Although the process may be simple, simply renewing with your current lender may cost you.  Renewing your mortgage with another lender requires a new approval and can take time to process.  However, renewing with another lender may save you thousands of dollars over your next term.  Should you qualify, you may even save tens of thousands by reviewing your options.  Switching lenders or refinancing before the end of your term may also make sense via interest savings, reducing interest rates on other debts, or by accessing the equity in your property to cover make investments or cover other costs.

To inquire on opportunities via a renewal or a refinance of your mortgage, contact your Mortgage Consultant to start the conversation.

Your credit score indicates to lenders whether or not you are a “good investment” by relaying how long you’ve had credit, your habits in paying back that credit, and how much you currently owe in total. Your credit score is affected by how much debt you’re carrying in relation to the limit of each account, how many loans and credit accounts you have, the number of inquiries by creditors, and your history of repayment.

If you are considering getting your first mortgage, keep in mind that a credit score above 680 puts you in a good position to get financing, while a score below that may affect the rate of interest you’ll pay, or your ability to secure credit, and improvement is needed generally.

CREDIT REPORTS

To ensure your credit score remains in good standing, it is important to take a look at your credit report for any old or incorrect information. If you find any errors, contact Equifax to have them corrected or removed. Another important step would be to pay any outstanding collections listed on your report such as parking tickets or overdue bills.

CONSIDER THE 2-2-2 RULE

If you’re a young person and new to the world of credit, consider the 2-2-2 rule to help build up your credit. Lenders typically like to see 2 forms of revolving credit (i.e. credit cards) with a limit of no less than $2,000 and a clean history of payment for 2 years.

Achieving a great credit score entails using your credit accounts, paying the balance off monthly if possible, and keeping balances below 30 percent of the overall limit at any time.  For a card with a limit of $2,000, this means having no more than $600 of it in use. Please note, if you carry a balance beyond one month, and you only make only the minimum required payment, you may be paying a high amount of interest.  Be sure to know what rate of interest you’re being charged.  It is also a good idea to check if your credit card has an annual fee and making sure you are up to date on that payment too.

The goal is not just to have credit, but to show potential lenders you use it responsibly.

REFINANCING

If you already own a home and you have other debts, consider refinancing your mortgage to help pay down your other credit obligations. If you compare the rate of interest on a mortgage with high-interest consumer debt, it sometimes makes sense to refinance depending on the new rate of your next mortgage.  Using the equity in your home can sometimes be a way to consolidate debt to keep more money in your pocket at the end of the day.  See your Mortgage Consultant to see if this option would be right for you.

Adapted from DLC Marketing

What’s involved in replacing the windows of a home? And what are the indications that you might need to replace yours?  Let’s take a look at some questions you might have.

new home, old windows

When you purchase a home, you receive a seller’s declaration. This is a document that contains all the information about your home that the previous owners are aware of. Hopefully, it will tell you when the windows were last replaced.

In my case, the declaration did not.

We knew going into the home that the windows would need to be changed sometime in the future, as they are outdated (probably from the 80s) and not very energy efficient.  We didn’t anticipate that they could possibly leak, as there was no indication from the previous owner that they had leaked.

It’s a good idea to pay specific attention to the windows of the home when you make an offer to buy.  It’s one of those things that you usually take as-is, but can be a costly expense to change.

According to moving.com, new windows can increase the sale value of a home, but in order for a return on investment to be made, you need to really upgrade the type of windows and frames you have. This can be a costly and time-consuming endeavour, as with the current COVID situation, there are significant manufacturing delays in the production of windows. While we’ll be putting in more energy-efficient windows at my home, the return on investment will be minimal, as it’s definitely a more functional renovation.

If we had known that the windows had needed replacing before purchasing the house, there’s a good chance we could have negotiated the price down slightly.

signs your windows might need replacing

There are a number of signs that indicate it’s time to replace your windows.  Let’s take a look at some of them, as highlighted by Mike Holmes:

1. Your windows are weeping: Not that they’re sad, mind you. Rather there’s a buildup of moisture on the inside brought about by poor sealing. This results in air from the inside of your home mixing with air from the outside, and moisture manifesting itself.
2. Your frames are rotten: Older window frames might not have the proper insulation, and they might have rotted as a result. This can lead to air and moisture leaking into your home, which leads to the costly repair of having your windows replaced.
3. Air drafts: Does it feel colder around your windows? Do you get a cool breeze coming in when you don’t want one? These are signs of air drafts, and could indicate your windows need replacing. While you might be able to re-caulk your windows and add weather stripping, this might only be a temporary solution.
4. Single panes: If your windows are older, they might only have single pane glass. These aren’t energy efficient, and also let in a lot of unwanted sound. Replacing your windows will make heating your home cheaper, and give you more peace and quiet.

the cost of replacing windows

 As with most renovations, the cost of replacing your windows can vary greatly.  Factors like the type of window you’re looking to replace, the materials you want your new windows to be made of, and how many layers of panes you want to have all affect the total cost.

In Ontario, the average cost of replacing a window is somewhere between $800-1200, and about $2,500-4,000 for bay or bow windows, plus tax. So for an average house of about 10 regular windows, you’re looking at around $8,000-12,000.

Is there siding on your house where the windows have been leaking? If so, there’s a chance there could be mould or other damage behind it. If this is the case, you’ll want to replace the siding as well. While significantly less than the cost of windows, it’s still an added expense.

You’ll definitely want to get a few quotes from different companies when you’re looking at replacing your windows, as the experience each company has can also affect the price and quality of installation. If you pay top dollar for high quality windows, and have a company install them that doesn’t have a lot of experience, you can end up having an even more expensive problem to deal with in the future, or find that for all the money you spent, the problems persist.

When you’re looking at replacing your windows, really consider all the factors.  While you might love to have a fancy aluminum or beautiful wood frame, these fixtures cost more than your basic white PVC frame. And a well-installed PVC frame can provide just as much protection from the elements as these other options.

saving money with window replacement

 As mentioned above, if you have old windows, changing them to more energy efficient ones can end up saving you on your monthly bills. By converting old windows, you can potentially save up to 25% on your heating bills.

And while the cost of installing energy efficient windows may seem prohibitive at the start, the good news is that there may be incentives available. It’s worth digging around to see what the active rebates are before starting renovations, and if you have any questions, talk to your renovator to see if they are aware of any incentives you might not be.

home inspectors can’t see everything

In a competitive housing market, you won’t always have the opportunity to get a home inspection done before you buy a home. This is unfortunate, as a good home inspector can help point out potentially problematic areas in your home-to-be, elements that might help you get a reduction in price. If you are unable to get an inspector in before buying your home, it’s a worthwhile investment to have one come in after the fact, as they can still help identify areas that might be problematic.

But even if you get a home inspector to check out your place, they may not be able to catch everything, and unfortunately, potentially leaky windows are something that can be missed.

If you are able to get a home inspector into your space, request that they check the seals around the windows and ensure that there are the appropriate sills at the base of the frames outside of the house. They can also check for various signs of water damage around the windows of your house.

Similarly, if you’ve had renovations done on your home, or if you’ve had the whole place painted, ask the people who’ve done the work if they noticed any indications of water damage. Damage can be anything from watermarks, rippled paint, or mould growing in the insulation. If signs have been present, you should be prepared to tackle the potentially costly affair of having your windows replaced.

anticipate the seasons

With the delays in supply chains and manufacturing, it’s important to think ahead. With spring just around the corner, now is the time to take action if you want to change your windows.  Seeing as the delay can be two to three months, it’s going to be summer before they’re installed, which is a perfect time of year to get them replaced.  If you wait, you could find yourself dealing with cold-winds drafting through your windows and possibly moisture creeping in.

Remember to get a few quotes, and take the time to really consider what your window needs are. While you’ll save some money on heating, the price you pay to replace your windows won’t have a profound impact on the resale value of your home.

Getting a home ready for sale or lease is a big job on its own. For some, the thought of staging your home may be overwhelming. Realtors may offer this service as part of their package, but if not, don’t worry, it’s easy to do it yourself with a little inspiration. Beyond the basic advice of the 3 D’s: depersonalize, declutter and decorate, there’s a lot more that can be done to get your desired outcome. Selling your home depends on many factors. Most importantly, it relies on the feeling it exudes when a potential buyer walks through the door. If you’re ready to move on quickly and for top dollar, consider some of these DIY home staging tips.

Your staging efforts will determine the experience buyers get when touring your house. The goal is to make them feel welcomed and at ease, starting with the exterior of the house. The right place gives prospective purchasers a positive feeling, somewhere they could see many joyous days.

1. use your resources

Can you think of an interior designer or realtor within your network? Invite them over to view the home in person and pick their brain a bit. They may be able to direct you to local businesses that offer furniture rentals or moving companies. Feng shui consultants are a good option to consider as well.

Emerging from ancient China, Feng shui is a traditional method also known as Chinese geomancy which is very popular in home staging. It claims to harmonize individuals by using the energy forces of their surrounding environment. By incorporating different elements in individual directions within your home, you may be inviting prosperity inside.

2. revive your rooms

Take a true and critical look at your place, does the kitchen scream “drab”? Are there stains on the upholstery? Does the bathroom look worn out? Freshening things up can make a place look new.

If your kitchen cabinets seem to darken up the room, consider painting them. Decide if you’d want them all one colour or different for the top and lower cabinets. Getting creative with the colour combination is one way of interesting buyers, however something too bold could turn some away. A clean slate is a great start, sparkle it up a bit with new hardware for the finishing touch. Doing this yourself can save lots of money as opposed to replacing the cabinets.

Do your existing rugs and window treatments pass the cleanliness check? If they are soiled or tattered it’s best to get them cleaned, repaired or replaced altogether. Go take a look around the sinks and tiles. Reapplying grout on tiles and caulk along sinks and windows makes it look so fresh and so clean.

3. edit your layout

Perhaps there is too much furniture that’s accumulated in the house throughout the years, making the space seem small and crowded. Consider donating, selling or storing larger items you want to keep for another day. Work with virtual room planners to help you better visualize the best possible placement for current furniture or future purchases.
Let the homes’ unique characteristics do the talking. Is there leaded glass in the living room or vaulted ceilings in the entryway? Keep the curtains pulled back to showcase your gorgeous windows and use decor that accentuates the height in the room. A fresh coat of paint in a warm yet neutral colour can work like magic.

4. boost your appeal

Ensure the entryway of the home is clean and has a nice doormat, if it’s on the larger side, a pair of outdoor chairs and side table would come in handy here. Sometimes using the senses works too, make sure the property smells nice but not overly fragrant. Before someone agrees to purchase your house they must first envision themselves living there. While staging, try to showcase all of the possible amenities that the house can provide. Maybe it’s a nursery set up in a small bedroom or a multipurpose bedroom with work from home desk combination. Give viewers of the home options of what they could use the square footage for. Does your house have an awkward empty space? Create a designated “drop zone” for day to day things like keys, mail and device charging.

5. accentuate your aesthetic

Do you want your home to make a statement? While the safe and neutral choices for paint schemes are welcomed, so are splashes of colour in accessories. Bold hues in accent furniture or throw blankets gives the potential buyer ideas of how they’d possibly decorate. Think of a theme, nautical for example, and roll with it for select items throughout the home. This is the time to get creative with artwork as well. Rooms with pops of blue, lanterns scattered or an overall coastal vibe will stand apart from boring beige places.

On the other hand, unless you’re looking to only sell to a specific demographic, it’s best to avoid overly themed staging. Test your styling limits by mixing metallics and materials. An office space with leather chairs can be styled with a sheepskin rug and nice shiny lamp. The idea is to mix and match textures, colours, patterns and light until it feels just right.

staged to sell

Home staging is an exercise in clearing away personal clutter, making your house feel like a home for someone else, all while trying to get the best possible return on investment. Reevaluating what is important with every possession you have can result in a renewed sense of self. Letting go of things that no longer serve you and likely won’t serve others can be freeing and purposeful at the same time.

Good luck on your journey!

How does this affect my mortgage?

If you don’t have a mortgage yet and are thinking of making a purchase in the next few months, please see below.

If you have a variable rate mortgage or home equity lines of credit (HELOC’s), either your monthly payment will increase, or more of the payment will be allocated to the interest, instead of the principal, by $24 per $100,000 of your mortgage balance.  Static payment variable rate mortgages can increase once the Prime Rate rises to a certain extent, but the number of increases required to reach that level is different for every mortgage.  Your lender will communicate any increase and the effective payment date.

Fixed-rate mortgages are not tied to the prime rate and aren’t affected.

Recommendations:

Variable Rate Mortgages

It’s natural to be tempted to lock in an as soon as you see rates starting to climb but you may still save money by staying variable. It may take more rate hikes to narrow the gap between variable-rate mortgages and their fixed-rate counterparts depending on your rate discount, and available fixed rates at the time you decide to select between the two. However, fixed-rate mortgages can also come with a much larger penalty to break your mortgage.

Fixed-Rate Mortgages

Fixed rates are also rising, though not in response to this particular increase. If your mortgage is coming up for renewal in the next 6 months, look into renewing as early as possible.

Lines of Credit (HELOC)

If you owe a considerable amount to your HELOC, it may be a good time to consider converting that HELOC into a mortgage.

I am thinking about purchasing in the coming months. What should I do?

A pre-qualification is the best first step anytime you’re considering a new purchase, but especially in a rising rate environment. A rate hold can lock in your rate for up to 120 days, so you’re protected from rate increases during your search for the right property.

If you have any questions, discuss with an experienced Mortgage Consultant to weigh the options.

There’s Often an Alternative.

When it comes down to getting approved for a mortgage, there are a lot of factors and not everyone will qualify. So what are your options if the banks say “no”?

When conventional lenders (such as banks or credit unions) deny mortgage financing, it can be easy to feel discouraged. However, it is important to remember that there is often an alternative! That’s where alternative lenders come in.

what is an alternative lender?

While the big banks, monolines and credit unions – or “A lenders” as they are sometimes referred – are viewed as the gold standard in the mortgage industry, some people have no choice but to consider other options for financing.

If you’re seeking a mortgage, but your credit score is damaged in some way and big institutions won’t lend you the money, you’ll find yourself in what’s commonly referred to in the industry as the “Alternative-A” or “B” lending space.

Much like the A Lender space, there are various companies which operate in the B lending space. Some B lenders are known as Mortgage Investment Companies (or MICs). Like the big banks, they’re still regulated, have shareholders and a board of directors and essentially act like a typical company. Equitable Bank and Home Capital are examples of other institutions that offer alternative options.

Alternative lenders cater to individuals which lack a strong credit history, or a guaranteed income (recent immigrants, or the self employed, for instance). As a result, these lenders generally have lower entry qualifications, which are offset by higher interest rates.

WHY IS ALTERNATIVE LENDING NECESSARY?

• CRA arrears
• Income issues such as non-traditional income as with self-employed borrowers
• Credit issues such as low credit score, credit arrears, current mortgage or even bankruptcies
• Unexpected liens on title
• Foreclosure situations
• Unique financing needs/opportunities

private or unregulated lenders

Beyond B-lenders are another alternative, which are known as Private or Unregulated lenders. These could just be individuals with money who are looking to invest. They are not regulated by any agency, and their rates and fees are higher.

These lenders are not required to stress test mortgage applicants, but many will abide by lower qualification rates. As a result, getting approved for a loan through an alternative or uninsured lender can be much easier than going through a traditional bank or credit union.

However, the same with B Lenders, it is vital to pay close attention to the deal an unregulated lender offers. Lower qualification rates tend to come with baggage in the form of high interest rates or penalties.

plan b mortgage services

Cole Hennig, president of Plan B Mortgage Services, explained his company typically deals with clients who are self-employed, have damaged credit and a score somewhere below 650. Some have difficulties proving their income. They could be looking for a second mortgage or seeking a way to keep their current home. He also noted that his clients often experienced a “trigger event”, such as a job loss or work-place injury, which forced them to take on more debt than they and can’t manage.

The point of using an alternative lender, according to Hennig, is to get back into the good books of a conventional lender. Plan B will work with their clients, offering a full assessment of their situation, and provide tools to repair their credit. However, Hennig added it’s critical his clients have a path to getting out of the B lending space.

“Usually, we’re seeing people who have hit a rough spot, and our job here is to get them an immediate solution,” he said. “But, if it doesn’t lead anywhere, it’s no good to us. We’re not going to do a deal if we don’t see how it’s going to help them get back to the best place they can be.”

At that point, Hennig said a difficult conversation with the client needs to be had, which could include advising them to sell the home to avoid foreclosure.  For more information on working with companies like Plan B, contact your Mortgage Consultant.

considerations for alternative mortgages

Due to the “B” Lender space, it is important to take a good look at the conditions for these mortgage products to ensure that you won’t get trapped with rates you can’t afford.

Before considering an alternative mortgage, there are a few things you should ask yourself:

1. What issue is keeping me from qualifying for a mortgage today?
2. How long will it take me to correct this issue and qualify for a mortgage?
3. How much do I currently have available as a down payment?
4. Am I willing to wait until I can qualify for a regular mortgage, or do I want/need to get into a certain home today?

If you are someone who is ready to go ahead with an alternative mortgage due to heavy credit score damage, or you don’t want to wait until you’re able to qualify with a traditional lender, these are five questions you should ask when reviewing any alternative mortgage product:

1. How high is the interest rate?
2. What is the penalty for missed mortgage payments? How are they calculated? What is the cost to get out of the mortgage altogether?
3. Is there a prepayment privilege? For example, are you able to avoid penalties if you give the lender a higher mortgage payment once a month?
4. What is the cost of each monthly mortgage payment?
5. What is the fine print?

When it comes to the alternative lending space, things can get a bit murky. Seeking the help of a mortgage broker will ensure that you are making the best decision for you! A qualified Mortgage Consultant can help you source out various alternative mortgage products and will review the rates and terms to ensure it is the best fit.

Did you know? Close to 70 percent of mortgages never make it to the end of their term. This means that, for a variety of reasons, homeowners are ending their mortgages early. However, that still leaves a solid 30 percent of home buyers who keep their mortgage until the term is up and it is time to renew.

If you are not planning to move in the near future and are happy with your current mortgage, you are likely one of the 30 percent who will renew once the term ends. So what does this process look like?

When it comes time to renew your mortgage, most lenders will send you a renewal letter when there are around 3 months remaining on your term. While nearly 60 percent of borrowers simply sign and send back their renewal without ever shopping around for a more favourable interest rate, this is actually the best time to check out your options with your Mortgage Consultant.

Most standard terms are 5-year terms and, with that much time having passed since signing, the market rates could be very different once the term is up.  Despite this, lenders tend to provide higher rates on renewals versus new clients as they are hoping that the ease of renewal will prevent you from seeking out new rates. However, shopping around for a better rate is not as difficult as it sounds – especially with the help of a Mortgage Consultant– and it could end up saving you a couple hundred dollars a month (depending on your situation).  Ideally, you should be keeping track of your own mortgage term end date as shopping for a new rate between four and six months before your expiry will ensure you are able to find the most affordable option for you.

After speaking with your Mortgage Consultant, you may find that your bank is actually offering a great rate – in which case you can simply submit the renewal. But if you are able to seek out a lower rate, you will thank yourself for putting in the effort to find out.  As another point of interest, renewal time is also a great time to make an extra payment on your mortgage, if you are able.

Beyond renewing your mortgage, homeowners also have the option to transfer or switch the mortgage. This can be done any time during the term of the mortgage but may have penalties associated with breaking the mortgage before the term is up. Transferring to another lender is generally done to get a better rate, but you will need to go through the mortgage process again.

If your mortgage is coming up for renewal and you want to find out what lower rates may await you, contact your Mortgage Consultant.  They can help you find the best option for where you are at in your life now and help you to ensure future financial success.

When it comes to mortgages, it is easy to focus on rates and your current situation, but the reality is that life happens and when it does, rates won’t be the only thing that matter.

First and foremost, the most important thing to remember is that a mortgage is a contract. That means that there is a penalty involved if the contract is ever broken. This is something that every homeowner agrees to when you sign mortgage paperwork, but it can be easy to forget – until you’re paying the price.

Why break your mortgage?

You’re probably wondering why you would ever break your mortgage contract? Well, you might be surprised to find out that 6 out of 10 mortgages in Canada are broken within 3 years and there are typically nine common reasons that this happens:

• Sale and purchase of a new home
• To utilize equity
• To pay off debt
• Cohabitation, marriage and/or children
• Divorce or separation
• Major life events (illness, unemployment, death of a partner)
• Removing someone from title
• To get a lower interest rate
• To pay off the mortgage

It is always important to think ahead when signing a mortgage agreement, but not everything can be planned for. In that event, it is important to understand the next steps if you do indeed need to break your mortgage.

Calculating penalties

Typically, the penalty for breaking a mortgage is calculated in two different ways. Lenders generally use an Interest Rate Differential calculation or the sum of three months interest to determine the penalty. You will typically be assessed the greater of the two penalties, unless your contract states otherwise.

INTEREST RATE DIFFERENTIAL (IRD)

Fixed rate mortgages can be subject to penalties calculated using an Interest Rate Differential (IRD).  In Canada there is no one-size-fits-all rule for how IRD is calculated and it can vary greatly from lender to lender. This is due to the various comparison rates that are used.

However, typically the IRD is based on the following:

• The amount remaining on the loan
• The difference between the original mortgage interest rate you signed at and the current interest rate a lender can charge today

In this case, these penalties vary greatly as they are based on the borrower’s specific mortgage and the specific rates on the agreement, and in the market today. However, let’s assume you have a balance of $200,000 on your mortgage, an annual interest rate of 6%, 36 months remaining in your 5-year term and the current rate is 4%. This would mean an IRD penalty of $12,000 if you break the contract.  Ideally, you will want to be aware of what your IRD penalty would be before you decide to break your mortgage as it is not always the most viable option.

THREE MONTHS INTEREST

For variable rate mortgages, the penalty for breaking your mortgage is simply equivalent to three months of interest. In some cases, fixed rate mortgage penalties may also be subject to just a three months’ interest penalty. Using the same example as above – balance of $200,000 on your mortgage, an annual interest rate of 6% – then three months interest would be a $3,000 penalty.

Paying the penalty

Waiting out your current mortgage term before making a change to your mortgage is the best way to avoid being stuck in the penalty box.  When it comes to making the payment, some lenders may allow you to add this penalty to your new mortgage balance (meaning you would pay interest on it) if you refinance your mortgage prior to the end of your mortgage term. You can also pay your penalty up front.

If do get stuck in the penalty box, do note that, while only calculators can be great tools for estimating penalties, it is best to call your lender and discussing with your mortgage consultant directly for an accurate number.

Original Post Link from DLC Marketing Team