Mortgage Articles
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Renovating your home can be an exciting way to enhance your living space and increase property value. However, not everyone has the upfront cash to pay for materials and contractors. If you’re looking for financial solutions, here are a few ways you can leverage mortgage financing to bring your renovation dreams to life. For Existing Homeowners: Mortgage Refinancing One of the most straightforward options for financing home renovations is accessing your home equity through a mortgage refinance. This solution allows you to borrow against the value of your home to fund your upgrades. Mid-Term Mortgage Refinancing - Depending on the terms of your current mortgage, a mid-term refinance may be a smart financial move. It could even lower your overall borrowing costs while adding the renovation expenses to your mortgage. Since every financial situation is unique, it’s worth discussing your options and crunching the numbers to see what works best for you. Refinancing at Renewal - If you’re not in a rush, consider waiting until your mortgage comes up for renewal. Refinancing at this time can help you avoid penalties for breaking your existing mortgage early. Whether you refinance mid-term or at renewal, you may qualify to access up to 80% of your home’s appraised value, providing ample funds for your renovation project. Home Equity Line of Credit (HELOC) Another popular choice for homeowners is a Home Equity Line of Credit (HELOC). This option allows you to tap into your home’s equity without refinancing your mortgage. Why Choose a HELOC? Unlike an unsecured line of credit, which often comes with higher interest rates, a HELOC uses your home as collateral. This typically results in more favorable borrowing terms, such as lower interest rates and higher credit limits. Whether you need a one-time lump sum or a flexible line of credit, a HELOC offers versatility to match your needs. Let’s explore how a HELOC could work for your renovation goals—contact us anytime for more details. For Buyers: Purchase Plus Improvements If you’re shopping for a property that needs a little TLC, a Purchase Plus Improvements mortgage might be the perfect solution. This program allows you to add renovation costs directly to your mortgage, simplifying the process of upgrading your new home. What to Keep in Mind To qualify, your renovations must increase the property’s value. The process involves specific steps and documentation, but don’t worry—we’ll guide you every step of the way. Let’s Make Your Renovation Dreams a Reality Whether you’re an existing homeowner or a first-time buyer, there are plenty of ways to finance your home renovation through mortgage solutions. Every financial situation is unique, and we’re here to help you find the best option. Contact our team at Silverman Mortgage today to discuss your goals and create a tailored plan to bring your vision to life.
Is now a good time to refinance your mortgage? Well, maybe! Interest rates are very low right now, and according to the bank of Canada, they will most likely remain low until at least 2023. So while everyone has different reasons to access their home equity, to a maximum of 80% of the property value, here are 6 reasons refinancing your mortgage might make sense to you. Your mortgage is up for renewal anyway. If your mortgage is up for renewal and you’re looking at a new term anyway, this is the perfect time to consider adding money to the balance outstanding as there won’t be a cost to break your existing mortgage. Breaking your mortgage mid-term will incur a penalty. Waiting until your term is up won’t. It lowers your overall cost of borrowing. The goal with any mortgage is to pay the least amount of money back to the lender as possible. When considering your mortgage options at the outset, this might mean taking the mortgage with the lowest rate, while it might also mean paying a little higher rate in favour of more flexible terms. It’s all about calculating the best option for you at that time. When considering a refinance, it’s very similar. You should consider breaking your term anytime and paying the penalty if the terms on the new mortgage can save you more money in the coming years. These aren’t calculations you can easily make on your own. However, in talking with an independent mortgage professional, you should be able to clearly assess if breaking your current mortgage will save you money in the long run. To consolidate all your debts into one payment. Life happens. Sometimes a financial reset is in order. If you have high-interest unsecured debt that is eating up your cash flow, bringing everything into one low payment secured by your mortgage could be a great option for you. Not only does this option give you breathing room in your daily life, but it will also help to protect your credit score if you are at risk of missing payments. Debt restructuring is probably one of the most common reasons people refinance their mortgages. To increase the value of your home. Home renovations can be expensive. Saving up to renovate properly can take a long time. The idea of using your home equity to pay for renovations upfront, especially ones that increase the overall value of your home, can make a lot of financial sense. Also, with more Canadians working from home due to the changes brought about by COVID-19, adding a home office or finishing a basement to increase the livable space in your home might be a great reason to refinance. To build wealth through investing in property. Purchasing a rental property can be a great way to build long term wealth. Although there can be some hassle involved in dealing with renters, having a tenant cover the mortgage cost as the property appreciates can be profitable long term. Depending on your situation, purchasing a condo for your kids while they attend school is another option to invest in property. And while a vacation home might cost you financially, it can be considered a solid investment in your lifestyle. If you have significant equity, consider a refinance of your existing property to come up with the funds or downpayment require to purchase another property. Because you can do whatever you want with your money. The equity you’ve built up in your home is money you have. However, to access that money, you'll either have to sell your home or borrow against it. And as it’s cold in Canada in the winter, having a home to live in is a good idea. So, if you’re looking to refinance your mortgage to access your equity, do it for whatever reason you like. Maybe you want to start a new business, maybe you want to help a family member through hard times, maybe you want to help your kids pay for their education, or maybe you want to buy a Harley. The truth is, it doesn’t really matter what you do with the money, as long as you pay the lender back what you borrowed plus the interest. Of course, with that said, some reasons to refinance might be a little bit better than others, but you can weigh the financial cost accordingly. However, as rates are really low right now, depending on the terms of your existing mortgage, a refinance might make sense. If you’d like to talk about what a refinance looks like given your existing mortgage and financial situation, let’s do a cost/benefit analysis together. Please contact us anytime.
While this potential second wave of COVID-19 is causing uncertainty in the Canadian economy, understandably, many homeowners are on edge. And although it might feel right to sit tight and see how things pan out, if your mortgage is up for renewal in the next 3-6 months, now is actually the best time to have a conversation with an independent mortgage professional to discuss your mortgage options. This is especially true if you’ve seen a reduction of income due to the pandemic, taken any government assistance, or if you’ve deferred (or missed) any of your mortgage payments. Any of the above might not impact your renewal, but the whole reason you plan ahead on things like this is to make sure you aren’t left without options by leaving it to the last minute. We haven’t seen the full impact COVID-19 has had on mortgage financing, don’t wait until the last minute to secure your renewal. Planning ahead is the smart move. Did you know that many Canadians sign the renewal letter they receive in the mail from their current lender without a second thought? They assume that the lender is looking out for their best interest. The truth is, all lenders know this and rarely offer their best rate or terms at the onset of negotiations. And that is exactly what a mortgage renewal is, a negotiation. Don’t be led to believe that a mortgage renewal is a simple transaction, that you should just take what your lender offers you, look at all your options. Now, this doesn’t mean just looking at all the terms offered by one lender; it means looking at products from multiple lenders. You do this by working with an independent mortgage professional. When you work with an independent mortgage professional, you receive the expertise of a trained banking professional who is working for you and not the bank; at no cost to you! As we move into an uncertain economic future, you might want to look at mortgage terms and options that might be different from what you’ve gone with in the past. Just because you took a 5-year term previously doesn’t mean you have to go with another 5-year term. You have lots of options. Interest rates are at an all-time low, making it a perfect time to ensure you’re getting the best deal on a mortgage. We’d love to help you with that. Contact us anytime! At the very least, by having a quick conversation, we can assess your financial situation and see if the renewal letter you received is a good deal.
Chances are if you’ve been paying attention to the news as the Canadian economy continues to work through the COVID-19 pandemic, you’ve heard that interest rates are at an all-time low. And it would appear that they will remain low for a while. In fact, the Bank of Canada recently hinted that they don’t expect rates to go up until at least 2023. That’s good news if you need to borrow money! So what does this mean for you? Well, if you are borrowing money for really any reason, you’ll most likely be paying lower interest for the foreseeable future, including any secured line of credits, car loans, student loans, and personal loans. As for mortgage financing, you’ve got options! If you’re an existing variable rate mortgage holder , the prime rate is currently 2.45%. You are paying that, plus or minus a component to prime. The variable rate spread is presently coming down at several lenders, so if you’d like to have a look at your mortgage to see if a refinance makes sense to save you money, please contact us anytime. If you’re a fixed rate mortgage holder, this means there could be a pretty significant penalty for breaking your existing mortgage. However, depending on the time remaining on your current term, and the rate you are currently paying, it might make sense to break your existing mortgage, pay the penalty, and refinance into a lower rate. There is no cost to run the numbers. If we can save you money in the long term on your mortgage, it might make sense to refinance. Now, depending on the terms of your mortgage, it might make sense to wait a year or two to refinance, but we won’t know that until we look at the details. We are more than happy to provide you with several financial scenarios. If you’re currently looking to purchase a property and you’re seeking new mortgage financing, you should know that although interest rates are at an all-time low, the government of Canada forces you to qualify at what they call the qualifying rate which is currently 4.79%. So while you can find a five year fixed rate around 2% now, you have to prove that you can afford double that amount in interest. The idea here is that it protects you against a rate hike when your term is complete. Unfortunately, it leaves you qualifying for a considerably lower mortgage amount now. So is now a good time to refinance or buy? Well, that depends on your financial situation. But there is nothing wrong with taking a look and putting together a mortgage application to assess your situation. We would love to work with you so that you can take advantage of these low interest rates. Please contact us anytime!
It's safe to say that things have (mostly) calmed down in the mortgage world since the beginning of COVID-19. The rush of mortgage deferral applications appears to be behind us. So if you're looking for a new mortgage, right now is an excellent time to get things going! Even before we've discussed your financial situation, and you've completed an online mortgage application, the best place to start is to collect all your supporting documents and have them accessible ahead of time. This is the absolute best way to ensure there won't be any surprises down the line and that we're dealing with concrete numbers, and not estimates. Most lenders won't entertain any type of mortgage approval without providing supporting documents along with the application. Here are some of the documents you will be required to provide. Income documents if you are employed: Letter of employment Two recent paystubs Notice of Assessments (NOA) for the past two years T4 or T4A's's for the past two years Income documents if you are self-employed: Company Financial Statements for the past two years T1 Generals with your statement of business activity Notice of Assessments (NOA) for the past two years Confirmation of being self-employed for more than three years Confirmation of company ownership Down payment confirmation: 90-day bank statements for your downpayment (in your account) Confirmation of 1.5% for closing costs Gift letter if any of the funds are going to be gifted Current mortgage statement and unconditional offer to purchase for your current property (once available) if your downpayment is coming from the sale of a property For any existing properties: Your current mortgage statement Your current property tax statement Your current lease agreement (if applicable) Other documents: Void Cheque for the account you would like your payments to come from 2 Pieces of Identification A separation agreement (if applicable) Making sure you have all your documents together ahead of time will give you the best chance at a smooth mortgage transaction. If you have any questions, please don't hesitate to contact us anytime!
As the initial shock of living through a global pandemic wears off and restrictions start to loosen, it would seem that Canada is en route to de-COVID soon (time will tell). If you’ve been waiting until things flatten out before making any significant financial decisions, now might be a good to time start working through your options. If those options include accessing the equity from your home; for whatever reason, here are some of the things to consider moving forward. Expect heightened scrutiny Due to COVID-19, lenders are currently dealing with a tremendous amount of uncertainty, as many Canadians are still out of work and deferring mortgage payments, appraisal values are in question, and sales in the housing market have slowed down considerably. And for most lenders, the best way to deal with uncertainty is by being cautious. Moving forward, you can expect heightened scrutiny on any mortgage transaction. Qualification standards are no longer hard and fast rules, but rather guidelines. So although you may qualify to access up to 80% of your property’s value based on the government regulations, depending on the lender, they might only be comfortable lending to 75% or less. Part of this heightened scrutiny will also include a more in-depth assessment of your employment. Lenders want to see evidence of stable income to ensure you have the means to make your new mortgage payments. So if you’ve experienced any type of job loss or reduced hours, if you have deferred your mortgage payments, or if you’ve accessed any government relief programs, qualifying to refinance your mortgage won’t be a walk in the park. 55+? Consider a reverse mortgage For those Canadians 55+ who have significant home equity, a reverse mortgage is worth serious consideration. Qualifying for a reverse mortgage is way less complicated compared to traditional mortgage financing as there are no income or credit requirements. Any money borrowed is tax-free and does not impact CPP or OAS qualifications. Instead of making regular payments to reduce the total balance outstanding, the interest is added to the total mortgage amount and increases each year. Accessing home equity, without having to make regular payments, has proven to be the ultimate in cash flow management and a useful tool in helping older Canadians live their desired lifestyle. You need a plan Despite the uncertainty, mortgage lenders are still in the business of lending money. It is still possible to refinance your mortgage and access your home equity, but if a lender assesses you’re using your home as a personal ATM, it’s probably not going to work out. So, the best plan of action is to have a plan of action. That starts with working with an independent mortgage professional who understands the lending landscape and can provide you with mortgage options at many different lenders. If you have any questions, please don’t hesitate to contact us anytime, together we can look at all your options and figure out a plan going forward.
It's a common held belief that if you've made your mortgage payments on time throughout the entirety of your mortgage term, that your lender is somehow obligated to renew your mortgage. This is simply not the case. The truth is, a lender is never under any obligation to renew your mortgage. The initial mortgage contract was drawn up for a defined time, when that term comes to an end, the lender has every right to call the loan.
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A question that comes up from time to time when discussing mortgage financing is, “If I have collections showing on my credit bureau, will that impact my ability to get a mortgage?” The answer might have a broader implication than what you might think; let's spend a little time discussing it. Collections accounts are reported on your credit bureau when you have a debt that hasn’t been paid as agreed. Now, regardless of the reason for the collection; the collection is a result of delinquency, it’s an account you didn’t realize was in collections, or even if it’s a choice not to pay something because of moral reasons, all open collections will negatively impact your ability to secure new mortgage financing. Delinquency If you’re really late on paying on a loan, credit card, line of credit, or mortgage, and the lender has sent that account to collections, as they consider it a bad debt, this will certainly impact your ability to get new mortgage financing. Look at it this way, why would any lender want to extend new credit to you when you have a known history of not paying your existing debts as agreed? If you happen to be late on your payments and the collection agencies are calling, the best plan would be to deal with the issue head-on. Settle the debts as quickly as possible and work towards establishing your credit. Very few (if any) lenders will even consider your mortgage application with open collections showing on your credit report. If you’re unaware of bad debts It happens a lot more than you’d think; people applying for a mortgage are completely unaware that they have delinquent accounts on their credit report. A common reason for this is that collection agencies are hired simply because the lender can’t reach someone. Here’s an example. Let’s say you’re moving from one province to another for work, you pay the outstanding balance on your utility accounts, change your phone number, and make the move. And while you think you’ve paid the final amount owing, they read your meter, and there is $32 outstanding on your bill. As the utility company has no way of tracking you down, they send that amount to an agency that registers it on your credit report. You don't know any of this has happened and certainly would have paid the amount had you known it was due. Alternatively, with over 20% of credit reports containing some level of inaccuracy, mistakes happen. If you’ve had collections in the past, there’s a chance they might be reporting inaccurately, even if it's been paid out. So as far as your mortgage is concerned, it really doesn’t matter if the collection is a reporting error or a valid collection that you weren’t aware of. If it’s on your credit report, it’s your responsibility to prove it’s been remediated. Most lenders will accept documentation proving the account has been paid and won’t require those changes to reflect on your credit report before proceeding with a mortgage application. So how do you know if you’ve got mistakes on your credit report? Well, you can either access your credit reports on your own or talk with an independent mortgage advisor to put together a mortgage preapproval. The preapproval process will uncover any issues holding you back. If there are any collections on your bureau, you can implement a plan to fix the problem before applying for a mortgage. Moral Collections What if you have purposefully chosen not to pay a collection, fine, bill, or debt for moral reasons? Or what if that account is sitting as an unpaid collection on your credit report because you dispute the subject matter? Here are a few examples. A disputed phone or utility bill Unpaid alimony or child support Unpaid collections for traffic tickets Unpaid collections for COVID-19 fines The truth is, lenders don’t care what the collection is for; they just want to see that you’ve dealt with it. They will be reluctant to extend new mortgage financing while you have an active collection reporting on your bureau. So if you decide to take a moral stand on not paying a collection, please know that you run the risk of having that moral decision impact your ability to secure a mortgage in the future. If you have any questions about this or anything else mortgage-related, please connect anytime! It would be a pleasure to work with you!