The news before Brexit had been that rates were expected to rise, but as I, and many others have said, that always assumes nothing new happens to change the plan. Brexit changes the plan. Not only has the UK currency dropped off a cliff, global markets went on a crazy downward spiral, but what does it mean for mortgage rates?
If they were going to raise rates the economies of the world and particularly North America would have to be steady, solid and are on an upswing, and while Europe is not Canada's largest trading partner you cannot slam that many "rich" countries and not have some kind of global falling of the dominoes. As angry as the Europeans are at Britain, and as shocked as Cameron might be that his silly gamble to resolve internal party disagreements has now led to a global crisis, the world needs and wants some stability, so "the powers that be" will work at making the ride as smooth as they can while still slapping Britain on the wrist. The odds are also strong that Scotland will now separate from England and Northern Ireland may join the south, ending many, many years of another type of disagreement. (It helps that the rule of the RC church is also losing some grip on the laws of the Republic of Ireland making it easier for the Protestants to consider joining.)
So economic turmoil tends not to lead to stronger economic growth, which in turn lowers the pressure of the bond markets, and the Bank of Canada to raise rates.
The bottom line is that anything that is bad for the global economy is going to keep rates low, which is great for borrowers, but tough for the unemployed and also making it tough for governments to raise revenue without increasing tax rates to meet much needed infrastructure and other spending needs.
On the housing side the government therefore will be turning to other tools to tackle the insanity of the Toronto and Vancouver housing markets, so I will be keeping an eye out for more changes to the mortgage rules in coming months.
Tuesday, June 28, 2016
Friday, January 8, 2016
Know the Key Factors to getting a Mortgage for a Cottage
Owning a cottage can be a wonderful thing if you enjoy leaving the
concrete jungle that is city life and embracing the green oasis that is
country life.
When the warm weather arrives, nothing beats loading up the family car with loved ones, luggage, and other goods, and making the trek to the family cottage. Unless you were gifted one or had a sizable enough cash pile to buy one outright, you will need to obtain a mortgage to make your dreams of owning a cottage come true.
Here are some key factors to getting a mortgage for a cottage. What you’ll find is that lenders will consider certain criteria before deciding whether or not to approve your cottage mortgage request.
Location, Location, Location
Lenders will want to assess the cottage you want to buy to determine, first, if they should lend you the money you need and to determine how much they are open to lending if your request gets the go-ahead. In addition to location, lenders will look at specific things such as the following:
You will need to get mortgage default insurance if you can’t come up with a down payment of 20% or more of the cost of the cottage. Since second-home mortgages are no longer insurable by the Canada Mortgage and Housing Corporation, you will have to find a private mortgage insurance firm in the event that you require mortgage default insurance.
How Much Can You Afford?
Lenders will, of course, want to be reasonably certain that you have the financial wherewithal to repay the loan. That means you need to have the sort of income that shows that you are capable of repaying however much you want to borrow.
Options
In the event that you can’t get the full loan amount you require, you will have other options on the table. For instance, you could potentially refinance your house or tap a line of credit to supplement what the lender is willing to lend you.
Words to The Wise
Getting the cottage of your dreams will take planning if you can’t pay it off in one shot, but obtaining a mortgage is possible. When you know the key factors to getting a mortgage for a cottage, you’ll be that much closer to enjoying your new cottage.
For help and more information Contact Andrea Meynell
(Northwood Mortgage lic 10349)
When the warm weather arrives, nothing beats loading up the family car with loved ones, luggage, and other goods, and making the trek to the family cottage. Unless you were gifted one or had a sizable enough cash pile to buy one outright, you will need to obtain a mortgage to make your dreams of owning a cottage come true.
Here are some key factors to getting a mortgage for a cottage. What you’ll find is that lenders will consider certain criteria before deciding whether or not to approve your cottage mortgage request.
Location, Location, Location
Lenders will want to assess the cottage you want to buy to determine, first, if they should lend you the money you need and to determine how much they are open to lending if your request gets the go-ahead. In addition to location, lenders will look at specific things such as the following:
- Proximity to reliable water source, which can impact the value of the property
- Access to the cottage — year-round access is preferable
- Distance between cottage and major market
- Cottage use — lenders prefer year-round, or even three-season cottages over one or two-season cottages
You will need to get mortgage default insurance if you can’t come up with a down payment of 20% or more of the cost of the cottage. Since second-home mortgages are no longer insurable by the Canada Mortgage and Housing Corporation, you will have to find a private mortgage insurance firm in the event that you require mortgage default insurance.
How Much Can You Afford?
Lenders will, of course, want to be reasonably certain that you have the financial wherewithal to repay the loan. That means you need to have the sort of income that shows that you are capable of repaying however much you want to borrow.
Options
In the event that you can’t get the full loan amount you require, you will have other options on the table. For instance, you could potentially refinance your house or tap a line of credit to supplement what the lender is willing to lend you.
Words to The Wise
Getting the cottage of your dreams will take planning if you can’t pay it off in one shot, but obtaining a mortgage is possible. When you know the key factors to getting a mortgage for a cottage, you’ll be that much closer to enjoying your new cottage.
For help and more information Contact Andrea Meynell
(Northwood Mortgage lic 10349)
Wednesday, October 21, 2015
Bank of Canada Rate Announcement - 21 October 2015
Bank of Canada maintains overnight rate
Yet again, the Bank of Canada has opted to keep the target for the overnight rate steady at ½ percent-meaning variable rate mortgages won't be moving any time soon.
The Bank attributed it's move (or lack thereof) to weaker-than-expected global economic growth and uncertainty surrounding China's transition to a slower growth path (which is putting downward pressure on energy prices). The US economy, on the other hand, is continuing to pick up steam-which is good news for Canadian exports.
Canada's economy has rebounded from the recession we were experiencing earlier this year. Non-resource sectors are benefiting from previous monetary policy actions and depreciation of the Canadian dollar, the Bank says. Households are continuing to spend at a moderate pace. Lower prices for oil and other commodities, however, are dampening business investments and exports in the resource sector.
It's these lower oil and commodity prices that are causing the Bank to revise its economic growth forecast for 2016 and 2017. Now, the Bank projects real GDP will grow by just 1% in 2015 before firming to about 2% in 2016 and 2.5% in 2017. The Bank is now saying the Canadian economy will return to full capacity by mid-2017.
If you have any questions about your variable rate mortgage-or even your fixed-rate mortgage-please don't hesitate to reach out to me. If you want to read the Bank of Canada's announcement in its entirety, you can read it here:
http://www.bankofcanada.ca/2015/10/fad-press-release-2015-10-21/
Yet again, the Bank of Canada has opted to keep the target for the overnight rate steady at ½ percent-meaning variable rate mortgages won't be moving any time soon.
The Bank attributed it's move (or lack thereof) to weaker-than-expected global economic growth and uncertainty surrounding China's transition to a slower growth path (which is putting downward pressure on energy prices). The US economy, on the other hand, is continuing to pick up steam-which is good news for Canadian exports.
Canada's economy has rebounded from the recession we were experiencing earlier this year. Non-resource sectors are benefiting from previous monetary policy actions and depreciation of the Canadian dollar, the Bank says. Households are continuing to spend at a moderate pace. Lower prices for oil and other commodities, however, are dampening business investments and exports in the resource sector.
It's these lower oil and commodity prices that are causing the Bank to revise its economic growth forecast for 2016 and 2017. Now, the Bank projects real GDP will grow by just 1% in 2015 before firming to about 2% in 2016 and 2.5% in 2017. The Bank is now saying the Canadian economy will return to full capacity by mid-2017.
If you have any questions about your variable rate mortgage-or even your fixed-rate mortgage-please don't hesitate to reach out to me. If you want to read the Bank of Canada's announcement in its entirety, you can read it here:
http://www.bankofcanada.ca/2015/10/fad-press-release-2015-10-21/
Wednesday, October 7, 2015
Will a Down Payment Make a Good Wedding Gift?
How many toasters does one couple need? The answer is probably one.
If you have a close friend or family member who is tying the knot, you
may be unsure what to get them. Nowadays, couples have been renting a
home together for a few years prior to getting married. They already
have toasters and other appliances so when it comes to setting up their
registry people are choosing a different path: a down payment for their
first home. Many families and cultures already do this, so don't worry.
It’s likely that you can’t pay for your friend’s dream house
altogether, but you can get them one step closer to home ownership. This
is called crowdsourcing or crowdfunding, and it’s becoming a less
costly way to get newlyweds into their first home faster than before.
Gifting a Down Payment:
If your friends haven’t registered anywhere and are thinking of it, talk to them about how crowdsourcing can help bring them closer to home ownership. Many wedding guests are eager to give monetary gifts, and there are many websites that can make it easy for them to accept digital gifts. Whether it’s a cheque or a payment made VIA website that gets deposited directly in to a savings account dedicated towards a down payment, this route is far more beneficial than your average gift of china and silverware.
For those getting hitched:
Sites like Hatch My House, Feather the Nest, and Down Payment Dreams make it easy for you to create your down payment registry. Most wedding gift down payment sites operate through PayPal and are fast and simple to set up. You can allow your guests to contribute any amount they’d like, or you can set a suggested amount for each guest.
It’s important to keep in mind that your older relatives may not be so keen or understand how to use the Internet to send you a wedding present, and some people simply like the idea of giving personal gifts. Either way, remain positive and appreciative of any and all gifts coming to you for your wedding!
There are fees involved with any crowdsourcing you will do but these fees are pretty standard (5-8% of what you raise), but this will still leave you with an ample down payment for your dream home. There are ways around them, like doing it the old fashioned way with cash, or by having a friend manage it with a special bank account.
The CMHC has restrictions that apply when you are gifted a down payment, but we can discuss what this means in more detail. For more information, Contact Andrea Meynell.
(Northwood Mortgage)
Gifting A __________________
Down Payment
Gifting a Down Payment:
If your friends haven’t registered anywhere and are thinking of it, talk to them about how crowdsourcing can help bring them closer to home ownership. Many wedding guests are eager to give monetary gifts, and there are many websites that can make it easy for them to accept digital gifts. Whether it’s a cheque or a payment made VIA website that gets deposited directly in to a savings account dedicated towards a down payment, this route is far more beneficial than your average gift of china and silverware.
For those getting hitched:
Sites like Hatch My House, Feather the Nest, and Down Payment Dreams make it easy for you to create your down payment registry. Most wedding gift down payment sites operate through PayPal and are fast and simple to set up. You can allow your guests to contribute any amount they’d like, or you can set a suggested amount for each guest.
It’s important to keep in mind that your older relatives may not be so keen or understand how to use the Internet to send you a wedding present, and some people simply like the idea of giving personal gifts. Either way, remain positive and appreciative of any and all gifts coming to you for your wedding!
There are fees involved with any crowdsourcing you will do but these fees are pretty standard (5-8% of what you raise), but this will still leave you with an ample down payment for your dream home. There are ways around them, like doing it the old fashioned way with cash, or by having a friend manage it with a special bank account.
The CMHC has restrictions that apply when you are gifted a down payment, but we can discuss what this means in more detail. For more information, Contact Andrea Meynell.
(Northwood Mortgage)
Wednesday, September 30, 2015
What is a Starter Home?
If you’re looking to purchase your first home but aren’t looking to
buy a five-bedroom palace, you could benefit from a starter home.
A starter home is a smaller dwelling (like a two-bedroom house or condo) that is better suited to newlyweds and people just starting out. It is ideal for young people who are purchasing their first home because the smaller size of the home makes it less expensive to buy than a house with a many storeys, front and backyard, and two-car garage.
The term “starter home” comes from the period following the Second World War where younger couples were looking to purchase a home to live in for a few years before they became parents and needed to move to somewhere that could accommodate their growing family. Additionally, people found it was cheaper to buy a small home than continue to rent their current apartment.
In today’s economic climate, people often stay in their starter homes for over 10 years. Families are getting smaller – generally 1-2 children – and people want to remain in bigger cities close to where they work. By staying in your starter home for many years, you are also able to save more money for your nest egg. The more capital you put away in the present, the better prepared you are for the future.
If you’re looking for a starter home there are some factors you should consider before you purchase:
(Northwood Mortgage Lic.#10349)
A starter home is a smaller dwelling (like a two-bedroom house or condo) that is better suited to newlyweds and people just starting out. It is ideal for young people who are purchasing their first home because the smaller size of the home makes it less expensive to buy than a house with a many storeys, front and backyard, and two-car garage.
| What is a starter home? |
The term “starter home” comes from the period following the Second World War where younger couples were looking to purchase a home to live in for a few years before they became parents and needed to move to somewhere that could accommodate their growing family. Additionally, people found it was cheaper to buy a small home than continue to rent their current apartment.
In today’s economic climate, people often stay in their starter homes for over 10 years. Families are getting smaller – generally 1-2 children – and people want to remain in bigger cities close to where they work. By staying in your starter home for many years, you are also able to save more money for your nest egg. The more capital you put away in the present, the better prepared you are for the future.
If you’re looking for a starter home there are some factors you should consider before you purchase:
- Work with a broker Being a first-time homebuyer can be tough. Where do you look for funding? How much down payment do you need? What are closing costs? A mortgage broker can not only answer all
- Consider the kids You may not have children now, but do you plan on having kids in the future? How many kids are you planning to have? A starter home can probably accommodate one or two new additions to your family, but eventually babies become children and children become teenagers who want their own rooms. If you plan on staying in your starter home for a long time, make sure you have enough space for your kids to grow up.
- Condo vs. house In Southern Ontario, condos are quickly becoming the norm for housing. In fact, many first-time buyers prefer to have a condo as a starter home instead of a house because you don’t have to worry about maintenance and there are amenities in the building like gyms and laundry rooms. You do, however, have to pay condo fees, which may not adhere to your budget.
those questions, but also help you find the best package to suit your needs.
(Northwood Mortgage Lic.#10349)
Thursday, September 24, 2015
What will today's spending mean for the future?
I sometimes wonder what the future will bring for young people trying
to establish themselves in the GTA. In some cases, their parents are
taking the hit to keep them afloat, borrowing or working longer to
support their children.
The delays getting into the workforce, or in moving up for many of these young people, also mean their life long earnings are likely to be less.
Where will that take us in the future? Debt is cheaper now, will it stay that way? The economy is not an easy thing to manage at the best of times, but when people are living longer and living life differently (borrowing and not saving for retirement, not leaving much for the children because it is being spent now) can old theories really be the grounds for making political decisions that will rebuild Canada for the future?
I think there are pieces that are not being put into the equation, and I am not sure I like where it is leading us. I REALLY hope I am wrong, but I fear it will only exacerbate the growing rich/poor divide.
"You can't take it with you," so maybe this is the ME generation going out with a bang. Like those who deny global warming, they are leaving it to the next generation to sort out. After all, they have had the best ride in the history of humankind, so why change now and why should not having enough money saved change the way they live. So raise a glass and CHEERS.
Source of the idea:
http://business.financialpost.com/personal-finance/debt/canadian-seniors-ramp-up-debt-to-soak-up-glitzier-lifestyle
The delays getting into the workforce, or in moving up for many of these young people, also mean their life long earnings are likely to be less.
Where will that take us in the future? Debt is cheaper now, will it stay that way? The economy is not an easy thing to manage at the best of times, but when people are living longer and living life differently (borrowing and not saving for retirement, not leaving much for the children because it is being spent now) can old theories really be the grounds for making political decisions that will rebuild Canada for the future?
I think there are pieces that are not being put into the equation, and I am not sure I like where it is leading us. I REALLY hope I am wrong, but I fear it will only exacerbate the growing rich/poor divide.
"You can't take it with you," so maybe this is the ME generation going out with a bang. Like those who deny global warming, they are leaving it to the next generation to sort out. After all, they have had the best ride in the history of humankind, so why change now and why should not having enough money saved change the way they live. So raise a glass and CHEERS.
Source of the idea:
http://business.financialpost.com/personal-finance/debt/canadian-seniors-ramp-up-debt-to-soak-up-glitzier-lifestyle
Wednesday, August 26, 2015
August Financial Commentary
So much has happened.
The media covered the Bank of Canada rate drop pretty thoroughly and the rather interesting (read perhaps political) failure by the chief of the Bank to use the "R" word, recession. A pretty standard definition of this term is "a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters."
In the Bank's press release it said, "Real GDP is now projected to have contracted modestly in the first half of the year, resulting in higher excess capacity and additional downward pressure on inflation." I italicized the "first half of the year" to point out that this in fact equals 2 quarters.
There has been a great deal of news since then, here are a few items of note:
China's market's have people watching and guessing about what it all REALLY means, but the bottom line for Canada right NOW is they are buying fewer of our resources and it hurts our overall economy.
Harper has declared that if re-elected he will increase the First Time home buyer RSP withdrawal limit from $25,0000 to $35,000. This is great for people who make enough to have contributed this much to their RSPs and who can pay it back on top of the cost of home ownership over the next 15 years. So this helps a small percentage of well to do buyers.
The Bank of Canada still says high personal debt, whether student loans, mortgages, car loans, credit card, or other forms debt is the biggest threat to our long term economic success and yet BMO comes out with an article about "GOOD DEBT." Good debt in this case is student and home loans, Student debt is only good if t leads to better jobs and more income, so until that is proven it is hard say it is "good" because having a large student loan and working minimum wage for years on end is not good debt for many. I think people need to be smart about debt, and do their best to use it wisely, and what that looks like for each person is a bit different, but everyone should have a plan to get OUT of debt.
Real estate values are dropping in some parts of the country which can cause problems for some, but in the short term is fine of you are planning to stay in the home.
Harper government hints at toughening up some aspect of mortgage lending before the election was called, and banks are tightening their lending practices. After the election we will see what becomes of the mortgage market.
While I do not have all the data to hand, my sense is that there will continue to be bumps in the road, but that overall the economy will tick along with no big ups or downs, we have no room for big growth because we did not fall as far as the US, and while our economy is tied to many markets there are no real signs that anything crazy is happening on the upside that should lift us significantly higher. The global situation will force the Bank of Canada to keep rates low for the foreseeable future and this will entice people to increase their debt levels, since the costs will seem so low.
Housing prices in Toronto show no signs of slowing down and as favoured areas sky rocket people will find new pockets to gentrify. A key calculation for anyone thinking of buying is looking at rent, savings, investment return vs. cost of buying, mortgage levels and likely future value of the home. Then of course there are the intangibles like feelings and personal preferences.
I do not like loosing business, but I also do not want people to get in over their heads. Check is out and think about your best options.
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/can-you-really-afford-that-mortgage-know-your-real-life-ratio/article17333137/
If your path takes you into the market or you want to use the equity in your home to add the extra space please let me help you get the right mortgage at a great rate.
After writing this of course we had a busy start to the week with major market shifts and a record low dollar. We will see what happens over the next while, but it looks like more Bank of Canada rate drops ahead.
All the best.
The media covered the Bank of Canada rate drop pretty thoroughly and the rather interesting (read perhaps political) failure by the chief of the Bank to use the "R" word, recession. A pretty standard definition of this term is "a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters."
In the Bank's press release it said, "Real GDP is now projected to have contracted modestly in the first half of the year, resulting in higher excess capacity and additional downward pressure on inflation." I italicized the "first half of the year" to point out that this in fact equals 2 quarters.
There has been a great deal of news since then, here are a few items of note:
China's market's have people watching and guessing about what it all REALLY means, but the bottom line for Canada right NOW is they are buying fewer of our resources and it hurts our overall economy.
Harper has declared that if re-elected he will increase the First Time home buyer RSP withdrawal limit from $25,0000 to $35,000. This is great for people who make enough to have contributed this much to their RSPs and who can pay it back on top of the cost of home ownership over the next 15 years. So this helps a small percentage of well to do buyers.
The Bank of Canada still says high personal debt, whether student loans, mortgages, car loans, credit card, or other forms debt is the biggest threat to our long term economic success and yet BMO comes out with an article about "GOOD DEBT." Good debt in this case is student and home loans, Student debt is only good if t leads to better jobs and more income, so until that is proven it is hard say it is "good" because having a large student loan and working minimum wage for years on end is not good debt for many. I think people need to be smart about debt, and do their best to use it wisely, and what that looks like for each person is a bit different, but everyone should have a plan to get OUT of debt.
Real estate values are dropping in some parts of the country which can cause problems for some, but in the short term is fine of you are planning to stay in the home.
Harper government hints at toughening up some aspect of mortgage lending before the election was called, and banks are tightening their lending practices. After the election we will see what becomes of the mortgage market.
While I do not have all the data to hand, my sense is that there will continue to be bumps in the road, but that overall the economy will tick along with no big ups or downs, we have no room for big growth because we did not fall as far as the US, and while our economy is tied to many markets there are no real signs that anything crazy is happening on the upside that should lift us significantly higher. The global situation will force the Bank of Canada to keep rates low for the foreseeable future and this will entice people to increase their debt levels, since the costs will seem so low.
Housing prices in Toronto show no signs of slowing down and as favoured areas sky rocket people will find new pockets to gentrify. A key calculation for anyone thinking of buying is looking at rent, savings, investment return vs. cost of buying, mortgage levels and likely future value of the home. Then of course there are the intangibles like feelings and personal preferences.
I do not like loosing business, but I also do not want people to get in over their heads. Check is out and think about your best options.
http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/can-you-really-afford-that-mortgage-know-your-real-life-ratio/article17333137/
If your path takes you into the market or you want to use the equity in your home to add the extra space please let me help you get the right mortgage at a great rate.
After writing this of course we had a busy start to the week with major market shifts and a record low dollar. We will see what happens over the next while, but it looks like more Bank of Canada rate drops ahead.
All the best.
Subscribe to:
Posts (Atom)