Save Thousands on Your Existing Mortgage

Save Thousands on Your Existing Mortgage

A family was recently referred to me because they wanted to reduce the interest they were paying on thier mortgage. When they took out his mortgage a couple of years ago his rate was reasonably competitive but with the recent drop in rates he thought he may be able to do a little better. In this particular circumstance my clients weren't concerned about lowering the monthly payment but reducing his total interest paid over the next 5 years. On my clients $240,000 mortgage if they kept the monthly payment the same but took the new lower mortgage rate they saved over $8,000 and as an added bonus reduced the mortgage amortization. The difference between the existing mortgage rate and the new rate was only .75% (3/4 of a percent) and it SAVED them $8000. This was all done no charge to my clients and as always, I was happy to walk the clients through the entire process to make it as painless as possible. If you would like, contact me and I would be happy to do a mortgage analysis to see if I can save you thousands as well.

I'm a fully qualified mortgage broker with Dominion Lending Centres. I spend 100% of my time giving you world class service...guaranteed! I will give you such extraordinary service that you would gladly refer your friends, family neighbors and coworkers to me for their home loan needs. With your help I am able to build strong, lifelong relationships, one person at a time. My goal is to be your mortgage lender for life! Please contact me with any comments or to see how much you can save.

Making sense of today’s housing market

Making sense of today’s housing market

In recent months, economists have had the unenviable task of trying to calculate the direction the housing market is likely to take, factoring in things like unemployment rates, population and immigration figures, economic growth, mortgage rates, and that most nebulous of criteria: consumer confidence.

They agree that the decrease in housing sales and prices bears little relation to the economic indicators in BC. What has changed is public perception of our financial security, triggered by the troubled global financial markets.

As realtors, people are asking us to help make sense of the housing market.

Sellers are asking if the market value of their home is decreasing. Buyers want to know if they should wait for further price reductions. Homeowners not in the market to buy or sell want to understand the impact on their equity, which may affect decisions like plans for renovations.

Investors are asking about short-term impact – is it a good time to buy, renovate, and re-sell for a profit? And long-term impact – is quality real estate now available at lower prices?

First-time buyers want to know how much they need for a down-payment, whether they can afford the monthly mortgage payment, and if they can get financing in these uncertain times.

There are no easy answers. Around the Lower Mainland’s kitchen tables, realtors are helping people assess their individual situations.

Circumstances cause each of us to make decisions despite uncertainties related to global economies and politics. Someone gets a job in another city. A family must consider estate planning for a parent. A young couple wants to start investing in their own home, rather than renting.

Our MLS® statistics and Housing Price Index (HPI) tell us that, since May, residential home sales and prices have been decreasing. After five years of unprecedented growth in home values in the Lower Mainland, that’s not particularly surprising or necessarily unwelcome.

Between 2003 and 2008, the HPI benchmark price of a detached home in Greater Vancouver increased nearly 70 per cent to $761,000 from $449,000. Condominiums over the same period increased 82 per cent to $387,000 from $213,000. Left unchecked at this rate, by 2013 the benchmark price of a detached home would top $1.2 million and condos more than $700,000.

Current trends offer moderation to a market where affordability, for much of this decade, was eroding, making home ownership unattainable to an expanding segment of our community.

Since May, residential home prices have declined 12.8 per cent, resulting in an 8.3 per cent year-to-date price reduction for detached, attached and apartment properties across Greater Vancouver.

These moderating home prices should not be confused with the U.S. housing downturn. Since 2005, prices in the U.S. have been edging downward due in large part to imprudent ‘sub-prime’ lending practices. Mortgages in Canada are tightly regulated and underpinned by a solid banking structure. The World Economic Forum recently identified Canada as having the world's “soundest” banking system.

The local real estate market is not immune to global economic challenges; however, Canada’s disciplined lending structure has kept the mortgage landscape steady in these uncertain times.

While the current rate of foreclosures in the U.S. is nearly five per cent, only 0.28 per cent of mortgages in Canada are in arrears, a proportion that is not only low but steady, according to the Canadian Association of Accredited Mortgage Professionals (CAAMP).

Low prices are not the concern as much as the view that prices are falling. Buyers are waiting to see of the real estate market has hit bottom.

Identifying the “bottom” of a market is difficult, given that certain variables must remain constant to attain real savings. For example, interest rates must remain low and that perfect house must remain available at an acceptable price.

Most of us sell a home and buy a home within the same market; while we may be selling at a lower price, we’re also buying within that lower-priced market.

Deciding to buy or sell a home should be a milestone moment based on your financial and personal circumstances, and the market conditions within your neighbourhood of choice. For those whose finances allow it, there are excellent opportunities in today’s housing market. This is a good market for long-term investors.

The Real Estate Board of Greater Vancouver has existed for nearly 90 years and witnessed numerous market cycles. Sales increase and decrease. Prices go up and down. Historically, the values at the peak of the next cycle inevitably surpass the ones before.

(Dave Watt, president of the Real Estate Board of Greater Vancouver)

I hope you found the above article informative. I'm a mortgage broker located in Vancouver BC working with one of Canada's largest brokerage houses Dominion Lending Centres.

5 Key Ways to Help Improve Your Credit Score

5 Key Ways to Help Improve Your Credit Score

Leading up to the holidays is the perfect time to think about things like improving your credit score and consolidating debt. After all, the holidays are a joyous time that should not be overshadowed by financial woes. And even if your credit score is good, these tips may make it even better. After all, the better your credit score, the fewer hurdles you’ll have to overcome when looking to renew or refinance your existing mortgage, or obtain a new one. Nowadays having good credit is as important as ever. Very few lenders are interested in making exceptions for people that have had credit challenges.

Following are five steps to a speedy credit score boost:

1) Pay down your credit cards. The number one way to increase your score is to pay down your cards to 30% of their limits. Revolving credit like credit cards seems to have a more significant impact on your score than car loans, lines of credit, and so on. Lenders will often use the term credit utilization.

By paying down your cards to 30%, you are leaving a big gap between what your limit is and what you owe – a move that is very favourable to increasing your credit score.

2) Limit the use of your cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there is a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you paid it all off the next month.

By being more accountable of your spending on a daily or weekly basis through the use of a budget, you can keep those cards below the magic 30% mark.

3) Check your limits. If your lender is slow to report your monthly transactions, this can have a big impact on how another lender may view your file. Make sure everything is up to date. Old bills that have been paid can come back to haunt you.

Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring formula that you’re regularly maxing out that card.

You could go on a wild spending spree to raise the limit, but a more sensible solution would simply be to pay your balance down or off before your statement period closes.

When making payments online, do so about a week before the period closing date printed on your latest statement to ensure the payment is received on time – it can take up to five business days for a payment to be received. This won’t raise your reported limit, but it will widen the gap between your limit and your closing balance, which should boost your score.

4) Keep your old cards. Older credit is better credit. If you stop using those older credit cards, the issuers may stop updating your accounts. As such, they will lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the card for a long time. Use these cards periodically and then pay them off.

5) Don’t let mistakes build up. Dispute any mistakes or situations that may harm your score. If, for instance, your cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation.

As always, if you want to talk about your credit score or consolidating debt, I’m here to help. I'm a mortgage broker located in Vancouver BC working for Dominion Lending Centres.

3 Tips to Compare Adjustable Rate Mortgages for the Best Deal Possible

3 Tips to Compare Adjustable Rate
Mortgages for the Best Deal Possible

In the last couple of years, adjustable (or variable) rate mortgages have become more popular in Canada, as well as with our neighbors down south in the United States. An adjustable rate mortgage can be a wonderful money-saving option. However, comparing multiple loans to each other can be a bit complicated to do.

While a traditional fixed-rate mortgage can easily be compared to another fixed-rate mortgage, the process becomes a bit trickier when you are dealing with multiple adjustable rate mortgages. Adjustable rate mortgages (ARMs) came in many forms and with many different options. The choice you have to make between ARM mortgage options can make for a very large difference in the quality, and cost, of the loan which you ultimately accept. So, it is important to be able to compare them to each other to make the best decision you possibly can. .

Most people have two basic issues when they try to compare two ARMs; the math to calculate the effective prime discount is not simple, and understanding what all of the various different options mean. No matter which lenders you are working with, there are three things you should first understand and keep in mind throughout the process. They are:

Understand Low Introductory “Teaser” Rates and Mortgage Costs.

The first thing you need to understand is how much a particular loan will cost you between the time you sign on the dotted line, and the time when the mortgage becomes open or renews.

To easily determine the cost of a mortgage until it becomes open or renews, you can multiply the introductory rate of the loan by the number or months it will be effective. Then multiply the interest rate of the loan after the introductory period by the number of months until the mortgage opens or renews. Add these two numbers together and divide by the total number of months the mortgage will be in effect before it opens or renews. This gives you a weighted average calculation and allows you to easily compare one ARM to another.

Understand Rate Discounts and Conversion Options.

Many people go into an adjustable rate mortgage assuming that they can easily convert to a closed term mortgage without any penalty, whenever they choose to. However, it is vitally important that you know exactly what the rate discount will be if you choose to convert. You may find that it costs you more than three month’s worth of interest to switch lenders and forces you to stay with the lender you currently have. If this is the case, then you will not be able to change lenders until your mortgage becomes open or renews without significant cost.

Understand How Interest Rate Changes Will Affect Your Payments.

There are currently two popular options with ARMs. The first type of ARM has payments which adjust as the prime interest rate moves up and down. This means that your amount due each month is constantly changing with the prime rate. This can be a good deal if rates drop and you can stomach the constant change. However, if you need stability in your payments from month-to-month, then this is probably not the best option for you to choose.

The second type of ARM keeps the payments the same each month but changes the amount applied to principle and interest based on the prime rate. For example, when the prime rate goes up then your payment applies more to interest than to principle. This means it could ultimately take longer to pay off your mortgage because you are paying less on principle each month if the prime rate is high.

Adjustable rate mortgages can be great alternatives to traditional closed-term mortgages. However, when you are evaluating your choices in an adjustable rate mortgages it makes a lot of sense to take the time to learn about, and understand, introductory teaser rates, discounts and conversion rates, and how the prime rate will affect your mortgage payments and ultimate payoff time. Once you fully understand what ARMs are all about, and which options best suit your situation.

As a mortgage broker I can help you get the best adjustable rate available. I work with one of Canada's largest mortgage brokerage firms Dominion Lending Centres Leading Edge.

The Best Asking Price for your Home

The Best Asking Price for your Home

In market like we're in now the most important thing when selling your house within a reasonable time frame is starting at the right price. Setting a realistic price for your home that reflects current market values will help sell your home quickly and for top dollar. When you price your home properly, you increase the chances that the offer you receive will nearly match your asking price, and that there will be competing offers (although, not very common in this market)—which may net you even more in the long run.

Your property has the best chance of selling within its first seven weeks on the market. And, studies indicate that the longer a property stays on the market, the less it will ultimately sell for. A property priced 10 % more than its market value is significantly less likely to sell within this window than a property priced close to its actual market value. About three-quarters of homes on the market today are 5-10 % overpriced. Sellers will usually over-price their homes by this margin if, either, they firmly believe the home is worth more than what the market indicates, or if they want to leave room for negotiation. Either way, if you choose to over-price your home by this amount, you run the risk of increasing the amount of time your home spends on the market, and decreasing the amount of money you’ll ultimately receive. At the other end of the selling spectrum are houses that are priced below a fair market value. Under-pricing often occurs when the owner is interested in a quick sell. You can bargain on these homes attracting multiple offers and ultimately selling quickly at—or above—the asking price.

The knowledge and skills of an experienced Realtor will be invaluable when determining an appropriate asking price. It is the job of your Realtor to know the current market and market trends inside and out, to be closely connected to the real estate market at large, and to be aware of other properties currently for sale in your particular area. Based on this range of connections and knowledge, your Realtor should counsel you on how to price your home properly in order to attract the highest price possible, in the shortest period of time. Before approaching this process, you should first do some homework yourself. You’ll need to know the workings of the current market before you even begin to think about setting an asking price. The market will always influence a property’s value, regardless of the state of a home, or its desirability.

Here are the types of market conditions and how they may affect you:

Seller’s Market: A Seller’s market is considered a “hot” market. This type of market is created when demand is greater than supply—that is, when the number of Buyers exceeds the number of homes on the market. As a result, these homes usually sell very quickly, and there are often multiple offers. Many homes will sell above the asking price.

Buyer’s Market: A Buyer’s market is a slower market. This type of market occurs when supply is greater than demand, the number of homes exceeding the number of Buyers. Properties are more likely to stay on the market for a longer period of time. Fewer offers will come in, and with less frequency. Prices may even decline during this period. Buyers will have more selection and flexibility in terms of negotiating toward a lower price. Even if your initial offered price is too low, Sellers will be more likely to come back with a counter-offer.

Balanced Market: In a balanced market, supply equals demand, the number of homes on the market roughly equal to the number of Buyers. When a market is balanced there aren’t any concrete rules guiding whether a Buyer should make an offer at the higher end of his/her range, or the lower end. Prices will be stable, and homes will sell within a reasonable period of time. Buyers will have a decent number of homes to choose from, so Sellers may encounter some competition for offers on their home, or none at all. Remember, a Realtor is trained to provide clients with this information about the market, helping you make the most informed decision possible.

The right Realtor will guide you through the ups and downs of the market and keep you up-to-date with the types of changes you might expect. Evaluate your house in the other main areas that affect market value:

Location: The proximity of your home to amenities, such as schools, parks, public transportation, and stores will affect its status on the market. Also, the quality of neighbourhood planning, and future plans for development and zoning will influence a home’s current market value, as well as the ways in which this value might change.

Property: The age, size, layout, style, and quality of construction of your house will all affect the property’s market value, as well as the size, shape, seclusion and landscaping of the yard. Condition of the Home: This includes the general condition of your home’s main systems, such as the furnace, central air, electrical system, etc., as well as the appearance and condition of the fixtures, the floor plan of the house, and its first appearances.

Comparable Properties: Ask your Realtor to prepare you a general market analysis of your neighbourhood, so you can determine a range of value for your property. A market analysis will provide you with a market overview and give you a glimpse at what other similar properties have been selling for in the area.

Market Conditions/ Economy: The market value of your home is additionally affected by the number of homes currently on the market, the number of people looking to buy property, current mortgage rates, and the condition of the national and local economy.


We are Mortgage Brokers located in Vancouver British Columbia and are happy to answer any questions you may have regarding the home buying and selling process.

Is 100% Financing Still Available?

In an article dated November 11, 2008 in the Vancouver Sun they point out 3 ways that you can avoid having to meet the Federal Governments minimum requirement of a 5% down payment on a property purchase.

The 3 basic ways in the Vancouver Sun article in which you can avoid the 5% down payment are in the are as follows;

• Wells Fargo still offers 100% financing because they self insure their mortgages. Wells Fargo 100% financing mortgages are available through mortgage brokers such as myself.

• Borrow the 5% from credit cards or lines of credits. There is more to it than simply borrowing from a line of credit or existing credit card. You need to make sure you get proper advice before simply borrowing for the down payment and are aware of the specific rules set out by mortgage insurers before considering this mortgage option.

• Borrow the 5% from a friend or family member and then take a cashback mortgage and pay them back. There are significant costs to a cashback mortgage that you should be fully aware of before being tempted by this type of mortgage arrangement. Although despite the cost it can make sense in certain scenarios.

Below is the link to the Vancouver Sun article:

Want a mortgage at 0%?All you need to do is skirt a few rules

I think it's important to point out that all 3 options carry a cost to the borrower with the second option most likely being the cheapest.

I also feel it's important to note that any time your skirting around rules you could open yourself up to potential problems unless you are fully aware of all of the issues.

Don't hesitate to contact me if you have any questions on the Vancouver Sun mortgage article.

You can also visit my website for tips on mortgages in Vancouver at MyMortgageBC.com.

Why the Canadian Housing Market is Not Set to Melt Down

This article provides a much different perspective on the Canadian housing market. All I've been hearing is gloom and doom so this is somewhat refreshing. Please feel free to leave your comments.

Why the Canadian Housing Market is not set to Melt Down.

While the "best days" for Canada's real estate markets may be over, comparing the Canadian outlook to the U.S. housing meltdown is off base, two Bank of Nova Scotia economists say in a new report.

Earlier this week, Merrill Lynch Canada economists warned Canada's housing market could be vulnerable to a U.S.-style crash, drawing a response from Prime Minister Stephen Harper rejecting that.

Derek Holt, vice-president of Scotiabank's economics department, and his colleague Karen Cordes, cite several reasons why the Canadian mortgage market is healthier than that of the United States. They do not mention the Merrill study.

"We do believe that the best days for Canadian housing markets are behind us, and that lower volumes of new home construction and resales lie ahead alongside further fairly modest erosion of house prices," they write. "Calgary and Edmonton are the most exposed in this regard. But, arguing that consequences to the overall Canadian economy and to debt markets particularly in terms of mortgage-backed securities are as severe as they are in the U.S. is way off base."

Here are the findings of Scotiabank's Mr. Holt and Ms. Cordes, as printed in their report:

Debt growth over the full cycle

Much is being made of the fact that Canadian debt growth relative to incomes over recent years has been on par with the U.S. experience.

Ergo, one is led to conclude, Canada must face similar stresses to its own housing and mortgage markets.

Nonsense. One must look at the full cycle and use the right measures. Recent Canadian debt growth reflects the unleashing of pent-up demand from the 1990s. Canada's recession in the early 1990s was more severe, and the effects were longer lasting by way of how long it took housing markets and the consumer sector to get back on their feet. The U.S. recession of the early 1990s was comparatively mild, and the economy rebounded faster such that U.S. debt growth over the long-haul has exceeded debt growth in Canada.

Leverage - night and day comparisons

Canada's ratio of household debt-to-income is much lower than the U.S. Despite its popularity, however, this is the worst way to look at leverage since it compares total debt amortized over decades to a single year's after-tax income, which is a stock-to-flow comparison that most economists avoid. One doesn't take out a mortgage on Jan. 1 with the expectation of having to pay it all back out of the current year's income by Dec. 31, so why make the comparison?

The best way to judge the full cycle's influences upon debt growth in Canada versus the U.S. is to look at where the two countries stand today on leverage on the household balance sheet (i.e., debt as a share of assets). This must be done by making adjustments to ensure comparability of Canadian and U.S. household sector balance sheet data. In Canada, total debt as a percentage of total assets sat at 20 per cent as at the end of 2007. The U.S. ratio is about 26 per cent. By corollary, Americans have used nearly 30 per cent more debt to purchase assets than Canadians. Clearly, Americans and Canadians have different debt tolerances.

Canadian mortgage markets are fundamentally healthier than the U.S.

• Canada's subprime market is small (5-6 per cent of outstanding mortgages) whereas the U.S. share peaked at about three times that. As a share of originations, 20-25 per cent of new mortgages in the U.S. were subprime over the 2004-06 period. So Canada isn't anywhere near as exposed to the products that caused most of the damage in U.S. housing markets.

• Not only is Canada's subprime market much smaller, but it isn't even really subprime per se. Canada's subprime market is more like the U.S. near-prime market, whereas the U.S. subprime market often lent to borrowers with extremely impaired quality.

• Adjustable rate mortgage (ARMs) resets also caused many of the problems stateside, but those resets occur much more suddenly in the U.S. By contrast, the closest Canadian product parallel is the variable rate mortgage, but they get constantly repriced so that people aren't caught offguard years later. Furthermore, in Canada, some variable rate products adjust the principal, not the payment. On balance, the shock effect from payment resets in Canada is nowhere close to what has caused much of the problem in the U.S.

• Canada's mortgage equity withdrawal market isn't like the U.S. We've seen secured home equity lines of credit (Helocs) grow in Canada as a way of withdrawing equity, but nothing like the U.S. withdrawals picture. U.S. homeowners' equity has been in free-fall with mortgage debt growth outpacing housing assets since the early 1990s. Canada, by contrast, retains much higher homeowner equity, and while it may have reached a plateau, the figure has risen in recent years while the U.S. position has deteriorated.

• Mortgage interest is deductible against taxes in the U.S. It generally is not in Canada. That creates vastly different incentives to leverage oneself in the two markets.

• The nature of the products has been very different in Canada versus the U.S. Examples of Canadian innovation like long amortization mortgage products are absolutely nothing like "Ninja" mortgages. Mortgage innovation was needed in Canada, but has been relatively more conservative.

• Further to this latter point, long-amortization mortgage products actually extend the Canadian credit quality cycle. Long amortization periods of over 25 years have been dominant as a share of new mortgage originations since the 40-year mortgage was introduced almost two years ago. However, there is still an overwhelming majority of Canadians who face the option of extending from the previously standard 25-year product into longer amortization products in a manner that lowers their payments in the face of shocks. Even though insured 40-year mortgages are now banned in principle, 35-year mortgages still provide this flexibility.

• Investor mortgages were among the first products to default in the U.S. ,where they account for about 9 per cent of all outstanding mortgages, similar to the U.K. (9.5 per cent) and Australia (10 per cent). In Canada, however, they are about 2-3 per cent of all outstanding mortgages. There are problems in the investor segment the world over, but the magnitude of the exposure in Canada is far less significant.

• If there is an imminent problem brewing, then it's not showing up in terms of industry-wide mortgage delinquency patterns. Mortgages 90+ days in arrears in Canada remain at 27 basis points, which is the range around which they've been floating since mid-2004. By contrast, even when the country had double digit variable mortgage rates and double digit unemployment rates in the early 1990s, the peak rate of delinquency was about 65 basis points. We're of the opinion that delinquencies will deteriorate going forward, but will be nowhere close to the U.S. experience.

• The extent of runaway house price inflation was much more muted in Canada than in many other countries. Canada's priciest market is Vancouver, and prices have gone up by about 80 per cent since the mid-1990s start of the global housing cycle. London, England, by contrast, went up by about 270 per cent over this time period. Canada's house price appreciation was, on average, significantly below the U.S. experience since then, and much below the experience of many European countries.

Canadian mortgages are funded, underwritten, and enforced in a totally different manner

• Canada's funding model is completely different from the U.S. The majority of mortgages are held on balance sheet in Canada, with only 24 per cent having been securitized. Thus, much more of Canada's mortgage book is funded by on-book retail deposits than is the case in the U.S. That also makes the banks more conservative about the products they are originating since they are mostly stuck on balance sheet.

• Further, the majority of the securitized totals have been done through the CMHC - a Crown corporation with explicit government backing - thus avoiding the problems in the U.S. caused by the ambiguity of GSE liabilities. Other insured securitizations have been done through private insurers that also receive explicit government backing for the underlying assets through the Canada Mortgage Bond program.

• Furthermore, Canadian financial institutions are not as reliant upon short-term lines extended by other financial institutions. The degree of reliance upon such funding in the U.S. is what caused excessive exposure to short-term swings in market sentiments, not to mention adverse incentive effects.

• Mortgage-Backed Securities (MBSs) were not placed in off-balance-sheet SIV and CDO structures as in the U.S. So, Canada MBS investors do not face the same heavily leveraged investor risks. This is perhaps the most important point, since origination mistakes in the U.S. were bad enough, but what really caused the problems were dollops of leveraging that occurred after the mortgages were originated.

• Unlike many U.S. banks, Canadian banks continue to apply prudent underwriting standards. In other words, they have always checked, and continue to check, incomes, verify job status, ask for sales contracts, etc., such that all those questions your banker asks in Canada have a purpose that somehow got lost on many American bankers. The no-income-no-job-no-asset ("Ninja") style, here-are-the-keys-to-your-brand-new-home lending just didn't take hold in Canada.

• Appraisal standards are generally higher in Canada, where appraisals are more likely to low-ball estimates of property value before making the final decision on how much to lend.

• Finally, enforcement of Canadian mortgages is not as tilted in the borrowers' favour as it is in the United States. In the U.S., lenders have little recourse - they can take the keys and settle relatively quickly, or sue and go through great expense for a potentially lengthy period. Alberta is similar to the U.S. treatment in this regard. But the rest of Canada provides greater recourse to lenders than in the U.S.

Globe & Mail

I'm a mortgage broker in British Columbia.