Your Mortgage Guide
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Choosing a mortgage is one of the biggest decisions you’ll make. Consult a mortgage specialist for overall guidance and support. Some things you’ll want to consider: Type of mortgage: Fixed-rate or variable-rate, open or closed.... Mortgage term: The length of time a mortgage rate, lender and conditions set out by the lender are in effect. Typically terms range from six months to up to 10 years. Amortization period: The total length of time it will take you to pay off your mortgage, typically people choose 25 or 30 years amortization periods. A longer amortization period usually means lower monthly mortgage payments. It can also mean you’ll pay more interest overall because you’re taking longer to pay back the mortgage principal to the lender. Note that if you choose an amortization over 25 years, you must have a down payment of at least 20% of the purchase price.

Canada’s average home price remained at a historic high in November as housing inventory remains at historic lows. The average sale price in the month was $603,000, 13.8% from a year earlier, according to data released by the Canadian Real Estate Association (CREA). Removing the high-priced markets of Toronto and Vancouver, the national average price was $481,000, up 19% from a year ago. Sales, meanwhile, edged back 1.6% from November but were still up 32.1% year-over-year.... If I had to sum up the Canadian housing story in 2020, I would say it’s gone from weakness because of COVID to strength despite COVID, CREA’s senior economist Shaun Cathcart said in a release. It will be a photo finish, but it’s looking like 2020 will be a record year for home sales in Canada despite historically low supply. We’re almost in 2021, and market conditions nationally are the tightest they have ever been and sales activity continues to set records. One of the biggest drivers of the home price increasesaside from the delayed spring housing market and record-low mortgage rateshas been historically low housing supply. Inventory fell to a record low of 2.4 months in November, meaning this is how long it would take to liquidate current inventories at the current sales rate. CREA noted that 21 Ontario markets were under one month of inventory, up from 18 markets in October. Here’s a look at how some regional and local housing markets performed in November: Woodstock-Ingersoll, ON: $466,600 (+28.4%) Quinte & District, ON: $402,700 (+28.2%) Ottawa: $540,500 (+22.4%) Halifax: $393,461 (+15.7%) Barrie & District: 598,000 (+23.5%) Greater Montreal Area: $423,400 (+17.5%) Greater Toronto Area: $902,500 (+10.6%) Winnipeg: $286,500 (+7.1) Greater Vancouver Area: $1,044,000 (+5.8%) Victoria: $730,200 (+4.9%) Calgary: $418,700 (+1.4%) The national sales-to-new listings ratio remained high at 74.8%, just off its record high of 77% set in September. Learn more here http://bit.ly/3p25cDt

Open mortgages The interest rate is usually higher than on a closed mortgage with a comparable term length. This is because it allows more flexibility if you think you may put extra money toward your mortgage on top of your regular payments. Open term mortgages allow you to do the following at any time during your term without paying a penalty:... put extra money toward your mortgage on top of your regular payments at any time pay off your mortgage completely before the end of the term renegotiate your mortgage before the end of your term break your contract to change lenders before the end of your term An open mortgage may be a good choice if you: plan to pay off your mortgage soon plan to move in the near future think you may have extra money to put toward your mortgage from time to time, such as if you get a lump-sum bonus

2021 PREDICTION #1: Canadian real estate prices will go down Opinion is split on where prices are headed in hot housing markets like the greater Toronto and Vancouver areas, and for the country at large, which saw a booming summer real estate market carry its momentum into fall. At publication time, the national average home price had crept up to $607,250 in October 2020, a 15.2% year-over-year gain from October 2019.... 2021 PREDICTION #3: Mortgage rates will stay low You may have heard rumblings of interest rate hikes in the future, but these forecasts are long-range, so don’t let them worry you. The Bank of Canada has signalled that interest rates will be low well into 2022 and possibly even 2023. As such, mortgage interest rates will also stay low although perhaps not at today’s record-breaking lows, says Taylor. Upshot: If you’re due for mortgage renewal or you’re interested in refinancing in 2021, go for it. But if your mortgage matures in 2022 and prepayment penalties have you concerned, don’t sweat it you’ve got plenty of time to renew. Read full article here https://bit.ly/3a9XKSz

Planning to buy a home in Canada? The house hunting has led you to the home of your dreams and you have already a pre-approved mortgage offer. Now you are ready to pay the down payment, get the mortgage to give it to the seller, and get the keys. Wait, you need to consider a few more expenditures known as closing costs before you seal the deal. Learn about closing costs in Canada here https://bit.ly/3gR5fxO

Ask about pre-payment privileges The more interest rates rise, the bigger portion of your monthly mortgage payments will go toward the interest versus the principal. Pre-payment privileges can help you pay down your mortgage faster.... What exactly are pre-payment privileges? They offer you the flexibility to prepay a percentage of the mortgage principal before the end of the amortization periodwithout penalty. In some cases, lenders may offer you their ‘best rate’, at the cost of not allowing you to make pre-payments on your mortgage during the set term. So be sure to ask your lender what kind of pre-payment privileges your mortgage allows to provide you with the option of making extra payments. The savings potential of taking advantage of pre-payment privileges Let’s say you have a $300,000 mortgage, currently at a 5-year fixed rate of 3.29% and amortized over 25 years. By making annual pre-payments of just $2,000, you would save $21,787 in interest and pay your mortgage off 3.5 years faster (assuming the interest rate remains constant over the amortization period)

Bond yields in both Canada and the U.S. jumped on news that Pfizer’s COVID-19 vaccine has proven more than 90% effective in its trials. Following the announcement on Monday, the all-important 5-year bond yield is now hovering around 0.50% for the first time since early June. Since bond yields lead fixed mortgage rates, that’s caused some observers to suggest mortgage rates could potentially be finding a bottom and may only head higher from here. Lenders’ profit margins are t...ight and rising yields are tightening them further. If yields climb higher, banks may not delay in taking fixed rates with them, RateSpy.com founder Rob McLister wrote in the Globe & Mail. He noted that, despite the current economic gloom, better days are ahead and that 2021 is shaping up to be a year of recovery, particularly with solid prospects for a vaccine on the way. The bond market believes this. It prices in good news one to two years in advance, McLister added. In other words, by the time we know the economy is back to pre-pandemic levels, fixed rates will have already shot up. Little Room Left for Rates to FallOr is there? Find out here https://bit.ly/2K53kL4

Open vs. Closed An open mortgage lets you repay the mortgage in full at any point during your mortgage term. Because of this, it tends to come with a higher mortgage rate. Open mortgages only tend to make sense if you expect a huge cash windfall or intend to sell your home in the near future.... A closed mortgage has limitations on how much extra money you can put towards your mortgage beyond your regular mortgage payments. Because of that that it tends to come with a lower mortgage rate than an open mortgage

Buying a home will always require some amount of cash upfront, also known as a down payment. The bigger your down payment is the better, for a few reasons. The main reason is simply that the larger your down payment, the less you’ll need to borrow, and the less interest you’ll pay. However, just getting approved for a mortgage relies on the down payment as well.... What’s the minimum down payment for mortgage approval? In Canada, there are minimum down payment requirements based on the home’s price: Less than $500,000: The minimum down payment is 5% of the purchase price. $500,000 to $999,999: You’ll need 5% of the first $500,000, and 10% for the portion of the purchase price above $500,000. $1 million+: 20% of the total purchase price. In Canada, a down payment of less than 20% of the home’s purchase price requires the buyer to buy mortgage loan insurance. Paying these insurance premiums will increase your monthly mortgage payment.

Expenses of Owning Real Estate as an Investment Here are some expenses you need to include in your budget: 1.BASIC EXPENSES... Everyone knows about basic expenses such as mortgage payments, property taxes, insurance or strata fee(if applicable). Another expense, which may or may not be part of your mortgage payment, is the interest cost for the borrowed down payment only applicable when you borrow your down payment 2. PROPERTY MANAGEMENT Because the property manager deals with headaches, associated with the property, on your behalf. They do everything from finding tenants, showing the property to potential tenants, collecting rent, and arranging repairs. Our clients, who manage their rental properties themselves, sometimes they get phone calls in the middle of the night and they have to deal with the problems on their own. 3.MAINTENANCE AND HOLDING FUNDS People often forget about maintenance. Things break down or get broken by your tenants, or unexpected urgent expenses come up. Yes, it happens. It’s common. Things that break down include appliances, water tank or furnace, leaks or plumbing issues as the most common problems. As a smart investor educated by Your Mortgage Guide, you should plan and budget for these expenses beforehand. We recommend setting aside 3% of the gross rent in a separate bank account for maintenance. When you already have the funds set aside, it eliminates the stress of finding money for repairs.

How could you pay your mortgage more aggressively? Like with anything else, how your money goes out should be a function of how it comes in. If you’re a salaried employee and just got a significant pay raise, you could choose to increase your regular payments and direct that extra money towards the principal.... If your extra money comes to you as a year-end bonus or an owner’s dividend, you could choose to make a yearly lump-sum payment towards the principal. Note that many full-featured mortgages come with flexible prepayment options that allow the borrower to increase their monthly payments by up to 100%, and allow for annual lump sum payments of up to 25% (though typically between 10-20%).

The postponed spring housing market has now extended its run well into the fall, with home sales in Toronto and Vancouver up 25% and 29%, respectfully, compared to a year ago. The high demand is continuing to put pressure on prices as well. The average selling price for all home types in Toronto rose 13.7% to $968,318, according to the Toronto Regional Real Estate Board (TRREB). However, there was a divergence between market segments, with detached home prices rising 14.8% t...o $1.204 million, while average condo prices were up just 0.7% to $622,122. In Vancouver, the MLS Home Price Index composite benchmark price for all property types rose 6% to $1.045 million, according to the Real Estate Board of Greater Vancouver (REBGV). It was a similar story in Greater Montreal, where sales and prices were also up sharply in October. The Quebec Professional Association of Real Estate Brokers (QPAREB) reported that Montreal saw a 37% jump in sales, while home prices were up 21% for single-family homes and 16% for condos. Find out which rates are more favored by new homebuyers here https://bit.ly/2IbXkPZ