Tag Archive for: mortgage options

Psychological Barrier

A psychological barrier is a commonly held belief that something can’t be done until someone brave enough proves everyone wrong. Take Roger Bannister for example, nobody believed that the human body could be able to run the mile in less than 4 minutes. So on May 6th, 1954 he proved them wrong by running it in 3:59.4. With this barrier broken, the record only stood for 46 days till it was broken again.

The last 10 years or so we were holding onto a psychological belief that interest rates would stay low forever. Thus giving us access to basically cheap money for as long as we wanted. This barrier too was broken this week when the 5 year fixed discounted rate rose above 5%. Our continued inflationary pressures that have pushed prices of food, fuel, housing and now bond rates to new levels.

Just a year ago the 5 year fixed discounted rate was at 2.09%. Today this same product is now at 5.09%. Even with the low rates of last year we were qualifying clients at the stress test rate of 5.25%. Now it’s the contract rate + 2%, so that means to qualify you must stress test at 7.09%. So if you were on the limits of your debt service ratio’s last year to get approved at 500K, you now have to set your sights at a lower price point. Either that or find a co-signer to help you qualify.

Quick note to let you know that it has been since before the financial crisis in 2008 that we had 5 year fixed rates above 5%.

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

Patrick

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 Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Two important components

There are two very important components when considering private lending to meet your borrowing needs. They are rate and fee’s. There are other important components like loan to value and location but today I want to talk about rate & fee’s.

The rate for a private mortgage is typically interest only for a 1 year period. I usually call these bridge loans as it helps bridge you from one situation to another. The rate determines your carrying costs for the loan. While there are various private lenders out there, the rule of thumb I advise clients is that it will be 1% per month interest only calculated monthly, which works out to 12% per year.

The next part is the fee’s. Which is the basically the cost to obtain the mortgage. Similar to high ratio loans where there is a CHMC premium, for private mortgages the fee is the lender & broker’s cost to arrange, secure and lend the money. In most cases this is added to the loan amount and then the monthly payment is based the principal amount + the fee’s. However these can be also be paid upfront and in full upon closing.

Not all private mortgages are created equal. Make sure that the rate and terms make sense to you. Also because of the rate & fee’s these are never supposed to be long term solution but short term fixes, so treat them as such.

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

Patrick

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 Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Stress Tested

There were plenty of complaints when the OFSI increased the stress test rate from 4.79% last year to 5.25%. At the time the concern was it would remove a lot of buyers from the housing market and cool things off. Well at least this was the goal but it never happened. In hind sight it was good that the stress test rate was increased as it proved that consumers could afford the higher rates if they happened.

So all those who closed last year and chose a variable rate, remember when you were stress tested it was proven that you could afford the higher rates. While you were loving the fact that your mortgage was in the 1% rate for last year. Now with the recent increases to prime you are still in the mid to high 2% range. Still well below the 5.25% stress test rate.

Now the people who close this year, the stress test rate is no longer 5.25% as it will now be the contract rate + 2%. So a current five year fixed rate of 4.89 now has a stress test rate of 6.89. The variable are tested at 5.25% or the contract rate +2% which ever is greater. That means currently 5.25% is the number for variable.

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

Patrick

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 Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Don’t Wait

Don’t wait till the stars align and everything is perfect in your life to be happy because that very rarely happens. Choose, yes I said choose to be happy now instead. Don’t wait for the perfect job, perfect relationship or your perfect body in order to be happy. Just be happy now and see how the everyday things in your life being to change.

Suddenly the traffic jam is not so bad as it gives you the opportunity to listen to some great music or call your family. Your car won’t start but meet some great people on your walk or bus to work.

Your happiness is not decided by your bank balance, the type of car you drive, the clothes that you ware or how many followers you have on social media. You and only you are in control of your state of mind. So for a little experiment just make a decision that you will not pin your mood or happiness on any external event but will instead decide to be happy irregardless of what life serves up for you.

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

Patrick

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 Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Necessary Evil

Let’s face it, insurance is a necessary evil. We need it to drive a car, you need it to buy a home or live in an apartment and you need it to run a business. What they don’t tell you is when you need to use it they will make you walk over hot coals, crawl over broken glass and give up your first born to prove that your claim is valid.

I know this is because that people have been less than honest and have taken advantage of them in the past. However isn’t starting with the assumption that the claim is invalid until proven otherwise a poor place to start? Let’s hope that your claims experience is significantly better than the one that I am going through right now.

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

Patrick

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 Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Celebrate

As I sit here writing this today, I find myself sore in places that I haven’t been sore in quite a long time. I may have over did it just a little bit this weekend, but that in no way means I will changes my approach to fitness. It just means I have to adjust my daily training to account for what I did the previous day.

The main point of my post today is to say that we should all celebrate life. Not just when things are going extremely well, but also when you’re a little sore or a little broke. Being thankful for what you have always has a tendency to bring more of it in your life. Even be thankful for the goals that you have not achieved yet, and especially for the lessons along the way.

It may also have something to do with recently listening to “I just want to celebrate” by Rare Earth. If you are in the mood for a classic rock tune that you may not have heard in a very long time, I suggest that you put it on. Great vibe for a beautiful day.

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

Patrick

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 Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Obstacles or Opportunities

I am a glass half full kind of guy. I prefer to look for opportunities rather than obstacles. Not everything goes according to plan every time but if all you focus on is obstacles then you will fail to see the opportunities or the options available to you. As it is how you deal with what happens in life that truly defines you. We all go though failures, breakups, job loss and death in the family. Nothing about any of that is unique to one individual, it’s how you respond to what’s happening to you that determines who you become.

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

Patrick

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 Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

New Normal?

For the first time in many years the discounted 5 year fixed rate is now just under 5%. The insured rate is 4.59% while the uninsured rate is 4.89%. This is quite the change from over a year ago when it was 5 year rate was just over 2%. This latest rate increase is due to the fact that bond yields ( which are the basis for fixed mortgage rates) have soared over 30 basis points in the last 5 days alone. Up 34 basis points in the last 30 days, with the biggest spike in the last week.

The days of rock bottom low interest rates is now gone. In fact we haven’t had bond yields and interest rates at this level since 2007-2008. Variable rates while still much lower than fixed rates, with the current prime rate at 3.20%, has also been steadily increasing and is expected to increase again at the next Bank of Canada meeting in July.

All this means that we better start to expect that interest rates will be and will stay much higher over the next couple of years. The days of pretty much free money with the low interest rates are gone. It is a good thing that we had the stress test in place over the last couple of years to prepare us for what’s happening now.

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

Patrick

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 Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Affordability

affordability

noun

  1. The extent to which something is affordable, as measured by its cost relative to the amount that the purchaser is able to pay.

The last few months our affordability has definitely taken a hit. Everything from gas, housing and food is up. There are recent news reports that people are eating less in order to save some money. Yet our pay checks have not kept up with the steady increase of the cost of everything.

In terms of housing and mortgage affordability, things are vastly different over the last 24 months. We have had a stress test for mortgage qualification, this is in order to protect us from rising rates so we will still be able to afford to make the payment. Not sure that they had this current market in mind when they came up with them.

At the start of last year our qualification rate was 4.79%. This changed last spring when the housing market went into overdrive and they increased it to 5.25%. The thought was that this increase would cool the market, in my mind there was no effect. Now there is another part of the stress test which says that the qualification rate will be either the stress test rate or the benchmark rate +2%. Now that we are in a much higher interest rate environment, it is now the latter as 5 year fixed rates are starting at 4.29%, so this makes the qualification rate now 6.29%.

With these higher qualification rates and still high housing prices, this has now priced many out of the housing market. For example people who have lived here in Halifax all their lives can not afford to buy in the neighbourhoods where they grew up. Yet there is still more talk about future interest rate increases by the Bank of Canada to help curb inflation.

So with our current inflation rate still sky high, talks of more rate increases and the Russian invasion of Ukraine still dragging on, we may have to do our best keep our spending in check until this all starts to settle down.

Patrick

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 Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here

Unmotivated

We have all had times in our lives when we have been unmotivated to get anything accomplished. When I don’t want to or I don’t feel like it seems like the perfect answer to almost any question. However if you spend too long in that mindset you will get nothing accomplished.

Because it’s days when you feel unmotivated but do it anyway that will make you feel the best. When you didn’t want to get up but ended up having an awesome day. When you didn’t want to do your workout but did it anyway and now you feel incredible. When you didn’t want to make your sales calls but ended up having some amazing conversations.

The magic happens when you just put one foot in front of the other and just keep moving. Psychology follows physiology, meaning if you want to feel better than start to move your body. Get funky to get out of your funk. Sooner or later you will forget why you were unmotivated in the first place.

I didn’t want to go for a recovery run today after doing 15K yesterday, but I did it anyway and I am glad that I did.

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

Patrick

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 Brokerage (2021-3000179) Broker (2021-3000180), Ontario(M18001555) & in British Columbia(BCFSA #504098).

p.s.s.s You can download my new mortgage app here