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

One of my favourite things about being a mortgage broker is bumping into a potential client who hasn’t ever used the services of a mortgage broker before and in this case, didn’t even know what a mortgage broker was.

I remember getting the text around 9:00 p.m. and I was just putting the finishing touches on a different mortgage file I was submitting that evening.

“Hi, I was referred to you by my REALTOR.  What is your best mortgage rate?”.   I answered back, “I’m just finishing up a mortgage submission, I will call you in 5 minutes.”  I always find the “best rate question” to be a way to start the conversation.   The conversation was about 15 minutes in length and I explained that a mortgage broker will do the following:

✅ Will most likely get a better mortgage rate and/or better terms
✅ Will spend the time to review the entire mortgage application upfront and look for any potential challenges.
✅ Will explain mortgage penalties and other mortgage terms.
✅ Will explain mortgage privileges such as pre-payment and portability.

The client mentioned they went to their bank for pre-approval already and had an amount that wasn’t exactly what they were looking for.   I offered to send her our introductory e-mail with our process, application, and other helpful information.  They agreed.

The next morning I woke up to their mortgage application (it was excellent by the way) and a text stating that our introductory e-mail had more useful information than their financial institution had provided.   I sent them our required documents list and to be honest and fair they thought the amount of documents we requested was too much.  I explained that their financial institution would ask for the same amount of documents, however, we like to invest our time into our clients to make sure that everything about their application meets/exceeds the lending qualification standards.  As it turned out there was an issue reporting on their credit bureau (an old Cable Company collection that was paid but not updated).  We were able to get this fixed with property documentation and by fixing it in advance saved us a lot of time when the clients made an offer to purchase a home and it was accepted.

The mortgage submission process was flawless, we had their mortgage approval back the same day without any conditions.   Their REALTOR, the clients, and the Listing REALTOR were all impressed and maybe a little shocked by the speed of our approval.  And while we would love to take all the credit for this, it helps when we have amazing clients who provide us with all of the proper documents, amazing REALTORs who have detailed MLS listings and contracts, and of course, amazing lender partners who take the time to also review mortgage documents upon submission.

I specifically asked this client how they liked using a mortgage broker.  I hoped to get some good feedback to help us improve our process and the information given.   Here are the hi-lites:

✅ Our response times were very fast.
✅ Our explanations were clear and easy to understand.
✅ The level of education provided far exceeded their financial institution.
✅ The mortgage rate was lower.
✅ The mortgage terms are better (no one had ever explained mortgage penalties and how they worked).
✅ Being able to have questions answered in the evenings and weekends was very helpful.
✅ Having a tailored pre-approval letter when writing the offer helped them during the purchasing process.

I always like hearing feedback whether positive or constructive.  It’s what makes us better.   And of course, the best compliment for us is getting a referral from our clients.  This lovely couple has already referred us 3 new clients.

We would love to help you with your next mortgage, answer any mortgage questions you have or provide you with a 2nd opinion.

Let us know how we can help!

Our scenario comes from a recent client we helped with their mortgage.   Credit scores were good, employment and income were very good, but there was quite a bit of consumer debt.   The mortgage on the home was at a pandemic-low interest rate, and while it seemed silly to try to find a replacement option, the amount of interest being paid on credit cards and unsecured lines of credit was gut-wrenching. for our readers who don’t have the time to read to the end here is our Cole’s notes version.

Refinancing didn’t make sense – Sold Home – Paid Off ALL Debt – Bought New & Better Home – Lower Overall Monthly Payments – Better Cashflow ($1,500/mo.) – $25,000 put into savings – HAPPY FAMILY!

The first thing we tried to do was to refinance the home.  There was enough equity built up in the property to qualify for a mortgage refinance (more than 20%), but not enough to consolidate enough of the debt to make sense (especially at a higher mortgage rate).
We explored some other options such as an independent consolidation loan, a car loan refinance, and even a 2nd mortgage.   Nothing made the family’s situation all that better.

We asked the question, “How would you feel about selling your existing home and leveling up on a new home?”   The clients wanted to know more about this option.  Let’s break it down.

The home was purchased in 2019 for $350,000, with a 10% down payment a mortgage payment of $1,518.66 per month, and a mortgage rate of 2.89%.   The mortgage is coming up for renewal in December 2024.   Since 2019 the house has increased in value to about $480,000 due to some very nice renovations, modernization, and a market increase in price.  Their current mortgage balance as of November 2023 was approximately $287,111.00.   The debt they hoped to pay or consolidate in the refinance was close to $115,000.00 (a couple of credit cards, 2 lines of credit, 2 car loans, and a buy-now-pay-later credit card).  The interest rates on the consumer debts were, 19.99%, 19.99%, 28%, 3.9%, and 1.9% and the buy-now-pay-later had a rate of 33% if the full payment wasn’t received by July 2024.  Total monthly payments including the mortgage and all debt payments were approximately $4,300.00.

Remember, we didn’t have enough equity to refinance and accomplish the goal of a full consolidation   For this family in particular, their current home, while beautiful wasn’t meeting their needs (3 kids under 10, 2 dogs, 1 cat, a bird, and some fish).   We qualified the clients for a new home of $550,000.0o with a minimum down payment of $30,000.   They sold their home for $485,000 just before Christmas with a March 15th, possession date.  After fees, commissions, and mortgage penalty ($2,100)  they had about $173,500 left to pay out the debts in full.  They had a remainder of $58,000 to use for the down payment and closing costs.

They purchased a new home for just under $500,000 with a possession date at the end of February.   This home was bigger, nicer, and in the same neighbourhood.  We were able to secure them a rate of 4.99% for a 5-year fixed rate.   Their new mortgage payment will be $2853.10.   This is a lower overall payment of $1,457.13 per month because all of the debt will be paid in FULL!!!  This family will have an extra $1,500 per month in their budget.

For transparency,  there were costs.  The cost to sell the home (REALTOR, Lawyer, Mortgage Penalty), and there were costs to purchase the new home (Closing costs approximately $7800).

This solution worked perfectly for these clients.   A new home that suited their needs, one lower monthly payment, and $1,500 more cash flow for their household budget.  I forgot to mention they had a little money left over to put in their savings account of just under $25,000.

If you applied for a mortgage refinance and were denied, or the numbers didn’t make sense, please call us for a 2nd opinion!