How to Own a Home and Save For Retirement

General Angela Calla 16 Jan

In todays cash strapped society, we all want to make the best decisions to balance out our future.

How do we do that? Simple, break down the math, look at the numbers and do what’s comfortable to you.  Where you will be surprised is that what you thought to be the right way, may not be once you know the breakdown.  Without it we all carry misconceptions about finance.

Lets look at how to make a decision on…

  • Is 25 or 30 year amortization better?
  • Is a 5 or 10% down on a purchase better?
  • Is it better to put 5% down and pay mortgage insurance or put 20% down?

Money is not intuitive, I’ll show you why (and help you save hundreds of thousands along the way).  There are many different ones but lets put a few together to compare.

 

Testing Financial Intuition

To get started, a quick test for your intuition.

If you needed to buy a $100,000 car would you be better off to buy it in cash or to finance the car at 6% for 6 years and invest the $100,000 into a Guaranteed Income Certificate (GIC) yielding 4% inside your TFSA?

Let’s break it down.

If we buy the car in cash our cost is limited to $100,000 but we lose out on the opportunity to invest the $100,000 and own a depreciating asset instead.

If we decide to finance the car and invest the money instead we have to consider taxes, risk(s) and payments on the debt. We are assuming we invest in something guaranteed (GIC) and hold the investment inside our Tax Free Savings Account (TFSA), which means no taxes!

The financing on the car would cost $1649/m with a total interest cost over six years of $18,731.

If we invest the $100,000 at 4% for six years we will end up with $126,531.9

I share this example because it feels counter intuitive that borrowing at 6% interest to invest at 4% could lead to a $7800 profit.

The key here is visualizing the debt vs the investments.

Example #1

 

The debt starts off at a higher cost but due to the balance rapidly declining the investments come out ahead.

In other words the average balance of the debt over six years is drastically smaller than the average balance of the investment over the same time period. (debt is getting smaller each year whereas the investment is getting larger)

We need to question the financial assumptions we are making because with the way the world is going it doesn’t feel like getting ahead is getting easier.

 

Comparing Financial Strategies

25 Year VS 30 Year Amortization

Let’s look at the story of Bill and Mary.

Next month they are each purchasing a home for $625,000 and will be neighbours. Bill, a self proclaimed financial expert, takes every chance he can get to tell others how smart he is… but that is all about to change.

During their first site visit to see their homes being built Bill and Mary start chatting.  They both plan on putting 20% down to avoid mortgage insurance but are debating over 25 and 30 year mortgages.  Bill quickly informed Mary that she was being irresponsible if she took a 30 year mortgage.  Bill, certain of his financial expertise and intuition, eagerly shouted off reason after reason on why Mary was a fool to not listen to him.

With a 25 year mortgage she would…

“You get a lower rate!”

“You pay off the mortgage faster!”

“You pay way less interest!”

With Bill red in the face and out of breath Mary thought on what he had said.  If Bill  borrows $500,000 on a mortgage at 5% paid off over 25 years he saves $99,927 compared to Jill taking a 30 year mortgage at 5.1% (generally there is a 0.1% premium for a 30 year mortgage amortization).

(5% at 500k = $373,246 total interest vs 30 year at 5.1 = $473,173)

Mary knew conventional wisdom taught that the best course of action is to be like Bill and to pay off our debts faster. Many would agree that the 25 year mortgage is the better choice…

But Mary was not “most Canadian’s” and instead of following the pack she decided to look at the math to decide what is best.  Mary let Bill know she would think about it which only irked him more. He knew he was right… why wasn’t she listening to him?

25 vs 30 Year Mortgage Over 25 years

That night Mary begins to think about the situation…

If Bill takes a 25 year mortgage his monthly payments are $2910.82. If Mary takes the 30 year mortgage her monthly payments are $2703.26 or $207.56 lower.  At the surface level Bill  is paying an extra $62,268 (207.56 X 25 years) to avoid paying $162,180 (2703 X 5 years).  Sounds like a pretty good choice but she thinks there may be a way to have her money work harder.

If Mary takes the 30 year mortgage she could invest the $207.56 into her Tax Free Savings Account (TFSA) each month.

She pulls out her calculator, pen and paper and begins to crunch the math…

Here is what Mary would end with based on her potential investment returns over 25 years.

Annual Return    Balance Year 25

4.5%                     $110,699.98

5%                         $118,554.11

6%                        $136,283.45

8%                        $181,595.15

10%                      $244,294.10

 

Keeping in mind that Mary’s mortgage would have a balance of $142,900.48 after 25 years she would need to earn at least 6.3% to break even and a return of 7%+ would put her ahead.

If she could average 10% per year she would be $142,656.16 ahead (after paying off her mortgage balance).  An extra $142,000 could help Mary retire sooner, pay for her kids tuition or help them buy their first home… ok with the way things are going micro condo… but it could help!  An extra $142,000 is great but this article is about challenging the financial assumptions we make and we have made a big assumption… we are paying off the mortgage after 25 years.

 Can We do Better?

Mary shows Bill her idea of investing the difference in payments each month and proudly declares herself more financially savvy than Bill.  Bill storms off and thinks about everything Mary has said. He stays up all night thinking about how he can do better than Mary.  If Bill pays off his mortgage over 25 years he will be mortgage free. He could then invest his full mortgage payment ($2910.82) each month for the last five years! Eureka he’s done it. He’s certain he can do better than Mary.  Meanwhile Mary stays up all night thinking on how she could do better. She decides she’s not going to pay off her mortgage early and instead will save her $207.56 every month for 30 years.

Which Mortgage and Financial Strategy is Better?

The next morning Bill and Mary end up on a call to see who is financially savvier.  Who will have more money? Bill paying off his mortgage in 25 years and then investing $2910.82 each month for 5 years or Mary paying off her mortgage over 30 years and investing $207.56 each month?

Here is what they would have based on potential returns after 30 years.

 

You should have seen Bill’s face! Bested a second time… he was furious.  As long as Mary earned over 6% she would come out ahead of Bill.  If Mary averaged 10% (Keep in mind the largest US stock index, the S and P 500 has averaged 10.757% over the last 50 years) she would have $195,413 more than Bill (assuming he also averaged 10%).  $195,000 could be life changing, while it’s not enough for financial freedom on its own, I doubt we could find many retiree’s right now who wouldn’t benefit from some extra money in the bank!

What would you do with the extra money? I have always wanted to travel but retiring sooner might be tempting!

While an extra $195,000 is great we are still making some big assumptions. We have broken down the merits between 25 and 30 year mortgages and there appears to be a clear winner. Does that mean that 30 year mortgages are always better than 25 year mortgages? Well remember the very first example I shared with the car… often the “best” financial choice can be counter intuitive.

Example #2 

 

Should you Put 20% Down?

Bill and Mary both made an assumption that putting 20% down was a better choice than putting 5% down and paying a 4% mortgage insurance premium (essentially having 1% equity day one).  Lets break it down and see!

Three weeks before closing Mary had been savoring her triumph over Bill but at the back of her mind she kept wondering if she could do even better.  You know, really ruffle Bill’s feathers.  She made some calls and realized that she could put 6% down (the minimum is 5% of the first $500,000, 10% of the balance above).

She knew it was a silly question but what if she put the minimum down and paid the mortgage insurance. She would have higher payments, a bigger mortgage, a dreaded 25 year amortization and her net worth would be lower day one (due to the 4% mortgage insurance cost).  The silver lining would be an interest rate 0.25% lower and having the remainder of her down payment to invest right away but would it be enough to help her retirement?

If Mary puts the minimum down ($37,500) she will have an extra $87,500 to invest and her new mortgage payment would be $3,336.  To be fair we should consider the two 20% down scenarios (25 and 30 year) and assume the difference in payments is invested each month.

A) Bill will take a 25 year mortgage, investing the difference in payments ($425.31) for those 25 years. Once his mortgage is paid off he will invest $3,336 until year 30.

B)  Mary could put 20% down and take a 30 year mortgage. She would invest the difference in payments ($632.97) each month for 30 years.

C) Mary would invest $87,500 into her TFSA day one and make no further investments until her mortgage is paid off year 25. Once her mortgage is paid off she will invest $3,336 until year 30.

Take a moment and think about what we have discovered so far. Which scenario do you think will do best?

Example #3

 

 

Scenario A) Bill B) Mary C) Mary
Annual Return 20% at 25 years + 60*3336  20% at 30 years  6% down at 25 years + 60*3336 
4.5% $                                  502,239 $                  462,678 $                546,719
5% $                                  531,859 $                  503,872 $                599,372
6% $                                  600,112 $                  599,577 $                728,220
8% $                                  782,676 $                  859,140 $             1,115,334
10% $                               1,052,183 $              1,247,553 $             1,771,222

The worst of the three options is putting 20% down and taking a 25 year mortgage, which may be surprising for some. The main reason this option performs poorly is due to its smaller investment potential.  Essentially your ability to save for retirement is being neglected in order to have a larger down payment and to pay off the mortgage faster.

The middle option is putting 20% down and taking a 30 year mortgage. As we learned earlier it can be financially beneficial to pay a little more interest if we can make consistent contributions to our investments earlier in life.

Putting the minimum down payment and investing the difference performs the best in most circumstances. With a worst case benefit of roughly $45,000 and a best case benefit of $332,658 it could be a real game changer for many Canadians trying to optimize their planning.

I personally was quite surprised to see the minimum down payment scenario do the best. I expected the higher payments and $23,500 in mortgage insurance premiums to really hurt the scenario.

Even more Benefits?

Another perspective to consider is how likely each scenario would be able to deal with job loss, repairs etc.

Scenarios A and B (putting 20% down) have put all of their savings towards their down payment. While they have lower mortgage payments it would take their payment differences 17 years (25 year mortgage) or 11.5 years (30 year mortgage) to rebuild the $87,500 reserve fund scenario C (6% down) has.

We could shorten that time to rebuild a reserve fund by factoring in investment returns but even a “best” case scenario would still take around 8 years (10% return, $632.97 invested monthly).

In the same timeline the 6% down scenario (C) would have built up $187,500.

Overall putting the minimum down payment and maximizing TFSA’s appears to be the most financially effective scenario we have analyzed so far. It provides the greatest long term financial benefit as well as a most robust position for a home owner (larger financial reserves).

If you have any questions, feedback or thoughts on this concept let me know. The goal is to help families make better and more aware financial decisions. I welcome your views even if they disagree with mine! Together we can make this better so please reach out!

As I am sure you can imagine Mary was on top of the world. She had repeatedly bested Bill and improved the future of her family.

Her head hurt a little as the journey had been a challenging one… every time she thought she had the best answer she learned she was wrong. She quickly came to realize that she could not make generalizations or “rules”.  At the most basic level a 25 year mortgage was better than a 30 year mortgage as it saved interest and paid off the mortgage faster.  If she thought a little more a 30 year mortgage could outperform a 25 year mortgage by having lower payments and investing the difference. If she used this strategy to build investments and to pay off the mortgage year 25 she could have a great benefit. If she left the debt alone and kept investing for 30 years she could have an even better benefit.

By challenging her financial assumptions she quickly learned that this was not the best option either.  She had assumed putting 20% down to avoid mortgage insurance was a far better choice than putting the minimum down payment.  After crunching the numbers she had discovered that putting the minimum down and investing the remainder of her down payment would lead to a massive improvement in her retirement savings. As a bonus she would have a substantial cash reserve to help her deal with the unknowns of the future.

She was feeling good about everything she had learned, knowing that a deeper understanding of her finances would make future decisions easier.  She no longer cared about besting Bill, being right certainly felt good but she cared more about her family’s future.

 

Angela Calla is an 19-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 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. 

Winterizing Your Home

General Angela Calla 9 Jan

We Canadians are no strangers to the chill of the winter season! As we shift into the final few months of 2023, now is a great time to check your home before the cold front hits. Below I have included a few tips that could help you save on bills, prevent future repair costs, and be more comfortable all winter long.

  • Inspect Your Fireplace: There is no better time than now to have your fireplace inspected to ensure optimal efficiency and heat output. Whether you have a wood-burning, gas, or electrical fireplace, proper maintenance can go a long way for your heating bill!
  • Maintain Your Furnace: While you’re having your fireplace inspected, don’t forget to maintain your furnace! If your furnace is getting up there in age, you may want to also consider replacing it as typically newer furnaces are more efficient than the previous generation, which could help save on energy costs. Either way, ensuring your furnace is in working order will guarantee top output and a cozy winter!
  • Clean The Gutters: The last thing you want is your gutters to be clogged when the snow hits! Cleaning your gutters from Fall leaves and other debris will help ensure proper drainage for melting snow. For those who want to go the extra step, consider gutter guards which can help keep out unwanted objects from your gutters.
  • Examine Your Roof: While you’re prepping your gutters for the winter, it is a good idea to also examine your roof. A few things to look for include broken or missing shingles, damaged flashing, staining from water leakage, and ventilation.
  • Consider a Programmable Thermostat: According to experts, a degree drop in your home temperature can measure up to 1% on your heating bill. For those of us who don’t like to have cold feet all season, smart thermostats are a great way to keep warm and optimize your energy savings! Ideally, you want to set your thermostat to turn on in the morning, off when you go to work, and back on in the evening to ensure a toasty welcome.
  • Insulate Windows: Always be sure to check your windows for any gaps or water leakage and get them resealed as soon as possible. If you live in a particularly cold location, consider swapping out your windows to double-paned glass for an added layer of insulation. Another tip to keep the cold from seeping in through your windows is swapping out your curtains for a heavier, thermal-lined set which can do wonders!
  • Check Your Pipes: Checking pipe joints for leaks that could cause rot and damage will save you trouble in the future. Repair any cracks you find, especially those around electrical outlets and alarm system lines. You can also consider foam pipe insulation, which is fairly easy to install and could help prevent energy loss and potential water damage from frozen pipes.
  • Stock Up on Supplies: There are a few things you might want to consider stocking up on ahead of time for the winter season, such as flashlights and batteries, ice melt, extra pet food and canned goods, and an emergency storm kit that includes an extra flashlight, candles, portable radio, water, and snacks.

With a little preparation, you can keep your home in good shape without needing to feel the cold bite of winter!

 

Angela Calla is an 19-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 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. 

Angela Calla in Zolo Canada Housing Market and Rate Predictions for 2024

General Angela Calla 2 Jan

Mortgage Rates to Drop in 2024

The biggest factor our experts use to make housing market predictions for 2024 in Canada will be interest rates. The Bank of Canada has been raising interest rates since March 2022. These higher rates have had a widespread impact across Canada. Some effects have been positive (like lowering inflation), and some have been negative (like making mortgages more expensive).

That said, the high interest rates we’re seeing going into 2024 won’t be around forever. Mortgage interest rates are directly influenced by the Bank of Canada’s policy interest rate. So we asked mortgage broker and author of The Mortgage Code, Angela Calla, whether the Bank of Canada will hike rates in 2024, lower them, or hold them steady.

 

Calla believes that as long as inflation continues to trend close to the Bank of Canada’s 2% target rate, Canadians should expect mortgage rates to fall in mid-2024. But, since no one can accurately predict what will happen, it’s best to take a cautious approach. “In terms of time and how much,” Calla says, “plan for the worst and hope for the best.”

 

How Will 2024 Rates Affect My Mortgage?

Many borrowers took advantage of low mortgage rates in the early 2020s, buying a home when money was cheap and locking in their rate for several years. Now that rates have risen from those low levels (the lowest discounted rate was 1.38% in January 2021; today, the lowest rate is 5.19%), many Canadians will renew their mortgages at higher rates with higher monthly payments.

Between 2024 and 2025, 2.2 million Canadians are expected to renew their mortgages. That’s almost half of all mortgage holders. These renewals will happen at higher rates, which could increase mortgage payments between 30 to 40%.To help prepare for these rising costs, Calla recommends that you research and shop around for the best mortgage rate instead of signing your lender’s first renewal offer. “This will ensure you gain the lowest cost of borrowing and protect your credit score.”

Suppose you’re due to renew your mortgage in 2024 and find yourself unable to cope with the higher payments. In that case, you have options, like adding rental income, extending your amortization, or considering a reverse mortgage.

 

Should You Choose a Fixed or Variable Rate in 2024?

Choosing a fixed or variable-rate mortgage is a personal choice, and depends on your goals and risk tolerance. Fixed-rate mortgages have the benefit of stability. The rate doesn’t change throughout the term, and you’ll always pay the same amount each month. But they are more expensive to break if you plan to sell your home before your term ends.

“Breaking such a mortgage for market or lifestyle changes can incur an interest rate differential (IRD) penalty,” says Calla. This penalty can be in the tens of thousands of dollars for some mortgages. So, it’s an essential consideration if you plan to sell your home before your mortgage term ends.

Variable-rate mortgages, on the other hand, are more flexible. That said, your mortgage rate is subject to change. That means your principal payment and, in some cases, the entire monthly payment itself could change.

“When Canadians are at the crossroads of choosing between a fixed or variable-rate mortgage, a critical step is to weigh the risks and benefits of each option,” Calla says. If you aren’t sure, talking to a mortgage specialist is an excellent first step.

The Breakdown: Mortgage rates may fall in 2024. If your mortgage is renewing in 2024, prepare to renew at higher rates. Shop for the best rate and terms with a mortgage broker.

Read the full article here: ZOLO

Angela Calla is an 19-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 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. 

 

Understanding Reverse Mortgages

General Angela Calla 19 Dec

A Comprehensive Guide to Understanding Reverse Mortgages in Canada: Designing Your Ideal Lifestyle and Debunking Myths
Introduction:

As Canadians embrace longer life expectancies and evolving financial goals, reverse mortgages have gained prominence as a versatile financial tool. In this comprehensive guide, we’ll explore the intricacies of reverse mortgages in Canada, shedding light on how they can be used to design your ideal lifestyle. Additionally, we’ll debunk common myths surrounding reverse mortgages, providing you with accurate information to make informed decisions about this unique financial solution.

Understanding Reverse Mortgages in Canada
1. What is a Reverse Mortgage?
A reverse mortgage is a financial product designed for Canadian homeowners aged 55 and older. It allows homeowners to convert a portion of their home equity into tax-free cash without selling their property. Unlike traditional mortgages, there are no monthly mortgage payments required.

2. How Does It Work?
The homeowner receives funds either as a lump sum, regular payments, or a combination of both. The loan, along with accumulated interest, is repaid when the homeowner sells the home, moves out, or passes away. The remaining equity belongs to the homeowner or their estate.

Designing Your Ideal Lifestyle with a Reverse Mortgage
1. Supplementing Retirement Income:
A reverse mortgage can provide a steady stream of income to supplement retirement funds, enabling homeowners to maintain their desired lifestyle.

2. Home Renovations or Upgrades:
Accessing home equity allows homeowners to fund renovations or modifications, making their living space more comfortable and suitable for aging in place.

3. Debt Consolidation:
Reverse mortgages can be used to pay off existing debts, reducing financial stress and improving overall financial well-being.

4. Travel and Leisure:
Enjoying your retirement to the fullest is possible with a reverse mortgage. Whether it’s travel, hobbies, or leisure activities, accessing home equity provides the financial flexibility to pursue your passions.

Debunking Common Myths about Reverse Mortgages
1. Myth: You Lose Ownership of Your Home with a Reverse Mortgage
Reality: Homeownership remains with the borrower. The homeowner retains title and can continue to live in the home as long as it remains their primary residence.

2. Myth: You Can Owe More Than Your Home’s Value
Reality: Canadian reverse mortgages are non-recourse loans. This means that neither the homeowner nor their estate will be responsible for repaying more than the appraised value of the home.

3. Myth: Reverse Mortgages are a Last Resort for Financial Distress
Reality: Reverse mortgages are a financial planning tool and can be used proactively to enhance retirement lifestyle, manage finances, and meet specific goals.

4. Myth: You Can Be Forced to Move Out of Your Home
Reality: As long as the homeowner maintains the property, pays property taxes, and keeps up with home insurance, they can live in their home indefinitely, even with a reverse mortgage.

Conclusion:
Understanding reverse mortgages in Canada is essential for designing a lifestyle that aligns with your retirement goals. By debunking common myths and exploring the versatile uses of reverse mortgages, you can make informed decisions that enhance your financial well-being. As you consider this financial option, consulting with professionals like the Angela Calla Mortgage Team ensures that you receive personalized advice tailored to your unique situation. With accurate information, you can unlock the potential of reverse mortgages to create your ideal lifestyle in retirement.

Angela Calla is an 19-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 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. 

Debunking Canadian Mortgage Myths: What You Shouldn’t Believe

General Angela Calla 19 Dec

Debunking Canadian Mortgage Myths: What You Shouldn’t Believe

Introduction:

In the dynamic landscape of Canadian real estate, misinformation can circulate easily, leading to misconceptions about mortgages. As you embark on your homeownership journey or consider refinancing, it’s crucial to separate fact from fiction. In this blog post, we’ll debunk common myths surrounding Canadian mortgages, empowering you with accurate information to make informed decisions about one of the most significant financial commitments in your life.

Myth 1: You Need a 20% Down Payment to Buy a Home

Reality: Contrary to popular belief, a 20% down payment is not a mandatory requirement to purchase a home in Canada. While a larger down payment can offer advantages, many lenders offer mortgage options with lower down payment requirements. Various government-backed programs and mortgage insurance options cater to buyers with more modest down payments.

Myth 2: Fixed-Rate Mortgages are Always the Best Option

Reality: The choice between fixed and variable-rate mortgages depends on your financial goals and risk tolerance. While fixed-rate mortgages offer stability with predictable payments, variable rates can provide potential savings in certain economic conditions. Understanding your preferences and consulting with a mortgage professional can help you make the right decision based on your unique situation.

Myth 3: Refinancing is Always a Money-Saving Move

Reality: Refinancing can be a valuable tool, but it’s not always a guaranteed money-saving strategy. It’s crucial to assess the costs associated with refinancing, including closing costs and potential penalties. Additionally, understanding your long-term financial goals and the impact of refinancing on your overall mortgage term is essential for making informed decisions.

Myth 4: Your Mortgage Rate Is the Only Factor Influencing Affordability

Reality: While the mortgage rate is a significant factor in determining affordability, it’s not the sole consideration. Other costs, such as property taxes, insurance, and potential maintenance fees, contribute to the overall cost of homeownership. Evaluating the complete financial picture ensures a more accurate understanding of what you can afford.

Myth 5: Paying Off Your Mortgage Early Always Saves Money

Reality: While paying off your mortgage early can save on interest payments, it’s essential to consider other financial priorities. Depending on your overall financial situation, investing in other areas such as retirement savings or education funds may offer better long-term benefits. Assessing your financial goals holistically is crucial for making informed decisions.

Conclusion:

Navigating the Canadian mortgage landscape requires accurate information and a discerning eye to debunk common myths. By separating fact from fiction, you empower yourself with the knowledge needed to make informed decisions about your mortgage. Whether you’re a first-time homebuyer or considering refinancing, consulting with a mortgage professional, like the Angela Calla Mortgage Team, ensures that you have access to expert guidance and personalized advice tailored to your unique financial situation. As you navigate the world of Canadian mortgages, armed with accurate information, you can confidently make choices that align with your financial goals and set the stage for a successful homeownership journey.

Angela Calla is an 19-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 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. 

Canadian Mortgage Renewal: What You Need to Know

General Angela Calla 19 Dec

Understanding Mortgage Renewal in Canada

  1. Know Your Renewal Date:

Mark your calendar! Your lender will typically notify you of your mortgage renewal well in advance. It’s crucial to be aware of this date to allow ample time for preparation and decision-making.

 

  1. Assess Your Financial Situation:

Take a closer look at your current financial standing. Consider changes in income, expenses, and any shifts in your long-term financial goals. Understanding your financial situation will influence your decisions during the renewal process.

 

Negotiating Rates:

  1. Research Current Rates:

Before entering negotiations, research the current mortgage rates in the market. This knowledge provides you with a benchmark to gauge the competitiveness of the rates your lender offers during the renewal process.

 

  1. Negotiate with Your Lender:

Don’t hesitate to negotiate with your existing lender. They want to retain your business, and often, they are willing to adjust rates or offer additional benefits to keep you as a customer. Be prepared to leverage your creditworthiness and loyalty to secure favorable terms.

 

Consider Your Options:

  1. Stick with Your Current Lender:

Renewing with your current lender is a straightforward option. However, it’s essential to explore the terms they offer and ensure they align with your financial goals.

 

  1. Shop Around:

Don’t be afraid to explore other lenders in the market. Shopping around allows you to compare rates and terms, potentially leading to a more advantageous mortgage package.

 

Assessing Your Mortgage Needs:

  1. Review Your Mortgage Terms:

Take this opportunity to review your current mortgage terms. Assess whether they still meet your needs or if adjustments are necessary. This could include changes to the length of the mortgage term or considering a switch from a fixed to a variable rate, or vice versa.

 

  1. Consult with a Mortgage Professional:

Seeking advice from mortgage professionals, like the Angela Calla Mortgage Team, can provide valuable insights into market trends and help you make informed decisions about your mortgage renewal.

 

Conclusion:

Canadian mortgage renewal is a pivotal moment in your homeownership journey, and understanding the process is key to making sound financial decisions. From negotiating rates to assessing your financial situation and exploring your options, this guide empowers you to navigate the renewal process with confidence. Whether you choose to renew with your current lender or explore new opportunities in the market, taking a proactive approach ensures that your mortgage aligns with your evolving financial goals. As your mortgage term approaches its end, use this guide to guide you through the renewal process, and secure a mortgage that suits your needs and sets the stage for continued financial success.

Angela Calla is an 19-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 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. 

Understanding Mortgage Pre-Approval: Your Key to a Successful Home Purchase

General Angela Calla 19 Dec

Embarking on the journey to homeownership is an exhilarating experience, but it comes with its fair share of financial considerations. One crucial step that can significantly enhance your homebuying journey is obtaining a mortgage pre-approval. In this guide, we’ll demystify the mortgage pre-approval process in Canada, highlighting its importance, providing insights on how to get pre-approved, and showcasing the advantages it offers when you’re ready to shop for your dream home.

 

The Importance of Mortgage Pre-Approval, 1st download our app to be one of the best free tools for Pre- Qualification https://www.dlcapp.ca/app/angela-calla?lang=en

  1. Know Your Budget:

Mortgage pre-approval gives you a clear understanding of how much you can afford to spend on a home. This knowledge ensures that you focus your search on properties within your budget, preventing wasted time on homes that may be out of financial reach.

 

  1. Increased Negotiating Power:

Sellers are often more inclined to negotiate with buyers who have a mortgage pre-approval. It demonstrates to the seller that you are a serious and qualified buyer, increasing your chances of securing the property.

 

  1. Avoid Disappointment:

Imagine finding your dream home only to realize it’s beyond your financial means. Mortgage pre-approval prevents this heartbreak by setting realistic expectations and allowing you to explore homes within your price range.

 

How to Get Pre-Approved for a Mortgage

  1. Gather Financial Documents:

Prepare key financial documents, including proof of income, employment verification, credit history, and information about your debts and assets. Lenders will use this information to assess your financial stability.

 

 

  1. Submit an Application:

Fill out a mortgage pre-approval application with your chosen mortgage broker. Be thorough and accurate in providing the required information. The more detailed and precise your application, the smoother the pre-approval process.

 

3. Wait for Approval:

Once your application is submitted, the lender will assess your financial situation and creditworthiness. If approved, you will receive a pre-approval letter outlining the maximum loan amount you qualify for.

 

Advantages of Mortgage Pre-Approval When Shopping for Your Dream Home

  1. Focused Home Search:

Armed with a pre-approval, you can focus your home search on properties within your budget, saving time and ensuring a more efficient process.

 

  1. Confidence in Bidding:

When you find the perfect home, you can confidently make an offer, knowing that you have already secured financing. This positions you as a strong and reliable buyer in the eyes of the seller.

 

  1. Quick Closing:

Pre-approval expedites the mortgage application process when you find the right property, allowing for a quicker closing timeline. This can be advantageous in competitive real estate markets.

 

Conclusion:

In the dynamic world of Canadian real estate, mortgage pre-approval stands out as a key tool for savvy homebuyers. By understanding its importance, following the steps to obtain pre-approval, and leveraging its advantages in your home search, you set the stage for a successful and stress-free homebuying journey. Consider reaching out to professionals like the Angela Calla Mortgage Team to guide you through the pre-approval process and ensure that you are well-prepared to turn your homeownership dreams into reality. With mortgage pre-approval as your key, unlock the doors to your future home with confidence and peace of mind.

Angela Calla is an 19-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 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. 

Demystifying Canadian Mortgage Rates: A Comprehensive Guide

General Angela Calla 19 Dec

Decoding the Factors Behind Canadian Mortgage Rates

  1. Economic Factors:

Mortgage rates in Canada are closely tied to the economic landscape. Factors such as inflation rates, unemployment figures, and overall economic health play a pivotal role. The Bank of Canada monitors these indicators to make decisions on the country’s benchmark interest rate, influencing mortgage rates. Fixed rates are tied to the Bond Market.

  1. Bank of Canada’s Influence:

The Bank of Canada sets the benchmark interest rate, which serves as a reference point for lenders when determining their own rates. Changes in the benchmark rate can lead to adjustments in mortgage rates, affecting borrowers across the country.

  1. Government Policy:

Government policies and regulations, including mortgage stress tests and lending restrictions, can impact the availability and affordability of mortgages. Staying informed about these policies is crucial for prospective homeowners.

Strategies for Securing the Best Mortgage Rates

  1. Maintain a Strong Credit Score:

Your credit score is a key factor in determining the interest rate you’ll be offered. A higher credit score typically translates to lower interest rates. Regularly check and improve your credit score to secure more favorable mortgage terms.

  1. Comparison Shopping:

Different lenders may offer varying mortgage rates and terms. It’s essential to shop around, comparing rates and negotiating with lenders to secure the best deal. The mortgage market is competitive, and informed borrowers can leverage this to their advantage using a mortgage professional who has the borrowers interest at heart, any one lender only sells there own products giving them a sales bias.

  1. Use a Mortgage Broker:

Mortgage brokers, like the Angela Calla Mortgage Team, can be invaluable in navigating the mortgage market. They have access to a network of lenders and can help you find the best rates based on your financial situation and goals. They shop without bias, protecting your credit score giving you the power of choice.

Empowering Yourself with The Mortgage Code

In your journey to understand and secure the best Canadian mortgage rates, a valuable resource awaits – “The Mortgage Code” by Angela Calla. This insightful book, available on Amazon, offers practical advice and insider tips from Angela Calla, a renowned mortgage expert. Whether you’re a first-time homebuyer or a seasoned homeowner, “The Mortgage Code” is a comprehensive guide that complements your knowledge, providing insights into the Canadian mortgage market.

Conclusion:

Demystifying Canadian mortgage rates is a crucial step in making informed decisions about your homeownership journey. By understanding the factors influencing rates and implementing strategic approaches, you can position yourself to secure the best possible mortgage terms. Additionally, the Angela Calla Mortgage Team and “The Mortgage Code” book serve as valuable allies in your quest for financial empowerment. As you navigate the Canadian mortgage market, empower yourself with knowledge and trusted resources to achieve your homeownership goals. Buy the book on Amazon or Audible here  https://www.amazon.ca/Mortgage-Code-Helping-Property-Mistakes-ebook/dp/B07HFHR8TV or reach out for personalized mortgage assistance 604-802-3983 or callateam@countoncalla.ca

 

Angela Calla is an 19-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 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. 

First-Time Homebuyer’s Guide: Navigating the Canadian Real Estate Landscape

General Angela Calla 19 Dec

Embarking on the journey to homeownership is an exciting and significant step. For first-time homebuyers in Canada, navigating the real estate landscape can be both thrilling and daunting. In this comprehensive guide, we’ll provide a roadmap tailored to first-time buyers, covering crucial topics such as down payments, government incentives, and homebuyer programs. This guide aims to be your go-to resource, offering valuable insights to ensure a smooth and informed entry into the Canadian real estate market.

Understanding Down Payments

  1. The Basics:

As a first-time homebuyer in Canada, understanding down payments is fundamental. In most cases, a minimum down payment is required, typically ranging from 5% to 20% of the home’s purchase price. The larger the down payment, the lower your mortgage loan amount and monthly payments.

  1. Saving Strategies:

Start saving early for your down payment. Consider creating a dedicated savings account, exploring government-sponsored savings plans, or using financial windfalls like tax refunds or bonuses to boost your down payment fund.

Exploring Government Incentives

  1. First-Time Home Buyer Incentive (FTHBI):

The FTHBI is a federal program designed to assist first-time homebuyers by reducing their monthly mortgage payments. Eligible buyers can receive a shared-equity loan from the government, lowering the overall cost of homeownership.

  1. Home Buyers’ Plan (HBP):

The HBP allows first-time buyers to withdraw up to $35,000 from their Registered Retirement Savings Plan (RRSP) to use towards a home purchase. This program provides a tax-friendly way to fund your down payment.

  1. First Time Home Savers (FHSA):

The First Time Home Savers account The First Home Savings Account (FHSA) is specifically designed to help first-time homebuyers save for their down payment without having to pay taxes on the interest earned on their savings.

This means that the interest earned on the savings in the account is not taxed, nor are withdrawals from the account. Plus, since your contributions to this account are not taxed, your money will have the opportunity to grow faster in an FHSA than a traditional savings account. More on this new for 2023 here https://angelacalla.ca/general/first-home-savings-account-fhsa/

Navigating Homebuyer Programs

  1. Land Transfer Tax Rebates:

Be aware of provincial land transfer tax rebates available for first-time homebuyers. These rebates can significantly reduce the upfront costs associated with purchasing a home.

  1. Mortgage Insurance Options:

Explore mortgage insurance options, especially if your down payment is less than 20%. Mortgage insurance protects lenders in case of default but also provides an opportunity for first-time buyers to enter the market with a lower down payment.

  1. Download our app to be pre qualified in seconds learning payment comfort and calculation closing costs https://www.dlcapp.ca/app/angela-calla?lang=en

The Importance of Professional Guidance

  1. Mortgage Brokers:

Consider enlisting the help of a mortgage broker, such as the Angela Calla Mortgage Team. Mortgage brokers have access to a wide range of lenders and can help you find the most suitable mortgage product for your unique financial situation.

  1. Real Estate Agents:

Work with a qualified real estate agent who specializes in first-time homebuyers. They can guide you through the process, help you find suitable properties, and negotiate on your behalf.

Conclusion:

Navigating the Canadian real estate landscape as a first-time homebuyer requires a thoughtful approach and a comprehensive understanding of key factors. By mastering the essentials of down payments, taking advantage of government incentives and homebuyer programs, and seeking professional guidance, you can embark on your homeownership journey with confidence. Remember, the Angela Calla Mortgage Team is here to support you throughout the process, ensuring that your first home purchase is a successful and rewarding experience. As you take your first steps into the world of real estate, use this guide as your compass, and embrace the exciting adventure of homeownership in Canada.

Angela Calla is an 19-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 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. 

 

Bank of Canada Holds The Overnight Policy Rate Steady at 5% For the Third Consecutive Meeting

General Angela Calla 15 Dec

The Bank of Canada Held Rates Steady and Took A More Neutral Tone

It was widely expected that the Bank of Canada would maintain its key policy rate at 5% for the third consecutive time. It will continue to sell government securities (quantitative tightening) to normalize its balance sheet. Market participants weighed and measured each word of the BoC press release and assessed that the Bank took a less hawkish stance.

This time, the release said, “Higher interest rates are clearly restraining spending: consumption growth in the last two quarters was close to zero, and business investment has been volatile but essentially flat over the past year. Exports and inventory adjustment subtracted from GDP growth in the third quarter, while government spending and new home construction provided a boost. The labour market continues to ease: job creation has been slower than labour force growth, job vacancies have declined further, and the unemployment rate has risen modestly. Even so, wages are still rising by 4-5%. Overall, these data and indicators for the fourth quarter suggest the economy is no longer in excess demand.”

 

 

 

 

At the prior meeting in late October, the Bank said that the labour market remained “on the tight side” but acknowledged today that it was loosening. Indeed, the October Monetary Policy Report suggested that the inflation rate would not hit its 2% target level until late 2025.

Today, the tone was much more optimistic, suggesting that policymakers are increasingly confident interest rates are restrictive enough to bring inflation back to the 2% target. Still, Bank officials want to see more progress on core inflation before it begins to ease. It said, “The Bank’s preferred measures of core inflation have been around 3½-4%, with the October data coming in towards the lower end of this range.”

The central bank focuses on “the balance between demand and supply in the economy, inflation expectations, wage growth, and corporate pricing behaviour” and remains resolute in restoring price stability.

Bottom Line

Bond yields peaked in early October and have fallen by nearly 100 basis points. This has led to reductions in fixed mortgage rates; however, those cuts have been far less than historical experience would have suggested, given the rally in 5-year government bonds.

Cuts in variable mortgage rates await a reduction in the overnight policy rate, which triggers a commensurate decline in the prime rate, which is currently stuck at 7.2%. I expect the BoC to begin cutting the policy rate by the middle of next year, taking it down a full percentage point to 4% by yearend

(Article courtesy of Dr. Sherry Cooper, Cheif Economist, Dominion Lending Centres)

Angela Calla is an 19-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 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. 

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