When you are shopping for a mortgage, you may hear the terms, CLOSED or OPEN mortgage. Let me explain the difference between these two options so you can determine which one is better for you.
OPEN MORTGAGE An “open” mortgage means that the mortgagor (the borrower) can pay the mortgage off, fully, at any time, without a mortgage penalty. A fully open mortgage is suitable for the following types of borrowers:
a) a property investor buys a property and has intention of selling it in a very short timeframe;
b) a borrower sets up this mortgage because they are expecting a large sum of money (for example, an inheritance or a work bonus) and will use that money to pay off the full mortgage loan amount;
c) a borrower who might be required to move on notice (perhaps due to a work relocation requirement) and would need to pay the mortgage off in full when the house sells.
d) you receive regular large bonus amounts, as an employee of your company, and you wish to apply these amounts to your mortgage anytime without the restrictions that might come on a lender's regular pre-payment terms.
e) or perhaps you just do not want to be locked into any term, for your mortgage loan.
Note that, the mortgage rates, for fully OPEN mortgages are higher than those given for “closed” mortgages. For example, effective today November 24, 2009, a fully open variable mortgage rate, is available at Prime Rate Plus 0.80% = 3.05%
CLOSED MORTGAGE A closed mortgage means that the mortgagor (the borrower) is given a contract “term”. If the borrower breaks the mortgage, before that contract term is up (known as the renewal date), the borrower must pay the mortgagee (lender) a full three months of interest penalty to get out of the contract (or IRD penalty).
Variable mortgage contract terms are available for 3 year terms and 5 year terms, right now. A closed variable, 5 year term, mortgage rate is priced right now at between Prime Rate Minus 0.10% = 2.15% up to Prime Rate Plus 0.10% = 2.25%. A closed variable, 3 year term, mortgage rate is priced at Prime Rate Minus 0.25% = 2.00%.
So you can see that there are specific reasons why a borrower would choose a closed mortgage over an open mortgage.
This post was written by Elizabeth Blair on November 24, 2009, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients all over the Greater Toronto Area.
You can contact Elizabeth by phone: (905) 510-5785 Or email: eblair@mortgageedge.ca
Visit her website at: www.missmortgage.ca
Elizabeth Blair is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca Lic # M08005880 / Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, L4B 3H7, Canada
The bond is up by more than 22 points in the last few days. We have already seen some movement at the bank level, and expect to see movement early next week if the bond stays where it is at – see links below.
Are you pressed for time? With fixed rates rising, you may be wondering how to jump on a rate hold fast.
Please call me today to find out about locking in a rate for 120 days. It only takes 2 minutes (time is guaranteed) to request a Rate Hold*.
Here's a good article on the great interest rate debate. The Fed in the US, will fire the first shot. Even though Australia raised rates last week, most bankers will follow the Fed. To ignore the Fed would mean fluctuations in currency values that would hurt one's economy. See following link in the New York Times. New York Times
* ”Rate Hold”: a rate hold is not the same as a mortgage pre-approval application. If you apply for a rate hold, you are still required to undergo a regular mortgage application process. The lender reserves the right to either accept or decline, any applicant, based on their review of the mortgage applicant(s) submitted application(s). This review involves the verification of personal credit report history and verification of income.
This blog post was written by Elizabeth Blair on October 12, 2009. Elizabeth Blair is a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785 by email at eblair@mortgageedge.ca or you visit her website at: www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca Lic # M08005880 / Brokerage Lic # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
If you have a client who seems to be undecided on whether they should deal with their bank or a mortgage broker, here is a short summary of what some compelling truths are, around this subject.
A mortgage broker acts as a MEDIATOR or a representative between the client and the bank.
Here are some straight-forward questions to present to a client:
a) what if something goes wrong?
b) who will represent you?
c) will you be able to navigate through escalation channels to get something done at the bank?
d) will you be able to successfully negotiate what you want on your own?
e) what if the lender says no?
f) how easy will it be for you to get the deal you want from another bank and on your own?
You may be asking, so how does a broker mediate between the client and the bank and how do I get my clients to understand this?
Lets start here. It is easy to quickly assess that any individual’s business, is truly like a small rain-drop in an ocean to a bank but not so with a broker’s office. That is because mortgage brokerages generate enormous volumes of business for lenders and therefore with this huge purchasing power, comes privilege.
If for example, an office has 50 representatives, who are actively carrying on in the business of dealing in mortgages. Lets say that each representative has placed 2 million dollars of mortgage business with a particular lender. The brokerage now has a combined volume of 100 million dollars of business with that particular lender. Now that kind of business volume will make anyone sit up and pay attention, agree?
So essentially the high volume of mortgage business, that a brokerage has, for a lender, will secure some real benefits for the client looking for financing:
1) the lender may now pass along additional mortgage rate discounts to those brokerages who have reached a particular sales volume;
2) a large brokerage will immediately receive dedicated focus and attention from individual lenders, for example, dedicated underwriters. A dedicated underwriter means that a submitted mortgage deal is reviewed quickly and this is essential to maintain the service level to the demands of a busy brokerage;
3) access to senior levels of management. When a lender has a particular brokerage that brings in substantial volumes of business, there is an extremely high importance level based upon that business unit and this is a simple formula to understand: high volumes of business demand greater care as the brokerage now has the ability to move business elsewhere if service levels and satisfaction levels are not adequately maintained to satisfy the brokerage. For the client, this means that a difficult situation can be escalated quickly to senior management and issues can be reviewed and approved that an individual client would not easily be able to accomplish on their own.
This article was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients primarily in Mississauga and all over the Greater Toronto area. You can contact Elizabeth directly by phone at (905) 510-5785 by email at eblair@mortgageedge.ca or you visit her website at: www.missmortgage.ca Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca Lic # M08005880 / Brokerage Lic # 10680 Head office:: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
Sometimes when you buy a home, the closing date for the home you are selling does not match the closing date of the house you are buying. Some of the typical reasons for a difference in closing dates might be: you want to get some renovations completed on the home being purchased before moving into it or perhaps you could not get the seller to give you the closing date that you really wanted. So if the closing date of the home you are buying is before the closing date of the home you have sold, you will need a bridge loan.
Let’s use a real example so you can understand how a bridge loan amount is derived:
Price of the home being purchased: $450,000
Less: Amount being mortgaged:$360,000
Less: Deposit you give to the Realtor: $10,000
Equals: $80,000 Bridge Loan amount
The bridge loan amount is really your total down payment, less your deposit because the lender is advancing the rest of the mortgage money on the closing date for the home you are purchasing. Using the above example, and some real dates, here is how the interest cost is calculated, for this particular bridge loan amount:
Client is buying a new house - closing date = April 30, 2009
Current home is not closing until = June 25, 2009
Clients need a Bridge Loan to cover them for 56 days until current house sells. Bridge Loan amount required is $80,000. Lender’s interest rate = *prime rate (2.25%) plus 4%.
Bridge loan $80,000 X 0.0625 (interest) = $5,000
$5,000 divided by 365 days = $13.6986 (per diem cost)
$13.6986 X 56 days = $767.12
For a Bridge Loan advance that is greater than a certain amount, and is greater than 45 days, the lender will sometimes ask that the bridge loan be secured by way of a collateral mortgage on the property being sold. If a collateral mortgage is required, lawyers will often charge extra to do this (estimated at $500 and up). Some lenders will also charge a bridge loan “set-up fee”, and some lenders do not. Remember also that a property sale must be firm before a lender will arrange a bridge loan for the borrower(s). And finally, lenders will not advance more than 90% of the value of the property being sold.
This article was written by Elizabeth Blair, a Licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario. Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca Lic # M08005880 Brokerage Lic # 10680 Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
For new business only, effective July 4, 2009, where the total mortgage amount is greater than $300,000, Elizabeth Blair at Mortgage Edge will refund the cost of the property appraisal for approved financing business placed through Elizabeth Blair at Mortgage Edge - residential appraisals only.
This applies to financing deals within the Greater Toronto area only.
This special is effective for actual property closings during the months of July, August, and September 2009.
Elizabeth Blair services clients in Mississauga, and all over the Greater Toronto area.
You can reach Elizabeth by phone at (905) 510-5785
Email at: eblair@mortgageedge.ca
or visit the website at: www.missmortgage.ca
License # M08005880 / Brokerage License # 10680
Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, L4B 3H7
Many good things, unless they are continually practiced and exercised, can truly be “lost”. I believe that there is an art in the practice of referring business and that too will go by the wayside unless business owners learn to do this well.
Each year, as I work in this business, I continue to build up a database that now holds over 750 people, prospects, clients, lawyers, appraisers, lenders, realtors. As I continue to see increasing growth in sales, I also see a rising trend in referrals that I receive from others. This steady stream of referral business has become the main reason why I have enjoyed the growth in sales today.
Over the years, I have also been focused on gathering an established network of individuals who I “believe in”. Each time I come across someone who might need that kind of service provider, I work very hard to ensure that the individual knows and understands that the person I am referring is excellent at what they do. In a way, it is a mini sales job, on its own, and most times, the individual I refer ends up getting the business. Here is an example of some of the things I have done in the past, on behalf of that individual I am referring: tell them about a recent great job they did for me or a client of mine, let them know that I know them well and I believe wholeheartedly in their service level and I may even send them the business card of the person I am referring. I can honestly say that I receive great satisfaction in referring others and I believe that if I expect others to refer business to me, then I must be working hard at securing business for them.
I believe that referring others must become something we do everyday IF we expect to reap the reward of constant referred business coming back our way. It is the basic rule of giving if you expect to receive. What a straightforward idea but yet so difficult for many to grasp…. truly a lost art. While there are structured programs and groups out there, like networking groups, that motivate members to refer business, these groups do come with hefty membership fees and often because of the fees, members feel obligated to push leads into the group just to get their fair share of leads back….it is a pay to receive structure. I believe true networking for referral business should not be something you “pay for”, it should be something you do naturally along with the group of business partners that you have come to know and trust….…sending business leads out and expecting business leads back.
This year has been an absolutely amazing year for me and as I continue to receive leads and pass out a high number of excellent real estate leads to realtors, I will continue to carefully monitor who is sending leads and will ensure those are the ones I refer business back to.
This article was written by Elizabeth Blair, a licensed Mortgage Agent with Mortgage Edge in Richmond Hill, Ontario.
Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can contact Elizabeth directly by phone at (905) 510-5785
by email at eblair@mortgageedge.ca
or you visit her website at: www.missmortgage.ca
Elizabeth is licensed with the Financial Services Commission of Ontario and is also a Member of IMBA (the Independent Mortgage Brokers Association of Ontario) www.imba.ca
Lic # M08005880 Brokerage Lic # 10680 Head office is located at: 15 Wertheim Court, Suite 210, Richmond Hill, Ontario, Canada.
Due to recent bond increases, there is now great pressure to raise fixed rates in Canada.
If you have clients who are house shopping now, without mortgage pre-approvals, encourage them to negotiate their mortgage rate now. Some lenders will lock a mortgage rate for up to a maximum of 120-days.
This would also be a good time for those who have mortgage renewals coming up in the next 120-days. If you typically take a fixed rate mortgage, lock in now before rate hikes hit.
Contact Elizabeth Blair today to discuss financing.
This blog was written by Elizabeth Blair at Mortgage Edge.
Elizabeth services mortgage clients in Mississauga and all over the Greater Toronto area.
You can reach Elizabeth by email: eblair@mortgageedge.ca
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
;)
;)
