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Mortgage Stress Test Changes Coming April 06-2020

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Starting in April, the government will change the rules that cover mortgage lending in a way that should, in the short term at least, make it easier to qualify for a loan to buy a home.

The Department of Finance says that as of April 6, the so-called “stress test” for mortgages will be calculated in a new way.

The stress test was implemented in January 2018 as a way to let some of the speculation out of the housing market at the time. It does so by making sure borrowers will be able to pay down their debts even if rates move higher. A would-be borrower is tested against his or her ability to pay down the loan at a higher interest rate, and if the borrower fails the test, a lender isn’t allowed to loan them money.

The rules had the effect of cooling the market, especially for first time buyers, which brought down prices in many markets because it shrank the pool of buyers.

ANALYSISAssessing whether 2020 will bring a Canadian property tumble: Don Pittis

At the time it was brought in, the benchmark was set at whatever the five-year posted rate at Canada’s big banks is, which is currently at 5.19 per cent. But under new rules announced on Tuesday and set to be implemented in April, the new bar will be “the weekly median five-year fixed insured mortgage rate from mortgage insurance applications, plus two per cent.”

“This will ensure that people only take on mortgages that are appropriate for the situation, but it does mean the changes in the stress test will be there if the average … rates provided by the banks actually goes down or up,” Finance Minister Bill Morneau said of the changes. “It will actually adjust appropriately to dynamic market conditions.”

The change tinkers with one of the major criticisms of the stress test in the first place, which was that the bar was set arbitrarily high. And non-bank lenders don’t like that the stress test rules give the big banks even more control over the market than they already had. Sherry Cooper, chief economist at Dominion Lending Centres, says the banks would always drag their feet in changing their posted rates, no matter what was happening in the market, “because it’s the rate they use in calculating the penalty for breaking a mortgage,” she said in an interview Tuesday. “This takes the big banks out of it.”

Source: https://www.cbc.ca/news/business/mortgage-stress-test-1.5467330

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Are Toronto House Prices Headed Back to 2016 Levels?

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Are Toronto House Prices Headed Back to 2016 Levels? Concern is growing that Canada’s largest housing market may be about to experience a new round of froth, similar to that seen in 2016.

Back then, red-hot housing markets in the Greater Vancouver and Toronto Areas ultimately forced the federal government to introduce the 2016 and 2018 mortgage stress tests on both insured and uninsured mortgages.

While sales activity and prices took a hit in both markets, the recovery for the Greater Toronto Area seems to be nearly complete. The Toronto Real Estate Board (TREB) reported in January that the MLS Composite Benchmark price was up 8.7% compared to January 2018—the fastest pace of growth since October 2017.

Source: https://www.canadianmortgagetrends.com/2020/02/toronto-house-prices-headed-back-2016-levels/

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Coronavirus fears help push down Mortgage Rates

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The ripple effects of the coronavirus are being felt on Canada’s bond market, which is translating into lower mortgage rates. Variable-rate mortgages are generally tied to the Bank of Canada’s overnight benchmark rate. Their fixed-rate counterparts depend on the five-year Government of Canada bond yield, which fluctuates with market forces. It’s fallen sharply since the coronavirus first surfaced.

Source: https://ca.finance.yahoo.com/news/coronavirus-fears-help-push-down-mortgage-rates-204114945.html

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Canadian interest rates may start dropping again in April: RBC

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The Bank of Canada announced this week that it would leave its mortgage market-influencing key interest rate unchanged again. This development — or lack thereof — did not come as a surprise to economists who pay close attention to the central bank’s moves. It was, after all, the fifteenth straight month that the interest rate did not change.

Source: https://www.livabl.com/2020/01/canadian-interest-rates-may-drop-april-rbc.html

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Bank of Canada keeps rates at 1.75%, trims 2020 economic forecast

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Bank of Canada | Finser Mortgages

The Bank of Canada is keeping its key interest rate target on hold at 1.75 per cent and forecasting a slower-than-expected start for the Canadian economy for 2020.

The central bank says in its latest forecast that the Canadian economy will grow by 1.6 per cent this year, down 0.1 of a percentage point from its projection in October.

Source: https://globalnews.ca/news/6445742/bank-of-canada-rate-announcement-jan-22-2020/

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Taking Advantages Of Private Mortgages

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TAKING ADVANTAGE OF PRIVATE MORTGAGE – THE BASICS

Private mortgages are usually a short-term solution for borrowers looking to get a quick solution to their financial problems without much hassle. Private mortgages are the loans which are taken from lenders who are not a part of a bank or a financial institution. They are individuals offering private mortgages Oakville from their own funds. These kinds of mortgages have the stigma of “bad” attached to it. This is a misconception as private mortgages can actually be really helpful and are done strictly by following the guidelines provided by the government of Canada.

Private mortgage

 

When do you go for private mortgages?

Most Canadian borrowers usually opt for a private mortgage when getting a traditional loan is out of the question. This could include people who have a bad credit score or low income. Even self-employed individuals who show less income on their taxes tend to opt for the easy solutions of private mortgages. This, however, does not mean that you can get a private mortgage only when you have to and cannot qualify for a traditional loan. You can take advantage of private mortgages when and how you see fit. It all depends on your financial goals.

Taking advantage of private mortgages:

When you are looking for a quick and easy fix for your financial problems, private mortgages can pretty much act as your saviour. The advantage with these kinds of loans is that the lender is looking at your collateral more than you. So, if your collateral is good enough, you can get a great loan you could never qualify for with a traditional process! Planning ahead with a broker can help you make sure that you get a great deal for the right collateral.

The second way to take advantage is with the flexibility. These kinds of loans allow us to determine most of the terms. The lender would not be considering our financial history or credit score and other government proofs of income as much as he would be considering the value of the collateral and its location. If you have a mediocre home in a great place which has a high selling value, then you can take your pick of the loan you want. The rates for such a loan will be dependent on your collateral as well. This would mean, the better your collateral the better the deal you are eligible for Private Mortgages.

Most lenders, if they find your collateral worthy of it, will even offer you some slack on non-payment of the amount on the scheduled date. This can allow you to really plan your finances and pay off the loan quickly. The term period for these loans is very less and you can take advantage of the fact that you will be free of debt soon and be the owner of the collateral. A broker can help you decide between lenders as well as ensure that you are getting the right price for your collateral. Brokers usually can also get you exclusive deals as an added benefit for Private mortgages.

 

for more details visit: https://finser.ca/private-mortgages/

 

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Purpose of getting the second Mortgage in Brampton

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second mortgage

THE PURPOSE AND PROS OF GETTING THE SECOND MORTGAGE 

A second mortgage is the second loan you take out on your home or a property to help you use the equity present in your home. These mortgages have the same qualification process as any other. The lender would require you to have a good credit score and good financial stability. The added factor for getting a second mortgages Brampton would be the compulsory presence of equity in your home. The equity should be above a certain percentage to make you eligible for the second mortgage.

second mortgages brampton

The purpose of a second mortgages Brampton:

A second mortgage can be used to finance anything which can be called legal under the terms of the Canadian government. You can use the funds you receive from borrowing against equity to finance home renovations or additions. It can even be used to finance the education of your children or to purchase a costly item. It has been used to pay off medical bills or clear of debts and in refinancing as well. This makes us understand that the purpose of a second mortgage is vast and can benefit us in multiple ways. It really depends on the person taking it.  The second mortgage can be availed in Brampton,  Mississauga, Oakville, Milton,  Toronto

The pros of getting a second mortgage in Brampton:

The mortgage which you take second on your home can benefit you in many ways.  A few of them are as follows:

  1. Access your equity:

    Taking out this type of loan lets you access the remaining equity in your home. It provides a way for you to use the equity lying idle in your home and finance your needs easily. This is a very simple way of accessing equity.

  2. Get a large amount:

    The equity in your home results in a very large amount. This amount can be beneficial when you are looking for emergency funding or are in need of a large sum to finance medical bills or any other form of debt clearance.

  3. Increase the value of your home:

    With the amount you receive from the second mortgage brampton, you can make additions to your home and also renovate it. This can help you increase the value of your home drastically and make it an investment with high returns.

  4. Invest in anything:

    The money this type of loan provides can help you to further your investment activities and provide more sources for income if these investments take off. They can help you to finance your business dreams with ease and also provide a security for you.

  5. Take advantage of tax benefits:

    Subject to certain terms and conditions, these mortgages can help you get tax benefits. This can help you save money and increase the amount you have for your monthly expenses as well. It helps you increase cash inflow.

  6. More plans and lenders:

    Since you will be getting this loan against your home, it tends to open up more choices. You seem like a lesser risk to lenders when compared to other borrowers and this gives you the leverage you need for it easily.

 

for more details about the second mortgage you can visit: https://finser.ca/second-mortgage/

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7 Mortgage Refinancing Myths Busted

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Mortgage Refinancing Brampton

Mortgage refinancing can help you to find the right plan for your situation. It can help you to update your financial status and make it feasible for you. With mortgage refinancing you can change the way your rates and terms are, and you can even switch to another lender. With the changing economy, new rumors and myths are likely to surface. Here, we have a list of some common myths associated with mortgage refinancing and what the actual truth is:
1. You should refinance only when you want lower rates.
This is a myth which has been in circulation for a long time. Refinancing your mortgage can surely help you get lower rates but that does not mean that is the only reason you should refinance. Refinancing can be done when you need to change your mortgage to suit your financial situation.
2. It can be done only with variable rate plans.
This again is a myth. Refinancing can be done with a fixed rate mortgage as well. If you plan to do so, you will just have to pay the breaking fees which is used to cover any of the losses which may be faced by the lender when you break the mortgage in the middle.
3. Doing this would be simple.
Well, this really depends on the newer terms you are asking for and how your finances play out. Whether you have enough equity to pay off the loan or if your income is good will still be a relevant factor in the deciding process. This is just like getting a new loan and will require just as much effort and shopping.
4. You should never switch lenders.
Even though mortgage refinancing can be done with the same lender, it is better to shop around and see if someone is willing to give you a better rate and if so on what terms. You could end up saving with shopping this way. It would help you to save money properly.
5. Refinancing your mortgage won’t help you save money.
This is utterly untrue. The process has the main purpose of making the plan more friendly to your financial situation and your requirements. This means, that you have the facility to search for a loan which does save you money. So, this process can definitely help you save your dollars from being spent on mortgage payments only.
6. Refinancing only allows you to change your rates.
With the option to refinance your mortgage, you can change much more than just the interest rates of your mortgage. You can opt to pay more or less than you were initially paying, thereby adjusting your monthly payments and also the term of the mortgage you have taken.
7. If I have a bad financial situation, I can’t do this.
Refinancing can be done even if you go bankrupt. It is obviously going to be a more costly and long drawn out procedure but it can definitely be done, especially with a mortgage broker.

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6 STEPS FOR A PERFECT FIRST TIME HOME BUYER MORTGAGE

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first time home buyer mortgage,

Six steps to get a Perfect First time home buyer Mortgage.

A first time home buyer mortgage is the mortgage a first time home buyer takes to purchase the home of their dreams. These kind of borrowers seem incredibly attractive to lenders as they are less risky than other borrowers. They do not have many loans and are not drowning in debt. There are quite some rewards to getting a mortgage as a first time home buyer. Here we have listed 6steps to the best and the quickest first time home buyer mortgage for yourself:

First time home buyer mortgage

 

Steps to Get a First time home buyer Mortgage:

1. Hire a broker:

Yes, this is the first tip for a first time home buyer looking for a mortgage. Even though most people consider a mortgage broker an expense, what they fail to realize is that they could help you save a lot of your hard-earned dollars with the help of exclusive schemes and expertise. They have been in the field for quite a while and will also have dealt with plenty of mortgage borrowers who are first time home buyers. So, it would only work in your favor to hire a mortgage broker.

2. Get pre-approved:

Pre-approval has almost become synonymous with the first time home buyer mortgage process. Pre-approval refers to the process of finding out how much you can afford. It involves receiving an approximate figure which is quite close to the finances you would be receiving in the form of a mortgage as a first time home buyer. This helps you to make decisions with a budget in mind thereby preventing you from any disappointments. It also helps you look profoundly serious when you talk to a seller. It could give you the competitive edge you are looking for with the seller.

3. Go house hunting early:

With a mortgage pre-approval in hand, you can now finish your house hunting process with vigor. Start searching for houses and you will find many listing to suit your first time home buyer needs. This is probably the most exciting part of the entire process. The earlier you start, the faster you would be able to complete the process. It will also allow time for scouring other neighborhoods which were not initially on your list. All of this with the guarantee of a fixed amount in payment could make the process a lot quicker than you would imagine.

4. Choose your mortgage:

After the process of home hunting is over, the duties of the first time buyer will kick in. In this step, you need to sit down with your mortgage broker and find the right plan which will fulfill all your requirements. Since you have a pre-approval in hand already, mortgage brokers will use it as a base to give you the mortgage. Negotiate it down to a reasonable rate and choose the perfect mortgage for yourself.

5. Talk about the costs involved:

The payment for the home will not be the only cost you incur for your mortgage as a first-time buyer. There could be a lot of costs involved which you may be unaware of. Make sure you are made well aware of the costs, hidden or visible. As a result, this can help you find out if your mortgage lender is duping you or not. Mortgage brokers can help you see through the red flags in the documents and assist you in finalizing the perfect mortgage for your needs. It is also advisable to keep a small portion of your mortgage amount separately for such hidden costs so that you are not surprised when they do show up.

6. Save early for your down payment:

The down payment is a very integral step to getting your mortgage. Depending on your financial status, credit score and income, you would be assigned to pay a certain amount as down payment for your first time home buyer mortgage. This down payment needs to be saved Certainly for and then paid off promptly to ensure a quick and comfortable process for the first time home buyer mortgage process. After all the processes have been completed to the dot, it is time to sign on the dotted line and claim your mortgage. You can then take custody of your home and have a happy stay there.

call Finser mortgage for more details or you could visit: https://finser.ca/first-time-home-buyer/

check out our another bog to get a clear idea: https://finser.ca/tips-for-first-time-home-buyers/

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Mortgage Renewal: The Process

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Mortgage Renewal

The process of Mortgage renewal

Mortgage renewal is a very simple process when compared to other types of mortgages and their terms and conditions. But this does not, in any way, mean that we shouldn’t put as much effort as we did while acquiring the mortgage in the first place. The mortgage renewal process starts once your term has ended. But, mortgage experts say that the process for mortgage renewal actually starts at least four months in advance.

 

Mortgage renewal process

 

These are the Four steps involved in the Mortgage Renewal process:

Step 1: Understand your needs:

At that particular point in time, what are you looking to get out of your life in the next five years? This is a very important question as it can help you determine what kind of rates and schemes you are looking for. If you are planning to go for a big investment in the future such as your child’s education, then you need to go for lower rates. But if you have gotten a raise, you can opt for higher rates in your mortgage renewal contract.

Step 2: It’s time to shop!

Most of us would have our date of maturity for the mortgage marked on our calendar. We just need to start shopping for rates four months in advance of this date. The shopping process begins with you contacting a mortgage broker. You can consult with them and decide what rates would be the best for you and from whom you can get them. The broker will work to get you a good deal for your mortgage renewal.

Step 3: Compare and decide:

After you have shopped around and have gained enough knowledge, you need to compare all the rates you have seen and decide on the mortgage renewal plan. The lowest rates are sometimes not the best. Consider all the factors of cost and time. The penalties and other terms also need to be understood. Take your time to decide. If you start shopping early, you can make a well-informed decision in the last 30 days before maturity.

Step 4: Sign on the dotted line:

After you have decided on the mortgage renewal plan, all you have to do is a sign. Take the contract from your lender and sit with a mortgage broker to understand if it has been done according to your plan. Consulting a lawyer isn’t a bad idea either. If everything seems fine, go ahead and sign.

for more details visit: https://finser.ca/mortgage-renewal/

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