Mortgage

Alternative Mortgage Lenders

Alternative Mortgage Lenders

Alternative Mortgage Lenders 

Have you heard of Alternative Mortgage Lenders? In this blog post we hope to explore what you can expect when you choose this option for a mortgage lender. At this time the Bank of Canada continues to raise interest rates and this has had an impact on the mortgage market. The effect this is having means that some people are being turned away from even getting a mortgage and others are paying high prices. 

“The conventional five-year mortgage lending rate is inching closer to six percent again. This also means that the mortgage stress test, which determines if you qualify for a home mortgage based on income and expenses, is getting harder to pass since it is the interest rate plus two per cent. So, for example, if the national average price for a home is $700,000, and you are making the national median gross income of $67,000, you will be denied a mortgage.” – RE/MAX Canada

Another issue that was reported by RE/MAX Canada was that in some cases someone might be rejected because of the current real estate market. This might be due to the fact that the real estate prices are lower or other market factors. 

In the report released by RE/MAX Canada, they stated that due to these sorts of conditions applicants might choose to go with an alternative mortgage lender. The question now becomes, what is an alternative mortgage lender? We hope to help answer that question in this blog post, at the end of this blog we’ll provide you with information to get in contact with the VanDinther Team. 

What are Alternative Mortgage Lenders? 

We are very familiar with the typical way to get a mortgage, usually this is through a bank or credit union. In some cases, one might have to go about this in a different way, these are what we call alternative mortgage lenders. 

“Alternative mortgage lenders are financial institutions offering mortgage loans outside the conventional banking system. They serve as substitutes for traditional banks and credit unions, allowing individuals, whether they are self-employed applicants or borrowers with poor credit scores, who might not qualify for a loan.” – RE/MAX Canada 

The alternative lenders will still look at the same factors that the banks and credit unions would. Such as the property value and the applicant’s assets. There are some great benefits to choosing an alternative lender, as well as some risks. 

Benefits & Risks of Choosing an Alternative Mortgage Lender

There are always going to be benefits and risks associated with choosing an alternative mortgage lender. RE/MAX Canada listed these risks in a recent report to help us better understand. This is important because we want to be able to consider all of the options available before making a decision. Listed below are the risks and benefits according to RE/MAX Canada. 

Risks: 

  1. Interest Rates 
  2. Fees
  3. Predatory Practices 
  4. Regulations 

“Unlike the larger financial institutions, the alternative mortgage lending market is not as regulated or monitored by the government. Put simply, there is a lack of oversight, meaning fewer consumer protections exist. This will require borrowers to do their due diligence by studying the company’s compliance, legitimacy, and reputation.” – RE/MAX Canada 

Benefits: 

  1. Flexibility 
  2. Personal Finance 
  3. Speed 
  4. Housing Market 

“Amidst the once-in-a-century pandemic, the Canadian real estate market witnessed an unprecedented surge, thanks to the Bank of Canada (BoC) slashing interest rates to nearly zero. Numerous individuals capitalized on this lucrative opportunity by applying for mortgages to acquire residential properties. Although some applicants may have faced delays or insufficient income, alternative lenders provided viable options to leverage current market trends and maximize low interest rates and capital appreciation.” – RE/MAX Canada 

Now that you’ve learned about alternative mortgage lenders you have some decisions to make. Asking yourself if this is the right choice for you or if you might qualify for a more traditional mortgage lender. That’s the benefit of working with a professional real estate agent, they are able to offer you advice about the market and best practices. 

Contact The VanDinther Team 

The VanDinther Team consists of a group of highly qualified and experienced professionals. This means that you can rely on their expertise and advice when it comes to not only the real estate market, but also the right kind of mortgage lender. 

If you have any questions or concerns about the real estate market or are looking to list your property, please contact the VanDinther Team today. To contact the VanDinther Team please call us at 905-330-2002 or email us at info@loriv.com. All of us on the VanDinther Team look forward to helping you make the right moves. 

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Advice for First-Time Homebuyers 

Advice for First-Time Homebuyers

Advice for First-Time Homebuyers 

This is an exciting time, you’re looking at listings and the prospect of being a homeowner. Not only is this a big step but it’s also an opportunity to make a major investment. Being a new homeowner comes with a lot of responsibilities, this blog is here to help you navigate this new world of being a first-time homeowner. 

RE/MAX Canada recently posted an article with some fantastic advice for first-time homebuyers. The article will review some of the government programs that are available to you that help to make this whole process easier and more affordable. 

When we get to the end of this blog we’ll give you the contact information about The VanDinther Team, so you can start your journey of being a first-time homeowner. Now, let’s learn about the importance of budgets and mortgages. 

Budgets and Mortgages 

The first step in the process of buying a home is determining what your budget is going to be. Determining your budget will help you know what listings you should be looking at, what price points, etc. This will be the very first step you take in your homeownership journey. 

There are some things you’ll want to consider when planning your budget, such as your financial health. What do your savings look like? Will you have enough for a downpayment? Asking yourself these questions are very important when starting out on this budget planning process. There are also other financial obligations you’ll have to consider as well such as legal fees, land transfer tax, moving expenses and more. That’s why being prepared and organized is so important when you’re planning on buying your first home. 

The next aspect of planning to become a new homeowner is applying for a mortgage. RE/MAX Canada explains the importance of gathering all of the necessary information that will be required. You’ll be required to show your proof of income, employment and your credit history. There are mortgage brokers that are available to assist you in this process, as it can be overwhelming at times. 

The mortgage broker will also help you shop around for the best deal. There are resources available to help if you don’t have a mortgage broker such as a mortgage calculator and other websites that can help. Finally, when you’re shopping for a mortgage you will also want to consider the payment schedules, term rates, fixed or variable mortgages and more. If you need assistance with the financial side of this process there are government programs available and you should consider them as well. 

Government Incentives to Consider

For some first-time homebuyers it’s good to consider what government incentives and programs are available. These incentives and programs are great tools for you to use and they can help you save money, including tax incentives. Listed below are three different programs that are available to help homeownership become more possible for those who otherwise might not be able to.  

  • First-Time Home Buyer Incentive Program: This program “provides a shared equity mortgage with the Government of Canada,” and helps to reduce mortgage payments and also increases your borrowing abilities. The incentive offers a five percent discount on the purchase price of a home and ten percent on a new build. 
  • Home Buyers’ Plan (HBP): With this plan you’ll be able to withdraw “$35,000 from your Registered Retirement Savings Plan (RRSP) tax-free to put towards your down payment.” This is a great program for new homebuyers who might not have enough for a down payment. 
  • First Home Savings Account (FHSA): This program allows you to save for your down payment but also earn tax free interest. The contributions to this program are tax-deductible and the interest you earn on this account will be tax free. The FHSA will allow you to save for your down payment quickly. 

“As a first-time homebuyer in Canada, you may be eligible for various government programs to help you achieve your homeownership goals. These programs offer financial assistance and tax incentives that can make homeownership more accessible and affordable.” – RE/MAX Canada

Making an Offer 

The time has come for you to make an offer on your very first home and the pressure is on. There’s a lot to consider once again and this time it has to do with the purchasing cost, the closing date and the sale conditions. 

As a first-time buyer you’ll need to negotiate with the seller on the terms of the sale. It’s highly recommended that you go with a professional real estate agent to make this process easier. It’s also important to have a home inspection done. Having professional home inspections are recommended and should be done before you close the sale and sign the papers. 

Once you’ve reached a deal with the seller you can start the process of buying your home. You’ll now be required to to sign a lot of papers and you may need to transfer funds and have the property registered. 

Making sure you have a reliable and experienced real estate agent is so important. They’re able to walk you through this process and help you find the home of your dreams. The VanDinther Team works hard to make these dreams possible with all of their clients, and can offer some great advice for first-time homebuyers

Contact The VanDinther Team 

Helping you make the right moves is what the VanDinther Team does best. This is an exciting process, if you have any questions please feel free to reach out to the team today. You can contact the VanDinther Team by phone at 905-330-2002 or by email at info@loriv.com

Have you been wondering what your home might be worth? Try our “What’s My Home Worth” calculator and find out. The VanDinther Team is ready and looking forward to helping you make the right moves. 

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Variable-Rate Mortgages

Variable-Rate Mortgages

Variable-Rate Mortgages Reach Trigger Rate

There was recently an article published in the Financial Post about the fact that variable-rate mortgages are now hitting their trigger rate. The article also talked about how this will effect Canadians financially and what to expect. Before we get into the details let’s learn a bit more about what exactly are variable-rate mortgages and fixed payments. The Bank of Canada explains this very well and what happens when variable-rate mortgages reach their trigger rate.

“In Canada, about three-quarters of variable-rate mortgages have fixed payments. For these specific mortgages, when interest rates move, the amount of the mortgage payment does not change, but the portion going toward interest (rather than principal) is adjusted. But if interest rates increase substantially, these mortgage borrowers may reach a point where their fixed payments cover only interest and not any principal. The interest rate at which this happens is known as the trigger rate. If rates rise above the trigger rate, borrowers may then need to increase their mortgage payment to cover the additional amount of interest. For some households, this payment increase may be unexpected.” — Bank of Canada 

It’s been indicated that higher rates are on their way, so what does that really mean for your mortgage rate? Well, if the rate was raised by say 0.50 per cent then you would see a $24 increase per month on your payment. Does that make sense? Let’s learn more about what the Bank of Canada says will happen since we’re now seeing these variable-rate mortgages reach their trigger rate in the Financial Post article. 

The Bank Of Canada & Variable-Rate Mortgages 

The Bank of Canada Senior Deputy Governor Carolyn Rogers announced that the adjustment to higher interest rates might be difficult for some Canadians with variable-rate mortgages. This was announced at a recent event in Ottawa to a networking group, they indicated that these variable-rate mortgages had an increase since last year. 

According to new research by the Bank of Canada, also included in the article by the Financial Post, variable-rate mortgages are accounting to one-third of the outstanding mortgage debt. This is an increase when we compare it to just a few years ago. 

The Senior Deputy Governor also said that mortgage costs have already gone up for most Canadians and that they’ll most likely see an increase for more Canadians. In the research paper previously mentioned, the Bank of Canada estimated that there will be around 50 per cent of variable-rate, fixed-payment mortgages that have now reached their trigger rate. Meaning that additional payments are going to be required, which is around 13 per cent of all Canadian mortgages.

“For a variable-rate mortgage with variable payments, the size of regular payments fluctuates as the prime interest rate changes—if prime rates go up, the mortgage payment increases to cover the larger interest component.” — Bank of Canada 

The Deputy Governor stated that the risk of Canada’s financial stability is elevated due to the higher levels of household debt, added to it is the rising interest rates. However, the Bank of Canada does expect that the finial system as a whole is going to withstand this time of stress. 

“If interest rates increase beyond the trigger rate, the amount required to cover the interest payment will be more than the mortgage payment. Each borrower with a variable-rate mortgage with fixed payments is subject to an individualized trigger rate, which is specified in their mortgage contract.” — Bank of Canada 

The VanDinther Team

There’s a lot of information to take in and learn when it comes to different types of mortgages and what they mean. It can be overwhelming at times, that’s why we want to keep our clients informed. If you have any questions please reach out to us. 

Contacting the VanDinther Team can be done directly by phone at 905-330-2002, or by email at info@loriv.com. There’s never a wrong time to list your home, so let’s chat about what you’ve been looking for and how our team can help you make the right moves! 

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