Tag Archive for: refinance

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!