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<h3>How does Mortagage Refinancing Work?</h3>A refinance alters the terms and conditions of your existing mortgage – it’s essentially a new mortgage. &nbsp;Specifically, you are increasing the amount of your mortgage, whether to pay off consumer debt, finance a renovation, invest, or to get a lower rate.Something to point out: When you want to access equity in your current home, the mortgage guidelines/rules are totally different from the mortgage rules in place for purchase transactions.When refinancing (accessing your equity) the maximum new mortgage (or existing mortgage plus any Home Equity Lines of Credit) is limited to 80% of the appraised property value.The Lender will request a full appraisal report completed by a licensed appraiser to determine current property value.For example:Your home is appraised at $1,150,00080% of the appraised value would be a $920,000 new mortgage.Then we have to subtract the existing mortgage + penalty, to determine any available equity left to be used:$920,000 - ($827,000 approximate outstanding mortgage + $10,000 estimated penalty) = $83,000 available equity&nbsp; Example #2:&nbsp;Property appraised at $1,200,00080% of the appraised would be a $960,000 new mortgage.$960,000 - ($827,000 approximate outstanding mortgage + $10,000 estimated penalty) = $123,000 available equity. As you can see, the appraised property value plays a huge role in the maximum amount you will be able to get from the refinance.In addition, you can expect to pay for the full appraisal and legal costs (about $1,300 to $1,500). Those costs can be included in the mortgage.Do you have any other mortgage related questions? Email me at <a data-mce-href="mailto:mortgages@snezhana.ca" href="mailto:mortgages@snezhana.ca">mortgages@snezhana.ca</a><table style="border-collapse: collapse; width: 100%;" border="1" data-mce-style="border-collapse: collapse; width: 100%;" data-mce-selected="1"><tbody><tr><td style="width: 100%;" data-mce-style="width: 100%;"> </td></tr><tr><th style="width: 100%; background-color: rgb(78, 235, 65); text-align: center; vertical-align: middle;" data-mce-style="width: 100%; background-color: #4eeb41; text-align: center; vertical-align: middle;"><a data-mce-href="https://snezhana.ca/newsletter-signup" href="https://snezhana.ca/newsletter-signup" data-mce-selected="inline-boundary">JOIN THE MORTGAGE CLUB NEWSLETTER</a></th></tr></tbody></table>

What is Mortgage Refinance

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Given the evolving market dynamics and stricter credit evaluation criteria implemented by both lenders and mortgage insurers recently, it's crucial to exercise caution during the period between mortgage approval and funding.Did you know that lenders may conduct fresh credit checks just before funding, particularly if there's a significant gap between approval and funding dates. They also have the right to cancel your mortgage application if there are any material changes to your situation between when your mortgage was approved and the closing (funding) date.<h3>Here are 7 key tips to keep in mind during the period between mortgage approval and funding:</h3>1. Refrain from purchasing a new vehicle or upgrading to a pricier lease. Avoid major credit-based transactions unless you can demonstrate to the lender that they'll be settled before your closing date.2. Avoid quitting or changing jobs, even if it's for a better-paying position, as you might still be under probation. Any transition in employment status, including self-employment or contract work within the same industry, should be deferred until after mortgage funding.3. Exercise caution when transferring substantial sums between bank accounts, as it might appear as if you're borrowing funds. Be prepared to provide documentation for any cash transactions or transfers. To avoid complications and streamline the process, it’s best to minimize the movement of money between accounts until your mortgage financing is fully finalized.4. Ensure timely payment of all bills, including disputed ones, to avoid jeopardizing your approval. Lenders scrutinize credit reports before closing, and any collections or delinquencies could lead to last-minute complications or even cancellation of the mortgage approval.5. Avoid opening new credit cards or lines of credit until after the funding date to minimize any impact on your credit profile.6. If receiving a cash gift, ensure proper documentation before depositing it, and consult with your mortgage broker beforehand if needed.7. Postpone furniture purchases on deferred payment plans until after funding, as these transactions can affect your credit report and potentially impact the approved mortgage amount.By following this steps you can help ensure a smooth mortgage funding process and mitigate any potential risks to your approval.Do you have any other mortgage related questions? Email me at <a data-mce-href="mailto:mortgages@snezhana.ca" href="mailto:mortgages@snezhana.ca">mortgages@snezhana.ca</a><table style="border-collapse: collapse; width: 100%;" border="1" data-mce-style="border-collapse: collapse; width: 100%;" data-mce-selected="1"><tbody><tr><td style="width: 100%;" data-mce-style="width: 100%;"> </td></tr><tr><th style="width: 100%; background-color: rgb(78, 235, 65); text-align: center; vertical-align: middle;" data-mce-style="width: 100%; background-color: #4eeb41; text-align: center; vertical-align: middle;"><a data-mce-href="https://snezhana.ca/newsletter-signup" href="https://snezhana.ca/newsletter-signup" target="_blank" rel="noopener">JOIN THE MORTGAGE CLUB NEWSLETTER</a></th></tr></tbody></table>

What NOT To Do Between Your Mortgage Approval and Funding Dates

When it comes to financing your home purchase, you may come across the term "collateral mortgages." In Canada, collateral mortgages are becoming increasingly popular among homebuyers. In this guide, we'll break down what collateral mortgages are and how they differ from traditional mortgages.<h2>What is a Collateral Mortgage?</h2>A collateral charge mortgage is a type of mortgage where the lender can register the mortgage for an amount higher than the actual loan amount. This allows the borrower to access additional funds in the future (up to the registered amount) without having to register another mortgage (saving legal fees).<h2>Pros and Cons of Collateral Mortgages</h2><h3>Pros:</h3><ul><li>Higher Registered Amount: Unlike a conventional mortgage where the registered amount matches the loan amount, with a collateral charge mortgage, the lender may register the mortgage for a higher amount, often up to 125% of the property's value.&nbsp; </li><li>Flexibility: This type of mortgage offers flexibility for borrowers because they can access additional funds later on, such as for renovations, without having to go through the legal process of registering a new mortgage or refinancing.</li></ul><h3>Cons:</h3><ul><li>The lender has the option to utilize the collateral mortgage to settle any outstanding debts you owe them. For instance, if you have a credit card with the same lender, and if you were to default on a credit card payment, the lender could increase the amount of your collateral mortgage to cover the debt.</li><li>In the event that you wish to refinance to tap into the equity you've accrued in your home, but your lender rejects your application due to poor credit or your income has decreased drastically, you may encounter difficulty obtaining a second mortgage from another lender. This is because your home is secured against the collateral mortgage, which appears to have exhausted the available equity making it challenging to secure additional funds in second position behind the existing 1st mortgage.</li></ul><h3>How to Qualify for a Collateral Mortgage</h3>Qualifying for a collateral mortgage is similar to qualifying for a traditional mortgage. Lenders will look at your credit score, income, and overall financial situation to determine if you are eligible for this type of mortgage.Feel free to email me at <a data-mce-href="mailto:mortgages@snezhana.ca" href="mailto:mortgages@snezhana.ca">mortgages@snezhana.ca</a> to discuss whether collateral mortgage might be a good fit for you.

What is Collateral Mortgage?

It is no secret that a lot of people took advantage of the attractive interest rates back in 2020/2021 and locked in extremely low interests with very manageable payments.But what happens when your mortgage term ends?&nbsp;At the end of the term, your mortgage becomes due and payable in full. If you are one of few lucky people to win the lottery or receive a large inheritance, good for you - you can pay off the mortgage in full with no penalty at all (assuming you make the payment on the maturity date).However, for the rest of us - we are left with the only option - renewing the mortgage for another mortgage term. But what happens when the rate you are offered from your current lender is much higher than your existing rate? You might be faced with the so- called Payment Shock: when your existing mortgage payment will be increased drastically and may negatively impact your monthly cash flow.Here is when my expertise comes to shine and I offer valuable advice and options to make the mortgage work for you.<figure id="figure-2wiskpa6frltpzpz8b"><img id="2wiskpa6frltpzpz8b" src="https://cdn.durable.co/blocks/0A8JPaNyp0VxSGzYYGeA2abIyQ2Df3ux6nYnMZUNHnx5ILAAlTNPUrMdFfXSQmTJ.jpg" alt="woman looking at the phone" class="object-cover bg-gray-100 rounded-sm md:rounded-md lg:rounded-lg" style="aspect-ratio: 16/9; object-position: 80% 5%;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="80%" data-positiony="5%" data-fullwidth="false" data-mce-src="https://cdn.durable.co/blocks/0A8JPaNyp0VxSGzYYGeA2abIyQ2Df3ux6nYnMZUNHnx5ILAAlTNPUrMdFfXSQmTJ.jpg" data-mce-style="aspect-ratio: 16/9; object-position: 80% 5%;"></figure> Did you know that 51% of Canadian homeowners don’t plan on changing lenders when their mortgage comes up for renewal — and 9% weren't even aware that they could switch lenders to get a better rate?&nbsp;Renegotiating your mortgage at renewal time is an excellent way to save money and ensure that you have the best mortgage product for your financial situation.&nbsp;There are 3 options to consider when your mortgage term is ending:1. Renew with the same lender 2. Switch/Transfer to another lender 3. Refinance the mortgage.<h3>What is Mortgage Renewal?</h3>Your mortgage is up for renewal when you approach your maturity date (also known as your renewal date). This is when your current mortgage contract ends and your mortgage lender will then present you with your options to renew the mortgage with them.As the name implies, a mortgage renewal is simply renewing your mortgage with your current lender. But here's the catch: don't just sign on the dotted line without checking out other options first.&nbsp; We're all busy, and it's tempting to just send the form back to your current lender without a second thought. It's quick, it's easy, and it seems like the simplest thing to do. But here's the deal: it could end up costing you a lot more than you realize. That's why it's super important to take a good look at your options. You want to make sure you're getting a really good deal when you renew with your current lender. They might offer you a decent rate, but guess what? You could actually save a ton of money or have a lower payment by switching to a different lender.<h3>What is Mortgage Switch/Transfer?</h3>There is a good chance that you’ll be able to find a lower rate with another lender. This is where you would switch your current mortgage balance and remaining amortization over to another lender. This is also known as a mortgage transfer.A title insurance company such as First Canadian Title (FCT) &nbsp;facilitates the transfer of funds from one lender to the other. The costs are generally picked up by the new lender. For most mortgage switches, the only fee involved is the discharge fee from your current lender. It can range anywhere from $200 to $400 depending on your province.&nbsp; While there are a small number of lenders who will cover the discharge fee, most will not. The fee would get added to the new mortgage, so you shouldn’t have any out of pocket costs at closing. The maximum amortization will be what you have remaining based on years passed on the calendar. For example, if you started with 25 years and five years have passed, then your maximum amortization will be 20 years. If you made use of your prepayment privileges or were on an accelerated biweekly or weekly payment schedule, then your effective amortization would reflect fewer years remaining. You can either go with the lower amortization or you can move it back up based on years passed.&nbsp; On a mortgage switch, you can always reduce your amortization but cannot increase it, nor can you increase your mortgage balance. However, &nbsp;there are some exceptions to this rule depending on your mortgage charge - whether the mortgage was registered as a standard or collateral charge. If you have a HELOC (Home Equity Line of Credit) attached to your mortgage, then your mortgage is most likely a collateral charge. If you have any debts outside your mortgage/HELOC, they can be transferred to the HELOC, and paid out during the mortgage switch.<h3>What is Mortgage Refinance?</h3>Refinancing allows you to replace your existing mortgage agreement with a new agreement – this means you’ll have a new interest rate, term length, and even a longer amortization. If you want to increase your amortization up to 30 years to reduce your payments, or if you are looking to take equity out of the property, then mortgage refinancing would be your best options. While the process is similar to a mortgage switch, it falls into a different pricing category. This means a slightly higher rate may apply.&nbsp; However, if your objective is to have a lower monthly payment and better cash flow - mortgage refinance will help you achieve your goal. Many people decide to refinance for a simple reason: to combine their debts. This means bringing together different debts, like paying for education or renovating a home, into one. Sometimes, you might have debts with high interest rates that make it hard to manage your money. Refinancing helps by combining these debts into one with a lower interest rate and a single, easier-to-manage monthly payment.In conclusion, exploring your options for mortgage renewal is a smart financial move that can help you save money, access equity, and improve your overall financial situation.&nbsp; Take some time to check out different mortgage options and reach out to me ahead of time. That way, I can help you find the right mortgage for what you need now and for the future. If you know anyone whose mortgage is coming up for renewal - feel free to share this blog post with them.If you are ready to discuss your mortgage renewal options, <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" data-mce-selected="inline-boundary">click here to book a call with me.</a>

Navigating Your Mortgage Renewal

While all the eyes were on the Bank of Canada, and their expected rate hold, let’s jump to what has been happening to the fixed rates in the last several months.I have seen many clients who are still on the fence and waiting for the “rates to drop” further in order to act and get their feet wet.Here is a real live example of a couple I am working with. I wanted to share their story because it reflects the changes happening in the real estate market, especially when it comes to affording a mortgage.Of course, their names have been changed, and I will call this cute couple Mike and Molly. They have been looking for a home since late Fall, and their strong determination keeps their search for their dream home alive. And now there is some good news for them!Let’s look at some numbers for &nbsp;them to show how affordability in the housing market is changing. Let's compare what they could afford at the end of 2023 to what they can afford in early March 2024.<figure id="figure-q3o8w1n33sltj073kq"><img id="q3o8w1n33sltj073kq" src="https://cdn.durable.co/blocks/23JPec1CL6RkWMXM3Fn64Kw5xHCokrGOE9fq0mbM4FGmqKNq6gvCZPOv8FbwspTN.jpg" alt="Snezhana looking at the camera with her hands on the closed computer" class="object-cover bg-gray-100 rounded-sm md:rounded-md lg:rounded-lg" style="aspect-ratio: 16/9; object-position: center center;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://cdn.durable.co/blocks/23JPec1CL6RkWMXM3Fn64Kw5xHCokrGOE9fq0mbM4FGmqKNq6gvCZPOv8FbwspTN.jpg" data-mce-style="aspect-ratio: 16/9; object-position: center center;"></figure>In November 2023, with a 3-year fixed-rate mortgage at 6.39% over 25 years, compared to today's 3-year fixed-rate mortgage at 5.14% over the same period, there was a big shift in affordability.Their situation has not changed in both November 2023 &amp; March 2024, and their ballpark figures are:- Down payment: $120,000 - Molly’s Income: $85,000 - Mike’s Income: $62,000 - No debts and excellent credit November 2023:Their budget, inclusive of property taxes, heating costs, and default insurance, allowed for a purchase price of $640,000 with a mortgage balance of $544,840 and a monthly payment of $3,613.22.March 2024:Their budget, inclusive of property taxes, heating costs, and default insurance, would allow for a purchase price of $700,000 with a mortgage balance of $606,520.00 and a monthly payment of $3,593.44.<table style="border-collapse: collapse; width: 100%;" border="1" data-mce-style="border-collapse: collapse; width: 100%;" data-mce-selected="1"><tbody><tr><td style="width: 30%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 30%; border: 1px solid #34495e;">Mortgage Details</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">Nov 2023</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">March 2024</td><td style="width: 10%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 10%; border: 1px solid #34495e;">Difference</td></tr><tr><td style="width: 30%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 30%; border: 1px solid #34495e;">Subject Property Value</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">$640,000</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">$700,000</td><td style="width: 10%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 10%; border: 1px solid #34495e;">$60,000</td></tr><tr><td style="width: 30%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 30%; border: 1px solid #34495e;">Mortgage Amount</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">$530,000</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">$590,000</td><td style="width: 10%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 10%; border: 1px solid #34495e;">$60,000</td></tr><tr><td style="width: 30%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 30%; border: 1px solid #34495e;">Insurance Premium Amount</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">$14,840</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">$16,520</td><td style="width: 10%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 10%; border: 1px solid #34495e;">$1,680</td></tr><tr><td style="width: 30%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 30%; border: 1px solid #34495e;">Requested Loan Amount</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">$544,840</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">$606,520</td><td style="width: 10%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 10%; border: 1px solid #34495e;">$61,680</td></tr><tr><td style="width: 30%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 30%; border: 1px solid #34495e;">Payment</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">$3,613.22</td><td style="width: 15%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; border: 1px solid #34495e;">$3,593.44</td><td style="width: 10%; border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 10%; border: 1px solid #34495e;">-$19.78</td></tr><tr><td style="width: 30%; border-color: rgb(52, 73, 94); border-style: solid; background-color: rgb(255, 255, 255); border-width: 1px;" data-mce-style="width: 30%; background-color: #ffffff; border: 1px solid #34495e;">Payment Frequency</td><td style="width: 15%; background-color: rgb(255, 255, 255); border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; background-color: #ffffff; border: 1px solid #34495e;">Monthly</td><td style="width: 15%; background-color: rgb(255, 255, 255); border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 15%; background-color: #ffffff; border: 1px solid #34495e;">Monthly</td><td style="width: 10%; background-color: rgb(255, 255, 255); border-color: rgb(52, 73, 94); border-style: solid; border-width: 1px;" data-mce-style="width: 10%; background-color: #ffffff; border: 1px solid #34495e;"> </td></tr></tbody></table>So, let's break it down. If we compare today's scenario with what it was before, buyers now could swing about $60,000 more in the purchase price. Plus, they'd end up with a lower monthly payment of just under 20 bucks and a bigger mortgage balance, all thanks to the decreased fixed-rate interest.Basically, what this tells us is that the housing market is always shifting. There's no one "perfect" time to buy. If you got pre-approved back in November/December, now's the time to circle back with your mortgage broker. You might be surprised at the numbers.But hey, let's keep things real. This example is just to give you an idea of what's happening in the market. It's not financial advice or a promise of pre-approval.. Remember, rates and terms can change quicker than you can say "sold."If you're thinking about taking the plunge into homeownership, why not shoot me a message? Let's chat about your options, dive into what's going on in the market, and figure out a plan that works for you. Your dream home could be closer than you realize.Book a <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana">call with me here</a>Snezhana

Your Borrowing Power Might Have Increased Without You Even Knowing It!

Today, the Bank of Canada decided to keep its main interest rate steady at 5.0%. They're worried about prices going up too fast (inflation), even though the Consumer Price Index only rose by 2.9% in January. Here's a summary of what the Bank said:In Canada:- The cost of housing is still high and is the main reason why prices are going up. - Prices for other things are also going up by about 3% to 3.5% each year. - Canada's economy grew a bit more than expected last year, but it's still not doing as well as it could. - People are spending a little more, but businesses aren't investing as much. - More goods are being sold overseas, which is helping the economy. - Not as many people are getting jobs compared to the number of people who want them. -The Bank thinks there's still too much stuff available compared to how much people want to buy. In the world:- The global economy slowed down at the end of last year. - The United States is doing okay, but Europe is struggling. - Prices in the U.S. and Europe are not rising as fast. - Interest rates have gone up a bit, but loans for businesses are becoming cheaper. - Stock markets are doing well. - Oil prices are a bit higher than expected. Looking ahead:The Bank thinks prices will stay high for the first part of this year before coming down a bit. They're worried about prices staying high for too long. High interest rates are causing households to spend less on non-essential items when they renew their mortgages, facing higher monthly payments. As the economy slows down in the first half of this year, the Bank of Canada (BoC) is expected to hint at easing its policies. This could occur at the next meeting on April 10, where policymakers will update economic projections, potentially paving the way for a rate cut in June.If your mortgage is coming up for renewal soon - reach out to us at <a href="mailto:mortgages@snezhana.ca">mortgages@snezhana.ca</a> to discuss your options.

Blog

What is Mortgage Refinance

What NOT To Do Between Your Mortgage Approval and Funding...

What is Collateral Mortgage?

Navigating Your Mortgage Renewal

Your Borrowing Power Might Have Increased Without You Eve...

Bank of Canada Rate update - March 6th, 2024