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Pro and Cons of breaking your Mortgage Contract.

Cost to break your mortgage contract.

You may want to break your mortgage contract if the current conditions of the contract are no longer meeting your needs.

When to break your mortgage contract?

A few tips to pay down your mortgage faster.

Mortgage default insurance protects the lender if you don't make your mortgage payments. It's required for all mortgages where the down payment is less than 20 percent of the purchase price. Often it's added to the mortgage, so you pay for it over the life of the mortgage—and you pay interest on it, too.

First-time home buyers may be eligible for a shared equity mortgage with the Government of Canada. With a shared equity mortgage, the government offers you financing without interest. This helps reduce your monthly mortgage payment without increasing your down payment.

Through the First-Time Home Buyer Incentive, the Government of Canada offers to a first-time home buyer:

5% of the purchase price of an existing home
5% or 10% of the purchase price of a newly constructed home
You need to repay the incentive after 25 years, or when you sell the property. You can also repay it at any time without a prepayment penalty.

The property’s fair market value at the time of repayment will determine the repayment amount.

First-Time Home Buyer Incentive:
The First-Time Home Buyer Incentive helps first-time homebuyers without adding to their financial burdens. Eligible first-time homebuyers who have the minimum down payment for an insured mortgage can apply to finance a portion of their home purchase through a shared equity mortgage with the Government of Canada.

Time to start a new chapter. Happy new year!
home

A home equity line of credit, often referred to as a HELOC, is a form of credit that relies on using your home as a guarantee that you’ll pay back the money you borrow. Unlike a loan, a HELOC lets you borrow money, pay it back and borrow it again up to a maximum credit limit.

It can seem like using the equity in your home is a quick and easy way to pay for larger expenses. While you may benefit in the short term, it’s also important to consider the longer-term risks. Large amounts of available credit can make it easier to over-spend and carry debt for a long time. You may also have to pay back your HELOC in full if you want to switch lenders when renewing your mortgage.

Wishing you a season that’s merry and bright with the light of God’s love. Merry Christmas! 🎄

What can you do to build your Credit Score?

✅Pay your bills on time. Delinquent payments and collections can have a major negative impact on a score.

✅Keep balances low on credit cards and other “revolving credit.” High outstanding debt can affect a score.

✅Apply for and open new credit accounts only as needed. Don’t open accounts just to have a better credit mix — it probably won’t raise your score.

✅Pay off debt rather than moving it around. Also, don’t close unused cards as a short-term strategy to raise your score. Owing the same amount but having fewer open accounts may lower your score.

✅Make sure the information in your credit report is correct. It won’t affect your score to request and check your own credit report. If you find errors, contact the credit reporting agency and your lender.

The amortization period is the length of time it takes to pay off a mortgage in full. The amortization is an estimate based on the interest rate for your current term.

If your down payment is less than 20% of the price of your home, the longest amortization you’re allowed is 25 years.

How to minimize the cost of additional interest on mortgage deferral?

Financial institutions assess the eligibility criteria for mortgage deferrals on a case-by-case basis.

You may be eligible for a mortgage deferral if:

👉you, or any member of your family, are unemployed due to COVID-19
👉you, or any member of your family, experience a substantial reduction in income due to COVID-19
👉you have an insured or uninsured mortgage
👉your mortgage is in good standing
👉your home is your principal residence or non-principal residence

Your financial institution’s decision to provide you with relief on certain products is ultimately a business decision.

A mortgage deferral is an agreement between you and your financial institution. It allows you to delay your mortgage payments for a defined period of time.

After the deferral period ends, you resume making your mortgage payments. You also have to repay the mortgage payments you defer. Your financial institution determines how you repay the deferred payments.

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Mortgages in Canada can be fixed or variable. This is a source of confusion for many first-time home buyers in Canada. Here's a quick explanation:

Fixed-rate mortgages have a constant interest rate over the life of your term. The rate does not change, meaning your monthly mortgage payments stay the same. However, because there is no risk for you if interest rates rise, the mortgage rates on fixed-rate loans are higher than variable rates.

Variable-rate mortgages fluctuate with market interest rates. They rise and fall with the prime rate, which is influenced by the Bank of Canada (BoC) rate. Variable-rate mortgages are typically the prime rate, with a premium depending on your creditworthiness. If the BoC interest rate rises, your variable interest rate will also be affected. IF you have an open mortgage, then your payments will also increase.

External factors considered by appraisers while determining the worth of your home.

Internal factors considered by appraisers while determining the worth of your home.

A few reasons for the appraised value being less than the quoted price:

Home Amenities – Number of bedrooms, bathrooms, square footage, quality of fixtures, utilities, and appliances are all analysed. Apart from interiors, the exterior such as structure, construction type, parking, and gutters are also included in the appraisal.

Comparable Properties – Similar valued properties in the area are used for comparison to determine the value of the properties in the area.

Location – The neighbourhood, local amenities, public transit, schools, and safety standards can all play a role.

Market Trends – The economic and social trends in the market can also affect the value of your home. For example, if it’s a buyer’s market where there are excess sellers and fewer buyers which can dampen prices, or a seller’s market, where there are excess buyers and fewer homes which can push up prices.

An appraisal is a process of determining the value of the home by a professional who is unbiased and impartial in their judgement.

Appraisals are used in home purchase transactions & mortgage refinancing as they are useful for all parties involved in a real estate transaction from the home buyer & seller to the lender.

In home purchases, an appraisal is helpful to ensure the home selling price is an accurate representation of the home’s condition, surrounding location, and neighbourhood.

Whereas, in a refinance, an appraisal is essential for the lender to determine the amount of funds that can be borrowed.

A few options to get out of an underwater mortgage.

An underwater mortgage is a mortgage where the homeowner owes more to the lender than what the home is worth. This can happen when the homeowner’s property value depreciates after purchasing the property.
When this happens, the homeowner might not have any equity in the home. This can negatively affect a person’s available credit and prevent the borrower from refinancing the mortgage. The homeowner may not even be able to sell the home without putting in their own cash to cover the losses.

Consider these 3 steps to check if your mortgage is underwater

When you buy a home, you’ll incur many costs outside of the actual mortgage. Otherwise known as closing costs, you’ll typically have to cover legal fees and moving expenses, and of course, in some provinces, a home buyer will pay the LTT when they purchase the property. These taxes are paid directly to the jurisdiction where the property resides, and the calculation depends on the final price you pay for the home.

Home buyers in Toronto pay additional municipal LTTs equivalent to the provincial transfer tax. However, buyers in Ontario, British Columbia and Prince Edward Island (as well as first-time buyers in Toronto) are eligible for rebates on these transfer taxes if they qualify as first-time homebuyers.