Author: every_gtmortgage

The Canadian economy has been growing robustly in recent years and this has reflected very strongly in the growth witnessed by the Greater Toronto Area as well. But something interesting has happened in recent times in this region: the decline in the housing market of Toronto region.

The data that came out recently has shown a big fall in sales of houses in this area. As per the Toronto Real Estate Board (TREB), the decline has been 40.4 percent in home sales. But here is the interesting part: This decline in the housing market of Toronto region is actually good for the economy. The housing sector of Toronto has been a bubble for quite some time and was worrying economists.

The decline in house prices will not only deflate the bubble but will also lessen the dependence of the Canadian economy on real estate sector which was sucking up a large share of the pie.

One of the causes of this decline in the housing market of Toronto region may well be the change of rules brought about by the government in the mortgage sector. The mandatory requirement of stress test for borrowers paying 20% or more of their loans in down payment seems to have changed the behavior of new entrants into the housing market.

Estimates suggest that the average purchasing power of members belonging to the crucial demographic section called the peak millennials has come down by 16.5 percent which roughly amounts to $40,000. These new buyers have felt discouraged by the rule changes and have decided to seek houses outside the downtown area of Toronto.

The peak millennials essentially consist of persons born between 1987 and 1998 and are the most likely to look for new houses. The high prices they are forced to confront in the housing market of Toronto region are way higher than that in other parts of the country. On top of that, the requirement that they should be able to pay an interest rate on their mortgage loans that are 20% higher than the actual rate at which they have borrowed has led to their migration and decline of the housing market of Toronto region.

In order to ensure financial stability, the Canadian Government in October 2017 decided to introduce new rules for mortgages. These apply to all mortgage loans with 20% or more of down payments from January 2018.

The new rules for mortgages state that all those borrowers who have made a down payment of 20% or more on their mortgage loans would have to undergo stress tests regarding servicing of these loans. This rule was already in place for people with less than 20% down payment since January of 2017 and now has its scope expanded. So, if you are a resident of Mississauga area and want to move into a new and better home, you would have a slightly tougher challenge in securing a mortgage loan.

The stress tests will be faced by not just those getting a new mortgage but even those renewing or refinancing one. These tests would involve an evaluation of the recipient’s ability to cope with interest rates which are higher than what they are currently paying.

Since July 2008, when the world was hurtling towards recession, the Canadian authorities have introduced seven new regulations in the mortgage market. The idea behind these new rules for mortgages is clear: to ensure that Canadian financial institutions don’t emulate their American counterparts by taking more debt than they can manage. It is worth noting that Canada’s economy was one of the less-damaged ones from the recession of 2008.

Market experts estimate that around 100,000 prospective home buyers would be affected by these new rules for mortgages and be rendered unable to draw a mortgage loan. This change will have different effects on those taking a new mortgage loan and those who are renewing it.

Those applying for a new loan will have to, in case of failing the stress test, look for a smaller loan or simply keep accumulating their income till they have the means of not failing the stress test.

On the other hand, those renewing their mortgage may be safer as the lenders are not required to put their clients through the stress tests. But this means you won’t be able to go elsewhere or borrow at a better rate if you are unable to pass the stress test.

Overall, considering the success of the Canadian government in steering the economy through choppy waters, you can’t fault them for being cautious and introducing these new rules for mortgages.

Refinancing a mortgage means paying off of an existent loan and replacing it with a new credit to suffice the needs of property ownership. The majority of homeowners in Canada especially in Toronto deliberate on seeking the services of the Great Toronto Mortgages enterprise and its associated with the clients attain the option of mortgage refinancing. Moreover, the clients remain sure to possess their property even with the low value of their loans.

Homeowners may opt for mortgage refinance for varied reasons each depending on the financial needs of the clients. The following cases serve as the basis for seeking a mortgage refinance.

• To secure a lower interest rate

One of the primary reasons to refinance is to lower the interest rate on your existing loan. A reduced interest rate not only saves you money, but it also increases the rate of building equity in your home.

• Shortening the loan’s term

A fall in interest rates may spike Canadian homeowners to refinance an existing mortgage for another loan. The other credit provided by Great Toronto Mortgages, without much change in monthly payment, will take a significantly lesser period.

• Converting from the adjustable rate to fixed rate mortgages

ARM usually starts out with a low-interest rate on mortgages, but the periodical increase may lead to higher interest rates than payment through a fixed rate mortgage. Great Toronto Mortgages allows the own owners, through refinancing to change from adjustable mortgage rates to fixed mortgage rates.

Conversely, adjusting from a fixed-rate to adjustable rate in falling economies may prove to be more economical. Great Toronto Mortgages offers clients in Toronto with this opportunity.

Methods of refinancing your mortgage

When planning to refinance your mortgage, Great Toronto Mortgages, offers you a variety of options. They include:

 Break your mortgage contract early

You could break your lease soon if you want to obtain your mortgage soon or obtain equity for your home. In case you break your mortgage. First, GT Mortgages offers you a chance to take another lower interest mortgage plan.

 Add a home equity line of credit

We at GT Mortgages offers you with the opportunity to add a home equity line of credit. It allows Canadians to access the equity in your house at their discretion. They are responsible for interest-only payments at the end of every month.

 Blending ad extending existing mortgage

GT Mortgages offers you a blended rate. Mostly, it is a blend of your current standard of the lease in addition to any amount of money you borrow at prevailing interest rates.

Conclusion

If you want to start owning most of your home without increasing payments, mortgage refinancing will help you achieve that with Great Toronto Mortgages. Refinancing of mortgages could be a great financial move given adequate considerations before making the final decision.

The concept of insurance attracts both negative and positive perceptions regarding the integration of its services into lives of people and their activities. In definition, coverage relates to the alleviation of risks and the improvement of the living conditions of people after the experience of an event bringing loss.

The growing urbanization and growth of population bring about the significant exposure to risks that bring losses especially to the people who try to build their homes through the help of financial institutions.

The northern American countries such as Canada have a progressive growth in the number of people, and as such, there arises the need for more housing options through the help of institutions such as the Great Toronto Mortgages. These facts remain evident on the increasing number of people taking mortgages to suppliant their needs for housing even without self-financing options.

Applying for a mortgage loan remains tedious, and once you qualify for one, it remains vital that you retain the financial support you receive and do not lose it to risks such as theft.

What is the purpose of mortgage insurance?

• Prevent default

The homeowner always wants to finish the purchase of their homes and for those with low incomes, obtaining a significant loan appears as an uphill task with an uncertainty of securing the home purchase loan. In the events that an individual acquires a considerable investment when compared to the credit behavior of the person and the falling and rising prices of the house, mortgage insurance cover from the GT mortgages in Toronto remains one of the rational decisions to undertake. The insurance of a mortgage loan from an individual with a weak credit pattern prevents the future failures of the loan and foreclosures from the lending banks.

• Value of the loan

Trends in the purchase of homes include individuals attaining loans that do not value more than the real value of their homes, and the opposition remains rare. Purchasing a home may occur as an investment and the same time a lifetime commitment if you opt for the mortgage loans as a means of payment for the purchase. If the amount of credit you receive exceeds the value of the property by eighty percent, you need to attain a mortgage insurance coverage to fill in the event you can’t pay.

What are the risks covered by mortgage insurance?

a) Death

Death implies the cut off for your income used to pay the loans and as such the term insurance cover for the period of the mortgage remains advisable.

b) Disability

The disability to a homeowner would mean the inability to work to pay the loans and more medical expenses. Hence, the insurance cover alleviates the default of payments through the insurance benefits.

Conclusion

The role of insurance prevents more fatality such as loss of a property from the loss of a source of income hence; as potential homeowners, mortgage insurance remains a viable solution.

While owning a home is an asset, there may come a time when you will have to move. Depending on your situation as at that time, you may need to upgrade or downsize. And you will want to sell your current home and buy a new one.

For many homeowners, it may make more financial sense to use the equity they take from their existing home, in purchasing a new one. If you find yourself in a situation where the closing date as you sell your home, comes after the closing date of buying your new home, Bridge Financing Mortgage could be your solution.

It applies especially when your down payment is tied up in the equity. Which lenders do you go to? Get yourself a reliable and expert mortgage broker. We at GT Mortgages also specialize in Bridge Financing Mortgages. Feel free to contact us.

How Does It Work

Bridge loans are typical, especially in all the Big Banks. And not all small lenders may be able to offer you bridge financing. If you find a lender who gives Bridge financing mortgages, they typically:

• Lend up to $200000 for a maximum of 120 days. For those who may need a longer time or a more substantial amount, the lender will require more work to evaluate your case.

• Often, the lender will not need to register a lien on the property, as the loan is short-term. If you get a loan for a longer term or a more significant sum, the lender may need a lien. It will increase your costs due to the added legal fees.

• It has some interest.

• You need to provide the Purchase Agreement for the home that you want to buy and the Sale Agreement for your existing home.

Calculation

Say, you have 90 days until the closing date of your current home, however, the closing date for your new home is in 35 days. Getting a bridge loan will cover the difference in the closing dates, i.e.
90 -35 = 55 days
A bridge loan will provide you with the difference between your total down payment that you would like to put down, and the deposit you make.
5% deposit = 5% (Purchasing price of the home)

Bridge Financing= Total Down payment – Deposit.

If you need Bridge Financing and don’t know where to look, GT Mortgages is here for you. Contact us for your Bridge Financing Mortgage solutions.

Too many of us, we hope to own homes and raise our families in it. However, our Credit Scores determine whether or not we are eligible for a mortgage through the conventional and regulated lenders. So, do you have Bad credit?
If yes, though your options won’t be similar to that of one who has good credit, you can still realize your dream of owning a home. To get the best mortgage you will need to practice discipline and plan. The following is what you need to know:

• Patience Pays

You’ve had a tough break that caused you to go bankrupt or have a consumer proposal. Now, once your case is discharged, the mainstream lenders won’t consider you, until, after a minimum of two years. It is the time to rebuild your credit.

Work on getting your credit score up and improving your finances. Find yourself stable employment and getting income that is provable. If your employment history is unstable, then to the lender, you become a risky investment.
A prime lender will approve you for a mortgage if you have a steady income and proper credit. The same applies to commission workers and those who are self-employed.

• Look Into Alternative Lenders

Maybe you feel the two years is too long a period to wait. What next? Some specific lenders deal with borrowers who have bad credit. With the conventional lender, you would have had to put a down payment of 5%, but the rules don’t apply to the uninsured and private lenders.

You can consider borrowing from a trust company if your credit score is high but not doesn’t meet the threshold. With a private lender, you may have to make a down payment of at least 20%.

• Bigger Down Payment

You do not meet the requirements of the A-lenders. Saving for a more significant down payment not only improves your finances but also helps you qualify for a subprime lender. It shows the potential lenders that you are less of a financial risk.

With a more significant down payment, you reduce the mortgage payment period, or you can amortize this high-risk mortgage over an extended period by making smaller payments.

• Rebuild Your Credit Score

Take charge of your credit score and rebuild it. Purpose to pay your bills in full, and in time. Try and meet the minimum monthly payments you make on your credit card statement. Don’t spend more than 60% of the given limit. Use a secured credit card if you don’t qualify for an unsecured one.

When choosing a secured credit card provider, it is ideal to go for one who after proving your creditworthiness, gives your deposit back to you.

So, yes you can qualify for a mortgage even if you have bad credit. But you will still need to work on your credit score. It will open doors to saving thousands of interest.

Every New Year is a season to rejoice and look forward to in hope. We are just a few weeks into the New Year. At the start of this year, the new mortgage rules as imposed by the OFSI (Office of the Superintendent of Financial Institutions) took effect.

If you are planning on buying a house, this year, you need to familiarize the changes made and the impact it may have. In the new regulations, both the uninsured and insured borrowers have to face a stress test. It doesn’t matter how much you put as down payment.

What does it involve?

• Scenario One

When applying for a mortgage, the potential lender needs to vet your application using the minimum rate for qualifying. That is the five-year benchmark rate by the Bank of Canada.

• Scenario Two

Also, the Lender can vet you at a higher rate by two percent of the actual mortgage rate. The choice between which of the two will depend on the higher interest rate.

This move by the OFSI aims at stimulating the financial situation of the borrower. The test will also apply to mortgage renewals, and specifically to those who will be looking to renew with another lender other than the existing one.

What are the options for one who doesn’t pass the stress test?
You will have several options to choose from if you fail the test. That includes:
 Adding more money towards your down payment
 Wait longer to become a homeowner
 Look for a cosigner

It’s is no debate that these regulations will affect the ability of would-be homeowners to buy their dream homes. Some will have to settle for homes at a lower price than what they would have afforded before the rules were enacted.

Also, you may have to forgo the lenders who are federally regulated, as they are the ones who have to abide by these regulations. If you are lost on how to find a mortgage that meets your needs, you can contact our experienced team of experts in the mortgage industry at GT mortgages.

We all desire to reach the state of financial freedom. And if it comes faster, that’s even better. When you are buying a house, of the major concerns for many is a mortgage.

It may be challenging to find the optimal mortgage for your needs but having debt is not a thing that many of us look forward to. But since it is a huge financial decision that you will make in your lifetime, it is essential to familiarize yourself with all the options.

What are some of the ways, in which you can pay off your mortgage faster?
• Make a lump sum payment

Depending on your mortgage contract with your lender, you can make a lump sum payment towards your mortgage. This amount is applied to the outstanding principal. It is so when you don’t owe any outstanding interest.
Also, it is a limited amount, according to the terms of the contract. If you put more money than the acceptable amount, you will be liable to prepayment penalties. If the mortgage contract is open, at renewal, you may be able to pay as much as you can, at that time.

• Increase your regular payments

Even a small increase may help you in paying off the mortgage amount faster. Usually, if you increase the remittances, you may not be able to lower then, during the term of the contract. It is the period in which the deal is in effect.
To avoid prepayment penalty, you can only increase your payments by a certain amount. It should be as agreed in the contract.

• Increasing the frequency of payments

It is also known as the accelerated option. Here, you opt to make payments on a weekly or biweekly basis. In the long run, it saves you on interest charges. It also helps you pay the principal faster.
You may be able to make an extra monthly payment, in a year, with the accelerated option.

• Same Payments even with reduced rates

As you renew and negotiate a new interest rate for your mortgage, you may get a lower rate. If you keep paying the same amount towards your mortgage, and with lower interest rates, you will be able to pay your mortgage faster.

So, yes, you can achieve financial freedom and final call it home, with the above mortgage repayment options.

It is easy to settle for any home especially if the home buying process becomes frustrating. As a potential homeowner in the Greater Toronto Area, you should ensure that the home that you choose meets your wants and needs. Don’t settle for anything less, as it will cost you money, time, and energy.

What should you look for?
• Location
We all have our preferences. Some enjoy the noise that living in towns offer while others love to have some time away from the hustle and bustle of daily living. Access the neighborhood, is it a community that you can comfortably settle in?

Find out whether they are development plans in the area that may affect the neighborhood. What are the facilities within the proximity of the residence? Maybe you are keen on keeping fit and would like to be able to get to the gym and back without much fuss.

Is the locale accessible by major roads or public transport?

• Condition of the house
Just because you get a sweet deal from the seller doesn’t mean it gives value for your money. You may invest in a property that will cost you more than it is worth. Check the state of the house.

That’s why it is necessary to get a home inspection done before you sign the offer. Check the plumbing and ensure that there is adequate pressure. There should be no leakage too.

How is the roof of the house? The longevity of a roof depends on what it is made of; steel roof may last longer than an asphalt roof. Check for cracks in the exterior foundation of the house.

• Reason for selling
You can also ask the seller why they chose to sell the property. How long have they been living in the house and how old it is? Get a disclosure statement for the home. Find out about the amount of tax levied in the area.

What are some of the zoning laws and how they could affect you? You can even investigate whether the property has a potential of increase in value.

Don’t just settle for any home. You should ensure that it meets your checklist and that the investment will be put to good use.