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Feeling stuck with your current mortgage lender and unable to shop around for a better deal? Well, there are big changes coming to the Canadian mortgage world that might just give you the freedom you’ve been waiting for. Let’s break down what these changes mean for you and your mortgage payments.<h3>The Big News: No More Stress Test for Mortgage Switches</h3>Starting November 21, 2024, the Office of the Superintendent of Financial Institutions (OSFI) is dropping the stress test for uninsured mortgage switches. But what does that mean for you?What’s an Uninsured Mortgage?An uninsured mortgage is where you’ve put down 20% or more on your home. If that sounds like you, this change could be a game-changer!What if you have an Insured Mortgage?&nbsp;Don't worry - the current rules already allow you to switch your mortgage without a stress test!What’s the Stress Test?The stress test, introduced in 2018, is how lenders ensure you can afford your mortgage, even if rates go up. Right now, you have to prove you can handle your mortgage at a rate that’s either 2% higher than your actual rate or the Bank of Canada’s benchmark rate, whichever is higher.What This Change Means: Freedom to Switch Lenders Without StressThe exciting part? With the new rule, when your mortgage is up for renewal, you can switch lenders without having to pass the stress test again. That’s huge!Here is Why This Change Matters1. More Freedom to Shop Around Picture this: You’re a homeowner in Guelph, and your mortgage is about to renew. You’ve found a better rate with a new lender, but under the old rules, you’d have to prove you could afford a higher rate, even though you’ve been making payments for years. Now, you can switch to that better rate without all the extra hassle.2. Potential Savings Let’s talk numbers. Say you’ve got a $500,000 mortgage. &nbsp; - Current rate with Lender A: 5.5% &nbsp; - New offer from Lender B: 5%With the old rules, you might’ve been stuck with Lender A. But now, you can switch to Lender B and save about $150 a month—over $1,800 a year!3. More Competition Among Lenders Since borrowers can move around more easily, lenders will need to work harder to keep your business. That could mean better rates and perks for you.4. Less Stress at Renewal Time Renewing your mortgage can be stressful enough. Now, you don’t have to worry about a test or if your financial situation has changed. Instead, you can focus on finding the best deal.<h3>Why OSFI Made This Change</h3>OSFI realized the stress test at renewal didn’t make sense, especially since some lenders don’t even check your employment status when renewing. This change helps level the playing field and gives borrowers more flexibility.<h3>What Should You Do Next?</h3>1. Mark the Date: November 21, 2024, is when the rule kicks in. If your mortgage renewal is coming up, keep this date in mind. &nbsp;&nbsp; 2. Shop Around: Don’t just stick with your current lender’s offer. Check with other lenders or a mortgage broker to see if you can get a better deal.3. Run the Numbers: Calculate how much switching could save you. Be sure to factor in any fees from changing lenders.4. Think Long-Term:&nbsp; While a lower rate is tempting, don’t forget to consider things like prepayment options and the lender’s customer service.5. Stay in the Loop: Keep an eye on interest rate trends to help guide your decision. Hint - we do this for you if you hire us as your mortgage brokers.6. Let Us Help You: At BRX Mortgage, we’ll make the process of switching your mortgage as easy and seamless as possible!<h3>The Bottom Line: A Win for Homeowners</h3>This change is great news for Canadian homeowners with uninsured mortgages. It gives you more freedom to shop around and potentially save money. Just be sure to make informed decisions that align with your long-term financial goals.<a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana">Book a Call Here</a> to get started

No Stress Test at Renewal Time! Now This is a Game Changer!

The Canadian government just announced some exciting updates to mortgage rules that could help bring homeownership closer for many. But like any change, there are pros and cons. Let's take a look at what these new rules mean for you.<h3>What’s New?</h3>Two major changes were announced by Deputy Prime Minister Chrystia Freeland:1. Higher Price Cap for Insured Mortgages: The price limit for insured mortgages is increasing from $1 million to $1.5 million. This means you can now buy a home up to $1.5 million with less than 20% down.2. Longer Amortization for First-Time Buyers: The maximum amortization period for insured mortgages is extending from 25 years to 30 years for first-time buyers and new construction homes.&nbsp;These changes start in December 2024, so if you're thinking about buying, this could be a game-changer.<h3>The Good Stuff</h3>1. More Homes to Choose From - If you're trying to buy in an expensive city like Toronto, this increase in the insured mortgage limit could help you afford homes that were previously out of reach.&nbsp;2. Lower Monthly Payments - Extending the amortization period to 30 years can make your mortgage more affordable with lower monthly payments. For example, if you're buying a $700,000 home, a 30-year mortgage could save you almost $300 per month compared to a 25-year mortgage.3. Boost for New Builds - The government is hoping these changes will encourage more people to buy newly built homes, which could help with the housing shortage.<h3>The Downsides</h3>1. More Interest Over Time - While lower monthly payments sound great, you’ll end up paying more in interest over the life of a 30-year mortgage compared to a 25-year one.2. Slower Equity Building - With a longer loan term, it will take you longer to build equity in your home, which could delay future financial goals.3. Possible Price Increases - If more people can afford higher-priced homes, sellers might raise their prices, especially in already competitive markets like Vancouver.4. Higher Insurance Costs - If you’re putting down less than 20%, you’ll have to pay for mortgage insurance, which gets more expensive as the loan amount increases.<h3>The Big Picture</h3>These changes are part of the government’s larger plan to tackle Canada’s housing crisis by making homeownership more accessible. But if the supply of homes doesn’t increase, we could see even higher prices as more people enter the market.Who Benefits the Most?- First-time homebuyers in expensive cities - Buyers of newly built homes - People with good incomes but lower down paymentsWho Might Face Challenges?- Buyers already carrying high debt - People in markets where these changes could push prices higher - Near-retirees who may not want to take on longer-term debtHow to Navigate These Changes1. Do the Math: Weigh the benefits of lower monthly payments against the extra interest you’ll pay over time. 2. Think Long-Term: If you plan to stay in the home for many years, a 30-year mortgage might make sense. 3. Don’t Overextend: Just because you qualify for more doesn’t mean you should max out your budget. 4. Watch the Market: Keep an eye on how these changes affect prices in your area. <h3>The Bottom Line</h3>These new mortgage rules offer opportunities for some, but also come with risks. Before jumping in, consider your financial goals and whether these changes make sense for your situation. Homeownership is a long-term commitment, so take your time, get advice, and make a smart decision.<a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" target="_blank" rel="noopener">Book a call</a> here to discuss how those new changes will impact your borrowing power.

Big Changes to Canadian Mortgage Rules: What You Need to Know

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When purchasing a home or waiting for your mortgage to fund, there are several important things to keep in mind to avoid preventable issues. Everyone seems to have advice on what to do during this process, but it's just as crucial to know what not to do.As your mortgage broker, I’m committed to ensuring a smooth closing for you and your family. Below is a list of things that could impact your mortgage approval, and it's important to remember that up until closing day, the lender has the right to cancel your mortgage approval if there are any significant changes to your application or financial situation.<h3>Key Points to Consider Before Your Mortgage Funds:</h3>Be Honest: Always provide truthful information on your application, including details about any other real estate you own.Income and Employment Changes: Any change to your income or employment, means you might not be able to qualify for the mortgage or prove your ability to repay it back so:<ul><li>Avoid losing your job - do not resign</li><li>If you are on probation with your employer, let me know</li><li>Do not reduce your income level</li><li>Do not change the status of your employment from full-time to part-time</li><li>If you are currently on maternity or paternity leave, or think you will be shortly, let me know</li><li>Don’t forget to disclose if you are currently on short-term or long-term disability</li><li>If you receive other income such as Canada Child Benefit (CCB), and it’s going to stop soon, let me know</li></ul>Down Payment and Closing Costs, remember:<ul><li>Do not spend your down payment on other things!</li><li>Don't move funds around between accounts:</li></ul>&gt; If you transfer part of your down payment from your TFSA or RRSP to your checking account, then to your savings account, and later decide to move it again to another savings account for better interest rates, it complicates things. &gt; In this scenario, you'll be required to provide a 90-day history for all accounts where the money has been held. As your mortgage broker, we then need to explain all the unusual deposits and clearly connect the source and destination of those funds to the lender. &gt; 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.<ul><li>Avoid surprises, by making sure you have enough money for ALL closing costs that we discuss</li><li>There might be property tax holdbacks and adjustments to be included in closing costs </li><li>Provide me with proof of your down payment as soon as possible </li><li>Be prepared to explain large deposits that you show in your bank account to comply with Money Laundering Regulations</li></ul>Things that might affect your Credit Rating….A lender reserves the right to review your credit rating just before the closing date of your mortgage - if there have been any material changes in your rating, they could withdraw their mortgage approval, avoid this happening by…<ul><li>Not increasing your debt load unless we have talked about it</li><li>Not buying big ticket items like a new vehicle without talking to me first!</li><li>Not volunteering to guarantee or co-sign on a loan or mortgage for anyone else Not applying for new credit cards or loans</li><li>Not opening a “don’t-pay-for-a-year” account</li><li>Not closing any accounts unless I advise you to</li><li>Not stopping to pay your bills including your current mortgage</li><li>Trying to fix your credit rating unless we have discussed it</li><li>Not disclosing any car lease payment, student loans you have or any credit problems/issues you have had in the past</li><li>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.</li></ul>And a few final tips:<ul><li>If your closing dates are not on the same day, you might need bridge financing!</li><li>Don’t change your closing date without telling me</li><li>Make sure you provide me with all the documentation I request at your earliest convenience</li><li>Don’t wait until the last minute to arrange for property (fire) insurance.&nbsp;</li></ul>Shopping Around: Everyone will be excited about your new home purchase, but please don’t believe everything you hear. Just remember, that if you ask too many people their opinion, confusion might well set in. If you feel the need to shop around for another option, remember that too many applications to other lenders can impact your credit rating negatively. Talk to me first so we can discuss this.

What NOT to Do Before Your Mortgage Funds

In Canada, an Interest Rate Differential (IRD) penalty is a fee that lenders may charge borrowers if they break a fixed-rate mortgage contract early, for example, by selling their home or refinancing before the mortgage term ends.<h3>How the IRD Penalty Works:</h3>The IRD penalty compensates the lender for the interest they lose when the borrower exits the mortgage before the term is up. The calculation generally considers the difference between:<ol><li>Your mortgage rate: The interest rate on your current mortgage.</li><li>The lender's current rate: The rate the lender could charge on a new mortgage for the remaining term of your mortgage.</li></ol>The Formula: The exact calculation can vary greatly between lenders, but the general formula is:IRD Penalty = (Difference between your rate and the lender’s current rate) × Remaining mortgage balance × Remaining term in months / 12Example: If your current mortgage rate is 5%, the lender's current rate for a term equivalent to the remaining 2 years on your mortgage is 3%, and your remaining balance is $200,000, the IRD might be calculated as follows:- Rate Difference: 5% - 3% = 2% (0.02) - Remaining balance: $200,000 - Remaining term: 24 monthsIRD Penalty = 0.02 × $200,000 × 24 / 12 = $8,000Important Notes: - Higher Penalties: IRD penalties can be substantial, especially in times of falling interest rates. - Fixed-Rate Mortgages: The IRD penalty is typically associated with fixed-rate mortgages. Variable-rate mortgages usually have different prepayment penalties, often equivalent to three months' interest.<h3>Factors Influencing IRD Penalty Calculations</h3>The calculation of an interest rate differential (IRD) penalty is influenced by several key factors:1. Mortgage Type: The IRD penalty calculation varies depending on the type of mortgage. Fixed-rate mortgages are more likely to involve IRD penalties, while variable-rate mortgages often have different methods for penalty calculations.2. Remaining Term: The time left until your mortgage matures plays a crucial role. Generally, the longer the remaining term, the higher the potential IRD penalty.3. Interest Rate Changes: Fluctuations in interest rates since the beginning of your mortgage term can significantly impact the IRD. A greater difference between your original rate and the current rate usually results in a higher penalty.4. Market Conditions: The IRD penalty is also affected by the broader market interest rates. If rates have risen since you secured your mortgage, expect a higher penalty. Conversely, if rates have fallen, the penalty may be lower.5. Portability Option: Some mortgages offer a portability feature, allowing you to transfer your existing mortgage to a new property. Utilizing this option could help you avoid substantial IRD penalties. However, not all mortgages include this option, and lenders may impose restrictions, particularly if the property's purchase price exceeds $1 million.This overview covers the main factors affecting IRD penalties, helping you understand what to expect if you decide to break your mortgage early.Always review your mortgage agreement or consult with your lender to understand how the IRD penalty might apply to your specific situation.<a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" data-mce-selected="inline-boundary" target="_blank" rel="noopener">Book a call here</a> to discuss your mortgage options. If you already have a mortgage, I can track the details for you and notify you when it might be advantageous to break your current mortgage for a better rate.

What Is an Interest Rate Differential (IRD) Penalty?

Great news for those looking to buy a newly built home! The 30-year amortization option is back for high-ratio borrowers, marking its return since 2012. This program is available for first-time buyers purchasing newly-built homes. While it might not make a huge difference for everyone, it's definitely worth exploring the options.Here are seven key points to help you understand and take advantage of this opportunity:1. Lower Monthly Payments Many buyers, especially millennials with high total debt service (TDS) ratios, focus on monthly payments rather than the overall cost. With the new 30-year amortization, you could reduce your monthly mortgage payments by over 8%. For instance, a $500,000 home with 5% down and a 4.59% interest rate would cost $2,522 per month with a 30-year term, compared to $2,764 per month with a 25-year term.2. Increased Purchasing Power Lower monthly payments also mean lower debt ratios, allowing you to afford approximately 8% more home. This can significantly boost your buying power and help you find a home that better suits your needs.3. Improved Cash Flow While extending the amortization term might mean paying more interest over time, it provides extra cash flow. This flexibility can help you pay off high-interest debt, invest, or save for retirement. It’s an opportunity to grow your net worth more effectively.4. Eligibility Criteria Here’s what you need to know to qualify: - Maximum purchase price: $999,999 - Down payment must be less than 20% - The property must be newly built and never lived in (except for interim occupancy) - At least one applicant must meet one of these criteria: &nbsp; -- First-time homebuyer &nbsp; -- In the last 4 years, the borrower has not lived in a home owned by themselves or their current spouse/common-law partner &nbsp; -- Marriage or common-law partnership ended 90+ days before closingFor more details, check the <a data-mce-href="https://www.sagen.ca/wp-content/uploads/2024/07/Sagen-Lender-Update-FAQ-30-Year-Amortization-Eligibility-BDL.pdf?ref=mortgagelogic.news" href="https://www.sagen.ca/wp-content/uploads/2024/07/Sagen-Lender-Update-FAQ-30-Year-Amortization-Eligibility-BDL.pdf?ref=mortgagelogic.news">Sagen FAQs</a>.5. Be Aware of Market Realities Transparency is key. While the 30-year amortization offers benefits, it won’t make expensive markets like Toronto suddenly affordable. Additionally, many builders require significant down payments on new constructions, although smaller deposits are becoming more common.6. Act Quickly If home values drop this year, as some economists predict, acting now could be advantageous. The 30-year amortization might allow you to buy sooner and benefit from potential future capital appreciation.7. Flexibility with Amortizations Remember, you’re not locked into a 30-year term. You can make extra payments to shorten the amortization period. Plus, with inflation, paying back your mortgage with future dollars that are worth less can make fixed payments easier to manage over time.If you have any questions or need further assistance, feel free to reach out. I’m here to help! Simply <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana">Book a Call</a> here to discuss your options

Exciting News for First Time Home Buyers: The Return of 30-Year Insured Amortizations

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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>

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No Stress Test at Renewal Time! Now This is a Game Changer!

Big Changes to Canadian Mortgage Rules: What You Need to ...

What NOT to Do Before Your Mortgage Funds

What Is an Interest Rate Differential (IRD) Penalty?

Exciting News for First Time Home Buyers: The Return of 3...

What is Mortgage Refinance