Now is a great time for first-timers to consider taking the plunge into homeownership – while taking all the fundamentals into consideration. Owning real estate is a cornerstone of financial freedom, and it’s not an investment made for short-term gain. Following are four key points that make it hard to suggest why you wouldn’t take the plunge:

Fundamentals
You have to live somewhere, so if you’re going pay into something, why not your own mortgage? Homeownership makes sense as long as you obtain the proper terms to suit your changing lifestyle (for instance, the option to port your mortgage if need be), and you have worked out a budget that works for you and keeps your living expenses within your means. Considering the allowable rent increase for landlords this year is 4.3% (www.rto.gov.bc.ca/content/news/default.aspx), this is something worth noting. While not all landlords will choose to raise rent for their tenants, they do have the ability to do so! Vacancy rates are at an all-time low and net migration is remaining very strong (http://publications.gc.ca/collections/collection_2011/schl-cmhc/nh12-218/NH12-218-2011-1-eng.pdf).

Low interest rates
We’re still seeing interest rates at all-time lows, with the average 5-year fixed rates still well below 4%. If you have an inflation hedge mortgage strategy in place (automatically set up for our clients as part of the Angela Calla Mortgage Team service to optimize your mortgage in a changing market), you’ll have a balance that’s significantly lower. So, regardless of rates increasing at some point or property values remaining stable, you’ll be positioned to reduce your living expenses. This is all part of the crucial budgeting process that takes place when you get preapproved with the Angela Calla Mortgage Team.

Selection
There are several municipalities where you can own up to a two-bedroom condo for $200,000, including Port Moody, Port Coquitlam, Coquitlam, Surrey, Langley, Delta, and so on. An applicant who makes $35,000 gross annual income can qualify for a mortgage in this range (provided they do not have significant outside debts, have a good credit rating, and have a 5% down payment – in this example $10,000 – either saved or as a gift). The monthly payments would be approximately $800, plus strata fees and taxes estimated at $300. This is a total expense of approximately $1,100 a month, which works out to approximately $37 a day! The average rent in Vancouver is $1,100 a month. For some, this will be obtainable with the right goals and guidance. This may not work for all, but it shows you, it IS possible.

Rebates
There are new rebates available to you for 2012 if you’re buying a brand new home: for HST (www.hstinbc.ca/making_your_choice/faqs/new_housing_rebate/); and a buyer’s bonus  for up to $10,000 (www.angelacalla.ca/blog_post?id=6674&title=Understanding-the-Buyers-Bonus-Angela-Calla).

Homeownership is not for everyone, and careful consideration is required when you’re reviewing your options and budget. With the right time and knowledge, owning your own home is a cornerstone of financial freedom. It’s what we don’t know that costs the most! So before you rule out homeownership, speak to the Angela Calla Mortgage Team and receive all the facts!

Angela Calla, AMP Dominion Lending Centres Host of The Mortgage Show on CKNW AM980 Saturdays @7pm one of Canada’s Top Mortgage Agents and AMP of the year by CAAMP in 2009 can be reached at 604-802-3983 or acalla@dominionlending.ca

For debtors, today’s historically low interest rates have constituted somewhat of a fool’s paradise. Central banks around the world, including Canada’s, have kept interest rates as close to zero as possible.

But if we thought we could keep our boat forever afloat on this sea of low rates, there are many lining up to convince us the time has come to get on dryer land.

Whenever they get a chance, Bank of Canada governor Mark Carney and Finance Minister Jim Flaherty warn Canadians to get their fiscal houses in order. It’s not a matter of IF interest rates start rising, just a matter of when.

And on Friday, Toronto-Dominion Bank chief economist Craig Alexander joined in, with a stern warning that debt levels have risen to “unsustainable” levels. He said without new mortgage regulations to temper borrowing, a correction in housing prices or a hike in interest rates would be “disastrous for the economy.”

“Make no mistake, such a combination of forces would likely cause a recession,” he said, grimly.

“We need to acknowledge that a significant imbalance has developed and it poses a clear and present danger to Canada’s medium-term economic outlook. If the overvaluation was fully unwound rapidly, it would be three times the correction in the early 1990s.”

The key is the connection between the overheating real estate market, which Mr. Alexander figures is between 10% and 15% overvalued nationally, and rapidly climbing household debt.

While Canadians usually think of their credit cards first whenever the Bank of Canada sounds off again on household debt, the root cause of the debt problem has been growing home purchases in an exceedingly low-interest-rate environment keeping markets attractive, he said.

One feeds into the other, leading to imbalances in both at least since the 2008 financial crisis, including a record high debt-to-income ratio of more than 150% in the past year.

As anyone who has fallen behind on credit-card payments well knows (or worse, anyone in hock to the Canada Revenue Agency), once you’re on the wrong side of compounding interest, things can fall apart rapidly. It may seem like a small burden to service debt at these low rates while you have a good-paying job, but what if you lose your position just as interest rates start climbing back to less-comfortable levels?

Even now, one-quarter of Americans aged 18 to 34 aren’t earning enough money to cover such basics as rent, food and car payments. They’re quick to reach for the plastic to tide them over but despite low interest rates for mortgages and lines of credit, ultra-low rates never came to the credit-card industry, where they remain close to 20%.

Those who can’t make their minimum monthly credit-card payments already know the pain of high interest payments. Homeowners get off relatively lightly but the days of ultra-low mortgage rates are numbered. Many who extended themselves to get a bigger house than may have been prudent may be shocked to find how a slight rise in rates (say two percentage points) might render it unaffordable. If you’re extended even while rates are low, you should run the numbers and “stress-test” your mortgage to see how much of a rise in rates your cash flow could tolerate.

According to a Bank of Montreal survey on Thursday, two-thirds of Canadian homeowners are now locking in to fixed-rate mortgages as a way to get some “rate certainty.” Katie Archdekin, BMO’s head of mortgage products, expects rates “may change sooner than expected,” possibly as early as next year.

Half would also do the smart thing and shorten their amortization. In the early days of an amortization schedule, a huge percentage of monthly mortgage payments is made up of interest, with only a fraction paying down principal. The faster you pay down principal, the more of each mortgage payment goes to principal repayment rather than debt-servicing costs, creating a virtuous circle.

Seen thus, today’s low interest rates are actually a gift, since they provide an opportunity for debtors to pay down as much principal as possible in the early years when interest still consumes the lion’s share of payments. Once rates start rising again — my guess is in the next 18 to 36 months — it will be that much harder to do this.

Young people have been spoiled by these tremendously low rates but older Baby Boomers are well aware rates could be much higher. Our first mortgage in 1989 had a fixed rate over three years of 11.75%, and I know some who paid close to 20% in the early 1980s. Compared to those, today’s five-year fixed-rate mortgages of 3% or 10-year fixed mortgages of 4% are ludicrously low. If I were a young family starting out I wouldn’t hesitate to lock in the 10-year rate, then work hard to pay it down early.

Shorten your amortization by all means but only if you’ve first dispensed with higher-interest credit-card debt. Daniel Chometa, community outreach manager for Consolidated Credit Counselling Services of Canada, Inc., says even though credit-card rates are high enough as they are, they could go still higher in a rising-rate environment.

“Legally they’re allowed to charge up to 60%,” he says.

Some predatory lenders charge a usurious 59.9% for loans to finance the purchase of furniture and various household goods. These firms prey on bankrupts who can’t get credit elsewhere or new Canadians who think they must emulate their neighbours by filling their homes with the latest flat-screen TVs and leather sofas.

jchevreau@nationalpost.com

For help to save money on your mortgage and debts contact Angela Calla Mortgage Team callateam@dominionlending.ca 604-802-3983

As heard on this weeks Mortgage Show on CKNW with Angela Calla Saturday March 17th 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:

http://rboies.mlslink.mlxchange.com/?r=1597016071&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

With longer term fixed rates below prime at 2.99%, various lenders have different policies and conditions on this offer, which may or may not be worth it for you. As your independent mortgage brokers we can show you which lender has the best option and terms for you without bias ensuring you save the most amount of money now and in the furture.

John and Debbie of Port Coquitlam reviewed their mortgage this week and the details were as follows

Old Mortgage: $300,000                          New Mortgage of $310,000( to include the penalty and legal fee’s)

              4.25% 25 year amortization        2.99% 25 year amortization

                Monthly Payment $1619           Monthly Payment $1466

Savings $153 a month and when applied to the mortgage it saved them $18,841.95 in interest alone AND took 3 years off the life of their mortgage saving $52,776 in future payments that will sure help with retirement.

If you or anyone that you care about would like to see if this could do the same for them, we are here to help personally and work towards making 2012 your best money saving year

Contact us at: 604-802-3983 or acalla@dominionlending.ca

Always here to help, have a great week.

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

Lindsay is an administrative assistant at an office in Burnaby making $16/hour. Lindsay had been renting for 3 years and was tired of it. She had moved a couple times and wanted the freedom stability of owning her own place, but didn’t know where to start. She had a dream of owning her own home but wanted a plan! Over the last number of years she was saving her money diligently and had accumulated just under $13,000 by the time we progressed to the next step in December.
     We went through some planning and budgeting for what it would cost to buy a place and the all processes associated. In January she started looking with a Realtor suggested by our team. Lindsay found a perfect home and her offer was accepted $7000 below the asking price! She completed in February with a 5% down payment and is now the proud owner of a condo in Port Moody. She is going to bank $25,000 over the next five years with her mortgage product and will upgrade down the road with her equity she is building, not to mention save lots of money in gas as it’s so close to everything!
     If you know someone who wants to purchase in the next year or two please introduce me and we can get them on the right track. It will take a little planning, there is no ‘one size fits all when it comes to buying a home. However, whether they are two months away or two years, a tailored plan with The Angela Calla Mortgage Team, will be very beneficial.

Call or email to see how we can help you, we are standing by!

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

As heard on this weeks Mortgage Show on CKNW with Angela Calla Saturday March 10th 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:

http://rboies.mlslink.mlxchange.com/?r=521681186&id=363434333136.312

rob_interview_mar_8_2012.mp3

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

Following up on commitments made in the past two budgets, the federal government has announced measures that will stop banks from mailing unsolicited credit card convenience cheques to customers, and that will reduce the holding period on newly deposited cheques. The banks will also have to stop being so secretive about the penalties clients must pay when they want to get out of a mortgage early.

These measures represent some good work by a government that has been under pressure lately as a result of the robo-call affair. Strangely, the measures were announced on a Sunday and, therefore, didn’t get the initial attention they deserve.

The sharp decline we’ve seen in mortgage rates over the past few years has prompted many people to think about breaking their mortgages in order to lock in lower borrowing costs. A mortgage penalty must generally be paid in this situation, but it’s exceedingly difficult to find out how much it is and how it’s calculated.

Click here for the full Globe and Mail article.

Angela Calla, Dominion Lending Centres 604-802-3983 callateam@dominionlending.ca

Angela Calla, AMP Dominion Lending Centres callateam@dominionlending.ca 604-802-3983

Code of Conduct for Federally Regulated Financial Institutions

Mortgage Prepayment Information
 
Yesterday, the federal government published a Mortgage Prepayment Code.  The Code will guide all federally regulated institutions in how they communicate the Interest Rate Differential (IRD) to borrowers. 

Borrowers win for more clarification for mortgage terms. After class-action suits and a lake of client tears, the federal government moved Sunday to force banks to clarify their prepayment terms. The policy elements are broken down into 5 parts

1Information provided Annually

2.Information Provided When the Borrower Is Paying a PrePayment Charge

3.Enhancing Borrower Awareness

4.Financial Calculators

5.Borrower Access to Actual Pre-Payment Charge

CAAMP was involved in the consultation process regarding the Code of Conduct. To view the Mortgage Prepayment Code – click here

Angela Calla, AMP
Mortgage Expert, 2009 AMP of the Year by CAAMP
Host of “The Mortgage Show” on CKNW AM980 Saturdays at 7pm

As heard on this weeks Mortgage Show on CKNW with Angela Calla Saturday March 3rd 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:

http://rboies.mlslink.mlxchange.com/?r=318838732&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