Christine Buemann Mortgage Broker

As I discussed in my previous blog posting, the interest rate is an important aspect of a mortgage, but is not the only factor to consider. There are other “features” within a mortgage that can be equally as important. Here are a few: ·          Payout penalty calculations: how the lender calculates what your penalty will be if you pay you pay out your mortgage out before the end of the term ·          Pre-payment privileges: how much principle you can pay down annually without a penalty ·          Portability: if you can “port” the mortgage to another home should you choose to move ·          Assume-ability : if someone can “assume” the terms and balance of your mortgage ·          Blend and refinance-able : if they will allow you to blend the rate of your mortgage with the current rate should you choose to refinance (generally with lower fees) ·          Conditions of release: are there any special conditions in order to get out of the mortgage (an example would

As you may have heard, the Office of the Superintendent of Financial Institutions Canada (OSFI) has eliminated the program that some lenders provide that allows borrowers to use “cash-back” from their mortgage as their down payment. With some lenders offering up to 5.5% cash-back, it allows borrowers to purchase a home without having saved a down payment. Because you are essentially financing 100% of the purchase price, there are higher risks and therefore a higher interest rate (bank’s posted rate). It is often viewed as a great opportunity for many first time buyers to get into the market while home prices and interest rates remain low. The standard qualifying criteria applies, as well the borrower must have a good credit score. In order to take advantage of the 5.5% cash-back, the application must be submitted prior to October 31 st . Here is a link for more information on how cash-back mortgages work. Contact me with any questions. http://christinebuemann.blogspot.ca/20

As expected, the Bank of Canada met this morning and decided to keep their target overnight rate at 1%. In turn, Bank's Prime Rate will remain at 3% www.christinebuemann.com

Check out this great article on the importance of having a contingency fund for all home owners. Many types of investments such as Tax Free Savings Accounts or short term investments will have automatic withdrawal options that allow you to build your fund easily and automatically. Building a Cash Cache www.christinebuemann.com

When it comes to fixed rate mortgages, the 5 year term is the most common. While most people think that shopping around for the lowest interest rate is the most important aspect of choosing a mortgage, choosing an appropriate term is equally as important. Here is an example: If you were to have taken out a $300,000 mortgage in 2009 with a 5 year term at 4.5% and you were wanting to get out of that mortgage 2 years early, you would have to pay roughly $11,000 in discharge fees (depending on the lender). If you would have taken a 3 year term at the time of origination at 4%, your payments would have been just over $80 less a month . You would also have paid approximately $4400 less in interest over the 3 year term. The savings of the penalty in combination with the lower interest rate is over $15,000! If you intend to keep your mortgage for the full 5 years, there are clear benefits of locking into an ultra-low rate for a longer period of time. With rates as low as 3.89% for a 10 ye