the real/estate blog


Bridging

Posted in Mortgages,Real Estate by Cesia Green on March 22, 2013
Tags: ,

Last week, I blogged abouBridget timing. This week, I wanted to touch on something related: bridge financing.

From a legal standpoint, bridging makes your move go much more smoothly. If you have bridge financing in place, I can close your purchase before your sale is closed, which means that you can move into your new home straight from your old home, without having to wait around after your sale closes while we get your new house bought. You can even do a same-day bridge if you don’t want to close a day or more earlier. While the decision to bridge is dependent on a lot of factors, it is something you should bring up with your mortgage broker and realtor so that your move is a lot happier.

Advertisements

Co-signing

Posted in Mortgages,Real Estate by Cesia Green on March 1, 2013

I see a lot of clients who are unable to get financing on their own, and so one or both of their parents will co-sign the loan. Before you decide to go ahead and do this for your child, however, be sure that you are fully prepared for the possible consequences.

Even if you are only going on title to 1% of the property, if you are on the mortgage, you are responsible for 100% of the payments if your child stops making them. This has the potential to cause friction in the relationship. Before signing on the dotted line, be absolutely certain you are prepared to go down that road if necessary – or ask your child to wait to qualify on his or her own.

Some what-ifs

Posted in Mortgages,Real Estate by Cesia Green on October 5, 2012

I read this interesting article earlier this week in the Globe and Mail. The basic premise is what might happen if the federal government decided to make purchasing a home more expensive by requiring much higher down payments – essentially, getting rid of the five per cent down payment. The author goes through the scenarios, imagining tumbling house prices as first-time buyers are pushed out of the market, climbing rental rates, less lender choice and higher mortgage rates.

Ultimately, the government is unlikely to raise the minimum down payment any time soon. It can, however, be interesting to contemplate what might happen.

Cooling the market?

Posted in Mortgages,Real Estate by Cesia Green on April 13, 2012
Tags: , , ,

The Globe and Mail published this article a few weeks back about proposed new rules from the Office of the Superintendent of Financial Institutions regarding refinances and new mortgages. Essentially, the Office is proposing that banks be required to take a much closer look a a home’s value and a borrower’s ability to repay a mortgage before lending money.

The primary target is secured lines of credit, because these allow homeowners to load up their properties with consumer debt after the mortgage is registered. Because of the rapidly approaching spring rush in real estate, most of Canada’s major banks have cut their rates. This move by the Office is likely happening now because of those slashed rates, in an attempt to rein in the market.

It remains to be seen if any changes will take effect.

Locking in a decade

Posted in Mortgages,Real Estate by Cesia Green on March 30, 2012
Tags:

Roma Luciw, a columnist for the Globe and Mail, published an article on Monday about the recent surge in popularity of the ten-year mortgage. There are distinct benefits to locking in for an extended period of time, especially now, with historically low rates that won’t stay low forever. Before choosing a mortgage product you should always see a professional to determine what is right for you, but the ten-year mortgage may be a good option – for now.

Mortgage wars!

Posted in Mortgages,Real Estate by Cesia Green on March 23, 2012
Tags: ,

The Globe and Mail published an article last week about the latest round of price cuts on Canadian mortgages. Bank of Montreal has reduced its rates again, offering low five- and ten-year mortgages. In response, the other big banks in Canada have followed suit, offering major discounts as well and keeping rates incredibly low. With the spring rush coming in the real estate market, it is no surprise that all of the banks are chasing business. It will remain to be seen if BMO’s tactic will keep rates at these historically low levels for a while to come.

Fixed or variable?

Posted in Mortgages,Real Estate by Cesia Green on December 9, 2011
Tags: , ,

The Globe and Mail had a feature a while ago about whether you should choose a fixed or variable rate mortgage when you buy or refinance, which included this handy summary of the issues. As noted in the article, if you are less comfortable with risk or are certain that you won’t be moving or refinancing within the term of your mortgage, you are likely better off with a fixed rate; if you think you might move before the end of the term or you are comfortable with fluctuating interest rates, then you are likely better off with a variable rate. Ultimately, you should speak to your mortgage broker and be very informed about your decision before you make it.

The end of the variable era?

Posted in Mortgages,Real Estate by Cesia Green on November 4, 2011

I read this very interesting article in the Globe and Mail the other day. In a nutshell: fixed rate mortgages are the way to go right now. Because of prime rates being so low, and the constant fluctuations in the markets, it is possible to get a fixed-rate mortgage at the exact same rate that variable rates are at right now, and going fixed means locking that rate in so that you’re protected against rates inevitable going up.

While the mortgage broker that Rob Carrick interviewed has some good points, I do still see below-prime variable rate mortgages coming into my office. I’m not in the mortgage business, so I can’t speak to whether these rate changes simply haven’t made it into my office quite yet, but this is precisely the reason why it’s important to educate yourself, and ensure that you are actually getting the right product for where you are at the time you buy or refinance.

Bridging the gap

Posted in Mortgages,Real Estate by Cesia Green on October 7, 2011
Tags: ,

I have a lot of clients who are moving up and selling the starter home they own in order to buy a larger home. Most of the time, they have these transactions occur on the same day: sell in the morning, buy in the afternoon, spend the weekend moving in. But what happens if your sale doesn’t close on time?

It’s not uncommon for a sale to take all day closing. Maybe the buyer’s lender didn’t get the money to the lawyer very early; maybe the buyer needs to sell a house, too. Whatever the reason, it can sometimes be after 4:00 pm before a sale closes, and in Ontario, the latest a transaction can close and be registered is 5:00 pm, which does not leave much time to complete your purchase. The last thing you want is for your sale to close at the end of the day, leaving you with nowhere to go over the weekend. There is a relatively easy way around this situation, though, called bridge financing.

Bridging is when you borrow against the equity in your home ahead of your sale. Say, for example, that you were planning on using $50,000.00 in equity from your home as your down payment on your new home. The lender you are getting your new mortgage with could lend you that $50,000.00 at the time of your purchase, and then be paid back at the time of your sale. You can have an extra day, an extra week, an extra month or even a few extra hours – it is possible to do a same-day bridge, so that your purchase can close right away in the morning, and then you won’t be stressed about the timing of the sale. If you qualify for a bridge loan, the interest that you will pay is far outweighed by the stress you will avoid by trying to purchase and sell on the same day. If you are moving from one house to another, you should definitely talk to your mortgage broker about the option of bridging.

Wouldn’t it be nice…

Posted in Mortgages,Real Estate,Seniors by Cesia Green on July 15, 2011

Many of us have seen the commercial: happy elderly people paying for renovations, trips and university education for their grandchildren through a reverse mortgage. I came across this excellent post from the Retire Happy blog, which details the pros and cons of a reverse mortgage. There are many advantages to these plans: income is tax-free, there are no monthly payments, and the repayment will never be higher than the value of your home, to name a few. However, there are some distinct negatives as well. Interest rapidly accumulates, for one, as you are not paying it regularly. There are only two companies doing reverse mortgages in Canada, and interest rates are correspondingly high, at least partly because of a lack of competition.

The bottom line? Always get advice from a third party, whether that is a financial planner, accountant or lawyer, or even all of the above. A reverse mortgage may be right for you, but it could also seriously harm your financial health in the long term.