After two years of ultra-low, pandemic-induced core lending rates, inflation in Canada is now the highest it has been in 30 years. To accommodate, the Bank of Canada is hiking those rates back up.

For mortgage seekers and current borrowers, payments could be on the rise. Add in record-high home prices and a constantly changing real estate market, and it can be a tough field to navigate.

There’s help for potential homeowners or those with existing mortgages coming up for renewal, though. According to Vancouver author, radio show host and mortgage broker Angela Calla, the current climate is all the more reason to schedule an appointment with an independent mortgage broker.

“A licensed mortgage professional’s interest is to help you navigate the market without bias,” she says. “That’s incredibly important when taking into consideration all the changes that are constantly happening and how you can navigate that with your changing lifestyle.”

In partnership with the Angela Calla Mortgage Team, we take a look at how current and prospective homeowners can navigate their finances during the current real estate market flux.

Getting a personalized option

When Nadine Furnell and her husband, Scott, needed to renew their mortgage, they wanted options beyond the bank. After three homes and several mortgages, they were ready for a more personalized approach that accommodated their lifestyle and needs. So they called broker Angela Calla and her team for help.

Furnell says not only did the team lock in a lower interest rate before the Bank of Canada’s most recent hike, but her family is now saving $1,500 a month.

“Over 20 years, we had not one phone call from the bank telling us our mortgage was renewing,” Furnell says. “The Calla team consolidated two vehicle loans into the mortgage with a lower interest rate. The mortgage itself didn’t even go up — it might have increased $100 or something like that.”

An independent mortgage broker usually accesses your credit score once and uses it to source several loan options, whereas borrowers shopping around with different lenders open themselves up to multiple checks. That can take points off their overall score, which then potentially impacts which products are available.

Calla points out banks can only sell their own products, whereas a mortgage broker examines options from a range of lenders. That allows them to source the best rate while also considering paydown and amortization options, potential insurance coverage and other products.

“If working with the lender you already do business with has the lowest cost of borrowing, then that’s what an independent broker will recommend,” Calla adds.

Climbing the property ladder

Even with rising interest rates, a mortgage still has a lower rate than most lines of credit, credit cards and other unsecured loans. Since lending institutions make the most amount of money on unsecured products, they typically focus only on the rate of the mortgage when bringing in new clients or renewing existing loans.

But according to Calla, that doesn’t always benefit borrowers. “Different lending products make different profit margins for institutions, and everybody within banks has different roles, depending on their sales goals and targets,” she says. “You can’t just assume that’s going to line up with what’s financially beneficial for you.”

By consolidating any pre-existing, high-interest debts into a mortgage, an independent mortgage broker can help clients achieve long-term financial goals sooner. If they’re saving hundreds — or sometimes thousands — of dollars a month on interest, a borrower can then reinvest that money into an RRSP, for example, and save even more at tax time.

“Effectively, focusing only on the mortgage keeps you in debt for a longer period of time, making it harder to move up the property ladder,” Calla adds. “When you have an independent mortgage broker, the goal is to reduce your overall cost of borrowing and improve your financial health.”

In many cases, it’s also a much more personal relationship, where the dialogue is open for yearly financial check-ups to ensure a borrower is always in the best situation for their goals and needs.

“We got nothing but radio silence from the bank,” Furnell says. “They would rather just throw more money at me and get me more into debt. We’re quite happy with our decision to go through a mortgage broker service.”

Above all, Calla advises, don’t wait to take charge of your financial health. “Don’t expect real estate prices to go down and don’t try to time the market,” she says. “What’s important is finding a budget that works for you and aligning yourself with the right people to ensure you’re in the best position with the products that are available.”

(This article is courtesy of Global News)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Mounting fears of a recession have gripped equity markets, with the S&P/TSX Composite Index now firmly in correction territory. The S&P/TSX is down 13 per cent from its record closing high of 22,087, reached on March 29.

The Globe and Mail recently spoke with Benjamin Tal, deputy chief economist at CIBC Capital Markets, who shared his perspectives on the risk of an economic contraction, monetary policy and implications for the housing market. Mr. Tal also provided some suggestions on which stocks may do well in this challenging environment.

Inflation is at a multidecade high, negatively affecting corporate probability and consumers. Yet, inflation is a lagging indicator so I wonder if there’s the risk that the Bank of Canada keeps raising rates while economic growth is contracting, putting the economy at risk of a recession. Has there ever been a time when the Bank of Canada combatted inflation that was more than 5 per cent and there hasn’t been a recession?

Nope, that’s the point.

I look at four sources of inflation, but before you start analyzing any of that, you have to have a working assumption about COVID: We are in the process of transitioning from a pandemic to an endemic.

Now we can analyze those four sources of inflation.

We’ll start with energy. If you look back in history, almost every time we had an oil shock, we had a recession immediately after. So the question is, to what extent is oil as inflationary as it used to be? So here we have three things. One, the shock that we are experiencing now is not as bad as in previous years in real terms. Second, the economy’s sensitivity to high energy prices has been reduced. If you look at the last 10, 15 years, energy consumption per unit of GDP is going down so we are more efficient. The other thing is the response from Alberta. In the past, the minute oil prices went up, oil executives in Alberta were very busy investing. That’s not the case now because everybody knows that green is replacing black.

Given that underinvestment are we now in an energy supercycle?

I am not sure about a supercycle but I think it’s fair to say that oil prices will remain elevated. But remember we’re talking about inflation. Inflation is the rate of change. It is reasonable that at this level energy is flat, or steady, which means that on a year-over-year basis, energy will not be a major inflationary force.

And the other sources of inflation?

The second source of inflation is the supply chain, and that’s a big one. If we are able to ease the restrictions on the economy vis-à-vis COVID then I think you remove a huge portion, maybe 60 per cent, of the inflation we’re seeing.

The third is rent inflation. If you look at the home price-to-rent ratio, it went to the sky. The combination of higher rents and lower home prices will help this ratio to go back to semi-normal. Higher interest rates will increase rental demand because people cannot afford to buy houses. We still have new immigrants coming. We have a lot of foreign students coming. We’re underestimating the number of people looking for units so the demand will be there. The supply is very limited, and more and more what we’re seeing is builders are not building because of the increase in construction costs. I had conversations with at least six big builders and I can tell you that big projects, especially rental projects, are being delayed or cancelled altogether because they simply cannot make money, the margins are squeezed.

The fourth source is the labour market – the wages. Wages are rising, especially among low wage individuals because that’s where the shortage is.

So you have the Bank of Canada able to control two things: one is wages, the other is rent, and the rest they cannot control, those being energy and the supply chain.

What you need to remember is the supply chain story. If the supply chain over the next six months starts easing then I think the Bank of Canada will be less concerned because they know that a significant portion of inflation is going to disappear. Therefore, I look at supply chain inflation, not now, not next month, but in September, October, November. I need to see some softening. The risk we are facing, and it’s a big risk, is that while the supply chain eventually will ease, it may not ease soon enough for the Bank of Canada to stop hiking.

At the end of the day, this is not about inflation. It’s about the cost of bringing inflation down to 2 per cent. The Bank of Canada and the Fed are telling you that they will do whatever it takes, even if it means taking an economy into recession, because they believe that’s the only way to keep the economy going, from a longer perspective.

So where do you see rates headed?

The market is forecasting an overnight rate of 3.5 per cent by the end of this year. Our official call is that they will stop at 2.75 to 3 per cent. Now, in my opinion, the difference between 2.75 to 3 per cent and 3.5 per cent might be the difference between no recession and a recession. The enemy of the economy is not only higher interest rates but also rapidly rising rates.

The effectiveness of monetary policy in Canada is actually stronger than in the U.S. Per capita, we have more debt, which means that we are more sensitive to higher interest rates. Second, their mortgage terms are for 30 years, our typical terms are for five years or less so we are more sensitive, which means that the tiny Bank of Canada is more powerful than the mighty Fed when it comes to impacting the consumer. In those terms, we estimate that a 1-per-cent increase by the Bank of Canada is equivalent to a 2-per-cent increase by the Fed, theoretically speaking. So the Bank of Canada is more effective in its ability to slow down the economy and this higher sensitivity to interest rates might slow down the economy enough for the bank to stop raising rates at 2.75 to 3 per cent, assuming that the supply chain is behaving. There is a probability of 30 per cent or so that that will not happen and we might overshoot.

So you believe there is just a 30-per-cent probability of a policy error that leads to a recession?

That’s fair. Usually you have a 10-per-cent probability of a recession at any point in time. The probability of recession is much higher now, three times higher than usual, so it’s not a rosy scenario.

With rapidly rising rates are you expecting to see a steep correction in home prices?

The housing market is very vulnerable to higher interest rates. If you look at some areas in the GTA and Vancouver, in the low-rise segment of the market, detached houses, prices are already down by 15 to 20 per cent. Prices will continue to go down, I believe. But remember, prices went up by 50 per cent in two years, so this is just an adjustment because we borrowed the activity from the future.

The lack of supply will work as a protection from a significant decline in prices.

My fear is that the economy will slow down. The housing market will slow down and over the next two years that will remove the sense of urgency about supply. But when we go back to semi-normal, the supply will not be there and there will be another wave of upward pressure on prices.

The S&P/TSX Composite Index recently dropped to its lowest level in the past year. Is the market sell-off a buying opportunity? Are we near a bottom?

I’m not sure where the bottom is. Timing the market is impossible. But if your time horizon is two or three years, I think that there are some good bargains at this point.

Our research suggests that dividend-paying stocks actually do okay during a period of higher interest rates. Telecommunications and utilities actually do okay, historically speaking.

Also, financials might be oversold at this point. The market is pricing in a lot of bad news. I think that from a long-term perspective, there are some opportunities there.

Are there country exposures that you favour?

I like Canada more than the U.S. in this environment for two reasons. If you look at the dividend yield in Canada, it’s double the dividend yield in the U.S. Also in Canada, we are benefiting from commodities.

When I interviewed you back in January, I asked you for your stock market prediction for 2022. You said you would assign the highest probability to a single-digit gain for the S&P/TSX Composite Index. Are you standing by this prediction?

Yes, I think it’s still reasonable to reach a flat to low-digit gain, at least we hope. With so much bad news already priced in, the market might have enough time to get there.

If you had to summarize your outlook for the second half of 2022 in one word or sentence, what would you say?

Higher rates, reduced inflation panic.

(This article is courtesy of The Globe Mail)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Mortgage broker Angela Calla advises her clients to tread carefully when buying property with a friend. A lot can change over the years of a friendship, particularly when new romantic partners come into the picture and alter someone’s financial priorities. The advice comes from a place of experience – Ms. Calla and a friend went through this themselves and ended up selling their property for a loss, straining the friendship along the way.

“Make sure you have a legal document in place with your purchase agreement that makes clear your enter strategy and exit strategy,” says the Port Coquitlam, B.C.-based author of The Mortgage Code. “Going through that process and having that agreement will give you that clarity.”

Ms. Calla is one of many in the real estate world who have seen an increase in non-traditional home-buying partnerships as purchase prices increase. Often it’s friends or siblings pooling money to get a foothold in a market where homes are increasingly out of reach for first-time buyers.

An Abacus Data survey released in late March found that 86 per cent of 2,000 people surveyed said “home ownership accessibility” is a moderate or major problem.

“This view is shared by Canadians in all parts of the country, across all age groups, and across the political spectrum. But we do find that those living in B.C. and Ontario are somewhat more likely to feel housing inaccessibility is a major problem than those in other parts of the country,” stated a release about the survey, which was commissioned by real estate tech firm Key and conducted in February.

A Statistics Canada report released last fall that looked at home buyers from British Columbia, New Brunswick and Nova Scotia found buyers in groups of three or more made up 10 per cent of B.C. home buyers, and roughly 4 per cent in the other provinces.

Ms. Calla says people considering such partnerships should think about more than just the money the other person brings to the table. She and other experts suggest creating a detailed legal agreement that lays out how things will play out in scenarios, including if someone wants out of the partnership, if someone wants to sell the property but the other owners don’t, and if someone dies.

She says the agreement should include the resolution process to be used in the case of a dispute, and even details as small as what realtor will be used for a sale. “If one person is going to buy the other person out, what metric are they going to use? Two appraisals, one appraisal, a bank appraisal, or market-value appraisal? If you’re mature enough to discuss it upfront then that is your foundation.”

Mark Weisleder, senior partner at Real Estate Lawyers.ca LLP, headquartered in Vaughan, Ont., says a legal agreement for a shared home purchase should also spell out how much of the property each person owns. He advises clients to try to get their name on the title even if they’re only contributing a small amount, and says the legal agreement can spell out who owns 10 per cent and who owns 90 per cent, for example.

He says such agreements cost between $1,500 and $4,000, depending on their complexity, a small fee compared with the costs of hashing those things out in court later. Those legal costs could run from about $20,000, if one party wants to force the sale of a property, to more than $100,000 for a complicated dispute involving numerous people.

“Like any partnership agreement, you hope you put it in the drawer and never have to look at it again,” he says.

Family lawyer Laura Paris encourages co-buyers to think about how their assets and family status have the potential to intertwine. She says two buyers living together could be perceived as a spousal relationship, which could allow the partner with less money to make a claim for support if the relationship ended. She says the legal agreement should include language making it clear that family law would not apply to the property.

“It’s not to say these claims will come to success,” says Ms. Paris, an associate at Shulman & Partners LLP in Toronto. “The purpose of these agreements are … to make sure nobody could ever make that claim against you.”

Ms. Calla, the mortgage expert, also advises co-buyers to get life and disability insurance policies with each other as the beneficiary, to make sure costs continue to be covered if something happens to one partner. As for the mortgage itself, she says it’s rare to see lenders approve mortgages with more than four people on the title, but as long as all partners have good credit, the process for getting a mortgage with a friend or sibling is fairly similar to doing so with a romantic partner.

“The traditional lenders are fine with it,” she says, adding, “They do ask about the relationship.”

Software developer Usama Iqbal, 33, is in the market to buy a Toronto condo with his brother and his brother’s wife. The purchase would be an investment to get his foot in the door, so they could sell down the road and have down payments for two homes. “My dream place is anything with a backyard at this point,” says Mr. Iqbal, who lives in a rented 500-square-foot condo.

While they haven’t yet laid out a legal partnership agreement, Mr. Iqbal says they’ve done lots of talking about what they’ll do in various situations. He’s learned from the experience of a co-worker in a shared ownership arrangement.

“They were running into that scenario where one wanted out but the others couldn’t buy him out. That got me thinking, let’s talk about all of these things.”

(This article is courtesy of The Globe and Mail)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

If you have a variable rate mortgage, we wanted to connect with you prior to the next Bank of Canada meeting on July 13th. We fully anticipate a 75-basis point increase as we know it is the highest increase we have seen in decades. What this translates to is a $40 increase in monthly payments for every 100K in your mortgage. In addition to this hike, it would be no surprise to me if we saw another 75 basis points to bring the overnight target rate to the 3% as they have discussed quite openly in recent meetings.

Here is what you need to know:

Bank Prime presently is 3.7. Come July 13 it will go to 4.45%. By Sept 7^th, if they follow through with what they are discussing, it will then rise to 5.2%. The last time Prime Rates were this high was back in 2007 and 2008.

I feel they will likely take a pause at that point, however, the economic factors at play are to be determined on how this will settle the economy.

Here is how you protect yourself as a mortgage holder:

Your discount off Prime will determine your principal/interest payment

If you have a renewal over the next 18 months- let’s get a rate hold in for you BEFORE July 13^th and reach out to us at callateam@countoncalla.ca.

Doing so today will help you secure a lower rate that will likely make sense for you to renew early, and you may see other benefits as well. We discussed this before with previous rate hikes on Global News before, which can be found here.

As always, our team is here to answer any mortgage-related questions you may have. We hope you have a wonderful rest of the week!

Warmly,

The Angela Calla Mortgage Team

*While we expect this with variable rates, we expect increases with fixed rates as well. We just do not have insight into the degree and the bond market has to react accordingly*

Recently we were invited by The Morning Buzz to talk with their host, Natasha, on decoding the mortgages and the current real-estate environment. We are always very honoured to have the opportunity to bring education to Canadian listeners so that they can have the tools equipped to best navigate the ever-changing market.

The interview can be found here and is roughly 13 minutes long, so please do give it a listen if you get the chance! You may also find more information about The Morning Radio as well as its production company Spice Radio 1200AM on their Facebook Page.

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

With summer underway, it might be time to consider a backyard upgrade! These don’t have to be luxurious or expensive, but a couple tweaks can give your yard a facelift and make your outdoor space feel brand new!

Check out my backyard renovation ideas below:

1. Revive Your Deck: You don’t necessarily have to tear it down and start over to have a fresh deck. Chances are the structure is in good shape. A remodel job featuring new decking, rails and stairs can save a ton of money over a full rebuild.
2. Generate Your Own Zen Space: If you enjoy spending time in your yard or on your deck, but are finding that nosey neighbours, traffic noise or barking dogs are impacting your serenity, don’t fret! A privacy fence is a great option to replace sections of your existing railing and make your deck more private, quiet and comfortable!
3. Relax with Water Sounds: If you have space in your yard for a unique water feature, such as a fountain, pool, artificial waterfall – or even a cute pond! – this can make your space feel that much more magical.
4. Set the Mood: When it comes to setting the mood for your backyard space, proper lighting can go a long way. From string lights to lanterns or path lighting, the options are endless (and affordable!) allowing you to create the perfect summer escape.
5. Create Your Perfect Pathway: Another great way to give your backyard a quick makeover is to add a practical walk path. Gravel is the easiest to handle and the least expensive option. While it looks less formal than brick or stone, it can be complemented with a stone or flower border for that extra appeal.

(This article is from the DLC June 2022 Newsletter)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Canada has seen a surge of international migration over the last few years. With all these new faces in town wanting to plant roots in this great country, it’s a good time to review some of the details surrounding mortgages and how individuals new to Canada can qualify to be homeowners.

Check out some details below on how to get your first mortgage in Canada!

If you are already a Permanent Resident or have received confirmation of Permanent Resident Status, you are eligible for a typical mortgage with a 5% down payment – assuming you have good credit.

If you have limited credit, or have not yet qualified for Permanent Residency, there are still options! In fact, there are several ‘New to Canada’ mortgage programs through CMHC, Sagen™ and Canada Guaranty Mortgage Insurance. Please note, for these programs you will typically require a valid work permit is valid up to 3 months post-purchase date.

To qualify for these New to Canada programs, you must have immigrated or relocated to Canada within the last 60 months and have had three months minimum full-time employment in Canada.

• For 90% credit, a letter of reference from a recognized financial institution OR six (6) months of bank statements from a primary account will be required.
• If you are seeking credit of 90.01% to 95% you need an international credit report (i.e: Equifax) demonstrating a strong credit profile OR two alternative sources of credit (i.e.: hydro/utilities, telephone, cable, cell phone or auto insurance) demonstrating timely payments (no arrears) for the past 12 months

Depending on your residency status and credit history, another option are alternative or private lenders as well who can fund your mortgage.

If you are unsure of your options or want to make sure you get the best mortgage product possible, please don’t hesitate to contact me. As a dedicated mortgage professional, I have access to dozens of lender options, which will allow me to find you the best options. I would love to set up a virtual appointment to discuss your financial history, goals and the mortgage process.

(This article is from the DLC June 2022 Newsletter)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Recently, Angela was invited onto the Stress Test, a podcast hosted by the Globe and Mail, to answer some questions about everything one would need to know about mortgages in the current market. Here is what she said:

Pre-approvals, why do I need one and at what point should I get it?

“They’re critical. If you are thinking of buying a home in the next five years, you need to start thinking about your pre-approval now because you need to understand, based on today, ‘Where my income is? And where my credit is?  What plan am I going to put in place to ever buy a home? How much income do I need to show?’ As an example, in today’s market, $100,000 in provable income qualifies you for a $400,000 mortgage. So, what does that mean for you? What type of property does that look at? What type of down payment do you have? How are you getting a down payment? Financial planning is critical, and you can’t create a plan without a map. The biggest mistake people make is, that as soon as they get a job they buy a car. Well, if they have an $800 per month payment, that takes away $200,000 in mortgage qualification. So, if homeownership is one of your goals, then way before you even think you’re going to need it. You need to understand your income, debt, and how you can save for a down payment to plug every dollar in the best possible place to get you a return. Not only on your taxable income but in every single way to ensure that you are setting yourself up for success. Because this isn’t something you just think ‘Okay I need to move next month, I need to go get a pre-approval. It’s a plan, so you need to start way before you think you do. So you can set up a plan to make sure you’re plugging your money in the best places.”

Tell us a little more about getting a rate hold. How long can I get a rate held for? We see rates rising almost week by week, month by month. How long can I lock in for?

“Some lenders will do up to 120 days, is average. Now again, with the variety of lenders that are out there. Some lenders that have the best rates, don’t do pre-approvals at all. Some lenders do pre-approvals for 120 days. Some 90 days. There is a cost to that. There is a why behind everything in the banking and mortgage and finance industry. When you think about that why, well it costs money for the lenders to hold money. Pre-approvals, only about 4 out of every 10 pre-approvals go live. So, for the banks to be holding money at a lower cost than they can lend out money at a higher cost or it no longer becomes available to them. There is a cost to that.”

Angela, how are the mortgage requirements different for self-employed workers or those in the gig economy? My understanding is that lenders like to see two years of consistent income.

“Correct, and again, it is about piecing it together. So if you’re in the same industry, maybe you have contracts with specific lenders. Well then, if we can piece it together and it makes sense and the story makes sense, and it’s the same type of industry but you just kind of shifted a little bit about how you get compensated, then there are lenders who have exceptions to that. So again, when you invest the time, and you invest in yourself, and see exactly what you need to do and where to go to get there. You’re going to have the clear picture, but you have to invest the time and it’s document-heavy.”

Let’s talk a little bit about interest rates, which are rising now. Buyers are subject to a stress test when they are getting a mortgage. For people who are applying for a mortgage, can you tell us how that works?

“Yes, you are tested for a mortgage on an, on average, 2% higher interest rate than what you are actually paying. So, that test is put there because it is anticipated that they want you to be able to qualify for the mortgage, should rates go up. On average, 2% from the time in which you got it. So knowing that that’s the plan that all the lenders have in place, all of us Canadians should be navigating our mortgage and financial plans for that. And then for whatever reason rates go down or they don’t go up as anticipated, you are the only winner because you have access to the equity in your home that you have protected yourself with in the event that things did change. You could do that in several different ways. You could either do that with your payment, or I recommend doing that on the side so that if you have an emergency come up you won’t have to go into debt outside mortgage at a higher rate to be able to navigate that. While it is important to look at your mortgage, you also have to consider how you plan your budget and navigate that to be able to have the most freedom in changing times.”

Angela, I’ve talked to mortgage brokers over the years and have continually been surprised by their stories of how many people break their mortgage before their renewal date. What happens if I break my mortgage?

Seven out of ten, that’s why I recommend a variable as well. Because a variable is consistent, it always only ever has a three-month interest penalty. You know, we don’t know what’s going to happen with discounts. If rates go up, sometimes discounts go down. Maybe that’ll be the time when people can make their move because properties are not going to multiple offers anymore. So if you adapt a fixed-rate mortgage with a traditional bank, your penalty is going to be much higher; four or five percent to get out of. And that’s the thing, you can’t guarantee the timing of when you’re going to need something. That’s why seven out of ten Canadians end up breaking their mortgage early. So, are you going to be someone in that seven out of ten, or are we going to be lucky and not have any changes in circumstances? I know I like to set myself up for the most amount of success to control what I can. We can’t foresee the future, we don’t know if our relationships are guaranteed to last, and one person is not going to be safe forever. Am I going to change jobs? Am I going to be blessed with a pregnancy? You can’t guarantee all those things in life, we get a lot of curve balls. I like to set myself up to be as successful as possible, utilizing every option that’s out there.”

What is the ideal downpayment?

“There is no ideal down payment. It’s whatever you can afford to get into the market ASAP.”

If I have extra money and I want to pay down my mortgage, how does that work?

“Easy, you either just email or call your lender but don’t do that until you are sure you have six months of emergency expenses aside, and that you can’t plug that money into somewhere else to get a tax refund or more cash on hand. Make sure what you do is in your best interest and no one else’s. It’s a one-way street when you put money down on your mortgage.”

What happens when I’m a homeowner, I’m short on money and I need to miss a payment.

“That’s why you keep the money in your account for six months of emergency expenses! Some lenders have that in their policy, some don’t. You contact them, you work it out, and they’re going to take care of you. But different lenders are different, that’s why when we said gig economy, I know some lenders are terrible for the gig economy and some are really good at it and allow you to skip some payments. Especially if unions go on strike and so forth, so again interview the people you work with, and make sure they get your lifestyle and goals.”

How do you get financing if you’re teaming up to buy a house with a friend or sibling, instead of following the traditional path of going solo or with a partner?

“Very risky, you need to document it up the yin yang. I can tell you the good, the bad, the ugly. I’ve done it myself, and I wouldn’t do it again. I would do it with a spouse or no one at this point. But you got a lot to consider because not everyone is exactly who they are and is influenced by the same people in 5, 10, or 20 years. You can’t guarantee if you will or will not qualify later down the road. So, you need to have a real hard thought about if you really want to do that and what your outs are.”

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

The housing market continues to favour sellers as we move into the summer months. If you’re thinking of selling, this is a great time to do so! Not only will your home likely be listed on the market for a shorter period of time, but most sellers are currently receiving multiple offers on their sale. This is due to the increasingly high demand for housing with limited homes currently available on the market.

However, even in a seller’s market, there are some things you can do to help improve your chances of selling your home and getting the best offer! Here are some tips for selling your home in a seller’s market:

List Your Home on a Friday

Depending on the location, Friday is typically the best day of the week to put your home up for sale. Most individuals have weekends free or can take Friday’s off early should they be interested in a home for sale! Be sure to include multiple photos of the home in your listing, or even a virtual tour video if possible, to get your listing off on the right foot.

Offer Limiting Showings

Another good strategy for maximizing your offers in a seller’s market is to limit your showings. Restricting the hours and days that you show your home will allow you to have multiple buyers touring at the same time, which tends to create quiet competition as the buyers know other individuals are interested.

Lower the Sale Price

While not always necessary, lowering the sale price can make your home even more attractive to potential buyers. If you get multiple buyers interested, it will leave some wiggle room for buyers to bid over the asking price.

Make the Most of a Bidding War

If you do end up with a bidding war on your home, you will want to make the most of it. Firstly, always inform buyers of the competition and encourage stronger offers. Secondly, respond to one offer with a counteroffer and set the others aside until you get a response. Thirdly, accept the best offer.

However! Keep in mind that the highest offer might not always be the best one. Some things to keep an eye out for that are conducive of a ‘strong’ offer include: a cash offer, a large down payment, few to no conditions and a flexible moving date.

If you’re looking to sell this year, make sure you utilize a top realtor who can help you navigate the current market settings so that you get the most out of your home! And don’t forget to reach out to your mortgage professional for all the information around moving and how that affects your mortgage.

(This article is from the DLC June 2022 newsletter)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog. 

Another Jumbo Rate Hike, Signalling More To Come

The Governing Council of the Bank of Canada raised the overnight policy rate by a full 50 basis points once again today, marking the third rate hike this year. The two back-to-back half-point increases are without precedent, but so were the dramatic pandemic rate cuts in the spring of 2020. Indeed, with the surge in Canadian inflation to 6.8% in April, the Bank of Canada is still behind the curve. The chart below shows that inflation remains well above the Bank’s forecasts. Today’s press release suggests they now estimate that inflation rose again in May and could well accelerate further.

Today’s policy statement emphasized that “As pervasive input price pressures feed through into consumer prices, inflation continues to broaden, with core measures of inflation ranging between 3.2% and 5.1%. Almost 70% of CPI categories now show inflation above 3%. The risk of elevated inflation becoming entrenched has risen. The Bank will use its monetary policy tools to return inflation to target and keep inflation expectations well anchored.”

“The increase in global inflation is occurring as the global economy slows. The Russian invasion of Ukraine, China’s COVID-related lockdowns, and ongoing supply disruptions are all weighing on activity and boosting inflation. The war has increased uncertainty and is putting further upward pressure on prices for energy and agricultural commodities. This is dampening the outlook, particularly in Europe. In the United States, private domestic demand remains robust, despite the economy contracting in the first quarter of 2022.”

The Bank said that “Canadian economic activity is strong and the economy is clearly operating in excess demand. National accounts data for the first quarter of 2022 showed GDP growth of 3.1 percent, in line with the Bank’s April Monetary Policy Report (MPR) projection. Job vacancies are elevated, companies are reporting widespread labour shortages, and wage growth has been picking up and broadening across sectors. Housing market activity is moderating from exceptionally high levels. With consumer spending in Canada remaining robust and exports anticipated to strengthen, growth in the second quarter is expected to be solid”.

Bottom Line

The Bank of Canada couldn’t be more forthright. The concluding paragraph of the policy statement is as follows: “With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further. The policy interest rate remains the Bank’s primary monetary policy instrument, with quantitative tightening acting as a complementary tool. The pace of further increases in the policy rate will be guided by the Bank’s ongoing assessment of the economy and inflation, and the Governing Council is prepared to act more forcefully if needed to meet its commitment to achieve the 2% inflation target.”

The Bank of Canada has told us we should expect at least another 50 bps rate hike when they meet again on July 13. It could even be 75 bps if inflation shows no sign of decelerating. The Bank estimates that the overnight rate’s neutral (noninflationary) level is  2%-to-3%. Traders currently expect the policy rate to end the year at roughly 3%.

This was a very hawkish policy statement. The central bank is defending its credibility and will undoubtedly continue to tighten monetary policy aggressively.

(This article is courtesy of the Sherry Cooper Assoc.)

Angela Calla is an 18-year award-winning woman of influence which sets her apart from the rest. Alongside her team, Angela passionately assists mortgage holders in acquiring the best possible mortgage. Through her presence on “The Mortgage Show” and through her best-selling book “The Mortgage Code“, Angela educates prospective home buyers by providing vital information on mortgages. 

In August of 2020, at the young age of 37, Angela surpassed $1 Billion dollars in funded personal mortgages. In light of this, her success awarded her with the 2020Business Leader of the Year Award.

Angela is a frequent go-to source for media and publishers across the country. For media interviews, speaking inquiries, or personal mortgage assistance, please contact Angela at hello@countoncalla.ca or at 604-802-3983.

Click here to view the latest news on our blog.