re-advanceable mortgage

2 Factors That Can Affect Your Home Value

The second factor that can affect your home value is jobs creation or an unemployment spike. Cities or towns that are reliant on one major industry are exposed to large swings in real estate values.
For example cities such as Windsor and Oshawa are reliant on the automotive industry. Since the automotive industry downturn, many jobs that support the auto industry have been lost as well (tool & die, transportation, manufacturing companies, sub suppliers...). As unemployment numbers rise, the supply demand pendulum swings towards more people selling their homes and/or less having the appetite to buy homes since there is a lack of job security which lowers real estate values.  This has been evident in Windsor over the last few years which continues to struggle in creating jobs.

Keep in mind the next time you are looking for a home or an investment property in a city, to take a look at job creation activities such as companies relocating or expanding, infrastructure investment or a city that is diversified in multiple industies. Afterall, having all the city's eggs in one basket is risky!

To discuss your personal mortgage needs, please contact me.

Are Mortgage Interest Rates Dropping?

My Commentary On What The Bank Of Canada Said Today

What's Your Best Interest Rate?

Typically, one asks for the best mortgage rate when looking for a mortgage.  In this video, other questions to be considered are discussed to help one decide since a mortgage is an investment vehicle not a commodity.

Where Is Prime Rate Going?

Is That The Best Rate You Have?

Best-mortgage_rate

In today's competitive mortgage market, there is lots of "lowest interest rate" and "best mortgage rates" advertising in the media. I even saw a jeweler offering mortgages!!  Is the best rate really what's best for one's situation?

Asking for and making a decision strictly on lowest rate is similar to someone walking into a financial planner's office and asking for the lowest MER mutual fund.  Mortgages are investments and need to be chosen based on where the economy is currently, what's expected to happen with interest rates over the next few years (inflation, job creation and global factors), personal and financial situation and borrower's risk tolerance. The fine print of the mortgage such as compounding, prepayment priviliges, increased payments, portability, assumability and how the penalty is calculated are important features to be understood upfront prior to commiting to a mortgage product.  It's unfortunate that homeonwers have been programmed to get the lowest rate, set the payment and not look at the mortgage till renewal time. There are significant opportunities in optimizing the mortgage to reduce the amortization and build significant equity in a shorter period of time if the mortgage is managed properly by a professional.

The next time you are in the market for a mortgage whether you are buying a home or an investment property, renewing, or refinancing, please email me to send you a checklist of factors to consider in choosing what's right for you and your family.

Please contact me should you have any questions regarding your mortgage.

Why Everyone Should Have A Re-Advanceable Mortgage?

What's a re-advanceable mortgage?Typically, homeowners get a mortgage on their home or investment property and should they need to access their home equity for investment or personal reasons, they would have to break the mortgage, pay a penalty and legal fees to refinance their mortgage.  A great way to continuously access their equity, homeowners can get a re-advanceable mortgage.

The homeowner will need to have 20% equity in their home.  Based on qualifications, a mortgage up to 80% of the appraised value can be obtained and split into a fixed or variable mortgage with a line of credit.  As the homeowner pays down the mortgage principal, the line of credit increases by the principal amount for a total of 80%. This product can be obtained on primary residence and one rental property.

Example

Home value: $400,000

80% mortgage: $320,000

Mortgage portion: $300,000, line of credit portion: $20,000

As the mortgage principal is reduced, eg. $319,500, the line of credit increases to $20,500.  Another benefit of this product is the homeowner does not pay interest on the line of credit until funds are borrowed which allows the homeower to aggressively paydown their mortgage knowing that all the available principal would be accessed via the line of credit.

For your personalized mortgage review, please contact me.