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Tag Archives: fixed rate mortgage

Historically Low Mortgage Rates are Vanishing

11 Saturday Feb 2012

Posted by torontomortgagetrends in Uncategorized

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bank of canada, bank of montreal, closed mortgage, fixed rate mortgage, royal bank of canada., toronto dominion bank

Historically Low Mortgage Rates are Vanishing…

The banks offered five-year mortgages at 2.99 per cent, specials that were a boon to home buyers and revealed increasing competitiveness among Canada’s big banks, but Toronto-Dominion Bank and Royal Bank of Canada have raised their mortgage rates ahead of schedule, putting an early end to record-low rates.

This low rates debuted at a time when the housing market is poised to slow down and the Bank of Canada has been warning heavily indebted consumers to do the same.TD raised its special four-year closed fixed rate mortgage by 40 basis points to 3.39 per cent, effective 7 Feb 2012. Also
at the same time, it is introducing a special five-year closed fixed rate mortgage at 4.04 per cent.The bank’s five-year closed mortgage stands 10 basis points higher at 5.24 per cent on the same day. Although TD had said it would offer the special rates until Feb. 29.

Rates can go up and down depending on market conditions,While Banks & Financial Institutions kept this offer available as long as they could, the new rate reflects rising bond yields and the subsequent increase in the cost of funds.

Royal Bank of Canada made similar changes to its rates on 6 Feb 2012. The new rates also took effect nextday. as they define as their long term funding costs have gone up considerably due to global economic concerns and while we have held off in passing on these rate changes to our clients, it is now necessary for us to increase this mortgage rate.

RBC cut its rate to 2.99 percent in January in response to a similar cut from the Bank of Montreal, whose offer has since expired aswell.

Still there is hope and that is Mortgage Brokers. Contact for more Low Mortgage Rates options click here and apply online

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Fixed Rate Mortgage vs. Variable Rate Mortgage

05 Monday Dec 2011

Posted by torontomortgagetrends in best interest rate, centum, credit, information exchange, mortgage agents, mortgage broker, Mortgage Brokerage, Mortgage FAQ, Mortgage Lenders, Uncategorized

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fixed rate mortgage, variable rate mortgage

Fixed Rate Mortgage vs. Variable Rate Mortgage

One of the many decisions home buyers have to make is to decide between choosing a fixed and variable-rate mortgage. With rates being so low, it confuses buyer now as may be the time to choose to go variable.

By choosing a fixed-rate mortgage, you are locked into an interest rate and your payments stay consistent over a given term and period unless you decide to use other options allowed under mortgage terms and your agreement. For first time home buyers taking on a huge amount of debt, a fixed-rate mortgage may help them sleep a little better at night. The homeowner will be paying more in interest, but they will know exactly what they will be paying for the entire mortgage term.

The homeowner that chooses a variable-rate mortgage can expect payments to fluctuate as interest rates rise and fall. For that reason, the homeowner usually gets a better interest rate reflecting the improbability and increased risk. (As Finance Minister recently made comment over we can believe the interest rate may not be rising sharply in this near future, but you never know it can definitely fluctuate).With the central bank rates barely changing over the past year, and not expecting to change any time soon, lenders have been closing the gap between fixed and variable mortgage rates. With the rate gap shrinking, it means it’s a good time to think about choosing a variable-rate mortgage, the buyer have more grip over the mortgage deals.

There are a few factors that favour choosing a variable-rate mortgage. Over the last fifty years, variable rates mortgage have been approx. 1% cheaper than fixed-rate mortgages. The last time variable rates were at a disadvantage compared to fixed-rates mortgage was in the late 1980’s, when the rate get huge surge.

Variable rates mortgage in Canada are near an all time low. Recently, The Bank of Canada indicated they’ll be keeping interest rates low as they are uncertain about the North American and European economy. Since the U.S. Federal Reverse promised to keep interest rates low through 2012 and 2013, and Europe is facing debt crisis, we can expect rates to stay low in Canada as Canadian interest rates usually don’t much differ from rates in the U.S.

Some of the top mortgage lenders/ mega brokers/ financial institutions in Canada think rates might drop even lower; it all depends on government monitory policy and economical recovery…

When it’s time to sell your house and you are not at the end of your mortgage term, it’s cheaper to break a variable rate mortgage than a fixed rate mortgage. Typically when you break a fixed rate mortgage the penalty is the greater of three months interest or the Interest Rate Differential. If you’re looking to break a variable rate mortgage you are only subject to a penalty of three months’ interest or better yet verify with your mortgagee, lender, bank, financial institution.

One of the great advantages of choosing a variable rate mortgage is you can lock in all or part of your mortgage at a fixed rate anytime you want, when it is variable open. if you did locked in for variable rate for certain period, your mortgage obviously with variable rates mortgage are a riskier product to choose, but it’s a risk that can really pay off as well. If you’re not a risk taker, ask your mortgage lender broker if they offer a half fixed and half variable product. It’s better of both world 50/50 mortgages.

Talk to us before you decide to buy real estate, renewal, refinance, 2nd mortgage, equity loans, cash back mortgage, or pre-approval…
Vijay Gandhi,
Sales Representative- REALTOR®,
RE/MAX Dynasty Realty Inc. Brokerage*
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Mortgage Agent Licence #: M10001947
CENTUM Metrocapp Wealth Solutions Inc.
Licence #: 12147

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P: 416.335.4335 | 905.471-0002
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What does “Refinancing a Mortgage” mean?

01 Thursday Sep 2011

Posted by torontomortgagetrends in Uncategorized

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fixed rate mortgage, free consultation appointment, initial free consultation, refinancing your mortgage, variable rate mortgage, What does "Refinancing a Mortgage" mean?

 What does “Refinancing a Mortgage” mean?


Simply put, when you refinance a mortgage, you pay off an existing mortgage in exchange for a new mortgage loan. The answers to “how”, “when”, “where”, “who you choose to refinance with” etc. will all influence your decision to refinance your mortgage.

Since your home is probably your most valuable asset, it is prudent to be well informed before you choose to work with any lender. Working with a qualified mortgage specialist, will help you understand all the pros and cons of your individual situation before you make that final decision.

Why refinance?

There are a variety of reasons of why you may want to consider refinancing your mortgage. Some of these are

  • You can get a new mortgage at a better or lower interest rate
  • You may want to increase the length of your mortgage term to reduce your payments
  • On the other hand you may want to decrease the length of your mortgage term to pay off your mortgage sooner
  • Move from a variable  rate mortgage to a fixed rate mortgage
  • Available funding for home improvements & renovations
  • Refinance your home to pay off debt
  • Increase cash flow for investments or for other purposes
  • Save thousands of dollars in interest over the life of your loan

Remember to always take advantage of your home equity to save money!

When is it a good time to refinance?

As we said above, you need to be well informed before refinancing. There are many factors to account for when deciding if it is a good time to refinance for you. At torontomortgagetrends.com we will explain the process to you fully so that you are aware if the time is right for you.

Will I qualify for refinancing my mortgage?

Make an initial free consultation appointment to discuss your situation with our qualified mortgage specialists. We will outline your options and help steer you in the right direction. We will evaluate the factors that affect your situation and be able to determine the amount you can borrow.

What we can do for you?
Take advantage of the low mortgage rates that are being offered. Options include:

  • Refinance your home to reduce the term of your mortgage to build equity faster!
  • Use increased equity to obtain cash flow for purposes such as:
  • Renovations
  • Funding for cars, boats or holidays
  • Your children’s education

You can refinance either with a first and/or second mortgage or line of credit. Our team of professionals will create the best financing solution that best serves your needs. They will evaluate your current situation and ensure that your financing objectives are met. We can help you with a variety of mortgage refinance options and terms, so that you have a customized solution that makes sense and best benefits you!

If you are interested in refinancing your mortgage or loan, simply call torontomortgagetrends.com or click on apply online! to get in touch with a torontomortgagetrends.com specialist. We will work with you to create a solution that benefits you and optimizes the use of your equity.

apply online or call 647.267.6338

Mortgage Features : An Info.

26 Friday Aug 2011

Posted by torontomortgagetrends in centum, information exchange, Mortgage FAQ

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canadian interest rates, double digits, fixed rate mortgage, Mortgage Features, variable rate mortgage, variable rate mortgages

Mortgage Features

Choosing A Term You Can Live With

What term should you take? That’s a good question. Before you look at the issue of term specifically, there are things you should consider:

When you’re looking at term and interest rates, look also at what you can live with in terms of payment amounts, because trying to predict where interest rates are going is a tough job. There are many forces that affect Canadian interest rates – economic, political, domestic, and international.

Even the best economists cannot pinpoint this, so how can we. You can twist yourself into knots worrying what will happen. When the rates dropped in 1992 to their lowest in 35 years, no one thought that they will get that low again. They dropped even further. Since then we have enjoyed low rates and we don’t think of rates going in the double digits again. That’s wrong to assume as well. Who would have thought in 1978 that rates only 3 years later would go as high as 21.5%?

Predicting interest rates is very much a gamble and one should be prepared to keep a close eye on the market.

Here’s a suggestion: If you feel that rates are at a point you can live with and you want to guarantee that rate as long as possible, go with a long term (5 years, 7 years, and 10 years). If interest rates appear to be rising, take advantage of the lower rate for as long as possible, and remember, if you sell your property, you can take the mortgage with you to the new property or have someone assume the mortgage. It could prove to be a great selling feature if you have an assumable mortgage at very low rate.

If rates appear to be falling, you can choose a shorter term (6-month convertible or variable-rate mortgage) that offers the flexibility to lock-in to longer term at any time, just in case the rates start going the other way.

Fixed vs. Variable Rate Mortgages

With a fixed-rate mortgage, the interest rate is set for the term of the mortgage so that the monthly payment of principal and interest remains the same throughout the term. Regardless of whether rates move up or down, you know exactly how many your payments will be and this simplifies your personal budgeting. In a low rate climate, it is a good idea to take a longer term, fixed-rate mortgage for protection from upward fluctuations in interest rates.

A variable-rate mortgage (also called adjustable-rate) provides a lot of flexibility, especially when interest rates are on their way down. The rate is based on prime and can be adjusted monthly to reflect current rates. Typically, the mortgage payment remains constant, but the ratio between principal and interest fluctuates. When interest rates are falling, you pay less interest and more principal. If rates are rising, you pay more interest and less principal, and if they rise substantially, the original payment may not cover both the interest and principal. Any portion not paid is still owed, or you may be asked to increase your monthly payment. Make sure that your variable-rate mortgage is open or convertible to a fixed-rate mortgage at any time, so that when rates begin to rise, you can lock-in your rate for a specific term.

Closed and Open Mortgages – What’s the Difference

An open mortgage allows you the flexibility to repay the mortgage at any time without penalty. Open mortgages are available in shorter terms, 6 months or 1 year only, and the interest rate is higher than closed mortgages by as much as 1%, or more. They are normally chosen if you are thinking of selling your home, or if expecting to pay off the whole mortgage from the sale of another property, or an inheritance (that would be nice).

A closed mortgage offers the security of fixed payment for terms from 6 months to 10 years. The interest rates are considerably lower than open, and if you are not planning on any one of the above reasons, and then choose a closed mortgage. Nowadays, they offer as much as 20% prepayment of the original principal, and that is more than most of us can hope to prepay on a yearly basis. If one wanted to pay off the full mortgage prior to the maturity, a penalty would be charged to break that mortgage. The penalty is usually 3 months interest, or interest rate differential (I.R.D. – please refer to glossary for detailed explanation).

Buy first or sell first?

Which comes first-the purchase or the sale-is the greatest dilemma facing homeowners planning to move-up.

If you choose to buy first, make sure the offer to purchase is conditional on selling your current house. That way, if you sell your house, both deals proceed; if not, the deal is off, and you won’t be stuck with two homes. Selling first though will give you considerable peace of mind.

Knowing how much money you’ll get on the sale will help you establish a price range for the new house. Selling first allows you to negotiate the purchase more vigorously, too, since unconditional offers carry a lot more weight with sellers.

Market conditions are another important consideration in deciding which route to follow. In a seller’s market, you’ll probably do better selling after you’ve bought, but in a buyer’s market, it makes more sense to sell.

If you obtained an insured mortgage after April 1’st, 1997, the premium you paid on the mortgage is now portable to another property (if you closed before this date, it is not portable, meaning that if you bought another home and your mortgage needed to be insured, you must pay the applicable premium again.

Amortization

The Amortization Period is the number of years it would take to repay the entire mortgage amount based on a set of fixed payments. The longer the amortization, the more interest is paid over the life of the mortgage. Therefore, when choosing the amortization period, careful planning should be done to meet your cash flows. Remember, the amortization can be easily shortened after the closing, by simply making arrangements to increase your payments.

MORTGAGE FEATURES – To Help You Become Mortgage-Free Faster

Monthly, Bi-weekly, or Weekly payments?

Once you have the mortgage amount, rate and amortization period, your monthly payment can be calculated. Now is the time to decide how often you want to make your payments, because by selecting the right payment frequency could literally mean thousands of dollars in savings. For example, on a $100,000 mortgage at 8% interest, amortized over 25 years, the monthly payments would be $763.21. However, by simply switching to bi-weekly payments (every two weeks) with payments of $381.61 (half of the monthly payment), there would be a saving of $30,484 in interest! Weekly payments of $190.80 will save $30,839 in interest, and you will be mortgage free in the 19’th year.

You notice that there is very little difference between weekly and bi-weekly payments, however. If you have other payments throughout the month, bi-weekly may be less stressful and easier to budget. If you are self-employed or commissioned, and your income varies greatly from week to week, it may be easier to pay monthly and use your prepayment privileges to knock the amortization period. Also, not all weekly and bi-weekly payments work the same as above. Let us show you how to manage your mortgage to your best advantage.

Prepayments – Extra Payments against Principal

This is one of the most important features to look for when you are getting a mortgage. Having the prepayment privilege that works to your specific needs could mean a difference of thousands of dollars over the life of your mortgage. Although all financial institutions offer some form of prepayment privilege, the amount and how it can be applied varies from one to another. Some offer only up to 10%, once per year, and on the anniversary date. Then there are others that offer as high as 20% per year, and prepayments can be done throughout the whole year as long as the total does not exceed 20%. Ideally, you should work your prepayment privilege as often as possible throughout the year. Saving aside to make that big prepayment is not the best strategy. We have found that the small, regular prepayments will get you quicker to that mortgage burning party (I hope we’re invited).

(TIP: Put your tax refund to good use. The average tax refund for Canadians in 1995 was $1,000. Even this amount will pay large dividends over the life of the mortgage)

Often times most mortgage shoppers are only looking at rates and overlooking this interest saving feature. That is why it is important to have a mortgage specialist make some recommendations for your specific needs. Not only can we find you the lowest rates, we can also get you the features that will work to your advantage.

Increase Your Regular Payment

The secret to borrowing is borrow it early in your life. The reason is that the future value of the dollar decreases. Why we are bringing up this fact is that when you borrow early, your payments are set. As time goes, our incomes increase (hopefully), but our mortgage payments stay the same, provided you locked-in to a long term, fixed mortgage. Therefore, in the future we may be in a position to increase our payment on the mortgage, regardless if you are paying weekly, bi-weekly, or monthly. Any increase in payment is directly going to pay down the mortgage, thus saving you thousands down the road due to the effect of interest not compounding on that amount for the life of the mortgage. Neat little feature.

Again, this feature varies from bank to bank. Some allow increasing payment up to 10%, and others as high as 25% per year, some up to 15% only once in the term of the mortgage. If you increased your payments, should the need arise, you can go back to the original payments as well. A mortgage specialist will run a “Mortgage Reduction” model for you and make some recommendations.

Double-Up on Payments

A few lenders will allow you to double-up on your payments, and the extra payment goes directly in the principal. If you double-up once in the year, you have just achieved the benefits of the weekly or bi-weekly mortgage. This is a neat little feature for someone who prefers the monthly payments but wants the results of the weekly and bi-weekly payments. And some lenders allow you the flexibility to skip a payment if you have made a double payment previously. This defeats the purpose, but when times are tough, a neat little feature to have.

Early Renewal Option

This is a great feature to have when interest rates are on a rise. If you are locked-in to a term and the mortgage will be maturing in months or years down the road, and the mortgage rates are on a rise, you can renew your mortgage before the maturity and lock-in the low rates for a new term. You may not even have to pay anything out of pocket and still save over the term, especially if rates move up considerably.

Portable Mortgage

If you want to take your mortgage with you when you move, you can if your mortgage has a clause that allows you to do that. This option allows you to continue your savings on your lower rate if the going rates are higher, as well as avoid any penalties if you were to break that mortgage. If you need a larger mortgage for the new property, your existing mortgage amount can be increased. As for the associated costs, since a new mortgage document must be registered on title, legal fees and normal appraisal fees would be applicable.

Assumable Mortgage

If you are moving and don’t want to take your mortgage with you, or you are selling and not buying, an assumable feature will allow the buyer(s) of your property to take over the mortgage, providing they meet the lender’s qualifying criteria. By doing so, you will not pay any penalties as you are not breaking the mortgage contract. In fact, if your interest rate is lower than those available at the time, your assumable mortgage suddenly became a great selling feature for your property.

A word of caution here: Just because someone assumes your mortgage does not necessarily mean you are off the hook for the responsibility. You must get a release from the Mortgage Company to ensure that you are no longer liable for it. Some mortgage companies automatically offer a release, but with others, you must make the request, and do it through your lawyer.

Mortgage Life Insurance (optional)

Since your home is likely your single largest investment, you may want to protect that investment. Many financial institutions offer mortgage life insurance at an affordable and competitive price, and the requirements for eligibility are usually quite simple to meet. If you or your co-borrower (if you choose joint coverage) dies, the insurance company will pay off your mortgage. Also, some institutions now offer job-loss and/or disability insurance to borrowers. The best thing to do in making a decision about how to insure your mortgage is to have an insurance agent work out the figures for a private term insurance and mortgage life insurance.

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