Since we know that lenders can back-end insure our mortgages (please read our Mortgage Insurance Market and Wholesale Lenders article first), and that this specifically makes these mortgage investments more attractive to investors, what does it mean for borrowers (every day people like you and me)?

To recap, any mortgage that is inexpensive for a wholesale lender to get financing for allows the lender to pass on savings to their clients, meaning mortgages that are insured get the best rates! An insured mortgage is where a borrower pays the mortgage default insurance because they have less than 20% down payment and is required on all mortgages where the down payment is less than 20%.

But, lenders can also pay for insurance for their client! An “insurable” mortgage is one where the clients puts 20% down (or more), and their mortgage is approved as though a client is paying for insurance, but the actual insurance is paid for by the lender.

Rates for insurable mortgages are generally very similar to insured mortgages. An “uninsurable” mortgage is one where mortgage insurance is not available.

The graph below outlines what type of mortgages are insured, insurable or uninsurable.

So what does this all mean for you, the borrower?

If your mortgage is insurable, you may be able to get the best rates. What is interesting to note is that if you have a mortgage that was previously uninsured, your current lender cannot insure your mortgage but your mortgage may be insurable if you transfer to a new lender – this is where our opportunity lies!

As an aside, if your mortgage was previously “insured,” and you paid for mortgage insurance, you will also be offered the best rates upon transfer or renewal.

Please call your local Dominion Lending Centres mortgage professional if you have any questions.

A Guarantor, when it comes to mortgages, is exactly what it sounds like—they “Guarantee” the mortgage for another person if they are unable to pay back the loan.

Guarantor’s or co-signers are often used if someone has:

• Damaged or poor credit
• Insufficient income

In most cases, someone with poor credit and/or insufficient income has a more challenging time securing a mortgage. Adding a guarantor can help get the file approved as the lender is assured that he or she will be paid, should the mortgage holder default.

Many people will assume that a co-signer and a guarantor are the same thing. This is not the case though…there are key differences that you should know before becoming a guarantor on a mortgage.

1. Whose name is on the loan?
This may seem like a small detail, but when it comes to loans, whose name is on it matters!
With a guarantor, their name will not be on the title of the property, but it will be on the mortgage. With a co-signor, this changes in that their name will be on the mortgage and on the title of the property. In addition to this, for a guarantor mortgage the guarantor must be a spouse. With a co-signer this is not the case, and you can utilize whomever agrees and meets the qualifications.

2. What’s the Risk?
For the people seeking a guarantor, a portion of risk is alleviated because they have the guarantee of the guarantor. However, for the guarantor, there is a heightened risk. They are responsible for the entire amount of the loan if the borrower defaults at any time. With this in mind, lenders require the guarantor(s), in addition to the borrower(s), to qualify for the loan they are looking to borrow. They must meet the following lending requirements which include:
. Credit Check
. Disclosure of income
. Disclosure of Liabilities
. Disclosure of Assets

It is also highly advisable that a potential guarantor seek legal advice before signing for the loan—and this should be a separate attorney from the one that is involved in the mortgage transaction. Seeking out proper legal advice can allow the potential guarantor to ensure they fully understand the contract, the loan, and any other details.

One final note that should be evaluated by any potential guarantors, is the relationship with the person you will be signing for. You are taking a risk and taking on a lot of responsibility for this person and it is advisable that you know the person well and trust them.

3. What other Variables are there to Consider for Guarantors?
There are a few other things that a guarantor will want to consider before finalizing anything. One of these is the fact that if you are a guarantor, you may not be able to qualify for a large loan or mortgage on your own. Look at your goals and future (or current) expenses before taking on this additional responsibility. As a final note to guarantors, they may want to consider creditor insurance (amount varies based on the loan) to protect themselves and their assets.

4. Can your relationship with your bank dictate if I need a Guarantor?
In some cases, yes! If you have a long-standing relationship with your current bank and they have seen your ability to responsibly handle debt-repayment, they may consider not requiring you to have a guarantor. This is not always the case, but it is an option that your mortgage broker may review with you.

These 4 facts along with your mortgage broker’s advice, can help you decide if you want to be a guarantor, or if you truly require a guarantor mortgage after all! If you have any other questions about guarantors or co-signers, we encourage you to reach out to your Dominion Lending Centres Mortgage Broker—we know they will be happy to help!

We have been warning clients for years about bank collateral mortgages but now we are seeing the effects on people’s lives first hand. Collateral damage is a term that means damage that is unexpected, and is no fault of yours.

“I had absolutely no idea the bank had tied up $200,000 of our equity,” said Tina not being told the bank was going to register our mortgage above the value of our property. They were told nothing about the Collateral Mortgage only that they could always borrow what they needed in future without a lawyer. Folks this is the kind of deception banks use on innocent consumers.

Tina is a high earner making almost $100K as a general manager for a Guelph firm. Her problems began when her husband left his $90K job to pursue self employment. The jobs for him were lining up but it’s tough in the beginning of going out on your own especially when some people don’t pay on time. Their mortgage with their bank was only $350,000 but it included a $50K line of credit. So as things got tighter the bank rolled out a line of credit, and another and another all at higher and higher rates. When she asked for one loan to pay off the credit, the bank offered her a 10% loan with payments she could not afford. To make matters worse, a week later her Visa was increased to $30K at 18% interest. So finally, she went to a mortgage broker in Guelph. The Guelph broker arranged for a 2nd private mortgage for a $110K at 14% interest. Unfortunately, the broker was new and didn’t realize the bank had collateralized most of the value in the property and the deal fell apart. So that’s where we came in. We had never seen one bank roll out so many credit facilities to one couple. Honestly, we felt sick to our stomach. This poor couple would have had to sell their home if we didn’t find a solution and fast.

No prime mortgage lender would touch these clients with all this debt and Tina’s pristine credit had fallen below the 600 mark where lenders will approve the mortgage. So we were able to find a lender who would charge slightly higher rates in order to get them out of this mess. By breaking the first collateral mortgage we were able to get a $570,000 first mortgage to 85% of the value of their home. Tina’s payments are now affordable at $3,000 per month. She had been paying double that with three credit lines and two credit cards and they were drowning. In a year, we will able to move Tina’s back into a prime mortgage at the best rates out there.

So moral of the story, is be careful people. Homeowners are not being told their mortgage is collateralized until it’s too late. This product is good for seasoned investors not everyday homeowners, who do not know the potential pitfalls.

If you are drowning in debt, don’t give up. Give us a call. There is always a solution and we always work hard to find the best one.

Click here to get help choosing the best mortgage rate.

For the first time in a long time, we are now encouraging Variable Rate Mortgages (VRMs) for clients that qualify.

Fixed mortgage rates have increased by about 0.40% in the last 6 weeks. Today’s Fixed rate is hovering around 2.84% and just a few weeks ago, it was 2.44% and for a time it was 2.24%. That 5-year fixed rate is long gone.
It looks as if fixed rates will continue to climb in 2017. Why? There are political and fundamental reasons for this (more on this below). Rest assured, it’s not panic time… there are great options besides 5-year fixed rates and now is a great time to explore those options.

At the moment, Variable rates are being offered anywhere from 0.35-0.6% below Prime, which is presently 2.7%. RIGHT NOW, FOR A LIMITED TIME, WE CAN GET 2.1% VARIABLE ON HIGH RATIO MORTGAGES. CALL US FOR DETAILS!

Many lenders are “bonusing” or rather, charging premiums of about .15% on Conventional loans, making High Ratio, insurable mortgage rates cheaper (mind you the insurance premium evens things out in the end).

To qualify for a Variable, you’ll need to debt service as if you’re making payments at an interest rate of 4.64%. So, if you can afford that, we say go Variable and knock down your principle balance as much as possible.

There’s a notion of fear where VRMs are concerned. However, there are strategies you can employ so that you’re protected in the event of a Bank of Canada rate increase. We will help you navigate this.

• Set your monthly payments at the Fixed rate payment level
• Set up automatic savings withdrawals in the amount of the difference in payment between Variable and Fixed (or even the qualifying rate payment level) so that you’ll have a cushion in the event of a change
• You can always lock in during your term (talk to us for details)

Now, back to why Fixed rates are on the rise. Two big reasons: Trump and Trudeau. Trump intends to stimulate the economy with spending, which means inflation. Inflation triggers rate hikes. Back in October, Trudeau’s cabinet shocked us with stricter mortgage rules without any input from experts and did so in just 2 weeks, instead of the usual 3 months. That certainly shook things up and triggered rate hikes.

Historically, as Fixed rates rise, Variable rates drop. This is a trend to be aware of and we can help you figure out how to benefit from the trends. Your best interest is our only interest. Contact us with any questions you might have. We are here to help!

We are born into this world into a home with our parents. Home is where the heart is. Home is where we feel safe, a place where we can let our hair down, have fun and be ‘us’. Home can be in an igloo, a wigwam, a cottage, a rental or a home that we own.

What is Home Ownership?

Home ownership means owning an asset through which we can create ‘tax free’ wealth. This for most of us if not all of us, in the beginning, means obtaining a mortgage to acquire a home with a minimum down payment.  What a huge benefit, being able to obtain the home of our dreams, be it the first or the last one, with leveraging.

How does Home Ownership Benefit You?

The immediate benefit of home ownership is appreciation of the entire asset, not just appreciation on the money you put in, like most other investments in this world. This is a huge opportunity for us to create wealth. But only if we are smart about it. Some are. Many are not!

The ‘wealth’ y people know how to leverage their capital to maximize their returns. This is what the banks do (to us) every single minute of every single day, to unsuspecting and uninformed Canadians. The rich have learned to use other peoples’ money to their advantage, while the masses have not and remain in the struggle of not getting ahead, or worse for many, living paycheck to paycheck.

Be Informed, Be Savvy

If you want to overcome your struggle and you want to get ahead in this increasingly crazy but still beautiful amazing world of ours, our advice is to become informed and savvy about your mortgage. If you do not educate yourself, you are unwittingly letting the banks take advantage of you, to put it mildly.

The Best Advice from Trusted…Respected…and Loved Professionals

Simply put, we give heartfelt informative advice; advice, that we would give to our own children. We care deeply and feel tremendous gratitude in helping our peeps get ahead financially and otherwise. We continue to be blessed with wonderful appreciative clients and now friends and acquaintances.  It’s a beautiful experience each and every day to be able to meet and provide guidance to such great people, especially those who have hit a ‘bump’ in the road and need to get back on track.

At Price Team Mortgages we love what we do, and now Tracy and I are so incredibly blessed to have two of our amazing daughters, Jennifer and Melanie, both moving, both building and bringing our two granddaughters to Fergus to make this community their new ‘home’. We are over the moon excited to announce they are joining us to make ours a true family business going forward which will continue with the passion and love we bring to you folks from our hearts.

As some of you head toward retirement it’s time to start thinking about the mortgage you are carrying.

Too often we see clients who wait for a health crisis and then come to us for help. Remember, it’s very difficult to get money from a bank when you are retired. Strategize with us before retirement and you will have peace of mind when you retire.

There is always the option to sell your property but most times people are not ready to give up their homes and more often than not, in this part of Ontario, rent is higher than mortgage payments.

Mortgage Retirement Options

Here are a few ways you can change your mortgage now and protect yourself for the future.

1. You can take a longer amortization and do an equity take out. That’s means you have cash should the unforeseen happen.  We offer up to 35 year amortizations at low fixed and variable rates.
2. Take a mortgage/line of credit product. You can go up to 80% of the value of your house if income supports.   When retired and on fixed income this is difficult sometimes, so arrange it beforehand.
3. Take a line of credit rather than a mortgage. You pay higher rates than on a traditional mortgage but you are out with no penalties when you sell.

Don’t Wait for the Unforeseen

We have helped many homeowners in the area ease into retirement with no worries. If you are retiring in the next five years it makes sense to come and talk to us about your options. Don’t wait for a health crisis or a severance or even a death of a spouse to plan for your mortgage in retirement. You don’t have to feel badly that you have a large mortgage heading into retirement.  The key is making it affordable and without bringing along consumer debt.

Use Prepayment Privilege Rather than a Lower Amortization

One of the common mistakes homeowners make is cranking down the amortization as retirement nears. While that is fine while working keep in mind that the banks tend not to let you increase your amortization once you are at a lower income from retirement or the unforeseen. You are much smarter to take a 25-35 year amortization and utilize the prepayment options at typically 15-20%. Prepaying will reduce your principal while still working, and at retirement you have the option to return to the lower affordable payment if you have increased your mortgage via the frequency pre-payment option.

Amortization Scenarios

Let’s say you have a $250,000 mortgage and you have a 15 year amortization at 3.09%. Your payment is $1790.00 per month plus property taxes. That’s an easy payment for a couple earning $100,000 a year. But it’s a very different story if one of you is either forced into early retirement because of a health crisis or the job becomes redundant.

Now here’s our plan. Prior to retirement, especially if there is a chance you may be given your walking papers or health is already a concern, apply with us for a 35  year amortization at the variable rate of 2.4%, your payment drops to $870. Continue to prepay your mortgage if you wish as much as 50 k per year through either lump sums or monthly increased payments, but keep the lowest payment for reasons mentioned above.

Call Us to Strategize

As we always say, live for today but have a Plan B if life throws you a curve ball. Come and talk to us prior to retiring so you don’t find yourself in a jackpot.