Tuesday, December 16, 2008

Dropping rates

Fixed rates are steadily lowering. Hopefully this will breathe some life into our soft market...

Residential rates:
1 yr fixed – 4.00%
4 yr fixed - 4.89
5 yr fixed - 4.99
5 year variable – 4.1% (Prime +.6%)
• Prime is currently 3.5%

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Need a quote on your mortgage? Call me at 416 876 2031.

Friday, December 12, 2008

Stuck with two properties: Investor mortgage may be the solution to your problem

It’s a fairly common scenario nowadays. You bought a new property and arranged financing that was conditional on the sale of your old property. And now with the market having fallen off, you’re under pressure to reduce the price of your original property but you hesitate to do so because you don’t want to realize a major loss.

Enter the investor mortgage, available with as little as 5% down. What is an investor mortgage? It’s a mortgage that allows you to offset the rental income you will receive from either one of the properties against the carrying cost the property. With a lender that allows rental offset, the total amount of mortgage (or mortgages) you are allowed to carry will be significantly higher than they would be with a mortgage on an owner occupied property. In other words, if you prefer not to realize the loss on your original property, it may be possible for you to keep both properties. The insurance premium on the investor mortgage is higher than the premium on a regular mortgage – insurance premiums apply when your down payment is less than 20% -- but this may be the solution for you if you want to hang on to the original property and wait for a better market to sell.

Call me direct at 416 876 2031 if you would like more information about the investor mortgage.

Q&A: Improving Your Credit Profile

I just received the following e-mail from an interested real estate investor about credit. I thought others might find the information useful so I am posting the Q&A...

Question: "As a mortgage broker are you looking at credit cards and there balance? The reason I'm asking is that I have 7 credit cards. Over the years company's just give them to me..I don't have a balance on any of them. And I only use 3. I have a high credit limit on them.

I"m just wondering when I go to apply for a mortgage are those card going to look bad and I might not get approved because I have them?

I'm try to get my application together so when I find my investment property I will not have a problem getting a mortgage.

Do you think it's a good idea to close those accounts? and will closing those accounts has an effect on my credit report?

Answer: "I would definately NOT close the accounts. Closing accounts will probably reduce your credit score. Do you know what your credit score is? I would recommend going to www.equifax.ca and checking your score on line for around $25. If your score is 680+ then you are fine. Keep the balances on your cards as low as you can and don't apply for any more cards unnecessarily. If you have no balance on your cards then it won't affect the debt service ratios with any of my lenders"

Do you have a mortgage question. Feel free to contact me by email or by phone.

Tuesday, December 9, 2008

Is now a good time to lock in your mortgage?

I just received an e-mail from a client asking the following question... "Given today's large Bank of Canada interest rate cut of .75%,should we be thinking about locking in our mortgage?"

I think a lot of people might be wondering the same thing so I thought I'd share my answer.

"Long term fixed rate mortgages ie. 3-5 year terms, are currently around the 5% mark. Fixed rates do not move exactly in tandem with the Bank of Canada overnight rate. When the Bank of Canada reduces the overnight rate as they did today, the banks normally follow by reducing their prime lending rate. After the Bank of Canada annoucement today, the banks dropped their prime lending rate almost immediately by .50% from 4% to 3.5%.

Variable rate mortgages are tied to the prime lending rate so if you have a variable rate mortgage you benefit directly the rate cuts. For example, if your rate is based on the prime rate less .60% (in the last few years many people took out mortgages rates below prime)then your current rate would be 2.9% which is a great rate. The premium you would have to pay to lock into a long term fixed rate of around 5% is pretty steep, therefore I would recommend you enjoy the current low rate for while".

Do you need help with your mortgage? Give me a call 416 876 2031.

Sunday, December 7, 2008

Investment Tip: You Can Buy a 5 unit apartment building w/as little as 15% down

With stock markets down, investors are looking for solutions to make up for steep losses.

Here’s a tip for people open to looking at a real estate investment as a way repair their badly bruised stock portfolios.

With a 5 + unit rental property, you can reduce your investment risk in comparison to a 1 or 2 unit rental property... in the event that you have a vacancy, you can count on the other tenants to ensure you have a steady income stream.

Real estate is a great investment.

With real estate, at least you can see your investment, so you know it’s not going to disappear on you (as long as you pay the mortgage that is !...)

Did you know that CMHC will insure a 5 + unit residential property with just 15% down, or up to 4 units with 5% down?

Sound interesting? Call me for more information.
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