Renewing Your Mortgage.

Did you know? Close to 70 percent of mortgages never make it to the end of their term! This means that, for a variety of reasons, homeowners are ending their mortgages early. However, that still leaves a solid 30 percent of home buyers who keep their mortgage until the term is up and it is time to renew!

If you are not planning to move in the near future and are happy with your current mortgage, you are likely one of the 30 percent who will renew once the term ends. So what does this process look like?

When it comes time to renew your mortgage, most lenders will send you a renewal letter when there is around 3 months remaining on your term. While nearly 60 percent of borrowers simply sign and send back their renewal without ever shopping around for a more favourable interest rate, this is actually the best time to check out your options.

Most standard terms are 5-year terms and, with that much time having passed since signing, the market rates could be very different once the term is up! Despite this, lenders tend to provide higher rates on renewals versus new clients as they are hoping that the ease of renewal will prevent you from seeking out new rates. However, shopping around for a better rate is not as difficult as it sounds – especially with the help of a mortgage broker – and it could end up saving you a couple hundred dollars a month (depending on your situation)! Ideally, you should be keeping track of your own mortgage term end date as shopping for a new rate between four and six months before your expiry will ensure you are able to find the most affordable option for you.

After shopping around, you may find that your bank is actually offering a great rate – in which case you can simply submit the renewal! But if you are able to seek out a lower rate, we promise you will thank yourself for putting in the effort to find out! As another point of interest, renewal time is also a great time to make an extra payment on your mortgage, if you are able!

Beyond renewing your mortgage, home owners also have the option to transfer or switch the mortgage. This can be done any time during the term of the mortgage but may have penalties associated with breaking the mortgage before the term is up. Transferring to another lender is generally done to get a better rate, but you will need to go through the entire mortgage process again – including the ‘stress test’ – which makes shopping around at renewal time an even smarter option.

If your mortgage is coming up for renewal and you want to find out what lower rates may await you, contact your local mortgage professional! They can help you find the best option for where you are at in your life now and help you to ensure future financial success.

Market Smarts: Home Buying Guide.  Published by DLC Marketing Team

The Canada Mortgage and Housing Corporation (CMHC) is one of Canada’s three mortgage insurers. Beyond insuring mortgage, CMHC also offers consumer guidance in the form of a unique step-by-step guide for home buying Canada, which the organization has dubbed the “roadmap” to home ownership.

The 27-page guide, Homebuying Step By Step is available on CMHC’s website. This guide is a manual for homeownership, breaking down the phases potential buyers will need to consider when looking to get into the housing market.

what homebuyers should know

This guide focuses on preparation being the key to homeownership success, and touches on many things for homeowners to keep in mind. A few good guidelines when considering purchasing a home, including debt management, necessary documents, pre-approval, and more!

DEBT-TO-INCOME RATIO

According to the CMHC, a homebuyer’s monthly housing costs should never exceed 32 percent of their average gross monthly income. This includes monthly mortgage payments, property taxes, condo fees and heating expenses. It is also recommended that a family’s debt load, such as car loans and credit card payments, should never exceed 40 percent of the average monthly income. While this recommendation may be somewhat conservative, remaining within these guidelines will ensure that you will be able to afford your debts, while maintaining future financial stability.

NECESSARY DOCUMENTS

This guide also includes a segment regarding the documents a home buyer will need for a mortgage. When you meet with your lender or mortgage broker it is recommended that you have these documents handy, which include things like personal identification, proof of a down payment, proof of income, proof of savings and investments and details of current debt.

MORTGAGE PRE-APPROVAL

CMHC also recommends that people get pre-approved for a mortgage before they start looking for a home. Getting pre-approved can prevent future roadblocks when you find your dream home, and ensures that subject-to-financing clauses won’t be an issue. It also guarantees the rate for up to 120 days, so that you can access the best mortgage once you’ve found the right home.

SOURCES FOR A MORTGAGE

This guide also discusses the various sources for mortgages, which include: banks, trust companies, credit unions and pension funds. As always, it is recommended that you shop around before you make a decision. Hiring a mortgage broker is another great resource, as they are able to access rates for more than one lender. The guide advises asking real estate agents, friends or family members for recommendations on a lender or broker.

Along with the above, this guide also details information about your credit score, mortgage loan insurance, home considerations, the mortgage process and home management. There are also very detailed financial calculations, which factor in costs that many new homebuyers might not even think about, such as groceries, dining out and hobbies. In addition, you will find information about:

• Principles that help buyers determine how much they can safely afford to spend on housing.
• A list of the upfront and ongoing costs of homeownership.
• Information on how to prepare for a meeting with a lender or broker.
• Definitions of key terms to know when buying a home.
• Explanation of mortgage basics and tips for how to manage your mortgage.
• Tips on how to maintain your home and protect your investment.

The underlying theme of the guide is to prevent Canadians from getting in over their heads in debt when buying a home. This guide also shows just how far mortgage brokers have come in Canada, with them mentioned alongside banks throughout.

If you are looking to purchase your first home, contact a Dominion Lending Centres mortgage broker today for expert advice! It is our job to help find the best mortgage product for YOU.

Are You Ready for Home Ownership?.

While most people know the main things they need to buy a home, such as stable employment and enough money for a down payment, there are a few other factors that may help you realize you’re ready – perhaps even earlier than you thought! In fact, there are four main things that can help you determine if you are ready for home ownership:

YOU CAN AFFORD YOUR DOWN PAYMENT AND ONGOING COSTS

It is easy for potential homeowners to get wrapped up in focusing on having enough money for the down payment and then forget about afterwards. It is important that you are not only financially able to afford the down payment, but that you can manage the monthly mortgage payments and ongoing maintenance as well. My Mortgage Toolbox app from Dominion Lending Centres has some great calculators to help you determine what you can afford on a monthly basis before you get in too deep. If you have enough funds in the bank for a down payment and are able to manage the monthly costs associated with the size and price range of home you would need, then you may be ready to start house-hunting!

YOU HAVE GOOD CREDIT

As most people know, credit score plays a major role in qualifying for financing to purchase a home. If you have a good credit score, which should now be at least 680 to qualify, then you have nothing to worry about! However, if your credit score is below this, it is more likely that you will be paying higher interest rates (and therefore have higher payments), or that you could be denied all-together. Before you begin your home buying journey, it is vital to have your credit score in order to ensure you can get the best mortgage product and rates. Working with a mortgage professional can help you get on the right track in the shortest time possible. Sometimes all that’s needed are a few subtle changes, or debt consolidation, to improve your credit score within a couple months.

NO OTHER LARGE, UPCOMING EXPENSES

Do you plan on buying two new vehicles in the next two years? Are you thinking of starting a family? Are you considering going back to school? Although you may think you can afford to purchase a home right now, it is vital to be honest about your future plans. What does your life look like in 1 year? 5 years? 10 years? If you know that you aren’t planning on incurring big expenses that you need to factor into your budget anytime soon, then that’s something that may help you decide to buy a home.

YOUR ARE DISCIPLINED

One of the most important factors for purchasing a home is budgeting. You have to know what you can afford – and stick with it! It is easy to be tempted by a gorgeous 6 bedroom home or a backyard pool or private community, but at what cost? If going all-in is going to leave you scrambling each paycheck or derail any plans of future financial stability, it is worth rethinking. Understanding what you NEED in a new home, versus what you WANT, is a good step towards determining what you’re looking for and planning a budget that suits your needs so that you can continue to live comfortably.

These are just four signs that you may be ready to purchase a home. If you’re seriously considering buying or selling, talking with a Dominion Lending Centres mortgage professional can help ensure you have the best experience when it comes to buying a home!