Tag Archive for: Halifax Mortgage Broker

38 Months in

Doesn’t mean anything to you? Well it should if you are planning on signing a 5 year fixed mortgage rate in the near future. 38 months is the average when people break their five year fixed mortgages. They could be broken for any number of reasons, marriage, divorce, job loss, job transfer or big promotion. The point is that I want to make the experience of you breaking your mortgage ( if you choose to do so) as painless as possible.

So there are a few things you need to know and I will then explain them a little bit further. Interest rate differential, posted rates, discounted rates and three months interest.

The penalty to break a five year fixed mortgage is either 3 months of interest or interest rate differential, which ever is greater. The formula to calculate out this penalty varies greatly between lenders, where most of the big 5 banks using posted rates in their calculation and the broker channel using discounted rates.

Since variable rates are tied to the Bank of Canada prime lending rate and these are short term investments, the penalty to break a variable is based on three months interest.

Five year fixed mortgages on the other hand are based on bond yields. Your lender takes the five year bond yield marks it up then sells it to homeowners as either 5 year posted or discounted rates. Then packages up these mortgages sells them to investors as mortgage backed securities with a guaranteed rate of return over the 5 years. If you break your contact prior to the end of the term you will still owe the bank the missing return, thus the reason the the penalty.

However as I have said not all lenders calculate out the penalty the same way. The big 5 banks use posted rates in their calculation. So I have just run two examples: 1st from big bank blue ( you know who they are), and the 2nd from one of my broker based banks First National. I have used an imaginary start of your mortgage of Feb 26th 2018, 5 year fixed with a rate of 2.79 from both lenders, and a balance of 225,000. Now because they use different rates in their calculation you will have an estimated penalty from big blue bank of $9,925 and an estimated penalty of $2,750 from First National. That’s a difference of $7,175 and yet you both started with the same rate.

This is because the rate you received from Big Blue bank was the posted rate minus a discount, giving you your rate of 2.79. So to figure it out take the non discounted rate from the date your mortgage was advanced, say there is 24 months remaining so the lender will get the rate for the remaining term, and now they get the difference between your non discounted rate and the rate for the remaining term, divide that by 12 to get monthly interest rate and multiply that by 24 the number of months remaining on your term and multiply this by the mortgage amount to get your penalty.

Long story short, if you really must go with a fixed rate then do it with a broker channel lender, if not then variable is defiantly the way to go.

I look forward to hearing from you in regards to your mortgage needs.

Pat

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

Fix your Variable

Most people like the fixed mortgages for peace of mind it gives them knowing that their payments will be the same every month. Those who go variable or adjustable rate mortgage like that they paying less than those on fixed rates 9 times out of 10. However there is a way to give you both the peace of mind of knowing that your payments will not change while still staying on a variable rate mortgage.

To do this simply contact your lender after your mortgage closes and request to increase your payment. Depending on the lender they will allow you to increase it by as little as $100 per payment or up to 20% of your principal amount. So for example say that your mortgage payment was $1000/month as set by the lender. This payment includes principal and interest. Because you’re so smart you have requested to increase your monthly payment by $200 to $1200/month. This means that your extra $200 per month works out to $2400 a year or $12,000 over 5 years that goes straight towards to principal balance of your mortgage.

This will allow you to become mortgage free faster, and who doesn’t want to do that. You see mortgage are just a tool to help you get into your first home or your dream home. You shouldn’t have one forever. Make extra payments and pay it off sooner.

I look forward to hearing from you in regards to your mortgage needs.

Pat

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

Dig deep!

Often with clients it’s necessary to ask them tough questions about their personal and financial situation. This is because we need to know in advance of sending their file off for approval if there are any possible roadblocks or issues that need to be addressed. You see I would prefer to know of anything that may prevent the client from getting approved so it can be dealt with prior to getting any surprises from a lender.

Getting to know my clients and getting as much as possible upfront allows the process to be much smoother for the client, the broker and the lender. Sure there are lenders who will approve files with just the application and the credit bureau but why run the risk of getting into trouble as you move toward funding.

In most cases this is the largest financial decision of your lives. So dealing with a competent broker is in your best interest. So if you have had past bankruptcies, consumer proposals, was married but now divorced, gifted down payment, co signed a loan for a friend or just started working for your self. These are all things that could impact your ability to get a mortgage.

My goal is to help you get into your first home or your dream home. Getting to know the real you is part of the process to making this happen.

I look forward to hearing from you in regards to your mortgage needs.

Pat

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

#TuesdayVibe

Well after several months of mortgage rates going down, they turned the corner and started going back up yesterday. As fixed mortgages are tied to bond yields, they hit a 10 month high on Monday with the 5 year bond closing at 0.67% forcing lenders to pass the increase on to borrowers.

The bond yields are increasing because there is belief that the US inflation with rise much quicker than initially expected. Thus taking our Government of Canada bonds up with them. While I have no crystal ball, we have been very fortunate lately with our current rock bottom fixed mortgage rates. Nothing stays low forever, so if you have been on the fence about buying a property then now is the time to get pre approved and lock in your mortgage rate in advance of future increases.

While these increases have only affected fixed mortgages. The variable rate is based on Bank of Canada Prime Rate. Which after their last meeting in January 2021, they kept their overnight rate at .25% and said that it will likely stay unchanged till 2023. So if you are comfortable with a variable rate, and 9 times out of 10 people have saved more money that way, then I would highly suggest sticking with a variable rate mortgage. As an added bonus even if you every break it, your penalty is only 3 months interest vs a much larger penalty for breaking a fixed rate.

Irregardless of slight changes in the 5 year fixe rate, don’t forget that to get a mortgage these days that you must qualify based on the 5 year posted rate of 4.79%. Also known as the stress test. So while your overall potential payment may have increased by a small amount your buying power remains the same.

I look forward to hearing from you in regards to your mortgage needs.

Pat

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

Plan Ahead!

As the common expression goes ” If you fail to plan, then you plan to fail”. Since today is Sunday, it is the day the highly organized plan for their upcoming week. Athletes that I know call this meal prep Sunday where they prepare the meals for the upcoming week so it’s just one less thing to worry about during the week. They also plan their training for the week ahead.

Burnout is just another way of saying decision fatigue. You get to a point in your day where you are mentally spent from having made too many unplanned decisions. Steve Jobs notoriously wore the same outfit so it was one less thing that he had to decide on for his day.

Start slowly by planning what you will be wearing for the next day by laying it out the night before. I have been doing this for years and it saves a lots of time. Then if you are so adventurous plan the start of your morning. Including the time you will get up, your morning meditation or exercise routine, meal then right up till you start work.

By planning your day, it will make it easier for you to hit the objectives for your week, your month and your year. What every your objective it, plan ahead and break it down so it is more obtainable.

If your plan is to buy your next home, your dream home or refinance your current home let me know as I would love to help you reach your goal.

I look forward to hearing from you in regards to your mortgage needs.

Pat

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

Take your pick!

The worst kinds of calls to get as a mortgage broker is when someone calls and asks for your best 5 year fixed rate. My answer typically is that it depends. Although I know what the rock bottom 5 year fixed rate is for that particular day, there is no guarantee that is what they will get.

You see after 30 seconds of being on the phone with someone I don’t know their credit, weather they are buying or refinancing, if the transaction would be high ratio or not and if they are self employed and require a stated income mortgage. All these things are required to determine what rate you will eventually receive.

Judging a mortgage by it’s rate is like shopping for a vehicle based solely on the horsepower. There is so much more to consider. This is why when working with a client I need all the documents upfront upon application so we can together find the best mortgage product that meets their needs.

The best rate comes with the best product that meets my clients particular needs at this particular time in their life. Sometimes is 12% , or 4.99% or even better 1.54%. Every situation is different so it’s best to get to know you so together we can find what works best.

I look forward to hearing from you in regards to your mortgage needs.

Pat

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

Just good enough is NOT good enough!

Sure just getting a passing grade will probably mean that you will graduate high school but just scraping by is not a recipe for success in life. I am sure there are many careers for you if you just want to put in your time, get a pay check and drink with your buddies.

You wouldn’t want the doctor who barely passed med school to operate on you. The lawyer who squeaked by the bar exam to represent you in court. The accountant did the minimum requirements for their CA designation to prevent you from getting audited.

Let’s face it if you have a tooth ache you don’t try to do your own dental work. We all know what it looks like if you cut your own hair ( for those lucky few who still have lots of hair). There are many back yard mechanics out there but I wouldn’t go to them if my vehicle needed serious repairs.

The same applies to your mortgage. It’s because there are lots of brokers and lenders out there that you need to work with someone who will help you sort through it all and find the best product that meets your particular needs. Be aware that shopping for rate alone may come back to haunt you when you find out your lender doesn’t have a portability clause, or calculates your penalty on posted rates or that your mortgage is locked in and closed and you can only break it with the power of sale.

“We are what we repeatedly do. Excellence then, is not an act, but a habit” Will Durant 1926 ( Sorry not Aristotle folks)

I look forward to hearing from you in regards to your mortgage needs.

Pat

p.s- You can click on this link to start the process whenever you are ready. Schedule your meeting with me here.

p.s.s- I should tell you that I am licensed in Nova Scotia, Ontario(M18001555) & in British Columbia(BCFSA #504098).

Don't look a gift horse in the mouth!

Ok I am not asking you to kiss your sister. There is nothing unpleasant here (for you or your sister). Heck it’s practically free. I am going to break with one of my golden rules and talk to you about mortgage rates. Now before you get too excited, I am doing it to illustrate an opportunity rather than as a price comparison tool.

In the 7 plus years that I have been a mortgage broker, I have seen rates go up an down. I have seen 5 year fixed rates as low as 4.5% to as high as 6.2% for the discounted AAA rated clients. The current turmoil in our financial markets has caused a liquidity crisis for many major lenders ( specifically in the US). This has made it necessary for the US government to inject Billions into the capital markets and to the banks them selves. Our Canadian government, thanks to our stronger banks, only had to inject money directly into the capital market. Anyway back to my point, these injections of large sums of cash are now finely finding their way into a position to benefit the consumer. As a result rates are at all time lows. Current 5 year discounted AAA money is at 3.95% and this is unheard of.

You are probably asking yourself, “well what’s in it for me?”. Let me tell you, if you are a home owner and you currently have debt outside your mortgage, like credit cards ( interest rates of 17.99% or more), Car loans (6-9%), unsecured personal loans (at 20% or more), there may not be a better time than now to look at putting all your egg’s in one basket. Doing this will lower your overall cost of borrowing and possibly save as much as several hundred as month.

However I must tell you that there is a downside to these low interest rates. Yes you heard that right, and you deserve to know the truth. You may not know but mortgages are contracts, and if you are in the middle of your contract term and you go to break it, there will be penalties. If your banks says that they are not charging you a penalty that they are just giving you a blended rate, you are still paying the penalty but in the new rate. Unless you have a closed term you can get out of your current mortgage with either a 3 month interest penalty or an interest rate differential penalty. The banks will charge the greater of the 2 penalty’s.

I had a client call me recently about refinancing and they had just signed a new 5 year mortgage about a year ago at posted rates ( which are higher then discounted, today’s posted is 5.45). I did a calculation for them and found out that their penalty would be over 15K. Now don’t get caught up in the number, if you end up saving more over the 5 years than the penalty then it is worth it to pay the penalty. In this case it was not. Please contact my office today to find out if this makes sense for you.

Cheers,

Pat

p.s- You can find me on Twitter,Linkedin, Facebookand friendfeed.
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PatSawler@Craigburn.com

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