Bank of Canada’s July Announcement & What This Means for You.

General Trish Pigott 12 Jul

The Bank of Canada announced this morning that the key interest rate will be raised another 25 basis points. This morning’s announcement will be the fifth interest rate announcement of 2023, but the 10th rate hike since the start of the tightening in 2022, with three more scheduled for the rest of this year. The next announcement is September 6th.

Prime Rate is now at 7.20%, the highest it’s been in 22 years.

Last month’s announcement raised the key rate another 0.25%. These rate hikes are supposed to relieve inflation. Canada’s inflation rate rose to 8.1% in June, but Statistics Canada reports that consumer spending has remained high. The annual change in the Consumer Price Index measures inflation.

The BoC’s goal is to keep inflation around 2%, but their forecasters are currently predicting inflation will return to 2% closer to mid 2025. The Forecasters say that this is due to excess demand, higher than expected housing prices and higher than expected prices for tradable goods.

Experts weren’t sure if this rate hike would bring another rate hike or hold. Experts shared that if the BoC increased the rate by another 0.25%, we should see a decrease in prices in the housing market.

Over the past two years, prices of goods and services have risen rapidly, corrupting the dollar’s purchasing power and making life less affordable for Canadians. Raising the rates makes it more expensive for households and businesses to borrow money and service their debts. Higher rates will eventually reduce demand for goods and services, slowing the pace of price increases.

Interest rate changes often fully impact economic growth inflation 18 to 24 months after an announced change.

CIBC Senior economist Andrew Grantham seems to disagree with the interest rate hikes, calling recent hikes “unnecessary” and a “mistake.” Grantham said that current consumer spending is still lower than pre-pandemic levels, suggesting that much of the growth in consumer spending is levelling out to regular numbers since the pandemic lock down.

If you are concerned about increased mortgage payments or how this might affect you, please do not hesitate to reach out. We can analyze your current situation and assess your goals and needs for the upcoming years and find the best option for you. We have been able to help many clients switch from Variable to Fixed these past few months to save them from the increasing payments out of their control. If you are wondering how restructuring your mortgage can help free up cash flow or manage your debt, then let’s chat!

 

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

604-552-6190

support@primexmortgages.com

Trish & The Primex Team

9 Tips for a Successful Appraisal

Home Tips Trish Pigott 5 Jul

Before banks or lending institutions can consider loaning money for a property, they need to know the current market value of that property.

An appraiser’s job is to check the general condition of your home and determine a comparable market value based on other homes in your area. Appraisals are required for any buy or sell situation.

To help make the appraisal as smooth as possible and ensure you are getting top market value, check out the tips below:

  1. Clean Up: The appraiser is basing the value of your property on how good it looks. A good rule of thumb is to treat the appraisal like an open house! Stage it as you would a home for sale, clean and declutter every room, vacuum and tidy to show the appraiser that the property is well cared for. Where applicable, remove any personal items that might make the appraiser lower the value of your home.
  2. Curb Appeal: First impressions can have a significant impact on an appraisal. Spending time ensuring the outside of your property, from your driveway entrance to the front step, is clean and welcoming can make a difference. Yard work and removing debris and garbage will make a big difference.
  3. Visibility: The appraiser must be able to see every room of the home, with no exceptions. YES, every room, including outbuildings, garage, closets, basement… Refusal to allow an appraiser to see any room can cause issues and potentially cause a decline of your file. If there are any issues with any spaces in your home, be sure to take care of them in advance to allow the appraiser full access. NOTE: If tenants are in your home, ensure you give them the appropriate amount of notice for access. If the appraiser can not get access to every room, they will have to return and can be an added expense to you for the return trip.
  4. Upgrades and Features: Ensuring the appraiser knows any upgrades and features can go a long way. Make a list and include everything from plumbing and electrical to new floors, new appliances, etc. This way, they have a reference for what has been updated and how recent or professional that work was done. Knowing the age of the roof and HVAC items like the water tank is essential. Also, ensure the breaker box is MIN 100amps as most lenders cannot finance a home with amps under 100; older homes from the 1930 area are generally only 60amps.
  5. Be Prudent About Upgrades: While the bathroom and kitchen are popular areas, there are better options than the be-all-end-all for getting a higher home value. These renovations can be pretty costly, so it is a good idea to be prudent about how you spend your money and instead focus on easy changes such as new paint, new light fixtures or plumbing and updated flooring to avoid breaking the bank while still having your home look fresh. Removing clutter, adding a new coat of paint and doing a deep cleaning will help make these spaces shine.
  6. Know Your Neighbourhood: You already know where you live better than the appraiser. Looking at similar homes in your neighbourhood and noting what they sold for will give you a ballpark. Keep in mind that an appraiser has to use comparable solds in your area and not current active listings. Generally they will collect 3-6 comparables over the last 90 days.
  7. Be Polite: The appraiser is there to get in and get out, so let them have the run of the house while they are there. Please do not follow them around, avoid asking them too many questions or making too many comments, and simply be prepared should they have questions. Once they have completed the review of your home, that is an excellent time to bring up any comments you might have. Remember, the onsite inspection usually is only 15 minutes through the house. The rest of the time is spent gathering data and reviewing sales and other forms of research to create the appraisal report.
  8. The Report: Even though the customer pays for the appraisal, the report belongs to the lender that it is prepared for. The reports are not given to the customer directly. Don’t be offended if your mortgage broker or the lender does not share the report with the homeowner, this is policy for all appraisal firms and lenders.
  9. Know The Costs: Every appraiser charges differently. There are a number of factors involved with the range in cost of an appraisal.  Whether it is an acreage property, large square footage or unique overall, those are a few examples of upcharges. Travel time can also be an extra charge for an appraiser if they have to travel to get to your location. You will pay for your appraisal usually through an online portal with your credit card information.

Remember to contact us at Primex Mortgages if you have questions about your existing home or mortgage or want to sell and relocate! CLICK HERE to book a quick call to review your mortgage!

Trish & The Primex Team

Contact us today!

604-552-6190

support@primexmortgages.com

Breaking Down the Components of Your Credit Score for a Better Mortgage.

General Trish Pigott 28 Jun

A credit score is a three-digit number based on credit history and financial behaviour. Lenders use it to assess the risk of lending money to an individual. It is crucial in determining loan eligibility, interest rates, and loan terms. A higher credit score indicates that the person is more likely to repay their debts on time, while a lower credit score suggests that they may have a history of missed payments. Your credit score is a vital aspect of your financial health.

Several factors can affect your credit score, including your payment history, credit utilization rate, length of credit history, types of credit accounts, and new credit inquiries.

Your payment history is one of the most significant factors affecting your credit score. Lenders want to see that you make on-time payments consistently. Late payments, missed payments, and defaults can significantly lower your credit score.

Another factor that affects your credit score is your credit utilization rate. This is the amount of credit you use compared to your available credit limit. Lenders prefer to see a credit utilization rate of 30% or lower. If you have high balances on your credit cards, it can hurt your credit score.

The length of your credit history is also an essential factor. Lenders like to see a long and positive credit history. It can hurt your credit score if you are new to credit or have a short credit history.

Finally, new credit inquiries can also affect your credit score. When you apply for credit, the lender will check your credit report, which lowers your score each time someone checks it. Lenders may be concerned that you are trying to live beyond your means if there are too many credit checks or inquiries in your credit report.

There are two main credit bureaus in Canada: Equifax and TransUnion. These private companies store and share information about how you use credit.

Your credit report may contain your history of non-sufficient funds payments, bankruptcy, debts sent to collection agencies, registered items such as car liens, fraud alerts, and identity verification alerts. It will also contain information such as when you opened your account, how much you currently owe, if you have missed payments, if you make your payments on time,  and if you have ever exceeded your credit limit.

Your credit score plays a crucial role in determining your eligibility for a mortgage. A low credit score can make it challenging to secure a mortgage or result in higher interest rates and less favourable terms. On the other hand, a high credit score can increase your chances of getting approved for a mortgage and save you a significant amount of money in the long run. Understanding the components of your credit score and taking steps to improve it before applying for a mortgage is essential.  Learn more about your credit score here.

At Primex Mortgages, we can help you repair your credit score while shopping for a home. We can create a plan to raise your score to appeal to more favourable lenders and get the best rate out there for you.  CLICK HERE to book a call with Trish.

Trish & The Primex Team

 

Will Prime Rate Increase?

General Trish Pigott 21 Jun

The Bank of Canada recently announced a rate increase of 0.25% on June 7th. Making their prime rate 6.95%, a 22-year record high.

The prime rate affects variable-rate mortgages and personal & home equity lines of credit. The increase translates into roughly $15 monthly for every $100,000 worth of mortgage debt for variable-rate mortgage holders.

The Bank of Canada announced this rate hike because of its need to control the excess spending in this economy and the rising inflation rate.

Economists expect to see another rate increase in July of 0.25% again.

But this doesn’t only affect variable interest rates. The fixed-rate impacts mortgage borrowers through bond yields, which determines where fixed rates stand. The rise in the Bank of Canada rate hike and the expectation of another increase next month caused bonds to plunge and yields to surge to a 15-year high. This resulted in lenders increasing their fixed rates over the past several weeks. This impacts new buyers and those with a mortgage renewal coming up.

The earliest rate cuts are now expected in the summer of 2024.

It’s a similar scenario south of the border, where additional rate hikes are now likely despite yesterday’s rate pause by the Federal Reserve. New projections show they expect the benchmark rate to rise by another half a percentage point, while other officials believe it needs to move even higher.

The latest rate hikes have made fixed mortgage rates under 5% a “rare find.” Almost every mortgage product has rates that start at 5% and 6%. It is recommended that anyone in the market for a mortgage act right away to get a rate held for them. We will likely see more hikes to fixed-rate mortgages.

Anyone who is in the market for a mortgage and is still deciding what fixed rate term to choose, we are here to remind you that you can break your mortgage term. It does come with a penalty, but it can be broken. If you lock into a fixed-rate mortgage now, and the rates start to come down in the upcoming years, you are more than welcome to break the mortgage term and lock into a new rate.

Especially those with a variable rate mortgage who are struggling to ride this wave of rate increases are encouraged to talk with a mortgage expert here at Primex Mortgages to see if locking into a fixed rate mortgage makes sense for you.

Trish & The Primex Team

Contact us today!

604-552-6190

support@primexmortgages.com

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

Read more about the mortgage industry at www.canadianmortgagetrends.com

 

What to know about Mortgage Renewal Time.

General Trish Pigott 14 Jun

Once there are about three months left in your mortgage term, your lender will send you a renewal letter. While most borrowers sign and send back their renewal without ever shopping around for a more favourable interest rate, this is the best time to check out your options.

Since your term is ending, it is perfect to shop the market or redo your mortgage without penalty! If you have wanted to change your lender, obtain a lower rate, extend your amortization or even change your mortgage from a fixed rate to a variable rate (or vice versa). At Primex Mortgages, we can help by shopping the market for you and finding the best product that suits your unique needs.

If you are considering switching lenders, you must inquire about any existing life insurance or other policies, as this could be affected if you change lenders. You should also be aware that NEW insurance could be more expensive as you are reapplying, and your circumstances (age, health) will have changed since your initial mortgage term and insurance plan was signed.

We can help answer all your refinancing questions and shop the market for a better rate! With access to over 90 lenders, we can quickly compare mortgage rates and products and help you switch! With over 20 years of experience, our team understands every mortgage is unique. We can help guide you in the right direction. Contact us to make your renewal a stress-free process.

Let us help! Contact us today at 604-552-6190 or support@primexmortgages.com.

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

Trish & The Primex Team

The Bank of Canada Announcement & What This Means For You.

General Trish Pigott 7 Jun

This morning it was announced that the Bank of Canada increased its rate by .25%. The rate went from 6.70% to 6.95%. The central bank’s key interest rate has not been this high since April 2001.

After two consecutive rate pauses from the Bank of Canada, the bond market and the GDP are trending upward, putting more weight on the Bank of Canada. Almost expecting another rate increase rather than continuing to pause.

Several factors led to the bank’s decision to raise the key interest rate, including economic growth in Canada. Gross Domestic Product exceeded expectations in the first quarter of this year, growing by 3.1 per cent.

Despite the fact that most households have less disposable income, consumer spending is not slowing at a pace that gives the Bank of Canada confidence that inflation will tick downward. The Spring real estate market has had no shortage of open house activity and multiple offer scenarios once again.

Canada’s economy was stronger than expected in the first quarter of 2023, with GDP growth of 3.1%. Consumption growth was surprisingly strong. In addition, spending on interest-sensitive goods increased and, more recently, housing market activity has picked up.

In April, inflation increased for the first time in 10 months to 4.4%. The bank still expects inflation to decline to 3% by this summer, but concerns remain that inflation could get stuck above the 2% target.

“Goods price inflation increased, despite lower energy costs,” reads the statement from CTV News. “Services price inflation remained elevated, reflecting strong demand and a tight labor market.”

Rates have been moving all week resulting in Fixed Rates rising slightly due to the increase to the Bond Market. With the recent announcement of GDP trending upwards, which is not the direction we want in order to keep the BoC rates paused. Also, April’s high inflation rates may have caused the BoC to increase the rates. Major central banks are signaling that interest rates may have to rise further to restore price stability.

Some economists were thinking that the BoC will wait until they see May’s employment statistics, which will be released this Friday after the BoC announcement, to make any changes to the rates. Overnight Index Swap markets are currently pricing in a 34% chance of a rate hike this week, but odds rise to 78% for the Bank’s July meeting

Economists from Desjardins similarly noted earlier this week that whether or not the Bank will hike rates this week is “almost a coin flip at this point.”

If you are stressed or struggling to make ends meet, especially with this new rate hike. Please do not hesitate to contact us today to discuss your options. We understand how frustrating this situation can be.

We can look into switching from a Variable rate to a Fixed rate Mortgage, and arrange all things necessary for you and your family.

You can call the office at 604-552-6190, or you can CLICK HERE to book a free mortgage consultation call with Trish.

Trish & The Primex Team

 

How to Gift a Down Payment

General Trish Pigott 31 May

Some of the most common strategies for families and parents to assist children with down payment funds are means of gifted funds or co-signing. The Canadian banking system is very conservative in this process. All banks have to follow the Anti-Money Laundering process in Canada, so here are a few ways to allow significant funds to be transferred to families to purchase a home.

Gifted funds – This is the most common way parents help children in today’s market. Parents are not on the mortgage or the title but can assist with gifting funds to children. The process is for a gift letter to be signed by children and the parents confirming the number of funds that are gifted, and this letter comes with your mortgage approval from whatever bank is the best fit. Then, fifteen business days before the completion of the purchase, the funds must be deposited into the child’s account. Gifted funds from parents can come from savings, investments, home equity line of credit or reverse mortgage.

Parents have two options for accessing funds from home equity:

  • The first option is to take a mortgage or home equity line of credit against your existing home, handled as a traditional mortgage process. Providing documentation for income, debts and assets, as well as home appraisal, is required for this process. A HELOC is tax-free, and the equity takeout would not be taxed.
  • The second option is a Reverse Mortgage. The Reverse Mortgage is the fastest growing product in Canada for those 55 and up as the rates are better than current HELOC rates with the banks, and no stress test applies. Often to get a HELOC, pensions only allow for a low limit due to the stress test, and you would also have to make monthly payments with a mortgage or HELOC. With a Reverse Mortgage, you can access up to 55% of your home equity, and no fees are required until you move out of the home. There is no income, assets or debt confirmation for this process; they base the approval on age and equity in the house. A home appraisal is required.

Co-Signing – This process is in place most commonly when parents do not have funds to assist with a gift. Parents then can come on to the mortgage application and on the title to the new property. The primary purpose of this is to assist with a qualification in today’s interest rate market, as the stress test makes it very difficult for young families to qualify in today’s real estate market. As co-signers, parents are on the mortgage and the title, requiring the same information as the primary borrowers, such as income and debts. There is no set time that parents can be on the mortgage and title. Still, the most common is for the first term of the mortgage. Then children would ideally release the parents from the mortgage and title once rates have come down. After that, the mortgage balance is less, making it easier to qualify on their own.

The Primex team can help figure out what is best for you with having access to over 90 mortgage lenders, it is easy to find a product that is right for you and your family. We also help with coordinating on your behalf. Confidentiality is key and I can assure that your personal and financial information is never shared across family members. You can CLICK HERE to book a call with Trish to start the process.

604-552-6190

Support@primexmortgages.com

Trish & The Primex team

 

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!

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