Tip #1

Prepay early in the mortgage

Make extra payments as early as you can after getting a mortgage because the loans are interest-heavy up front and the faster you pay down your principal, the more interest savings you will accumulate over the long run. Within the first five to seven years of your mortgage is where the largest portions of interest payments are contained. This not only will save you thousands in interest payments but will also increase the speed in which you are growing equity in your property.

Tip #2

Make an annual lump sum payment

Whether you use your tax refund, receive an inheritance or get a Christmas bonus you should apply as much as possible directly to your principal. You will have to check your mortgage documents or ask your mortgage broker to find out how often you can prepay and what maximum percentage of your principal you are allowed to pay without penalty each year. Most companies allow 15% to 20% per year without penalty, while one or two may even allow up to as high as 25% on a closed mortgage.

Tip #3

If your payments go down, don’t lower the payment amount

If you are on a variable mortgage and the rates go down your payment will also go down. Instead of making the lower mortgage payments, call your lender and let them know that you would like to continue making payments for the original amount. You will have to check with them to see if there is a charge for making the extra payment. Even with the charge, in most cases, it is still worth it and will help you pay down your principal faster.

Tip #4

Keep track of your extra payments

It’s always important to make sure your payments are being handled properly. When your payments are set up on a monthly cycle there is always the chance that an untracked payment could be lost accidentally. You’d be surprised how often it happens. I suggest that when making an extra principal payment you should always print the screen when paying online or use a separate check and making a note in the memo line that the payment should be applied to the principal directly. A good time to check up on these payments and make sure that they have been applied correctly would be during tax time.

Tip #5

Stay informed

Once you’ve obtained your mortgage most people never take a look back and just keep making payments until their term is up. It is always important to stay up to date on interest rates and new mortgage products that can save you money. Something as simple as switching from your variable rate into your fixed rate could save you thousands in the long run or even paying off your credit cards through an Equity Line of Credit or a Home Equity Take Out.

Tip #6

Sometimes paying down your mortgage isn’t the right move

Even though in most cases paying down your mortgage as fast as possible is the best move, it may not be the best move for everyone financially. In the case where you have an extremely low interest rate you may be better off putting your money into a high yield investment with a higher investment rate.

This enables you to grow your money and use it to pay off a larger amount at one time. In some cases you can be paid out the interest on your investment every month, this payment could also be used towards helping with your mortgage payments. Another good time where you may want to hold off on making extra payments on your mortgage is when you are planning on moving.

This money may come in handy for a down-payment and closing costs for the new home or carrying costs should your current home take longer to sell.

Tip #7

Round up your payments even if it’s just a little

If your monthly mortgage payment is $776.22 and you were to round up your payment an extra $23.78 a month to $800, that’s less than a dollar a day, you would effectively reduce your mortgage amortization from 35 years to just over 32 years right away or from 25 years to just over 23 years.

TIP #8

Increase your payments with your pay increases

If your income increases, try not to keep your mortgage payments the same. Although the disposable income is a joy to spend on unnecessary luxuries in the short-term, the long-term benefits of being mortgage free faster and saving those interest payments will far outweigh the short-term joys. I tell my clients to just pretend that their income did not increase and to maintain the lifestyle that they are currently living.

Tip #9

Increase the frequency of your payments

If you make monthly payments and get paid bi-weekly, you should change your mortgage payments to coincide with your payday. Changing from Monthly to Bi-weekly accelerated creates an extra payment per year that goes to paying down your principal quicker and is unnoticeable to the average person. Speak with your mortgage broker about your specific case.

Post from: paulsidhu.com

Tips to pay down your mortgage faster

Post from: paulsidhu.com

Tips to pay down your mortgage faster

Who’s Involved?

Purchasing a home takes more than just the buyer and seller to agree on a price. It takes numerous professionals with a vast knowledge of expertise and experience to get the job done right every time.

People you will meet while in the process of purchasing a home:

Mortgage Broker/Agent

A mortgage broker’s role is to act as a middleman between you and the lender, 9 out of 10 times at no cost to you. Our job is to find a product tailored to your needs with an excellent rate that will save you money.

See our Mortgage 101 section for more

Mortgage Lender

Is the person or company that is loaning the money to you for the purchase of your property? In today’s mortgage market it pays to shop around because there are so many lenders and so many different financing options available.

When a lender provides funding they will want to be sure that you are a worthy credit risk and that the mortgage you are requesting corresponds to the value of the property you intend to purchase. They will set out any stipulations that they see fit in the commitment letter.

Realtor

Finding the right home is an extensive and exhausting job. A realtor can make it a lot easier by doing a good deal of the searching for you and providing you with the options closest to your needs. Your realtor is more than just a sales agent.

Your realtor should serve as a resource and help by providing valuable advice to help you make an informed decision with respect to your purchase. They should be a certified real estate agent and have your best interests when negotiating the terms and conditions of your purchase.

Home Inspector

The home inspector inspects the property to reassure that you are getting what you paid for. They will let you know of any repairs that need to be done or have been done in the past.

If you are buying a resale home, it’s always advisable to have it checked by a certified home inspector as a condition of purchase. The home inspector will search for major deficiencies, which may not always be apparent, to the naked eye. The home inspector then writes a full report and submits it to the client and the lender.

See more about a home inspector in our Home Inspection VS Appraisal section

Appraiser

Appraisers assess property values for the lenders.

When a property is purchased it is imperative for the lender to be satisfied that the purchase price reflects the properties true market value. An appraiser is an officially accredited valuator who is hired to conduct an inspection of the property for the lender to assess and certify its value based on comparative properties and recent sales prices in the area.

See more about appraisers in our Home Inspection VS Appraisal section

Builders Representative

A builder’s representative’s job is to aid you when purchasing a newly constructed home from a builder. They arrange the sale of new homes to the general public by providing information to purchasers on the lot sizes, costs of purchasing and displaying the house models. They also aid in the New Home Warranty programs and any other related features of the property including municipal procedures and requirements.

Make note, most builders that provide financing, offer it through the bank that financed their project and mostly use the banks posted rate. They do not specialize in mortgages but are governed by the regular consumer law. Their duty is to the builder and is the seller’s agent, not the buyers.

The Lawyer

Your lawyer’s job is to ensure that the property you purchase is legally yours and comes with no strings attached. i.e. liens, charges, encumbrances.

When you purchase a property you are also taking claim to the legal rights of ownership to that property. There may be liens, work orders or back taxes owed that are attached to the property so you must be certain that no other party has a claim to your property.

The lawyer will confirm that there are no legal rights to your property except your own and help the purchasing process proceed smoothly.

Their job is to conduct a title search and obtain all necessary information. They will ensure that the property conforms to local by-laws and that the taxes are up to date. They handle the transfer of ownership and the registration of the mortgage on title.

They must also ensure that all terms and conditions have been met by both parties and arrange the signing of the legal documents. They do all this and more while working in conjunction with the lawyer for the seller of the property.

Post from: paulsidhu.com

Meet the professionals involved during your mortgage process

Post from: paulsidhu.com

Meet the professionals involved during your mortgage process

A Toronto Mortgage Brokers job is to provide consumers with choice, convenience and expertise.

The consumer receives an accredited, expert mentor through, what is, a complex lending process.

Because each applicant’s needs and qualifications differ greatly, a Mortgage Broker who is familiar with the different mortgage programs and products available and knows which questions to ask, can approach lenders that best meet your needs and goals.

The difference between us and a single lending institution is that they will attempt to sell you only their limited products and we have access to all theirs as well as dozens of other lenders products. Mortgage Brokers are service orientated and save you time and money while shopping for a better mortgage and rate for you.

A broker will:

- be there to help you every step of the way and answer your questions or concerns as they arise

- give you efficient and highly personalized service putting your name to your face instead of just a file number

- help you with your home purchase, mortgage renewal, refinancing or any other financing needs you may have

- get you the most competitive rates available

- provide you with maximum flexibility in your financing choices

- put you in touch with suitable realtors, appraisers, or any other home-related professional that you may require

- counsel you on credit and mortgage qualifications and assist you with raising your beacon score if required

-show you ways to save on your mortgage once you’ve been set up

We provide all the help you need, for FREE**!

Our service is free because it’s the selected lender who pays us, not you.

**Some brokers charge a brokerage fee if you don’t qualify under normal lending guidelines.

Post from: paulsidhu.com

Advantages to Using a Mortgage Broker

Post from: paulsidhu.com

Advantages to Using a Mortgage Broker

1. Learn what your current Beacon score is and what appears on your credit report. Go to Equifax.ca or TransUnion.ca to get an up to date summary of your credit report.

2. Do not open any new credit cards that you will not need just to try and increase your available credit. This approach could backfire and actually lower your score due to inquiries.

3. Try to keep your total account balances as low as possible. High outstanding debt will negatively affect your score. A good range is 4%-12% of the total available credit.

4. Correct any incorrect information that might appear on your credit report. If there is a discrepancy, notify Equifax immediately before it negatively effects your beacon score.

5. If your credit is severely damaged, or you have a very short credit history, there are numerous ways to improve your beacon score over time. Consider opening new accounts and ensure that they are paid off on time. Make sure these accounts are ones that will be reported to a credit bureau.

6. If you need help building your credit from scratch or re-establishing credit after bankruptcy or a consumer proposal, take advantage of a secured credit card offered by your bank or your broker. These credit cards usually require a minimum deposit of $500 or more.

7. To minimize the number of inquiries on your credit report, don’t apply for multiple credit cards over a short period of time, or for a card you’re not likely to get. Apply for new credit accounts only as needed. Also if you choose to shop around for a mortgage, you must be careful of the number of times the bank pulls your credit report. I suggest going to a Toronto mortgage broker and having them pull it once and letting them shop around to find you the best rate.

8. Make all of your payments on time. If for some reason you miss a payment, be sure to pay the following month. All late payments and delinquent accounts will be noted on your credit report and there is no way to remove them.

9. Keep checking your credit report regularly. Whether your buying a home or not, this should be done once a year to ensure that your information is up to date and that your not a case of identity theft.

Read about The Importance of Good Credit here.

Post from: paulsidhu.com

Top 9 Ways to Improve your Beacon Score

Post from: paulsidhu.com

Top 9 Ways to Improve your Beacon Score

A lot of mortgage brokers in Toronto don’t like to talk about the negative events that happened in the U.S with the “Sub prime Market”. In fact if you even mention the word sub prime around brokers or realtors a hush will definitely follow.

The US had a bad case of over lending. Canada has found a way to prevent this from happening on this side of the border. They’ve taken preventative measures to avoid over lending.

Before you were capable of obtaining 100% financing and in some cases 105% when you borrowed your closing costs as well. Lenders had the 40 year amortization in place for smaller payments and longer life’s to the loan.

They’ve decided to cut this off the market to help stabilize it here in Canada. They’ve taken the amortization periods down to 35 years from 40 and are only doing 95% loan to value on homes for credit worthy people.

In my opinion this was a great move. This helps people pay off their homes sooner and saves thousands of dollars in interest. It will stabilize the market and keep the values of homes up and prevent a bubble burst in the market like what happened in the US.

Post from: paulsidhu.com

Understanding recent changes in the Canadian Mortgage market

Post from: paulsidhu.com

Understanding recent changes in the Canadian Mortgage market

Take an application

For your convenience, here is a downloadable Canadian mortgage application in either Adobe PDF or Microsoft Word format.

Click here to download your Mortgage Application in Adobe PDF format

Click here to download your Mortgage Application in Microsoft Word format

This application will be an in depth look at your net worth. We ask that you be completely truthful as everything will come out once the credit report is pulled.

Make note that we DO NOT report directly to the Canada Revenue Agency and ask that if you do have any jobs paid by cash to claim them as well. i.e. Babysitting (you are solely responsible for claiming your income). It’s our job to fit in the puzzle pieces that is your information to get you what you need.

Review the application and assess the credit report

We will look at all your assets and liabilities to find ways to leverage your money to provide you an excellent mortgage rate but more importantly, a product that will save you money.

Ask the right questions

We ask you what your needs are, what you would like to do with your property, how long you plan on staying in your property and what type of flexibility you would like in regards to your payments. We get the total picture for your specific situation because no two situations are alike.

Analyze the data; find ways to resolve credit issues

We analyze all the information we have as well as look over your credit report line by line and go through it with you to resolve any issues that have arose.

Consult with team as to options

We sit with three to four other brokers and an underwriter and go through the particulars of your mortgage. At this time we brainstorm any ideas or options that your primary broker may have not seen. We figure out the best three products for the client and prepare them to be offered.

Educate the client

We sit with the client and explain how variable and fixed rates work as well as educate them on ways to pay down their mortgages faster, i.e. bi-weekly accelerated, weekly-accelerated

Provide client with their best options

Now that the client is educated we can provide the client with what we think are their best options and would save the client the most money. 

Help the client make an informed decision

We show the client how much money they would spend on interest and on principal through the options provided and based on their situation how they can make payments in their advantage to pay down their mortgage quicker.

Post from: paulsidhu.com

Obtaining your Canadian Mortgage

Post from: paulsidhu.com

Obtaining your Canadian Mortgage

How much does hiring a Toronto mortgage broker really cost me? In most cases nothing! 9 out of 10 times we get paid directly by the lender saving you money from the start.

We don’t take a penny from you and all Mortgage Brokers are regulated by FSCO The Financial Services Commission of Ontario.

Mortgage brokers are paid a finders fee from the lender for placing loans for clients into appropriate mortgage products that the lenders offer.

In the odd cases that we can’t find a lender for you, based on credit worthiness, we can place the mortgage privately and a minimal fee may be charged.

Only 25% of the Canadian mortgage market takes advantage of mortgage brokers. The rest usually go to their respective banks to obtain mortgages and loans.

The reason for this is that most people don’t realize the advantages that a mortgage broker can provide to them. Some of the advantages are:

• help every step of the way
• efficient and highly personalized service
• counseling on credit and mortgage qualifications
• the most competitive rates
• provide maximum flexibility in financing choices
• help with your home purchase, mortgage renewal or refinancing
• put you in touch with suitable realtors, insurance agents, or any other home-related professional that you may require

We always have the client’s best interest in mind at all times. So with no cost, no risk, an accredited licensed mortgage broker that knows their products, quality service, a product that best suits you – not the lender, what do you have to lose except your unwanted mortgage payments.

Post from: paulsidhu.com

How much does a Mortgage Broker really cost you?

Post from: paulsidhu.com

How much does a Mortgage Broker really cost you?

Did you know that by law in Canada, if your down payment is less than 20% of the value of the home you are purchasing, you are required to obtain mortgage insurance? Mortgage insurance is not the same as life insurance or home insurance.

Mortgage Insurance is the insurance required by the government in case you default on your mortgage. This insurance protects the banks from losing their investment.

The three main mortgage insurance companies in Canada are Canada Mortgage Housing Corporation (CMHC), Genworth Financial, and AIG United. An example of the advantage of mortgage insurance is a story that recently took place in Halifax.

There was a couple, husband and wife, with three kids. One morning the husband wakes up to find that his wife has up and left him overnight. So this husband is left with the three kids and a mortgage payment that he cannot afford on his wage alone.

He decides that the smart thing to do, knowing he was going to default, was walk into the bank and hand in his keys. The bank calls his mortgage insurance company.

In this case the mortgage insurance company for this client covers half the mortgage payment and starts building an addition on to the client’s house. They also help him find a tenant to rent the addition, thus making up the missing income required to make the mortgage payment and allowing the client to keep his home.

They also gave him a promissory note, interest free, for the cost of the addition. They also went above and beyond by stating to the client that if he makes his mortgage payments on time for the next five years that they would forgive the entire promissory note as well.

This may not be the outcome for all situations but the cost of foreclosing on a house with all the fee’s involved is in the range of $50 000.  So in most cases, it’s beneficial for the mortgage insurance company to find ways to keep you in your home.

Post from: paulsidhu.com

Mortgage Insurance

Post from: paulsidhu.com

Mortgage Insurance