31 May

Is your Mortgage up for Renewal?

General

Posted by: Maria Solverson

Is your Mortgage up for Renewal?

Nationally, Alberta has the highest percentage of homeowners with mortgage renewals coming up within the next two years.

You may be coming up for renewal soon. You may be concerned rates are rising, even with a renewal a few years away. The consensus is rates are increasing in North America over the next year and may continue to do so in the foreseeable future.

The new government has significantly changed the mortgage market with their implementation of new rules and underwriting guidelines. Due to these changes lenders are now restricted on what they can do and what they cannot offer to their clients. Some specific niche situations are now larger factors in whether or not you are approved.

Here are some questions to think about when you’re up for renewal:

  • Has your credit score changed?
  • What is the loan to value of the mortgage required?
  • Was your mortgage originally insured by CMHC or another mortgage insurance company?
  • Is this a simple switch to a new lender with no new money or a refinance with added funds?

Depending on how you answer these and other questions, I may very well be able to get you a lower interest rate with better terms then what your current lender offers.
Your existing Lender will typically offer you a renewal rate around 30 days before renewal. In an increasing rate environment, why wait until the 30-day mark? Most lenders can lock in a rate hold for 120days. If rates go up during the 120-day period, and you are locked in and do not have to worry about the increase.

Never hesitate to contact me to review your financing and see what options you have.

24 May

FIXED OR VARIABLE?

General

Posted by: Maria Solverson

What is a FIXED RATE MORTGAGE?

A fixed rate mortgage is one where your mortgage payments are fixed and remain the same throughout your mortgage term.

What is a VARIABLE RATE MORTGAGE?

A variable rate mortgage can fluctuate during the mortgage term depending on fluctuations or changes to the prime lending rate set by your lender & The Bank of Canada.

Fixed Rate

Pros

Cons

Peace of mind—when you take a fixed rate, the rate is set and is untouched for the term of the mortgage.

Risk vs Reward—Historically variables have been more attractive, but it comes with uncertainty knowing payments can change without warning, interest rates could increase or decrease.
Budgeting—Fixed rate payments allow you to budget knowing your payments are constant Penalties—The standard penalty to pay out a fixed rate mortgage is either three months’ interest or interest rate differential – whichever is greater of the two. this is often more costly

 

Variable Rate

Pros

Cons

Converting into a fixed rate—You can convert into a fixed rate at any time within the term but you lock into whatever the rates are at the time you convert which means you might be getting the best rates if rates have already increased. Mortgage payments—Payments can fluctuate during the mortgage term depending on Bank of Canada & Lender. When the Prime Rate interest rates fluctuate, your payments fluctuate as well. This could mean that your overall payment amount changes, or it may stay the same and the change will be reflected in the proportion of your payment that goes towards paying down your loan’s principal vs. interest.

 

Penalties—The standard penalty to pay out a variable rate mortgage is three months interest.
Increased Payments—If prime goes up, payments go up. You can mitigate risk and reap some rewards of choosing a variable rate loan product is to fix your mortgage payment at a set amount higher than the minimum requirement.

 

If you need help deciding weather Fixed or Variable rate are better for you, or if you would like to learn more about a payment strategy to make a Variable rate more secure and pay down your loan faster. Please do not hesitate to contact me at any time. My advice is free and I am here to help.