500,000 Canadians Deferred Their Mortgage Payments

Commercial & Rental DAZADA DIAMOND 25 Sep

500,000 Canadians Deferred Their Mortgage Payments

Human Hand Placing A Coin On Increasing Coin Stacks In Front Of House
The mortgage payment deferrals extended by the big banks in Canada to households at the onset of the COVID-19 pandemic have elapsed. There are over 500,000 mortgages on payment deferral at the Big Six banks in the country. Payments are resuming and the level has dropped by one-fifth in the most recent quarter.In the report by Canada Mortgage and Household Corp. (CHMC), more than 75% of a million Canadian homeowners have either deferred or skipped a mortgage payment. The total amount per month is about $1 billion. CHMC’s report also reveals that more people are taking out more loans.

Significant impact on mortgages

The big lenders announced the sweeping mortgage deferral programs in March 2020 to give borrowers some breathing room. Since incomes were falling, the banks allowed households to skip some payments on their mortgages. The big wave of deferred payments indicates the significant impact of the pandemic on Canadian mortgages.

All the payment deferrals in the six banks are expiring, as tens of thousands of borrowers are starting payments again. At the end of the third quarter, the number of mortgages on payment deferral is 510,530, or 17.53%, lower from the preceding quarter. The total amount likewise dropped 15.38% to $136.27 billion from the second quarter.

Royal Bank of Canada (TSX:RY)(NYSE:RY) has the most number of accounts (138,830) on payment deferrals, while Toronto-Dominion Bank is second with 107,000 accounts. Interestingly, the Bank of Nova Scotia saw a 5.3% increase in payment deferrals or 99,000 mortgages in the third quarter. The length of the deferrals varies from one to six months.

Dream investment

It’s not surprising to learn that RBC has the most mortgages on payment deferrals. With a market capitalization of $139.3 billion, it’s the largest banking institution. For the same reason, RBC is the top investment choice of income investors and retirees’ dream investment.

RBC was founded in 1864 and started paying dividends six years later. The 150-year dividend track record is what attracts investors, because it has been paying dividends for the vast majority of its corporate existence. Likewise, it tells you that you can buy and hold the stock for decades.

When you’re investing for the long term, the choice must be a company that can weather economic downturns. Your pick should be well positioned to ride out the pandemic. According to RBC’s president and CEO Dave McKay, the bank is navigating these uncertain times on a position of strength and stability.

In Q3 fiscal 2020 (quarter ended July 31, 2020), RBC reported $3.2 billion in net income — a 2% year-on-year drop. The capital markets segment posted record earnings (+45%), while the insurance business turned in stable profits (+6%).

The push to grow its U.S. business continues after RBC hired a Merrill Lynch Wealth Management team and a UBS wirehouse advisor. For prospective investors, RBC pays a 4.41% dividend, despite the low-rate environment.

Expected declines

The big banks expect the reductions in mortgages on payment deferrals. However, the real number of distressed households should be known soon.

  • https://www.fool.ca/2020/09/18/500000-canadians-deferred-their-mortgage-payments/

Commercial check-in: What’s in store for office real estate in Canada?

Commercial & Rental DAZADA DIAMOND 6 Jul

Commercial check-in: What’s in store for office real estate in Canada?

Commercial check-in: WhatCanada’s commercial real estate sector is as unsettled as it has ever been. With CECRA struggling to work up a detectable heartbeat, there is growing anxiety that when federal and provincial efforts to support small businesses through the COVID-19 pandemic come to an end, it will leave thousands of business owners unable to pay their employees or their rent.

Retail and restaurant tenants are already having the life squeezed out of them – and social distancing will mean more discomfort for both shops and shoppers going forward – but the damage coming to the office sector is a little harder to gauge since most renters of office space have been able to carry on operations by leveraging a work from home model to generate some form of income. Companies with their leases about to expire, however, will have a large part to play in the future of office real estate.

“Those companies whose leases have come to an end, they’re looking at what the future is,” says Luciano D’lorio, Cushman & Wakefield’s director of operations in Quebec. “They’re in the process of negotiating with their existing landlord or they’re looking at a new space.”

Office real estate faces several unknowns that could negatively impact demand. Social distancing means more space will be needed per employee, but smaller businesses may not be able to justify the added expense of renting larger spaces. Working from home has proven a productive, if not entirely fulfilling, alternative to the typical office 9-to-5, giving companies the opportunity to greatly reduce their rent expenses.

But D’lorio remains optimistic that the pre-COVID-19 office paradigm is here to stay.

“There’s still a need for office space,” he says. “Think of all the money that companies spend on team-building and building a corporate culture. I think that’s hard to do in a remote situation.”

D’lorio says maintaining office space is also valuable in attracting millennial and Gen Z workers. According to Cushman & Wakefield’s recent Future of Workplace study, neither group particularly likes working from home. D’lorio says if employers want to attract a steady stream of willing young candidates, it’s in their interest to resist a complete work-from-home framework and provide office space, even if it’s on a part-time basis.

“I think, in the long-run, there’s going to be a mix,” he says, “of people who want to work from home – and employers are going to accommodate them – and groups who want to work in the office.”

D’lorio is particularly optimistic about suburban office space. Downtown offices are still better suited to provide that coveted work-live-play balance, but they are also problematic in a world rocked by COVID-19. Few people will be excited by the prospect of riding in a packed subway car for 45 minutes just to get to an office building where they’ll have to share an elevator with eight other people.

“The public transit issue is what’s keeping many employees from wanting to return,” he says.

A two- or three-storey building in the ‘burbs would alleviate two major concerns. Abundant, often free parking would mean employees could drive themselves to work. A short walk up the stairs would eliminate those uncomfortable, “Should-I-be-inhaling?” elevator rides.

D’lorio says Cushman & Wakefield plans to bring 25 percent of its staff back initially, with the next phase of reopening to be determined by the path COVID-19 takes. A vaccine or treatment for the disease would speed things up considerably – and clear much of the fog obscuring the future of Canadian office space. Until one materializes, office tenants and owners will be forced to wander another few months in the dark.

  • https://www.mortgagebrokernews.ca/news/commercial-checkin-whats-in-store-for-office-real-estate-in-canada-330546.aspx?utm_source=GA&utm_medium=20200616&utm_campaign=Newsletter-20200616&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Small business closures to further weaken purchasing power in Toronto

Commercial & Rental DAZADA DIAMOND 1 May

Small business closures to further weaken purchasing power in Toronto

Small business closures to further weaken purchasing power in TorontoToronto is likely to suffer another blow to its already dwindling purchasing power as around 61% of small businesses across the market might have to permanently shut down within three months, according to a recent survey by the Broadview-Danforth Business Improvement Area.

The poll found that amid the economic ravages of the coronavirus pandemic, at least 23% of Toronto’s small businesses could last for another three months taking into account their “current/expected revenue” levels. Meanwhile, 21% said that they can survive for two months, and 17% said that they can last for only one more month.

Lower incomes across the board have significantly harmed this segment: Only 28% said that they can pay their rents for May in full, while as much as 38% said that they wouldn’t be able to make their rent payments.

Approximately 85% said that a program focused on rent relief will be helpful, although some business groups have raised concerns that such programs would not prove sufficient to address the fundamental issue.

Mayor John Tory said in an interview with CP24 that the government has implemented several steps to help the sector survive for much of this year.

“I don’t think it is any accident that the time period they are talking about also happens to be the time period chosen by the governments for the relief programs, the individual relief programs and the wage subsidy programs and so on,” Tory said. “I think what we have to do is hope that through maintaining physical distancing and staying home and doing what we have to do that those numbers (of cases) will keep going down and that we will be in a situation where we can start to reopen the city.”

  • https://www.mortgagebrokernews.ca/news/commercial-mortgage/small-business-closures-to-further-weaken-purchasing-power-in-toronto-329211.aspx?utm_source=GA&utm_medium=20200501&utm_campaign=Newsletter-20200501&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Real estate, construction helps boost Canadian economy

Real Estate DAZADA DIAMOND 25 Feb

Real estate, construction helps boost Canadian economy

Real estate, construction helps boost Canadian economyThe real estate and construction industries played their part in helping Canada’s economy grow in November, the latest month of stats published by Statistics Canada.

Overall, GDP was up 0.1%, offsetting most of the decline in October, as 15 of the 20 industry sectors posted gains. This was enough to offset losses in the mining, quarrying and oil and gas extraction and transportation and warehousing sectors.

Construction posted gains in all sectors, for a total 0.6% increase, following four stagnant months.

The residential subsector posted a 0.6% as alterations and improvements rose along with apartment construction. The commercial sector drove the 0.4% in non-residential construction.

Real estate agents
Offices of real estate agents and brokers saw a 1.3% boost thanks to increased resale activity in the housing market, led by Montréal, Toronto and Vancouver.

National home sales grew by 0.6% month-over-month in November, and by 11.3% annually. Compared to the same time last year, housing market activity intensified in nearly all of the largest urban areas.

  • https://www.mortgagebrokernews.ca/archived/real-estate-construction-helps-boost-canadian-economy-325734.aspx?utm_source=GA&utm_medium=20200203&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Albertan, federal governments to add new affordable housing supply

Real Estate DAZADA DIAMOND 24 Feb

Albertan, federal governments to add new affordable housing supply

Albertan, federal governments to add new affordable housing supplyLate last week, the governments of Alberta and Canada pledged to contribute $11 million for the creation of more low-cost housing supply in the province.

The initiative will specifically focus on people who are at-risk of homelessness in Lethbridge, with the allocated sum to be used for the construction of 42 affordable housing units.

“Alberta Seniors and Housing will support the development of the facility, while Community and Social Services will be responsible for the on-site social supports,” the provincial government stated in its announcement.

“Planning and design work is underway and construction will begin later this year. The housing management body, Lethbridge Housing Authority, will operate the facility. The project will create about 80 jobs.”

Elsewhere in Alberta, housing markets will likely benefit from gradual recovery this spring, according to a recent Royal LePage analysis.

With the national aggregate home price growing by 2.2% annually in Q4 2019 (reaching $648,544), the Western Canadian province has seen modest housing growth levels in its largest cities.

In Calgary, the 2.1% price increase from Q2 2019 to the final quarter of that year has “been encouraging for homeowners,” Royal LePage stated. This helped offset the 2.3% year-over-year price decline in Q4 2019, down to $469,916.

Meanwhile, Edmonton home prices remained virtually flat during the fourth quarter, with a miniscule 0.7% annual decline to $379,426. The trend suggests a market steadily regaining its footing.

  • https://www.mortgagebrokernews.ca/news/albertan-federal-governments-to-add-new-affordable-housing-supply-325737.aspx?utm_source=GA&utm_medium=20200203&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Alberta to allow construction of 12-storey wood buildings

Commercial & Rental DAZADA DIAMOND 4 Feb

Alberta to allow construction of 12-storey wood buildings

Alberta to allow construction of 12-storey wood buildingsThe government of Alberta has announced that it will allow wood-building construction for up to 12 storeys.

As part of a drive to cut red tape, the province says that it will become the first in Canada to allow wooden buildings of 12 storeys provincewide. Builders will be given the chance to take advantage of this change to the Alberta building code in advance of the publication of the next edition of the National Building Code (expected late 2020).

“Not only will this decision support the forestry industry and land developers, it will provide affordability to homebuyers, bolster employment, and give Alberta a competitive advantage,” Kaycee Madu, Minister of Municipal Affairs. “We made this change knowing that mass timber products are safe and that these buildings will meet all necessary standards.”

Wood is also a key part of Toronto’s smart city project launched by Alphabet’s Sidewalk Labs, with plans eventually for wooden towers of up to 30 storeys, five times the current allowable limit.

Better technology
The decision to allow taller wooden buildings stems from improvements in technology which the province says makes them feasible including better fire protection and wood-product technology.

“BILD Alberta is excited to see the Government of Alberta take steps to modernize construction, reduce red tape and address environmental needs by allowing innovative techniques to deliver the homes and buildings people need,” said Patrick Shaver, chair, BILD Alberta Chair, and president of Avillia Developments. “This provides our industry and member companies with more options in meeting the housing affordability needs of Albertans.”

  • https://www.mortgagebrokernews.ca/archived/alberta-to-allow-construction-of-12storey-wood-buildings-325435.aspx?utm_source=GA&utm_medium=20200127&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

New data is positive for Canada’s CRE market

Commercial & Rental DAZADA DIAMOND 3 Feb

New data is positive for Canada’s CRE market

New data is positive for CanadaTwo new reports provide some positives for the Canadian commercial real estate sector including retail and head office buildings.

In the week that Bench announced the closure of several physical stores in Canada, Statistics Canada reported Friday that retail sales gained 0.9% in November to $51.5 billion, largely offsetting a 1.1% decline in October.

Motor vehicle and parts dealers along with food and beverage stores accounted for much of the gain having been in decline in the previous month.

Six provinces posted increases led by Ontario, Quebec, and BC, while Alberta posted its largest decline (0.9%) since early 2017.

Retail ecommerce increased 6.6% year-over-year while total unadjusted retail sales were up 2.2%.

Head offices
Meanwhile, Statistics Canada also reported its annual head office survey.

Data for 2018 shows that, despite several head office closures, the number of head offices in Canada gained 0.3% to 2,737. The burgeoning cannabis industry accounted for part of this increase.

The major CMAs accounted for most of the head office locations with 698 in Toronto, 385 in Montreal, and 212 in Calgary.

  • https://www.mortgagebrokernews.ca/archived/new-data-is-positive-for-canadas-cre-market-325433.aspx?utm_source=GA&utm_medium=20200127&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Alberta cuts tax to encourage businesses to hire workers

Latest News & Economy DAZADA DIAMOND 16 Jan

Alberta cuts tax to encourage businesses to hire workers

Alberta cuts tax to encourage businesses to hire workersBusinesses in Alberta are getting a boost for their hiring intentions, helping to offset some of the jobs lost from economic challenges.

The provincial government has introduced a new incentive for businesses by cutting the corporate tax rate from 11% to 10% as part of its ongoing Job Creation Tax Cut.

“It will take time to reverse the damage done to Alberta’s economy, but we are seeing positive signs that the Job Creation Tax Cut is working. We expect more good news of increased investment as the rate continues to decrease and businesses make new plans. We will continue to work to attract investment to Alberta.”

With the lowest general corporate income tax rate in Canada, Alberta is hoping to see improved competitiveness and attract new investment, especially as the combined federal-provincial corporate tax rate falls to 8.8% at the start of 2022. At that point, it will be lower than 44 of the US states.

Housing market improving
Along with a rise in non-residential investment in the province, Alberta’s housing market has seen some positives in the past year.

Investment in residential construction improved by more than 21% in 2019 from the multi-year lows seen in late 2018 and in October, home sales rebounded by more than 11% since they reached an eight-year low in February. Compared to the same month of 2018, home sales were up by 8.8%.

Building permits were up 3.8% year-over-year in October.

  • https://www.mortgagebrokernews.ca/archived/alberta-cuts-tax-to-encourage-businesses-to-hire-workers-324664.aspx?utm_source=GA&utm_medium=20200108&utm_campaign=MBNW-MorningBriefing&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Property taxes a burden on Canadian businesses

Commercial & Rental DAZADA DIAMOND 30 Dec

Property taxes a burden on Canadian businesses

Property taxes a burden on Canadian businessesAltus, in conjunction with Real Property Association of Canada, recently released the 2019 Canadian Property Tax Benchmark Report, which provides an in-depth look at property tax rates, both commercial and residential, in 11 major urban centres across Canada. The report found that eight of the 11 cities surveyed have a commercial rate which is at least double that of the residential tax rate. This means that a commercial property would incur property taxes more than twice the amount of an equally valued residential property, having dramatic impacts on Canadian small businesses.

Montreal, Toronto and Vancouver posted the highest commercial-to-residential ratios in the country, for a 12th consecutive year. However, Calgary and Montreal saw the highest ratio increases in 2019, indicating a growing burden on commercial rate payers in those cities.

“Ideally, the tax rate on residential and commercial property should be the same and applied to current market values of both, but over time we’ve moved well beyond that, and municipalities across the country have been reluctant to increase taxes on residential rate payers who vote for them [versus] on commercial rate payers who don’t vote for them,” said Terry Bishop, president of Property Tax Canada at Altus Group. “Over the years, we’ve gotten a gap between the rates, and that’s really the purpose of the report . . . to shed some light on that.”

Property tax is the main source of revenue for Canadian municipalities and is used to fund services such as road repair, education, recreational programs and public transit. Both residents and business owners pay property taxes, but the rate they pay varies depending on whether the property type is commercial or residential – taxing authorities set these rates at their discretion.

The average commercial-to-residential tax ratio for all municipalities surveyed in 2019 was 2.84 as compared to 2.90 in 2018. This minor decrease is the result of eight cities lowering their ratio in 2019 as opposed to five cities lowering their ratio in 2018. Most significantly, for the first time in at least 20 years, Vancouver’s ratio dropped below 4.0, with a decrease of 17.17%. While Montreal, Toronto and Vancouver continue to post the highest commercial-to-residential ratios, Montreal has now taken the top spot for highest commercial-to-residential property tax ratio, reaching 3.93. Additionally, Calgary saw the largest increase in the survey for the second year in a row with a jump of 8.31% to 3.31. For the first time in six years, Halifax now sits slightly above average with a ratio of 2.87.

Increased Pressure on Small Business

The rising valuations on commercial properties in Vancouver, Toronto and more recently Montreal, have begun to put more pressure on the sustainability of small commercial businesses. In those locations, retail prices are being driven up by speculation, where people are buying retail locations for future development potential. While small retail in these markets is being impacted by rising values, Calgary retailers are being equally impacted, but by declining values. Since the energy crisis began, the city has experienced a drop in their commercial assessment base, but have been trying to collect the same amount of taxes from a declining property tax base, thereby shifting the tax burden from one sector onto another.

“I think the way to approach it is to try and target any tax relief efforts at the specific problem in that jurisdiction, and there are ways of doing that on an assessment basis or a tax basis,” Bishop said. “It’s a jurisdiction by jurisdiction issue that needs to be dealt with within those jurisdictions.”

The answer to widening ratios won’t be the same for every municipality, but there are choices that have to be made in terms of how they’re going to tackle a widening spread: either they have to tighten their belt on expenses, transfer some of the tax burden onto residential rate payers, or put businesses at risk, and if they put businesses at risk it could have other implications.

Effect on residential market

Those implications could have a knock-on effect on the residential market. Many urban and suburban homebuyers want to live in areas with vibrant commercial activity, and if high property taxes prove to be a burden, those businesses won’t be sustainable.

“It starts to change the complexion of the community, particularly in some of the areas with small retail strips. When businesses start to go dark, it starts to have a negative impact on the residential values as well in the community,” Bishop said.

Brokers might also want to keep an eye on clients looking to finance a property with development potential; future tax consequences could impact a borrower’s ability to pay.

Altus Group has conducted this report analyzing the differing tax ratios between commercial and residential properties for more than 16 years, and the average ratio has stayed between 2.5-3%, which indicates a balancing point somewhere in that range.

“Despite seeing some major shifts this year, the commercial-to-residential tax ratio is still an issue of relative fairness as we continue to see several cities across Canada shifting the burden of property taxes to business owners,” Bishop said. “Expecting businesses to shoulder the same burden while values decline, or taxes increase beyond business growth, is unsustainable. Measures that compress the gap between residential and commercial tax rates are positive steps that can help the viability of all businesses.”

Although each city is addressing this issue with their own unique approach, these solutions will compound the problem of inequities in commercial property taxes and create further disparities in commercial tax rates. Assessment phase-ins and tax mitigation measures such as capping, rebate programs and graduated tax rates, only serve to compound the existing inequities in taxation and prolong the inevitable tax increases. Reducing the gap between residential and commercial tax rates is a measure that can help the viability of all businesses.

More Market Trend Analysis

  • Quebec City’s commercial-to-residential tax ratio is the fourth highest of all cities surveyed. It has been steadily climbing for 15 years; however, it decreased by 3.75% this year.
  • Halifax’s commercial-to-residential tax ratio has slowly been increasing over the past few years. It now sits above the average for the first time in six years.
  • Ottawa’s commercial-to-residential tax ratio of 2.51, sits just below the average ratio for the 10th consecutive year.
  • Edmonton sits just below the average with a ratio of 2.41 and has remained relatively stable over the last four years.
  • Winnipeg’s ratio has remained stable for three years, it posted the highest 2019 residential rate at $12.33, an increase of 1.76% from last year.
  • Regina remains quite stable posting a 1.74 commercial-to-residential tax ratio, with only slight increases in both commercial and residential tax rates in 2019.
  • Saskatoon continues to show the lowest commercial-to-residential tax ratio at 1.71, a slight decrease from last year.

  • https://www.mortgagebrokernews.ca/news/property-taxes-a-burden-on-canadian-businesses-323239.aspx?utm_source=GA&utm_medium=20191127&utm_campaign=MBNW-Newsletter&utm_content=CAB225E9-A56E-4453-BA7A-30CBD695B619&tu=CAB225E9-A56E-4453-BA7A-30CBD695B619

Mortgages 101 – What You Need to Know about Mortgages

Mortgage Tips DAZADA DIAMOND 10 Oct

Mortgages 101 – What You Need to Know about Mortgages

Mortgage [ˈmôrɡij] NOUN
With a residential mortgage, a home buyer pledges his or her house to the bank. The bank has a claim on the house should the home buyer default on paying the mortgage. In the case of a foreclosure, the bank may evict the home’s occupants and sell the house, using the income from the sale to clear the mortgage debt.

Mortgages in a Nutshell
Since homes are expensive, a mortgage is a lending system that allows you to pay a small portion of a home’s cost (called the down payment) upfront, while a bank/lender loans you the rest of the money. You arrange to pay back the money that you borrowed, plus interest, over a set period of time (known as amortization), which can be as long as 30 years.

When you get a mortgage loan, you are called the mortgagor. The lender is called the mortgagee.

How Do You Get a Mortgage?
The companies that supply you with the funds that you need to buy your home are referred to as “lenders” which can include banks, credit unions, trust companies etc.

Mortgage lenders don’t lend hundreds of thousands of dollars to just anyone, which is why it’s so important to maintain your credit score. Your credit score is a primary way that lenders evaluate you as a reliable borrower – that is, someone who’s likely to pay back the money in full WITHOUT a lot of hassle. A score of 680-720 or higher generally indicates a positive financial history; a score below 680 could be detrimental, making you a higher risk. Higher risk = higher rates!

How Mortgages Are Structured
Down payment: This is the money you must put down on a home to show a lender you have some stake in the home. Ideally you want to make a 20% down payment of the price of the home (e.g., $60,000 on a $300,000 home), because this will allow you to avoid the extra cost of Mortgage Default Insurance which is mandatory with all down payments of less than 20%.

Every mortgage has three components: the principal, the interest, and the amortization period.

Mortgages are typically paid back gradually in the form of a monthly mortgage payment, which will be a combination of your paying back your principal plus interest.

  1. Principal: This is the amount of money that you are borrowing and must pay back. This is the price of the home minus your down payment
    taking the above example, purchase price $300,000 minus $60,000 down payment to get a mortgage (principal) of $240,000.
  2. Interest rate: Lenders don’t just loan you the money because they’re nice guys. They want to make money off you, so you will be paying them back the original amount you borrowed (principal) plus interest—a percentage of the money you borrow.The interest rate you get from the lender will vary based on: property, lender, credit bureau, employment and your personal situation.
  3. Amortization means life of the mortgage, or how long the mortgage needs to be, in order to pay off the complete loan (principal) plus interest. Mortgage loans have different “amortizations,” the two most common terms are 25 & 30 years.Within the life of the mortgage (amortization) you will have a Term. The length of time that the contract with your mortgage lender including interest rate is set up (typically 5 years). After your term completes, you can renew your mortgage with the same lender or move to a new lender.

When to Get a Mortgage

First Step: connect with a Mortgage Broker for a mortgage before you start hunting for a home. You need to know what you can afford – especially with all the new government regulations.

Ideally you need a mortgage pre-approval, which an in-depth process where a lender will check your credit report, credit score, debt-to-income ratio, loan-to-value ratio, and other aspects of your financial profile.

This serves two purposes:

  1. It will let you know the maximum purchase price of a home you can afford.
  2. A mortgage pre-approval shows home sellers and their realtors that you are serious about buying a home, which is particularly crucial in a hot housing market.

Types of Mortgages
How do you figure out which mortgage is right for you? Here are the 2 main types of home loans to consider:

  1. Fixed-rate mortgage:This is the most popular payment setup for a mortgage. A fixed mortgage interest rate is locked-in and will not increase for the term of the mortgage.
  2. Variable rate mortgage aka Adjustable Rate Mortgages (ARM) A variable mortgage interest rate is based on the Bank of Canada rate and can fluctuate based on market conditions and the Canadian economy. A mortgage loan with an interest rate that is subject to change and is not fixed at the same level for the life of the term. These types of mortgages usually start off with a lower interest rate but can subject the borrower to payment uncertainty.

How to Shop for a Mortgage?
Use a mortgage broker, a professional who works with many different lenders to find a mortgage that best suits the needs of the borrower.

Brokers specialize in Mortgage Intelligence, educating people about mortgages, how they work and what lenders are looking for. Everyone’s home purchasing situation is different, so working with us will give you a better sense of what mortgage options are available based on the 4 strategic priorities that every mortgage needs to balance:

  • lowest cost
  • lowest payment
  • maximum flexibility
  • lowest risk

Most Canadians are conditioned to think that the lowest interest rate means the best mortgage product. Although sometimes that is true, a mortgage is more than just an interest rate. You can save yourself a lot of money if you pay attention to the fine print, not just the rate.

Banks tend to concentrate on the 5 year fixed mortgage rate (since that’s the best option for them)… rates are important, however your Dominion Lending Centres mortgage professional will look at the total cost of the mortgage. Brokers will advise & explain mortgage options, help you understand the implications of your choice and help you avoid the pitfalls of choosing a mortgage based on rates alone.

  • https://dominionlending.ca/news/mortgages-101-what-you-need-to-know-about-mortgages/