Planning her first major home renovation in the summer of 2009, Tina Davies felt like she was awaiting her first baby: excited, nervous and not sure what to expect.
The project would plunge the Toronto makeup artist’s household into chaos for five months, but once it was done, her family of three would have a new kitchen and bathrooms, updated plumbing and electrical systems and upgrades to the entire interior, from new floors to freshly plastered ceilings.
With $350,000 on the line, however, Ms. Davies wasn’t impressed by the vague quotes and sparse details being offered by the first three contractors she approached, whose contracts were so unprofessional, they looked as though they’d been drawn up “on paper napkins.”
Was this normal? She wasn’t sure. She’d never done this before.
“As a homeowner, you’re just really at the mercy of these contractors and you don’t know their language or what is the proper way to have something done,” Ms. Davies said. “You’re so overwhelmed and confused and you want to make sure you don’t do the wrong thing.”
She figured she needed help from someone knowledgeable and impartial, who understood how the industry worked. Then she heard about reno coaching, a relatively new service where, for $75-$100 an hour, a project manager would come to her house and help her draw up a budget and advise her whether her project was practical and affordable – think Mike Holmes meets Gail Vaz-Oxlade, but with the aim of preventing expensive mistakes.
The reno adviser she hired, Jay Charendoff of House Calls Project Management, “was really good about advising us about what to do before you get into it,” said Ms. Davies, adding that once she found a reputable contractor, he went through the contract line by line and highlighted problem areas.
“It’s just nice to know that there’s somebody on your side,” she said.
Mr. Charendoff, who has a degree in architecture and is a LEED-affiliated professional, launched his business four years ago and is among a handful of professionals offering reno advice in Canada.
It’s a service that is starting to catch on due to a new consumer awareness about the financial risks of renovating, says Carl Mascarenhas, president of eRenovate Inc. With the housing market cooling, he says, it’s no longer a given that property values will rise and homeowners will recoup their costs; they are more cautious now.
As with any new industry, Mr. Mascarenhas says it’s buyer beware when hiring a renovation adviser. As demand for the service increases, opportunists will emerge, he says. “There’s still a bit of caution for consumers to really weigh out the role the professional is playing and that they have the right credentials or experience to do so.”
Home renovations are big business in Canada. According to a survey by the Canada Mortgage and Housing Corp., Canadians spent $25.8-billion on home renovations in 2009, with the average project costing about $12,100. Of those 2.1 million households, 35 per cent said they went over budget.
“People don’t really know how much things are going to cost,” Mr. Charendoff says. “People sometimes have a general idea of what they want to do, but in this business, it’s really about the details.”
In addition to budgeting advice, Mr. Charendoff also looks at housing market conditions and gives homeowners straight talk if he thinks they are not making a good investment.
Such was the case for Karen Weinthall, who asked for advice while planning a major kitchen renovation on her 1920s Toronto home. After inspecting the property, Mr. Charendoff told Ms. Weinthall that her house, which was built on top of a steep hill, was slowly sinking into the ground.
He looked at the kitchen and looked at the floor and said you really are not going to be able to do that without a huge structural job. So I moved,” Ms. Weinthall said with a laugh.
“If we had just gone ahead and hired a contractor to do the kitchen, at what point in that proceeding would we have found out what a big problem it was?”
Mr. Charendoff says a reno adviser acts as a middleman between the homeowner and the contractor, whose main objective is sales. “The hat that I wear is really a different hat – it’s what advice and guidance can I offer to this owner that’s going to be a wise financial decision.”
Lisa Rapoport, a partner at Plant Architect Inc. in Toronto, is skeptical of the reno coaching trend and says any good designer or contractor will offer the same advice, and will be able to help clients find savings to match their budgets. “Just providing that kind of middleman service sounds like an extra cost, and I guess if you’re going to pay the extra cost, I’d rather put it into a good contractor,” she said.
Finding a good contractor requires a bit of homework, says Mr. Mascarenhas. He recommends consumers begin by doing some research on the CHMC and Better Business Bureau websites, and read consumer reviews on sites like HomeStars.com and casaGURU.com.
For Ron Singer, hiring a reno adviser was certainly a wise financial decision. In the midst of constructing a $30,000 art studio for his wife, he began to have some doubts about whether the contractor was putting in adequate insulation. The adviser confirmed his doubts, and he was able to have the contractor fix the problem on the spot.
“As far as I’m concerned, hiring someone for a couple of hundred in order to ultimately save down the road in terms of either repairs or things that go wrong, is certainly worth it,” Mr. Singer said. “We now have without a doubt the best constructed, best insulated studio one can have.”
The pre-reno checklist
1. Know the rules. Building codes and local by-laws may limit what and how you renovate. There’s nothing worse than discovering the project you’ve painstakingly planned is not allowed. Talk to your municipal building department and find out about zoning and permits.
2. Know what’s possible. Your home’s heating, plumbing and electrical systems will also affect how you can renovate. For big projects, it’s wise to check with an architect, home inspector or contractor before you begin.
3. Create a budget. Doing a detailed financial analysis of your project in advance of the physical design allows you to evaluate your situation and study a variety of options well before you get to the construction stage. It’s a low-cost exercise that allows you to clarify your needs versus your wants.
4. Do the math. Get quotes from at least two reputable local renovators, architectural firms or material suppliers. Take the most reasonable quote and add 10 to 15 per cent for unexpected costs.
5. Spend wisely. If you need financing, you may be able to renegotiate your mortgage or apply for a personal loan to cover the cost of the reno. You may even be eligible for assistance, as some utilities and governments offer incentive programs for energy-efficiency upgrades.
Sources: Dianne Nice, CMHC, House Calls Project Management
http://www.theglobeandmail.com/globe-investor/personal-finance/household-finances/reno-coach-keeps-projects-in-the-ballpark/article1924599/
Tuesday, March 8, 2011
Saturday, February 19, 2011
The rise and fall of mortgage rates
Research released by the Bank of Canada Thursday, not surprisingly suggests that Canada’s largest banks are slow to pass on cuts in the Bank of Canada’s policy interest rate.
“Canadian lenders appear to be extremely slow to pass on changes in the Bank Rate to their customers,” author Jason Allen wrote in the report entitled “Competition in the Canadian Mortgage Market.”
Researchers found that “in the short run, five of the six largest Canadian banks adjust their rates upward more quickly when there are upward cost pressures than downward when costs fall,” he said.
Having market power in Canada, “there is scope for banks to coordinate implicitly or explicitly,” Allen wrote.
If costs rise they all want to increase their prices, but if costs fall they wait before reducing rates “because all the banks can earn higher profits.”
Vince Gaetano, vice-president and principal broker with MonsterMortgage.ca is not surprised by the report, calling the banks’ practice of holding off discounting for longer periods “common practice.”
He said banks usually lenders hold off until after the end of the month before passing on lower rates because this is when renewal notices for maturing mortgages are printed and issued in advance of the maturity date.
“Renewal notices with a higher rate printed on them provide the illusion of a potentially bigger discount that can be offered to the client – a client who most times does not want to put in the effort in the mortgage transfer process.”
Dave Larock, a broker with Integrate Mortgage Planners-TMG in Toronto said there is another group affected – borrowers who are just about to close their mortgage transaction. “Since most rate drop policies are in effect until seven days prior to closing, it is this group that misses the savings if rate drops are delayed,” he said. “From a lender’s perspective, this group is not very rate sensitive because they are so close to their funding date that switching lenders is usually not feasible, while mortgage applicants who are earlier in the process will eventually receive the lower rate through any standard rate-drop policy, provided that the rate decrease is sustained.”
The research also indicated that borrowers who use a mortgage broker pay less, on average, than borrowers who negotiate with lenders directly. This average discount is about an additional 19 basis points.
“The conclusions of the report are very reasonable,” said Jim Murphy, president and CEO of CAAMP. “They coincide with our own research at CAAMP on discounts. Mortgage brokers play a key role in offering choice to borrowers when making their most important financial decision.”
Larock said he agrees with the paper’s overall premise that more lending competition leads to better rates and choice for consumers and that in today’s market banks can coordinate implicitly or explicitly. “That’s just the nature of an oligopoly,” he said. “If Canada’s big banks were allowed to merge they would increase their market muscle at the customer’s expense. We need more lenders, not fewer.”
The report stated that Canada’s mortgage market represents “almost 40 per cent of total outstanding private sector credit, BOC researchers said in the quarterly Financial System Review.” It is dominated by the nation’s six major national banks plus a large credit union, the Desjardins Movement, and the Alberta province-owned ATB Financial.
The “Big Eight” controls 90 per cent of the assets in the banking industry. All offer the same types of mortgage assets, the great bulk of these being guaranteed by the federal government’s Canada Mortgage and Housing Corporation.
“The Canadian mortgage market is relatively simple and conservative, particularly when compared with its U.S. counterpart,” the report stated. “Many Canadians sign five-year, fixed-rate contracts for the life of the mortgage -- typically 25 years.”
Bruno Valko, director, national sales for Resmor Trust said there is an advantage because the mortgage broker marketplace is not dominated by a few big players.
“In the broker/wholesale channel, there’s more competition and lenders will move quicker to lower rates and attract business when the opportunity presents itself,” he said. “Furthermore, the scale of product offerings is greater, so in the event a person doesn’t qualify at the Big Eight, a broker can potentially offer solutions.
“And if we agree that the broker/wholesale channel moves quicker to lower rates when the opportunity presents itself, that's another advantage for consumers to choose mortgage brokers.”
“Canadian lenders appear to be extremely slow to pass on changes in the Bank Rate to their customers,” author Jason Allen wrote in the report entitled “Competition in the Canadian Mortgage Market.”
Researchers found that “in the short run, five of the six largest Canadian banks adjust their rates upward more quickly when there are upward cost pressures than downward when costs fall,” he said.
Having market power in Canada, “there is scope for banks to coordinate implicitly or explicitly,” Allen wrote.
If costs rise they all want to increase their prices, but if costs fall they wait before reducing rates “because all the banks can earn higher profits.”
Vince Gaetano, vice-president and principal broker with MonsterMortgage.ca is not surprised by the report, calling the banks’ practice of holding off discounting for longer periods “common practice.”
He said banks usually lenders hold off until after the end of the month before passing on lower rates because this is when renewal notices for maturing mortgages are printed and issued in advance of the maturity date.
“Renewal notices with a higher rate printed on them provide the illusion of a potentially bigger discount that can be offered to the client – a client who most times does not want to put in the effort in the mortgage transfer process.”
Dave Larock, a broker with Integrate Mortgage Planners-TMG in Toronto said there is another group affected – borrowers who are just about to close their mortgage transaction. “Since most rate drop policies are in effect until seven days prior to closing, it is this group that misses the savings if rate drops are delayed,” he said. “From a lender’s perspective, this group is not very rate sensitive because they are so close to their funding date that switching lenders is usually not feasible, while mortgage applicants who are earlier in the process will eventually receive the lower rate through any standard rate-drop policy, provided that the rate decrease is sustained.”
The research also indicated that borrowers who use a mortgage broker pay less, on average, than borrowers who negotiate with lenders directly. This average discount is about an additional 19 basis points.
“The conclusions of the report are very reasonable,” said Jim Murphy, president and CEO of CAAMP. “They coincide with our own research at CAAMP on discounts. Mortgage brokers play a key role in offering choice to borrowers when making their most important financial decision.”
Larock said he agrees with the paper’s overall premise that more lending competition leads to better rates and choice for consumers and that in today’s market banks can coordinate implicitly or explicitly. “That’s just the nature of an oligopoly,” he said. “If Canada’s big banks were allowed to merge they would increase their market muscle at the customer’s expense. We need more lenders, not fewer.”
The report stated that Canada’s mortgage market represents “almost 40 per cent of total outstanding private sector credit, BOC researchers said in the quarterly Financial System Review.” It is dominated by the nation’s six major national banks plus a large credit union, the Desjardins Movement, and the Alberta province-owned ATB Financial.
The “Big Eight” controls 90 per cent of the assets in the banking industry. All offer the same types of mortgage assets, the great bulk of these being guaranteed by the federal government’s Canada Mortgage and Housing Corporation.
“The Canadian mortgage market is relatively simple and conservative, particularly when compared with its U.S. counterpart,” the report stated. “Many Canadians sign five-year, fixed-rate contracts for the life of the mortgage -- typically 25 years.”
Bruno Valko, director, national sales for Resmor Trust said there is an advantage because the mortgage broker marketplace is not dominated by a few big players.
“In the broker/wholesale channel, there’s more competition and lenders will move quicker to lower rates and attract business when the opportunity presents itself,” he said. “Furthermore, the scale of product offerings is greater, so in the event a person doesn’t qualify at the Big Eight, a broker can potentially offer solutions.
“And if we agree that the broker/wholesale channel moves quicker to lower rates when the opportunity presents itself, that's another advantage for consumers to choose mortgage brokers.”
Thursday, September 30, 2010
First-Time Home Buyers' (FTHB) Tax Credit
The costs associated with purchasing a home, such as legal fees, disbursements and land transfer taxes, can be a particular burden for first-time homebuyers who must pay these costs, as well as save money for a down payment. To assist first-time homebuyers with the costs associated with the purchase of a home, the Government of Canada introduced a FTHB Tax Credit in 2009 — a $5,000 non-refundable income tax credit amount on a qualifying home acquired after January 27, 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief starting in 2009.
Friday, September 3, 2010
How to lower your property taxes
Save thousands by cutting your property tax bill.
Einstein’s general theory of relativity. Lady Gaga’s popularity. Your home’s assessed value. Some things just seem utterly incomprehensible. But solving the property tax assessment mystery is worthwhile: appealing an incorrect valuation could save you thousands of dollars.
Here’s how to do it:
Check for fairness
Property taxes, which pay for most municipal services, are the product of your home’s assessed value multiplied by the local tax rate. You can’t change the tax rate, but you can argue that you have been over-assessed. Begin by checking your home’s assessment report. This is typically a computerized estimate of your home’s selling price, based on sales information from a particular assessment date. Is it fair? If a similar house on your block sold for much less than your valuation around the time of the assessment date, you may have evidence of over-assessment.
Fix factual errors
Assessments are carried out by provincial agencies or municipalities. If you’ve spotted a factual error on your assessment—it claims you have a two-car garage when you don’t—you can often get this fixed by simply calling the assessor. If there are no clear-cut mistakes, but you still think you’ve been over-assessed, you will need to officially appeal your assessment.
Prepare your case
The more unique your house, the harder it is to value—and the better your chances of winning an appeal. “If you live in a cookie-cutter neighbourhood, assessments are usually pretty accurate,” says William Howse, a Toronto tax lawyer. “But as soon as you get anything unusual in features or lots, or get into pricier neighbourhoods, then the computer can have big problems.” An older or smaller house in an expensive area or proximity to a busy road, railway or school can provide a strong case for appeal.
Compare, compare, compare
Find comparable local homes that sold around your assessment date for less than your home’s assessed value. This will be evidence that your assessment is too high. You’ll need to show a minimum 5% difference between your assessed price and the selling price on three comparable houses to have a good chance of winning.
Chose wisely
Selecting the right comparison houses is the true art behind a successful appeal, says Howse. Pick comparables that are within 100 interior sq ft of your own house (30 sq ft for condos), and ensure the houses are the same quality as yours. For a formal appeal hearing, Howse strongly recommends hiring a certified appraiser.
What are your odds?
Few homeowners challenge assessments, but of those who do, many are successful. Roughly 45% of Ontario property owners who submitted evidence of over-assessment last year got their valuations reduced.
Einstein’s general theory of relativity. Lady Gaga’s popularity. Your home’s assessed value. Some things just seem utterly incomprehensible. But solving the property tax assessment mystery is worthwhile: appealing an incorrect valuation could save you thousands of dollars.
Here’s how to do it:
Check for fairness
Property taxes, which pay for most municipal services, are the product of your home’s assessed value multiplied by the local tax rate. You can’t change the tax rate, but you can argue that you have been over-assessed. Begin by checking your home’s assessment report. This is typically a computerized estimate of your home’s selling price, based on sales information from a particular assessment date. Is it fair? If a similar house on your block sold for much less than your valuation around the time of the assessment date, you may have evidence of over-assessment.
Fix factual errors
Assessments are carried out by provincial agencies or municipalities. If you’ve spotted a factual error on your assessment—it claims you have a two-car garage when you don’t—you can often get this fixed by simply calling the assessor. If there are no clear-cut mistakes, but you still think you’ve been over-assessed, you will need to officially appeal your assessment.
Prepare your case
The more unique your house, the harder it is to value—and the better your chances of winning an appeal. “If you live in a cookie-cutter neighbourhood, assessments are usually pretty accurate,” says William Howse, a Toronto tax lawyer. “But as soon as you get anything unusual in features or lots, or get into pricier neighbourhoods, then the computer can have big problems.” An older or smaller house in an expensive area or proximity to a busy road, railway or school can provide a strong case for appeal.
Compare, compare, compare
Find comparable local homes that sold around your assessment date for less than your home’s assessed value. This will be evidence that your assessment is too high. You’ll need to show a minimum 5% difference between your assessed price and the selling price on three comparable houses to have a good chance of winning.
Chose wisely
Selecting the right comparison houses is the true art behind a successful appeal, says Howse. Pick comparables that are within 100 interior sq ft of your own house (30 sq ft for condos), and ensure the houses are the same quality as yours. For a formal appeal hearing, Howse strongly recommends hiring a certified appraiser.
What are your odds?
Few homeowners challenge assessments, but of those who do, many are successful. Roughly 45% of Ontario property owners who submitted evidence of over-assessment last year got their valuations reduced.
Monday, August 23, 2010
10 Reasons to use a mortgage broker
What are the benefits of using a mortgage broker?
1. Advice on your financial options.
Mortgage brokers can make recommendations and draw from available mortgage products that match your needs and help you decide what is right for you.
2. Save time with one-stop shopping.
It can sometimes take weeks to organize appointments with competing mortgage lenders — homebuyers would rather spend their time house-hunting.
Brokers work directly with lenders and can quickly narrow down a list of options that suit you best.
3. Brokers negotiate on your behalf.
Most people are uncertain about negotiating mortgages directly with their bank. Brokers negotiate mortgages every day on behalf of buyers and have a wealth market knowledge to secure competitive rates.
4. More choice means more competitive rates. We have access to a network of major lenders in Canada, so your options are extensive.
5. Ensure that you’re getting the best rates and terms. Even if you’ve already been pre-approved for a mortgage by your bank or another financial institution, you’re not obliged to stop shopping!
6. Get access to special deals and add-ons.
We do the math on which offers might be worth your attention.
7. Things move quickly.
Our job isn’t done until your closing date goes smoothly. We’ll help ensure your transaction takes place on time and to your satisfaction.
8. Get expert advice. When it comes to mortgages, rates and the housing market, we are not limited. We will explain the various mortgage terms, conditions and rates so you can decide confidently.
9. No cost to you. There is (in most cases) no charge for our services.
10. Ongoing support and consultation.
1. Advice on your financial options.
Mortgage brokers can make recommendations and draw from available mortgage products that match your needs and help you decide what is right for you.
2. Save time with one-stop shopping.
It can sometimes take weeks to organize appointments with competing mortgage lenders — homebuyers would rather spend their time house-hunting.
Brokers work directly with lenders and can quickly narrow down a list of options that suit you best.
3. Brokers negotiate on your behalf.
Most people are uncertain about negotiating mortgages directly with their bank. Brokers negotiate mortgages every day on behalf of buyers and have a wealth market knowledge to secure competitive rates.
4. More choice means more competitive rates. We have access to a network of major lenders in Canada, so your options are extensive.
5. Ensure that you’re getting the best rates and terms. Even if you’ve already been pre-approved for a mortgage by your bank or another financial institution, you’re not obliged to stop shopping!
6. Get access to special deals and add-ons.
We do the math on which offers might be worth your attention.
7. Things move quickly.
Our job isn’t done until your closing date goes smoothly. We’ll help ensure your transaction takes place on time and to your satisfaction.
8. Get expert advice. When it comes to mortgages, rates and the housing market, we are not limited. We will explain the various mortgage terms, conditions and rates so you can decide confidently.
9. No cost to you. There is (in most cases) no charge for our services.
10. Ongoing support and consultation.
Tuesday, August 10, 2010
The ABCs of Mortgages in Four Parts
The Financial Consumer Agency of Canada updating mortgage publication
OTTAWA, ONTARIO--(Marketwire - Aug. 10, 2010) - The Financial Consumer Agency of Canada (FCAC) has completely updated The ABCs of Mortgages to take into account the different needs of Canadian consumers. While some are borrowing to buy their first home, others are renegotiating their mortgages. No matter what their needs are, FCAC reminds consumers that it is essential that they get informed before they plunge into the world of real estate. It could save them money … and headaches.
"The financial market is complex. That's why we strive to develop tools and resources that are easy to consult and use," says FCAC Commissioner Ursula Menke. "We cannot stress enough how important it is to shop around before signing a mortgage agreement. The ABCs of Mortgages contains a range of objective information that will help consumers make informed choices about their mortgages."
The revised version of The ABCs of Mortgages is divided into four parts: each one addresses a specific topic, making the publication more concise and easier to read. "Whether consumers are preparing to buy their first home, taking out a home equity loan, renegotiating their mortgage or searching for ways to pay off their mortgage faster, the new version of The ABCs of Mortgages will help them find the information they need more quickly," adds the Commissioner.
If you are planning on buying a home, here are a few key tips.
Pay off your mortgage faster
To save money, plan your mortgage payments so you can pay off your mortgage as quickly as possible. For example, you could increase your down payment, make larger payments or increase the frequency of your payments.
Give yourself a financial cushion for the unexpected
If your mortgage payments and the bills from the purchase of your home are keeping you up at night, your dream home could turn into a nightmare. Make sure that you have a financial cushion to cover unforeseen costs, such as an increase in interest rates or unexpected home maintenance and repair costs.
Shop around before choosing a mortgage
Your home will likely be the biggest purchase you'll ever make. Take time to shop around and negotiate to get the mortgage that best meets your needs. Remember, as a consumer, you have bargaining power.
To find FCAC's interactive tools and publications, visit www.moneytools.ca.
About FCAC
Using educational materials and interactive tools, FCAC provides consumers with objective information about financial products and services and informs them of their rights and responsibilities when dealing with banks and federally regulated trust, loan and insurance companies. Through its financial literacy program, FCAC also helps Canadians acquire the necessary knowledge and confidence to manage their personal finances. FCAC also makes sure that federally regulated financial institutions comply with legislation and agreements intended to protect consumers.
You can reach us through the FCAC Consumer Contact Centre by calling toll-free 1-866-461-3222 (TTY: 613-947-7771 or 1-866-914-6097) or by visiting our website: www.fcac.gc.ca.
OTTAWA, ONTARIO--(Marketwire - Aug. 10, 2010) - The Financial Consumer Agency of Canada (FCAC) has completely updated The ABCs of Mortgages to take into account the different needs of Canadian consumers. While some are borrowing to buy their first home, others are renegotiating their mortgages. No matter what their needs are, FCAC reminds consumers that it is essential that they get informed before they plunge into the world of real estate. It could save them money … and headaches.
"The financial market is complex. That's why we strive to develop tools and resources that are easy to consult and use," says FCAC Commissioner Ursula Menke. "We cannot stress enough how important it is to shop around before signing a mortgage agreement. The ABCs of Mortgages contains a range of objective information that will help consumers make informed choices about their mortgages."
The revised version of The ABCs of Mortgages is divided into four parts: each one addresses a specific topic, making the publication more concise and easier to read. "Whether consumers are preparing to buy their first home, taking out a home equity loan, renegotiating their mortgage or searching for ways to pay off their mortgage faster, the new version of The ABCs of Mortgages will help them find the information they need more quickly," adds the Commissioner.
If you are planning on buying a home, here are a few key tips.
Pay off your mortgage faster
To save money, plan your mortgage payments so you can pay off your mortgage as quickly as possible. For example, you could increase your down payment, make larger payments or increase the frequency of your payments.
Give yourself a financial cushion for the unexpected
If your mortgage payments and the bills from the purchase of your home are keeping you up at night, your dream home could turn into a nightmare. Make sure that you have a financial cushion to cover unforeseen costs, such as an increase in interest rates or unexpected home maintenance and repair costs.
Shop around before choosing a mortgage
Your home will likely be the biggest purchase you'll ever make. Take time to shop around and negotiate to get the mortgage that best meets your needs. Remember, as a consumer, you have bargaining power.
To find FCAC's interactive tools and publications, visit www.moneytools.ca.
About FCAC
Using educational materials and interactive tools, FCAC provides consumers with objective information about financial products and services and informs them of their rights and responsibilities when dealing with banks and federally regulated trust, loan and insurance companies. Through its financial literacy program, FCAC also helps Canadians acquire the necessary knowledge and confidence to manage their personal finances. FCAC also makes sure that federally regulated financial institutions comply with legislation and agreements intended to protect consumers.
You can reach us through the FCAC Consumer Contact Centre by calling toll-free 1-866-461-3222 (TTY: 613-947-7771 or 1-866-914-6097) or by visiting our website: www.fcac.gc.ca.
Monday, August 9, 2010
Not so Fast
Is your mortgage coming up for renewal?
Don’t be too quick to sign that mortgage renewal letter. Over 70% of Canadian mortgage holders do just that, and what is the usual result? A higher rate and a mortgage product that might not be best suited to your interests.
Experience has shown that the “Big Banks” send their mortgage renewals out at a posted rate.
Lenders are counting on the fact that most home-owners are too busy to ask questions or to inquire about getting a better rate, but don’t let this happen to you. Posted rates are way too high of a rate to lock into, which can cost you thousands over the term of the mortgage.
You should recognize that you are now negotiating from a position of strength as your mortgage principal has dropped and in most cases your home value has increased.
Lenders see you as a lower risk borrower and consequently you should be getting the best rates available. That may not happen if you simply sign the renewal document provided by your existing lender.
Rather, let the lenders compete for your business to be sure you do in fact get the best mortgage possible.
A mortgage broker can do this for you. He or she can review your current situation and ensure you get the best rate and terms available. In most cases there is no fee.
Don’t be too quick to sign that mortgage renewal letter. Over 70% of Canadian mortgage holders do just that, and what is the usual result? A higher rate and a mortgage product that might not be best suited to your interests.
Experience has shown that the “Big Banks” send their mortgage renewals out at a posted rate.
Lenders are counting on the fact that most home-owners are too busy to ask questions or to inquire about getting a better rate, but don’t let this happen to you. Posted rates are way too high of a rate to lock into, which can cost you thousands over the term of the mortgage.
You should recognize that you are now negotiating from a position of strength as your mortgage principal has dropped and in most cases your home value has increased.
Lenders see you as a lower risk borrower and consequently you should be getting the best rates available. That may not happen if you simply sign the renewal document provided by your existing lender.
Rather, let the lenders compete for your business to be sure you do in fact get the best mortgage possible.
A mortgage broker can do this for you. He or she can review your current situation and ensure you get the best rate and terms available. In most cases there is no fee.
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