Steven Burrows
Phone: (905) 338-3721 Email Steven

Mortgage Rates


 RATE SHEET 

Special Rate Mortgages


Terms Posted
Rates
Payment
  Per $100k
Our Rates Payment
  Per $100k
Savings
6 Months 3.14% $480.46 3.10% $478.39 $2.07
1 Year 3.34% $490.86 3.29% $488.25 $2.61
2 Years 3.74% $512.02 3.44% $496.11 $15.91
3 Years 3.89% $520.07 3.54% $501.38 $18.69
4 Years 3.94% $522.77 3.64% $506.69 $16.08
5 Years 5.59% $615.64 3.39% $493.48 $122.16
7 Years 5.80% $627.97 4.04% $528.19 $99.78
10 Years 6.10% $645.76 4.14% $533.64 $112.13
 Variable   2.70% $457.99 2.70% $457.99 $0.00
Prime Rate 3.70%
Please Note: Payment per $100K and possible savings shown above are based on a 25-year ammortization. Rates are subject to change without notice and the rate you receive may vary depending on your personal financial situation. *OAC E&OE. Please reply to this email and I will be happy to provide you with greater detail and determine the best rate available for you.

 

Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.” Check with your Mortgage Professional for full details & to determine what rate will be available for you.

Mortgage Rates have been provided by different Mortgage providers such as:
Homefree Mortgages, Dominion Lending Centres, Mortgage Alliance.

 Contact Steven Burrows for Details: 


Helping Retired Canadians


Hope you are having a great week.

A quick update on one of our Mortgagors areas of expertise. The reverse mortgage....there I said it, I know it can be considered a dirty word.

 

I still like this product for seniors whom are house rich and cash poor that don’t have the income to support a new traditional line of credit or mortgage and do not want to sell.  A bit of information on this product for you below.

 

Top 3 Misconceptions About Reverse Mortgages:

 

1. The Bank Owns Your Home. 

2. Your Estate Can Owe More Than Your Home. 

3. The Best Time to take a Reverse Mortgage is at the End of Your Retirement.

 

Let’s examine each misconception in more detail. 

1. The Bank Owns Your Home. 

Over 50% of Canadian homeowners over the age of 65, believe the bank owns your home once you’ve taken a reverse mortgage. Not true! We simply register our position on the title of the home, exactly the same as any other mortgage instrument, with the main difference in the flexibility of not having to make P&I payments on the reverse mortgage.

 

2. Your Estate Can Owe More Than Your Home. 

A reverse mortgage, unlike most traditional mortgages in Canada, is a non-recourse debt. Non-recourse means if a borrower defaults on the loan, the issuer can seize the home asset, but cannot seek any further compensation from the borrower - even if the collateral asset does not fully cover the full value of the loan. Therefore, when the last homeowner dies (and the reverse mortgage is due), the estate will never be responsible for paying back more than the fair market value of the home. The estate is fully protected – this is not the case for almost any other mortgage loan in Canada, which is  full recourse debt. So read the fine print the next time you offer to co-sign for a loan for mom!!

 

3. The Best Time to take a Reverse Mortgage is at the End of Your Retirement. 

This is a common mistake that reflects the “old-school” financial planning mentality.

For the majority of Canadians (without a nice government pension), the old school financial planning mentality is about cash-flow, and is as follows: 

a) Begin drawing down non-taxable assets to supplement your retirement income. 

b) Once your non-taxable assets are depleted, begin drawing down more of your registered assets (RSP/RIF) to supplement retirement income. 

c) Once your registered assets are depleted, sell your home, downsize and re-invest to generate enough cash-flow to last you until you die.

 

The problem with the “old-school” financial planning model is two-fold: 

1. 91% of Canadian seniors have no plans to sell their home (CBC News “Canadian Boomers Want To Stay In Their Homes As They Age). 

2. You are missing out on a huge tax-saving opportunity by not taking out a reverse mortgage in the beginning of your retirement. 

“Research has consistently shown that strategic uses of reverse mortgages can be used to improve a retiree’s financial situation, and that reverse mortgages generally provide more strategic benefits when used early in retirement as opposed to being used as a last resort.” - Jamie Hopkins, Forbes

 

In Canada, a reverse mortgage can be set-up to provide homeowners with a monthly draw  out of the approved amount. For example: client is approved for $240,000 and decides to take $1000/month. This is deposited into the clients’ bank account over the next 20-years. Interest accumulates only on the amount drawn (i.e.: not on the full $ amount at the onset).

 

This strategy allows clients to draw down less income from their registered assets to support their retirement lifestyle. In turn, this can create some excellent tax savings, since home equity is non-taxable. Imagine lowering your nominal tax bracket by 5 – 10% each and every year over a 20 year period?! 

 

The tax savings can be huge.  You are also able to preserve your investable assets, which historically, can generate a higher rate of return when invested over a greater period of time.

 

In summary, Canada and the U.S. both have aging populations and both have misconceptions about reverse mortgages. Learning about these misconceptions will allow you to be knowledgeable on how to balance retirement, lifestyle and cash-flow, with the desire for retirees to age gracefully within their own homes. 

 

 

Have a great week!  

 

As always feel free to get in touch with me about any mortgage questions.

 

Steven Burrows

 


New Mortgage Product Alert


Here is some quick information which I thought may be helpful regarding a new Mortgage product from one of my lenders, Merix Financial, just launched. 

Have a quick look below and just get in touch with me with any questions.  Also it looks like some weak economic data rolling in this week will put increased pressure on the Bank of Canada not to raise rates July 11 as was previously expected.  Good news for all variable rate mortgage holders.

 

Interest-Only Makes a Comeback

 

Innovative mortgage products. Remember those?

With Ottawa’s onslaught of rule tightening, it’s been a while since we’ve seen a new product that was substantially unique. This is one of them.

 

Merix Financial, the broker channel’s seventh-largest lender by market share, is launching the Interest-Only Flex mortgage.

 

The IO Flex has one key purpose: to cut a borrower’s monthly carrying costs. While the rates are higher than a conventional amortizing mortgage (as you’d expect given the higher risk), the payments are materially lower.

 

Take a $300,000 30-year-amortized mortgage, for example. A traditional adjustable-rate mortgage at prime – 0.75% has a payment of $1,214.

 

The IO Flex mortgage has a payment of just $918, almost $300 less each month. That’s based on a 5-year adjustable interest-only rate of prime + 0.25%, a rate that is one point higher, but a quarter point less than most HELOCs.

Of course, you pay a whack more interest on the mortgage itself, but interest cost is not necessarily determinant of net worth. That’s because the cash flow savings can be redirected to things like:

•5-year Fixed Interest Only Rate: 4.25%
•5-year ARM Interest Only Rate: Prime + 0.25%
•5-year Fixed Amortizing Rate: 3.84%
•5-year ARM Amortizing Rate: Prime – 0.70%

Merix says it’s the only prime lender in Canada with a fixed interest-only rate.

 

Here’s more of what you need to know:
•Qualification rate: The greater of Bank of Canada posted or the contract rate + 2%
•Qualifying amortization: 30 years (even on the interest-only mortgage)
•Maximum loan amount: $2 million
•Minimum loan amount: $200,000
•Maximum GDS / TDS ratios: 39% / 44% (40% TDS for rentals)
•Minimum credit score: 640 for purchases; 680 for rentals; 720 for refinances
•Convertibility: The IO Flex can be converted to a fixed-rate amortizing mortgage at any time
•Sliding scale: Varies by city (e.g., 80% of the first $2 million property value for single-family houses in the GTA and GVA, 50% thereafter; 80% of the first $1 million property value in Calgary, 50% thereafter)
•Registration type: Collateral charge demand loan (meaning if you default, they can call it in right away)

 

When can they demand repayment?

In the same theoretical circumstances that any HELOC can be called, HELOCs can be called in on demand. But barring non-repayment, it would have to be something catastrophic.

 

The product is B-20 compliant and funded by rather large financial institutions, implying funding stability.

 

This project has been in development for over a year with Merix’s investors doing substantial analysis. Among other things, the company carefully evaluated the default behaviour of interest-only HELOCs. It confirmed the default ratios are “quite low” largely because the equity in the home is well established

.

These mortgages are B-20 compliant so they have to be satisfactory to regulators. So you wouldn’t see wild disparity between [default rates for] amortizing and IO loans.

Where this product could get particular uplift is with rental investors, for four reasons:
1.The rate premium is only 5 bps for rental financing
2.It can be tax efficient for investors who write off all their interest (assuming no amortizing portion)
3.Merix allows the mortgage to be in a company name
4.The lower payment makes debt servicing easier when building rental property portfolios.

The Interest-Only Flex is available only through mortgage brokers.

 

Contact me with any further questions.

 

Steven Burrows

 


New Mortgage Rules Starting Jan. 1st, 2018


CHANGE 1: Qualifying Rate Stress Test To All Non Insured Mortgages

Non insured mortgage consumers (buyers with a 20% or greater down payment) must now qualify using a new minimum qualifying rate. The minimum rate will be the greater of the 5 year benchmark rate published by the Bank Of Canada (BOC) OR the lender contractual mortgage rate +2.0%.

HOW DOES THIS AFFECT YOU WITH A DOWN PAYENT OF 20% OR MORE?

The biggest impact will be on the amount you will be able to qualify for. Now you must qualify at the benchmark rate, which is the higher of the (BOC) Bank Of Canada rate (currently 4.99%) OR your lenders rate plus 2.0%. This applies to all terms, fixed and variable.

FOR EXAMPLE:
 

Mortgage Amount If Your Contract Rate Is 3.44% Benchmark Rate 5.44%
(3.44% + 2.0%>BOC)
Monthly Payment $1985.00 $2427.00
Minimum Income* $70,000 $85,000
 
Mortgage Amount If Your Contract Rate Is 2.77%** Benchmark Rate 4.99%
(2.7% + 2.0%<BOC)
Monthly Payment $1832.00 $2324.00
Minimum Income* $65,000 $81,500


* The chart above is based on GDS RATIO (Gross Debt Service Ratio) and a 25 year amortization.
** In order to qualify for any variable rate, as in the past, you must qualify at the BOC rate.

These stress test rules only apply to residential mortgages (dwellings with 1-4 dwellings under one legal description: houses, duplexes, tri-plex, and four plex).
Any unit over 4 units is considered commercial and the stress test DOES NOT APPLY.

 


WHY CHOOSE TO MAKE LESS THAN A 20% DEPOSIT ON YOUR MORTGAGE.


Less is more when it comes to a down payment? 

Bizarre but maybe true. Find out why a 20% home down payment may not be worth it in the article below.

 

 It's tough to feel financially prudent when buying a house these days. That's why an increasing number of first-time buyers are saving a down payment of 20 per cent or more. In doing so, they avoid having to buy mortgage default insurance which, in the case of a house price of $487,095 (the national average) bought with a 10 per cent down payment, would be 3.1 per cent or $13,590. This premium is generally added to the mortgage, which means more interest to pay.

 

It certainly sounds financially prudent to make a 20-per-cent down payment where possible, but this isn't always the case. In fact, you may save money both now and in the future by making a slightly smaller down payment and taking on the cost of mortgage default insurance.

 

Listen up if you're concerned about the new mortgage lending rules that were announced last week and will take effect on Jan. 1, 2018. When making a down payment of 20 per cent or more, the new rules require that you be able to qualify for a mortgage at the greater of the five-year benchmark rate published by the Bank of Canada, or the original contractual rate plus two percentage points. An easier path to a mortgage may be to make a smaller down payment.

 

To even propose this seems bizarre. "The story has been that you're just throwing money away with mortgage insurance," said Mike Bricknell, a mortgage agent with CanWise Financial. What this thinking ignores is the way today's mortgage market discriminates against people who make down payments of 20 per cent or more. They may pay a fair bit more for a mortgage than someone with a high-ratio mortgage (down payment of less than 20 per cent) both now and on renewal.

 

A lender dealing with a client who has a sub-20 per cent down payment can take comfort from the fact that the loan is covered by government-backed insurance that is paid for by the borrower. A conventional mortgage (20 per cent or more) can be insured as well, but by the lender. All in all, a high-ratio mortgage is preferable from the lender's point of view and often results in a lower mortgage rate.

 

Mr. Bricknell has lately found that rates on five-year fixed rate mortgages are about 0.45 of a percentage point less for high ratio as opposed to conventional mortgages. Maybe your lender can do better than that. If not, consider this example of how a down payment less than 20 per cent can pay off.

 

We start with a $450,000 house and a buyer with a 20-per-cent down payment already saved. With a conventional mortgage amortized over 25 years, Mr. Bricknell figures this person could get a five-year fixed rate mortgage at 3.29 per cent. That means a monthly payment of $1,758.

Now, let's see what happens when this borrower makes a 19-per-cent down payment. A smaller down payment means borrowing a bit more, and thus more interest over the life of the mortgage. Also, mortgage insurance will be required at a cost of $10,206. All of this nets out to a monthly payment of $1,743, with the mortgage insurance premium included. How is this possible? Mr. Bricknell said it's because the high-ratio borrower gets a mortgage rate of 2.84 per cent.

 

There's a stress test for high-ratio mortgages as well, but it's marginally less onerous than it is for conventional mortgages because you only have to be able to handle the Bank of Canada benchmark rate, currently 4.89 per cent. Thus the high-ratio mortgage in Mr. Bricknell's example would have a qualifying rate of 4.89 per cent and the conventional mortgage would be at 5.29 per cent (the client's actual rate plus two percentage points).

 

The two mortgages outlined by Mr. Bricknell are pretty much a wash right now when compared on cost. Looking ahead, the high-ratio mortgage offers the potential for lower interest rates when it's time to renew your mortgage. This assumes that lenders will continue to look more favourably at high-ratio mortgages.

 

Mortgage industry data shows that even as house prices increased from the early 2000s through the past few years, the percentage of people making down payments of less than 20 per cent has declined to 39 per cent from 54 per cent. If the rationale for this is to save money and be financially prudent, a rethink is required. Depending on the rates offered by your lender, a slightly smaller down payment could save you money in the long run.

 

Contact me for more details if need be. If you or someone you know is thinking of buying another home, please contact me. Your referrals are greatly appreciated!

 


The New "Stress Test" Guideline


Under a new Liberal Government Ruling, qualifying to buy a home, refinancing your home or even looking to renew and shop for competitive rates when your mortgage is up for renewal is about to get much more difficult! 

Announced on October 17th, 2017, the new "Stress Test" guideline will affect even those home buyers with 20% down or those who have 20% saved in equity. 

That’s right…. even if you have saved and saved for a hefty down payment or have a large amount of equity in your home, this new rule can still affect you! 

Obtaining access to the equity in your own home for home improvements/renos, rentals, debt consolidation, funds for education…etc. will soon be harder to do. 

Act Now! It’s Time for a MORTGAGE FINANCIAL CHECK- UP! 

If your mortgage is coming up for renewal or if you were planning on withdrawing some of the equity out of your home for renovations etc., NOW is the time to review your financial situation! 

The new B-20 Rules will take effect January 1st, 2018 – and most lenders will tighten their purse strings prior to this date!

 

If you are looking to buy, sell, invest or refinance, contact me asap to ACT NOW before the new year!

 


‘Spousal Separation Program’


A few lenders have a special ‘Spousal Separation Program’  that you need to know about. How does this work? 
 

- One spouse can purchase up to 95% LTV (Loan to Value) from the other on title, allowing them to remain in the family home.  Biggest misconception I hear is that 80% LTV is the max.

- Separation agreement must clearly state the division of assets from the matrimonial home.

- Appraisal is required.

- Purchase and Sale agreement is required

- Must income qualify as per any other regular mortgage.

 


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Maintain Seniors Independence
A guide to home adaptations. There is a direct relationship between aging and disability. While most older people carry out their daily activities with little effort or difficulty, for some, the activities of daily living become a challenge. The ability to maintain control over one’s immediate surroundings and to function freely in an environment that is safe, secure and appropriate is linked on the one hand to the characteristics of the individual (physiological, psychological) and on the other hand to the characteristics of the environment in which that individual lives (economic, social and housing). For many seniors, living independently at home is a much less costly and much more welcome alternative to living in an institution. The design of much of our housing stock, however, does not allow for the increasing disabilities that sometimes accompany aging.
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