Monday, February 24, 2014

How to get rid of Holiday bills and start building wealth.

How to get rid of Holiday bills and start building wealth.

Most Canadians suffer with their highest personal debt load in January, when the “holiday hit” arrives and your credit card statements let you know just how much you spent on the festive season. It’s especially hard if you already had a burgeoning debt load before the holidays.

This year, make the best New Year’s resolution ever: resolve to clear that debt, and start building wealth. With the right plan in place, this year could be the beginning of a strong new financial life. Start now, and every month you could be seeing the difference: a boost to your monthly cash flow, one easy payment, faster debt paydown, and potentially thousands of dollars in interest savings.

It’s not about borrowing more: it’s about restructuring your debt to save interest and pay down faster. Your debts could be standing in the way of your financial security. Add up the interest you’re paying on all your bills this month. Then talk to us about how you can slash that.

If you have enough equity in your home (you can’t refinance a mortgage above an 80 per cent loan to value), we can show you how to use that equity to consolidate your high-interest debt into a new or existing mortgage. In almost every case, you’re better off rolling large amounts of high-interest debt into a mortgage. Why? Because we are benefiting from mortgage rates that continue to be among the lowest in decades. Just compare mortgage rates with what you’re paying on your credit cards and other debts.

First we’ll do an assessment of your situation. Here’s an example – mortgage, car loan and credit cards total $225,000. Roll that debt into a new $233,000 mortgage, including a fee to break the existing mortgage, and look at the payoff:

                                                                                Current                                NEW

Today         Monthly Payments*               Monthly Payment*

Mortgage                     $175,000                     $969                               $1,163

Car loan                         $25,000                       $495                               $ 0

All credit cards             $25,000                      $655                                $ 0

Total                                                              $2,119                            $1,163

*4.5% current mortgage, 3.5% new mortgage, 25 year am. Credit cards 19.5% and car loan 7%, both at 5 year am. OAC. Subject to change. For illustration purposes only.

 That’s $956 less each month! Now decide how to use that $956. If you put $500 into your mortgage payment, you’ll reduce your amortization from 25 years to 15. Or you could invest in RRSPs or RESPs and reap some tax benefits. Consider putting some funds aside each month into a “December” fund – so you never have the financial pain of the “holiday hit” again!

It’s a new year. Make it the start of a new financial life.

Crunch some numbers to see what kind of life you could be living, something to really celebrate about next New Year’s Eve!  Speak with an experienced Mortgage Broker to get unbiased and neutral advice.

Bank of Canada 'more comfortable' after inflation pick-up

By Louise Egan- Feb 22/2014
(Reuters) - Two months of stronger inflation in Canada has made the central bank feel a "little more comfortable", Bank of Canada chief Stephen Poloz said on Saturday, signaling that he may feel less pressure to cut interest rates to deal with disinflation.
Poloz also told Reuters the value of the Canadian dollar will remain a challenge for manufacturers and exporters even as the U.S. economy recovers, because higher prices for commodities that Canada exports would prop up the currency.
Speaking before a meeting of finance ministers and central bank chiefs from the Group of 20 leading economies in Sydney, Australia, Poloz said data on Friday showing the inflation rate rose to a 1-1/2-year high of 1.5 percent in January from 1.2 percent in December indicated the surprisingly low prices seen in 2013 may have been just "noise".
"In your heart you're hoping that some of it is noise and that other bits of noise will offset it, and in the wash you find that the underlying inflation rate isn't falling really rapidly," Poloz said.
"So in that sense it's reassuring. It's helping us to feel a little more comfortable."
Still, Poloz said there was nothing in the data to make the central bank rethink its forecast that inflation will hover at around 1 percent in the first half of this year before returning to the 2 percent target in about two years.
Poloz, 58, took over as central bank chief last June. In October he oversaw a major policy shift because of growing worries about disinflation, saying policymakers were puzzled by the trend. The central bank abandoned 18 months of talking about eventual interest rate hikes and adopted what it called a neutral stance.
In January, Poloz said he was even more worried by disinflation and left the door open to a rate cut. Inflation has been below the central bank's target for 21 months.
Most economists expect the bank to hold its main interest rate at the current 1.0 percent until 2015, when it will begin raising rates. Traders are still pricing in a small chance of a rate cut later this year, although they scaled back those bets after the inflation data.
Poloz endorsed efforts by some G20 members gathered in Syndey to set a higher goal for global growth, but said it should be seen as aspirational rather than a hard target.
The Canadian dollar has depreciated by about 7 percent against the U.S. dollar since October, a relief for exporters whose products become more competitive in their main market, but Poloz said the pain was not over yet for exporters.
"Even though the (Canadian) dollar has come down off its peaks, it still remains a challenge for certain companies like manufacturers ... It looks like it would remain so because the terms of trade is so high, 25 percent higher than it was back in the 1990s," he said.
In its quarterly report in January, the central bank characterized the currency as still "strong". Poloz said that was meant "to remind people that those things don't go away just because we get a recovery from the U.S. recession, which is there".
"Other forces that are thrown into action by a terms of trade shock, many of which are sectoral and regional ... Those characteristics will persist for a really long time. They don't go away just because the recession is over," he said.
Poloz, who formerly headed the country's export credit agency, dismissed talk among some market players that he is deliberately seeking a weaker dollar to help exporters, saying the currency move was a consequence of factors such as the changing economic outlook and firmer U.S. recovery.
"I think you can tell a reasonable story and it's got nothing to do with anybody talking the dollar up or down," he said.
The weaker currency gives "a little extra kick" to the economy, but the main driver of exports is demand from the U.S. market, he said.
Canada's economy appears to have stumbled in December after a five-month growth spurt. Retail sales, jobs, manufacturing and the trade deficit all deteriorated in the month, possibly because of a severe storm that hit a large swath of the country and cut off power for days in Toronto.
Poloz said more data was needed to determine whether the setback was due to bad weather mainly or reflected an underlying trend.

Thursday, February 6, 2014

7 homebuying mistakes to avoid

Susan Johnston
For most people, a home is the largest purchase they'll ever make, so choosing the wrong property can have disastrous implications for their wallets and well-being. Still, many homeowners feel a strong sense of pride in putting their mark on the property, building equity and having a place to truly call their own. Whether you're a seasoned or first-time buyer, here's a look at seven homebuying mistakes to avoid.
1. Using the wrong real estate agent. Just because your sister's college roommate's friend just got a real estate license doesn't mean she's the right agent for you. San Francisco real estate agent Herman Chan suggests vetting agents and looking for someone who does real estate full time and knows the local inventory. "You can lose an offer if you're not responsive in a couple of hours," he says. Request the agent's sales data, and find out how he or she communicates. Chan recommends asking questions like these to gauge the agent's tech-savyness: "Is it OK if I text you? Is it OK to DocuSign things? If I can't make an open house on Sunday, can you shoot me a video?" If you prefer to check texts and emails on your phone, you may not want an agent who insists on faxing contracts.
2. Shopping before you get preapproved. Before you get serious about buying real estate, find out how much mortgage you qualify for and get a preapproval letter from your lender. "If you fall in love [with a property], write that offer and then find out you can't afford it, it's an emotional roller coaster you can't afford," Chan says. Many agents won't even take buyers to showings until they have a preapproval letter for that very reason.
3. Maxing out your spending power. Qualifying for a half-million dollar mortgage does not mean you should buy a Mansion. Jon Sterling, regional sales manager for Chase International Real Estate in Lake Tahoe, Calif., says he's seen people, especially first-time buyers, make this mistake. "It's wiser to be a little more conservative," he adds. Homeowners have additional expenses such as property taxes, condo fees and maintenance that renters do not, so some first-time buyers fail to budget for these extra costs and assume they can afford a monthly mortgage equivalent to the rent they paid. "If you buy into a [homeowners association], you don't know what their future plans are," Sterling says. If, for instance, a storm rips the roof off the clubhouse or the association decides to upgrade the common areas, you may get hit with a special assessment to cover those costs. For these unexpected situations, it's a good idea to keep a cash reserve on hand. Some dual-income couples choose to qualify based on just one income to give themselves a financial buffer.
4. Taking advice from outsiders. Parents, relatives or friends who haven't bought property in the local market may not understand local pricing and market conditions. Parents or in-laws who own houses in the suburbs may also have unrealistic expectations about what the equivalent amount of money buys in the city. "Be careful about people that are giving you advice from across the country," Sterling says. When parents are gifting money for a down payment, their input may be necessary, so Sterling tries to show properties only when "all the decision-makers are in the car."
5. Skipping the inspection. Home inspections can help alert potential buyers to problems such as structural issues, faulty wiring and other problems a layperson probably wouldn't spot. But if you're in a market that moves quickly, you might be tempted to skip an inspection to make the offer more appealing, Sterling says. Insisting on an inspection might slow the process, but as he points out, "any seller that is going to knock you out because of that is probably hiding something anyway. You're spending hundreds of thousands of dollars, [so you want] to make sure you're getting what you think you're getting."
6. Overdoing contingencies. While home inspections are recommended, Michael Alderfer, a Washington, D.C., agent with the national real estate brokerage Redfin, says some homebuyers include so many inspection-related contingencies that it can scare off the seller and his or her agent. "Some buyers are nervous, so they're looking for extra ways to change their mind and walk away," he says. "You can write a competitive offer without all these extra things and leave yourself a couple of ways to get out." He suggests talking to your agent before submitting the offer, so you'll feel confident your interests are protected.
7. Getting too attached to one property. In competitive markets, you may have to put in offers on several properties before one is accepted. Alderfer says some buyers get so infatuated with one property that a rejected offer hits them hard. "It's OK to feel anxious, but you need to be able to fall in and out of love during a home search," he says. "If you find a home that you think is perfect for you and you don't get it, you can't stay down too long. You have to recognize that wasn't the house for you."

Tuesday, February 4, 2014

Five ways to prepare for higher mortgage rates

Victor Peca
Mortgage Broker

Almost half of homeowners sleepwalk through their mortgage renewal
Given the large financial commitment of a mortgage, it’s surprising that 44 per cent of Canadian homeowners either just accept whatever their lender offers at renewal, or don’t even remember how they renewed!
It’s tempting to just sleepwalk through the mortgage renewal process. But if you’re not doing even the slightest comparison shopping or negotiating, then you’re missing out on an opportunity to save thousands on your mortgage. When your lender sends you a letter saying it’s time to renew… what that really means is that it’s time to get advice. Professional, independent advice.
Get an expert second opinion on what you’re being offered. We’ll take a look, and compare it to what we can find out there as an alternative among the 50 or more lenders we have access to.
Got a mortgage renewal coming up in the next six months? Let’s start talking!
* A recent CAAMP/Maritz survey found that only 56% of renewers negotiated, 44% took the mortgage rate originally offered by their lender (39%) or just didn’t know how they renewed (5%)

Your credit rating is how lenders check to see how reliable you are about paying your debt. Your credit history is considered a reliable indicator of how you will manage your mortgage and your finances in the future. A less-than-stellar credit rating can affect your ability to get the best mortgage rates. We have some quick strategies to help you polish your credit, and to build (or rebuild) your credit over time. The pay-off? You’ll get access to better rates and more borrowing options. Shaky credit but need a mortgage now? If it’s possible, we can find a way!
Five ways to prepare for higher mortgage rates
Mortgage rates on the rise? No need to panic; what you need is some smart strategies to prepare. Here are our top 5 tips:
1. Don’t take the money. If you're buying a new home, don’t be tempted to borrow the maximum amount your lender will allow.
2. Do more than the minimum. If you have a variable-rate mortgage, build in some wiggle room by setting your payments higher than required. 
3. Plan to pre-pay. Find out what your pre-payment privileges are and pay whatever you can.
4. Conduct a reality check. Find out what your mortgage balance will be at renewal and use our online mortgage calculator to project what your payments could be if you renewed at a higher rate. Start to ease up to your new payment level so at renewal, it’s like a merge lane!
5. Watch your bad debt. Be cautious about any credit card or other high-interest debt.
Getting prepared for higher rates is not about panicking, it’s about being prudent. Talk to us. We can help you determine your best personal strategies to prepare for rising rates!
5 year fixed rate special 3.19%
5 year variable special 2.45%
Must close in 30 days
On new business only

Victor Peca
Mortgage Broker

Brokerage #: 10428

Top 10 Mortgage Tips for 2014

Your home may be the biggest investment you’ll ever make. That means you want to be smart with your mortgage. Although we can’t say for sure what mortgage rates will do – or how the housing market will shift – we have compiled our top tips for the year ahead; sensible strategies for today’s homebuyers and owners.
  1. Variables are back. Several lenders are offering strong “prime minus” rates that could save you thousands in interest. And the Bank of Canada is still holding their key “overnight rate” very steady and very low… making variable-rate mortgages a sensible option right now. Fixed versus variable has always been a challenging mortgage decision. Let us help you decide which financing option best meets your needs.
  2. Don’t sleepwalk through your mortgage renewal. Don’t miss out on an opportunity to save thousands on your mortgage. When your lender sends you a letter saying it’s time to renew… then it’s time to get an expert second opinion. We’re independent and we have access to over 50 lenders. If there’s a better deal, we’ll find it.
  3. Pay your phone bill on time! Paying your bills on time has always been the most important credit habit. Equifax recently started to include phone companies on credit bureau reports – so your lender can see if you have any delinquencies with your phone bills. Look like a good borrower.
  4. Keep other good credit habits. Don’t let your credit accounts exceed 30 per cent of your limit. Don’t cancel an old credit card without getting advice. And don’t sign up for store cards: they often have crazy interest rates, and the application triggers a credit inquiry (you don’t want a lot of those).
  5. Mortgage versus total debt. Do you have high-interest debt outside your mortgage that you won’t be able to pay off in the next few months? Then think about rolling that debt into a new low-rate mortgage. This one, smart strategy could save you thousands… and boost your monthly cash flow. We can analyze your situation to see if you qualify.
  6. What’s the prepayment penalty? Don’t let anyone tell you prepayment penalties are “all the same”. They’re not. If you ever need to get out of your mortgage early, the right mortgage could save you thousands. Not all lenders calculate penalties the same way, and the differences can be substantial. It helps to know which lenders have the most fair prepayment penalties. With access to dozens of lenders – we’ve got that information at our fingertips.
  7. If one of you wants to keep the marital home. If you are going through a separation or divorce and one of you wants to keep the marital home, we’ve got some great mortgage options, including a mortgage to 95 per cent. Your home can be the asset that gives you both a fresh start!
  8. A paydown will pay it forward. Take every opportunity to beat down your mortgage principal using any prepayment privileges! Use tax refunds, bonuses, whatever. Or switch to weekly or bi-weekly payments. Every dollar you pay down on principal means every future payment goes further.
  9. Thinking renovation? We see what you see. Your reno will add value to your home. That’s why we have a special “Refinance Plus Improvements” mortgage that lets you refinance up to 80 per cent of the new, post-reno value of your home. Cool deal.
Come in for a checkup. Your mortgage needs an annual checkup. Really. Life doesn’t stand still, which means your needs may have changed. Even a minor tweak can pay big dividends.