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Mortgage rates in Canada are influenced by many factors, but one of the most significant is the yield on Government of Canada bonds. Here, we’ll break down what bond yields are and explain their impact on fixed-rate mortgages in particular.But before we go there, let's clarify something:Fixed-rate mortgage rates in Canada are priced off of Government of Canada 5-year bond yields that are, in turn, influenced by the U.S. Treasuries. Variable-rate mortgages are affected by the Bank of Canada's monetary policy, namely interest rate hikes and cuts that, in turn, impacts commercial banks' Prime lending rate.<h3>What Are Bond Yields?</h3>Bond yields can be thought of as interest rates on loans from the government. When the Government of Canada needs to raise money, it sells bonds to investors, offering them a return on their investment. Bond yields indicate the amount of interest investors earn from these bonds, and they fluctuate according to market conditions. This fluctuation influences other types of interest rates in Canada, including mortgage rates.<h3>How Bond Yields Affect Fixed-Rate Mortgages</h3>Fixed-rate mortgages offer homeowners a stable interest rate throughout their term, giving budget certainty. When you lock in a fixed-rate mortgage, your rate is directly influenced by current bond yields. As bond yields rise or fall, fixed-rate mortgage rates adjust accordingly. However, once your fixed rate is set, it remains consistent for the term of the mortgage, so fluctuations in bond yields only affect your mortgage rate when you initially lock it in.<h3>Why Do Bond Yields—and Mortgage Rates—Fluctuate?</h3>Bond yields fluctuate based on the financial market’s risk-reward balance. When market conditions become riskier, bond yields rise to attract investors. Higher bond yields, in turn, lead to higher borrowing costs for the government, which can drive up fixed mortgage rates.&nbsp;Government bonds have a near-zero risk of default since they are guaranteed to be repaid. Mortgages, on the other hand, carry more risk due to the possibility of default or early repayment, which may disrupt the investment’s return. This additional risk results in mortgage rates being set at a premium over bond yields.<h3>How Much Higher Are Mortgage Rates Priced?</h3>In normal market conditions, Canadian mortgage rates are typically priced about 120 basis points (or 1.2%) above the rate for government bonds. This difference, known as the "spread," fluctuates based on market conditions, investor interest, and the availability of other investment options. Factors like corporate bonds and stock markets—both domestic and international—also compete for investor attention, affecting this spread.<h3>Understanding the Bond Price-Yield Relationship and Mortgage Rates</h3>The relationship between bond prices and bond yields is inverse: when bond prices go up, yields go down, and vice versa. Fixed mortgage rates tend to move in tandem with bond yields. So, when bond yields increase, fixed mortgage rates rise; when yields decrease, fixed rates generally drop as well. This close link between bond yields and fixed mortgage rates is a key reason why it’s valuable to track bond market trends when considering a mortgage.By understanding the influence of bond yields on mortgage rates, you can make more informed decisions about the best time to secure a mortgage, helping to potentially reduce borrowing costs over the life of their loan.As always, I am here to answer any mortgage related questions that you may have and help you crunch any numbers that you don’t quite understand -<a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" target="_blank" rel="noopener"> book a call here.</a>

Understanding How Government of Canada Bond Yields Influence Mortgage Rates

Mortgage refinancing is a financial strategy that allows homeowners to adjust their existing mortgage terms to better suit their needs.Understanding the ins and outs of mortgage refinancing is essential for homeowners looking to improve their financial situation or take advantage of new opportunities. Let’s explore the process, benefits, considerations, and eligibility criteria associated with mortgage refinancing.<h3>What is Mortgage Refinancing?</h3>Mortgage refinancing refers to the process of replacing your current mortgage with a new one, often with different terms and conditions. This can be done with your existing lender or by switching to a new lender. Homeowners choose to refinance their mortgage for various reasons, including lowering monthly payments, accessing home equity, securing a better interest rate, or changing the mortgage type (fixed-rate to variable rate).<h3>Benefits of Mortgage Refinancing:</h3>Lowering monthly mortgage payments: Refinancing can help reduce your monthly mortgage payments by obtaining a lower interest rate or extending the loan term. Accessing home equity: Refinancing allows homeowners to tap into their home equity for purposes such as home improvements, debt consolidation, or funding other investments. Securing a lower interest rate: If interest rates have dropped since you initially obtained your mortgage, refinancing can help you lock in a more favorable rate. Consolidate higher interest rate debt: By consolidating higher-interest debts into a lower-interest mortgage, you can streamline payments and reduce the overall interest rate you’re paying on debt.<h3>The Process of Mortgage Refinancing:</h3>The mortgage refinancing process involves several steps:Assessing financial goals and needs: Determine your objectives and evaluate how refinancing aligns with your long-term financial plans. Evaluating current mortgage terms and conditions: Review your existing mortgage details, including interest rate, loan term, and penalties for early repayment.Researching and comparing mortgage lenders and offers: Shop around for different lenders and compare their terms, rates, and fees to find the best refinancing option for your situation.Gathering required documentation: Prepare the necessary documents, such as income verification, credit history, and property appraisal.Submitting the mortgage refinance application: Complete the application process, providing all the required information and documentation.Appraisal and property evaluation: A new appraisal may be required to assess the current value of your property.Approval and closing the new mortgage: Once approved, review the terms and conditions of the new mortgage and close the refinancing transaction.Paying off the existing mortgage: The proceeds from the new mortgage are used to pay off the remaining balance of the original mortgage.<h3>Considerations and Potential Costs:</h3>Before proceeding with mortgage refinancing, it's important to consider the following factors:Applicable penalties and fees: Be aware of any penalties or fees associated with early mortgage repayment and refinancing.Common costs associated with mortgage refinancing include appraisal fees, legal fees, and discharge fees for your current mortgage.<h3>Eligibility and Qualifications:</h3>To qualify for mortgage refinancing, lenders consider factors such as credit history, income stability, property value, and loan-to-value ratio. It's important to meet the lender's eligibility criteria and provide the necessary documentation to support your application. If you face challenges in meeting traditional criteria, alternative options may be available through alternative lenders or specialized mortgage programs.Working with a Mortgage Professional:Seeking guidance from a mortgage broker can greatly assist you throughout the mortgage refinancing process. They will provide expert advice, help you navigate the various options available, and negotiate on your behalf to secure the best possible terms and rates.Mortgage refinancing can be a powerful financial tool for homeowners. By understanding the process, benefits, considerations, and eligibility criteria, you can make informed decisions and take advantage of the opportunities refinancing offers. However, it's crucial to carefully evaluate your financial goals, assess the costs involved, and work with professionals who can guide you through the process.With the right strategy and proper planning, mortgage refinancing can help you achieve your financial objectives and improve your overall financial well-being.Do you want to figure out whether refinancing is the right move for you? Email me at <a href="mailto:mortgages@snezhana.ca" data-mce-href="mailto:mortgages@snezhana.ca">mortgages@snezhana.ca</a> or <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" target="_blank" rel="noopener">Book a Call here</a>

The Ins And Outs Of Refinancing Your Mortgage.

It's common for people to confuse property inspection reports with appraisal reports, thinking they serve the same purpose. Although both processes typically involve an on-site evaluation of the property, they have distinct goals, methodologies, and outcomes. This article will clarify these differences and explain the important roles each report plays in the real estate process.<h3>Similarities Between Property Inspections and Appraisals</h3>Both property inspections and appraisals involve a detailed on-site examination of a property. Inspectors and appraisers assess the property's condition, though they focus on different aspects. Both professionals create reports that are used by key stakeholders in the real estate transaction process. For commercial property financing, lenders often require both reports, while for residential financing, an appraisal report is typically requested.<h3>Key Differences Between Property Inspections and Appraisals </h3>Purpose<ul><li>Property Inspection: The primary goal of a property inspection is to identify potential issues or defects in the property. This helps buyers and lenders understand the property’s current condition and any repairs that might be needed.</li><li>Appraisal Report: An appraisal's main objective is to determine the property's market value. Lenders use this report to verify that the property is worth the amount specified in the mortgage application. </li></ul>Scope of Inspection <ul><li>Property Inspection: This is a “hands-on” process where the inspector examines the functionality of systems and structures, such as heating and cooling systems, plumbing, electrical systems, the roof, attic, and foundation.</li><li><em style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-weight: inherit; background-color: rgba(249,250,251,var(--tw-bg-opacity));" data-mce-style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-weight: inherit; background-color: rgba(249,250,251,var(--tw-bg-opacity));">Appraisal Report:<span style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-weight: inherit; font-style: var(--body-fontStyle, normal); background-color: rgba(249,250,251,var(--tw-bg-opacity));" data-mce-style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-weight: inherit; font-style: var(--body-fontStyle, normal); background-color: rgba(249,250,251,var(--tw-bg-opacity));"> Appraisers conduct a visual inspection, focusing on the property's overall condition and features without delving deeply into the functionality of individual systems.</li></ul>Nature of the Final Report <ul><li>Property Inspection Report: This report is detailed and descriptive, often including photos and notes about the condition of various systems and structures. It identifies any defects or issues found and may suggest repairs or further evaluations.</li><li><strong style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-style: var(--body-fontStyle, normal); background-color: rgba(249,250,251,var(--tw-bg-opacity));" data-mce-style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-style: var(--body-fontStyle, normal); background-color: rgba(249,250,251,var(--tw-bg-opacity));">Appraisal Report:<span style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-weight: inherit; font-style: var(--body-fontStyle, normal); background-color: rgba(249,250,251,var(--tw-bg-opacity));" data-mce-style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-weight: inherit; font-style: var(--body-fontStyle, normal); background-color: rgba(249,250,251,var(--tw-bg-opacity));"> This report concentrates on the property's value, using a comparative market analysis. It estimates the property's market value based on location, condition, and recent sales of similar properties.</li></ul>Who Relies on the Reports <ul><li>Property Inspection Report: Property buyers primarily use this report to make informed decisions about their purchase. Lenders may also review it to understand whether repairs might impact the borrower’s ability to meet mortgage payments. Sellers might use the inspection report to address issues before listing the property.</li><li><em style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-weight: inherit; background-color: rgba(249,250,251,var(--tw-bg-opacity));" data-mce-style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-weight: inherit; background-color: rgba(249,250,251,var(--tw-bg-opacity));">Appraisal Report:<span style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-weight: inherit; font-style: var(--body-fontStyle, normal); background-color: rgba(249,250,251,var(--tw-bg-opacity));" data-mce-style="font-family: inherit; font-size: calc(18px * var(--body-fontSize, 1)); font-weight: inherit; font-style: var(--body-fontStyle, normal); background-color: rgba(249,250,251,var(--tw-bg-opacity));"> This report is crucial for lenders to determine the maximum loan amount they are willing to offer. It confirms that the property’s value aligns with the loan amount requested, helping lenders manage risk.</li></ul><h3>Detailed Overview of Each Process </h3>Property Inspection Process <ul><li>Preparation: The inspector gathers relevant property details and necessary tools.</li><li>Inspection: A thorough examination of the property's exterior and interior, including major systems like HVAC, plumbing, electrical, and structural components, is performed.</li><li>Report Generation: The inspector compiles a comprehensive report with photos, descriptions of any issues found, and recommendations for repairs or professional evaluations.</li></ul>Appraisal Process <ul><li>Preparation: The appraiser collects data on the property and comparable sales in the area.</li><li>Inspection: A visual inspection is conducted, with the appraiser noting the property's condition, features, and any factors that might influence its value.</li><li>Valuation: The appraiser uses various methods—like the cost approach, sales comparison approach, and income approach—to determine the property's market value.</li><li>Report Generation: A final report is created summarizing the findings and providing an estimated market value.</li></ul><h3>Conclusion </h3>Understanding the differences between property inspections and appraisal reports is essential for anyone involved in a real estate transaction. While both reports are important, they serve unique purposes and provide distinct types of information.Property inspections focus on evaluating the condition and functionality of the property, helping buyers and lenders make well-informed decisions. Appraisal reports, meanwhile, determine the market value of the property, assisting lenders in their loan decisions. Knowing the roles of these reports can help buyers, sellers, and lenders navigate the real estate process more effectively. As always, <a data-mce-href="http://www.calendly.com/snezhana" href="http://www.calendly.com/snezhana" target="_blank" rel="noopener" data-mce-selected="inline-boundary">book a call here</a> to answer any mortgage related questions.

Understanding the Differences Between Property Inspections and Property Appraisal

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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.

Blog

Understanding How Government of Canada Bond Yields Influe...

The Ins And Outs Of Refinancing Your Mortgage.

Understanding the Differences Between Property Inspection...

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