Everything has a cost.

I was part of a conversation recently.  I was listening to different points of view.   One person had recently purchased a home and started paying their mortgage, the other stated that interest rates were too high and that they were waiting for either the prices of houses to come down, or for interest rates to come down.   I was sitting there sipping my coffee and listening intently to these two perspectives.  Suddenly,  I heard a deafening silence, as all heads slowly turned in my direction and all eyes were on me.   I think waiting will ultimately prove to be incorrect.   Home values are starting to increase again, interest rates are slowly coming down, the housing supply is dropping and rents are increasing.  Not to mention the amount of money that will be spent on rent that doesn’t build any equity.

I’m not sure who is right and who is wrong in this scenario.   Everyone’s situation is slightly different.  I bowed out gracefully and I asked both parties to watch our socials this week.  This conversation made me ask myself  “What interest rate are you paying on your apartment lease/rent?”

Later on, I pulled out my mortgage calculator and decided to do an interest-only calculation that is compounded monthly.  I googled for the average rents in Winnipeg and assigned a reasonable mortgage amount to the rent being paid and came up with the following chart.

The interest rates ranged from 5.83% – 6.90% and the amount of interest paid after 5 years left me gobsmacked!

If you are currently renting, living with your family, or planning to rent soon, I hope you read this post.  We would be happy

Sometimes I forget how many different services we offer to ensure that we have to help our clients find the right financial solutions.

1. Mortgage Pre-Approval Purchase (Fully Underwritten)
2. Purchase Plus Improvements (Up to $100k)
3. Mortgage Refinance
4. Mortgage Refinance Plus Improvements
5. Mortgage Debt Consolidation
6. Mortgage Renewal
7. Mortgage Switch/Transfer
8. Cashback Mortgages
9. Borrowed or Flex Down Payment
10. Construction Mortgages
11. Mortgages After Divorce or Legal Separation
12. Rental Property Mortgages
13. Rental Property Refinances
14. Rental Property Renewals
15. Rental Property Switches/Transfers
16. Hybrid Mortgages
17. Self Employed Mortgages
18. New To Canada Mortgages
19. 2nd Home Mortgages
20. Vacation Home Mortgages
21. Home Equity Lines Of Credit (HELOCS)
22. Mortgage Life Insurance
23. Mortgage Disability Insurance
24. Credit Repair
25. Auto/Boat/RV Refinancing
26. Commercial Mortgages
27. Commercial Construction Mortgages
28. Alternative Financing
29. Private Mortgages
30. First & Second Mortgages
31. Manitoba Metis Federation Grant
32. Commercial Equipment Leasing
33. Referrals to Financial Planners
34. Referrals to REALTORs
35. Referrals to Life Insurance Advisors
36. Referrals to Real Estate & Family Lawyers
37. Referrals to Home Inspectors
38. Referrals to House Insurance Brokers
39. Reverse Mortgages
40. Bruised Credit
41. Mortgages For New Business Owners
42. Stated Income Mortgages
43. Apartment Building Financing
44. Apartment Building Construction
45. Mortgage Calculators
46. Mortgage Training For New Agents
47. Mortgage Mentorship
48. Mortgages For Strip malls
49. Mortgages For Duplex, Triplex, and Fourplex
50. Interest Only Mortgages
51. Business Financing
52. Farm Credit & Financing

We pride ourselves on being experts in all of the products listed above.  We have dozens of different lenders and programs to choose from.  We can provide you the correct information suited to your own situation and would love to help and answer any questions you may have!

Your mortgage amortization period is the number of years it will take you to pay off your mortgage. Depending on your choice of amortization period, it will affect how quickly you become mortgage-free as well as how much interest you pay over the lifetime of your mortgage (a longer lifetime equals more interest, whereas a shorter lifetime equals less interest but also bigger payments).

Amortization Benchmarks
Let’s start by looking at the mortgage industry benchmark amortization period. This is typically a 25-year period and is the standard that is used by the majority of lenders when it comes to discussing mortgage products. It is also typically the basis for standard mortgage calculators. While this is the standard, it is not the only option when it comes to your mortgage amortization. Mortgage amortizations can be as short as 5 years and as long as 35 years!

Benefits of a Shorter Amortization
Opting for a shorter amortization period will result in paying less interest overall during the life of your mortgage. Choosing this amortization schedule means you will also become mortgage-free faster and have access to your home equity sooner! However, if you choose to pay off your mortgage over a shorter time frame, you will have higher payments per month. If your income is irregular, you are at the maximum end of your monthly budget or this is your first home, you may not benefit from a shorter amortization and having more cash flow tied up in your monthly mortgage payments.

Benefits of a Longer Amortization
When it comes to choosing a longer amortization period, there are still advantages. The first is that you have smaller monthly mortgage payments, which can make home ownership less daunting for first-time buyers as well as free up additional monthly cash flow for other bills or endeavors. A longer amortization also has its advantages when it comes to buying a home as choosing a longer amortization period can often get you into your dream home sooner, due to utilizing standard mortgage payments versus accelerated. In some cases, with your payments happening over a larger period, you may also qualify for a slightly higher value mortgage than a shorter amortization depending on your situation.

Let’s Chat!
We would be happy to help with the decision for the amortization that best suits your unique requirements and ensures you have adequate cash flow. However, it is important to mention that you are not stuck with the amortization schedule you choose at the time you get your mortgage. You can shorten or lengthen your amortization, as well as consider making extra payments on your mortgage (if you set up pre-payment options), at a later date.

Ideally, you are re-evaluating your mortgage at renewal time (every 3, 5, or 10 years depending on your mortgage product). During renewal is a great time to review your amortization and payment schedules or make changes if they are no longer working for you.

More sad news for the Canadian Mortgage space.  The Government of Canada’s FTHBI First Time Home Buyer Incentive is going away!

All applications for the incentive will need to be received by March 21st at 12:00 a.m. EST.   For single-income households, this program usually made the difference between being able to qualify for a house or condo.

If you are planning on using the incentive, you will need to move fast!  After March 21st, your purchasing power could be reduced.

We hope that there will be some good policy and news coming out of Ottawa in the coming months!

Here is the link to the CMHC Website

https://www.cmhc-schl.gc.ca/consumers/home-buying/first-time-home-buyer-incentive?fbclid=IwAR0ajl5LvjQ6ll8rBlsRLq_2s40N3xPAkhaPvWTYlQy0Ap9sinybZoIgKks