Don’t fear the small mortgage lender

General Angela Calla 7 Aug

DECODING THE MORTGAGE MARKET

Don’t fear the small mortgage lender

Special to The Globe and Mail

Published Friday, Aug. 03 2012, 7:00 PM EDT

Last updated Tuesday, Aug. 07 2012, 6:43 AM EDT

Mortgage lenders come in all sizes, ranging from RBC – the biggest in the country – to tiny wholesale lenders and credit unions.

When it comes to entrusting a company with your biggest debt, odds are, name recognition matters to you. Consciously or subconsciously, people gravitate to well-known lenders partly because there’s a feeling of safety in “big.”

Even when a smaller lender has tantalizing rates and the best terms, homeowners sometimes tend to avoid it if they don’t know the name. An oft-cited reason for that is fear that the lender will go out of business. And that is certainly not unprecedented.

If we’re talking about “prime” lenders – i.e., those catering to more creditworthy customers – the list of extinct lenders includes companies like Abode Mortgage, Citizens Bank, Dundee Bank, Maple Trust and ResMor Trust. Mind you, most of these lenders were purchased by others.

Just recently, we buried another lender. FirstLine, once one of the biggest mortgage companies in the country, closed its doors Tuesday after 25 years in business.

People worry about lenders closing down for one main reason: they’re scared the lender will force them to repay their mortgage early. In reality, however, that rarely happens with prime lenders.

The bigger risk has been with subprime lenders. In fact, some subprime borrowers have even lost their homes in cases where they couldn’t refinance elsewhere after their lender shut down.

But if you’re a qualified borrower with provable income, do you really need to be worried if your lender goes out of business?

“Not at all,” says Boris Bozic, president and chief executive officer at Merix Financial.

“I always find it fascinating that people are concerned about smaller lenders,” he adds. “We’re not deposit takers. We’re giving money, not taking money. The risk is all ours.”

Many second- and third-tier lenders get their funding from large financial institutions and that funding is fairly stable, Mr. Bozic says.

“Even if a company were to run into financial difficulties, the vast majority of the time there are backup servicers in place.” This sort of contingency planning is almost always required by the parties funding a lender’s mortgages.

If a lender were to close, Mr. Bozic says another financial institution would simply take over the mortgage.

When a lender sells your mortgage to another party, you just keep making the same payments like nothing happened – albeit to a different company, in some cases. The new lender is generally required to honour the terms of your old mortgage contract, Mr. Bozic says.

The one thing that will change is the renewal offer you receive at maturity. Generally, the new owner of your mortgage will be the one making your renewal offer. That could be good or bad depending on how competitive the new lender is. But smart consumers always shop their lender’s renewal offer anyway, so this isn’t a major issue.

Overall, the probability of a lender disappearing is low. On its own, it’s not enough reason to avoid a less prominent company.

That’s especially true when the lender has the best deal in the market – which is the case with many smaller lenders today. If you can find a 0.10 percentage point lower rate, you’ll save roughly $1,200 over 60 months on a standard $250,000 mortgage.

If you’re interested in getting the best rate possible, you need to be open to saving money with a smaller mortgage company. Just be sure to get independent advice so you can sidestep the ones with onerous contract restrictions. Examples of those include fully closed terms, costly penalty calculations, porting restrictions, refinance limitations, and so on. Some lenders have rather unpleasant fine print, but that’s true for micro and mega lenders alike.

There are certainly reasons to choose a major bank or large credit union for your mortgage, including branch accessibility, integrating your mortgage with your banking or credit line, and access to other financial products. But it’s rarely necessary to shun lesser-known lenders for fear they’ll close and leave you stranded.

Questions? Contact Angela Calla Mortgage Team 604-802-3983 or callateam@dominionlending.ca

Deal of the week as heard with @angelacalla @willingtwo @cknw #whiterock

General Angela Calla 31 Jul

As heard on this weeks Mortgage Show on CKNW with Angela Calla Saturday Auguest 4st 2012. To get pre approved for this property or any other purchase email us at callateam@dominionlending.ca or call 604-802-3983

This weeks deal of the week has been brought to you by:

Robert Boies
Royal LePage Coronation West
cell: 604 341 3009 t: willingtwo
E-mail: robboies@royallepage.ca
www.willingsellerwillingbuyer.com

Live across from the #whiterock beach for $48 dollars a day http://rboies.mlslink.mlxchange.com/?r=1795529341&id=363434333136.312

Please note that properties like this move quickly and getting set up with Rob Boies directly robboies@royallepage.ca will keep you abreast of all of these types of oppertunities meeting your speciafications

Thanks for visiting

Angela Calla, AMP

Changes upcoming to secured Lines of Credit

General Angela Calla 30 Jul

With the latest round of changes to insured mortgages, which came into effect July 9th, 2012, it appears that Canadians may have overlooked some changes that they should review more closely for Conventional Mortgages (borrowers who don’t require mortgage insurance)! As early as this coming October, there will be even more changes (as I mentioned earlier this year). This will  impact the segments of the market approaching retirement or accessing tax-deductible funds from a line of credit for investment.

OSFI’s final mortgage underwriting guidelines are out, and these guidelines are less concerning than OSFI’s original draft. In many ways this news isn’t as market-shaking, but you have time to prepare in advance and review your plan either to purchase or access your equity through a home equity line of credit (HELOC) up to 80% now instead of 65% later.  The Angela Calla Mortgage Team is committed to ensuring you are well positioned in any market!

That said, here is what’s changing (Note: this applies to federally regulated lenders only):

 •HELOCs:  The maximum loan-to-value on a HELOC will drop from 80% to 65%. This will sting borrowers who leverage HELOCs for productive purposes (eg, as substitutes for open mortgages, or as a low-cost borrowing source for income-generating investments or small business). Lenders can, however, still provide a 15% amortizing mortgage on top of a HELOC, for a total 80% loan-to-value. OSFI tells us: “Existing HELOCs are not affected, but future offerings are subject to the limits.”

Federally regulated lenders have until “no later than fiscal year-end 2012” to comply with these guidelines. That ranges from October 31st, 2012 for major banks to March 31st, 2013 for other institutions. But OSFI expects them to comply sooner, if possible, so we may see some of these changes within a few months, if not weeks. (This is another example of why the Angela Calla Mortgage Team always talks about acting sooner rather than later and not procrastinating!)

 There’s no telling yet if provincial regulators will impose the same guidelines on the lenders they regulate (like credit unions). Time will tell and we will keep you informed. We’re always here to help you and those you care about with your mortgage questions and reviews.

 Here’s the full Guideline B-20: www.osfi-bsif.gc.ca/app/DocRepository/1/eng/guidelines/sound/guidelines/b20_e.pdf

 Angela Calla, AMP Dominion Lending Centres

Host of The Mortgage Show on CKNW AM980 Saturdays @ 7pm

acalla@dominionlending.ca 604-802-3983

 

3 Tips to Eliminate & Manage Debt

General Angela Calla 27 Jul

Canadians are lucky if they save 5% of their income, and a new report suggests most actually spend more than they make. And one in six Canadians live paycheque to paycheque!

Following are a few tips to help you get off the hamster wheel and make a positive impact on your finances:

  1. 1.       Take advantage of today’s low interest rates by reviewing how a debt restructure may work for you. For instance, a $10,000 credit card debt may be able to be reduced from a $300 monthly payment to just $50 – freeing up $250 a month in cash flow. This, coupled with the right financial strategy and time limit, will help you pay off debt much quicker.
  2. 2.       Take advantage of small adjustments while long-term rates are at all-time lows. This can make a BIG difference long term. For example, rounding your payments up to the nearest $100 dollars will shave years off of your mortgage, which is consistent with a good time strategy to pay your mortgage off quicker.
  3. 3.       Keep on track with a budget tool available at (www.angelacalla.ca) and don’t make excuses. Remember that making the wrong decisions or delaying reviewing your mortgage is time that you can never get back. Taking the time now to review your options truly can save you a lot of money in the future!

The Angela Calla Mortgage Team can help you see how much you can save!

Angela Calla, AMP
Mortgage Expert
Host of “The Mortgage Show” on CKNW AM980 Saturdays at 7pm

callateam@dominionlending.ca 604-802-3983

Lower Mainlands Real Estate Darling #newwestminster

General Angela Calla 25 Jul

We featured #newwestminster 2 weeks ago ahead of this article on The Mortgage Show on @cknw which we believe to be a great showcase of the beautiful city

http://www.theglobeandmail.com/life/home-and-garden/real-estate/the-lower-mainland-has-a-new-neighbourhood-darling/article4436080/

Tune in this week with Angela Calla, AMP to hear our deal of the week from @willingtwo Rob Boies

To get pre approved to learn your options today in the Lower Mainland contact

The Angela Calla Mortgage Team 604-802-3983 or callateam@dominionlending.ca

"Average Home Prices" don’t tell the whole story

General Angela Calla 23 Jul

There are many factors involved with finding out the real pricepoint, and the other 4 methods mentioned in link below are more accurate.

Thank you to CBC for reporting this! We have been saying this for YEARS on The Mortgage Show on CKKW AM980 Saturdays at 7pm with me Angela Calla,AMP

http://www.cbc.ca/news/canada/story/2012/07/17/f-average-home-prices.html

Want to review your purchasing power or review your mortgage?

Ccontact the Angela Calla Mortgage Team callateam@dominionlending.ca 604-802-3983

 

Deal of the week @cknw @angelacalla @willingtwo #portcoquitlam

General Angela Calla 19 Jul

As heard on this weeks Mortgage Show on CKNW with Angela Calla Saturday July 21st 2012. To get pre approved for this property or any other purchase email us at callateam@dominionlending.ca or call 604-802-3983

This weeks deal of the week has been brought to you by:

Port Coquitlam detached hone with 1 bedroom basement suite:http://rboies.mlslink.mlxchange.com/?r=1938575320&id=363434333136.312

Robert Boies
Royal LePage Coronation West
cell: 604 341 3009 t: willingtwo
E-mail: robboies@royallepage.ca
www.willingsellerwillingbuyer.com

Please note that properties like this move quickly and getting set up with Rob Boies directly robboies@royallepage.ca will keep you abreast of all of these types of oppertunities meeting your speciafications

Thanks for visiting

Angela Calla, AMP

 


Is now the time to buy? Warren Buffet thinks so!

General Angela Calla 18 Jul

No question we are in buyers market not only here in our home town but in the US as well.

We have been talking about this Warren Buffet analogy for over a month on the Mortgage Show on CKNW Saturdays at 7pm

Enjoy the read:

http://www.smartmoney.com/invest/stocks/is-it-time-to-buy-into-real-estate-1341940837097/

To learn about your options to buy a home contact The Angela Calla Mortgage Team 604-802-3983 callateam@dominionlending.ca

More Costs For Credit Card Users

General Angela Calla 18 Jul

No Surpise here, most costs go up

http://www.vancouversun.com/business/Credit%20card%20users%20could%20soon%20face%20higher%20costs%20paying%20with%20plastic/6948690/story.html

What you can do about it is review your mortgage to see if you can take advantage of todays emergency low interest rates to reduce your interest costs on your credit card by restucturing your exisiting mortgage, this on average results in a reduction of $250 per current $300 a month payment!

Angela Calla Mortgage Team 604-802-3983 callateam@dominionlending.ca

 

Why is Carney still talking rate hikes

General Angela Calla 18 Jul

Simply put, to get Canadians saving instead of spending and not planning there futures on todays emergency low rates.

25% of investors are betting on a rate decrease, while economists disagree.

Carney notes 1% is still an emergency rate and is ready to move at any time the forcast changes.

Optimize your mortgage today as you can’t count on low rates forever!

Angela Calla Mortgage Team 604-802-3983 callateam@dominionlending.ca

http://business.financialpost.com/2012/07/18/investors-want-to-know-why-carney-is-still-talking-about-rate-hikes/