TESTIMONIAL: “As a real estate investor, the reason that we choose to work Brad is because he knows big deal about real estate investment, which makes me feel more confident. Brad was with us the whole time when we were purchasing our first investment property, which says he cares his relationship with every customer. Overall, we are very satisfied with his service.” – M. Li
TESTIMONIAL: I am normally not in the habit of writing testimonials but in this case I felt it absolutely necessary and deserved. Without any exaggeration, I believe that Brad Plummer made the seemingly impossible, possible. He went above the call of duty to secure financing for me under very difficult circumstances and held my hand through the entire process. He was professional throughout the entire process and due to his tireless effort, I was able to successfully receive the financing that I needed. I cannot say enough good things about Brad. He is a dedicated mortgage broker and without reservation, would highly recommend that you retain his services.M.Richards
The Globe and Mail Published
Wednesday, Mar. 18 2015, 5:50 PM EDT Last updated Wednesday, Mar. 18 2015, 5:50 PM EDT
The big banks are masterly in how they attract attention to their mortgage rate cuts. Don’t buy the hype. For the best mortgage deals as defined by low rates and favourable terms, see a mortgage broker. You may still end up doing business with your bank, but failing to at least consult a broker is borderline personal-finance negligence. A sign of spring’s approach in Canada is a bank making what looks like bold mortgage moves to the uninformed. This week, Bank of Montreal and Toronto-Dominion Bank announced five-year fixed-rate mortgages at 2.79 per cent, while Canadian Imperial Bank of Commerce has been offering a special introductory rate of 1.99 per cent on the first nine months of some fixed-rate mortgages. Mortgage broker David Larock says the vast majority of mortgages he’s arranged lately are five-year fixed, and the rates range from 2.54 per cent to 2.69 per cent. In addition to lower rates, they have comparatively light penalties if you have to break your mortgage before its maturity date. “The penalties are a fraction of what the major banks charge,” Mr. Larock said. Besides rates and penalties, some of the key variables in choosing a mortgage are prepayment privileges, or how much of the mortgage principal you can pay down every year without incurring a cost, and the length of time the lender will hold a mortgage rate for you. Mr. Larock said the mortgages he’s set up lately all have rate holds of 90 to 120 days, and they mostly let clients prepay 20 per cent annually. These terms are similar to what the banks offer, so you’re not giving up anything in using a broker. The Canadian Association of Accredited Mortgage Professionals says 30 per cent of outstanding mortgages were arranged by mortgage brokers in 2014, up from 23 per cent in 2009. Banks had a 55-per-cent share last year, with other lenders claiming the last 15 per cent. Bank dominance is slipping, but slowly. By creating an illusion of daring competitiveness, the banks keep customers coming back. Here’s what’s really going on in bank mortgage lending today. According to Robert McLister, mortgage planner at intelliMortgage Inc. and founder of RateSpy.com, banks have for weeks been offering rates lower than 2.79 per cent for clients with good credit histories. “You’ll never see a bank advertising its lowest discretionary mortgage rate,” he said. “That’s not how they maximize profits.” As a rough guideline, Mr. McLister says a rate in the 2.6-per-cent range should be doable if you’re a creditworthy bank customer. He says standard mortgages from the “monoline” mortgage lenders that brokers work with are in the 2.59- to 2.64-per-cent range, and that slightly lower rates can be had through no-frills mortgages with restrictive terms. Mortgage prepayment penalties are where alternative lenders really crush the big banks. I wrote about this in a column a little more than a year ago (read it here online: The hidden trap of mortgage penalties at the big banks). In short, lenders calculate these penalties on fixed-rate mortgages as the greater of three months’ interest or what’s known as an interest rate differential, or IRD. The idea behind the IRD is to compensate a lender for the interest lost when you pay out a mortgage early. Lenders have different ways of calculating the IRD, but you should expect penalties to be as much as three to four times higher at the banks than competing lenders. Mr. Larock, the mortgage broker, says he’s seen figures suggesting about one-third of mortgage holders get out of their loan early. However, he thinks these numbers may be skewed by the large numbers of people who have broken mortgages to capitalize on falling mortgage rates in the past few years. Generally, he figures about 10 to 15 per cent of people break their mortgages and therefore incur penalties. If you’re dead certain you’ll stay in a five-year mortgage for five years, maybe your bank’s best deal on rates will suffice. If you want to keep your options open and possibly get a better rate, check out a mortgage broker. It’s worth noting that Mr. Larock does about 20 per cent of his business with banks, mainly in cases where clients want a mortgage and a home-equity line of credit. However, he warns these people that the prepayment penalties can box them in for the term of their mortgage. “I tell them, as you sign I want you in your mind to hear the sound of a giant iron gate slamming shut.” Mortgage market survey These are currently the best advertised rates for a full-featured five-year fixed mortgage with a 90+ day rate hold: Advertised at major banks: 2.79% Credit unions: 2.59% to 2.69% (e.g. Slovenia CU at 2.59%) Monoline (mortgage only) lenders: 2.74% (e.g. Canadiana Financial) Mortgage brokers: 2.59% to 2.69% (multiple reputable brokers) Note: Brokers and lenders may sell at lower rates on a discretionary basis. Shorter rate holds typically save you at least 0.1 of a percentage point. Source: Ratespy.com
Once again Big banks hit the news because of low rates? When are they going to speak to a Mortgage Agent? 2.84% on a 5 year is old news, 3.84% on a 10 year might be the lowest advertised rate, but a mortgage agent can do better without even trying. http://ow.ly/JnySV
Refinancing your home could be a really great way to increase cash flow!
By this time next week, Canadian consumers borrowing for a home might be looking at the lowest rates in the country’s history as a result of the Bank of Canada’s rate cut on Wednesday.
[np_storybar title=”Top five takeaways from Bank of Canada’s surprise rate cut” link=”http://business.financialpost.com/2015/01/21/top-five-takeaways-from-bank-of-canadas-surprise-rate-cut/”]
Governor Stephen Poloz called the cut ‘insurance’ against low oil prices. Here are the bank’s top messages on how the oil rout could impact the economy
Interest rates on the discount market are already 2.05% on a variable rate, five-year mortgage and 2.57% on a five-year, fixed rate mortgage, said Rob McLister, editor of Canadian Mortgage Trends.
“We haven’t heard from the banks yet,” he said, referring to whether financial institutions will match the central bank’s 25-basis point cut. Bank lending rates tend to move with prime which variable rates are tied to. “Historically it takes a day or two for them to move.”
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|There are many things that can affect the market value of a property, ranging from interest rates to home improvements to the mood of the seller. Below are some of the key dynamics that tend to have the largest influence on home values that every homeowner or aspiring homeowner should be aware of. These factors are often gauged by sophisticated Real Estate investors before they decide to invest in an area:
1. Increase in Disposable IncomesThis is one of the most important indicators. If a town’s average disposable income is increasing faster than the national average, real estate prices are poised to follow suit. Key indicators: a) increased average income; b) decreasing income tax rates; c) increasing retail sales. Be wary of towns where demand is driving values upward while the average income is remaining flat.
2. Job Growth & MigrationIt pays to read the news regularly in the town you would like to invest in or have invested in. Be on the lookout for announcements of new jobs, major expansions, or new employers. Ideally you can purchase in areas where the population is growing faster than the provincial average and where the reputation of the town, city or region is strong.
3. Political ClimateBusiness friendly politicians generally equal real estate friendly investment areas. Look for regions where development is wanted, not shunned. Look for areas with forward-looking economic development offices where they sell the area to potential employers. Progressive towns attract business while other towns lose it.
4. Infrastructure ExpansionHere’s another reason why reading local news in areas that you plan to invest in can pay off for you big time. Look for planes, trains, highways, sewers, land annexation or expansion plans. Don’t buy until the construction begins or until plans have been completely firmed up, it can be dangerous to buy based on rumors alone. Trains and rapid transport are huge opportunities (towers that spring up at subway stops as an example). To enjoy a nice price increase relative to other areas of the town, city or region not affected by the infrastructure enhancement, try to buy within 800 meters of the station, or exit/entrance etc.
5. Areas Of RenewalIf chosen correctly this consistently provides the biggest bang for investment dollars. This is best defined as areas that are moving up from one economic class to the next, often described as “tough, yet funky”. In these areas, you’ll witness a mix of run down to well-kept, recently fixed up properties. Often you’ll see these areas mentioned in the news, every city and most towns have areas like this. The local perception is the hardest to change, so often locals miss the opportunity.
|6. Mortgage Interest Rates
Low interest rates allow a greater proportion of renters to become homeowners, which in turn can lead to an increase in home sales and therefore push prices higher. That said they don’t significantly increase mortgage costs (on a $100K mortgage a quarter % increase in rates only increases the payments by about $14). With interest rates historically low for the past several years, this is less of a factor now than it would be when rates first dropped.
7. Maximizing Value and Zoning OpportunitiesSophisticated real estate investors look first at a properties physical attributes, and then they examine how they may be able to change the property to optimize profit way beyond just renovations. As an example, an old hotel that is converted into loft apartments (advanced), or taking a single family home and converting it to a duplex (less advanced but still can be tricky). You need to know zoning bylaws and tenant regulations to make the transition successful. A small percentage of properties will have this potential, but make sure you have the required finances and expertise before taking this on, or find a partner.
8. Buy Wholesale; Sell RetailYou can buy properties at wholesale any day of the week in any town across the country, there are many investors across Canada who make their entire livings this way. This can include buying rundown properties and fixing them up, developing raw land or buying properties that are going to foreclosure. In Canada, accessing foreclosure properties is tougher than in other countries such as the US. The best opportunity for this in Canada is the pre-foreclosure market, some investors will advertise targeting distressed homeowners and then provide them with a much needed opportunity to sell.
9. Stand OutQuality marketing is a real estate investor’s best kept secret. You must be proficient to get above market rents and values for your properties. An example of this would be how two incredibly similar houses in the same neighbourhood can easily sell or rent for a 5-10% variance from each other. Matching your message to your prospective target in a compelling way is critical.
10. Renovations and Sweat EquityAreas in transition are great sources for homes that need improvements. Look for well-built but neglected homes. Keep the work simple and in line with what a renter or owner is looking for. Remember, smaller aesthetic investments such as in paint, flooring or carpeting can provide the biggest bang for your buck. Landscaping and exterior work also typically provide a solid return.
Many people could be in trouble if the rates do start to rise. It may also be wise for those of you sitting in and around the 4 to 5% interest rate to refinance early and lock in for a longer term.
Canada’s central bank will raise its key interest rate in May to contain inflation pressure, the Organization for Economic Cooperation and Development said.
Inflation will return to the central bank’s 2% target on “a sustained basis by late 2015,” the Paris-based OECD said Tuesday. The Bank of Canada “will have to start to withdraw stimulus as remaining slack is progressively taken up,” and the 1% policy rate “rises steadily” after the May increase, the report said.
That’s a more bullish prognosis of Canada’s economy than the one given recently by its central bank. The economy has considerable excess capacity and needs monetary stimulus to sustain a recovery over the next two years, Governor Stephen Poloz told lawmakers Nov. 4. Economists surveyed by Bloomberg News don’t see the central bank tightening rates until the fourth quarter of next year, according to the median forecast.
Poloz’s next decision on borrowing…
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