August 16, 2018

Are You Ready For Higher Interest Rates On Renewal?

Is your mortgage coming up for renewal?  Are you ready for increased payments based on today’s interest rates?  Your current interest rate is probably in the range of 2.5-2.7% for a 5 year fixed term.

We went through years of interest rate decreases and got used to lower interest rates and lower payments when renewing our mortgages but that trend appears to be over.  Competitively discounted fixed five-year mortgage rates today run from 3.19 per cent to 3.69 per cent.

Increased rates are only a piece of the puzzle.  New mortgage-industry rules are complicating the process of taking your mortgage elsewhere if you don’t like the rate offered by your current lender.  You will have to pass the ‘stress test’ if you want to switch your mortgage to another lender.  Unfortunately some lenders, notably the banks, may use this as an opportunity to become less competitive in the renewal rates for clients that are less creditworthy.

The reason for the range of interest rates offered on renewal will depend if your mortgage was previously an insured high ratio mortgage or whether you purchased with 20% down payment.  This insurance makes a mortgage more attractive to lenders due to how they can trade mortgages on the investment market.

You should expect your mortgage renewal 30-60 days before your maturity date.  If you feel your interest rate is unsatisfactory, I would be happy to help you find a more competitive rate.  We anticipate more people will be looking to see what other options are available!

Colleen Saunders is a 25 year veteran in the mortgage industry serving Oakville, Burlington, Mississauga and Toronto and offering all mortgage related services such as 1st & 2nd mortgages, private mortgages and more.

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

Have You Heard About The ‘Textalyzer’?

Apparently drunk driving no longer constitutes the greatest threat on our roads, it is distracted driving!  According to the OPP, as of the beginning of September, 32 deaths were due to impaired driving compared to 47 due to distracted driving with texting being the most deadly distraction.  Experiments have shown drivers who are actively texting have reaction times substantially slower than someone who is legally impaired, scary!!

Decades of effort by groups in government, police, and lobbying organizations such as Mothers Against Drunk Driving Canada (MADD) have caused a dramatic decline in the rate of deaths caused by impaired driving since the 1980s.

Now safety groups are refocusing their efforts to address distracted driving with the help of new technology.  Meet the “textalyzer”, a device which is able to determine whether drivers have been using their phone at the time of a car accident.  This is a roadside device that specializes in data extraction.  It would require drivers who have recently been in a car accident to submit their cell phones for police testing.

The jury is still out on its use because it is unclear whether the textalyzer will detect and differentiate between active and ambient phone use – legally acceptable examples include speech-to-text, hands-free calling, maps, and music applications.

While privacy issues still need to be resolved, this textalyzer may be a welcome and useful tool to make Ontario roads safer.  Distracted driving is a grave public safety concern impacting us all!

Colleen Saunders is a 25 year veteran in the mortgage industry serving Oakville, Burlington, Mississauga and Toronto and offering all mortgage related services such as 1st & 2nd mortgages, private mortgages and more.

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

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Benefits Of Being A Private Lender

What is a Private Lender?  Well, that is someone like you or I that invests our money into mortgages.  It could be a 1st mortgage or a 2nd mortgage but usually a 2nd mortgage.

Typically a client would be referred to me because they require a mortgage for a debt consolidation, equity take out for renovations, purchase an investment property, pay Revenue Canada taxes or divorce.

Here are some examples for obtaining a 2nd mortgage:

  1. The cost to break the 1st mortgage to refinance their property is cost prohibitive
  2. With the new lending guidelines implemented January 1, 2018, they cannot meet the debt servicing guidelines
  3. Poor credit
  4. Illness: I have financed mortgages where the client has been in arrears due of loss of income while going through chemo or other illnesses

Reasons to lend your money into a 2nd mortgage:

  1. Higher interest rate, return on your investment 8-12%
  2. I will do all the credit checks, verify employment and income to ensure you are secure in the knowledge that these clients can repay your mortgage
  3. We do an appraisal to verify there is realistic value and equity in the property
  4. You are putting your money into the real estate market instead of the stock market
  5. You can go see the property: you can see, feel and touch your investment

As in all relationships, it has to be a win win situation, it has to be good for both parties.  Typically interest rates would be in the 8-12% range depending on how much equity is in the property, reasons for late payments on the credit bureau, purpose of funds, etc.  I meet with every client and actually go to the property to get a feel for home’s value and condition.  I am very experienced lender and have personally been lending in private mortgages for 20 years and have a proven track record.

I am always looking for new private lenders.  If you are interested, please call me, we can meet and I will show you examples of a typical client file, what documents I would provide, interest rates and the procedures we would follow.  I look forward to hearing from you!

Colleen Saunders is a 25 year veteran in the mortgage industry serving Oakville, Burlington, Mississauga and Toronto and offering all mortgage related services such as 1st & 2nd mortgages, private mortgages and more.

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

Divorce And Taxes

I receive a number of referrals of clients going through the divorce process and wanting to purchase their own home.  As we are moving into tax time, I felt this article may be timely on working with Canada Revenue Agency (CRA).

  1. Are You Separated in the Eyes of Canada Revenue:  CRA considers you separated when you live separate and apart for a period of 90 days.
  2. Inform CRA: the CRA expects you to notify them when your marital status changes. You can call, do it online, or fill out and mail a marital status change form.
  3. Write-Off Legal Fees Where You Can: It may be a pleasant surprise after paying those big legal bills that you may be able to write-off a portion of those fees. The CRA will allow you to deduct legal fees that were paid to obtain or collect child or spousal support.
  4. Claim the Eligible Dependent Tax Credit: If you have children, you may be able to claim them as eligible dependents. If you have primary custody of those children, the credit may go to you. If you have shared custody, then you will have to decide which parent will claim the credit
  5. Support Payments & Taxes:  Child support is not taxable in the hands of the person who receives the support, and the person who pays it can’t claim the support as a deduction.  Spousal support, however, is fully taxable as income. Additionally, if you are paying spousal support to your ex, you can claim it as a deduction on your return.
  6. Who Receives the Child Benefits:  If you have joint custody of your children, you may have to share child benefits with your ex. You may see a rise in the benefit amount, as your household income has decreased, but the CRA may split the benefit 50/50 between you and your ex.  There are also certain spousal tax credits you will now be no longer eligible for. The pension income amount, the disability amount, and the tuition, education and textbook amounts, can no longer be shared when you split. But, your lower household income may mean an increase in the amount of child benefit you are entitled to.

This is very general info, please check with your lawyer or accountant for more info.  If you need a referral of a good divorce mediator or accountant, let me know.

Colleen Saunders is a 25 year veteran in the mortgage industry serving Oakville, Burlington, Mississauga and Toronto and offering all mortgage related services such as 1st & 2nd mortgages, private mortgages and more.

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

https://www.moneytalkgo.com/divorce-2/

Advantages & Disadvantages of HELOC

What is a HELOC?  A HELOC is a ‘Home Equity Line of Credit”.  Often consumers think there is no mortgage registered against their home but in fact there is.  A collateral mortgage/charge is registered for the amount that you are authorized to borrow as security in support of the loan amount.

A HELOC is typically requested when you want access to short term financing, for example, doing renovations, debt consolidation or investment and know there will be monies coming in through commissions, sale of stocks, inheritance, etc. that will be used to pay down the loan amount.

The advantage of a HELOC is you only pay interest each month on the amount your borrow.  Whereas when you take out a mortgage, you draw down the full amount and therefore pay interest on the total mortgage amount.  You are also required to make regular monthly payments, so the mortgage is amortized over, say, 25 years in order to pay the mortgage off in full.

The disadvantage of a HELOC is because you pay interest only, if you don’t purposely pay down the HELOC loan, then the balance never reduces.

HELOC’s have increased in popularity over the past number of years because of the low interest rates and because they are fully open with no penalties for repayment.  This type of borrowing has contributed to increased consumer debt as about 40% of HELOC borrowers don’t regularly pay down the principal.

With interest rates rising, it may be a good time to have your HELOC replaced by a traditional good old mortgage product!

Colleen Saunders is a 25 year veteran in the mortgage industry serving Oakville, Burlington, Mississauga and Toronto and offering all mortgage related services such as 1st & 2nd mortgages, private mortgages and more.

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