There has been a lot of chatter in the markets over the past week about fixed rates rising.  This is mainly due to the government bond yields continuously rising which in turn will impact fixed mortgage rates.  While many are enjoying the benefits of ultra low rates since the start of the pandemic, we could expect to see rates rise with lenders over the next week.  We have already had notification from two major banks that fixed rates are rising, some effective late last week and some effective this week.  It’s only a matter of time that they all follow suit.

With that said, it doesn’t necessarily mean time to panic.  We are still at record low variable rate mortgages for those that are a little more comfortable with risk and would rather take advantage of savings and lower payments.  While no one has a crystal ball, each borrower needs to do what is best for you and your risk tolerance. The way to protect yourself?

1. Secure a pre-approval if you think you are about to purchase a property, either a principal residence or investment property.  This will protect you for 120 days while you shop for further increases.

2.  Request a lock in agreement from your lender if you are thinking of locking in your variable rate.  This generally protects you for 7-10 days while you decide what to do.

3.  Set your payments higher on your variable rate so you have more going to principal.  Often we will advise people to set their variable mortgage payment to a fixed rate amount to protect you from rising rates when the day comes.

We are here to chat anytime you need assistance or would like some guidance with your new or existing mortgage.

~Trish~

When it comes to finding your perfect home, there are so many more options for potential homeowners! From a single-family dwelling to a townhouse to a modular home, the choices are seemingly endless. Before you start widening your search, let’s take a look at what makes these home types different – and which one is perfect for you!

• Single-Family Detached: This is a stand-alone house that sits on its own lot and is the most common type of home. As these are detached dwellings, they provide more privacy with less noise from neighbours. They also tend to be larger dwellings (complete with a yard!) which gives you the space and freedom to really make it your own.
• Single-Family, Semi-Detached: These homes are suitable for a single family and are typically attached to another house on one side. Semi-detached homes are often more affordable to both buy and maintain. With this affordability does come somewhat less privacy and protection from noise due to the shared walls on one side.
• Duplex: These structures contain two single-family units on separate levels and are great options for individuals looking to reduce home purchase and carrying costs – live in one unit, rent the second! This type of home also provides unique flexibility for older families, giving you the option to move adult children or aging parents into the second unit as needed. As expected, these units offer less privacy than single-dwelling homes and can sometimes have increased noise through the floor or ceiling.
• Townhouse or Row House: These are a row of single-family homes, which are connected on both sides to the next home (excluding the end unit, which is only connected on one side). Townhouses typically have private yards but, in some cases, it may be freehold or condo-style with shared ownership rights and responsibilities. However, these homes are typically more affordable and easier to maintain, though you may have to consider strata or maintenance fees. Similarly to duplexes, these home types have less privacy and may have noise from shared walls.
• Condominium: These are low- or high-rise buildings containing multiple apartment units. Condos are excellent starter homes for single adults, or couples, as they are affordable and require minimal maintenance. Some buildings even have shared amenities, such as a fitness center or swimming pool or party room. QUICK TIP: Always check for these amenities and if you would be interested in using them. If not, why pay for them? In this case, you might be better off finding a condo with less amenities and lower strata fees.
• Modular or Mobile Home: Growing in popularity are modular homes, which are prefabricated homes delivered to a home-site for installation. These homes are owned by the individual, while the land it sits on could be rented or owned outright. These types of homes are highly affordable and extremely flexible; if you relocate, you can sell the mobile home with the property or keep the home and relocate it! If renting land in a mobile home community, there are also those costs to consider.
• Carriage House or Urban Infill: A carriage house is located on the periphery of a single-family detached house. Similarly, are urban infill homes which are a modern solution to crowded cities. These homes are often located in interesting, urban environments and have their own character. They are also generally less expensive, but there is potential for noise pollution if you are in a busy location. Due to the size, there is also limited inventory and limited or non-existent yard space. But if you’re looking for something affordable and unique, these are a great option!

Finding the right home to suit your needs means considering your lifestyle and budget now, as well as where you’ll be a few years down the road. Want more information or need help deciding the best option for you? Contact me today to learn more about your options when it comes to buying and owning a home.

Part of trying to be the best team we can for our clients is staying aware of what questions can we easily answer and help with. The biggest topic we see searched is for mortgage calculators. We have an app that can help with that!

The My Mortgage Toolbox application was designed to make it simple for people like you to manage the mortgage process and access all the information you need!

Some of the great features included in this pocket-sized mortgage toolbox are:

• Payment Calculator
• All Possible Payment Frequencies
• Historical rates
• Stress Test Rules and Qualification
• Minimum Down Payment Calculator
• Total Monthly Ownership Calculator
• Closing Cost Calculator
• Affordability Calculator
• Maximum Loan Calculator
• Extra Payments Calculator
• Beautiful graphs and illustrations
• And more!

To download this app, you can visit My Website and click on the app link. You can also download it directly from the Apple App Store or Google Play.

If you have any questions, please let me know!

Have you been considering purchasing a home on a leasehold property? Living in Vancouver the market can be expensive, this is an option to owning with a smaller purchase price. There are drawbacks to this route. Like anything its always good to read the fine print.

A leasehold property means that the owner owns the house/townhouse/condo itself but not the land it is built on. That land is leased to the home owner by the land owner. Leasehold land is basically a plot of land that has been rented out to a developer, who then builds on the land and rents the property for a certain sum of money (or a portion of it as with an apartment building or condo). The leases on the plots of land are typically for extended periods of time (think up to 100 years or more), very often pre-paid up front, and often belong to either the City, or in many cases a corporation, a University or are First Nations Reserve lands.

Can I Get a Mortgage on a Leasehold Property?

Unfortunately there is no easy answer to this question. Generally speaking, however, leaseholds are more challenging. To begin with, most lenders will not approve a mortgage for a term or an amortization that is longer than the lease itself, which, depending on the lease’s expiration date can be problematic.

Any time the property is not a freehold strata there will be limits, but some lenders will be more open to the possibility. Your options will be reduced for a First Nations reserve leasehold, and private leaseholds are the most challenging. In many cases the only option may be a private lender but even that is not a guarantee.

When looking for mortgage on a leasehold property, the lender will look at everything: income, credit score, down payment, and of course the property itself. Because leasehold land is less expensive than freehold land for similar properties, you may be able to find homes in areas where you would not have been able to find anything similar at that same price point.

If you choose a leasehold property, you will be limited as to the lenders and mortgage rates. But to put things into perspective, as with any home that you buy there will be lenders that like it and lenders that won’t.

Read the fine print, make sure you know what you’re getting yourself into. We are always available to answer more questions on this topic.

With multiple offers and bidding wars now the new norm, our clients find themselves, in the heat of the experience, contemplating a subject-free offer.

Most of our clients are totally qualified. They have well established careers and businesses, amazing credit ratings, large down payment funds, etc. They are the type of clients who will almost certainly receive mortgage financing… no problem!

But there’s often an unanticipated hitch: the property itself.

No banker or Broker can give a client 100% assurance of financing without factoring in the actual property details. Until an appraisal is reviewed and approved, the application is not complete. There are some properties that some lenders simply will not lend against.

There are the obvious examples that lenders tend to exclude;

• Properties containing Asbestos, Aluminium wiring, Underground Oil tanks
• Re-mediated former grow-ops
• Re-mediated drug labs.

There are also less obvious ones;

• live-work units
• row-homes (attached non-strata properties)
• properties smaller than 450 sq ft
• properties on lease land, Government, First Nations, or Private.

When it comes to the appraisal process, there is more than the value to be considered.

Another major piece of the appraisal lenders look at is the ‘Remaining Economic Life or REL’ (as opposed to the ‘physical life’) of the home. This refers to how long this specific house is likely to remain standing on this property under the current care it is receiving.

Example: We have a perfectly habitable home for decades to come ─ lots of remaining ‘physical life’. The problem is that lenders are looking for remaining ECONOMIC life rather than the remaining physical life. The question is not “How long can that house be standing there?” it is “How long does it make economic sense for that house to be standing there given current market conditions?”

What if it is located in a neighbourhood where lots of the homes around it are older homes that are being purchased to be demolished and replaced with multimillion dollar homes. That could be a problem.

The REL is calculated by subtracting the Effective Age from the Total Economic Life.

65 years – 30 years = 35 years Remaining Economic Life (REL)

FEW lenders will lend on a home with a remaining REL of less than 15 years. Also, the effective amortization will be set at the REL minus five years, which drives payments sky high, and often leaves client unable to qualify for such large mortgage payments should they even want to sign on for them.

Clients would be wise to also minimize risk, by either writing offers that contain a ‘subject to inspection’ and a ‘subject to financing’ clause, or by having a conversation with one of us well in advance of writing a subject-free offer.

It’s easy to get caught up in the idea that comparing mortgage rates will guarantee your dollar is stretched further. While this may be true for particular situations, there are many scenarios where this strategy is not effective. Following are three reasons why it doesn’t always pay to make a decision based solely on rates.

Reason #1

Your long-term plan and risk tolerance should determine which mortgage product is right for you. This product may or may not have the lowest rate.

For instance, there are cases where lenders will offer lower rates for insured mortgages. With insured mortgages, however, you’re charged an insurance premium, which is usually added to the mortgage amount. But if you’re not planning on keeping the property for a long enough time to offset that cost, it may be better to take an uninsured mortgage with a slightly higher rate. The cost difference you will pay with the higher interest rate may still be less than what you may pay in insurance premiums.

As another example, if you prefer to budget for a consistent payment and can’t handle rate fluctuations, it may be better to go with a higher fixed-rate mortgage. If you think current rates are low enough and you will be living in your property for at least five years, it may be wise to also opt for a mortgage with a longer term.

Reason #2 

One of the biggest mistakes people make when merely comparing mortgage rates is failing to consider important factors such as prepayment options to help pay off the mortgage faster, whether secondary financing options are allowed, early payout penalties, or what fees are involved.

It’s not enough to simply compare mortgage rates because you have to know what “clauses” are contained within the mortgage deal. There may be cases where you will find a lender with the lowest rate and willing to pay for your closing costs, or even provide you with cash-backs after closing.

Reason #3

Lenders can change their rates at any time. As such, if you’re shopping for rates with one lender and then approach another that gives you a lower rate, it’s quite possible that the first lender has also dropped its rates. This is why it’s important to get pre-approved with a lender once you a mortgage that fits your needs. In some cases, you can secure your rate and conditions for up to 120 days.

These are just three reasons why it’s not enough to merely compare mortgage rates. The mortgage rate you may qualify for is also highly dependent on your credit score among other things. In order to get the best mortgage deals, you need to have solid credit.

Misconception No. 1: Your interest rate reflects the true cost of your mortgage.

Your annual percentage rate (APR) is actually the figure that represents the true cost of your mortgage. It is inclusive of your interest rate, points, mortgage insurance (when applicable) and other fees, including mortgage default insurance and lender fees. It does not include the cost of your homeowners insurance policy. The APR is typically higher than your interest rate because it incorporates the rate and the fees. In fact, when signing your mortgage approval, have a look at your APR instead of the interest rate because it gives a better sense of the total cost over the life of the loan.

Misconception No. 2: Mortgage rates are only released once per day.

Mortgage rates for all types of mortgages can change frequently, sometimes dramatically, throughout the day. Because of the rapid changes in mortgage rates and a lender’s ability to control what is offered, this is why it’s important to work with an experienced broker that has access to top lenders rate discounts.

Misconception No. 3: I must get my mortgage through the same lender I was pre-approved with.

A pre-approval is a conditional agreement that estimates the size of the home loan a lender would fund for you. It typically involves income verification and a credit check. However, you are under no obligation to proceed with the lender that gave you the pre-approval. For most of my clients, we can often have more than one pre-approval in place for you so you are protected if rates drop with another lender.

Misconception No. 4: You will almost always get the best mortgage interest rates at the bank where you do your everday banking.

While some banks do give their customers discounts, it’s unlikely your bank will offer the best interest rate available simply because you bank there. To get a competitive mortgage rate, work with a mortgage broker you trust so they can shop all lenders on your behalf and compare not only rates but terms as well.

Misconception No. 5: When taking out a mortgage with your spouse, lenders will look at each of your credit reports equally when determining the interest rate you qualify for.

When applying jointly for a mortgage, lenders will review each of your credit reports most commonly with Equifax and Trans Union. Each lender views credit differently, some will look at the primary applicants score more than the co-applicant and others have an average scoring system.  I will know immediately by looking at your credit score and report which lender will be the best fit.  Sometimes this can determine the best choice.

Misconception No. 6: You cannot get a mortgage with less than a 5 percent down payment.

It is a common misconception that you need to put down 10 percent, 15 percent or even 20 percent on a home, especially in light of the recent housing crash. But with as little as 5 percent down, you can often can be approved for a mortgage and pay mortgage default insurance in lieu of a higher down payment.  This premium gets added on to your mortgage amount.  In order to avoid it all together, you need 20% down.  With some banks, you can even borrow the down payment.

When in doubt, call with any questions, We are here to help!

This past Monday we were seen sponsoring a hole for the Vancouver Police Department Sergeant’s Golf Tournament hosted at the Pitt Meadows Golf Club. The day was a great day for golfing as well as getting to meet some of the sergeants. We had a couple of fun games set up at hole number one to interact with the golfer’s and in addition, let them know about our First Responder’s Mortgage Program. We wrote about this program not too long ago and have the link to that post below!

Connecting with our clients is a priority for our team. Having the opportunity to share about the programs we offer as well as we saw a few of our existing clients on the course, bringing in that community feeling that is so important to our team.

First Responder Mortgage Program™

You’ve been searching for a home; you find a home that has a lot of things on your list of what you are looking for. The only issue is that it requires some renovations and you don’t have the excess finances for those renovations. That’s where a purchase plus improvements mortgage comes in.

Many people are not aware that they can add renovation costs to their mortgage. CMHC did a survey and found that 37% of mortgage consumers that took part in the poll did not know about the purchase plus improvement mortgage options. This mortgage program covers not only the purchase price of your home, as well as the additional money to cover renovation costs. The cost of borrowing is put all into one payment, simplifying it to purchase your home and renovate it once the deal has closed.

How does this program work? And what are the steps to adding in the purchase plus improvements mortgage? The very first step would be to determine that improvements need to be done. An example would be if your home needs a new floor, paint, kitchen renovation, or appliances that need to be replaced? It’s recommended to seek 3 quotes from contractors to make sure that you are getting the best quality service and price. Speak with your broker about the improvements and they will line up the financing approval that will include these costs. Once you have determined the renovations and costs, you will go through the standard home buying process. After the sale closes and you take possession of the home, the lender will forward the agreed-upon costs of the renovations to your lawyer, who will hold that as cash in trust. Your contractor can start the renovations that were agreed upon with your lender right away. The work typically must be complete within 90 or 120 days. Once your reno is complete, the lender will send a representative to take a look at your home. Once approved, your lender will provide the money needed to pay your contractor.

For further details about this program or in the event this mortgage program isn’t what is right for you, your broker can go over other methods of  borrowing against home equity

Call us anytime to ask about the different programs and options for your mortgage needs.