Mortgages In Ottawa

Five great reasons to renovate:

1. Figure out how much real estate commission you’re saving and think about what kind of renovation you could finance with that money.
2. Consider the myriad of other costs that you incur when you sell and buy a new home, such as legal fees, moving costs, and decorating/furnishing expenses.
3. Your reno won’t just improve the quality of your life – it can boost the value of your home (check outwww.aicanada.ca for tips!).
4. Think “green reno” – and get your reno to help pay for itself through energy savings or government incentives! Check with your mortgage planner about what is available.
5. Take advantage of incredibly low mortgage rates to refinance your mortgage, extracting some equity for your renovation. You can then use your prepayment privileges to pay off your renovation cost faster.

The house of your dreams may be only a renovation away.

Mortgage Architects copyright 2010

Home equity has been building across Canada, and many Canadian homeowners have determined that two or more roofs are better than one. There are several reasons why a growing number of Canadians are purchasing investment properties:
1. Return on investment. Certainly, residential real estate is a solid long-term investment, typically appreciating faster than inflation.
2. A pension plan for the future. Over the long term, an investment property or multiple real estate holdings can be a great source of retirement funds.
3. A better alternative to student residence. Many Canadians are shipping off their university-age children, and housing them in an investment property purchased specifically for that purpose.
4. Earlier access to a first home. For first-time homebuyers, a duplex or triplex can be a terrific way to get onto the home ownership ladder. Rental income from the extra units can help offset the cost of the mortgage.

A minimum downpayment of 20% is required for an investment property. You can put down less than 20%, but you’ll need to use an uninsured lender, which can mean higher interest rates. Once you have more than four properties you need to start spreading out your business among several lenders so as to not reach the maximum number of mortgages a lender will approve per investor.

Sound confusing? It absolutely is. That’s why you need to speak with an experienced mortgage planner who can help you better understand what’s involved in financing investment properties.

Mortgage Architects Copyright 2010

A credit score is a credit risk assessment tool that analyzes

consumer information and produces a three-digit numeric risk

score.

Known as a FICO score – with a range from 300-900 – your credit

score tells lenders what kind of risk you are likely to be as a borrower.

The score is an indicator of how you use credit and can

predict the likelihood of your defaulting on a loan.

For example, when you fill out a loan application, pieces of

information from the application along with information from

your credit report will be used to compute a score that

indicates to the lender the statistical probability that you will

become delinquent on the loan.

The credit score is an important indicator of your creditworthiness.

It is important to understand that a credit score is one

criterion that a lender will use in making decisions.

Your score is based on the following five attributes, with some

weighted more heavily than others.

• Previous payment history (approx. 35% of score)
• Current level of indebtedness (approx. 30% of score)
• Length of credit history (approx. 15% of score)
• Pursuit of new credit (approx. 10% of score)
• Types of credit available (approx. 10% of score)

At high credit scores (750 and up), lenders offer a quick

approval at the best rates.  This score says the person is

reliable and responsible with debt.  At lower scores you

will probably pay a premium on your rate, and even find

it difficult to qualify.

You should check your credit score and report yearly.

You can do so by ordering a free report from either:

www.equifax.ca or www.transunion.ca.

Fixed Vs Variable?

The Variable Mortgage continues to be a wise choice with fixed rates on the rise. Why pay the lender for the security of a fixed payment when you can keep your money, pay less interest, and reduce your mortgage faster!

Let’s look at the difference of a Variable Mortgage at Prime -50 and a 5 Year fixed rate term for a $250,000 mortgage and we’ll assume a 1% increase in Prime annually.

Well the numbers speak for themselves!

With the Variable Mortgage you will:

~Pay $7,671.36 LESS in Monthly Payments

~Pay $11,072.88 LESS in Interest

~Balance will be $3,403.43 LESS with the variable mortgage

Total savings across all three factors $22,147.67

Choose a variable mortgage and manage your money!

Want to increase your savings even more? Reduce interest costs further, decrease balance faster

Take advantage of

~increased payments and/or lump sum payments

~investing the savings into RRSP’s and using the tax returns to do lump sums annually

The impact is incredible especially in the early years while rates are lower.

The debate will continue, but perhaps the numbers speak louder than words.

The entertainment industry has found a new spin on reality shows that has been surprisingly successful:  home renovations.  The tool belted contractors on television are unlikely stars, but their home improvement message has helped fire up the imagination of a whole generation of Canadian homeowners!

According to Statistics Canada, Canadians spend almost $30 billion for renovations in 2005, and that # climbs every year.  That represents more than 40% of the total dollars spent on residential construction.  We’re renovation-obsessed, and we show no signs of slowing down.

So where are we spending our renovation dollars?  A gourmet kitchen tops the list of “dream renovations” for most Canadians, and that’s also where they tend to spend the most renovation dollars (with bathroom renos coming close behind in popularity).  According to the Appraisal Institute of Canada (AIC), homeowners are probably making the right decisions on where to spend their money: kitchens and bathrooms are at the top of the list for renovations most likely to provide a return on the money invested (returning 75% – 100%).

Think that a renovation will increase the value of your home?  It’s a nice thought, but just not a sure thing.  In fact, there are very few renovations projects that will return more than 100% and pay you back more than your costs.

Painting may be the exception.  While it doesn’t have the power-tool appeal of knocking down walls, it can be almost as impactful.  In fact, the experts consistently agree that painting pays: money spent on a great paint job is almost always money well spent, whether it’s inside or outside.  In the grand scheme of renovations, painting is a low-cost activity, but it can have a big impact on the look of your home.

The AIC says that the best renovation projects are kitchens, bathrooms and both interior and exterior painting.  In the mid-range category (returning 50% to 80%) are more mundane projects like re-shingling the roof or improving the heating system.

It’s clear that renovating to add value to your home is a tricky business.  Playing your own version of Trading Spaces can be a great way to increase your enjoyment of your home.  Though they might not be making their owners big bucks, certain home renovations are popular projects because they improve the quality of life of the families that live in the homes now – not because they might be attractive to the next buyer.

No, wonder we’ve become a nation of renovators – turning the houses we have into homes we want.  And why not?  There’s never been a better time.  With a wide range of financing products available to make their renovation dreams come true.

If you have built up some equity in your home, then you probably hold the key to unlock the financing to make your home renovation possible.  In today’s great interest rate environment, homeowners aren’t renovating just because they want to…..but also because they can.

copyright 2006 Mortgage Architects, all rights reserved

Get in great Credit Shape

A high beacon score is a key component to your security – it is even more important now that lenders have tightened up their guidelines. Your goal – 700.  And if you find your self in the job-hunting pool, a good score could distinguish you from others. (Yes employers check your score and credit history. It is considered an insight into your sense of responsibility.

Ask for my booklet – it’s free.  Really Free!!!!

There could be a flurry of activity before April 19th – as many take advantage of the existing rules and move up purchases and refinances, call today!

Finance Minister Jim Flaherty has announced three new mortgage rules effective April 19, but there’s no reason for alarm: these new mortgage rules won’t affect most homeowners or buyers! Here’s the quick rundown on what’s new:
Think five-year, fixed rate. Mortgage qualifying is now based on a five-year, fixed-rate mortgage, even if you opt for a shorter term now and/or a lower rate. Most lenders were already qualifying on the three-year fixed rate, which means this shouldn’t affect too many homebuyers. With 5% down and a 35-year amortization on a $300,000 home, a buyer would need about $7,400 more in annual income under the posted five-year fixed rate versus three-year rate.

Protect at least 10% of your equity. There are common sense limits to using your home as a piggy bank, but now the new rules dictate that you must protect at least 10% of your equity, up from 5%, primarily affecting those who are overextended on high-interest debt.

You need 20% down on an investment property. This change primarily affects investors. If you’re not personally living in a property that you own – such as a second home or a rental property – you will now need a minimum downpayment of 20% (up from 5%).

We’re keeping this one simple.

We’ve all been hearing that rates are going to rise, well tomorrow will see our first hike.

Anyone sitting on the fence with a potential purchase, call me to lock in – 3.69% 5 year term, 120 day rate guarantee.

Purchase, refinance, transfer etc.  Now is the time.

A secured Visa card gives you all the benefits of a Visa while re-building their credit!

Not only will you be re-building your credit, but a Visa has many other benefits.

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When is refinancing beneficial?  Good question.  Here’s a good rule of thumb.  Take all the costs associated with refinancing, for example, legal costs, penalties and fees, appraisal costs and divide by the amount you will be saving each month to determine the time you need to cover your costs.

For example:

Costs: Legal, penalty, appraisal $4700

Savings: monthly savings $180, therefore, $180 multiplied by 60 months (represents a typical 5 year term) = $10,800.

In this example it would take 2.1 years to recoup your costs associated with refinancing ($4700), you then begin your savings; which if you hold until end of term (balance of 5 year term) will be $6100.

If you would like to save have a mortgage broker work out the calculations for you.  It’s free.