Mortgage Blog

What is a "closed" and "open" mortgage?

Mortgage Edge — Tue, 24 Nov 2009 12:41:35 -0600

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

Interest rates moving up?

Mortgage Edge — Mon, 12 Oct 2009 14:34:55 -0500

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*.

See link: Announcement by a major bank

See link: Bonds

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.

What are the most important things you want from your Financing Person?

Mortgage Edge — Tue, 22 Sep 2009 14:03:43 -0500

I have always been curious to know the top and most important things, that a Realtor wants, from their mortgage financing contact?

Can you take a second and send me a response and list your top 3 or 5 things please?

Email: eblair@mortgageedge.ca

Netfirms.ca ---> does anyone know what happened??

Mortgage Edge — Tue, 15 Sep 2009 19:27:04 -0500

I have not been able to check email, or access my website for TWO DAYS.

Does anyone use this web hosting service: www.netfirms.ca

What's wrong with their service, anyone know why they are down and have not posted any official update to their customers ?

Please email me at: eblair029@yahoo.com

A question to all realtors in Canada

Mortgage Edge — Sun, 02 Aug 2009 09:46:41 -0500

A realtor I work with, recently told me that they MUST send the names of three people, to their clients, if they are looking for financing.

I researched this with RECO and they advised that there is no such rule or requirement set by RECO who governs the real estate industry.

Would anyone tell me please where this might have come from?

Emails only please to: eblair@mortgageedge.ca

An important thing to tell your clients

Mortgage Edge — Sat, 25 Jul 2009 09:36:35 -0500

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.

What is a bridge loan?

Mortgage Edge — Fri, 10 Jul 2009 18:28:40 -0500

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.

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

get your client appraisals PAID

Mortgage Edge — Sat, 04 Jul 2009 10:34:21 -0500

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

The lost art of referring business

Mortgage Edge — Sun, 14 Jun 2009 23:13:43 -0500

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.

Mortgage rates on the rise

Mortgage Edge — Sat, 30 May 2009 08:32:21 -0500

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

By phone: (905) 510-5785

or by email: eblair@mortgageedge.ca

FSCO license # M08005880 / Brokerage License # 10680

Mortgage plus a line of credit - is it for you?

Mortgage Edge — Sun, 17 May 2009 17:13:51 -0500

Home owners who have lots of equity in their house, might be looking for ways to get access to that equity without having to re-finance their house every time a need arises for some additional money.

A mortgage with a line of credit portion is a great product for some. Here are some typical reasons why you might want to get access to your home equity: buy investments, stocks, bonds, RRSPs, renovate your home, pay for education costs, or other reasons.

The example below shows a total home value of $380,000 divided into three sections: the top portion means that 20% of your home value must remain as equity and cannot be financed. The middle portion represents the line of credit portion. The line of credit portion can go up to 80% of the value of the home. The bottom portion is your actual mortgage loan portion today, that you decide to convert over, when you move into this product. Using the example of a home owner who has a home valued at $380,000......This client has a mortgage balance right now, with a lender, at $210,000. By moving into the mortgage + line of credit product, the current mortgage amount of $210,000 is set up as either a FIXED mortgage, or a VARIABLE rate mortgage. The borrower can then use anything over this set mortgage amount, all the way up to 80% of the home value.

Home Value for this illustration is $380,000

----------------------------------------------------------------------------

20% cannot be financed

----------------------------------------------------------------------------

$ 94,000 MAX Line of Credit

portion Variable rate

**Prime + 1% **2.25% + 1% = 3.25%

Line of credit can be increased up to 80% of the value of the home

---------------------------------------------------------------------------

Mortgage balance today $ 210,000

Variable rate 5 year term

Fixed Rate 2, 3, 4, 5, 7, 9 and 10 year terms

5 yr fixed = 3.69%

variable = **Prime 2.25% + 0.80% 3.05%

---------------------------------------------------------------------------

It is important to mention....... this kind of mortgage product requires a very disciplined borrower as reckless spending or improper investing strategies could have a very negative outcome, a higher debt and possibly the inability to re-pay the debt.

NOTE: Mortgage rates are effective as of May 17, 2009. **The variable rate amount can go up or down depending on current posted Prime Rate. Mortgage rates are subject to change without notice.

This blog 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

Frustrated with lender document requests?

Mortgage Edge — Mon, 04 May 2009 13:28:09 -0500

Are you buying a house and maybe just totally frustrated now, with your lender, and all of their requests for more documents?

Let me shed some light on a popular question about the whole requirement to provide “proof of down payment” and the real reasoning behind it.

All Canadian banks, have implemented very strict policies to cover this subject called, “Anti-Money Laundering”. These policies have recently been strictly enforced and monitored because of “mainly” the back-door terrorist financing. With this in mind, you can probably see why there is such vigilant watch placed on the movement of money, especially any border-to-border movement. Canadian laws have been put into place to ensure all banks and lenders comply and that they all have consistent standards to ensure that questionable activities and money transfers cannot occur.

As you know, purchasing a house requires the movement of a very large amount of money and therefore, the monitoring of mortgage funds, also falls under that same strict scrutiny. The lender will always need to know where the funds came from, where the funds reside now, and what is the exact ownership of those funds. As long as a borrower can provide legitimate documents (bank statements, investment accounts, and other proof) that they have sufficient funds, here in a Canadian bank account or investment account, to satisfy the down payment and the closing costs, then a lender is fine with this.

Here is what a mortgage lender will typically ask for:

If you are pulling funds from an existing savings or chequing account, the lender will want to see print-outs, with your full name and address, bank name, and account number, going backwards from the current date. That account should show your down payment plus your closing costs there, and that these funds have been accumulated there. If there are large transfers, into your account, these will need to be explained to the lender. For example: if a lender sees a large deposit of say $120,000 going into your bank account, the lender has the right to ask where it came from and be prepared to even go after additional documents to prove the movement of the money. Lets say, you have recently moved to Canada, from the USA. You sold a house in the USA, and you had a $120,000 deposit made into your bank account (from your sale proceeds). This $120,000 shows up on your 3-month bank statement window print-outs. Yes, the lender can ask you to provide the proof of the sale document (a copy of the sale agreement) and perhaps even a copy of the lawyer’s statement of adjustments which would clearly demonstrate what funds you would have left over from the property sale.

If you are pulling funds out of your investment accounts, the lender may want to see copies of those investment accounts.

If you are pulling funds out of an existing RRSP account, under the government Homebuyer’s Plan, you should provide a copy of the RRSP statement, plus a copy of the completed and signed RRSP withdrawal form.

As frustrating as the documentation process may seem to a borrower, it is really part of the extreme due diligence that lenders have had to put into place to protect their mortgage “book of business”. It is best to fully co-operate with your banker or broker and provide the documents that are being requested to ensure a smooth financing process.

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

Realtors.....bank or mortgage broker - what's the difference?

Mortgage Edge — Sun, 03 May 2009 19:41:14 -0500

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?

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?

It is easy to quickly assess that any individual’s business, is truly like a small rain-drop in an ocean, for a bank but mot so with a broker’s office. Mortgage Broker offices 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 the business of dealing in mortgages. Lets say that each representative has placed 2 million dollars of mortgages 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 brokerage has now secured some real benefits for the client:

1) the lender may now pass along additional mortgage rate discounts to those brokerages who have reached a particular sales volume;

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. 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 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.

Canadian Mortgage Rate Special: 3.59% on a 5-year fixed rate

Mortgage Edge — Tue, 31 Mar 2009 15:54:10 -0500

Mortgage rates.....you just keep coming down!

Realtors: If you have a client who needs a mortgage, please call me asap to get this great rate.

3.59% on a 5-year fixed rate - for Canadian applicants only and some conditions apply.

Elizabeth Blair, Mortgage Edge

Phone: (905) 510-5785

Email: eblair@mortgageedge.ca

Website: www.missmortgage.ca

License # M08005880

Look out Ontario :: more tax burdens are coming your way

Mortgage Edge — Sat, 28 Mar 2009 09:19:31 -0500

Is the bad news about our economy, the slumping housing industry, and more lost jobs enough to have you down and out? Wait there is more bad news heading your way. Yes the poor, beat-up and overtaxed Canadian family, living in Ontario, is about to face more taxes. Primarily, the tax is directed at the housing industry so if you plan to buy a newly constructed home, or sell your home, you will be facing this new tax in Ontario.

Announced on March 26, 2009, the Ontario Liberal Government, Dalton McGuinty, is fine-tuning their annual provincial budget which is scheduled to take effect on July 1, 2010. The new budget is going to merge the current 8% PST and 5% GST, into a new “harmonized” tax. If you think that is a harmless undertaking, have a close look at some of the housing-related services that will now be taxed:

Buyers who purchase a newly constructed home, after July 1, 2010, where the value is greater than $400,000, will be required to pay a 13% tax. For example, if you purchased a house for $500,000, the additional tax, added into the mix, would stick you with a $65,000 tax. It is important to mention, that this harmonized tax would NOT apply to re-sale homes. This has Ontario home builders especially worried as they are already dealing with excess inventory now and current deterioration of prices. With the introduction of this tax, newly-built, higher-priced homes, from builders, will be very difficult to sell.

If you are planning to sell your home, after July 1, 2010, you would be required to pay a 13% blended tax rate. The new 13% tax rate will replace the current 5% GST calculated on a realtor’s commission. Here below is an example of what a $400,000 sale price might look like, comparing today’s 5% GST and the coming 13% blended tax. This 13% tax will apply on the service, regardless of the sale price of your home. The tax will be charged, whether you utilize the services of a professional real estate agent or a discount service provider. Realtors, no doubt, will be facing disgruntled sellers who will push even harder to negotiate the commission down because of the new added costs a seller will face: a higher tax, a lower home value and less cash room for sellers to maneuver. The 13% tax will be a big burden especially since real estate values are predicted to face challenges right into 2010, when the new tax is introduced.

Sale Price of the Home = $400,000

Now After July 1, 2010

Real Estate Fees Real Estate Fees

5% to Realtor $20,000 5% to Realtor $20,000

5% GST $1,000 13% harmonized tax $2,600

Total Selling Cost $21,000 Total Selling Cost $22,600

The list of affected services, does not stop there. The following, in the housing and services industry, will also be required to top up their invoice with this new 13% tax:

- legal services

- home inspection services

- landscaping

- renovation services

- land survey services;and there are others too.

Of course the Ontario Government is really beginning to lick their lips with glee, as this new tax is estimated to bring in over $300 MILLION in tax revenues, and the revenues are only estimated for the closing of home sales alone. With a surging deficit, the Ontario government is going straight into our pockets for help. Many in Ontario are unhappy about the proposal but like most legislation in Ontario, it is passed without the strong-arm to stop it.

For me, as an Ontario resident, a move to the province of Alberta sounds really tempting because our friends out west do not pay any provincial sales tax!

This blog 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

Breaking a mortgage and a very LARGE mortgage penalty

Mortgage Edge — Tue, 24 Mar 2009 16:36:32 -0500

We are now in an environment of lower interest rates. Perhaps you are the person who is sitting in a mortgage rate at 5.2% and the thought of moving to a mortgage rate of 3.30% has you very tempted. Before you do anything, you must be absolutely sure that your mortgage penalty is not going to be a shocking surprise.

There are two formulas used to calculate a mortgage penalty, the first is the standard three month's interest penalty, and the second is IRD: Interest Rate Differential.

The following link will show you how these two mortgage penalties are calculated:

http://www.fcac-acfc.gc.ca/eng/publications/mortgages/PenaltyCharges-eng.asp

Banks will often use the IRD calculation in an environment when interest rates are declining. It is very unfortunate that many individuals do not understand this, or have this explained, when they are negotiating the new deal. I witnessed, this week, a close neighbour, who visited her bank. She was moved from a 4.6% to a 3.6% mortgage rate. She thought this was a wonderful deal, however, she was required to pay a $5,000 mortgage penalty just to get this new rate. I sat down with her, and showed her the amortization schedules based on the two mortgage rates, over five years, and demonstrated that her savings would only be a grand total of $2,000.

She had been misled by the banker to focus only on the "great rate" but her banker failed to properly advise the client that the savings on the lower rate were really washed away by the monstrous penalty amount. A move that was probably motivated by a desire to get a new mortgage deal on the books and bump up their sales numbers and at a very serious expense to the client. Others, I am sure, are all happily breaking mortgage contracts, without really understanding the numbers until it is perhaps too late.

This neighbour had already signed all of the paperwork with the bank and she did regret that she did not understand the implications of the new mortgage. Be careful you are not lured into switching your mortgage just because you are told about a "great rate".....sometimes that "great rate" will result in a handsome penalty that can outweigh any long term savings.

If you are concerned about how your own mortgage will look, with a move to a lower rate, please call me to show you the possible options.

This blog 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

Breaking a mortgage :: You could be facing a LARGE mortgage penalty

Mortgage Edge — Tue, 24 Mar 2009 16:33:30 -0500

There are two formulas used to calculate a mortgage penalty, the first is the standard three month's interest penalty, and the second is IRD: Interest Rate Differential.

The following link will show you how these two mortgage penalties are calculated:

http://www.fcac-acfc.gc.ca/eng/publications/mortgages/PenaltyCharges-eng.asp

I witnessed, this week, a close neighbour, who visited her bank. She was moved from a 4.6% to a 3.6% mortgage rate. She thought this was a wonderful deal, however, she was required to pay a $5,000 mortgage penalty just to get this new rate. I sat down with her, and showed her the amortization schedules based on the two mortgage rates, over five years, and demonstrated that her savings would only be a grand total of $2,000.

Today others, I am sure, are all happily breaking mortgage contracts, without really understanding the numbers until it is perhaps too late. This neighbour had already signed all of the paperwork with the bank and she did regret that she did not understand the implications of the new mortgage.

Be careful you are not lured into switching your mortgage just because you are told about a "great rate".....sometimes that "great rate" will result in a handsome penalty that can outweigh any long term savings.

If you are concerned about how your own mortgage will look, with a move to a lower rate, please call me to show you the possible options.

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 and Brokerage Lic # 10680

Seeking new members...

Mortgage Edge — Sat, 21 Mar 2009 10:35:16 -0500

Hi all, I just created a new Group and would sincerely appreciate if you could take a moment to have a look and see whether you might consider joining. Thanks!

Here is a link to the site:

http://activerain.com/groups/mortgagemarketupdates

This notice was posted by Elizabeth Blair, Mortgage Edge.

www.missmortgage.ca

Federal Budget to help the housing industry but is it enough?

Mortgage Edge — Thu, 19 Mar 2009 21:16:20 -0500

Anxious Canadians have waited to see how our government would tackle a monstrous world economic crisis and its spill-over effects into Canada. It was a year ago, in January 2008, that some economists optimistically announced Canada would experience some pain however we would be immune to any kind of recession here. As the mouse slept beside the elephant, the elephant did roll over and we were also smothered by its weight.

It was in the last quarter of 2008, that the story changed. The housing market continued to slow down, vehicle sales fell and Canadian exports to the USA dropped. Many Canadian companies began to see a decline in their own business and forced many to downsize. As companies began to cut back on their workforce, the overall job losses in Canada have continued to climb. It is estimated that Canada will lose approximately 170,000 jobs, this year alone.

Canada is most certainly in a recession and desperately awaits an injection of hope. In response to this economic crisis, Canadians must now place their faith in the new federal budget which was tabled in the House of Commons, by the Honourable Jim Flaherty, Minister of Finance on January 27, 2009.

This very detailed 360-page report entitled: "Canada's Economic Action Plan - Budget 2009" is available for review at the following link:

http://www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf

Recognizing that the Canadian housing industry is a significant contributor to our economy and its growth and stability, a swift move to stimulate the housing industry was critical. Canada's housing industry has experienced a drop in new building permits, housing starts, and a decline in housing sales and home prices. Along with the slow-down has come stricter lending and financing guidelines which have also resulted in many mortgage defaults and foreclosures. The Economic Action Plan promises to provide a total of $7.8 billion in tax relief and funding. The objective is to give much needed support and stimulation to this very important industry where thousands of jobs in real estate, financing, construction, trades, and housing industry suppliers are in jeopardy now.

As the Action Plan is now official, here are some highlights of the Economic Action Plan, of interest to Canadian home owners:

1. Canadians who want to make their homes more energy efficient are able to receive grants from the Federal and Provincial governments. These grants can total, up to $10,000 for energy-saving approved and compliant upgrades. The Action Plan outlines an additional $300 million that will be allocated to this program, over a 2-year period. The program is already known as the "ecoENERGY Retrofit" initiative. You may visit the government website at ecoaction.gc.ca and follow the links to the ecoENERGY Retrofit, or call 1-800-622-6232 to find out how you, as a homeowner, can apply to receive available grants through the program.

2. First time home buyers, will be able to receive a $750 tax credit to offset closing costs. The tax relief will be extended to those first time buyers who acquired a home after January 27, 2009. This is a great incentive especially considering that the Ministry of Revenue extended a refund on the Land Transfer Tax, to buyers of resale homes, back in December 2007. This allowed first-time home buyers to apply for a refund, for up to a maximum of up to $2,000 on the land transfer taxes paid. Details on this previous notice can be found at the following link: http://www.rev.gov.on.ca/english/taxes/ltt/

3. A Home Renovation Tax Credit is being introduced. For eligible home renovation expenses, performed after January 27, 2009 and before February 1, 2010, individual home owners may claim a tax credit up to a maximum of $1,350. The credit must be claimed on your 2009 income tax return and the renovation expenditure must be greater than $1,000 but not more than $10,000 to receive the maximum credit of $1,350.

4. The Canada Revenue Agency Home Buyers' Plan (HBP) will also be revised to allow first-time home buyers an opportunity to withdraw from their Registered Retirement Savings Plan (RRSP) avoiding the requirement to pay tax on the withdrawal but at a new higher amount. The new withdrawal limit is $25,000 compared with the previous limit of $20,000. An individual, or an individual and their spouse, or common-law partner can combine their maximum limit to make a total HBP withdrawal of $25,000 each, thus bumping the maximum allowed HBP withdrawal to $50,000 for the pair.

Federal Budget to help the housing industry but is it enough?

Mortgage Edge — Thu, 19 Mar 2009 21:12:49 -0500

This very detailed 360-page report entitled: "Canada's Economic Action Plan - Budget 2009" is available for review at the following link:

http://www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf

As the Action Plan is now official, here are some highlights of the Economic Action Plan, of interest to Canadian home owners:

Federal Budget to help the housing industry but is it enough?

Mortgage Edge — Thu, 19 Mar 2009 21:11:16 -0500

This very detailed 360-page report entitled: "Canada's Economic Action Plan - Budget 2009" is available for review at the following link:

http://www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf

As the Action Plan is now official, here are some highlights of the Economic Action Plan, of interest to Canadian home owners:

Federal Budget to help the housing industry but is it enough?

Mortgage Edge — Tue, 17 Mar 2009 09:49:18 -0500

This very detailed 360-page report entitled: "Canada's Economic Action Plan - Budget 2009" is available for review at the following link:

http://www.budget.gc.ca/2009/pdf/budget-planbugetaire-eng.pdf

As the Action Plan is now official, here are some highlights of the Economic Action Plan, of interest to Canadian home owners:

The Green Energy Act....how it will affect our industry

Mortgage Edge — Tue, 17 Mar 2009 09:03:52 -0500

Home-owners will be facing some big changes on the home selling process, if Ontario's new Green Energy Act is passed through and fully implemented.

One of the stipulations of the new Act, is that anyone who is selling their home, will be required to have an Energy Audit on their home.

I wrote about this home Energy Audit process, in a December 6th, 2008 blog entry, not knowing at that time, that this type of Energy Audit would make its way, right into a new Ontario government Act! While the Act has not been implemented yet, there is discussion in the news, that this proposed legislation, will march right through to full approval.

As a homeowner, you might be asking, so what exactly is an Energy Audit anyway?

An Energy Audit is conducted via a visit to your home, by a trained and experienced advisor. The advisor would conduct tests and then document their recommendations on where energy efficiency can be optimized in your home. The advisor would then prepare a final detailed report to the homeowner that would give a detailed list of what changes or upgrades are recommended to make the home more "energy efficient". The homeowner would then use this report to carefully consider their options. Some examples might be, a recommendation to change older windows and doors, install new improved heating and cooling systems, upgrade insulation, etc. The homeowner could then decide what upgrades they would like to do, based on the report provided.

While this requirement may stimulate activity in some industries, by creating some new jobs, it will likely cause headaches elsewhere... I am quite sure two things will happen: 1) homeowners will be unhappy about having to disclose energy efficiency reports to interested buyers and will not likely to be happy about facing expensive upgrade costs before they can sell their homes. Even though grants are available, homeowners must still come up with money to complete the upgrades. In a housing market where home values are decreasing and homeowners already facing shrinking available home equity plus the rise in household debt-loads, this will be a new cost that homeowners will not be able to easily absorb.
2) realtors will not like it either as interested buyers might away from listed homes that just are not up to energy standards in listings where homeowners are unable to invest into needed upgrades to the home.

This blog 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

FSCO revoking and suspending licenses

Mortgage Edge — Tue, 17 Mar 2009 08:50:46 -0500

The Financial Services Commission of Ontario (FSCO) has identified several mortgage Brokerages and individuals that have failed to pass audit inspections for carrying satisfactory E&O insurance coverage.

Please visit the following link to see the Brokerages that failed to comply as of this date:

http://www.fsco.gov.on.ca/english/licensing/mebonline/enforce/mortgage/brokerages/default.asp

FSCO will continue ongoing audits and compliance in the industry and as FSCO's audits have only just begun, there is no doubt that the industry will undergo incredible scrutiny driving out even more individuals and brokerages operating today.

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

No downpayment :: is it still possible to buy a house?

Mortgage Edge — Tue, 17 Mar 2009 08:47:01 -0500

If you have been contemplating the purchase of a home but you just cannot pull together a 5% downpayment, there is good news for you. I have a lender offering a program called a CASH-BACK mortgage. You may be saying, so what is a cash-back mortgage anyway? If, for example, you wish to purchase a home for $300,000. 5% of $300,000 is $15,000. On your closing date, the lender would advance you the loan amount PLUS the $15,000. The $15,000 would then be used to make up the required 5% downpayment.

Here are some highlights of the cash-back program:

the mortgage rate for the cash-back offer is 5.75%.
the maximum cash-back amount that you may get is $15,000. In other words, you cannot use this program to purchase a home that is greater than $300,000.
you can borrow your closing costs, if you do not have your closing costs saved now.
you must have a credit score of 650 points or higher.
you cannot qualify for this cash-back program if you have had a bankruptcy in your past.
the cash-back program is only allowed for purchases of a home that is your primary residence, that is, rentals cannot be considered under this program.

This blog 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.caor 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