What should I do with my mortgage in 2019?

If you’re recovering from a good party on New Year’s Eve, here is something to sooth your real estate woes. But if you’re like me, I had trouble staying up past 10 pm and am ready for a new and profitable year!

With all the volatility in the last year around mortgage rates and the real estate market, we can expect stability in 2019. This email is longer than usual but it’s worth the read if you’re interested in real estate.

IT’S A BALANCED MARKET SO IF YOU’RE A FIRST-TIME BUYER OR A REAL ESTATE INVESTOR NOW’S YOUR OPPORTUNITY.

In the last three years, sellers have had the upper-hand in the market. If you had a property to sell, and it was reasonably priced it would sell in no time. There are still hot spots in the market especially lower-priced homes or condos under $400K. That’s because of the demand from three key cohorts:  first-time buyers; real estate investors, and those down-sizing.   The new mortgage rules have affected these cohorts the most. Many self-employed individuals are also having difficulty getting approved at a bank.

The 2018 real estate market ended with a whimper, but there are two converging trends that may give the housing market a boost in 2019. The unemployment rate is at historical lows and when people are working they are buying or able to refinance and pay their debts off. The Bank of Canada (BofC) is also slated to keep rates steady into 2019 because the prospect for inflation is low (have you seen the cost of gas lately?).

There’s also been a lot of attention placed on consumer debt loads. With the new mortgage rules borrowing has slowed and home appreciation is on a more sustainable increase. First-time buyers are also benefiting from their parents, as a massive transfer of wealth is happening both in terms of gifted down payments and co-signing on mortgages.

WHAT SHOULD I DO WITH MY MORTGAGE?

If you’re renewing your mortgage it may make sense to pay the penalty and renew early especially if you’re looking at consolidating debts. Your improvement in cash flow will offset the penalty so it’s worth considering. Five-year fixed rates are currently just under 4% and we can typically get at least a .5% lower on a variable rate mortgage (CRM). So does it make sense to do a VRM? About 40% of our clients have a VRM.  Even if rates go up this year by .5% you’re still further ahead especially if you can make a pre-payment on your mortgage while rates are low.  I currently have a VRM so I track this carefully for myself and when I’m locking in I’ll let you know too.

IF YOU KNOW SOMEONE WHO’S BEEN TURNED DOWN BY THEIR BANK – TELL THEM TO CALL US. WHY? WE CAN PROBABLY GET THEM APPROVED.

As a mortgage broker, not only do we do mortgages for chartered banks like TD and Scotia, and credit unions like Meridian and Your Neighbourhood Credit Union, we also have access to lenders that will lend to borrowers even if they don’t meet the usual criteria. Have your friends or family come to us first, as it’s our goal to get the best mortgage that the borrower can qualify for.

Are you an orphaned mortgage holder?

Do you have a mortgage that’s coming up for renewal and the mortgage broker that you originally arranged your mortgage through is no longer in business?

The Mortgage Centre can adopt you!

At The Mortgage Centre, we love brokering a mortgage, but it’s a tough business. That’s because it’s purely commissioned based. In the majority of cases, mortgage brokers don’t charge their clients a fee – they get paid a small commission based on the financial institution the borrower chooses. Only in a few cases do mortgage brokers charge a fee. Such as, if the borrower is considered a higher credit risk because of weak credit or job instability. So, many mortgage brokers can’t make a living because of the commissioned-based business.

Whenever your mortgage comes up for renewal, people who use mortgage brokers know it’s time for their broker to help them get another great mortgage. The value-added service and advice that brokers bring to their clients is that they help negotiate a new mortgage (possibly at another institution that has a more-competitive rate), normally at no cost.

If you find that you need to make adjustments to your mortgage, such as changing the amortization, mortgage amount, or you’re just moving to another house – a mortgage broker can help you with that too. 

We work with most chartered banks and wholesale mortgage lenders and can access just about any mortgage lender in Canada.

If you currently have a mortgage with a bank, and are looking for a second opinion – most mortgage brokers will set aside time to help you shop the mortgage market to get a better rate. We’ve found that normally upon mortgage renewals, financial institutions may not offer a competitive rate.

Keep in mind there’s more to a mortgage that just a rate. Often times the lowest mortgage rate means that you need to sacrifice pre-payment options, or pay hefty penalties should you need to make adjustments to the mortgage in the future. Mortgage brokers will help you identify the best mortgage out there that fits your financial needs and balances rates and features.

I'd love to hear how you make your own decisions on choosing a mortgage. Please e-mail me at lastovic.s@mortgagecentre.com or offer your comments. If you're on twitter follow me @Sandra_lastovic.

It seems there's just no shaking Canadians' faith in real estate.

It seems there's just no shaking Canadians' faith in real estate. There was more proof of that over the past week.

The latest report from Statistics Canada shows that the rate of household debt to income has topped-out again. It hit nearly 164% for the third quarter of 2013. Most of that is mortgage debt, which rose 1.8% and now stands at $1.13 Trillion.

The Bank of Canada and the Finance Minister continue to call the high level of indebtedness the single biggest domestic threat to the economy, but Canadian consumers don't seem worried. The latest read on consumer confidence by Bloomberg-Nanos shows an increase to 59.3, up from 58.9 a week earlier. Pollster Nik Nanos says most of that is based on a positive view of real estate.

Consumer confidence is getting some support from a forecast by one of Canada's biggest credit union cooperatives. Citing an expanding population and a contracting supply of development land, it expects the price of housing in the country's biggest market, Toronto, to double over the next 25 years. 

 Thanks to our mortgage-lender partners at First National Financial for this analysis today.

How to negotiate a better mortgage rate for yourself....

Everyone who needs a mortgage wants the best rate on the current market. However a good rate is only one way to save money on a mortgage.  Adjusting payment schedules, creating flexibility on the amortization or paying-out consumer debt are cost-saving strategies too often overlooked by most people.

Focusing only on the mortgage rate and finding a rate that’s “too-good-to-be-true,” often leaves people paying more fees in the future.

Banks and brokers work mortgage interest rates differently. The chartered banks have posted and discounted rates. If you decide to work with a bank, then the rate negotiation is up to you.  It’s almost like buying a used car and negotiating the price - you’re never really sure what the best price really is. Negotiating your mortgage with a bank can be as frustrating as haggling for a used car…and that’s where a mortgage broker can help.

There are several seasoned mortgage brokers in Guelph that have strong reputations for helping their clients find the best combination of rates and features. At The Mortgage Centre (Guelph), we’ve built a team with such standing. If you trust your mortgage broker to do their job, they’ll find a good mortgage that combines a low rate while still giving you the features you need to save money and meet your financial goals.

Recently I worked with a group of investors in negotiating a commercial mortgage with their own bank and saved them nearly 0.5%. That may not sound like a lot but it was for a million-dollar loan, saving the clients $5000 per year in interest. Whether it’s a commercial mortgage or one for your home, let someone else who knows the mortgage market negotiate on your behalf.

I always keep my pulse on the mortgage market and check www.cannex.com to ensure my rates are competitive. I would encourage you to do the same!

I'd love the hear how you negotiated a better rate for yourself. Please leave a comment!