Retain Financial Stability with Line Of Credit Mortgages

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If you are thinking of a line of credit that is secured by a mortgage against your home then consider HELOC (A home equity line of credit) mortgage. A HELOC similar to home equity loans can allow homeowners to borrow money against the built up equity in their home. Such mortgages depend on a varying rate that fluctuates with the prime rate of the Bank of Canada. On the other hand, the rate of interest is usually higher than a variable rate mortgage. However there is no need to select between them. HELOCs may offer you the borrowing flexibility but they also come with some risks, mainly financial discipline.

Home Equity Loan Rates

Is A HELOC A Savior In Emergency Financial Situations?

Irrespective of if you require to enhance your kitchen or get your leaky roof fixed, any home improvement or repairing project will never come cheap. For instance, remodeling of an average kitchen will cost almost $19,450 and the average roof replacement can be around $6000. If you do not have that much money in your bank account, you will require to borrow the find for remodeling or repairing.

HELOCs will give you flexibility to borrow and repay the money that you borrow. But you must be well disciplined when you borrow funds and repay the lenders. Also remember that to qualify for a HELOC you require to have the ratio of your debt to income in the lower 40s or less than that, a credit rating of 620 or more and a home value which is at least 20% greater than you actually owe.

How Will A HELOC Work?

In simple terms, a HELOC will appear to work almost like a credit card. You can borrow money up to a specific credit limit that is approved by the lender beforehand. As a homeowner, you need to repay the borrowed funds as well as the interest. Such an option can come with more flexibility i.e.; you can withdraw and make repayments on daily or weekly basis if needed.

A HELOC may act similar to a credit card and give you constant access to the equity of your home, but it has a big difference when it is related to your credit rating. Some credit bureaus will treat HELOCs of a specific size such as installment loans instead of revolving lines of credit. It means that if you borrow the total limit of your HELOC, it won’t create the same negative impact that maxing out a credit card would have. Similar to a line of credit, taking a new HELOC will affect your credit score.

Is the First-Time Home Buyer Incentive helpful at all?

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On September 2nd, the federal government implemented the First-Time Home Buyer Incentive, which is a program they had announced in the federal budget this spring.   It’s aim is supposed to be to help first-time home buyers to get into their first home.

It is curious timing that they would call an election 9 days later, but I will get to that later.  For now, more about this new program. (more…)

The age-old question “Is it a good time to buy a home?”

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In my time as a mortgage broker, there have been many instances when I have been asked “Is it a good time to buy a home?”  If you were to hear the words of many Realtors, you would hear the words “Its a great time to buy a home”.  This may sound self serving, and to some extent, that may be correct.  The subject of this post is to dig deeper as to when it is a good time to buy, and what constitutes a good time to buy a home.

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First Time Home Buyers Mortgage Broker Tips And Tricks

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Among the services I provide to my clients, I consider myself to be a “first-time home buyer mortgage broker“.  As a first time home buyer mortgage broker, I know how difficult it is to get into the real estate market, particularly in Vancouver, and it brings me a particular amount of job to help someone get past the challenges if being a first time home buyer.

I have recently completed an e-book and will be launching it soon.  I believe it will be very helpful for not just first-time home buyers, but for anyone who is not as knowledgeable in residential mortgage lending, about how to make your home buyer mortgage broker application appealing to a mortgage lender.

As a sneak preview, here are three tips on improving your mortgage application as a first-time home buyer.

3 Home Buyer Mortgage Broker Tips

  1. Take advantage of the home-buyers plan to fund your down-payment.  This program is not technically ONLY for first-time home buyers, but all first-time home buyers are eligible.  Under the plan, you can borrow up to $25,000 from your RRSP for the purchase of an owner-occupied residence.  If you and your spouse are both applying, then you can withdraw $25,000 each. It is a loan, so it has to be paid back over 15 years (or 1/15th of the loan will be added to income for that year).  However, there is no withholding when you withdraw it, it does not have to all be declared as income on any given year, and you don’t even have to use all of it for down-payment!  You can use it for any purpose that you need it for. A good mortgage broker, like myself, can help you with some of the finer details and complex situations that often arise from these situations.
  2. Make sure you pay your bills on time. If you have a high balance on your loan, or you have a lot of debt, those also have a significant negative impact on your credit score, but you can get the bills down and there is no record of your high debt levels.  However, when you miss a bill payment, it stays on your credit bureau for 6-7 YEARS.  This not just negatively impacts your credit score, but lenders look at this when assessing risk, and they have been particularly uncompromising and (unreasonable, paranoid, strict…and other words that I cannot put in print) in the last few years.  While you likely do not have to wait 6-7 years to become bankable if you have had gone through a period of bad credit, the less negative credit on the bureau, the better. At least make the minimum required payments and you will go a long way to making yourself appealing to them.
  3. Having no credit is just as bad as having bad credit. Many people feel that not requiring credit should prove your ability to pay your bills and should be good evidence of credit-worthiness.  This is not how mortgage lenders think.  If you currently do not have any credit, then you do not have any documentation that you are an acceptable credit risk, and no matter how strong your income is, you will have difficulty obtaining a prime mortgage approval.  Make sure you have at least 3 different credit facilities in your name.  (Secondary credit cards in a spouses name are not considered acceptable for establishing your credit).

I am excited to launch my home buyer mortgage broker e-book soon, in which I go into much greater detail and give many different ideas to help home buyers prepare for home ownership, but as a mortgage broker in Vancouver, you are welcome to contact me in the meantime to discuss your circumstances and see if there are any options for you.

Good news regarding OSFI rule changes

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This is just a quick note to let viewers know that IF you are one of the people with 20% or more down-payment and are in a position that the new OSFI rule changes affect your pre-qualification, that I can extend the current guidelines into the new year by up to 120 days provided that I have an application and am able to get a pre-approval in place with a lender for you before January 1. (more…)

OSFI B20 mortgage guideline changes 2017 – Part 2

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This is a continuation of the article published here about the OSFI B20 morgage guidline changes for 2017.

If you are familiar with mortgage brokers at all (which you probably aren’t) you would know that we also have alternative sources of lending for situations where a mortgage borrower will not qualify with a prime institution.  We have what we call “B” lenders, who have higher rates but more flexible lending criteria, and we have private lenders, which are individuals and corporations who can lend money on on anything that suits them. (more…)

OSFI B20 mortgage guideline changes 2017 – Part 1

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B20?  Is that some kind of vitamin?

It certainly sounds like a vitamin, but unfortunately, it is something else altogether.  The Office of the Superintendent of Financial Institutions is the regulator for all federal mortgage lending institutions.  They set the regulations for mortgage companies like banks to follow (or ignore).

The latest updates to the B20 mortgage regulations could bring some potentially very disrupting changes to the real estate market, especially if you are wanting to get a mortgage in Vancouver, or you are a mortgage broker in Vancouver. In summary: (more…)

Bank of Canada announces increase to the prime lending rate.

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I am just sending a quick note out to let you know about today’s announcement by the Bank of Canada to increase the prime lending rate. The increase is .25% and is applicable to variable and adjustable rate mortgages.

If you are one of the people on a fixed rate mortgage, then this will not affect you at this time. If you are on a variable rate, most lenders adjust the payment to reflect the interest rate change. A couple lenders will keep your payment the same but you will be paying less principal and more interest with each payment. (more…)