyers down payment + incentive) must be less than 20% of the value of the home
  • Maximum mortgage amount + incentive amount cannot exceed 4x income.
  • Must repay the loan at time of sale or at the end of the 25-year term
  • You can pay back this loan at any time, with no prepayment penalty
  • The repayment amount will be calculated based on the home value at time of repayment and an appraisal will be required
  •  

    The Numbers Behind the Shared Equity Plan:

    As enticing as this might sound to people struggling to get approved for a mortgage, a mortgage broker will give you the real numbers behind the incentive. Depending on your situation, what seems like a great short-term solution, may end up costing more than you’re willing to invest in the long term. While there is no interest on the loan, the government does get 5% of any increase in the value of your home when it’s time to repay the loan. On the other hand, they also share in any loss if the property’s value declines.

    Let’s look at this example… you decide to purchase a home priced at $400,000 and receive an incentive of $20,000. Let’s look at a few different pay-back scenarios:

    Scenario 1: You decide to repay the loan two years later. The home is now appraised at $500,000. That means that you have to pay the initial $20,000 with another $5,000 based on the increase in the value. So, you will have to repay $25,000. Not too bad.
    Scenario 2: You decide to repay the loan 2 years later, but the home has decreased in value, now appraised at $375,000. Rather than the $20,000 initial investment, you only are required to repay $18,750.
    Scenario 3: Congratulations on your growing family. That means you have outgrown your home and decide to move five years later. With your home now valued at $650,000, in addition to the $20,000 you owe another $12,500 for a total loan repayment of $32,500.
    Scenario 4: You decide to move 10 years later and your home value is now $900,000. What once seemed like a reasonable $20,000 interest-free loan, now costs you $45,000 to repay.

    My Tip: If you are certain that you can facilitate a quick turnaround on the loan payback, this might be worth-while to investigate. If you think that you won’t be able to pay for years, I would highly recommend working with a mortgage broker to find a financial institution who will approve your mortgage. If you are aiming too high, a mortgage broker can point you in the right direction to ensure you are getting in the home that is right for you.
     

    Want to get started? Contact us by filling out the form below or by calling us at 905-541-6961

     

    Contact Us
    Sending

    The post New Government Shared Equity Plan… What is the Risk? appeared first on HW Advantage.

    ]]>
    The Pros & Cons of Co-Signing https://www.hwadvantage.com/mortgage-education/pros-cons-co-signing/ Thu, 04 Apr 2019 16:24:41 +0000 https://www.hwadvantage.com/?p=1123 When Qualifying for a Mortgage or Renewal is Just Out of Reach With stress tests and current home prices still out of reach, many Canadians are looking at co-signing in order to buy or re-finance their home. While this might not even be an option for some, for others there still seems to be a […]

    The post The Pros & Cons of Co-Signing appeared first on HW Advantage.

    ]]>
    When Qualifying for a Mortgage or Renewal is Just Out of Reach

    With stress tests and current home prices still out of reach, many Canadians are looking at co-signing in order to buy or re-finance their home. While this might not even be an option for some, for others there still seems to be a lot of mis-information out there on this topic, so let me set the record straight.

    Q. What is a co-signer?

    A. A co-signor is an individual who agrees to be named on both the mortgage and the title of a property to help another borrower qualify for the required mortgage financing.

    Q. What are the main reasons that I should consider a co-signer?

    A. Most often co-signers are engaged when a homebuyer can not qualify for a mortgage alone, typically based on income or job situation, such as those who have been self-employed for less than 2 years or those who don’t have enough tenure at their current job. The addition of a co-signer can help satisfy the income requirements needed to qualify for a mortgage or can also be enlisted for their strong credit, which can strengthen a mortgage application.

    Q. I have heard the terms Co-signer and Guarantor. What is the difference between the two and which makes the most sense for those looking to buy their first home?

    A. While adding a co-signer is the most common of the two, a guarantor, generally a spouse or immediate family member, is not named on the title of the property but is named on the mortgage. In most cases this person needs to occupy the property as their principal residence and have a valid reason for not being named on the title. For example, if one spouse is an owner of a corporation in an industry that is vulnerable to lawsuits, they will want to protect their home against future claims by omitting their name from the title. However, as a guarantor they are still recognized by the lender for their income and credit.

    Q. Who can co-sign? Does it have to be a parent?

    A. Most big banks and AAA lenders want immediate family members to be co-signers, however there are exceptions when friends and more distant relatives can be considered.

    Q. What is required of a co-signer?

    A. A co-signor has the same requirements as the main borrower(s), such as standard proof of income and credit. This will include the co-signer’s liabilities and other mortgages. Basically, the co-signer is not just another signature, but they have to be in good financial standing to help you improve your application.

    Q. If my financial situation changes, can the co-singer be removed from my mortgage and property title?

    A. This really depends on the lender, which is why we always recommend talking with a  knowledgeable mortgage broker when deciding whether to use a co-signer. Some lenders will allow the co-signer to be removed penalty-free within the mortgage term as soon as the main borrower(s) can show they can qualify on their own. There is typically a small legal fee (roughly $300-$500 depending on how expensive the art is in your lawyer’s office) to assume the co-signer off the title of the property. This is definitely something you’ll want to understand before signing on the bottom line.

    Q. Are there any drawbacks for the co-signer?

    A. Generally there is no financial burden to the co-signer unless the main borrower(s) defaults on mortgage or property tax payments. In this case the co-signers credit will be negatively impacted and the bank or municipality will go after the co-signer for payment. The other consideration is that if a co-signer is requiring credit of their own, the mortgage payment obligation, even if they are not the one actually responsible for making the payment, will be considered in qualification. There are ways to mitigate that impact but it requires further discussion.

    Q. Does getting a cosigner impact any first time home buyer incentives in Ontario

    A. Generally the lawyer registering the mortgage will set up first-time buyers as 99% owners of the property and co-signers as 1% owners. This has to be agreed upon by all parties involved but that way FTB will receive 99% of any rebates.

    My Tip: In today’s economic and housing climate, co-signers are becoming more of a reality for many first-time homebuyers. However, do not try to negotiate a mortgage, where a co-signer is involved, without the help of an experienced broker; there are too many details that could impact the parties involved, including the ones you read above. Plus, there may be some tips and tricks to getting that first mortgage approved without the need for a co-signer. Our HW Advantage team can talk you through your options and then you can weigh your options and make an informed decision.

     

    Want to get started? Contact us by filling out the form below or by calling us at 905-541-6961

    Contact Us
    Sending

    The post The Pros & Cons of Co-Signing appeared first on HW Advantage.

    ]]>
    January Mortgage Forecast https://www.hwadvantage.com/mortgage-education/january-mortgage-forecast/ Tue, 12 Feb 2019 19:36:44 +0000 https://www.hwadvantage.com/?p=1005 January Mortgage Forecast – 2018 was Stressful, but 2019 will be Hopeful  Let’s just say it… last year sucked for those most vulnerable trying to get ahead in the home ownership game. Thanks to the newly introduced “stress test” and rising rates, both fixed and variable, the housing market cooled considerably. Even as we prepared […]

    The post January Mortgage Forecast appeared first on HW Advantage.

    ]]>
    January Mortgage Forecast – 2018 was Stressful, but 2019 will be Hopeful 

    Let’s just say it… last year sucked for those most vulnerable trying to get ahead in the home ownership game. Thanks to the newly introduced “stress test” and rising rates, both fixed and variable, the housing market cooled considerably. Even as we prepared to welcome in a new year, with all the hope that it so often brings, we were hit with the reality of North American markets trending downwards and whispers of a recession. 

    As we head into 2019 and look at the mortgage forecast, we expect to see the conversation around consumer debt take centre stage. For the first time in a while, Canadian households are feeling weighed down by their debt as rising interest rates take them further down that slippery slope.

    In 2018, the Bank of Canada increased its benchmark rate three times ending at 1.75 percent. Another two or three hikes sounded all but confirmed for 2019, but recently the Bank of Canada has cooled discussions of rate hikes and we are now hearing whispers of potential rate stabilization or even (gasp) decreases. 

    For the first time in a while, households are having to renew their mortgages at higher rates than what they last renewed at. Mainly because rates in general are up, but also because of the Government “Stress test” rules which have made it more challenging to shop around and qualify for the best rate… So now, for some, it’s a struggle to renew altogether at a rate that is feasible for their family to afford.

    A survey last fall by Ipsos Canada on behalf of insolvency trustee MNP found one in three Canadians worry that rising rates could push them into bankruptcy.

    There Are Options

    While many banks and lenders continue to make life difficult for many of my clients (they still don’t like you if you are self-employed), based on the property types they’ll lend on, and pricing according to the loan-to-value of the mortgage, there are still a number of options out there. Banks, credit unions, mono-line lenders and private lenders all have different pro’s and con’s so be sure to work with a trusted mortgage broker as you consider all your options for you and your family.

    We, as brokers, can help Canadians navigate this changing home ownership landscape. We know that households don’t have to play by the rules set by the big banks and can start to push back and get the mortgage that meets their needs. 

    My Tip: Continue to be optimistic. We are hearing rumblings of lower than expected Bank of Canada interest rate changes. We are also seeing provinces push back on the stringent rules surrounding the Stress Test altogether. The conversations are continuing and the stress test has already become a topic for this years federal election so stay tuned and informed! 

    Want to get started? Contact us by filling out the form below or by calling us at 905-541-6961. 

    Contact Us
    Sending

    The post January Mortgage Forecast appeared first on HW Advantage.

    ]]>
    Changes to HELOC Rules Now In Effect https://www.hwadvantage.com/mortgage-education/changes-heloc-rules/ Wed, 05 Dec 2018 11:50:18 +0000 https://www.hwadvantage.com/?p=985 HELOC Home Equity Line of Credit The big banks have slowly and quietly introduced new regulations that could affect some 3.1 million Canadians with home equity line of credits. So what changes are we talking about here and how can it impact you? Well, for those looking to qualify for a mortgage – new or […]

    The post Changes to HELOC Rules Now In Effect appeared first on HW Advantage.

    ]]>
    HELOC Home Equity Line of Credit

    The big banks have slowly and quietly introduced new regulations that could affect some 3.1 million Canadians with home equity line of credits.

    So what changes are we talking about here and how can it impact you?

    Well, for those looking to qualify for a mortgage – new or renewal – you may now be asked to prove that you can pay your debt based on your mortgage amount, plus your FULL line of credit available balance amount. In past years if you had a $100,000 line of credit and you owed zero dollars, it wouldn’t even be taken into consideration. If you owed, $10,000, that amount would be added onto your mortgage amount to determine the total amount of debt to be re-paid. Today, that full $100,000, regardless of how much you have used, will be added to your mortgage to determine eligibility.

    Let’s look at a scenario with some basic numbers added in:

    2017: You were applying for a mortgage of $375,000 and had a HELOC of $200,000, but have only used $10,000, so you would be applying for a mortgage based on your ability to pay back $375,000 at a rate of 2.99% and a HELOC of $10,000 at a rate of 5.34% over a 25-year amortization period. You would proving you could afford roughly $1830.86/month.

    2019: Same scenario looking ahead to January 2019. You now are looking at proving you can pay back the $375,000 at 5.34% and a HELOC limit of $200,000 at a rate of 5.34% over that same amortization period. You would now be looking at proving you could afford roughly $3,456.38/month.

    Pretty significant when you put numbers to it. This is another rule change making it harder for Canadians to be able to purchase additional properties (rental or vacation homes) and will hinder many peoples ability to “shop around” for the best mortgage option/rate at their renewal dates or for refinancing. Keep in mind, banks are well aware of this fact and we’ve already seen banks offering high rates to their renewal customers because they know a large number of their clients will be unable to qualify elsewhere.

    On the surface, these changes are being introduced to help Canadians manage their debt-load; especially in times of financial flux. TD Canada Trust announced their new approach on November 5th stating that the changes were “prudent underwriting guidelines that reflects concerns around consumers’ abilities to manage debt.” However, these changes indirectly give Banks a considerable amount of power over their existing borrowers and hope that the government considers this as they roll out future regulations. Options and competition are always a good thing and this change may be pushing our country in the wrong direction if not handled carefully.

    For those who have been turned down for a mortgage under these new regulations, or expect to be rejected, there are some workarounds:
    1. Cancel your HELOC all together and take it out of the equation
    2. Lower your HELOC if you are close to qualifying, but just out of reach
    3. Find a co-signer to help you qualify
    4. Work with a broker to find another lender… never settle for the first answer

    My Tip: Working with a broker can help you identify risk-reduction strategies before you apply. If you can’t qualify for a mortgage with your current line of credit, consider lowering your limit rather than cancelling all together. You still might want that safety net for life’s mishaps.

    Want to get started? Contact us by filling out the form below or by calling us at 905-541-6961.
    Please call me with any questions.
     

    Contact Us
    Sending

    The post Changes to HELOC Rules Now In Effect appeared first on HW Advantage.

    ]]>
    Is a Reverse Mortgage Right for You? https://www.hwadvantage.com/mortgage-education/reverse-mortgage-right/ Wed, 24 Oct 2018 09:07:29 +0000 https://www.hwadvantage.com/?p=960 By retirement, often the largest asset our clients own is their home and that often plays into their retirement strategy. Early in our relationship, we ask specific questions surrounding retirement and work with our clients to ensure we understand their short and long-term financial goals as it pertains to home ownership. Life happens and we […]

    The post Is a Reverse Mortgage Right for You? appeared first on HW Advantage.

    ]]>
    By retirement, often the largest asset our clients own is their home and that often plays into their retirement strategy. Early in our relationship, we ask specific questions surrounding retirement and work with our clients to ensure we understand their short and long-term financial goals as it pertains to home ownership.

    Life happens and we know that not everything goes according to plan, so by retirement, sometimes there may be a need for additional revenue. A little extra boost to help you live the retirement you have always wanted.

    The concept behind a reverse mortgage is simple – it allows homeowners to borrow against their home while maintaining ownership. However, the actual decision to pursue a reverse mortgage is anything but simple. It requires concentrated thought and careful weighing of the pros and cons as it relates to your overall goals.

    For those looking to subsidize their retirement with additional finances, either short or long term, a reverse mortgage may be a viable option. The premise is that the lender makes payments to you, the borrower, either as a lump sum or in monthly payments. The borrower, if aged 55+, can qualify for a reverse mortgage and access up to 50 per cent of the home’s value (lender depending). Considerations for qualification:

  • Your Age (Also spouses age)
  • Value of Home
  • Current Interest Rates
  • Other assets
  • Credit
  •  
    A key benefit is that the borrower only pays interest on the amount that has been withdrawn rather then on the full amount like you’d see in a standard refinance. A lower interest rate is what can make this option so tempting, despite the higher rates.

    While a reverse mortgage is enticing because it provides tax-free income as a short-term solution, there are those that fall into the trap of going into a reverse mortgage unprepared and uneducated. Our HW Advantage team won’t let that happen. We will take time to make sure you understand:

    Fees: Often the fees associated with a reverse mortgage leave people experiencing “sticker shock.” The lender fees and the interest rates are typically higher than standard mortgage rates/fees. It is important to balance the long-term cost with your long-term financial goals. This might not be worth the price.

    Payback: Clients have to be aware that if they decide to leave the home, for whatever reason, they are responsible for paying back the mortgage borrowed.

    Impact on Your Estate: In the case of death, you will be leaving your loved ones with less total equity in the home than you might like.

    If, after understanding the financial and emotional implications, you are considering a reverse mortgage, ask yourself:

  • Have I considered all my options?
  • Have I talked with my spouse / children about what this could mean?
  • Are you open to selling your home and moving to a less expensive property?
  • What do you want to leave behind for your loved ones?
  •  
    My Tip: If you can find other revenues to help you manage your retirement funding let’s talk about those first. Using the equity in your home as a retirement strategy does have its drawbacks and we always recommend talking with your family prior to making any decisions.

    If you have thought through all the options and want to discuss strategy, our HW Advantage team should be your first call. We have the expertise to handle the most complicated scenarios and the compassion to walk you through this, often emotional, process.

    Want to get started? Contact us by filling out the form below or by calling us at 905-541-6961.
    Please call me with any questions.
     

    Contact Us
    Sending

    The post Is a Reverse Mortgage Right for You? appeared first on HW Advantage.

    ]]>