July 17, 2018

Should You Take Equity From Your Home?

We all come to a point in our lives when we may need to refinance our mortgage to invest in a major purchase, home renovation, investment, emergency or consolidate outstanding debts.  The interest rates on mortgages are much less than borrowing via another vehicle.  There are some things you do need to consider before doing that refinance.

1. Your Mortgage Terms Will Change

When you refinance your mortgage, what your institution will do is an ‘increase and blend’ on the interest rate, which means they will blend your existing mortgage rate based on the current mortgage owing and blend the current mortgage rate with the amount you want to borrow.  This will increase your mortgage payment based on the amount being borrowed.  The amortization will remain the same as your current mortgage.  If that payment is too high, you can always rewrite a new mortgage and amortize up to 30 years to keep the payment down.

2. Under The New Rules, You Will Have To Re-qualify

The only situation that you do not have to re-qualify for a mortgage is upon renewal, any other situation means you will have to meet the new debt servicing requirements and produce all the financial verification to be approved.  Do the leg work beforehand to make sure you qualify.  If I can help you in any way, call me.

3. What Is The Purpose Of Refinancing?

If you plan to invest these new monies to increase your wealth or do some major renovations which will increase the value of your home or pay off high-interest debt that will lower your monthly expenses, then it makes a lot of sense.  However if you plan to take the equity to go on a extravagant vacation or purchase some long desired things, it may not be a strong financial plan.

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

 

How To Read Your Credit Report

And now for something completely different, as opposed to writing a blog about “everything you wanted to know about how to read your Credit Report”, I did a recording!!  I hope you enjoy it.

If you have any questions or need clarification on any points, would love to speak with you!!

Information session on: How To Read Your Credit Report, all you ever wanted to know!

Posted by Mortgages By Colleen on Wednesday, June 27, 2018

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

Pros & Cons Of Reverse Mortgages

I receive a number of enquiries about Reverse Mortgages and the question is always “is this a good product for someone in retirement?”  Personally, I am not a big fan of Reverse Mortgages but here are the pros and cons to consider.

  1. What is a Reverse Mortgage?  A Reverse Mortgage allows Canadians 55 years of age and older to remove the equity from their home to assist with their financial requirements.  You can take up to 55% equity from your home but the average withdrawal is more like 33%.  There are no monthly payments
  2. Conditions:  If you are married, both people must be over the age of 55 and at least 1 owner must live in the house
  3. What can the money be used for?  a) help seniors remain in their home b) Pay off or consolidate debts  c) Supplement income d) renovations or repairs e) pay for unexpected medical or emergency expenses f) financially assist a family member g) purchase a car, vacation or any other needs
  4. How do I receive the monies?  You can take a lump sum amount of all the money (minimum $25,000) or you can take partial advances (minimum $5,000 for each advance)
  5. Terms:  Fixed 1, 3, 5 years or Variable rate
  6. When does the Mortgage get paid off?  The mortgage is paid when you sell your home or when you have passed away

PROS:

  1. There are no mortgage payments made on this type of mortgage on principal or interest, the interest is compounded each month
  2. No health check to qualify
  3. 100% tax free therefore it does not effect your Old Age Security or Guaranteed Income Supplement
  4. Seniors can remain in their home
  5. Provides cashflow
  6. You may not qualify for an ordinary mortgage

|CONS

  1. As there are no payments on the mortgage, interest compounds on the interest which is very costly
  2. There are only 2 lending institutions offering reverse mortgages
  3. Interest rates are approximately 2% higher than regular mortgages on a 5 year term
  4. You have to sell your home or die in order to payoff the mortgage
  5.  As the interest is compounded, this eats away at your equity and reduces the size of your estate for inheritance
  6. Higher costs to arrange this type of mortgage

If you would like any further information, please contact me!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

How To Stop Those Nasty Collection Calls

I have never personally experienced those nasty calls from Collection Agencies however many of my clients have and I have heard of the verbal abuse they have been subjected to.  It is plain wrong, there is no reason you should have to listen to that type of abuse.  Every week, hundreds of thousands of Canadians receive collection calls.

So the first question should be, why are they calling you?  Do you owe them money?  If you do, you need to deal with it and have a plan.  Do you need to hire a lawyer to negotiate a debt settlement or possibly look at a Consumer Proposal to negotiate with all your creditors?  You need some options because they are not going to go away.

However, there are also policies in place to protect the public and some collection agencies hire lawyers that are dealing in illegal behaviours i.e. sending out draft ‘Statement Of Claim’ (sample attached) and people believe they are being sued.  It is a scare tactic and you can tell it is fake because it says “Draft“, does not have a court file number or a court date.

If you are dealing with an unprofessional collection agency, you can send a Cease & Desist letter to whomever is harassing you or you can stop these collectors from calling you at work.

If you want more information, there is a lawyer that represents consumers struggling with debt.  I have not personally used him but I really like what he has to say.  Here is his latest blog: https://www.linkedin.com/pulse/five-scenarios-when-canadian-can-stop-collection-mark-silverthorn/

If I can help you at all to consolidate your debts, negotiate with your creditors, I am here to help you!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

Liberals Refuse To Hear Evidence Against Stress Test

Less than 1 week ago, I shared an article where the Conservative Party Deputy Shadow Minister MP  for Finance, Tom Kmiec, was looking into overturning B-20 and the stress test.  Apparently the Federal Government is declining the Conservative’s proposed subcommittee review of B-20 and this is the second time the proposal has been dismissed in a matter of weeks.  What is their motivation in refusing to even hear evidence on what impact their changes are having on Canadians?  Is it all about their fragile egos or possibly because they made a mistake?

“The new stress test is going to block up to 60,000 Canadians from being able to buy a home and about 100,000 Canadians will probably fail the stress test and won’t be approved to borrow from a federally-regulated lender and that will push them to the unregulated lenders. We know from a CIBC Capital Market report that 47% of all mortgages need to be refinanced in 2018. In the year they knew there would be so many people refinancing, they still imposed the stress test. That was irresponsible and unfair.  B-20 is harming Canadian families.”

Upon renewal of your mortgage if you continue with the same lender, you don’t need to re-qualify, you just sign the renewal agreement.  However, lenders are not going to be offering you the best rates on renewal because they know you are stuck between a rock and a hard place.  If you switch to a new lender, you have to re-qualify at the new stress test and they know the odds of you qualifying and potentially losing your business are less than 50%.  Banks used to send renewal notices at posted rates because they had a captive market until Mortgage Brokers came on the scene and offered better interest rates.

Given the escalating number of desperate families taking out private loans this year, we wish Kmiec’s proposal was given consideration rather than dismissed outright.  The result is we’re seeing is a lot of people getting refinances that would have previously qualified but now need to go to private lenders to retain their homes or face putting them up for sale, this has a dramatic impact on people’s lives.  It shouldn’t be government policy to force people out of their houses or be forced to pay 12% – 15% for a private mortgage to take care of their finances.  I really don’t know who is winning in this situation except maybe the Banks getting a higher return on their Mortgage portfolio!

Colleen Saunders is a 20 year veteran in the mortgage industry, serving Mississauga, Burlington, Oakville and Toronto and offering all mortgage related services such as 2nd mortgages, private mortgages and more.

To contact Colleen, please fill out the form on  www.mortgagesbycolleen.ca  or call 416-459-2406

Calgary MP vows to continue his fight for B20 review