Backing out of a mortgage early? You probably won’t be able to avoid fees entirely, but you can limit them. A rise in interest rates appears imminent, so folks with big mortgages may want to lock in the current low rates now! But, for some, that means getting out of an existing mortgage early.

Trying to discharge your mortgage early comes with a cost. After all, banks are in the business of making money, right? The sad truth is banks can be very greedy when it comes to calculating the interest penalty on a mortgage you’re trying to renew early.

 Once upon a time, the standard in the industry was to charge a three-month interest penalty for early discharges. CMHC paved the road for that because they had it written into their policy. But when they removed it back in 1999, they’ve created a feeding frenzy among banks who now want to charge what’s called the Interest Rate Differential: a calculation they can do any way they want because there’s no uniform system among lenders or regulation by the Bank Act.

Click here to read more from MoneySense.

The Angela Calla Mortgage Team looks to place your mortgage first (provided you qualify) with a lender that does not have posted rates to minimize any breaking early costs to help you optimize the market to your best ability.

Questions on your mortgage? Contact The Angela Calla Mortgage Team directly 604-802-3983 callateam@dominionlending.ca

Finance Minister Jim Flaherty said he isn’t planning new measures to restrain the country’s housing market because his past four rounds of action have already worked to avoid a bubble.

“So far, I’m satisfied that we have a balance in the real estate sector,” Flaherty told reporters in Wakefield, Quebec, at the start of a policy retreat with business leaders. “There are some bumps along the road in Toronto and Vancouver, in particular in the condo markets, but overall, I’m satisfied.”

Flaherty has warned consumers to avoid mortgages that could become unaffordable when borrowing costs rise, after Canadians took on record household debts relative to disposable income.

Flaherty said that “we have been watching the condo market and the housing market very closely for at least five years.” He also said that he does have “contingency plans” he can use if the need arises. 

Click here for full details from the Financial Post.

Questions on your mortgage? Contact The Angela Calla Mortgage Team 604-802-3983 callateam@dominionlending.ca

 Following the recent announcement by CMHC to impose limits on the amount of government-guaranteed mortgage-backed securities (MBS) that a lender can sell to investors or hold on its balance sheet, I joined Global TV’s morning news to discuss what this means to borrowers in a brief interview that can be watched here:

http://www.youtube.com/watch?v=elvDlO65vZM&feature=youtu.be

Top Points Covered:

1. Reasons for the new limits

2. How the lenders will adapt

3. Effect on borrowers

4. Best advice for dealing with rising rates

In this ever-changing mortgage market, The Angela Calla Mortgage Team cares about helping you and those you care most about. We want to ensure you benefit from our experience and proactive approach to market changes. Please contact us directly with any questions or to see how we may be able to help you.

Sincerely,

Angela Calla, AMP

Dominion Lending Centres-Angela Calla

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

Phone: 604-802-3983

acalla@dominionlending.ca

www.angelacalla.ca

The prospect of loading up with debt to buy a home is daunting to most Canadians – and doubly so for first timers. Which is why it’s crucial to have an expert to depend on for good mortgage advice. While most lenders have well-trained in-house consultants to support their clients through the application and approval process, many borrowers turn to independent mortgage brokers to gain a broader view of their options before committing to a specific lender.

The Canadian Association of Accredited Mortgage Professionals (CAAMP) points out that mortgage brokers work for both the borrower and the lender. Brokers are paid a commission by the lender and act as a bridge between the two until an agreement is concluded.

In 2004, CAAMP launched the Accredited Mortgage Professional (AMP) designation for Canada’s mortgage brokers as part of its ongoing commitment to increase the level of professionalism in the industry. One of the first pieces of advice that Angela Calla, an AMP at Dominion Lending Centres, gives new clients is to assess the credentials of mortgage lenders in the same way they would evaluate an investment adviser. “Let’s say you’re going to get a mortgage for $300,000. Approach it as if you were going to invest $300,000,” she says… Read the full article HERE.

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

Some financial advice is so oft-repeated that everyone takes it for granted: You shouldn’t bring debt into retirement. Debit cards are safer than credit cards. Older folks should invest more conservatively. As they used to say on Seinfeld: yadda, yadda, yadda.

The problem is a lot of that is bad advice. At best, it fit a bygone era; at worst, it was never right and is dangerous.

Click here for a list of favourite financial chestnuts courtesy of the Globe and Mail.

Questions on the right mortgage for you?

Contact The Angela Calla Mortgage Team

callateam@dominionlending.ca 604-802-3983

Fraud and investment scams abound at all levels of the real estate market – whether it be a contractor who charges hundreds of dollars for work not done to an “investment agent” who embezzles hundreds of millions.

 Protecting yourself can require a measure of vigilance and legwork, but it can also come down to exercising skepticism and common sense.

Click here for the top six real estate scams and how to avoid them from the Globe and Mail.

Have questions on a mortgage?

The Angela Calla Mortgage Team is here to help

callateam@dominionlending.ca 604-802-3983

The Angela Calla Mortgage Team is committed to giving you information in real time so you can use it to your advantage. By contacting us today to see what your options are under the current guidelines we can help you renew or refinance your current mortgage today before these policies come into place by years end. If you have questions on your mortgage, or for someone that you care about, please call or e-mail us today.

Stricter Debt Ratio Standards on the Way

If you’re a typical borrower, your debt ratio’s will largely determine if you’re approved for a mortgage.

For applicants who push the limits of qualification, those approvals have been tougher to come by. That’s a direct result of last year’s mortgage rule tightening, which imposed stricter debt ratio calculations (among other things).

And by year-end, those calculations will get even more conservative.

On June 27, CMHC issued new guidelines for calculating debt ratios and confirming income documents.

“Under current practice, CMHC stipulates standard formulas for calculation of debt service ratios but has not been specific as to how each key input is to be treated,” says CMHC spokesman Charles Sauriol.

These new guidelines will clarify that, and they become effective on CMHC-insured mortgages on December 31, 2013. (In practice, many lenders already apply them.)

These standards will apply to all insured 1-4 unit residential mortgages, regardless of the loan-to-value ratio. Uninsured (conventional) mortgages are allowed different policies, but most lenders will use the same rules for all their approvals.

Here are some of CMHC’s newly minted insured mortgage “clarifications” that will have the largest impact on your borrowing abilities:

• For variable income: Lenders must use “an amount not exceeding the average income of the past two years.” Variable refers to things like bonuses, tips, seasonal employment and investment income.
• For guarantor income:  A guarantor’s income must not be used in GDS/TDS ratios “unless the guarantor…occupies the home and is the spouse or common-law partner of the borrower.”
• Unsecured credit lines & credit cards: For these debts, “No less than 3% of the outstanding balance” must be included in monthly debt payments. Interest-only payments are no longer considered on credit lines. Furthermore, lenders must assess the borrower’s credit history and borrowing behaviour when determining the amount of revolving credit that should be accounted for in debt ratios.
• Secured lines of credit:  Lenders must factor in “the equivalent” of a payment that’s based on “the outstanding balance amortized over 25 years.” That payment must use the contract rate (of the LOC) or the 5-year Benchmark rate (V121764) published by Bank of Canada (if the contract rate is unknown). Again, interest-only payments are no longer allowed for debt ratio calculation purposes.
• Heating costs:  Lenders must now obtain the “actual heating cost records” of a property. When no such history is available, the heat expense used in debt ratio calculations “must be a reasonable estimate taking into consideration factors such as property size, location and/or type of heating system.” That’s why some lenders have now moved to a set heating cost formula, like:

         (square footage x $0.75) / 12 months

Compared to past methods (which entailed flat heating costs, like $100/month), the new guidelines can double or triple the heating cost that must be factored into debt ratios on larger properties, and reduce it on smaller ones.

It’s important to repeat that most of these policies are already being followed by most lenders. But there are exceptions.

Those exception-case lenders are commonly viewed as go-to sources when borrowers have tight debt ratios. These new guidelines are designed to minimize those “loopholes.”

All of this has come about, in part, because of Ottawa’s rule changes last July. At that time, the government fixed the maximum Gross Debt Service and Total Debt Service ratios for insured mortgages at 39% and 44% respectively.

Sauriol says that change “reinforces the importance for CMHC to ensure that debt service ratios provide the same measure of a specific borrower’s ability to service the mortgage debt, regardless of the lender submitting the application to CMHC for insurance.”

Courtesy of CMT

Angela Calla, AMP

Dominion Lending Centres-Angela Calla Mortgage Team

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

Phone: 604-802-3983 Fax: 604-939-8795

“An introduction to someone you care about is a big responsibility…it’s also the biggest compliment a client can give us & it’s not taken lightly. We pledge to treat everyone that is referred to us with the utmost respect & professionalism”.

www.angelacalla.ca

Reach my Team Chris Adkins & Denzil Anderson at 604-939-8777 & callateam2@dominionlending.ca

The Ottawa family who received a $10,000 cheque from an embattled rent-to-own business say they can’t cash it because the owner’s bank halted the payment.

Chantal Scott took the $10,000 cheque — delivered to her door on Tuesday evening by company owner Jean-Claude Lacasse — to a Laurentian Bank of Canada branch on Wednesday afternoon.

Full story here:

http://www.cbc.ca/news/canada/ottawa/story/2013/07/03/ottawa-rent-to-own-fraudulent-cheque-bank-certified-chantal-scott-lacasse-golden-oaks.html

We alwaya reccomend these fundementals if you are renting and looking to buy.

1. Practice homeownership- calculate what it would cost to own and make that payment every month, with the remainder over and above the rent going to your personal savings account.

2. Have the savings portion go into your savings via automatic withdrawl, take advatage of an rrsp program if your company offers one as that will be off of pre-tax dollars.

3. Know your credit and how to maintain the best score.  Most rent to own victims are individuals hope to restore their credit and that’s why that option is considered and appears attractive in the first place. Unfortunitaly a rent to own does not help restore or esablish credit.  Renting to own puts you not in control of your own money.

If you would like to understand your options to purchase a home or would like to calculate a budget, contact the Angela Calla Mortgage Team directly to help you at 604-802-3983 or callateam@dominionlending.ca

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These days, getting hitched and buying a home seem to go hand in hand. But if you want your wedded bliss to last, avoid these three classic mistakes.

Top three mistakes newlyweds make in their real estate purchases:

1. Focusing on the interest rate

Who can resist an ad that promises you’ll only pay 2.99% over five years for a fixed-rate mortgage? Very few, it seems. But the lowest interest rate doesn’t necessarily mean the best mortgage for your situation, says Angela Calla, an accredited mortgage professional with Dominion Lending Centres in Vancouver and host of radio’s The Mortgage Show. She says such a mortgage likely has restrictions and penalties. Younger couples may need a more flexible mortgage – one that allows them to pay more when they have more and less when a spouse is on maternity leave or facing job loss, for instance.

While the payments required to carry a hefty mortgage are lower than, say, a decade ago, Calla says the strategy should be to repay the debt as quickly as possible. That means paying more money towards the mortgage than you technically need to. This strategy will pay off greatly when interest rates return to more normal levels. “Today’s interest rates are a gift and young couples have a great opportunity to pay off a significant part of their mortgage,” she adds.

But are they doing this? By and large, the answer is no. Many newlyweds tend to lack an overall plan for paying off the mortgage, notes David Field, a financial advisor with WSC Insurance Group in Oakville, Ont.

2. Not talking about their finances

Picture it: A young couple goes out for a Sunday drive and spots a new housing development in a trendy area. They see the open house signs and decide to take a quick look, since they’re in the neighbourhood anyway. Presto! They’ve found their dream starter home. Calla hears a version of this scenario more often than she’d like. The problem is, couples haven’t run the numbers ahead of time. “A lot of times, they don’t take the time to get preapproved for a mortgage before looking. They don’t even understand about each other’s credit situation,” she says. “One of them may not be in a financial position to even purchase a home. That can put a damper on their plans moving forward.”

3. Not factoring in other expenses

Young couples definitely know the amounts of their mortgage payments for the next three to five years. But when Field asks his newlywed clients about their property taxes, home insurance policy premiums and how much they are setting aside for emergencies, details get scarce. Many couples’ budgets are more mortgage-heavy than they should be. But taxes and insurance can rise significantly each year, and that translates into a lack of cash flow.

The lesson here? Make sure you are saving properly for retirement and emergencies, then see how comfortably your mortgage, utilities and property taxes fit into what’s left over. “If your cash flow is too tight, if something happens like losing your job or having a new baby, you are really constrained,” says Field. “A new marriage has its ups and downs as it is; adding money problems to the mix really affects the marriage.”