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Variable Mortgage Rates – Variable Mortgage Rates Canada

Variable mortgage rates are a hot topic and have been for several months now (as of writing – August 5th, 2020). The Bank of Canada key interest rate (policy rate) now sits at a level last seen in over a decade, since the most recent 3 key interest rate cuts took place between March 4th and March 27th (1 planned cut followed by 2 emergency cuts). Subsequently, the banks’ prime lending rate has dropped from 3.95% to 2.45%. What does this all mean?

As a result, those currently under variable mortgage rates are reaping the benefits immediately. Variable rates have dropped, and mortgages have become more affordable. Homeowners are finally seeing reductions in their monthly mortgage payment after 3 years of prime rate increases, followed by 18 months of a steady 3.95% prime lending rate.

For further context, the price of variable mortgage rates is directly tied to the banks’ prime lending rate. As you have likely noticed, variable rates are typically priced at a discount (ex. ‘prime minus 0.50%’). In other words, you can take the banks prime lending rate and subtract the contract discount given (ex. 0.50%) to determine the rate being offered at any given time. Historically speaking, variable mortgage rates are more favourable than fixed mortgage rates.

But currently, we are in a recession. Does that change anything?

We have tumbling markets and a bumpy recovery ahead of us. In fact, the worst, in terms of economic impact, has yet to come according to some analysts. All speculative of course. The question you likely need to know is: Are variable rate mortgages, or fixed rate mortgages, best for me right now?

First and foremost, variable mortgage rates are for more risk tolerant borrowers. Why? Simply put, uncertainty in rate fluctuations does exist. As your variable mortgage rates fluctuate with the prime lending rate, you can imagine that this rate choice is not for the faint of heart. However, rates tend to stay low when the economy is messy, so if you agree with analysts’ projections that we are heading into a much deeper recession, variable is way to go for the next 3-5 years.

Two pros if you are willing to give variable mortgage rates a shot:

  1. By default, variable mortgages yield the lower of the 2 possible penalty clauses (3 months interest rather than interest rate differential), thus making them more attractive
  2. Variable mortgages (through most banks) allow you to lock into current market fixed terms anytime throughout the duration of your term (good escape clause)

If you are considering variable mortgage rates over the traditional fixed terms, here are two recommendation we’ll make to help ensure you’re not swinging in the dark:

  1. Market watch: Keep a good eye on the market and keep up to date with economic outlooks whenever you can. Most times, if something volatile is happening, a skim through the latest financial headlines will clearly indicate this.
  2. Build a trusting relationship with your broker: That’s us! We have the resources to help. And while we can’t predict the future, we can provide industry insight and trend to help make decisions with more confidence

 

We have all the information you need of variable mortgage rates… or any rates for that matter, among a broad and deep knowledge of everything related to mortgage financing. Call us today at (905) 455-5005.

2020 Popular Search Term – Lowest Mortgage Rates Canada

According to trending mortgage search terms in Ontario (2020), Ontarians are looking for information on the lowest mortgage rates. Here is what you need to know to get the Lowest Mortgage Rates Canada:

To ensure that you can get the lowest mortgage rates Canada, you need to KNOW a few things and you need to DO a few things! This will require some effort and discipline on your part, but if you keep this top of mind, there’s no doubt that you’ll be able to get the lowest mortgage rates available at any given time.

  1. No credit slip ups! – Credit is a huge component to how mortgages are priced. To a degree, the higher the credit score, the lower the interest rate. If we could deem one variable to be more important than any other when trying to get the lowest mortgage rates, credit would be that variable because it’s the one you (as the borrower) have full control over. Credit scores are important, but it’s only half the battle folks. Since the bureau reports so much data over so many years, its important to make sure your history is clean (and for 18-24 months at the least). If you need tips on improving blemished credit, we can help with this.
  2. Down payment – Believe it or not, yes, this has some bearing when it comes to getting the lowest mortgage rates Canada. Most borrowers do not know this. Anything less than 20% or anything greater than 35% yields the lowest mortgage rates. Under these two scenarios, the mortgage is ‘insurable’ (default insurance that is) thus allowing the bank to price your mortgage rate even lower (usually with applicable promos). This scenario only applies to purchases of course.
  3. Term – The lowest mortgage rates are dependent on the length of term chosen. With most banks, 5-year terms are usually discounted more than 1-4 year years terms… while a few banks might favour their 1-4 year pricing. Explore all options between 1-7 years to really make an informed decision if the mortgage rate is your primary focus.
  4. Amortization – In most cases, the lowest mortgage rates will be applied to 25-year amortization or less. Anything greater than 25-year amortization (26 – 30 years) will yield a higher mortgage rate (or rate ‘premiums’ as the banks refer to)
  5. Rate type – Depending on the market at the time you’re seeking out your mortgage options, the lowest mortgage rate will be dependent on which type of rate you choose – fixed mortgage rate or variable mortgage rate. It’s rare to see both types on par with one another. If you favour the lowest rate over all other factors involved in the decision-making process, you will be more inclined to choose the type of rate that has the lowest offer at that time.
  6. Negotiation – This applies mostly to mortgage renewals, but negotiation comes into play when getting the lowest mortgage rate. Don’t just accept the first renewal offer … heckle them down, use leverage, use comparisons… even use threats (but keep it strictly business!)

 

Finally, how will you know when you’re getting the lowest mortgage rates Canada? When you feel content. It’s a simple as that. If you don’t feel confident in being able to do this on your own, that’s what we do daily! We’re always happy to help educate and provide the guidance necessary to get you the best! Call us now at (905) 455-5005.

Mortgage Brokers Near Me?

We get it, you’re looking for someone to help you with your mortgage needs and just like when searching for other goods & service providers, you want to find someone near you because…. well, it’s naturally ideal.

But the when it comes to “Mortgage Brokers near me”, you’d be surprised to learn that your proximity to a mortgage broker may not be necessary when looking for a suitable and experienced mortgage broker to serve your needs. This is especially true in our current times of social distancing and other lockdown measures that we are encouraged to take to protect of communities.

In fact, all Mortgage Brokers near me (including myself) are licensed by the Financial Services Regulatory Authority (FSRA) of Ontario, which means we’re all licensed to broker mortgages in all of Ontario. Also, since most of our work can be conducted remotely via telephone, email, web sessions, etc., the idea of finding mortgage brokers near me becomes less relevant to the fulfillment of your mortgage needs.

At CMS Canadian Mortgage Services, we have been breaking the barriers of distance for our clients by operating as a mobile brokerage since 2012. Our process has always allowed us to offer services that accommodate our clients in their respective lives. Whether we meet in person or through virtual means, our primary objective is to provide you with the right solutions to meet your needs. So, the next time you search mortgage brokers near me, remember that the closest broker to you may not be the one to get you the best possible solution.

Don’t be afraid to click on CMS Canadian Mortgage Services because even if we’re not the closest to you, we can help you just the same and possibly more efficiently! (905) 455-5005

Our service areas include (but not limited to):

Brampton, Mississauga, Etobicoke, Toronto, Milton, Caledon, (and most of the Greater Toronto Area)

Prime Rate Canada: Important Dates/Changes to Make Note Of

October 2018 to March 2020 – Prime Rate Canada: 3.95%

 

Change (March 4, 2020) – Bank of Canada cuts it’s key interest rate by 0.50% (half a percentage point) to 1.25% from 1.75% as an attempt to soften the economic impact of the Covid19 outbreak.

Result – Prime Rate Canada: Drops from 3.95% to 3.50%

 

 

Change (March 13, 2020) – As the pandemic worsens, Bank of Canada delivers an emergency rate cut by another 0.50% (half a percentage point) from 1.25% to 0.75%… a level last seen in August 2017.

Result – Prime Rate Canada: Drops from 3.45% to 2.95%

 

Change (March 27, 2020) – The economy takes a huge hit and panic kicks in as governments start taking stricter control over the Covid19 pandemic. Bank of Canada delivers another emergency rate cut, again by 0.50% (half a percentage point) from 0.75% to 0.25%… a low last seen in 2008-2009

Result – Prime Rate Canada: Drops from 2.95% to 2.45%

 

It’s no coincidence that the Key Interest Rate and Prime Rate Canada have dropped amid the pandemic. The pandemic poses great threats to the economy… something we’re all experiencing by this point in time.

But what does a drop on the Prime Rate Canada mean for you, and what questions should you be asking industry professionals if you have a mortgage or are looking to purchase? Should you choose a Fixed or Variable rate as a result of the new Mortgage Prime Rate?

Watch our video and give us a shout for more information. (905) 455-5005

Mortgage Deferral Aka Mortgage Payment Deferral & Relief

As many of our clients have heard, the major banks such as TD Bank, RBC, Scotiabank, CIBC, BMO, etc. have announced their efforts to help those clients in need of some mortgage payment relief. When this was first announced earlier in March 2020, the banks proposed that they would offer mortgage deferral to their clients. Although this is technically true, it is only approved on a case by case basis. In other words, the banks would need to assess each request for mortgage payment deferral, and this suggests not everyone would qualify for this mortgage payment relief.

After some time, we’ve learned that the banks are only offering this as a last resort and will opt to explore other available options. For example, most of the banks offer mortgages with features such as “skip a payment” or “mortgage vacation”. These features allow homeowners to defer their mortgage payment for a period of time as described in their mortgage agreement. If, however you have already exhausted these features, then the bank would move to see if you would qualify for further assistance.

As mentioned before, this remedy is not for every single request by homeowners, but rather for those who absolutely need such relief by deferring their mortgage payment. This means, that you would need to have suffered a direct temporary/permanent loss of job or income as a result of the Covid-19 pandemic. There is some grey area in the qualification of those who would be approved for mortgage deferral by the banks, but borrowers would need to prove their stated hardships. For example, if you are claiming that you are experiencing a loss of income due to a recent job loss or are self isolating due to contracting covid-19, then you may need to provide a letter from your employer or a health professional that substantiates your claim…

OUR RECCOMENDATIONS FIRST:

  1. Assess how the covid-19 pandemic has affected your monthly cashflow
  2. Reduce unnecessary expenses within your household
  3. Look into your available mortgage features (I.e. “skip a payment”)
  4. Look into your available Savings

IF YOU ARE STILL IN A BIND, THEN:

  1. Gather documentation that can substantiate your current hardships
  2. Call the bank that holds your mortgage to discuss your options

If you are in a situation that requires you to seek mortgage deferral from the banks, then you are likely to be more successful with your request by following the steps outlined above. If you can demonstrate to the banks that you have exhausted all other options, then they are more likely to work with you on your mortgage deferral request

If you have any questions regarding mortgage deferrals (mortgage payment deferral) or would like to explore other options such as refinancing your mortgage or leveraging your equity through these difficult times, please give us a call today – 905.455.5005.

What is a mortgage pre-approval?

At face value, it seems self explanatory, yet we often get asked frequently: What is a mortgage pre-approval?

People are right to ask though and that’s because there is some ambiguity behind mortgage pre-approvals. What is a mortgage pre-approval really? What can I do with one? Do I need to worry about financing, even with a mortgage pre-approval in hand?

We answer by first saying: A mortgage pre-approval is a great ‘starting point’, for all intents and purposes, but is not intended to be depended on solely when making important mortgage related decisions.

Confused by this? Let’s explain further…

What IS a mortgage pre-approval?

  • A mortgage pre-approval is a financial assessment of your maximum affordability calculated using variables such as: income, credit score, debt ratios, current market rates (or pre-approval rates), etc.
  • It often comes in the form of a formal bank or brokerage letterhead stating the important pre- approval details allowing you to search the market for properties with a much higher level of confidence
  • They typically confirm a specific approval interest rate being offered, the duration of that rate hold (ex. 90 days, 120 days, etc.) and standard terms and conditions for financing fulfillment
  • Mortgage pre-approvals are offered for purchases (both insured or uninsured) and are often not provided for refinances or mortgage switches
  • Your two biggest takeaways from the mortgage pre-approval will likely be:
    • Your maximum affordability
    • The rate approval & rate hold duration

What is a mortgage pre-approval NOT?

  • A mortgage pre-approval is not a binding contract. Ultimately, this means the bank providing the pre-approval can withdraw their interest at any time using their discretion
  • A mortgage pre-approval is not the ‘end all be all’ for the mortgage process. During the pre-approval stages, the most important steps in the approval process have not yet taken place (ex. verbal employment verification, in depth review of income documents, appraisals, etc.)
  • Pre-approvals are not approved by the mortgage default insurer (assuming you are putting less than 20% down) who ultimately gives the final approval on financing
  • A mortgage pre-approval is NOT intended to be used as leverage to forego a condition for financing in your offer to sellers. The act of foregoing conditions for financing are done at the sole discretion of the buyers (we cannot stress this enough)

To sum up in 3 points – What is a mortgage pre-approval best used for?

  1. To understand your maximum affordability or purchasing power (to ensure you are purchasing within your limits)
  2. To enter the real estate market with confidence (knowing the rate, mortgage payment, amortization, affordability, debt ratios, etc.)
  3. To familiarize yourself with financing conditions that need to be met (examples, but not limited to: letter of employment, pay stub, business license, articles of incorporation, notice of assessment, T1 generals, etc.)

If you need a mortgage pre-approval to get started, we offer that service and guidance! We’ll make it easy for you and will ensure you enter the market with confidence.

Call us today at (905) 455-5005.

 

Second Mortgage Process

Second mortgages are a very common request, especially in markets with growing home appreciation and increasing household debt. Reasons for needing this type of mortgage are endless and if used correctly, they can help achieve many different goals which can be outlined in some of our previous blogs. Among questions surrounding the specifics of the mortgage itself (rates, terms, standard conditions, etc.), we’re frequently asked what the ‘second mortgage process’ is like, as applicants tend to worry as to whether they’ll qualify given their recent denial from their home branch. This blog is catered to the second mortgage process more so than the typical terms and conditions of the mortgage.

The second mortgage process is (or can be) a quick and painless one. Unlike your traditional forms of financing (i.e. banks or alternative-A lenders), second mortgage lenders often require only basic documents to get started and can be funded (money in hand) in as little as 48 hours for rushed deals, or 4-5 business days at a much more relaxed pace.

If we break the second mortgage process into 4 identifiable steps, it will resemble the standard mortgage process that you’re likely already familiar with but would happen much quicker and with far less requests. The second mortgage process could be outlined as such:

  1. Initial Consultation (15 – 20 minutes phone call):

Discuss with your mortgage broker your request (loan size), short and long terms goals for the use of the second mortgage and other important details pertaining to your existing first mortgage/finances

  1. Provide Basic Documentation (15 – 30 minutes):

Provide basic documents via email such as – mortgage application, mortgage statement, property tax bill and valid home insurance policy. Sometimes, but less frequent, additional documents might be needed.

  1. Meeting with us, your broker! (30 minutes in person meeting):

This usually can take place within 24 hours of providing the application. The convenient part is, we can come to you! This is where we discuss all details of your second mortgage financing and is the most important part of the second mortgage process.

  1. Sign with the Lawyer (30-minutes in person meeting)

Since this is a mortgage, it must be legally registered to the property as such. Prior to receiving the funds, you’ll need to meet with the lawyer to sign the second mortgage closing package.

We understand that at first glance, this might seem like an overly simplified second mortgage process, but the truth is, it’s very simple. With the right guidance, resources and strategy, the second mortgage process is far less complex than that of traditional financing. In step 1, 3, 4, you’ll be given the opportunity to learn about the specific details of the second mortgage itself, thus being able to make informed decisions (Mortgage rate, term, payments, terms, etc.)  and will be prepared for each following step.

 

How to Get a 2nd Mortgage with Bad Credit

If you’re wondering how to get 2nd mortgage with bad credit, then you’ll soon realize that there’s less hurdles with 2nd mortgages compared to 1st mortgages. This is because, unlike 1st mortgages, 2nd mortgages don’t put equal consideration on credit vs income vs equity. In fact, 2nd mortgages relay heavily on the available equity in the home with respect to the 2nd mortgage request.

In order to get a 2nd mortgage with bad credit, we first ask our borrowers to answer the following questions:

  1. What is the balance of your existing 1st mortgage?
  2. What is the loan amount that you are looking to get with the 2nd mortgage?
  3. What is the approximate value of your home, conservatively speaking?

These questions help us determine the “loan-to-value” which is simply a percentage value, calculated by dividing the sum of your total mortgages (including the requested loan), over the value of your home. In current market conditions, most private lenders will consider 2nd mortgages with bad credit to 80%-85% loan-to-value. In most cases, if the LTV does not exceed 80%-85%, then private 2nd mortgage lenders will typically approve the mortgage request, with less emphasis on the other aspects of the application (income, credit, etc.) …

Below is an example of a loan request from a client who is seeking a 2nd mortgage to consolidate some debts. His responses to the 3 questions above were:

  1. Existing mortgage = $232,000
  2. Request = $45,000
  3. Home Value = $375,000

Based on this information, the LTV would be 73.8% and as a result, the request would be approved…

With that being said, it is still important to us that our clients can demonstrate the ability to carry the monthly mortgage payments based on their income sources or by providing an exit strategy for the repayment of the loan at the end of the term. At CMS Canadian mortgage Services, we want to ensure that the solutions we provide are best leveraged for the needs of our clients. We also want to also ensure that these solutions assist (not add) to their respective challenges that they seek to solve…

If you would like to learn more about how to get a 2nd mortgage with bad credit or if you are interested in applying, please feel free to call us today – 905.455.5005