There’s something about September that signals a fresh start. It’s a perfect time to get serious about saving money on your mortgage. So get out your notebook: here are five surprising mortgage facts that can save you money over the long term!
Fact #1: Your credit score matters even more
Lenders are beginning to review client files prior to renewal, which means if your credit score has slipped, you may be offered a higher rate at renewal, even if you have never missed a payment. Regardless of where you are in your mortgage term, it is very important to always pay your bills on time, use only 30% of your credit limits, and monitor your credit score regularly.
Fact #2: Refinancing is still one of the best ways to get debt under control
If you’re holding too much high-interest debt and you have enough equity, consolidating all of it into a low-interest mortgage can save you thousands in interest, lower your monthly payments, boost your cash flow, and eliminate the stress of multiple debt payments. It can also improve your credit score!
Fact #3: Interest-only mortgages are once again available for those with more than 20% equity in their homes
While not a product for everyone, this can be a great financial strategy for those who want to minimize their mortgage payments to free up cash flow for other uses like investing, business needs, post-secondary education, maternity leave or other life situations. Lump sum payments can be made when the time is right for principal paydown.
Fact #4: Variable mortgages are popular
While fixed rates are higher today than they were a year ago, many lenders are offering exceptionally low rates on their variable rate mortgages. In addition to offering the ability to save on interest, a variable mortgage can be significantly less expensive if you need to get out of your mortgage later.
Fact #5: Insured mortgages get the best rates
If your mortgage is not insured, it’s possible that you weren’t eligible for the best rates available at that time. Some uninsured mortgages can now be switched at renewal to a new lender that will offer an insurable rate, a move that could offer huge savings. Not sure if your mortgage is insured or not? I can find that out for you.
If you have any questions about your current mortgage strategy, are thinking of refinancing, or getting closer to renewal, get in touch. I’m here to help you, your family and friends understand which mortgage facts are the most important at any given time.
Click here to book a no-obligation chat with PureMortgage to discuss your mortgage options: https://calendly.com/ronlefebvre
500 solar panels cover south side of downtown Edmonton office tower
In a sea of Edmonton downtown construction, it may be difficult to draw eyes to a specific project, unless you’re Gene Dub.
The Edmonton architect showed off his latest creation, a 10-storey officer tower near 106 Street and 104 Avenue, directly across from the MacEwan campus.
The Edge is built up with an entire north wall of windows, drawing in natural light to cut back on energy consumption. But it’s the opposite side of the building that is getting the most attention.
Solar panels cover the entire south side, with a price tag of $400,000.
Dub has been told his office tower boasts the largest vertical solar wall in Canada.
“You have enough power generated by those panels to power up 26 houses,” Dub said from inside the tower.
“Those solar panels will end up generating enough power for 80 per cent of the power needs of the building.”
That solar power would likely be reduced if a neighbouring tower project is constructed; Dub predicts by 20 per cent.
The architect admits he was disappointed with Edmonton city council’s decision in September 2015 to approve a Toronto developer’s request for three 40-storey towers next door on the old Healey Ford site.
Construction has not yet broke ground.
Less mortgage. Higher rate. What gives?
Think that mortgage rates are suddenly very confusing? It’s not your imagination. New Canadian mortgage rules have changed the way lenders operate in Canada. Let’s take a look at what’s changed, and the information you need so you can get a mortgage under those rules that is right for you.
Here’s a quick explanation of what’s going on with Canadian mortgages right now.
First, think about where the money comes from when your lender gives you a mortgage. The banks – both big and small – get money from deposits. They have the ability to loan from their deposits, and hold the mortgage for the full term if they choose. They’ve got money coming in, so they can invest in money going out: like a mortgage. It’s called “balance sheet lending”. And it comprises some – but not all – of their mortgage business.
Non-bank lenders don’t take deposits so they get their money from investors in the financial marketplace. When they fund a mortgage, they will “securitize” it, and sell it off to an investor. That process gives them their supply of funds. It’s smart business. It’s so smart, that the banks do it too for some of their mortgages.
The new mortgage rules are designed to protect the housing market and the financial well being of Canadian homeowners. But they reflect a different approach to risk, which has resulted in pricing changes, even for the best clients.
Homebuyers who are looking to borrow less than 80% of the value of their home are dream clients for a lender. But an LTV of less than 80% is a magic threshold for clients because they no longer need to pay for “default insurance”. So lenders would purchase bulk insurance on these mortgages, which was inexpensive and kept investors happy. Last October, however, new rules made insuring these low LTV mortgages much more costly. And refinances and certain other mortgages are not even eligible for insurance anymore. Suddenly, mortgage lenders have more risk and/or higher costs.
For the mortgages that banks hold on their own balance sheets, the new rules had another wrinkle: the requirement to set aside more capital to use in case there are losses in the mortgage market. That’s money safely tucked away – and not available to invest. For a bank, that’s a lost opportunity that affects the bottom line.
You can guess the rest – any extra cost, risk or lost opportunity for the lender… are passed along to you through a higher rate.
That doesn’t mean that you are a less worthy borrower than you were a year ago. The lenders are still incredibly sound, and your perfect mortgage is still out there. Mortgage pricing is just more confusing and getting an expert working with you is now more important than ever!
With this information in hand, let’s take a look at what’s going on in the Edmonton area. While Alberta, as a whole, has been undergoing a real estate recession for quite a while, Edmonton has remained relatively untouched. Until now, that is. Lower prices and higher supply are expected to finally make their way here, driving down prices and lowering the threshold for new investors. While mortgage loans have become pricier and more difficult to obtain, you can look for these depressed prices to offset at least some of these changes.
So inventory in Edmonton is high and this is a good scenario for buyers, but there are some important factors to consider. Experts are anticipating that prices in the Edmonton market are going to remain low for at least four to five years, so you need to make sure that you’re willing to make an investment that you can hang on to. Houses in certain areas priced in the $300K range may be an exception to this, but even so, it would be best if you’re not expecting a quick turnaround on your home investment.
The changes to mortgage loans might seem intimidating and, at first glance, can discourage you from even beginning the process of getting into a home. But, with the right help from qualified professionals and by taking advantage of the spring buyer’s market in Edmonton, you can still find the perfect mortgage for you and get into the home you’re looking for.