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— Metrocapp Wealth (@MetrocappWealth) November 28, 2012

What If Mortgage Rates Went Up?

Economic forecasters from coast to coast anticipate that The Bank of Canada will keep its key lending rate low. As it has remained unchanged for the past 25 months, it is anticipated that we will see minor changes through late 2013. Estimations are that 2014 will likely see more significant changes, and these changes will be impactful to the general consumer.

How impactful?

Well let’s take a look at an example including the recent changes that we have seen to the amortization effective June, 2012.

If you had a $100,000.00 mortgage at the rate of 2.94%:

With an amortization of 30 years, your monthly payment would be $417.44

With an amortization of 25 years, your monthly payment would be $470.14

The difference is $52.72

If you had a $100,000.00 mortgage at modestly increased rate of 3.44%:

With an amortization of 30 years, your monthly payment would be $444.35

With an amortization of 25 years, your monthly payment would be $496.11

The difference of $51.76Protect yourself from identity theft

These numbers may seem rather insignificant, but be mindful that the average residential home price in Canada was $368,000.00 in October 2012.

Based on the above information this difference with the amortization reduction and the inevitable rate increase is $78.67 per month x 3.68 = $289.50 monthly increase. Whatever your mortgage goals may be, today or in the future, these numbers are worth paying attention to.

Keeping up to date and apprised of the current market conditions, products and rates via your CENTUM Mortgage Professional, like myself, can in fact save you thousands of dollars. The above example based on a five year mortgage term turns into a savings of $16,346.40 over the sixty months.

Be aware of some of the posted “Best Rates”. If it sounds too good to be true it probably is. This can be the case with a large amount of “special” promotions. They can have tight constraints for early payouts, and in some cases you can’t pay the mortgages out during the term of the mortgage!
Reduced anniversary payments and any changes to your monthly payments can command high administration fees.

If you would like more information about how I, as a CENTUM Mortgage Professional, can assist you in ensuring that your best interests are looked after, please do not hesitate to get in touch with me.

Anne Brill
Licence #: M08005655
Phone: (416) 289-2224
E-mail: anne_brill@centum.ca
Web: www.centum.ca/anne_brill

CENTUM Metrocapp Wealth Solutions Inc.
Licence #: 12147
716 Gordon Baker Road Unit #204A
Toronto, M2H 3B4, ON

If your looking for a mortgage please let our combined 45+ years of experience work for YOU! Contact us as today 416-289-2224!
— Metrocapp Wealth (@MetrocappWealth) November 27, 2012

When someone is looking out for your best interest, you get to focus on what matters. Call us today at 416-289-2224!
— Metrocapp Wealth (@MetrocappWealth) November 19, 2012

Keep calm and broker on

_{By CMP | 04/09/2012 5:00:00 PM | 0 comments} 

http://www.mortgagebrokernews.ca/industry-talk/keep-calm-and-broker-on/124241/# 

Jim Flaherty hadn’t formally announced the latest mortgage rule changes before broker phones began to ring.

The calls came in just as fast and often just as furiously to network execs as mortgage professionals grappled with the impact for both themselves and their clients.

You may have been on the receiving end of some of that analysis, but not all. Well, that is until now.

CMP has corralled many of those broker heads, asking them to share their own insights on four mortgage rule changes meant to slow down the market and protect Canadian households from the perils of unmanageable debt.

These broker execs don’t pull any punches about the 25-year amortization cap on insured mortgages or the “refi reset” to a maximum LTV of 80 per cent. They also meet square on concerns about the $1-million ceiling on home values and a maximum gross debt-service ratio of 39 per cent, with a total debt-service ratio limited to 44 per cent.

Still, their collective message is undeniable: Brokers will survive; brokers will continue to succeed.

An Amortization Abatement

Paul Therien
Director of Business Development
Centum Financial Group Inc.
We all know the government recently changed lending guidelines, including limiting maximum amortization to 25 years.  I have been following the reaction from a large portion of our industry, and I think the sky falling theory is overstated.  I have come to this conclusion by really paying attention to some consumer polls that show over 45 per cent of mortgage holders thought that 25 years was already the maximum allowed; 25 per cent said that they knew about 30 years, the balance simply did not know or care.

We also need to step back and look at the hard numbers.  The impact of that extra five years to the consumer is not drastic.  A $350K mortgage with a rate of 5.99 per cent only has a payment difference of $157.55 per month.  If that change means that you cannot afford your home then you should not be buying that home. What will happen in the event of a major repair, assessment, or other unexpected expense?  We should also consider that the interest paid on that mortgage increases from $321,174.25 to $398,692.91 -  a staggering $77,518.66.  Yes, you have a moderately smaller payment, but is that small savings really worth it in the long term when considering how much more you pay in interest over the full term of the mortgage?

In some areas, this impacts the ability of consumers to purchase a home in their preferred location.  There are always options such as buying a smaller home or buying in a different area.  This is not a new dilemma; it has always existed and is why we have suburbs.  We can’t always get what we want, and sometimes we should consider needs before wants.  Does a first-time home really need a $50,000 kitchen?  I want to live on a waterfront, but do I need to?  This may also result in some price compression and create pressure for greater affordability in housing.  True this is not always a good thing, but the industry ebbs and flows, always has.

Homeownership is a good long-term investment, but it needs to be smart homeownership, that is made with educated decisions and creates financial sustainability for the consumer.  It should not create hardship.  We live in a world today where we want instant gratification, and that is no different when purchasing a home.  Living on debt, however, is also living on borrowed time, because, eventually, it will catch up to us.

Brokers have the ability to turn these changes into an opportunity should they make that choice. We can become true advisers to our clients and instead of just focusing on the transaction today, stop and consider the long-term homeownership goals of our clients.  They might not be able to own the biggest house in the best neighbourhood today, but with sound advice, and a properly structured mortgage plan, that customer will come back to you when they are ready to move closer to their dream home.




Reduced LTV on Refis and its Impact

Michael Beckette,
President & CEO for Mortgage Alliance
We’ve all heard the expression “using a home as an ATM.”
It’s referencing the concern that Canadians are utilizing the equity in their homes to potentially live beyond their means and to rely on debt as a way to sustain their lifestyles.  I don’t think anyone was ultimately surprised by the government’s announcement to reduce LTV (on refis) given the recent trend in economic and consumer indices. The writing was on the wall and it was only a question of “when”!

Change in our industry is the one constant you can bet on. The pendulum never stops swinging – which direction and how far over one way or the other is hard to say. You can’t run a business today based on the assumption that things will be the same tomorrow. You either choose to succumb to the problem or you carve a strategy to pursue the opportunities. Each change will bring with it those respective scenarios.

OK, so here’s the bad: If you owe, for example, $20,000 in debt outside of your mortgage and are paying 21 per cent in interest, the 80 per cent maximum limit could mean that you are paying an extra $3,600+/- annually in interest (since you can’t roll it into your mortgage based on current interest rates). In addition, this may have an effect on home renovations – since quite a few homeowners depend on refinancing their mortgage or taking a home equity line of credit to pay for major home renovations.

The Good: The reduction to 80 per cent (previously 85 per cent) means that as a homeowner, you will now retain an additional $20,000 in equity in your $400,000 home. The plus is that a loan-to-value less than or equal to 80 per cent means you save approximately $5,900 in high-ratio mortgage insurance premiums (based on a $400,000 property value).

The Outcome: We may see the return of more private lenders to fill in the gaps. We will manage those partnerships to the benefit of the Mortgage Alliance network and their customers.

Our network is founded on providing the ultimate choice, convenience and counsel. Mortgage Alliance Professionals are in a unique position to provide that “counsel” and deliver their clients with alternate solutions for their customer’s challenges. It comes from our position of having the resources of a bank, but the attitude of an elite mortgage brokerage.

With this in mind, we will have to become better at helping our clients at managing their debt and counsel them toward planning for major spending by first saving or paying down their mortgages faster before they borrow again. Therefore, the better we know our clients, the more we connect with them and the more they’ll trust us to help them navigate their financial future. That hasn’t changed and never will.

Don’t forget: Changes Three and Four
Eddy Cocciollo
President of Mortgage Centre Canada

Fixing maximum TDS/GDS: 44%/39%
Consumers who are in debt with credit vehicles that have higher interest rates and higher minimum payments and could use a consolidation mortgage to better their monthly cash flow will be affected by the new TDS ratio change.  Those wanting to purchase a little more house and are stretching will also be affected. Brokers will win themselves an advantage if they are in tune with being more creative on behalf of these clients and use private funds or non-traditional lenders.  The broker who is a transactional cookie-cutter broker will have to better his knowledge in creative financing .. and do it fast!

Maximum insured mortgage amount: $1M
In a nutshell, a borrower with less than 20 per cent down payment cannot have a mortgage amount of more than $1 million.

I think the Smith Manoeuvre scenario may be affected more in this rule change than simply the consumer looking to purchase with less down on mortgages over a million. I think once a purchaser qualifies for this kind of mortgage then he or she should be able to come up with a 20 per cent DP more times than not.  Maybe those professionals that are cash flow heavy but are still paying student loans or would rather use home capital for their business may see it more difficult to get into a high-end home or condo now.  Brokers that have this kind of clientele will probably see their average mortgage come down slightly.   This market is small and tends to be only in the big cities, so overall the change won’t have much of an effect on the average mortgage broker really.

Take Four: A four-pronged approach

Colin Dreyer
President and CEO
Verico Financial Group Inc.
At VERICO, we ensure that we arm our professionals with balanced and insightful perspectives on any issues that affect our business.

On the day that these changes were announced by the government, we immediately hosted a webinar featuring two VERICO members who, not only have great insights, but are also regularly interviewed by major media: Calum Ross in Toronto and Jared Dreyer in Vancouver.

We started the discussion with the 25-year amortization change, which will mostly impact first-time homebuyers and those on the fringe.  We advised our mortgage brokers who have focused on this particular sector as an opportunity to expand their demographic circle and offer their valuable services to a broader range of consumers.

The removal of CMHC insurance for $1 million-plus homes will affect mainly brokers in Vancouver and Toronto where many homes are in and over that price range.  The consensus was that there is no reason why CMHC and the Canadian taxpayer should be backing luxury home purchases with less than 20 per cent down. Calum pointed out that this is a change for the greater good in terms of helping citizens use credit responsibly and that CMHC insurance should not have been available for $1 million-plus home in the first place.

On the change to GDS and TDS; it is hard to determine how this will affect the market overall.  Combined with the maximum amortization cutback, there will be reduced buying power, but will likely stimulate more subprime lending and, again, present new opportunities to VERICO members.

And finally, we addressed the change to LTV on refinances from 85 per cent to 80 per cent.  In our opinion, there are few cases where a refinance at 85 per cent was justifiable given that clients would need to pay insurance premiums if they wanted the extra five per cent, so this change is beneficial to consumers.

I’m pleased to have been able to provide our VERICO members with this opportunity for discussion and to gain valued insight from two very involved members in our network.  Credit changes or shifts are part of our new landscape and we need to learn to adapt and find opportunities in any market condition. Bottom line is if our employment rate stays consistent then these regulatory changes or market shifts will be less cumbersome than some predict.

VERICO mortgage brokers are in the best position to adapt to the changes and to continue to provide sound financial advice and to help secure the best mortgage products for Canadian home buyers.

A Broker’s Critique
Albert Collu
President & CEO of Argentum Mortgage and Finance Corporation
There is much discussion and speculation around the past and pending mortgage rule changes that have been implemented by our respective regulators and government. A number of mortgage brokers and agents are trying to crystalize the impacts of these changes as it relates to lending institutions and borrowers and that has raised many questions and concerns.

There are varying opinions as to whether or not these changes are necessary, but my opinion rests in the following notions. While I agree that the Canadian government must safeguard against potential credit issues experienced in other countries, I believe the manner in which they are doing so is disagreeable from my point of view. It is true that Canadians have been using their homes as ATMs to cash in equity for many purposes, including the consolidation of debt and therein lies the symptom of what I deem to be the greater issue. Canadians and their homes have been made the targets while other more vulnerable areas should be scrutinized, namely credit card debt.

It seems that day in and day out we are inundated with mail solicitation to apply for credit card debt and it is clear that Canadians are starting to take advantage of those campaigns towards the option of overextending themselves and are looking to normalize their monthly payments by extracting equity from their homes. The Canadian residential mortgage market has been stable for quite some time now with policies that allowed for higher loan-to-value ratios and more relaxed lending criteria than what is being imposed by our regulators. With that said it is my opinion that our credit preservation and liquidity concerns would be better aimed at revolving credit facilities such as credit cards rather than targeting a segment that has been fairly stable and consistent.

How to pay off your mortgage sooner!

Getting hooked on a mortgage based just on the lowest interest rate could lead to regret. 

Borrowers need to look at other factors, such as pre-payment options and penalties, if you want to pay it off early.

Accelerate your payments. If you do have the extra budget room, consider adjusting your payment plan.

For example, if you go on a bi-weekly accelerated schedule, making a payment every 14 days, instead of twice a month, you’ll have made the equivalent of 26 payments, by the end of the year.

Smaller, more frequent payments will reduce your interest costs and get you mortgage-free faster.
Make a lump sum payment. Say you get a bonus at work or receive an inheritance - putting a chunk of that windfall toward your mortgage can make a difference.
 
(Note: the lump sum contribution is over and above the amount you are allowed to contribute in additional bi-weekly payments.)

Reduce your amortization.  Tip the scale a little bit so that a bigger portion of your payment is going towards your principal for that portion.

http://www.genworth.ca/homeownership/c_on-your-terms/finance_mortgage_free_faster.asp 

Low Credit Score = You not qualifying or higher interest rates!

Genworth's eLearning Courses

http://www.genworth.ca/content/genworth/ca/en/tools/training/elearning.html eLearning Courses

At Genworth Canada we understand that in today's fast-changing market place ongoing training and education is critical to keeping your competitive edge.

On-line, interactive, current and fully accredited, our selection of eLearning courses will help you refresh fundamental skills and contribute to your professional and personal development.*

Best of all they are available absolutely free. Plus, you can learn at your own pace and at a time that best suits you.

* Subject to satisfying eligibility criteria. Only available to realtors, lenders, brokers and builders.

NOTE: You only need to register once for the following six elearning courses. For NEW USERS, register now by selecting a username, password and follow the instructions for easy and quick access to online courses.

To receive continuing education credits, you must:

1. Complete the course
2. Pass the test with 75% of questions answered correctly

New! Customer service confrontation and conflict – 1 hour – 1 AMP credit

How do you handle angry and confrontational customers? One of the most challenging, and potentially uncomfortable responsibilities of any professional is dealing with angry customers. By following a few simple techniques such as letting the customer vent, and expressing empathy towards the customer's situation, you can usually defuse tense situations without incident. This course explores typical trouble spots in dealing with angry customers, including reasons for customer dissatisfaction and things customer service people should refrain from saying or doing to avoid adding to the customer's frustration.

New users, click here to register. Returning users, click here to launch the course offerings.

New! Negotiation essentials: Persuading – 1 hour – 1 AMP credit

Successful negotiators have the ability to persuade others that their interests are important. But they don't achieve this by ignoring the interests of the other party. Instead, they frame and adapt their interests to reflect the other side's viewpoint. This course identifies the value of persuasion in negotiations and highlights strategies to help you be persuasive in negotiations. It also covers techniques for effectively dealing with difficult people in negotiation.

New users, click here to register. Returning users, click here to launch the course offerings.

New! Optimizing Your Work/Life Balance: Maintaining Your Life Balance – 1 hour – 1 AMP credit

You have the knowledge to assess current work/life balance and overcome internal and external obstacles to achieving balance. You know where you are and where you want to be, but now what? How do you achieve and maintain that balance? How will it be affected by external factors and behaviors? This course will focus on techniques for maintaining work/life balance. It includes recognizing the behaviors of passiveness, aggressiveness, and assertiveness and how those affect a person's ability to find balance in life. Techniques that can be used to achieve and preserve balance are also discussed.

New users, click here to register. Returning users, click here to launch the course offerings.

Interpersonal Communication - Targeting Your Message - 1 hour - 1 AMP Credit

Author and communication expert Anthony Robbins once said, 'To effectively communicate, we must realize that we are all different in the way we perceive the world and use this understanding as a guide to our communication with others.' In other words, understanding who you're talking to is as important as understanding what you're trying to communicate. Additionally, it is important to understand the role the medium, context, and other variables have on the communication process so you can optimize factors that are under your control. To confirm that your message got through, the final step in the communication process is asking for and reviewing feedback from your audience. This course explores key considerations for planning and delivering targeted messages. It highlights the components involved in communication and describes what to look for when analyzing the needs and wants of your intended audience – even if it is an audience of one. This course also takes you through the selection of an appropriate medium and context for a given message, and suggests strategies for delivering a well-planned message and eliciting feedback after your message is delivered.

New users, click here to register. Returning users, click here to launch the course offerings.

Email As A Marketing Tool - 2 hours, 2 CE credits / 2 PD Credits

Learn how to communicate effectively with your customers through e-mail. You and your company will benefit from better customer relations and increased sales.
New users, click here to register. Returning users, click here to launch the course offerings.

Organize To Remember - 2 hours, 2 CE credits

This course presents a number of different organizational systems that can be used to ease memory overload. Use retrieval systems to locate your reference and reading materials. Use reminder systems to remember names, commitments, and deadlines. Systematically log your phone calls and delegated tasks so you don't have to commit the details of these events to memory.
New users, click here to register. Returning users, click here to launch the course offerings.

For more information, email the Genworth Development Centre
at devcentre@genworth.com or call 1-800-511-8888.

Toronto Housing Outlook Conference 2012


This November, CMHC's Toronto Housing Outlook Conference will measure the city core and its satellite communities from many perspectives. As part of the most extensive housing research network in Canada, CMHC analysts and economists will showcase analyses from comparable centres and explain how economic, geographic and demographic variables can influence Toronto's housing market.

https://www03.cmhc-schl.gc.ca/catalog/productDetail.cfm?cat=14&itm=23&lang=en&fr=1352609097187

"Whenever you find yourself on the side of the majority, it is time to pause and reflect" Mark Twain
— Metrocapp Wealth (@MetrocappWealth) November 11, 2012

http://www.moneyville.ca/blog/post/1279470--3-ways-to-become-mortgage-free-faster

3 ways to become mortgage-free faster

October 29, 2012

Is now the time to lock in your mortgage?

Owning a home is one of the cornerstones of a solid financial plan. However, making mortgage payments for 20 to 30 years can take a huge bite out of your budget, even with low interest rates. A $300,000 mortgage at 3.29 per cent, amortized over 30 years will cost $161,300 in interest.
Related: Mortgage amortization calculator

Yet it’s surprisingly easy to reduce your amortization – and the amount of interest you’ll pay. When you’re mortgage free, a big part of your budget will become available to help achieve your other financial goals.

Here are three ways to become mortgage free faster:


1. Make a lump sum payment

A lump sum payment, or prepayment, reduces your outstanding principal. The sooner you can make a prepayment, the less interest you’ll pay over the long term. Your mortgage agreement specifies the maximum amount you can prepay each year (usually 10 to 25 per cent) and how often (usually once per calendar year) without penalty.

Related: Is this a good time to refinance your mortgage?

Coming up with a large lump sum - up to $75,000 on a $300,000 mortgage - is next to impossible for most people. But even a small sum – from a bonus or tax refund, for instance – can reduce your overall interest amount.


2. Increase the amount of your payments

Most mortgage lenders allow you increase your payment by 10 to 100 per cent, but there may be a fee if you change it again during the calendar year. This option is easier than coming up with a large lump sum.

Related: How much house can I afford?

Paying an extra $100 a month on a $300,000 mortgage at 3.29 per cent over 30 years will save you more than $11,000 and reduce the amortization by 3 1/2 years.

3. Make more frequent payments

Financial institutions offer a number of payment options. The standard ones are: monthly, semi-monthly, bi-weekly and weekly. Many people match the frequency to their pay periods for ease in budgeting.
If you decide to make more frequent payments, make sure you choose an accelerated option. Accelerated weekly and bi-weekly payments can save you thousands in interest charges because you’ll make the equivalent of one extra monthly payment each year.
There is very little extra savings if you just switch to a more frequent payment without taking the “accelerated” option.
Related: 34, mortgage and debt free: Here’s how
On the same $300,000 mortgage as above, a bi-weekly payment will save $289 in interest over the life of the mortgage. On the other hand, with an accelerated bi-weekly payment (an extra $50 per payment) you’ll save more than $18,000 over the life of the mortgage.
You can save thousands in interest by paying off your mortgage as fast as your budget allows. Choose any one, all, or a combination of the prepayment options available to you. Contact your mortgage lender for your payment options and any penalties or fees you may be required to pay.
Robb Engen blogs at Boomer & Echo. Reach him at robbengen@gmail.com.

Mortgage Rule Changes

June 21, 2012 -- The Honourable Jim Flaherty, Minister of Finance, announced four measures for new government-backed insured mortgages with loan-to-value ratios of more than 80 per cent:

Reduce the maximum amortization period to 25 years from 30 years.

Lower the maximum amount Canadians can borrow when refinancing to 80 per cent from 85 per cent of the value of their homes.

Fix the maximum gross debt service ratio at 39 per cent and the maximum total debt service ratio at 44 per cent.

Limit the availability of government-backed insured mortgages to homes with a purchase price of less than $1 million.

The new rules will take effect on July 9, 2012.

For more detailed information, please visit www.fin.gc.ca

Your client’s new home doesn't come with mortgage advice. We do.

When it comes to your client’s mortgage, it is important to make sure they get the home they really want, with flexible financing solutions that are right for them.

This is where Centum Metrocapp Wealth Solutions Inc. comes in. We are here to help your client get the mortgage best suited to their lifestyle and to make your home ownership goals happen.

Supported by the considerable resources and expertise of Centum Metrocapp Wealth Solutions Inc., we will provide your clients with expert advice and service for their home financing needs.

We help clients understand the economic environment and ensure that their financing suits their current situation and their future plans.

You’ll enjoy the confidence of knowing that you are working with a professional who has only your client’s best interests in mind.

If you are looking to have your client make informed mortgage decisions, contact us today and we will be in touch with you within 24 hours.

416-289-2224

Centum Metrocapp Wealth Solutions Inc.

License 12147