How to Pay off Your Mortgage Faster.

Mortgage Tips Trish Pigott 24 May

When it comes to home ownership, many of us dream of the day we will be mortgage-free. While most mortgages operate on a 25-year amortization schedule, there are some ways you can pay off your mortgage quicker!

  1. Review Your Payment Schedule: Taking a look at your payment schedule can be an easy way to start paying down your mortgage faster, such as moving to an accelerated bi-weekly payment schedule. While this will lead to slightly higher monthly payments, the overall result is approximately one extra payment on your mortgage per calendar year. This can reduce the total amortization by multiple years, which is an effective way to whittle down your amortization faster.
  2. Increase Your Mortgage Payments*: This is another fairly simple change you can execute today to start having more of an impact on your mortgage. Most lenders offer some sort of prepayment privilege that allows you to increase your payment amount without penalty. This payment increase allowance can range from 10% to 20% payment increase from the original payment amount. If you earned a raise at work, or have come into some money, consider putting those funds right into your mortgage to help reduce your mortgage balance without you feeling like you are having to change your spending habits.
  3. Make Extra Payments*: For those of you who have prepayment privileges on your mortgage, this is a great option for paying it down faster. The extra payment option allows you to do an annual lump-sum payment of 15-20% of the original loan amount to help clear out some of your loan! Some mortgages will allow you to increase your payment by this prepayment privilege percentage amount as well. This is another great way to utilize any extra money you may have earned, such as from a bonus at work or an inheritance.
  4. Negotiate a Better Rate: Depending on whether you have a variable or a fixed mortgage, you may want to consider looking into getting a better rate to reduce your overall mortgage payments and money to interest. This is ideally done when your mortgage term is up for renewal and with rates starting to come back down, it could be a great opportunity to adjust your mortgage and save! This may be done with your existing lender OR moving to a new lender who is offering a lower rate (known as a switch and transfer).
  5. Refinance to a Shorter Amortization Period: Lastly, consider the term of your mortgage. If your mortgage is coming up for renewal, this is a great time to look at refinancing to a shorter amortization period. While this will lead to higher monthly payments, you will be paying less interest over the life of the loan. Knowing what you can afford and how quickly you want to be mortgage-free can help you determine the best new amortization schedule.

*These options are only available for some mortgage products. Check your mortgage package or reach out to us to ensure these options are available to you and avoid any potential penalties.

If you’re looking to pay your mortgage off faster, don’t hesitate to reach out to us at Primex Mortgages today! We can help review the above options and assist in choosing the most effective course of action for your situation.

You can reach us at 604-552-6190 or support@primexmortgages.com

CLICK HERE to book a quick call to review your mortgage with Trish!

Trish & The Primex Team

What You Should Know About Mortgage Amortization

General Trish Pigott 17 May

Mortgage amortization period is the number of years it will take you to pay off your mortgage. Depending on your choice of amortization period, it will affect how quickly you become mortgage-free as well as how much interest you pay over the lifetime of your mortgage (longer lifetime equals more interest, whereas a shorter lifetime equals less interest but also bigger payments).

Let’s start by looking at the typical mortgage industry amortization period. This is usually a 25-year period and is the standard that is used by the majority of lenders when it comes to discussing mortgage products. It is also typically the basis for standard mortgage calculators.

While this is the standard, it is not the only option when it comes to your mortgage amortization. In fact, mortgage amortizations can be as short as 5-years and as long as 35-years!

As mentioned, opting for a shorter amortization period will result in paying less interest overall during the life of your mortgage. Choosing this amortization schedule means you will also become mortgage-free faster and have access to your home equity sooner! However, if you choose to pay off your mortgage over a shorter time-frame, you will have higher payments per month. If your income is irregular, you are at the maximum end of your monthly budget or this is your first home, you may not benefit from a shorter amortization and having more cash flow tied up in your monthly mortgage payments.

When it comes to choosing a longer amortization period, there are definitely still advantages. The first is that you have smaller monthly mortgage payments, which can make home ownership less daunting for first-time buyers as well as free up additional monthly cash flow for other bills or endeavors. A longer amortization also has its advantages when it comes to buying a home as choosing a longer amortization period can often get you into your dream home sooner, due to utilizing standard mortgage payments versus accelerated. In some cases, with your payments happening over a larger period of time, you may also qualify for a slightly higher value mortgage than a shorter amortization depending on your situation.

The Primex Team will be able to help you choose the amortization that best suits your unique requirements and ensures you have adequate cash flow. However, it is important to mention that you are not stuck with the amortization schedule you choose at the time you get your mortgage. You are able to shorten or lengthen your amortization, as well as consider making extra payments on your mortgage (if you set up pre-payment options), at a later date.

Ideally, you are re-evaluating your mortgage at renewal time (every 3, 5 or 10 years depending on your mortgage product). During renewal is a great time to review your amortization and payment schedules or make changes if they are no longer working for you.

If you have any questions or are looking to get started on purchasing a home, don’t hesitate to reach out to us at 604-552-6190 or you can send us an email at support@primexmortgages.com!

You can also CLICK HERE book a call with Trish to review your mortgage!

Trish & The Primex Team

Self-Employed and Seeking a Mortgage?

General Trish Pigott 10 May

Approximately 20% of Canadians are self-employed, that’s about 7.9 million people. Making this an important segment in the mortgage and financing space. When it comes to self-employed individuals seeking a mortgage, there are some key things to note as this process can differ from the standard mortgage.

Qualifying for a Mortgage

In order to obtain a mortgage as a self-employed individual, most lenders require personal tax Notices of Assessment and respective T1 generals be included with the mortgage application for the previous two years. Typically, individuals who can provide this proof of income – and with acceptable income levels – have little issue obtaining a mortgage product and rates available to the traditional borrower.

Self-Employed Categories

  • For those self-employed individuals who cannot provide the Revenue Canada documents, you will be required to put down 20% and may have higher interest rates.
  • If you can provide the tax documents and don’t have enough stated income, due to write-offs, then you have to do a minimum of 10% down with standard interest rates.
    • If you are able to put down less than 20% down payment when relying on stated income, the default insurance premiums are higher.
  • If you can provide the tax documents, and you have high enough income, then there are no restrictions.

Documentation Requirements

For those individuals who are self-employed, you must provide the following, in addition to your standard documentation:

  • For incorporated businesses – two years of accountant prepared financial statements (Income Statement and Balance Sheet)
  • Two most recent years of Personal NOAs (Notice of Assessments) and tax returns
  • Potentially 6-12 months of business bank statements
  • Confirmation that GST/Source Deductions are current

Calculating Income

When it comes to calculating income for a self-employed application, lenders will either take an average of two years’ net income or your most recent annual income if it’s lower.

If you’re self-employed and looking to qualify for a mortgage, reach out to us at Primex Mortgages today! We can work with you to ensure you have the necessary documentation, talk about your options and obtain a pre-approval to help you understand how much you qualify for.

You can call us at 604-552-6190 or you can CLICK HERE to book a call with Trish!

Renovating to Save Money.

General Trish Pigott 3 May

Are you planning on buying an eco-friendly home, or plan to make improvements to your home for energy efficiency purposes? Did you know that there are many incentive programs to support households make these changes?

Under the Low Carbon Economy Leadership Fund, the federal government is helping British Columbians with financial incentives to help households save energy and reduce greenhouse gas emissions by switching to high-efficiency heating equipment. This is a part of the Government of Canada’s plan to achieve carbon neutrality by 2050.

CleanBC Better Homes has many rebate programs to help British Columbia residents make the switch to save energy. Many of these programs have rebates for upgrading heat pumps, insulation, windows/doors, heat pump water heaters and electric service upgrades. Click here to see their many programs to find out what you qualify for. You must apply for the grant before you begin renovating.

There is also the Canada Greener Homes Grant, which is an initiative that provides grants and a loan for EnerGuide evaluations for retrofits. They provide grants from $125 to $5,000 depending on what your home qualifies for, they also provide up to $600 that goes towards the total costs of your pre- and post retrofit EnerGuide evaluations. You must apply for the grant before you begin renovating. You can check your eligibility here.

But did you also know that if you qualified for mortgage insurance, each insurance company has their own program for refunds towards energy efficient upgrades?

At Canada Guaranty, one of Canada’s mortgage insurance companies, they have the Energy-Efficient Advantage Program. The program allows you to qualify for a 25% premium refund for borrowers who are purchasing an energy efficient home or making energy efficient upgrades. This is applicable to all Canada Guaranty mortgage insurance products. Applications for this refund must be submitted within 24 months of the mortgage closing date. Refunds are processed and mailed directly to the homeowner within 30 business days.

Mortgage Insurance Premium Refund Example (25%)

$475,000 Mortgage at 95% LTV Premium Payable*
Standard Premium Amount (95% LTV = Premium rate of 4.00%)

Energy-Efficient Premium Refund (25% of premium amount)

Total New Premium (minus refunded amount)

 $19,000.00

($4,750.00)

$14,250.00
*For the purpose of this example, the mortgage insurance premium does not include any applicable provincial sales tax.

Find out if you are eligible here.

At Sagen, another Canadian mortgage insurance provider, previously known as Genworth Canada, they have the Energy Efficient Housing Program. The program offers a refund of 25% of the mortgage insurance premium for borrowers purchasing an energy efficient home or making energy-saving renovations. This program is available to all homeowners with Sagen mortgage insurance products. To apply, you can complete the online application or download and mail the document to their headquarters. You can learn more about the program and apply online here.

Lastly, at CMHC, another one of Canada’s mortgage insurance providers, they have the program CMHC Eco Plus. Which again offers 25% of your mortgage insurance premium back. Find out your eligibility here.

If you’re thinking of renovating, or purchasing with improvements, call us today at 604-552-6190. Or you can book a time to chat with Trish here to find out how you can refinance your mortgage to start renovating your home.

 

Trish & The Primex Team 

 

How to Talk to Your Parents about Reverse Mortgages.

General Trish Pigott 26 Apr

Some more good information about Reverse Mortgages from the Dominion Lending Centres House Blog. 

Talking about money is one of the last taboos and can make people feel very uncomfortable – a feeling that’s only amplified when it comes to talking about your parents’ money. However, when a conversation is difficult, that normally means it’s worthwhile having; and getting transparency on your parents’ financial situation can help you help them make the best financial decisions for their future.

If you think a reverse mortgage would be beneficial to your parents, we’ve put together some top tips to help you broach the topic with them.

Sensitivity is Key

Your parents may feel uncomfortable talking about their finances with you, especially if they have any worries regarding their situation, so be sure to approach any financial talk with sensitivity. Listen to them, show empathy, give them the space to speak, and show your willingness to help them find the solution that works for them.

You might also want to reassure them that you have no expectations regarding inheritance and that you’d rather they live their retirement the way they’ve always wanted.

Choose the Right Time

Conversations around finances mustn’t be rushed so set a date for the conversation when you both have plenty of time. If possible, meet up face to face and give the conversation your full attention – don’t do chores as you talk.

Start the Conversation Right

There are several ways of broaching the topic of reverse mortgages with your parents. If you’re comfortable being direct, you could simply ask: “Mom, are your finances ok?”.

If you’d rather be more subtle, you could start the conversation in a more roundabout way. Perhaps you could ask about the house and whether there’s anything they’d like to update, or maybe you ask about their retirement and whether they’re able to do all the things they’d like to.

These conversations can lead naturally into a discussion about monthly income, assets, and savings and provide an opportunity to explore how the reverse mortgage can help them increase their cash flow and boost their standard of living – all while staying in their own home!

Come Prepared

While you don’t need to prepare an entire script, it’s a good idea to think about what you’ll say beforehand. Do some research on the CHIP Reverse Mortgage and get a clear idea of how it would benefit your parents. Think about the questions they might have and come up with some answers.

It’s also a good idea to bring resources with you such as a CHIP Reverse Mortgage brochure or our new book Home Run: The Reverse Mortgage Advantage, which takes a deep dive into using reverse mortgages as a strategic retirement tool.

Follow Up the Conversation

Don’t ask for a reaction or any kind of decision right away. Give your parents time to digest what you’ve spoken about, re-read any information you’ve given them, and think about any questions they have. Don’t expect one chat to accomplish everything, follow up in the next few days with a call.

Talking about finances is difficult at the best of times – even more so when the finances in question are your parents’. But hopefully, with the help of these tips, it’s a conversation you’ll now find easier to have. ~ This article was provided to DLC from Sue Pimento

If you have any further questions about reverse mortgages, or would like to see if this would work for you and your family, you can contact us at 604-552-6190, email us at support@primexmortgages.com or CLICK HERE to book a free call with Trish!

Trish & The Primex Team 

 

How to provide a tax-free gift to your children with the CHIP Reverse Mortgage.

Home Tips Trish Pigott 19 Apr

The current economic landscape can be challenging for young Canadians to navigate as they face uncertainty with heightened interest rates and inflation.

This can be frustrating as they are just starting to build their career, considering buying a home or starting a family. If you are a parent, you may be thinking about how you can help your child during this period.

The CHIP Reverse Mortgage by HomeEquity Bank is a sound financial solution that can help you support your loved ones by providing a tax-free gift.

The Gift of Early Inheritance 

As a parent, you may want to provide an early inheritance to see your adult children use the funds to improve their lives in a time of need.

By giving an early inheritance, you can avoid probate fees (estate administration tax) and save money by bringing you to a lower tax bracket (*HomeEquity Bank requires all clients to receive independent legal advice to review the mortgage contract and ensure they fully understand the terms and conditions). With an early inheritance, your children can pay for their wedding, start a business, pay off student loans, make a down payment on their home, and much more.

Speak to your tax specialist for more details.

How the CHIP Reverse Mortgage Works

You may have heard of people using a home equity line of credit (HELOC) or liquidating their investments to give an early inheritance. However, there are disadvantages associated with loss of earnings or tax payable when it is time to sell their investments.

The CHIP Reverse Mortgage by HomeEquity Bank allows you to unlock up to 55% of the equity in your home without any of these challenges. With the CHIP Reverse Mortgage, your investments remain intact, and no monthly mortgage payments are required. Therefore, your income is not affected, and best of all, the money you get from the CHIP Reverse Mortgage is tax-free!

Interested in giving a gift to your children or would like to know more about eh CHIP Reverse Mortgage? Contact us at 604-552-6190 to find out if this product is right for you and your family.

You can also CLICK HERE to book a free call with Trish to review your mortgage!

Trish & The Primex Team 

Bank of Canada’s April Announcement & What This Means For You.

General Trish Pigott 12 Apr

The Bank Of Canada announced this morning to keep their key overnight rate of 4.5%. As the Bank is still waiting to assess the impact of its previous eight consecutive rate hikes.

Previous Bank of Canada announcement also decided to keep the current interest rate. But It was threatened that it was conditional, making it clear that they will be ready to raise interest rates further if inflation doesn’t come down quickly enough.

Most forecasters expected the Bank to leave its key lending rate at 4.5% this Wednesday morning. Investors seem to agree, with trading on the overnight swaps market indicating less than a 10% chance of a change. But CIBC chief economist Avery Shenfeld says the bank may add cautionary language to its announcement that it could restart its inflation-fighting rate hikes again.

The Bank of Canada says they expect the annual inflation rate to fall to around 2-3% by mid-year. However, the poll suggests that inflation is still running at 5.2%, well over twice the BoC’s 2% target.

In March, the BoC became the first major central bank to stop its aggressive hiking cycle and is currently on a conditional pause. A majority of forecasters in the Reuters poll, 23 out of 31, believe that the rate will remain unchanged for the rest of 2023.

The BoC Deputy Governor Toni Gravelle said the Canadian banking system had a well-earned international reputation for stability, suggesting that policymakers are more focused on inflation and how the economy is performing.

Have questions about today’s announcement? Don’t hesitate to contact us at the office at 604-552-6190. Or you can CLICK HERE to book a quick call to review your mortgage!

Trish & The Primex Team 

Are you 55+?

General Trish Pigott 5 Apr

Are you 55+? Or are your loved ones retired?

Did you know that there is a great product for those 55+ to access their home’s equity tax free and not make any mortgage payments?

A reverse mortgage is a versatile and flexible financial solution for Canadians in their retirement years. Homeowners 55+ are unlocking their home equity for tax-free funds that don’t have to be repaid until they decide to sell their homes.

Contrary to popular belief, with a reverse mortgage the homeowner will remain on the title and ownership of the home. It will also pay off your conventional mortgage along with any other secured debt, and requires no monthly payments as long as the homeowner is living in the home. But HomeEquity Bank can secure up to three properties for a client.

Consider these four reasons Canadians 55+ turn to the CHIP Reverse Mortgage by HomeEquity Bank:

  1. Alleviate the stress of debt.

You are struggling with mortgage payments and credit card bills, prefer not to tap into savings or investment portfolios, or are incurring more debt due to unavoidable expenses.

  1. Pay for unplanned expenses.

You are faced with unexpected home repairs such as a leaky roof, retrofitting for mobility reasons, or need to hire in-home healthcare to assist with day-to-day.

  1. Want to live life to the fullest.

You have more time to do the things you want – but not the funds. For example, you want to purchase a summer property or take your dream vacation.

  1. Maintain a standard of living.

You are experiencing a shortfall in your retirement funds while trying to maintain the lifestyle you and your family are accustomed to.

 

If the above relates to you, don’t hesitate to contact us to find out what a reverse mortgage could do for your household.

You can contact our office at  604-552-6190 or you can CLICK HERE to book a call with Trish!

Never hesitate to contact us if you have any questions at all!

 

Trish & The Primex Team 

The New Tax-Free First Home Savings Account

General Trish Pigott 29 Mar

The Government has confirmed that as of April 1, 2023, financial institutions will have the ability to start offering the new Tax-Free First Home Savings Account (FHSA). This program allows prospective first-time home buyers the ability to save $40,000 on a tax-free basis and, like a Registered Retirement Savings Plan (RRSP), contributions will be tax deductible. When a client makes a withdrawal from the plan to purchase their first home, that withdrawal is non-taxable, just like a TFSA. This plan includes an $8,000 annual contribution limit and a $40,000 lifetime contribution limit.

For those purchasing with a partner/spouse who is also eligible under this program, both applicants will have access to the $8,000, thus doubling their lifetime contribution limit to $80,000.

Program Highlights

  • The FHSA and HBP (Home Buyers’ Plan – RRSP down payment program for First Time Buyers) can now be combined on the same qualifying purchase.
  • Applicants must be a resident of Canada and between the age of 18 and 71 years old.
  • Must be a first-time home buyer, defined as someone who has not owned a home in which they have lived at any time during the calendar year before the account is opened, or at any time in the preceding four years.
  • Owner of the plan would have the ability to hold a broad range of investments, just like an RRSP or TFSA.
  • Unlike an RRSP, contributions made in the first 60 days of a calendar year cannot be applied to the previous tax year.
  • Home buyers have up to 15 years from their first contribution or until their 71st birthday, whichever comes first, to use the funds to purchase a home.
  • Home buyers can carry forward unused portions of their annual contribution (up to max. $8,000) to subsequent years, as long as they do not exceed the lifetime limit of $40,000.
  • Funds that are not withdrawn from the plan to purchase a home can be transferred to an RRSP or RRIF on a tax-free basis.
  • Non-qualified withdrawals from the plan are permitted but will be subject to a withholding tax, just as they apply to taxable RRSP withdrawals.

For complete information, please click the link to view the Government Tax-Free First Home Savings Account web page.
If you have any questions on what this means for you, never hesitate to contact our office. Or you can click here to book a Mortgage Consultation call with Trish 🙂
Trish & The Primex Team

 

4 Key Things to Know about a Second Mortgage

General Trish Pigott 22 Mar

A second mortgage is a mortgage that is taken out against a property that already has a home loan (mortgage) on it. Generally people take out second mortgages to satisfy short-term cash or liquidity requirements, have an investment opportunity or to pay off higher-interest debts (such as credit cards and student loans) that a second mortgage might offer.

If you are considering a second mortgage for any reason, here are a few key points to keep in mind:

Second Mortgages and Home Equity: Your second mortgage and what you can qualify for hinges on the equity that you have built up in your home. Second mortgages allow you to access between 65 and 80 percent of your home equity, depending on your qualifications.

For example, if you seeking 80% Loan-to-Value loan (“LTV”):

House Value =                                                  $850,000

80% LTV (maximum mortgage amount)           $680,000

less: First Mortgage                                           ($550,000)

Amount Available Through Second Mortgage     $130,000

Second Mortgages and Interest Rates: When it comes to a second mortgage, these are typically higher risk loans for lenders. As a result, most second mortgages will have a higher interest rate than a traditional first mortgage. There is also the option of working with alternative and private lenders depending on your situation and financial standing.

Second Mortgage Payments: One advantage when it comes to a second mortgage is that they have attractive payment factors. For instance, you can opt for interest-only payments, or you can select to pay the interest plus the principal loan amount. Work with your mortgage broker to discuss options and what would work best for your situation.

Second Mortgage Additional Fees: A second mortgage often comes with additional fees that you should be aware of before going into the transaction. These fees can vary widely but often range from 1-2% of the mortgage amount.  These fees are in place as they are higher risk loans that do not make you qualify with the stress test guidelines with traditional mortgages. Other fees to consider include appraisal fees, legal fees to set up the second mortgage and any lender or broker administration fees (particularly with alternative or private lenders).

Second mortgages are a great option for many homeowners and, in some cases, may be a better solution than a refinance or a Home Equity Loan (HELOC). This allows you to keep more favorable terms in place with your current mortgage and avoid penalties to access your equity.

If you are interested in finding out if a second mortgage is right for you, contact us at Primex Mortgages today! We are more than happy to crunch numbers to figure out what would work best for you.

Trish & The Primex Team

 

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