26 Sep

Why Would I Want My Mortgage with a Monoline Lender?

Latest News

Posted by: Patricia Kirkham

If you’ve heard the term ‘monoline’ lender, chances are, you’ve used a mortgage broker to negotiate home financing on your behalf.

Although not as well known as banks and credit unions, monolines provide excellent mortgage solutions to meet the needs of a variety of different borrower types.

 While banks and credit unions provide an assortment of financial products and services in addition to offering mortgage financing, monolines solely concentrate on mortgages. The term ‘mono’ literally means ‘one’, as in a singular focus.

Monoline lenders have a great reputation countrywide and follow the same rules as Canadian banks, so you’re well protected.

Competitive mortgage marketplace
As a mortgage broker, I value monolines in the mortgage space as they offer very competitive pricing and specialized products that help me ensure I find the mortgage product and rate that best matches each client’s needs.

Monolines also help keep the banks competitive. In fact, monoline lenders often source their funds through the big banks – even ones that don’t lend directly through the mortgage brokering channel.

Monolines are frequently able to pass along better deals to borrowers because they don’t face the high overhead costs associated with branch locations.

Additionally, if you must break your mortgage early with a monoline, you’ll likely pay a lot less in penalties than if you have your mortgage placed with a major bank. That’s because banks and monolines calculate penalties differently. Early exit penalties, for instance, are typically calculated using three months’ interest or the interest rate differential (IRD) – whichever is higher.

The IRD is the penalty that can really add up with the banks. Here’s a comparison between bank and monoline prepayment penalties.

If you’re considering breaking your mortgage early – which the majority of Canadian mortgage holders end up doing on a standard five-year fixed-rate mortgage – I can help you decide if it makes sense or if you should wait out your current term.

Have questions about breaking your mortgage early, or your mortgage in general? Answers are just a call or email away!

 

*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.

28 Aug

First-Time Buyer? You Can’t Afford Not to Use a Broker!

Latest News

Posted by: Patricia Kirkham

As a licensed mortgage broker, it’s my pleasure to walk you through every step of the homebuying and mortgage financing processes – from prequalification to funding and beyond.

If you’re a first-time homebuyer, my extensive knowledge of the Canadian mortgage landscape will prove particularly beneficial.

In today’s reality of tougher mortgage qualification rules, it has never been more important to get prequalified for a mortgage to know what you can afford before you start looking for your dream home.

With access to multiple lenders – including banks, credit unions and trust companies – I’m able to negotiate the best possible mortgage products and rates on your behalf. In comparison, if you approach your bank with a mortgage request, they can only offer you a narrow choice from their own product line.

I also have access to dedicated programs to help provide solutions for a variety of income and credit types, including the self-employed, new Canadians or those with bruised credit.

Because I specialize in mortgages, I do my homework on available products and stay up-to-date on any new products – or changes to existing products or mortgage rules – as they happen, so I can best advise you on offerings that match your specific needs.

I don’t have quotas for selling other products, like insurance, investments, and so on. I only focus on funding mortgages every day.

The big picture

It’s my job to ensure you’re paired with the mortgage product and rate that best suits your financial situation both now and into the future.

In fact, I recommend an annual mortgage review for all my clients to ensure your mortgage savings are always being optimized. Working with me is like having your own personal mortgage coach walking you through the entire process and explaining all the ins and outs of your mortgage options every year.

Have questions about working with a mortgage broker or your mortgage in general? Answers are just a call or email away!

 

*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.

24 Jul

Self Employed? New Mortgage Rules May Help You Qualify!

Latest News

Posted by: Patricia Kirkham

Canada Mortgage and Housing Corporation (CMHC) announced changes this month aimed at making it easier for self-employed Canadians to qualify for a mortgage.

Under the new rules, which come into effect October 1st, CMHC will give lenders more guidance and flexibility to help the self employed.

Self-employed Canadians are key contributors to strong and vibrant communities, and make up about 15% of Canada’s population, says CMHC, adding that this sector often has difficulty qualifying for a mortgage as their incomes can vary or are less predictable.

Statistics Canada reports there were 2.8 million self-employed Canadians in 2017. Numbers have been steadily increasing every year with the greatest rise in self-employed women at 15% and men at a 4% increase.

The changes include CMHC providing:

  • Examples of factors that can be used to support the lender’s decision to lend to self-employed borrowers – who have been operating their business for less than 24 months, or were in the same line of work for less than 24 months – such as acquiring an established business, sufficient cash reserves, predictable earnings and previous training and education
  • A broader range of documentation options to increase flexibility for satisfying income and employment requirements when qualifying self-employed borrowers, such as a Notice of Assessment (NOA) accompanied by a T1 General, the CRA Proof of Income Statement and the Statement of Business or Professional Activities (T2125) to support an “add back” approach for grossing up income for sole proprietorship and partnerships

Traditionally, stated-income mortgage products have been available to self-employed borrowers who are unable to provide traditional income verification but have a proven two-year history of responsibly managing credit and finances.

This added flexibility for proving income and employment, and helping those who have been self employed for a shorter period of time will better streamline the mortgage process for business owners.

Have questions about your options as a self-employed borrower or your mortgage in general? Answers are just a call or email away!

 

*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.

20 Jun

A Purchase Plus Improvements Mortgage May Be Your Answer!

Latest News

Posted by: Patricia Kirkham

Finding the right home to meet both your needs and your budget is not always an easy task.

You may find a house with the perfect layout on a great piece of property in your ideal neighbourhood, but the interior needs some major upgrades before it’s fully functional for you and your family.

Fortunately, there are mortgage products available that allow you to add renovation funds to your mortgage amount. With a Purchase Plus Improvements mortgage, you can buy a home, renovate it the way you like and pay for it all in one mortgage payment with as little as a 5% down payment.

How big are your renos?

There are two options available for this product depending on how much money you require for renovations.

First, if you need $10,000 or less, with a 5% down payment you may qualify for fully-discounted mortgage rates. For example, a $300,000 purchase would require $15,000 (5%) for the down payment if you need $10,000 or less for renovations.

Second, if you require more than $10,000, you must have a 5% down payment based on the improved value of the property, and the interest rate will typically be the lender’s posted rate minus 1%.

For instance, if you purchase a $300,000 home and want $50,000 for renovations, you need 5% of the $350,000, which is considered the improved value. The required down payment in this case would be $17,500.

This mortgage is completed in stages similar to a construction mortgage. The first advance will be for the purchase price, a second advance will be given once 50% of the renovations have been completed, and the final advance will be released once the renovations are entirely complete.

This is an excellent product that enables you to not only buy a home that’s more affordable due to required upgrading, but also allows you to customize your renovations.

Have questions about Purchase Plus Improvements options or your mortgage in general? Answers are just a call or email away!

 

*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.

15 May

Are You Prepared for Rising Rates?

Latest News

Posted by: Patricia Kirkham

Economists are predicting that interest rates will continue to gradually rise over the next couple of years. And, while the good news is that you won’t be shocked by large increases, it’s always best to plan ahead when it comes to your mortgage product and rate.

While the Bank of Canada held rates steady last month, which is the indicator for changes in variable rates, the bond market is increasing, which impacts fixed rates.

Here’s what you need to know depending on whether you have a variable or fixed mortgage.

Variable-rate mortgage holders:

1. Review your lock-in options. It’s always best to know your options should the time come when it makes sense to lock in. (The next Bank of Canada rate announcement is May 30th.)

2. Review your discount. If you don’t have the best variable discount available, it may be worthwhile to consider switching lenders.

Locking in isn’t always the best solution, particularly if you’re making higher payments and your mortgage is below $300,000. Locking in typically means you’ll end up paying up to a 1% higher rate than you’re currently paying.

I’m available to discuss your options and what makes the most sense for your unique situation.

Fixed-rate mortgage holders:

1. If your mortgage is less than a year old, it makes sense to stay the course.

2. If you’re considering buying another property or tapping into your home equity to consolidate debt, finance home renovations, send your kids to school, etc, let’s secure a rate hold so you have peace of mind knowing we’ve locked in your rate for up to 120 days – protecting you if rates rise as predicted.

3. If you’re up for renewal this year, now’s the perfect time to talk about your options.

Have questions about variable- or fixed-rate options or your mortgage in general? Answers are just a call or email away!

 

*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.

22 Mar

Prepayment Penalties: Banks Vs Monoline Lenders

General

Posted by: Patricia Kirkham

Simply stated, if you pay your mortgage off before the end of your term, you’re going to face a ‘prepayment penalty’. But there’s nothing straightforward about how that penalty is calculated when you compare banks and monoline lenders.

Monolines are dedicated mortgage lenders. While lenders such as banks and credit unions provide an assortment of financial products and services in addition to offering mortgage financing, monolines solely concentrate on mortgages. The term ‘mono’ literally means one, as in a singular focus.

Monoline lenders follow the same rules as Canadian banks, and actually help keep mortgage pricing competitive.

Most fixed-rate mortgages have a prepayment penalty that is the higher of three months’ worth of interest or the interest rate differential (IRD). IRD is based on: 1) The amount that is being prepaid; and, 2) An interest rate that equals the difference between the original mortgage interest rate and the interest rate that the lender can charge today when re-lending the funds for the remaining term of the mortgage.

Penalty calculations can vary drastically

When selecting a mortgage, it’s important to ask upfront about prepayment penalties. Let’s face it – life happens. A lot can change over a five-year period, or whatever term you select for your mortgage. If you have to break your mortgage contract before your term expires, it’s nice to know it won’t cost you a fortune to do so.

Your penalty amount will be larger the farther away you are from your renewal date.

Here’s a Monoline Vs Bank comparison example of how penalties are calculated:

I can help you decide if paying out your mortgage early makes sense for your specific situation.

Have questions about payout penalties or your mortgage in general? Answers are just a call or email away!

*The postings on this site contain my own views and don’t necessarily represent the company’s positions, strategies or opinions.