Tag Archive for: mortgage options

https://www.ctvnews.ca/politics/canada-to-allow-30-year-amortization-for-first-time-buyers-mortgages-on-new-homes-1.6842913

2024 Federal Budget Announcements and Thirty Year Amortization Period

Finance Minister Chrystia Freeland announced April 11, 2024 that the federal government will allow a thirty year amortization period on insured mortgages for first-time homebuyers purchasing newly built homes. Some say expanding the policy to all Canadians would help make home ownership more affordable. The change takes effect Aug. 1, 2024.

Under the current rules, with a down payment less than 20 per cent of the home price, the longest allowable amortization is 25 years. Extending amortization, to a thirty year amortization makes monthly mortgage more affordable for young Canadians who want to buy their first home.

This will allow more opportunities for home ownership and will ultimately contribute to economic revival and economic recovery. Enabling some Canadians to stop renting and become homeowners.

First Time Home Buyers Withdrawal Plan – RRSP

Freeland also announced the government will raise the amount first-time homebuyers can withdraw from their RRSPs to $60,000 from $35,000 to buy a home. That will take effect April 16, 2024 the day the federal budget is set to be released. The size of a down payment and the amount of time needed to save up for one are much larger than they used to be. Withdrawals will also have an extended timeframe for repayment.

People who have made or will make withdrawals between Jan. 1, 2022, and Dec. 31, 2025, are also getting more time to begin repayment — up to five years rather than two. 

Ottawa said the changes are meant to work in tandem with the First Home Savings Account, which it launched last year. The rules governing that program allow prospective homebuyers to start saving for up to 15 years once they open an account, with an annual $8,000 (tax deductible) deposit cap and a lifetime contribution limit of $40,000. Unlike the RRSP First Time Home Buyers Withdrawal Plan, qualified withdrawals do not require repayment and are non-taxable.

Freeland said more than 750,000 Canadians have opened an FHSA to date. While the program came online April 1 of last year, most Canadian financial institutions only began offering the account as of last summer or fall.

Ottawa also announced changes to the Canadian Mortgage Charter that will include an expectation that financial institutions offer permanent amortization relief to protect existing homeowners who meet certain eligibility criteria.

That would allow eligible homeowners to reduce their monthly mortgage payment to a number they can afford for as long as needed.

 

https://www.ctvnews.ca/politics/canada-to-allow-30-year-amortization-for-first-time-buyers-mortgages-on-new-homes-1.6842913

 

https://www.cbc.ca/player/play/1.7171449

CEBA Loan Forgiveness: Deadline Approaching

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CEBA Loan Forgiveness Deadline Approaching

For eligible CEBA loan holders in good standing, repaying the balance of the loan on or before January 18, 2024 will result in loan forgiveness of up to 33 % (up to $20,000).

As of December 4, 2020 the maximum CEBA loan amount was increased to $60,000. CEBA loan holders who had received the $40,000 CEBA loan, were able to apply for the CEBA expansion, which offered eligible businesses an additional $20,000 of financing.

All Application Outcomes: Are Now Final

 

As of September 14, 2023 the repayment deadline for eligible CEBA loan holders to qualify for partial loan forgiveness was extended to January 18, 2024. Additionally, CEBA loan holders that submit a refinancing loan application by January 18, 2024 but require a grace period in order to finalize the payout of their CEBA loan can still qualify for partial forgiveness if the outstanding principal of their CEBA loan, other than the amount of potential debt forgiveness, plus any applicable interest is repaid by March 28, 2024.  Accessing the equity in your home is a great way to support your business and ensure you keep as much money as possible in your pocket. The government loans served a purpose that assisted business owners when they needed it most-utilize those monies as best you can.

Additional Information

If businesses repay the loans by January 18, 2024, they can receive loan forgiveness on up to a third of the amount they borrowed, but if they don’t they must repay the full amount and will face 5% interest on their remaining balance. There could be mortgage options available to help you pay the balance and be excused from full repayment.

 

“There is near panic on the part of close to half of Canada’s small businesses about the looming deadline that is approaching for CEBA loans”

Dan Kelly, President and CEO of the Canadian Federation of Independent Business

Locally owned and operated since 1985.

“The name friends recommend”
Mid Island Mortgage & Savings Ltd, #12 – 327 Prideaux Street, Nanaimo, BC V9V 1C8, Canada, 250 753 2242

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Mortgage Renewal and Educating Yourself

We believe Informed Consumers Make Better decisions

 

Educate Yourself

 

Mortgage renewal and educating yourself, there are so many questions. There is information overload and it can be daunting. Where is the economy at and where is it going? We don’t have a crystal ball, but here are some tips if you have a mortgage renewal coming up.

 

Why education matters; we believe that informed consumers make better decisions.

  • Do I have to requalify?
  • Variable rate or fixed rate?
  • What term should I take?
  • How much are my payments going to increase?

Five things to consider when renewing your mortgage:

What the economists are saying:

 

Benjamin Tal, CIBC Economist:

“Things are moving in the right direction, but not good enough – therefore, we keep the option to raise again open”, “They’re not going to commit to not raising interest rates anymore. [That’s] no big surprise – they don’t want to be seen as relaxed about inflation.” “The short answer is, we don’t know. It’s really 50/50.”

Stephen Brown, Capital Economics:

“The Bank of Canada accompanied its decision to leave interest rates unchanged with a pledge to hike again if needed, but we doubt it will need to follow through. With recession risks rising and labour market conditions loosening, we continue to think that the bank’s next move will be a rate cut, in early 2024”

Earl Davis, head of fixed income and money markets at BMO Global Asset Management:

“We didn’t anticipate a hike today [Sept 6th] there’s two more meetings before the end of the year, we anticipate they’re going to hike it once minimum.”

Changes to Consider

Lender

Switch/Transfer your mortgage to a new lender (at their cost).  Most lenders will help pay the costs associated with moving your mortgage at renewal. To be eligible for a transfer program, you cannot increase your mortgage amount at this time. Everything is the same except the lender.

Refinance your mortgage

Now is the time to consider any of those upcoming changes that may require money in the coming years. Does it make sense to take equity out of your home?

Extend you amortization

Increasing your amortization period helps provide payment relief by spreading payments out over a longer timeframe.

Type of mortgage

Should you consider a fixed or variable mortgage? Would you want to look at removing co-signers who may not be needed any longer?

Look at the big picture

What is coming up in the next five years?

  • downsizing
  • expanding your family
  • moving closer to family
  • major renovation
  • kids education
  • help adult kids with housing
  • buy rental property/vacation property
  • dream vacation

Avoid Payment Shock

Get an idea of what your payments will be at renewal. You could start practicing making higher payments now, to relieve some pain at renewal!  Why not get the budget book out.  If you have the funds to make a lump sum payment, this will help reduce interest paid, and monthly payments. You could also consider paying off some debt to free up monthly cashflow. Whatever you do don’t take on any new payments.

Interest Rates

Bank of Canada (BOC) sets its policy interest rate (overnight rate) to control inflation. They raised rates 10x since March 2022 (+4.75%) this impacts variable interest rate products. The last meeting on September 6, 2023 the rate was held at 5%. The BOC’s next meeting is October 25, 2023.

Fixed mortgage interest rates are not directly linked to Bank of Canada Rates. The fixed rates follow bond yield. Fixed rates increased roughly 2.25% since March 2022.

 

Requalifying 101

You can refinance up to 80% of the value of your home.

Income qualification – documents and questions will be required (no blood sample required).  Stress Test – you will qualify at 2% above your mortgage interest rate. A Lawyer/Notary could be needed and an appraisal is likely.

Renewing with you lender

  • If you’ve made all your payments on time, your existing lender will generally give you the option to renew your mortgage.
  • Avoid requalifying – if you are not increasing your mortgage amount, amortization, or making a change to who’s on the mortgage.
  • No cost – there shouldn’t be any legal fees, appraisals, or income documents to provide.
  • Can be as easy as signing the dotted line. There is a bit more involved, but the most straight forward option.

Options

Terms – Lenders usually automatically offer a 5 year fixed term. Consider a shorter term or a variable rate.

Early Renewal – Most lenders offer early renewal options – up to six months early

Rate Holds – Inquire with your lender about how long they will honour a rate hold.

We believe that informed consumers make better decisions. To discuss your upcoming renewal,  or any mortgage situation call Kevin, Jason or Blaire today!

 

DollarWise Mortgage Experts Blog Post

 

Did someone say “Second Home” ?

 

University will start in the Fall. For some of our kids that means seeking accommodation options.  Perhaps your looking to buy a second home to reside in for commuting purposes, or want to buy a vacation property to enjoy.  Others might want to purchase a property to move a family member closer.  Canadians are allowed to purchase a second home with minimum down payment as long as the use of the home meets certain requirements.   

 

The kids may have graduated high school, but that doesn’t always mean providing for them is done.  High rent amounts and cost of living make it challenging for young adults to get ahead.  Even with full time jobs.  Challenging stressful times await these young adults, going to school, having limited time to work to pay bills, living on their own for the first time and studying to achieve their education goals to secure their future employment. Having housing in place is a monumental difference maker and a stress relief, allowing them to concentrate on schooling.  The second home program can help.

 

The caveat to this program is that the home must be occupied by an immediate family member. Buying property for a child in University is a great example. Helping a child with housing in that way not only gives them shelter, but provides them the life lesson of homeownership.  They will learn how real estate can produce wealth, and how getting your money to work for you can be a life changer. Help your kids save on rent, while you invest in Real Estate and their future.   University is a massive expense–maybe the real estate you purchase increases in value while they are in school, offsetting the cost of their education.  The return will be worth it! 

 

The fast ferry is making its maiden voyage in Nanaimo.  With Vancouverites being able to commute to Nanaimo with a short sail across the ocean, housing in Nanaimo will be that much more desirable. More people who already commute that “hour plus” drive in Vancouver to their job can look at purchasing a property in Nanaimo. They could buy a home in Nanaimo as a second property.  Mortgages are possible!

 

Summer weather comes with heat, and the desire to be by the water. While travelling around during the summer months you might find that special spot you and the family fall in love with. You can look at purchasing a property in that area, creating family memories for generations. That summer cabin can be bought with minimum down, and you can start making your own family memories this year.  

Do you have that family member living far away who has a desire to live closer to you? Help them relocate by purchasing a property with the minimum downpayment: get the family together again. 

With as little as 5% down on the first $500,000 and 10% on the balance, a mortgage for a second home can be achieved.  Applicants are required to qualify for the mortgage without rental income on the new property.  The property has to be for your own, or a close family member’s, use.  This is not the program for a rental purchase.  

 

For clients in any of these categories, Kevin, Jason and Blaire would be happy to explore options.  Call 250-753-2242 or apply now or email: 

 

info@midislandmortgage.com

kevin@midislandmortgage.com

jason@midislandmortgage.com

blaire@midislandmortgage.com 

“The wise young man or wage earner of today invests his money in real estate.” -Andrew Carnegie

Mortgage Options for Self Employed

Self Employed : Mortgages

Woman working hard at her business

Business Owner? There are options for mortgage financing.

Being self employed has many advantages, like setting your own schedule and being your own boss.  You also have the advantage to write off items to decrease your taxable income.  This is great when it comes time to pay the Government, but can create challenges when you are planning on borrowing.  There is a major advantage to working with a broker who is well versed in Business for Self (BFS) programs available.

The Gold Standard for Self Employed

The most universal method to calculating self employed individuals income is by taking a 2 year average.  To achieve ideal interest rates, a 2-year average of your NET income is used.  That means your gross income is not the amount being used to calculate your capacity for a mortgage.  All write-offs and deductions are used to calculate your Net Income.  If your Net income has been declining, the lower amount is used for qualification purposes.  In an ideal world, real estate transactions would be planned a few years in advance–allowing for pre-planning with your accountant.

Traditional Lending – New to BFS

There are programs available through traditional lenders for clients who have less than 2 years self employed.  The requirements include having to have worked in the same industry as before they became self employed.  The client needs to be able to show that they have a history in the industry to qualify for this program.

Subprime Lenders

Subprime lenders offer solutions to a variety of self employed individuals.  Clients could be new to their industry, or well established but their past years net income isn’t an accurate reflection of current income.  Regardless, there are Subprime lenders who might be able to help.  Subprime lenders will complete a review of your business bank statements for the past 6-12 months. Lenders review deposits and deduct expenses to arrive at an income amount that will be used for qualification.  Having flexibility in income qualification does come with additional costs.  Interest rates are generally 1-2% higher than a traditional lender, plus there is a lender fee.

Why use a Mortgage Broker

Mortgage Brokers have access to a variety of programs and options for self-employed individuals.  If you’re working with clients who are BFS it’s important they know what’s available.  Brokers have access to multiple programs and lenders, and can ensure that client’s buying power is at it’s full potential.  This gives the client an advantage; providing them with multiple possible solutions.

For more information please call Kevin, Jason or Blaire today 250-753-2242

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