It’s that time of year again when many of us are faced with credit card bills that may be the ‘Choking’ result of Christmas and holiday shopping. If you are finding that you cannot pay the balance(s) in full, then it may be time to ask us for a ‘Mortgage Checkup’. Not only will we evaluate your debt load, but also your existing mortgage terms, maturity etc. This is especially true if your mortgage is maturing this year.

Mortgage rates remain at ‘Epic’ lows which translates into an opportunity to secure your financial future perhaps for the next 10 years. With continued global financial turmoil which could well get worse, we are seeing more and more people becoming proactive with their finances by taking advantage of current unbelievable rates. This is called a mortgage ‘Switch’ which can be done at NO COST to you in most cases. Moving to a lower rate now instead of waiting another year or longer could COST YOU BIG if rates rise.

If your current rate is higher than 3.89% you can lock into a new 10 year fixed rate with us at this incredible rate gaining the peace of mind that your payment will not go up for an entire decade.

A year or two from now this 10 year rate may well be below all rates, and you will be laughing.

Note, the banks can only refinance up to 80% while we can refinance you up to 90% of value.

If you do, then you may cringe when you hear about the new ‘COLLATERAL MORTGAGES’ now used by all the big banks. So what is a collateral mortgage and what does this mean?

It means that they have the right to register the mortgage in excess of 100% of property value (regardless of actual loan amount), thereby indicating to any other potential future creditor “THAT THERE IS NO EQUITY IN YOUR PROPERTY”. Hence you are stuck with your bank.

It means that they have the right to increase your interest rate (up to as much as Prime + 10 Per Cent) at their discretion, just like they did with lines of credit during the 2008/9 credit crunch.

It also means that they can effectively ‘SECURE’, your existing ‘unsecured’ credit cards, loans, and lines of credit AGAINST YOUR PROPERTY, if you miss any payments. So if anything goes wrong, like job loss etc., and you have been relying on two incomes to pay the bills (even if you continue to pay your mortgage on time) the bank can force you to sell your house and/or put you into ‘Power of Sale’ if you miss you’re your credit card, loan or line of credit payments. At the very least, you will have to pay for any such actions by the bank, which will be very expensive. This was never the case before. And know this. Even if you can access more credit with the bank, is it likely to be as ‘competitive’ as another institution? We think not because they no longer have any competition (do they?) since they have become your only choice when you have a collateral mortgage.

The thing is, that you may not be aware of the negatives, and the fact of the matter is, that with a Collateral Mortgage you are giving the bank more Power and more Control than ever, and we think that is pretty scary.

When you get your mortgage through us, we will only offer you a bank mortgage as a last resort, meaning that is the only place that will accept you. Needless to say, we do very few bank mortgages these days, and when we do, we make sure you understand the ramifications of a ‘Collateral Mortgage’.

Folks we have over 40 lenders, all reputable and national companies with excellent rates, products and terms. We want you to understand that the ‘Terms’ of a mortgage are often more important than the ‘Rate’ since they can cost you dearly. The truth is that these ‘Non-Bank’ or monoline lenders keep our big banks competitive. Without monolines, mortgages would cost more, much more, and so we support the monolines first, which benefits you, and benefits Canadians as a whole, over the longer run.

Who should you get your next mortgage from? A bank? Or from us? We think the answer should be  abundantly clear.

Job loss, marital breakup, and people tired of renting who have the ability to buy a home but who do not currently qualify (usually for credit reasons) are increasingly going the RTO route. Even some existing homeowners have turned to this option to avoid losing their homes when no other options were available.

Rent to Own is a viable short term solution that assists people to get into home ownership and now, to ‘retain’ the family home versus having to sell and rent, or lose it to the bank. They want to keep their kids in place without the heartache and disruption, embarrassment and shame of having to move into an apartment. These are usually hard working people who have suffered job loss, divorce etc., who know they will bounce back, and who have good earnings potential. In the meantime credit has suffered and they no longer qualify for an institutional mortgage, and quite often even a private mortgage is too risky as well.

In fact the last three RTO’s we have done have all been to existing homeowners in danger of losing their homes, and this is a growing trend. Our program is designed to make clients ‘successful’ and to give them financial ‘relief’. It is not just an ‘Option’ (like most RTO programs) that the client may or may not pick up because our clients legally repurchase their home as soon as it is sold to an investor, and so as long as they meet their obligations as set out in the RTO agreement, and they follow our advice and coaching to improve their credit ratings, they will regain title at the ‘completion’ of the agreement when they once again qualify for a prime institutional mortgage. This is a Win/Win because they continue to live in the matrimonial home, can improve it etc., just as if nothing has changed.

Typically, with the funds from the sale, RTO clients can pay off all debts, eliminating financial stress, begin to rebuilt savings and credit during the term of the RTO agreement. Sometimes there are sufficient funds available to provide money to buy a (much needed) newer vehicle or have as a financial cushion going forward.

This not well known and often misunderstood solution is available from us ‘The Price Team’ Dominion Lending Centres. For further details please call and ask for Ron.

When Amy came to us she was at her wits end.   An expensive divorce had left her deep in debt and a financial planner suggested she call us.  She had a good job as a teacher and thankfully her credit although maxed was still satisfactory.

It was only a year ago, Amy had bought her house in a good location in Guelph.  She paid $270,000 for it and she used $70,000 of her equity from her former matrimonial home  to put down as a down payment leaving her with a $200,000 mortgage.  So when she came to us, Amy told us she could no longer afford all the payments in addition to her $1,000 mortgage payment.   Because Amy had been the breadwinner in the family, she got stuck with the debt of the divorce and her bank extended her a credit card and a line of credit to help her pay her legal bills.  

We had an appraisal done and the value came in at $285,000. We found a solution for Amy to refinance her home under the new rules to 80% of the value, getting her all the money she needed to pay off her mortgage and $25,000 in debts.

That was until the lawyer conducted a title search.  The lawyer found a second mortgage for $36,000.  We thought it had to be a mistake because Amy didn’t tell us about a 2^nd mortgage. That tweaked us to investigate further, to ask the lawyer how much was registered on the 1^st mortgage.  The answer was $270,000. When Amy learned that her bank had put a $270,000 mortgage on a property worth $270,000 or 100% of the purchase price when her mortgage was only $200,000 because she had put a down payment of $70,000 she freaked.  “The bank has stolen my equity” she said.  When we asked whether she was even aware that the bank had put a $270,000 collateral mortgage against her home, she said “No, I had no idea.  How can banks get away with this?” Good question, but a better one might be how can two different institutions put $306,000 in mortgages against a property valued at $285,000. 

Thousands of Canadians are signing for these collateral mortgages without being advised properly about the ramifications.  Amy like many others did not know that the bank can go power of sale on your property if your visa card is in default because the visa and line of credit become secured under these mortgages.

Well we figured out how to get Amy untangled from these mortgages and she cashed in some RRSP’s to bring down her debt.  She got a new first mortgage at a lower interest rate and a longer amortization and a private mortgage from a good soul who felt she was worth the risk. With her payments reduced, Amy can breathe again and she is going to teach summer school in order to bring in some extra money to pay down her mortgages.

Don’t let the banks pull the wool over your eyes. Come instead to us, for your next mortgage need.

Diane was a soft spoken 40 year woman who came to us to see if she could qualify for a house.  She is self employed earned about $40,000 in gross income. Unfortunately, she wrote down her income to  $11,000. so she did not qualify for a mortgage on her own. Her income had been rising steadily since her divorce two years ago and she was approximately two years away from buying a home on her own.

Diane told us that her ex husband had been living in their home for the past two years and she really wanted to get her home back.  Diane didn’t have the money to get lawyers involved so she had been living in an apartment with her teenage daughter.  There was some good equity in the home, so we suggested Diane make a deal with her husband to give him some of their equity in lieu of spousal support to enable her husband to also move on with his life. It was a long shot but we suggested if the deal was sweetened, hubby might agree to leave the home.  Well  Hubby liked the deal and agreed to give Diane her house back and  almost immediately he went out and purchased a new home with the money Diane agreed to give.

So we went about refinancing Diane’s home.  Since her income would not qualify we asked Diane to ask her parents to co-sign.  Although they were on pensions they were pleased to help their daughter and it worked.

Hubby moves into his new home at the end of the month and Diane and her daughter move back into theirs.  We gave her a Win/Win solution that she was thrilled with.  That’s what we like to do…help people improve their lives.  

Ten years ago when rates were much higher, more frequent payments were more beneficial than they are today. Why? Because the interest ‘component’ relative to the ‘principal’ component was much higher.

We did the necessary calculations and going biweekly on a $200,000 mortgage at 9.0% 5 years, 25 year amortization means you make extra payments over the term of $8,277 saves you $5,308 and reduces the remaining amortization to 14.6 years. The same mortgage at today’s 3.09% saves a mere $426. Amortization is reduced to 17.3 years so you can see that the ‘effect’ is negligible.

It is for this reason that our advice to clients these days is to make monthly payments and also voluntary ‘Prepayments’ twice a year or at year end to accomplish the same thing. Paying down your mortgage faster is always a good thing to do, but remember whether you do it via more frequent payments or by prepayments, you are paying more out of your pocket to generate the additional savings. Most people who make more frequent payments view the mortgage balance and amortization left after the term as pure savings. This is a mistake because only ‘interest’ was saved and any principal reduction was from their out of pocket money.

There is also the danger of going into default faster since any lender can take action based on 3 missed payments, be they weekly, biweekly or monthly.  So if you are relying on two incomes to handle shelter costs and one of you loses you job, if you are on biweekly payments, you can literally go into default in 3 short weeks as opposed to 3 months.

We had a client come in last week who had separated with her husband, was on disability due to an on the job injury and was in trouble because she (they) had chosen biweekly payments. The lender issued a notice of default and was preparing for a power of sale action within just one month of missing the first payment. How scary is that. So it’s not worth it is it? She had never missed a mortgage payment in 20 years; the bank was hot helpful or understanding and stopped returning her calls because they had already sent the file to a litigation lawyer to act for them.

If you are concerned about your job stability or your marriage, even if you are not, and you are currently on a frequent payment plan (and you have a good repayment history) you may want to approach your lender to be put on monthly payments.

Many mortgage brokers across Canada are riled about bank mobile mortgage specialist’s use of the term ‘Mortgage Broker’ to represent themselves to consumers. Big bank head office’s condone this and say it is done “For ease of use” and “To better explain their role to clients” when in fact the opposite is true.

This is absolutely ‘unethical’ since all mortgage ‘brokers’ must, by law, identify him/her self by quoting his/her individual License #, the Broker he/she is employed by and the Brokerage licence on all correspondence and advertising aimed at the general public.

Complaints have been sent to FSCO the Financial Services Commission of Ontario to have them disciplined and/or fined. Mobile bank mortgage specialists work for the bank, get paid by the bank to make money for the bank offering one product line and few options/solutions to consumers.

Confusing the public by calling themselves mortgage ‘brokers’ not only is misleading, it is a complete misrepresentation.  It is not a mistake.  It is also a ‘strategy’ to confuse the public by blurring the line between unlicensed bank road reps and us. Properly licensed mortgage brokers and agents in our industry are highly regulated. We offer a multitude of mortgage products, options and solutions to consumers while also representing their ‘best interests’ in an informative, unbiased, professional manner, which the banks simply do not/cannot do.

And so the competitive ‘Game’ continues. Folks do not be fooled. This is just another example of bank ‘tactics’ get your business.  We choose to always take ‘The High Road’ by delivering our services and representing ourselves the best ways possible, ethically.

Who you gonna call for your next mortgage need?  

More Canadians are utilizing the Rent to Own (RTO) solution these days. These are people who want to own but cannot qualify because of credit and they are tired of renting. Typically an RTO contract runs 2 – 3 years, sometimes longer depending on how long it will take to improve one’s credit rating. The client finds a home that they want to own and an investor buys the property for them. Part of the rent is credited towards down payment and closing costs, but because there is risk to the investor, a (refundable) deposit is required.

We have done several over the years and all have been ‘successful’ for client and investor.  Most RTO programs have ‘Options’ to buy at the end, whereas our program represents a bona fide purchase by our clients (from the investor) from day one, the first day of occupancy. All parties have a clear expectation of timeframe, dates, price etc., and are focused on completing the transaction. We coach (educate) the clients and make sure they are following our advice to gradually improve their credit so they will qualify for an institutional mortgage. We also create a budget and we oversee spending habits to keep people on tract.

An RTO is an excellent solution for self-employed who have good income. We have done a few for single parents, for divorcees and we also do them to help people ‘Save’ their homes. This involves people who may lose their homes as a result of financial problems and who just need time to turn things around. Rather than default on the mortgage and go ‘Power of Sale’ an investor buys the house from them and they repurchase it back in future at a specified price, so there are no surprises. This approach can work very well and the family is not uprooted during critical years of child rearing.

With poor/bad credit you must have good job(s)/income as we must see that you are capable of qualifying so you can successfully complete the transaction in future.

Most are so thankful at the end for the experience with all they have learned and they are well equipped to continue on a path to financial security and wealth. If you know anyone who may be interested in an RTO solution, please call us for an appointment today.

According to ‘Moolala’ author Bruce Sellery who was recently on the ‘Lang & O’Leary Exchange’ TV program, “Going back to your bank for a mortgage, primarily because you’ve been a customer ‘Forever’ is “Zombie Behaviour”. “A lot of people would say it’s loyalty. I would say it’s lazy” he added. Sellery offered his guidance on picking your next mortgage originator and said “Mortgage Brokers work for you, versus the bank mortgage specialist who works for the bank and offers only bank products and rates.”

“You can be loyal to a restaurant you love because they treat you right, but don’t be loyal to your bank because you like the person there” or you feel you will get a better deal because you have been a good customer. He went on to say “It can make a profound difference in the rate you pay.”

Moreover Sellery knows that ‘Bank reps/specialists rarely highlight their product’s negatives vis a vis the competition, because they have to push ‘one brand’ (their banks’ brand) to make a living’. Reactions from our industry on ‘Canada Mortgage Trends’ web site, echoed Sellery. One said “Is there anyone that still doesn’t know NOT to take a bank’s first offer? The sales games banks play are straight out of a car dealer’s playbook.”

Even if you negotiate with your bank, how do you know (when you are not an expert) if there is a better rate out there.  Folks that’s where we come in. We give you the best rate, PERIOD, end of story, the first time every time AND at no cost to you OAC, on approved credit.

Equally as important, is for you to get ‘Objective, Unbiased Advice’ that is in your best interests that will save you thousands, sometimes tens of thousands of dollars. This is where our service becomes invaluable in addition to rate.

We had a new client come in the other day. She and her husband split up and she told us that her bank would not let her out of a loan that they both co-signed for. The bank kept renewing her mortgage every six months at a high rate (above 6%) despite the fact she never missed a payment and despite the fact that they knew she has worked for minimum wage for years and was struggling. The bank did not tell her that she needed to improve her credit score so she could get a better rate. So there she was year after year paying mostly interest and not reducing principal. Fortunately she had good equity in her house, so we are getting her a short term second mortgage to pay out the loan and her first mortgage reducing her total monthly outlay by $500/mth and we are coaching her improve her credit as quickly as possible, so she can qualify for a low rate prime institutional mortgage.

Why didn’t the bank come up with a similar solution or at the very least give her a much lower rate to her get ahead. They know she earns minimum wage, yet they kept taking as much as they could from her. The answer is that they just do not care, and bank reps are training to maximize bank profits.

So should there really be any question who the best mortgage source is? I often scratch my head when I think that if Canadians really understood the benefits of using a top notch mortgage broker versus the banks, that our market share would not be at 25%, it would be at 75% which is the market share the banks still enjoy. People have the power and you can change this dynamic in your favour.

The Canadian Mortgage Professional Magazine (CMP) recently ranked us as one of Canada’s top Mortgage Professionals on the CMP top 75 Brokers list and we want to share this fabulous news with our valued clients. In fact we placed 49^th in overall mortgage volume when compared to all other Canadian Mortgage Professionals in our industry. This ranking includes all cities and metropolitan areas with considerably larger mortgages. Since there are over 21,500 mortgage broker/agents from coast to coast, our standing literally ‘Blows Us Away’.

We also placed 10^th on the Small Markets Top 20 List, which celebrates Mortgage Professionals who work in markets where the average home price is $290,000 or less.

Of course production/volume is only one measure of success. Two other important factors are Customer Satisfaction and Loyalty which are more difficult to measure. However all three do in fact go hand in hand, and we take great pride in knowing our business is growing based to a large extent on ‘Referrals’ and ‘Repeat’ business from satisfied clients, many of whom have become friends.

Our sincere and heartfelt thank you goes out to all who have referred loved ones, friends and acquaintances to us for their mortgage needs over the years. We greatly appreciate your patronage and thoughtfulness.

For those of you whose mortgage is currently with a bank, we invite you to check us out and call us for your next mortgage need. Aside from a level of service that will make you smile, we have so many more products and solutions than a single bank can give you and our unbiased professional advice, will be invaluable to you. 

Call ‘The Price Team’ Dominion Lending Centres, Fergus, Elora, Rockwood to Mount Forest today. We look forward to meeting you in the near future.