11 Most Common Mortgage Questions

10 Most Commonly Asked 

Mortgage Questions + 1 More Just Cuz.

1. What’s the best rate I can get?

• Your credit score plays a big part in the interest rate for which you will qualify, as the riskier you appear as a borrower, the higher your rate will be. Rate is definitely not the most important aspect of a mortgage, however, as many rock-bottom rates often come from no frills mortgage products. In other words, even if you qualify for the lowest rate, you often have to give up other things such as prepayments and porting privileges when opting for the lowest-rate product.

The Keys to A Super No Hassles Mortgage Loan

How to successfully apply for a loan...


This is what I see guarantees you a loan with little to no hassle. For the record, I can't recall ever having someone qualify this easily but it's always fun to dream.


#1 You Have most of the sale price in the bank already. You say you only need a mortgage loan for $50,000 on a a $500,000 property? Sweet.

#2 You've worked at the same place, a nationally recognized company, for over 10 years? Sweet!

#3 You have 5 different credit cards that you continually use but pay off monthly? Sweet!

#4 This house is being sold by a certified Realtor? Sweet.

#5 You are a Canadian Citizen buying a decently average home in a steady, suburban neighbourhood in a large city? Sweet.

Are you Wanting A Pre-Approval? Know the Difference.

If you ever actually read a generic advert for a mortgage broker, it will cover the basics of the job description of said mortgage broker or firm. We arrange financing for home purchases, re-financing for people trying to alleviate their debt, switches (finding a better interest rate at a different lender) and pre-approvals.

When most people start thinking of home purchasing they say 'Hey, we should get a pre-approval so we know how much we can afford'. They will then call me or a fellow broker up and tell them as such. Perhaps say 'I saw your advert' or 'I got your name from (blank) and want to buy a house. How much of a pre-approval can I get?'.

Now, here's where things get confusing for some; they want me to give them an answer preferably during that phone call yet what they are really going to get is a pre-qualification; they are just 'feeling' things out, to see if where they should start looking in the MLS listings; which is completely fine.

However, a pre-approval is backed up by evidence of your income and debts; it is actually no different than an actual approval other than there is not currently a house associated with the pre-approval. We assume that there will be one soon however. But if you want to just tip your toe in the water, talk to a mortgage broker about a .... 

My Commercials

$15,000 worth of film school  twenty years ago and here's what I come up with...

Any questions...

On the less off-beat side; 

For the hockey pool addicted...

On The Lighter Side of Mortgage blogging...

It is pretty bad when the most frequent marketing tip I read about it in regards to mortgage brokering is to provide a newsletter to your contacts (I still have a bit of a crisis of identity when I try to think of my friends, family and ex-co-workers as a 'database').  

In reality, most of my friends won't use me - knowing a friend's finances crosses a social etiquette path few care to broach; we all have images to maintain including what is actually in our bank account or how much we have banked for our retirement. We are okay with telling strangers this information although we generally have no idea who they are outside of the office (however my former bank financial adviser also played in a country band). Depending on which friend it is, I might not even offer to buy them a drink or vice versa, I might insist that they buy me a drink.

Yet while only a small percentage might use me for their financial needs, ninety percent of them will refer me to a friend of theirs. That's a nice thought that keeps me going. Meanwhile, I might throw out a newsletter or two (because it must be really successful what with everyone pointing out I need to put one out there too) but I think i can count on one finger the number of my contacts that are passionate about their mortgages and the mortgage industry. It doesn't help me as he's a mortgage broker too.

So in the meantime I will just keep bloggin' along, singin' my song...

ATT'N BC Teachers

There's an old story about a guy that is going around the scene of a battefield, pulling the boots from dead soldiers. Asked why he was doing that, he says "Hey, a guy has to make a living somehow."


For those in the Internet world with No Boundaries, in British Columbia, Canada there is a pretty big ideological fight going on over our public education system. Our public school teachers are on strike and have been since last June. The current government (called the Liberals but ironically more right wing than what the term suggests) have not negotiated a new contract with the teacher's union in over 10 years. In fact, they were found guilty 2x of attempting to union-bust and are currently appealing for the second time in Canada's Supreme Court.

BC's current public education system is represented by the guy on the right

Anyways, all you BC teachers know this; I'm just updating the dozens outside BC that are unaware of your situation. Keep reading and I will get to a small way I may be of help financially.

As this drags on the 90% of BC parents who rely on the public education system are caught in a war of words and mis-information. Everyone has picked a side but as the dispute plays out in the game of public opinion, it belies the fact that there are a lot of teachers out there that are starting to have troubles paying their bills. Much has been said of how the extended legal battle (again, original verdict in 2002) has drained the union's coffers. Food drives are being organized on behalf of teachers standing strong and walking the picket lines, other unions are starting to pledge financial help to the teachers while the government continues to state there is no money in the system to provide decent wage increases to make up for a decade of declining economic worth. Like I said, I'm going somewhere with this...

Renewal Time - Should I Stay or Should I go (to a Different Lender)

RENEWAL TIME – Switching a Mortgage (to a new lender)

So there you are, grooving to The Clash and thinking 'Where did the time go?' as you are opening your mail. You then notice a letter from your bank or credit union, which is curious as that means they have paid the cost of a postage stamp to contact you. That probably will be added to your monthly bank fees. And if they are contacting you, that means they probably want money.

You open it and find out its actually not that bad - just a friendly note reminding you that your mortgage term is coming up for renewal and hey, why not stop in and renew early before rates rise? They will even disregard any fees or penalties that may have occurred because they care about you.

You get suspicious at that word 'care'. If they cared would they be charging you that $15/month banking fee? Would they charge you $100 for an NSF check when they know that you obviously don't have or else that check wouldn't be NSF?

Buying a Home, the Basics

How many times have you asked this; "If there was only some visual representation of what I need to do as someone who wishes to buy a new home?"

Well, that's what Kiss Mortgages is here for, to Keep It Simple Simple. Feast your peepers on this.  

While it's meant for your basic mortgage broker 101 course, I believe it helps to take away the mystery of what a mortgage broker does and why. After all, we may understand why we need a T1 General (Canada represent) or two years NOAs but do you? Do you even know what that means? Let me be your tour guide. Follow me down the rabbit hole...

1) Initiate Client Contact - Whatever the marketing pros want to call it - 'touches' 'collisions' 'interactions' all it is really is someone saying 'I might need help one day and I will remember you first.'

The Pros and Cons of Using a Mortgage Broker

If you know me (and you probably don't) you should know I'm a mortgage broker. I'm not a great one, but I'm pretty good, so I like to think. Sometimes I tell people that maybe they should stick with their current lender or that they aren't ready to buy that house yet. In this cutthroat world of commission-based sales, I believe that you have to do what is right for the client, not my bank account. And sometimes that news isn't what my clients want to hear. 

So when I was trying to come up with an idea for this week's blog post, I found this little article about the pros and cons of using a mortgage broker. And I thought 'Cons? What cons?". Then i realized I'm a little biased on the matter so I decided to deconstruct these cons as posed by Krystal Yee, an interesting lady who does her own thing at the greatly named  www.givemebackmyfivebucks.com and makes some freelance income on the side such as with this article which you can read in entirety here but I'm going to deconstruct it on my blog anyways but still - every writer loves the web hits. 

Support Krystal - she's worth the read. 

'You don't need double-talk, you need Bob Loblaw'

The Pros and Cons of Using a Mortgage Broker


Whether you decide to purchase a house in the country or a swanky downtown loft, your home will likely be the biggest investment you will make. But before the keys get handed to you, there is a lot of research and paperwork to do -- and that includes securing financing for the most expensive purchase of your life. 

- I'm with you so far, Krystal. 


According to a 2011 survey by the Canada Mortgage & Housing Corporation, 81 per cent of recent buyers, at some point, will rely on a mortgage professional (either a mortgage lender or mortgage broker) for advice and consultation.

When you decide to use a mortgage broker to help you with your financing, they will act as a liaison between you and the lending institution. Mortgage brokers negotiate the best available terms and rates on your behalf, and will usually work with dozens of different lenders in order to secure the financing options that you are looking for. 

- this is our typical sales pitch; all new mortgage brokers must recite this from memory in their secret initiation ceremony.

Here are three reasons to use -- or not use -- a mortgage broker: 

1. Mortgage brokers provide their services for free to borrowers. 

Pro: Since mortgage brokers are only paid when a loan is approved and signed, their assistance will cost you nothing. 

Con: Brokers are paid a commission by the lending institution, and don't work just for you. 

- I'm glad I wrote the intro before actually reading this - It's more fair to say that brokers work for themselves. All lending institutions provide close to the same commissions - that's actually not a big factor - what we look for is competency, co-operation (ie; some lenders will never finance farm land) and competency again. If we have difficulties with a lender on your behalf, we're most likely not going to use them again just so we make an extra $50. 


2. Mortgage brokers help those with less-than-perfect finances secure a loan. 

Pro: For those with blemishes on their credit report or a low household income, a broker might be able to negotiate better rates than if you approached the lending institutions yourself. 

Con: If your finances are less than perfect, you might not be financially ready to become a homeowner, whether the bank will give you a mortgage or not.

-Most everyone has less-than-perfect finances, that's why you have a consultation with a mortgage broker. A good mortgage broker will tell you what you need to do to qualify, can help you budget or give you a referral to someone who can if you don't and will keep in contact with you to see how you are doing. If you aren't going to be a present client, you might be a future client.   


3. Mortgage brokers will save you time. 

Pro: Mortgage brokers will do all of the legwork for you in terms of paperwork and negotiating with lenders. They will also be your point of contact for everything related to your financing. 

Con: Even though you will most likely save time by using a broker to do all of your negotiating, some brokers may compare the rates from only a handful of lenders. If you want to ensure that you're getting the best possible financing, you will have to do the research yourself. Because mortgage rates are so easily accessible by anyone online, it is a lot easier than it used to be to compare and negotiate with different lenders on your own. 

-ummm...well, speaking for myself, i get daily and monthly rate sheets all in one nicely formatted email. If you are concerned if you are getting .2% or .5% less than Prime then sure; you could save maybe $4 a month shopping for yourself but you won't know if that lender is 'competent, co-operative and competent'. Rates are pretty level across the board as public lending institutions are extremely competitive with each other. Plus, some brokers (like me) receive 'unadvertised discount rates' for preferred mortgage brokers. An advantage that online do-it-yourself'rs don't have.  


When deciding which type of financing is right for you, here are a few details you need to make sure you share with your mortgage broker or the lending institution you decide to work with. 

- please mention assets, please mention assets.

Prepayment 

How often will you be able to make additional payments on your mortgage without being assessed a penalty, and how much will you be able to pay? 

Frequency of payments 

Whether it's weekly, biweekly, accelerated biweekly or monthly, make sure the lender offers the payment frequency you feel most comfortable with. 

Penalties to breaking the mortgage 

Make sure that you are fully aware of what the penalty would be should you decide to opt out of your mortgage term. 

- These are actually details that the broker needs to share with you, not the other way around. These are all considerations in the 'fine print' of a mortgage contract. 

The one other thing you will need to decide is if you are going to go with a fixed rate or a variable rate. The advantage for variable is the penalty is awfully small compared to fixed...ask your broker to explain it.

Now...
details you need to share are your assets, liabilities, any breaks in work history the last three years. Your personal information, your SIN #, bank information, any other properties owned, current mortgage amount (if applicable), possibly the current appraised value of your house.

Unfortunately if you are paranoid this will bother you that I will be seeing so much of your financial life, but trust me, I see a lot of people's financial information...yours won't be anything spectacular. To share that information outside of my office is a severe breach of trust and criminally irresponsible. If I don't have your trust and confidence from this relatively anonymous blog or in person, then you will have to find someone you do trust or someone recommends. Ask around.  

Whether you decide to use a mortgage broker to help you through the home-buying process or to secure your own financing, it is important that you do your research so that you are happy with your decision. Some banks or lenders might give you the runaround, while a mortgage broker might be able to hold your hand through the entire process, securing a great rate for you. Or vice versa. Don't be afraid to shop around and ask for references whenever possible. 

Would you consider using a mortgage broker? 

-Thanks Krystal, Mortgage brokering is not rocket science - it's more data analysis with some sales thrown in and long-distance financial forecasting. Brokers are fast becoming a reasonable, growing option for a cost-conscious society. Nothing is more satisfying than having new business come to us because of someone else's referral. It's our way of knowing we are doing a good job.

Until next time...

Three Bank Mortgage Renewal Traps to Avoid

It's Mortgage Season! 

Three (3) Renewal Traps to Avoid; 

How do you get the most bang for your mortgage buck? By understanding you are the one in control of your mortgage. All banks want your mortgage payments. Here are three ways that banks will try to trap you into staying with them instead of finding the most affordable option for you.

Maybe I can convince you with this free pen as well? 

1. 'Encouraging' you to Renew Early

You do not need to renew early. Banks will call 6 months before the renewal date and say "if you renew early, we will give you best rate". The best strategy is to get the best rate from all of their competitors over the next 6 months.

For example, we can lock in a rate at 3.19% today. If rates go up before your renewal date, we will use the 3.19%. If rates decrease, we then use the lower rate.

Try to determine if your bank rep is smiling or growling. That helps.

2. Renewal Mail Outs 

Don't ever sign this! Banks will send out renewal letters, citing the 'convenience' of you not having to come into the bank yourself. Sometimes they will give you rates .5% higher then what they are currently offering new clients counting on you not to know the big picture. A .5% difference over 5 years is 2.5% profit for a bank. On a $400,000 mortgage, that's $10,000 you lost and the bank gained because you didn't liked the convenience of not shopping around.

This says a lot right here when it comes to mortgage renewals. 

3. Last Second Renewal 

They will contact you a week before your renewal date. If you are unprepared, you may agree to what they offer you. Never agree and call a mortgage broker! AKA - Me! Most mortgages can be turned around in 2-3 days.

Yes, I am Daffy Duck in this situation...

HOW TO AVOID THE ABOVE THREE SITUATIONS:

Email me here your renewal date. I will get in touch with you 6 months before your renewal and build a strategy with you. Worst case scenario, if I can't find anything better, I will negotiate directly with your current bank for you.

Don't pay money that you don't need to. Stay informed, contact a mortgage broker today.

What in tarnation?! Where's my cameo? 

Ten Costs to Consider When buying a House.

There's a lot of things to consider when you are looking at 'moving on up' in the world, or even just 'moving across the street'. Here are 10 things. You may overlooked one or two.

Balloons help in every situation. 

Conventional vs. Collateral Mortgages

What's the difference? I asked one day. Big mistake. There's a big difference. Like Cool Fonzie Vs. Cool Batman difference.

Not Cool-a-mundo...

CONVENTIONAL MORTGAGE -

If you are the average, hard-working, beer-swilling, Tim Horton-eating Canadian with a steady paycheck and looking into purchasing your own home you will most likely getting a conventional mortgage. Most people you know have a conventional mortgage. It's basic. It's simple. You know your monthly payment amount, your rate of interest, the length of your term and most important when it would be paid in full.

For example; You bought a nice home for $200,000. You saved up enough to put the minimum 5% down and so have a mortgage of $190,000. You are paying 3.5% interest and after 5 years your mortgage will be up for renewal. Keeping at the current rate, your mortgage will be paid out in 25 years.

Your monthly payments go to paying principal and interest that is calculated over time. At the start of your mortgage, most of your payment goes towards the interest owing with a smaller portion going to principal. As time goes on, the payments go more towards principal than interest.

You can 'switch' or 'transfer' your mortgage to another lender at any time (with a penalty) OR you can wait until the end of your term, at which point you can switch lenders at no cost to you.

Don't worry that his office is a Public Men's Room... 

COLLATERAL MORTGAGE

Collateral mortgages are great for 2 reasons. Neither of them are beneficial to you. They keep you from switching lenders and can be used to pay off outstanding debts owed to other lenders, without your consent.

A collateral mortgage is basically a loan agreement secured by the mortgage against your home. Several lenders will offer to have your mortgage registered for up to 125% of it’s value. So, if you have a house that's worth $200,000 you can register a mortgage of $250,000. You won't get that, but it allows you to borrow against that supposed equity without having to resubmit a new mortgage application.

BUT if one day in the future you wish to change lenders a registered collateral mortgage makes it very difficult and expensive. It's how banks keep customers by effectively holding your mortgage for ransom.

Also, if you have a collateral mortgage and you have defaulted on another loan or credit card, a lender can use this collateral mortgage to pay out your other debt.


and KISS or Keeping it Simple Simple.


You have a collateral mortgage at Big Bank because you needed to use the future equity in your home for emergency repairs. Your house is worth $200,000 but your mortgage is $250000. You default on your Big Bank Credit Card, as interest expenses haven't allowed you to pay the balance down and you owe $20,000. Big Bank sees you have a collateral loan and so uses that extra 'equity' in your home to pay off the credit card with no authorization needed from you.

OR you want to move to a credit union because you like the concept and so when you try to switch your mortgage you are told you have to pay off your current collateral mortgage (which may be more than the current value of your home) and then you can reapply for a new one. You really have no choice. You have to stay with your current lender. Sort of like Detroit.

Remember to ask if you are being sold a conventional or collateral mortgage. If you are looking for a line of credit as well as a mortgage, keep in mind this means you will most likely be sold a collateral mortgage and you may be in such a state of euphoria to get that loan you might not hear the smaller details, like that most new homeowners find they sell their first home on average 3 years after purchase.

The interest rate adds 200 lbs. 

The Fear and Reality of Rates Rising

....I read too much....

When will the sky start falling? It's a question put forth nearly every 3 days by some financial expert about the current state of real estate in today's day and age. I read articles constantly about the real estate bubble bursting and unfortunately, none of them are about how to be prepared.
The consensus among those pessimists is 'soon, any day now, like really, it's going to happen, this can't last forever, the real estate bubble will burst.'

But man, doesn't it feel like they have been saying this forever?

I admit I am fairly new to the mortgage broker business. I've never seen a public lender rate at above 6% (which was my 1st house mortage). I can't fathom my parents' mortgage, where they had loans of 11-18% interest. So what's happening?

I'm not financial expert, but here's one thing; Money is not infinite. There has to be balance. This is kept in check by 'inflation'. You may remember discussing this in high school economics or socials class. At one time, governments thought the easiest answer to nobody having money was just to make more. I remember my teacher using Post-Germany WW1 as an example of inflation.

And then I found the Internet using this as an example.

But that was centuries ago! Well, not really. More like only 1 century ago. So this idea of inflation or cause and effect, taken as a moment of time in all known history is relatively new.

Amending a Point About the IRD Buy-out/Penalty

So previously I wrote a definition of the Interest Rate differential (see below w/ classic Family Guy moment). I am going to avoid my opinion on the preference for lenders to call the IRD a 'buy-out' instead of a 'penalty' (which it is, oops). 

Interest Rate differential (IRD) If you wish to perhaps buy out your mortgage as you found a better rate elsewhere or wound up with a lot of extra cash, an IRD is what your bank will charge you for breaking the term's agreement. It handcuffs a lot of owners who may wish to take advantage of lower rates as an IRD can run into the thousands of dollars. Simply put, the IRD can be equivalent to a kick in the balls when you check into how much it would cost to pay out your mortgage.

there's your IRD!

Anyways, the large kick to the balls when you find out that if you wish to take advantage of lower rates will cost you $2000-$20,000 is the #1 reason people stay with their current mortgage lenders. 85% of these people inquiring as to penalties buy-outs are with the Big Banks. They, in turn, are being pro-active in keeping you (their best, loyal contributor to their shareholders) from switching over to a smaller lender that offers better savings.

That's just the interest I'm paying for my mortgage?

YET, is that penalty buy-out enough to stop you from investigating your options? 

Top 20(ish) Must Know Definitions when talking about Mortgages

A typical mortgage broker class

Sometimes us mortgage brokers forget that not everybody has gone through an all you need to know about applying for a mortgage course. Websites and MBs will throw certain words at you repetitively as if you know them. Here are some of those words for a handy quick reference guide. Of course, most lenders will also have a glossary of common terms on their websites.

Interest Rate  Simply put, it's the cost of borrowing money from a lender. The higher the interest rate, the more you pay for borrowing.

Amortization The time over which all regular payments would pay off the mortgage but not to be confused with 'term'.

Term The length of the current mortgage agreement, after which time the mortgage contract can be renewed or renegotiated with no penalty to the borrower.

Consider a Term as being a base hit. Amortization is a home run. 

Variable or Fixed Rate  lenders offer you 2 types of interest rates when creating your mortgage agreement; variable and fixed.

Variable  fluctuates with the established Interest Rate which can change 8 times a year. It is also called a Floating Rate. It's a gambler's rate as if the rate starts climbing you may pay more in interest or conversely most lenders allow you to 'lock in' your rate at any time in the first 3 years of your term.

Fixed Rate  the interest rate is agreed upon for the term of the mortgage. You can 'lock in' on a fixed rate and forget about it until the end of your term.

Open Mortgage  A mortgage which can be prepaid at any time, without requiring the payment of additional fees.

Closed Mortgage A mortgage agreement that cannot be prepaid, renegotiated or refinanced before maturity, except if agreed upon beforehand.

Loan to Value (LTV) A lending risk assessment ratio that lenders examine before approving a mortgage. High LTV ratios are seen as higher risk and therefore the loan will generally cost the borrower more in interest. They will also need to purchase mortgage insurance.

LTV = mortgage requested divided by the appraised value of property.

Total Debt Service Ratio How much do you need to be making in order to cover all monthly debts that will occur for your new household? Your TDSR should not exceed 40% of your gross monthly income.

Beacon Score aka Credit Score All lenders require a credit check. The result that is returned to them is your beacon score. A score of 650 or higher is good, 650 or below may cause concerns in approving a mortgage.

has excellent beacon score

Maturity Date  Last day of the term of your mortgage agreement. Most lenders look to lock in another mortgage term before the maturity date.

Appraisal Value  An estimate of the market value of the property in question

Conventional Mortgage A mortgage that does not exceed 80% of the purchase price of the home. Mortgage insurance is not need in a conventional mortgage.

High Ratio Mortgage If you don't have 20% of the purchase price or appraised value of the property, your mortgage must be insured against payment default by a Mortgage Insurer, such as CMHC.

CMHC (Canada) or Genworth These are companies that provide mortgage insurance to the lender against loss in case of default by the borrower. The premium is paid by the borrower. CMHC is federally run and is the number one reason why mortgage insurance rates remain low.

Interest Rate differential (IRD) If you wish to perhaps buy out your mortgage as you found a better rate elsewhere or wound up with a lot of extra cash, an IRD is what your bank will charge you for breaking the term's agreement. It handcuffs a lot of owners who may wish to take advantage of lower rates as an IRD can run into the thousands of dollars. Simply put, the IRD can be equivalent to a kick in the balls when you check into how much it would cost to pay out your mortgage.

there's your IRD!

Porting This allows you to move to another property without having to lose your existing interest rate. You can keep your existing mortgage balance, term and interest rate plus save money by avoiding early discharge penalties.

Principal  the easiest for last; the principal is the actual amount of money you borrowed from the lender, not including interest

Hope it helps! Good luck. Contact me with any questions or clarifications. 

Mortgage Penalties

Or ... How much will I really save? Like, really? 

It's been a crazy millennium so far for mortgages. Long gone are the olden days of what at the time seemed reasonable 6-10% interest rates pre Y2K (remember that fun?). Instead we have had a steady mantra of 'rates won't go lower' and yet they continue to do so - just months ago the industry-shocking rate of below 3% was announced and experts were all like 'WTF!!! That's insane.'

Then this monthin Canada, another mortgage lender announced a 1.99% interest rate and industry experts heads exploded.

DO NOT PRESS PLAY IF YOU DO NOT WANT TO WATCH SOMEONE'S HEAD EXPLODE:

ah...science.

Moving on...now keep in mind that the interest rate in it's essence is the amount that a lender charges you for lending you money. If I lend you $100 and then get you to fill out a bunch of forms that legally say you will be paying me back $110 in six months then I am charging you a flat 10% interest fee.

Pretty simple at it's core. But nothing is simple in banking finances. There are a lot of little tricks to hide that true number, as consumers all love a deal. You got a weed whacker for $129 at Canadian Tire? I bought one at Sears for only $125! Sucker! Banks charge you a semi-annual interest rate, meaning that 10% isn't actually 10% but rather 5% charged to your amount owing 2x a year. And that's just the tip of the iceberg and also maybe for another column.

Investing In Real Estate? Or How Many Mortgages Make a Mortgage Mortgage?

Too Much Money, Not Enough Mortgages...

There are many variables to consider when/if you decide to jump into real estate investment. Like...how do I do it? Can I afford it? Do I even want to do it? Before you jump into looking for your first investment property, here are some important considerations to make.

So much money to burn...

Investable Funds Sit down with your financial adviser (first step; get a financial adviser). Talk with them about how much can you actually afford to invest? 

What are your expenses? How much do you have set aside for emergency funds? Real estate investment will tie up your funds for some time and if you need to liquefy your assets quickly, this could become an issue. You may need to consider a moderate initial investment amount and strategize accordingly - investing in smaller deals, partnering with others or investing in assets that you can readily exit from or all the above.

Bridge Financing, the other kind...

First, did you know that the Ambassador Bridge that links Detroit to Windsor and vice versa is privately owned?
Nothing to do with mortgages, it's just something I never considered. There is currently some very large drama going on over there as the US and Canadian governments wish to create a second crossing between the two countries to ease congestion and well, stop paying an American billionaire the privilege of using it. He, of course, is opposed to that idea because that apparently goes against every ideal of free enterprise that his family and bank account holds dear.

But I'm supposed to be writing about the other type of bridge financing as it relates to the mortgage business.

Bridge financing is the term used when the purchase of your new home is tied up (or subject to) the sale of your old home. Many homeowners today, whether upsizing or downsizing their homes lack in having the necessary 5% downpayment for a new purchase. A $300,000 home would still require a minimum of $15,000 down. So instead of draining RRSP's or holding out a hat on a major pedestrian thoroughfare, lenders will allow that down-payment to come from the sale of their old home.

you don't have to be honest about your needs but it helps

5 Reasons to Avoid Big Bank Mortgages

In Canada, there are few things guaranteed. Snow. Taxes. Roll up the Rim to Win.

Wearing out your snow shovel...

We want guarantees. We need them. So when we want that feeling of security that only home ownership provides we turn to the first thing that we think may be able to help us financially; our parents.

But what if you are past that stage of wanting/needing parental assistance? Your second choice is most likely your financial institution. After all, you've been with them probably ever since your parents set you up with your first bank account in a perhaps misguided attempt to teach you about savings and earning interest.

I know that's where I started. I was told that the banks will 'give me money on the money i give them'. It was called interest. So every once in awhile my folks would take me to the local bank and I would give the teller my bankbook and some birthday money from Gramma and the teller would take my money and give me the book back. Inside it were numbers; my previous balance, the money the bank gave me for keeping it there, my deposit and then finally my new total.

The one time i remember registering how much my bank was giving me it was 11 cents. I probably had not been in there for a few months. I remember thinking 11 cents isn't very much. Fast forward 30+ years and I'm still wondering when I'm going to be getting paid for giving my money to the bank to hold for me so that robbers wouldn't get it.

I digress. You are a grown up now and want to buy a house. You need a mortgage because you don't have $400,000 built up from the interest you have earned from your bank. So, after your parents say no, you decide to go to the only place you know that deals with big amounts of money; your bank.

Is that your smartest choice?

Assuming a Mortgage

Assuming the possible

Let's say you have an opportunity to perhaps buy someone else's house. Maybe it's a family member or someone that years ago locked into a 10 year rate and now wants out but has found there is some clause in their mortgage that puts a financial penalty on them if they want out of the mortgage so they've offered you the great opportunity to just assume their mortgage, bypassing a penalty imposed on them. 

You could see the potential with an in-law suite

An assumable mortgage is a mortgage that may be transferred without changing the terms of the original mortgage, meaning someone else can take on your mortgage payments and become legally responsible for them. 

Why would someone assume a mortgage?

Home Equity Financing Options

HELOC vs. HEL 

or 

"How are we going to pay for this new bathroom?"

If you were like me two years ago, when someone mentioned the term HELOC you probably assumed they were talking about some new super-villain that the Spider-Man movie franchise was going to bring out of obscurity to appease the comic fanboys.

In actual fact, it's an acronym used in mortgage financing. HELOC actually stands for Home Equity Line of Credit, which is quite different than it's other, equally popular cousin, HEL, or the Home Equity Loan option.

"Well, hey now", you might be saying, "that may sound relevant to my needs. Tell me more."

How I feel when someone introduces me as a mortgage broker...

And that's what I'm here for...

The Variable Rate Advantage

                     or To Fix or Not to Fix (your mortgage rate)

One has a fixed rate mortgage, the other is Matt Damon.

Throughout the years, most people have fallen into two groups; those that understand mortgages and those that let their banker figure it out for them.

Okay, there's also that group that just does what their parents tell them to do. 

Then there's that other group that have no idea what mortgage is and what it entails (let's call them 'kids today'). 

So, four groups but I digress.

Let's focus on the first two. 

Nowadays, thanks to the internet and the continuing increase of personal debt, people are doing more research into how they can make their dollar stretch farther. Ironically tv shows, websites, travelling circuses have been set up to help people take control of their debt in between advertisements for flat screen TVs, mobile phones and 0% down brand new cars and limited edition paperback do-it-yourself manuals.