One of the many important considerations to understand when sourcing the best mortgage is how different types of lenders – namely, banks versus lenders who only work with mortgage brokers – calculate penalties, as the market and your needs can easily shift throughout the term of your mortgage.

Does the lender charge a reinvestment fee as well?

Do they have hidden clauses about firm sales?

Do they charge a premium on top of the interest rate differential (IRD)?  

Below are two examples of how different lenders are calculating penalties. Which one would save you the most amount of money not only when you first get a mortgage, but also if you need to make a change?

Understanding the different available options and the terms lenders use to make more money from borrowers are some key differentiators that borrowers will benefit from only when working with mortgage brokers.

My first consideration when placing a mortgage is to look at lenders who don’t use posted rates!

I know that some lenders charge a high penalty – even when the mortgage term is almost over – as a retention tool leveraged to keep more mortgages on their books!

Following are two quick penalty calculators that compare typical banks versus broker lenders.

Penalty Calculator #1 – Broker Lender (applicable when not opting for a replacement mortgage)

 As you can see, there is quite a difference in the penalty amounts – $4,880.05. And this is a modest calculation comparison. Penalties can be tens of thousands of dollars higher depending on the lender’s specific calculation formula and how far into the mortgage term a borrower is at the time of breaking the mortgage.

 Another hefty cost can come in the form of additional clauses borrowers are usually unaware of if they deal with the lender. These include an additional 1-3% fee in above and beyond the IRD to pay out early.

 Imagine adding another $6,870.00 to the $8,238.72 for a total of $15,108.72 in penalties. This is certainly an amount that could potentially shut out moving as an option for many borrowers, as this amount is enough to eat up real estate commission and an extra bedroom in a home, to say the least.

 Some lenders may have a sale only clause in their mortgage as well. If you think, “Oh, that’s no big deal. I don’t plan on selling,” think again. Throughout every path in life, there are moving parts and uncertainties. When you get married, do you plan for a divorce? Likely not. Did you predict the company you were with for 20 years could downsize or your pension would be reduced or cut? Can you guarantee your health will never throw you a curve ball?

We all hope none of the above scenarios happen to us, but they can. And if they do, having options is extremely important.

You also have to consider that if the interest rate market changes 0.5-0.8% there are opportunities to optimize your mortgage to your advantage, but only if you have the most cost-effective mortgage in the first place, which, clearly, is not based on just your interest rate anymore.

Angela Calla, Mortgage Expert, AMP of the Year in 2009 and Host of The Mortgage Show on CKNW Saturday’s at 7pm. One of the most influential people in the mortgage industry for her sheer volume of people she helps save money on their mortgage, contributions she makes by consulting with Canadian’s national & regional lenders, insurers and media contributions. She and her Port Coquitlam, Port Moody & Vancouver team are here to help you personally at 604-802-3983 or callateam@dominionlending.ca

In hot real estate markets, it’s common for both buyers and agents to consider having no subject to financing when making a purchase offer.

It’s important to realize, however, that no professional is in a position to legally advise you to enter into a real estate transaction with no subjects, especially no subject to financing.

This is a personal choice that you must carefully consider. Understanding the risks involved will help you make an informed decision.

 Keep these three points in mind when making the choice with which you will be most comfortable:

 1. Regardless of whether you have secured a rate hold/preapproval, the lender has the right at any time to decline the property. This can occur for a number of reasons including, but not limited to: value, condition, wiring, tanks, strata documents, zoning, work completed without permits, full fix completed without proper documentation, rental components or remaining economic life. Lenders only review property details once an accepted offer is in place – not when you’re simply considering making an offer or during the time you’re going back and forth as part of the negotiating process. They then review the contract, PDS and anything else accordingly.

 2. Even if a lender has approved you based on credit and income, if your scenario has since changed and they request further documentation (eg, you haven’t received enough overtime, you spent more on your credit cards, your employment/credit has changed or there was something you may have forgotten to disclose), they have the right to alter or cancel the approval. All lenders only do a full review of your credit and income once you have an accepted offer in place. They only view an application for rate hold or preapproval purposes and verify once an accepted offer is in place with the right reserved to disregard the preapp or even an approval at any time for the above reasons while doing their due diligence right up until closing.

 3. Who is in the best position to go into a purchase with no subjects? Borrowers who:

– Are overqualified for the purchase

– Can afford a higher payment if the original plan doesn’t work out with any of the above points

– Have their own cash (not a gift pending qualifications) far in excess of what was intended

– Have income that far surpasses what is required

 As AMPs, it’s our responsibility/fiduciary duty to be honest and transparent, and give you the power of choice with clarity on all the considerations to anticipate scenarios that may arise, so you can make the best choices for your family. It would be much easier to be a yes person and cross our fingers that none of this comes up, but it’s not how a professional should guide you, as you come to trust in our clarity, knowledge and experience. When you have this expertise coupled with the right real estate agent, they too will ensure you take the emotion out of the purchase, and protect you accordingly with subjects you’re comfortable with for your personal circumstances so your choice is calculated, clear and comfortable long term.

Angela Calla, Mortgage Expert, AMP of the Year in 2009 and Host of The Mortgage Show on CKNW Saturday’s at 7pm. One of the most influential people in the mortgage industry for her sheer volume of people she helps save money on their mortgage, contributions she makes by consulting with Canadian’s national & regional lenders, insurers and media contributions. She and her Port Coquitlam, Port Moody & Vancouver team are here to help you personally at 604-802-3983 or callateam@dominionlending.ca

April sure has been a very busy month!

We have seen a substantial increase in the amount of purchases and increased insurance premiums were announced for when you have less than a 10% down payment.

This raises the question:  with all of the news about unaffordability, how can I or my loved ones possibly buy a home?

We are here to help you gain clarity, not speculation or “averages”, on what is actually applicable to you.

I have included 3 points of reference that you may find helpful:

1. Earlier this month I conducted a 7 minute interview on a local radio station 98.7 FM in addition to the regular Mortgage Show on CKNW to break down what it takes to own a home.  Listen here: https://www.youtube.com/watch?v=9U901l3sON4&feature=em-upload_owner

2. Hear it from a recent client named Rob that we helped.  Llisten/watch here:  https://www.youtube.com/watch?v=0WsCxtgIWzY

3. The mortgage insurers also increased premiums for lower down payment borrowers. Nothing of significant impact but still a notable $6/month for a 250k mortgage.  The other insurers have followed suit.   Read more here: http://www.cmhc.ca/en/corp/nero/nere/2015/2015-04-02-1605.cfm

The premiums are still lower today than they were just a decade ago when there was only one option for mortgage insurance (CMHC).

Part of living in any home is adjusting your budget accordingly to potential increased future expenses.  We can help you consider these changes when putting together a custom mortgage plan for you.

We are here to help you and those you care most about to gain the clarity required in having the best mortgage plan – contact us to help personally at 604-802-3983 or callateam@dominionlending.ca

Angela Calla, AMP

Dominion Lending Centres

DLC-Angela Calla

Click HERE and listen to Angella Calla debunking one of the most common myths of purchasing a home and breaking down how many AFFORDABLE options are available

https://youtu.be/9U901l3sON4 

Vacation property prices haven’t increased in 5 to 7 years.

In 2015 many vacation homes are selling for the same price they were bought 5 to 7 years ago. If you’re in the market, now is the time to buy a cottage.

Review the article here:

http://www.moneysense.ca/property/buy/great-time-to-buy-a-cottage

Your AMP is here to help guide you through the mortgage process, and give you clarity throughout each step of the home-buying process.

Angela Calla, Mortgage Expert, AMP of the Year in 2009 and Host of The Mortgage Show on CKNW Saturday’s at 7pm. One of the most influential people in the mortgage industry for her sheer volume of people she helps save money on their mortgage, contributions she makes by consulting with Canadian’s national & regional lenders, insurers and media contributions. She and her Port Coquitlam, Port Moody & Vancouver team are here to help you personally at 604-802-3983 or callateam@dominionlending.ca

Click Here and listen to Angela’s youtube testimonials 

Click Here to listen to Diana’s testimonial

Click Here and listen to Zia’s amazing testimonial 

Moving up the property ladder is a great time, having clarity on how the process works is key to your success.

1. Understand the terms in your mortgage to be prepared- get pre-approved.

Just because you already have a mortgage now, doesn’t mean you automatically qualify for a new one.  Policies change all the time along with your credit score, and perhaps your income type/structure & current debt load, which all contribute to what your current options are.

2. Have a deposit ready

These will be the funds you will use to put a firm contract in place. These cannot come from your sale proceeds initially unless the completion date has already passed and you have received the sale proceeds. You will need to have access to this cash up front and you may not qualify to borrow it from a lender, so being pre-approved will help you plan for that.

3. Get your dates in order.

Not many people can qualify to own 2 properties at once. This means you cannot buy another home or qualify for a bridge loan until someone has REMOVED subjects on your sale.    Bridge financing is required when the sale of your place completes after the completion date of your new purchase, so the sale proceeds (down payment) aren’t available until after you’ve purchased a new home.    Bridge Loans come at a price -one that needs to be carefully considered, usually an admin fee, a short term higher rate charged on the amount being bridged and additional legal fees.

An AMP will provide you with transparent, unbiased advice with the power of choice so you can make a decision with clarity moving forward with your plans. The service is free from the initial consultation to ongoing management & optimization of your mortgage.

Angela Calla, AMP

Dominion Lending Centres-Angela Calla

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

Phone: 604-802-3983

Email: acalla@dominionlending.ca

www.angelacalla.ca

Considerations When Purchasing Rental Property

Purchasing a rental property has become more and more difficult for borrowers with the consistent rule changes from the federal government, mortgage insurers & banks over the last 5 years.

Today, rental properties need a minimum of a 20% down payment. They can do this only if they debt service at very high standards

1. Only using a 50% addback after all expenses

2. Using on average 3% of outstanding balances of secured, unsecured or even unused balances on approved credit in some cases!

This is easy to see how this could easily put even the highest income earners TDS completely out of qualification, causing a decline or added costs to consider.

Most applicants find themselves either having to place down 35% to be able to use more appropriate qualification guidelines or get the mortgage insured at a premium of up to 3.15% of the entire loan amount to use different guidelines such as:

1. An 80% offset

2. A “real” payment on outside debts, or amortized calculated payment.

Most lenders even limit product options to only a fixed rate or increase the interest rate for rental property purchases, in addition to allowing only lending under residential guidelines after you have 4 rentals plus a principal residence.

With the constant change in options, products & guidelines to get transparency, unbiased advice and the power of choice you AMP will guide you through the process of real estate investing so you always have clarity on the best option for you.

Angela Calla, AMP

Dominion Lending Centres-Angela Calla

Host of ” The Mortgage Show” Saturdays @ 7pm on CKNW AM980 Phone : 604-802-3983

Email: acalla@dominionlending.ca

www.angelacalla.ca