3

Featured Article

Edison Financial: LMB Mortgage Review

Are you looking for a mortgage broker to help you refinance your home loan in Ontario or British Columbia? In 2020, there were 551,392 housing units sold throughout Canada – an increase of 12.6 percent over the previous year!

Buying a home or choosing to refinance an existing loan is a major life decision. It is important to find the best mortgage broker for your big choice. A mortgage broker will help you with paperwork and find the most competitive rates. 

Check out this Edison Financial Review to decide if Edison Financial is the best broker for you!

An Overview

Edison Financial was established in 2017 with one goal in mind. Founder Hash Aboulhosn aspired to transform the mortgage broker industry in Canada to make life better for clients and brokers!

Based in Windsor, Ontario, Edison’s employees have lots of experience in the mortgage industry in Canada. They work alongside Lendesk Technologies to give customers a range of financing options.

Rock Holdings is the parent company of Lendesk Technologies and Rocket. If you aren’t familiar with Quicken Loans, it is the largest mortgage lender in the United States!

The industry knowledge and Lendesk Technologies’ programs help set Edison apart from the competition.

The Pros and Cons 

Edison Financial Canada has built its reputation on meeting customer needs. They also provide efficient service to close deals faster. Here’s a closer look at some of the pros and cons of picking a mortgage broker like Edison Financial:

Pro: Access to Wide Range of Options

Don’t overlook the importance of a broker’s use of technology when trying to pick the one for you. Edison’s partnership with Lendesk gives it access to the largest home loan database in Canada. This allows Edison Financial to cast a large net to find the best rate for your loan. 

Pro: The Depth of Industry Knowledge

Aboulhosn founded Edison in 2017 and developed his business around knowledge and experience. He worked with Lendesk to establish a relationship to help Edison’s customers later.

Today, Edison’s clients receive the benefit of working with Edison’s team of professionals. This group has decades of experience in the Canadian housing market. They also have access to Lendesk’s systems to give you lots of financing options.

Pro: Ease of Shopping for a Mortgage

Edison has direct access to over 50 lenders with no hidden fees and low rates.  With this type of access, they can pass on savings to their clients with rate buydowns and cash rebates.  Further, unlike a traditional bank, Edison works with alternative lenders who may have a solution for each consumer.

Pro: Technology First Approach

Edison is backed by Rocket Mortgage, the largest lender in the US.  This gives Edison the ability to offer a completely digital mortgage experience.

Pro: Excellent Customer Service

Edison boasts a 4.9 star service rating and pride themselves on putting people first from initial call to close.  Edison provides each client with a dedicated agent and closing specialist to help every step of the way.

Review of Edison Financial: Mortgage Broker

Con: Limited Geographic Scope

Edison Financial’s limited geographic scope means they don’t serve all the provinces across Canada. If you are looking to refinance your mortgage outside of Ontario or British Columbia, you’ll need to look elsewhere for these services. 

Although Edison Financial is limited to serving two provinces at this time, they may expand across Canada in the future.  

Is Edison Financial Right For You?

Your decision to pick Edison Financial comes down to whether they are the right ones for your needs. One of the things setting Edison apart from others is they work with clients that don’t check all the boxes on paper. 

Are you concerned about some of your credit history? You may not get approval for your loan through traditional banks. The representatives at Edison Financial look for ways to say “yes” to working with you!

Edison Financial is best for homeowners and buyers in Ontario and British Columbia. Especially those that may not have the best track record with creditors. 

Edison Financial Review: Choosing Edison Financial for Your Lending Needs

An Edison Financial review is not complete unless it tells you why Edison Financial may be right or wrong for you.

There are other mortgage brokers that have been in business longer than Edison. Don’t let that steer you away from taking a serious look at them for your business.

Are you looking for other great ways to lower your costs for owning a home in Canada? Check out our blog section for tips and tricks to use during the home buying process!

Featured Article

Should I Refinance My Mortgage

Imagine this: your mortgage is cheaper every month. The interest rate that you’re paying for your mortgage is lower. You can pay off your mortgage faster.

Sounds too good to be true, right?

Surprisingly, you can enjoy these changes if you refinance your mortgage. But, what is a refinanced mortgage and how can you take advantage of it?
If you’re ready to learn more, just keep reading. We have everything you need to know.

What Is Refinancing?

The term “refinance” refers to the act of renegotiating a loan that you currently have. By renegotiating your current terms, you can try to get a lower monthly payment and a lower interest rate. This lowers your overall payment to the entity that provided the loan.

Refinancing isn’t new. In fact, people have used it for years and years to consolidate their debt, pay for large expenses, and make room in their monthly budget.

When you’re refinancing a loan, you’re discussing an entirely new loan agreement. This means that you’re likely going to have a low monthly payment and a lower interest rate like we discussed above.

What Is a Refinanced Mortgage?

If refinancing is the renegotiation of a loan, then a refinanced mortgage is the renegotiation of your mortgage. This means that you have the ability to get terms for your mortgage contract.

In turn, you could have lower mortgage payments as well as a lower interest payment to go along with your mortgage.

You can refinance your mortgage with your current lender or a new lender. Either way, you’re likely to get a better deal than you currently have (as long as you time the refinancing correctly).

What Does It Mean to Refinance a Mortgage?

If you’re still confused, let’s break it down.

Refinancing a mortgage involves two things: (1) agreeing on new mortgage terms and (2) paying off the first mortgage.

Once you agree to and sign onto your ‘second’ mortgage, you’re going to use the money that you’re borrowing to pay off the first one. Then, you’re left with your second and only mortgage to pay off.

Since you used the loan from the second mortgage to pay the first, you now only have to worry about following the terms from the second. This means that you’re paying off one loan to take on another smaller loan.

Should I Refinance My Mortgage?

Each case is different. Everyone has their reason(s) for refinancing their mortgage.

From the interest rate to the monthly payment, there’s a lot to love. But, refinancing isn’t for everyone. In fact, it’s possible for you to negatively impact yourself by going after a refinanced mortgage.

To determine whether or not you should consider refinancing your mortgage, go through our list of reasons that you should refinance your mortgage. If you find that these resonate with you, it may be time to refinance.

Refinancing Your Mortgage May Give You a Lower Interest Rate

If you’re interested in getting a lower interest rate for your mortgage, refinancing may be right for you. Often, people are given awful interest rates when they’re first starting out. As they make their payments over time, their credit scores increase.

If your credit score has improved or you can prove that you’ve been making payments, you might be able to get a lower interest rate on your mortgage.

Getting a lower interest rate could save you a lot of money over time. This means that you’re going to pay less towards the loan overall.

Unfortunately, you may have to incur a prepayment penalty. You should take the time to figure out whether or not the prepayment penalty will be so much that it will cancel out the money that you’d make back in interest.

If you find that you’d save more money by refinancing, you should start considering talking to lenders.

Refinancing Your Mortgage May Allow You to Access Equity in Your Home

Home equity is the difference between the amount that you currently owe for your home and the amount that your home is currently worth.

For example, you may have $150,000 left on your mortgage. If your home is currently worth $200,000, your home equity is valued at $50,000.

Home equity is a measurement that financial professionals use to determine a lot of things about your financial wealth. For one, having more equity in your home is a sign of great wealth, especially if your home equity is greater than 50% of your home’s value.

You can also use your home equity as a tool when you’re selling your home later. You might be able to make a profit off of a home sale if your home equity is large enough.

Plus, you can leverage home equity in a reverse mortgage when you’re older.

The bottom line is that you want to have equity in your home. The greater your equity, the better your financial health is.

Refinancing your mortgage can lessen the amount you owe on your mortgage. Therefore, it can increase the difference between what you owe and how much the home is worth. In turn, you have larger home equity to show off.

Refinancing Your Mortgage May Help You Consolidate Your Debt

Debt consolidation is the process of taking multiple accounts that you owe money on and combining them into one payment. It’s a popular technique for taking multiple accounts and bringing them into one for a single payment rather than several payments.

If you’re dealing with debt in multiple, high-interest accounts, you might want to consider consolidating your debt to decrease the overall amount of money that you’re going to spend.

A refinanced mortgage is a way that people choose to consolidate their debt. This option is great for people who have built enough home equity.

You can use the equity that you’ve collected on your home to pay off high-interest debt through the refinanced mortgage.

What To Expect When You Refinance Your Mortgage

Once you’ve decided to go through with refinancing your mortgage, you’re going to follow steps similar to those that you followed when you applied for your first mortgage. Here’s how the process works.

Shop for the Best Deal

Before you sign onto any kind of loan, you need to do your research. This is the same for a refinanced mortgage.

You should take your time finding the best loan and lender that meets your needs. Here are the factors that we recommend that you take into consideration while you’re trying to find the perfect refinanced mortgage:

  • The type of refinancing, whether that be rate-and-term, cash-out, or another type
  • The type of loan, whether that be an adjustable-rate or a fixed-rate mortgage
  • The term length
  • The number and amount in fees that you’ll have to pay upon closing

We should also note that you need to make sure that you’re collecting loan estimates from lenders that you’re considering. This is a standard document that should lay out all of the details of your potential new loan. This may include costs, features, risks, and other important details.

Review the loan estimates and choose the best one for you.

Agree With the Lender You’ve Chosen

Once you’ve chosen the lender that you want to work with based on the loan estimates that your potential lenders gave you, you can lock in your rate. ‘Locking in’ a rate means that you and the lender are agreeing to the rate options that they presented that day.

By locking in your rate, you’re protecting yourself in case rates go up later on. If you don’t lock in the rate, you may have to pay a much higher interest rate than you were planning for. Since mortgage rates fluctuate on a daily basis, it’s best to act on interest rates quickly.

Get Your Documents in Order

As with any big financial decision, you have to submit all of the necessary documents. Usually, lenders will ask you to provide the following:

  • Two years of personal tax returns
  • Two years of business tax returns (if you owe more than one-fourth of a business)
  • Two years of any W-2s or 1099s that you had
  • Two months of bank statements
  • Proof of any alimony or child support payments

Hopefully, you’ve been keeping track of these documents over the years. If not, you should get these together before your lender asks for them. Having everything in order early makes everything run smoother with the lender.

Follow up as Requested

Once you’ve collected everything that your lender has asked you to send them, they should send all of the information to an underwriter. This is an evaluator who looks at what kind of mortgage terms that the lender may or may not be able to offer you.

While you’re in this step, you should make sure that you’re clearly communicating with the lender. Double-check that they don’t need any more information from you.

If they are missing information, they may not be able to offer you a mortgage. Alternatively, you could end up with worse terms than you would have originally gotten.

Get Approved (Hopefully)

Once the underwriter has (hopefully) determined that you’re eligible for a refinanced mortgage, it’s time for the final approval. This is the stage during which the lender ensures that all of the information is accurate.

If everything is in order, you’re all set. It’s time to get ready for closing.

Close on the Refinanced Mortgage

Once the lender has finalized the terms of your refinanced mortgage, they’re going to send you the closing documents. These detail the final costs and mortgage balance that you need to know about upon starting the loan.

Once you’ve agreed to and signed all of the documents, it’s official. You have refinanced your mortgage.

What Are the Penalties for Refinancing a Mortgage in Canada?

If you live in Canada and you’re trying to refinance your mortgage, you may end up paying the “mortgage refinance penalty.” This is a financial penalty that you have to pay if you change the terms of your mortgage before the term is up. In other words, you’ll be penalized for refinancing your mortgage because you didn’t carry out the agreement of your initial mortgage.

Lenders calculate the penalty using one of two techniques. Either your lender will charge you three months of interest or they’ll calculate the interest rate differential.

However, if your new loan saves you more money than either of those options, the penalty is worth the refinance.

When Is It Smart to Refinance My Mortgage?

If you’re going to refinance your mortgage, you need to make sure that you’re doing so at the best time possible. This means that you need to keep an eye on mortgage interest rates.

You should consider refinancing when interest rates start dropping. When you do this, you can shorten the term of your mortgage and decrease your interest rate during that time.

If you’re feeling confident about the current interest rates, you can opt for a fixed-term mortgage.

When Not to Refinance a Mortgage

On the other hand, you definitely need to know when not to refinance your mortgage. The best rule of thumb is to keep watching mortgage interest rates.

Just as we mentioned before, you’ll want to notice the trends in how the mortgage rates are changing over time.

So, when should you avoid refinancing your mortgage? Well, if you notice that the mortgage interest rates are trending upwards, you should avoid refinancing.

One of the biggest advantages of refinancing your mortgage is getting a lower interest rate. If you don’t wait for the lower mortgage interest rates, you’re not going to be able to take advantage of them.

Patience is key. Just keep watching the trends and consult a financial professional if you’re feeling lost on how to navigate mortgage interest rates.

Is It Better to Refinance With Your Current Mortgage Company?

Even if you’re a fan of your current lender, you need to make sure that you take the time to shop around. Refinancing with your current lender is a great option, but it isn’t necessarily the best option.

The main reason that we suggest shopping around elsewhere is that your current lender knows your current mortgage. That means that they know your current interest rate.

Your current mortgage company may give you a lower interest rate than you currently have, but they may give you a higher interest rate than another mortgage lender would. Your current mortgage lender may give you an interest rate that is slightly lower than the one you have now and expect that you take it because it is technically lower than the one you have.

They know how to take advantage of you because they have more information than other companies would have.

You can ask your current mortgage company what they would offer, but we would recommend asking multiple lenders before making a decision.

Does Mortgage Refinance Require Appraisal?

Most lenders require an appraisal before they agree to refinance your mortgage. However, you may be able to get refinanced without an appraisal.

Those lenders that don’t require refinancing may insist on a higher interest rate in place of the appraisal.

During the appraisal, the lender makes sure that they aren’t going to be lending you too much money for the property that you have the mortgage for.

If your home was accurately appraised when you applied for your first mortgage, you shouldn’t have anything to worry about. Getting an appraisal isn’t a punishment to you. It’s just a way for the lender to cover themselves.

Can You Refinance a Mortgage With Bad Credit?

While it’s true that refinancing a mortgage with poor credit is more difficult, it is possible. In fact, many lenders have programs specifically for people with bad credit.

If you have bad credit, you should take extra time to research these programs.

You should know that you’re less likely to get competitive interest rates. However, it’s not impossible to get a lower interest rate than you have on your current mortgage.

Can You Refinance a Mortgage to Consolidate Debt?

If you’re looking to consolidate your debt, refinancing your mortgage is a great way to do it.

As we discussed earlier, debt consolidation involves taking several debts from different accounts and combining them into one large debt pool that you make payments towards. Debt consolidation is a great way is pay off debt easier and faster.

One of the reasons that we suggest that you use a mortgage refinance to consolidate your debt is so that you can get those lower interest rates that we’ve been talking about.

Considering that most credit cards have interest rates around 20% and greater, a refinanced mortgage is much more favourable especially when interest rates are under 5% (which they often are).

Can I Refinance My Mortgage to Buy a Second Home?

The short answer is yes!

With a cash-out refinance, you can use up to 80% of the equity you own in your first home towards the purchase of a second home. While you’re applying for the cash-out refinance, your lender will ensure that you aren’t taking out more money than you need. This often involves appraisals of both properties.

The term “cash-out refinance” refers to a mortgage loan where you take more money than you actually need for the home that you currently have. This extra money on the loan is then put towards the second home that you’re looking at buying.

Can You Refinance a HELOC Into a Mortgage?

When you take out a home equity line of credit (HELOC), you’re going to go through what lenders call an ‘initial draw period.’ Usually lasting ten years, the initial draw period is the time during which you can borrow from the loan as needed.

As you borrow, you can make payments towards it. These are low, interest-only amounts.

After the initial draw period ends, you can no longer borrow any money from your HELOC. This is when you’ll start making full amortized interest and principal payments every month.

Since the principal payments are delayed, people who borrow with a HELOC can end up with payments that are too high for them to pay. They take out more money than they anticipated and aren’t able to pay the money back on time.

If this happens to you, you should consider refinancing your HELOC. This works in the same way as a second mortgage.

You can open a new HELOC to pay off the old one or you can use a mortgage loan to pay it off. Either way, you’ll be able to lower your payments and your interest rates.

How to Refinance a Second Mortgage

If you start your second mortgage and discover that you still can’t make payments comfortably, you might want to consider refinancing again. Luckily, refinancing your second mortgage isn’t much different than how you refinanced the first one.

  • You should determine if now is a good time by using the methods we discussed in the section “when is it smart to refinance my mortgage?”
  • Evaluate your credit score and match it against qualifications that various lenders share
  • Determine what interest rate your new mortgage would need for you to sign on
  • Research and talk to different lenders to find out what your best options are
  • Gather all of the necessary financial documents
  • Once you’ve chosen a lender, you should apply for a refinance
  • Keep up with the payments on your new mortgage

We should note that it may be more difficult to get a refinance on a second mortgage. You have to make sure that you’re gathering information before you try to apply. The more information you have, the better off you’ll be.

How to Find the Best Mortgage Refinance Rates

A refinanced mortgage is a great way to get your finances under control. Even if you’re able to make your monthly payments, a refinanced mortgage can help you open up your monthly budget.

Make sure to take the time to do your research before you refinance a mortgage.

If you’re looking for more guidance, check out the rest of our blog. There, we share more financial information just like this.

Featured Article

What Are the Best Mortgage Rates in British Columbia

What Are the Best Mortgage Rates in British Columbia?

Your home is the single biggest investment you’re ever likely to make. After all, in British Columbia, the average cost of a home is $737,834.

But depending on your mortgage rate, you could end up paying thousands more in interest. And that’s money that’s far better invested elsewhere.

In this guide, we’ll show you how to find the best mortgage rates in British Columbia so that you can make the most of your hard-earned dollars. Pen and paper at the ready, you’ll want to take notes!

How Do Fixed Mortgage Rates Compare to Variable Rates?

The first decision that mortgage buyers need to make is whether to choose a fixed rate or variable rate mortgage. Fixed-rate mortgages are a popular choice with first-time buyers and current homeowners who want to have a clear idea of their monthly outgoings.

With a fixed rate, you get exactly what you sign up for; the same repayment sum every month for the duration of your mortgage. Unless your circumstances change dramatically, you’ll continue to afford all your payments. Meaning no nasty shocks in the future.

Variable rates often have a lower headline rate than fixed-rate mortgages. And for cash-strapped buyers, this sounds pretty appealing. But it’s important to remember that the interest on a variable rate mortgage can significantly increase during your mortgage term, adding to your financial burdens.

3 or 5 Year Fixed Mortgage Rates in British Columbia: Which Is Best?

If you decide on a fixed-rate mortgage, the next step is to compare mortgage terms to find the best rate possible. You can fix your mortgage for as little as a year and as much as 10 years depending on your lender.

Most buyers choose a 3 or 5-year fixed mortgage rate to provide short-term financial security but still leave them with the option of negotiating if rates change significantly during their term.

The longer you fix for, the more security you have. Meaning if interest rates shoot up, you’re still protected. However, if rates reduce, you’ll be stuck paying the fixed-rate or be charged to re-mortgage early, which will negate the cost benefits of switching!

Your final rate will depend on your home’s loan to value (the less you owe the less interest you typically pay) and other factors, like your credit history and whether you’ve purchased mortgage default insurance.

Who Are the Biggest Mortgage Lenders in British Columbia?

You can apply for a mortgage with leading banks like RBC, Scotiabank, and CIBC. Alternatively, you can apply to a credit union or directly with a mortgage broker.

BC has the largest number of credit union members in Canada, at around 1.9 million members. These unions offer mortgages exclusively to homebuyers in British Columbia often offering exclusive rates and higher approval rates for buyers with weak credit history.

Vancity is the largest credit union in BC according to the Canadian Credit Union Association. Vancity is closely following by Coast Capital Savings, First West Credit Union, and Prospera Credit Union. All of whom provide mortgages for properties within British Columbia.

Whilst it’s worth comparing Union and bank rates, mortgage brokers routinely offer the best figures on the market. The largest brokers in the province include the VERICO network, Dominion Lending Centres, and Canadian Mortgage Experts.

Who Offers the Best Rates?

Residents of British Columbia have access to some of the best mortgage rates in Canada. With plenty of brokers in the market, strong credit unions, and the big banks all trying to compete for your custom, there are plenty of great deals to be discovered!

But how do you compare so many rates, terms, and offers?

The difference between the mortgage rates in BC can be more than 1% when comparing quotes on lenders’ websites. Comparing mortgage rates on a comparison site like LowerMyBills takes the headache out of the task by gathering like-for-like quotes from BC’s leading lenders.

What is the Forecast For Mortgage Rates in British Columbia?

When you’re choosing a mortgage, it’s not just a case of thinking about the here and now. You need to consider what the market will look like in the future so that you can make an informed choice about whether to fix your rate and if so, for how long.

However, depending on how the Canadian economy bounces back from 2020’s COVID-19 lockdowns, recovery could speed up and interest rates could increase alongside it. In light of this, fixing your rate might not be such a bad idea, whilst they’re so favorable.

Need Help Finding the Best Mortgage Rates in British Columbia?

There’s no doubt that you need to compare mortgage rates to find the best deals on the market. For the past 20 years, LowerMyBills has helped thousands of home buyers navigate the complex world of finances and saved them hundreds through exclusive relationships with BC’s leading mortgage providers.

If you want to compare mortgage rates in British Columbia LMB has you covered. Use our comparison tool to compare quotes for your property and unlock incredible deals. 

Featured Article

Mortgage Rates

Finding a home is one thing; choosing a mortgage for your new home is another. The process can be stressful for some people, especially homebuyers who have little to no knowledge about Canadian mortgage rates. Those who are not familiar with the process may end up paying thousands of dollars more in their mortgages. 

To help you get the most from your mortgage, find the time to compare mortgage rates from different financial institutions. Better yet, hire a mortgage broker who can assist you better. 

It would be wise not just to consider the mortgage rate when choosing a lender and a type of mortgage. Terms & conditions, closing costs and other fees must be taken into consideration. 

Should You Choose a Closed or an Open Mortgage?

The closed mortgage is popular as it has lower rates compared to the open mortgage. You can either have a variable or a fixed mortgage with this type. However, you will not be able to pay off the entire principal amount before your set term. Otherwise, you will need to pay the prepayment penalty charges. Refinancing a mortgage can also be costly with a closed type.

With open mortgages, you can pay off the balance anytime you want to. You can make a lump-sum payment or increase your regular payments with little penalty. Refinancing a mortgage is also cheaper and flexible with an open type. The downside is, you will get higher interest for it. This type of mortgage is ideal for homebuyers who plan to buy another home or move to another home within a few years. If you intend to stay longer, then a closed mortgage would be ideal. 

Fixed Mortgage Vs Variable Rate

A fixed mortgage is more popular than a variable rate. By fixed, it means that the amount you will be paying for each month will be the same for the entire course of your mortgage term. There is no need to worry if there are sudden changes in the real estate industry as you won’t be affected. You are protected against fluctuations in interest rates. 

Variable rates have lower interest rates but it can be very risky for the homebuyer. There is a chance that you may pay higher mortgage rates, depending on the market condition. 

The current mortgage rate in HSBC Canada is .99% APR in a 5-year variable rate compared to 1.44% APR for a 5-year fixed rate. 

How to Better Negotiate Mortgage Rates in Canada

When negotiating for a better mortgage, you should make it clear to the lender that you are comparing their rates with other financial institutions. Having a good credit rating can give you more leverage and you may be able to demand lower rates. 

Keep in mind that it’s not just you who wants the deal to close. The mortgage process can be stressful especially to the lenders too so they are as eager to close the sale as you are. If you highly qualify, consider asking for a lower mortgage rate. 

Another way to negotiate better rates is by hiring a mortgage broker. An experienced broker knows these numbers by heart and has worked with and even connected with financial institutions. If there is someone who can tell you the mortgage rates and other fees of banks or other lending companies, that will be the mortgage brokers. 

Sometimes you can’t get something that you haven’t actually asked for. You can negotiate lower mortgage rates if you actually ask for it. Before speaking with the lender though, make sure that you have done enough research and that you have compared different mortgage rates from other lenders. Do not just go with banks; consider checking out credit unions and even specialty lenders. 

Always pay attention to details. Do not just look at the mortgage interest rates as there are other costs involved too. Ask if there are prepayment options available or penalties when you need to break the contract. Ask if there are transfer fees and how much. You can also ask the agents to pay for your other costs – and that will add up to your savings. 

How to Get the Best Mortgage Rate in Canada

There are factors that affect your mortgage rates. One of them is your credit score. While you can still get a mortgage from other lenders, the interest rates may be slightly higher compared to what banks offer. Another factor that affects mortgage rate is the property’s location and the property type. Cities like Toronto usually have lower mortgage rates than Halifax. Homebuyers who purchase rental properties tend to have higher rates than those homeowners who live in their properties. 

To take advantage of lower mortgage rates, ensure that you close your mortgage as soon as possible. Lenders charge more the longer they wait for the mortgage to close. Some people also make the mistake of thinking that higher equity has lower mortgage rates. Lower equity usually has insurance and lenders offer them lower mortgage rates because they’re protected by the insurance. 

What you need to get good mortgage rates:

If you are thinking about getting a mortgage in the future, aim for a good credit score. As much as possible, get at least a 620 FICO score. Pay your bills on time; a missed payment could go to your credit report. Keep in mind that banks rely heavily on this. Borrowers with a not-so-desirable credit score either will not get approved for a mortgage or get higher mortgage rates. 

Just like other loans, you need proof of your income. Tax documents and pay stubs should be available as well as any bonuses or commissions you have received. Finally, make sure that you have a reasonable debt ratio. Your other financial obligations must not be more than 44 percent of your gross monthly income. Otherwise, you may not qualify for the lowest mortgage rates. 

Down payment and mortgage rate:

The majority of the Canadian homebuyers would save at least 20% for their downpayment. They are not aware that a 20% downpayment often leads to the highest mortgage rate. What they can do is pay less than 20% and purchase mortgage insurance or CMHC. Because this will not be very risky for the lender, the borrower will likely get lower interest rates. 

What about those borrowers with bad credit?

Borrowers with bad credit can still refinance their mortgage or apply for a new purchase. However, they will not qualify for lower mortgage rates. Fix your credit first before applying for a mortgage. 

The Best Mortgage Rate in Canada for You

Just because it has lower mortgage rates doesn’t mean it’s the best mortgage. You will need to consider other factors in the entire mortgage buying process. The end goal should be to minimize your costs and you can do this by taking the time to research different lenders. Make a list of lenders that offer lower interest rates to the borrowers. The next step would be to take your research further. Do not just stop with the mortgage rates; take into consideration other factors such as the terms, conditions and other fees. If possible, hire a professional to assist you better. Mortgage brokers know about the industry and are familiar with the different terms and rates of different lenders. To help you make an informed decision, talk to these brokers. 

Of course, you can do it alone too. As much as possible, use only reliable sources. Don’t forget to check out our resources to help you get the best mortgage rate in Canada. 

Featured Article

Mortgage Renewal

Did you know that there are nearly five million mortgages in Canada today? Homeownership remains a dream of many Canadians. They’re willing to take on debt to fulfill this goal.

In 1999, 60 percent of Canadian families owned their homes. By 2016, this figure increased by 3 percent. From 1999 to 2016, mortgage debt comprised two-thirds of the overall increase in debt among Canadian families.  The median amount of mortgage debt almost doubled, expanding from $91,900 to $180,000 across all demographic groups and regions. No wonder many Canadians ask, “What Is mortgage renewal?”

After all, 74 percent of those with mortgages have a fixed rate, 21 percent have a variable rate, and 5 percent have a fixed and variable rate. Here’s what you need to know about mortgage renewal. 

What Is Mortgage Renewal in Canada?

In a nutshell, a mortgage renewal represents an extension or new agreement that you enter into with your mortgage holder. Most mortgages require monthly payments.

 When homeowners make payments promptly, they may pay off their mortgages within 30 years. This payment timeframe is known as the amortization period. That said, some homeowners opt for mortgages with shorter terms, such as 15 or even ten years.

How does mortgage renewal fit into the mix?

Let’s say you take out a $200,000 mortgage to purchase a home, and it sits at a 7 percent APR. You have a four-year term. This scenario would place your monthly payments at $1,317.21 over a 30-year amortization period. 

But you only have a four-year term, so what gives? It means that after four years, if the mortgage doesn’t get renewed, the mortgage holder will demand payment in full. In other words, you’ll need to go through a different lender or renew the mortgage. 

Of course, if you have an excellent payment history, there are usually no issues with getting a renewal from your original mortgage holder. Does that mean your mortgage with automatically renew? Let’s take a closer look. 

Will My Mortgage Automatically Renew?

Mortgage renewal often proceeds in a fashion similar to car insurance renewal. In other words, you’ll receive renewal paperwork from the mortgage company that you must sign and return. This act cements the new mortgage in place. 

What is the renewal amount based on?

The amount you owe at the time of the renewal. For example, returning to our previous example, let’s say your balance is $190,000 at renewal time. Then, you’d be entering into a new agreement for $190,000.

If you play your cards right and make timely payments, it should be relatively easy. That said, you must consider a variety of factors before agreeing to renew a mortgage on the same terms.

You’ll want to explore whether interest rates are higher or lower than they were when you entered into your previous mortgage. You should also think about whether you were happy with the last lender and if you want to do business with them again. You’ll also want to inquire about fees and costs related to switching mortgage lenders if you’re interested in going a different route. 

As you can see, the process isn’t always automatic. Depending on the company you work with, however, it can be.  When you receive a renewal letter, read it carefully, looking for notices of automatic renewal. If your mortgage holder intends to renew your mortgage after the renewal date automatically, the company should state this clearly.  

Should I Go With a Short Term or Long Term Mortgage? 

Why might a consumer take out a shorter-term on a mortgage? Besides the desire to fit into a specific pre-determined timeline, some consumers use short term mortgages as a strategy.

 How does this work?

 Instead of taking out the most extended mortgage possible when interest rates are low, they opt-in when rates are higher. To avoid losing extra money in charges, they go with shorter terms. 

Hopefully, when their mortgage comes up for renewal, rates will prove more favorable, and they can lock in these rates. That said, you should consult with a professional before this type of gamble. Sometimes, there are better options than this approach. 

Do I Have to Renew My Mortgage?

Some customers have questions about their options when it comes to renewing a mortgage. If your lender sends you renewal papers, must you sign them? The short and simple answer is no.

Paperwork typically arrives four months before the actual renewal date. This timeframe lets you reassess your finances. It also enables you to explore current interest rates along with the costs associated with switching mortgage holders if you find a better deal. 

What are some other things you might wish to consider when you receive renewal paperwork? For starters, are you now making more money than you were before? If so, it’s well worth your time to check into mortgages with higher monthly payments and shorter terms.

 You’ll also want to see whether interest rates have dropped since you took out your last mortgage. If so, it’s time to contact some holders to see what they might be able to offer in terms of better rates. Shopping around to find the most advantageous terms always makes sense. 

Can You Pay Off Your Mortgage at Renewal?

Let’s say you’re going to renew at the end of your mortgage and would like to pay it off more quickly.

What do you need to know?

Start by checking the fine print on your loan agreements. Or you may also wish to give your mortgage holder a call to inquire about an early payoff. Either way, you can find out what your options are and whether or not you’ll face any penalties for early payoff.

Paying off a mortgage early can prove a very costly endeavor because of penalties, so you should be well-informed before proceeding with an early payoff. There are several charges you must know about when paying down a mortgage before the term ends. 

Incidentally, you would face these same charges when refinancing a mortgage.

What do these charges include?

A prepayment penalty is typically equal to three months of interest if you’ve got a variable mortgage rate.

What about fixed rates?

You’ll usually pay the higher of two options:

1.     Three months of interest

2.     The interest rate differential (IRD)

There are many online mortgage penalty calculators to help you estimate what these costs will look like. That said, it remains in your interest to avoid large penalty fees in the first place. 

How Can You Avoid Penalty Fees?

As you can see, mortgage penalty fees can add up quickly. How do you avoid them altogether? By doing the following:

·        Go with shorter terms

·        Consider a secured line of credit

·        Remain patient

Here’s what you need to know about each of these recommendations and how they can help you avoid racking up unnecessary charges.

Go With Shorter Terms

You should always go with a term that fits your desired timeline. For example, if you think you can swing paying off a home in five years, consider going with an even shorter term.

For example, if you go with a three-year term instead, you can make larger payments while avoiding early payoff fees. 

Consider a Secured Line of Credit

Some consumers choose to convert their mortgages into a secured line of credit. Why? Because this permits you to pay down the line of credit whenever you’d like. 

You won’t face any penalties, and you can also borrow extra for renovations and improvements in many cases. Just know that interest rates will prove higher than with a mortgage.

And if you have trouble sticking to a budget, a secured line of credit could prove more of a temptation that you might be able to avoid. 

Remain Patient

If you lock in a mortgage with low-interest rates, it’s still likely the best way to pay off your home. That said, you’ll need to remain patient and pay off your loan based on the terms you agreed to. 

After all, patience is a virtue, and you may find that paying off a mortgage over the long-term will save you loads of money once penalties get calculated. 

What Are Some Options for Paying Down a Mortgage Quickly? 

What are some of the charges you’ll most likely come across in the fine print? They may include prepayment charges for:

·        Lump-sum payments

·        Double-up payments

·        Increased payment frequency

·        Renewal payments 

Let’s take a closer look at each of these categories and what fees might look like for an early payoff.

Lump-Sum Payments

What are lump-sum payments? These are large payments most mortgage holders permit customers to make annually. 

How large? They typically comprise between ten and 20 percent of the original principal amount. Payments go towards a reduction of the amount of interest you must pay on the original principal. 

Double-Up Payments

Many mortgage holders also allow customers to make double payments. For example, if your monthly mortgage payment is $1,600, you may pay up to $3,200 per month. 

Where do these payments go?

They get applied directly to the principal. 

Increased Payment Frequency

What are some other options when it comes to paying off a mortgage more rapidly? If you’re paying every month, you can switch to semi-monthly, bi-weekly, or even weekly installments to pay down your balance.

You may also be able to make accelerated payments based on all three of the options listed above.

What are accelerated payments?

These are higher payments, permitting you to pay less interest over the length of your loan. 

Renewal Payments 

In most cases, you also have the option of making renewal payments each time your mortgage renews. These payments may be as large as you like without any penalty payments. 

How Should You Negotiate Mortgage Renewal?

Some consumers fail to realize they have options when it comes to mortgage renewal. These include the ability to negotiate new rates and terms.

Recently, rates have fallen, so now represents a good time to refinance. In the process, you may get better rates.

What if your current holder doesn’t work with you when it comes to negotiating? Don’t be afraid to shop around for a better deal. 

Before you go with a new company, though, make sure you’ll benefit from the new mortgage. How do you do this? Start by calculating fees and penalties associated with switching companies to ensure a swap is still beneficial. 

How Early Can You Renew Your Mortgage?

Sometimes, lenders permit homeowners to renew their mortgages early. How early? Up to 120 days before the renewal date of the mortgage with no penalties. 

That said, you may not have this option. After all, not all lenders like to deal in early renewals. Nevertheless, you should usually receive paperwork for renewal four months or 120 days before the renewal date.

 What if you work with a lender that permits early renewals? For starters, you must realize this may not prove to be your best option. Remember that even with companies that offer up to 180 days’ advance notice, you could incur a penalty by switching to a different lender.

Early renewal only makes sense if you’re in an environment of increasing rates. Why? Because it provides you with the opportunity to lock in rates before they skyrocket. 

What happens if another lender approaches you, offering a better rate? You’ll end up paying the penalty to break your current contract. 

As long as you stick to shopping the competition no more than 120 days before your renewal date, you can avoid costs associated with breaking the contract. You’ll also enjoy more fantastic options because your existing lender, along with others, will be competing for your business.

What Happens When My Mortgage Is Up for Renewal?

How Does Mortgage Renewal Work in Canada? By law, a mortgage lender must provide you with renewal paperwork no less than 21 days before the end of the current terms.

Your mortgage holder must also notify you within 21 days if they’re going to renew your mortgage. What does this notification entail? You’ll either receive a paper or electronic statement based on your preferred method of communication.

On this renewal statement, your company must provide all of the following information:

·        The interest rate on your mortgage

·        The remaining principal or balance at the time of the renewal date

·        The frequency of payments

·        The term 

·        Any fees or charges that apply

The statement should also delineate that interest rates offered won’t increase until the renewal date arrives. Some consumers also receive a mortgage renewal contract at the time they get a renewal statement. 

At this point, you may simply sign and return the letter, accepting the terms of your mortgage holder. But we recommend additional steps to secure the best rates and deal possible. Here’s what you should do after receiving a mortgage letter. 

What Should You Do After Receiving a Mortgage Renewal Letter?

What’s the next step after you’ve received your mortgage renewal statement? You’ll want to assess your current situation, the financial climate, and whether any changes are needed to address your short- and long-term financial objectives. 

Next, we always recommend shopping around to see what other companies might be able to offer you. Just remember you’ve got to factor in all fees for a refinance if this is the route you choose to go. 

Once you’ve got an idea of what’s out there, go back to your current mortgage company and attempt to negotiate better interest rates. Ask about whether or not you might qualify for a discounted interest rate lower than the rate offered in your renewal letter. 

Make it clear to your current lender that you’ve received better offers and let them know what these offers are. Always report these offers as accurately as possible and be prepared to provide proof if asked. 

If you don’t take action during your mortgage renewal window, it could occur automatically. If this happens, you likely won’t enjoy the best rates and conditions possible.

When you receive your renewal letter, look for wording about automatic renewals. Your holder should inform you of such plans in this letter. 

Should I Renew My Mortgage Now?

Some customers want to know whether they should renew their mortgage now. As you can see from the answers to other questions listed above, the answer to this question depends on various factors. 

These factors include:

·        How close you are to your mortgages renewal date

·        What current interest rates look like

·        Whether or not you’ve had changes in your finances since taking out your previous mortgage

·        What your ultimate goals for paying off your mortgage are

·        Whether you’ve received better offers from other companies

·        What costs to change lenders look like

Once you’ve got answers to the questions above, you should weigh the pros and cons. Only then will you know whether or not mortgage renewal makes sense for you. 

Can I Renew My Mortgage Online?

Because we live in the Digital Age, it’s never been easier to renew a mortgage online. Especially if you work with a lender that puts a premium on customer convenience. 

For many homeowners going with the same company, it’s as simple as logging into their online banking account and clicking on their mortgage account. From there, you’ll navigate to your Mortgage Renewal Agreement. Simply accept the terms, and you’re done. 

Another fantastic advantage of sticking with your current mortgage holder is that you won’t have to worry about re-qualifying. 

Of course, if you switch companies, refinancing becomes much more complicated. While you can still complete most of the steps online, you’ll need to sign some paperwork in person. 

Can a Bank Deny Mortgage Renewal?

Some consumers have concerns about whether a holder will deny their mortgage renewal. But is this a valid concern? If you pay on time, a denial shouldn’t be an issue.

If you’re considering a move to a new company, and your credit score has dropped since getting you home, you could get denied by a new company. It may be in your best interest to stay with your current holder.

Your chances of having a mortgage renewal denied by a new company remain much higher than with your current holder. You must bear this in mind as you shop around and explore your options.

Besides poor credit, other factors could impact a new lender’s decision. These include volatile work history, missed mortgage payments, or other debt and loan repayments. 

What happens if both your current lender and new lenders deny your renewal? You may have to work with “B” lenders. What are “B” lenders? These are trust companies and poor credit institutional lenders. 

Unfortunately, if your credit score proves low enough, “B” lenders may not be an option, either. In this case, you’ll need to explore other options like working with a private lender or selling your home. 

That said, the likelihood of a mortgage renewal progressing to this point is quite rare. But it’s essential to be aware of this possibility, especially if your finances have declined drastically. 

Will a Consumer Proposal Affect My Mortgage?

For those struggling with personal finances, filing a consumer proposal may make sense. It’s an excellent way to safeguard your assets from creditors. And it permits you to negotiate down some of your debts. 

Not only does a consumer proposal protect assets like your home from debt collectors, but it could also up your chances for renewal.

Why? Because this proactive approach to dealing with debt will result in better credit scores, which positively influence your likelihood of renewal. 

What’s the Final Step in Paying Off a Mortgage?

Let’s say you’ve made your final mortgage payment on your house. Congratulations! You’re off the hook.

That said, there’s now more thing you must remember to do. You need to ensure that the lender’s lien (or its rights) get removed from your property’s title. Only then will the mortgage get discharged. 

How do you do this? You’ve got a handful of options. You may work with your provincial or territorial land title registry office to ensure the mortgage gets discharged correctly. 

Or you may contact the lender directly. Know that this transaction will involve fees. How much? Costs vary depending on your geographic location. 

What happens after the discharge gets completed? 

Congratulations! You’re free from further mortgage payments. 

The Financial Help You Need

Few decisions have a more significant impact on your long-term financial health than a home mortgage. The article above provides a detailed answer to, “What is mortgage renewal?” It also includes responses to many other recently asked questions. 

Armed with this knowledge, you can make better financial decisions moving forward. But you don’t have to go it alone. Contact us today to discuss your mortgage renewal needs.