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The Mortgage Centre - Mortgage Worx Inc.

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Office: (403) 380-2211 Toll Free: 1-800-513-4449

Welcome to the April issue of the Mortgage Financing Journal, which is designed to help keep you in the know regarding Real Estate and Mortgage related matters!
This month's edition offers tips to help prepare for porting your mortgage; resources for seniors; and some timely lawn care hints now that Spring has Sprung!

Moving House Means Moving Mortgage
Do you have a mortgage on your existing home and you're thinking of moving? There are some things you first need to consider.

The importance of accurate and detailed answers around questions of the portability of your existing mortgage is vital prior to taking the first step to listing your property in order to move to a new one. All too often a cursory phone call is made directly to the lender to inquire 'is our mortgage portable' and often the answer to that question is delivered in a simple 'yes'. However there is more to this answer, and a detailed conversation with your Mortgage Centre professional is vital.

Although nearly all mortgages are portable, the key point often missing from the one word answer is that a borrower MUST re-qualify for that mortgage. It is treated like a brand new mortgage application and underwritten according to current lending guidelines. Guidelines which may have changed significantly since the original mortgage was approved.
A renewal is a simple process with limited paperwork required while porting a mortgage to a new property is essentially starting from square one. This said a conversation with your Mortgage Centre professional at renewal time is also prudent.

There are also variations around lender process which require greater clarity, few lenders will allow the porting of a variable rate discount, yet the prepayment penalty itself can still be recovered up to 12 months later in some instances. The key is that a mortgage of equal size or greater and an equal (net) rate or higher is registered. Should a mortgage of a lower size be taken then the penalty is pro-rated. There are many ways to avoid a penalty with the right assistance navigating policies.

Again this is where your Mortgage Centre professional can play an important role. Clarifying the widely varying polices around penalty recovery. Thinking of selling your home? Your first call should be to your Mortgage Centre professional to confirm portability policies and potential strategies to minimize risk.

Maintaining Seniors' Independence Through Home Adaptations
The overwhelming majority of seniors wish to continue to live in their own homes for as long as possible. However, many homes are not well designed to meet our changing needs as we age.

Canada Mortgage and Housing Corporation (CMHC) provides resources and publications to both assist in identifying as well as addressing the difficulties that seniors can experience with adapting their home for continued residence.

Each of the sections of the CMHC Guide deals with an activity in the home. In using each section of the Guide, first decide whether you are having difficulty with the described activity. If you are, examine the types of adaptations described in the section and decide whether any could help you.
Although this Guide is designed to assist you in assessing your own needs, you may wish to ask a family member or friend to help you answer the questions. Sometimes an additional pair of eyes will spot something you have overlooked.

Getting the work done
You, a family member or a friend may possess the knowledge and special skills required to successfully carry out some of the adaptations you have identified.

However, if you are going to get a contractor to carry out the work, it is advisable to obtain more than one estimate. This Guide, complete with your notes and descriptions, can be used as the basis for obtaining tenders and negotiating with the contractors. 
You may have to be selective in choosing adaptations in order to stay within your budget, so be sure to concentrate on the adaptations that will be of most benefit to you. Every house and every person’s requirements are different, so be sure you agree only to adaptations that you need and want.

Homeowner Tips
Lawns are great for picnics, slip and slides, cloud watching and having your teenager earn an allowance to keep it looking great!
Spring Lawn Care:
As the ground thaws across Canada, except for those on the West Coast who have forgotten what a snowflake looks like at all, the time for gardening and lawn care is upon us.

Aeration is often referred to as the best fertilizer for your lawn - and it's fairly simple to do. The process involves the removal of small cores - or plugs of soil - which are then deposited on the surface. Within a month or so, these soil plugs will work their way back into the grass thus ensuring a lush thick lawn requiring a weekly cut. Perhaps also a reason to avoid aeration for some! However for those pursuing Greenskeeper perfection, aeration should be followed by sanding and overseeding. Between the bulky, heavy aeration machine and load of sand required, this is often a task best coordinated with a few neighbours, ideally ones with fiscally motivated teenagers. The aeration and overseeding should lead to a reduction in weeds throughout the summer as well.

Allow your local garden centre expert to suggest a proper fertilizer and schedule to suit your lawns needs.
Some gardeners prefer no lawn at all, as do some non-gardeners. Yet as much as I may prefer a yard that is palatial decking from fence to fence the reality for children is that a lawn is a canvas on which to paint many a summer memory. From picnics, to slip and slides, from cloud watching to earning an allowance lugging a mower around. Lawns absorb water and release clean oxygen all while being aesthetically pleasing with a modest amount of effort.
May yours be stunning and low maintenance.
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April Mortgage Rate
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March 18 Rate Update
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Welcome to the March issue of the Mortgage Financing Journal, which is designed to help keep you in the know

regarding Real Estate and Mortgage related matters!

This month’s edition looks into mortgage payment frequency and a very important related keyword; ‘accelerated’.  We

then offer some thoughts on whether or not now is the right day to purchase a property.

Please feel free to ask questions or offer feedback on anything outlined below via phone or email.


Over the past number of years banks have come up with a rather confusing set of payment frequency options that have left

some mortgage clients a bit disappointed 5 years down the road.

Rather than the Amortization crushing ‘Accelerated bi-weekly’ plan which a quality Mortgage Broker will discuss with

you, clients left to their own devices run the risk of opting for simply ‘bi-weekly’ payments.  Here is the math;

Let’s use a $100,000 mortgage amount (to make working out your own numbers simpler) with a 25 year amortization, a

2.74% interest rate and a 5 year term.

Monthly Payments: $460.01

Ending Balance 60 months later: $85,043.18

Now let’s calculate bi-weekly payments and the balance remaining at the end of the 5 year term.

Bi-Weekly Payments: $212.18

Ending balance 60 months later: $85,043.60

The balance is 42 cents higher.  This is because you did not effectively pay anything extra over the 60 months to the

lender.  The sum of the annual payments is identical.  Now let’s insert the word ‘ACCELERATED’ (bi-weekly) into the


Accelerated bi-weekly Payment: $230.00

Ending balance 60 months later: $82,563.13

Ah-ha, now you have a $2,480.47 lower balance, and you have paid $163.87 less interest over the 5 years.  Excellent!

How did this happen?  When one opts for ‘accelerated’ in the above scenario, the payment increases by $17.82 per

payment, or $463.32 per year.  For a total of $2,316.60 in additional funds going straight to the mortgage balance.

The big picture is improved as well, as you have effectively lowered your amortization from 25 years to 22 years and 5


Shaving 2.5 years off a 25 year mortgage might not seem huge, but in 22.5 years it surely will make you happy.  Imagine

having $460.00 more per month (per $100,000 of mortgage balance) to play with for 2.5 years.

If you started with a $300,000 mortgage, then we are talking about $1380.02 per month X 30 which is a total of

$41,400.60.  All from one word ‘accelerated’.


This question arises on a near daily basis within our social circles… Answer:  Today is the right day assuming one has

found the specific property that works for them on all levels.

If the conversation is about a property which one plans to own for at least the next few years, then yes, the right time to

buy is today.

Over a 7-10 year horizon the day-to-day, even the month-to-month gyrations of the market will tend to resemble those of a

small yo-yo on a large escalator.  Yes there are some ups and downs but the lows often do not drop below the second last

high. This is true of nearly any major urban 25 year chart of Real Estate Values.

There are some key considerations that will dictate not only the continued value, but perhaps more importantly your own

ability to stay put for that magic 7-10 year timeframe:

 Home location

 Layout

 Age

 Size

 Recreational amenities

 Schools

 Distance from workplace

 Potential basement suite revenue

The list goes on…

Getting all of these variables aligned is something that takes dedication on the part of the both the buyer and Realtor.  The

hunt itself can easily consume a few weeks or more, and for some may result in dozens of viewings.  This is more than

enough to juggle without also trying to ‘time the market’ on that perfect home.

Speaking of timing; consider allowing for a small overlap during which you have access to both the current residence as

well as the new one.  Being able to install new flooring throughout, complete interior painting, or upgrade kitchens and

bathrooms, without having to live in the middle of the disruption is well worth an extra month of rent or the marginal costs

of bridge financing.  The costs involved are surprisingly lower than most clients expect.

Keep in mind during your search that the MLS #’s are an imperfect indicator of what is happening today in the market, as

in literally ‘today’. MLS data reflects purchase contracts that were negotiated 30, 60, 90 or even 120 days prior to the

completion date which was itself in the previous months report.  In other words, by the time the MLS data indicates a

trend one way or another, said trend has in fact been in motion for as long as 6 months and could be either reversing or

ramping up further.

Where then to get the most accurate data? Talk to frontline folks, Realtors, Brokers, Appraisers, etc. for a better handle on

up-to-the-minute trends.  Ask an Industry Expert.

Short term fluctuations in values and/or interest rates are themselves not the key factors in many peoples decision to buy.

Instead it is finding that perfect combination of all the factors that create a home within a community and the realisation

that homeowners win in the long run by owning, not by sitting on the sidelines.

It is all about finding a place you can call home for the duration. To be able to plant roots and become a part of a

community.  Home ownership will undeniably continue to be a part of living the Canadian dream.

Perhaps the (short term) timing will feel imperfect, as it did for presale buyers in 2007, whose completion dates were set

for Spring 2009. However, a few years later most will be glad that they bought when they did.  In fact many were smiling

again as soon as the Spring of 2010.

Home ownership remains the one true forced savings plan. It is one of the best investments we make socially as it provides

an individual and/or a family with a certain sense of security, stability and community.
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Feb Rates
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As a broker and franchise owner, you are exclusively receiving this email for funding over a $100 million in the fiscal 2014.  A monumental achievement only few franchises have earned this year putting you in exclusive company.  Attached are EPS and PNG files which can be used  to promote your franchise.  We encourage you to insert these logos on your website, social media, business cards and any other marketing material to promote your team work and achievement to better market your franchise brand.
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Office: (403) 380-2211 Toll Free: 1-800-513-4449
Welcome to the February issue of our monthly newsletter!

This month’s edition looks into Property Assessments as a measure of real estate value.  It also goes deeper into the impacts of the Bank of Canada lowering lending rates and how that affects mortgages. Please feel free to ask questions or offer feedback on anything outlined below via phone or email.

When homeowners receive provincial Property Assessment notices, some will smile and have a bit more spring in their step, feeling the assessed value is accurate or perhaps even overly positive. Others will wilt and lament a modest gain or even a decrease in the assessed value over the previous year or period. Reactions will of course vary factoring in the potential increase in property taxes that tends to come along with stronger assessments.  The reality, setting aside taxation concerns, is that neither parties' emotions should be tied to the ‘value’ printed on these notices. 

A provincial property assessment is an approximate value based on the (broadly) estimated market value as of the previous years. There is a lag time between the estimation of valuation and delivery of the envelope. It also fails to involve a formal site visit or viewing of the inside of the home to consider either significant upgrades or significant deterioration.
To put this in perspective, few lenders will work with a detailed official appraisal report that is even 90 days old.  Most prefer a report completed with 30 days, as markets can move significantly month over month.
For these reasons, among others, a provincial property assessment should not be relied upon as a totally concrete indicator of value for the purposes of either purchase, sale, or financing.

Always enlist a licensed professional, or perhaps even two or three, in order to get a timely and detailed appraisal of current market value. This will provide a much more accurate reflection of current market values reflecting recent comparable sales, value for zoning, renovations and/or other unique features to the property.  An appraiser is an educated, licensed, and heavily regulated third party offering an unbiased valuation of the property in question.

Think of your provincial property assessment as something akin to a weather forecast spanning far larger and more diverse areas than the unique ecosystem that is your neighbourhood, street, and specific property. The forecast may call for rain in your city, yet you might have a ray of sunshine radiating upon your street specifically.

On the heels of headlines forecasting ‘inevitable interest rate hikes’ came (from left field for many journalists, less so for many Mortgage Brokers) the announcement of a 0.25% rate reduction to the Bank of Canada’s overnight lending rate.

The majority of Mortgage Brokers found themselves spending the first two work weeks of 2015 calming clients in the face of multiple headlines forecasting interest rate ‘shocks’ ahead. In turn, the past two weeks were spent explaining to variable-rate clients the subtle, yet important difference between the bank of Canada’s Prime rate and their mortgage lenders' ‘Prime’ rate.

Lenders base variable-rate mortgages on what is referred to as their own internal Prime rate. Although historically lenders have moved in lockstep with the Bank of Canada decisions, there was some initial reticence to lower effective interest rates on current variable-rate mortgages and after nearly a week without movement Lenders reduced their internal Prime rate from 3.00 to 2.85% sharing some of the Bank of Canada’s reduction with variable rate mortgage and line of credit holders, but not all of the rate reduction.

One important point is that the Bank of Canada’s Prime rate is specifically NOT used to qualify clients for mortgages. In other words, Canadians do not currently qualify for any more mortgage debt today than they did the day before the rate reduction announcement. Accordingly this reduction in interest rates does not directly strengthen purchasing power for home buyers, and thus should do little to add more fuel to real estate values. 
It is further worth noting that, historically, as lenders reduce their own Prime lending rate on variable-rate products, the discounts offered on these products - mortgages, lines of credit, etc -.tend to be adjusted upward, negating any potential gains for new mortgage applicants. Existing closed variable-rate discounts will of course continue to be honoured until the end of the client's mortgage term.

In short, although this rate reduction may bode well for clients currently in a variable-rate mortgage, it may not be of significant net benefit for clients applying for a variable-rate product in the coming weeks. Although today we have both deep discounts on variable rate products, and the new lower 2.85% Lender Prime rate. New applicants may have their cake and eat it too.

Fixed rates, although largely dictated by the bond market, have been edging downward since Jan 5. Despite this material and documented decline, there had not been a major headline noting this. Rather headlines were largely promoting the opposite of what was occurring in reality. The day that the Bank of Canada announced the cut of 0.25%, the bond market saw a (then) record low of 0.83% and has since dipped below 0.60%.

This has created significant increases in lenders' fixed-rate profit margins, and arguably calls for further rate reductions to fixed-rate products, in particular the five-year fixed-rate mortgage. However, as with the cut to Prime, lenders have thus far been slow to respond. Offering 0.05% and 0.010% reductions and reaping the increased profits. Lenders remain unlikely to make any significant moves until one breaks ranks. With strong property values coupled with strong sales activity in most major markets, there seems little incentive - or fundamental desire - on the part of lenders to reduce rates further. 
What is evident at this time is that variable-rate clients will continue to be the big winners into the foreseeable future, and those clients who prefer a fixed-rate product will also continue to benefit from historic lows as well. It should be a very busy Spring market! 
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Latest Rates September
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September Events, News and tips
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