To Stay or Not to Stay

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To Stay or Not to Stay!

To Stay or Not to Stay is the question many home owners ask themselves when trying to decide whether to stay or not to stay with their current lender or to go to a new lender when its mortgage renewal time.

With mortgage interest rates at all time lows it makes more sense than not to consider switching your mortgage to a new lender who has a better rate than the rate your current lender can offer you at renewal time.

However most consumers do not consider this fact and do not know that it is not as cumbersome and even pretty well free to switch your mortgage from one lender to another. Many Banks and mono-line lenders have promotions that cover the cost of the client switching their mortgage to the new lender.

It is for this reason that you should consult with your trusted mortgage broker or agent, when considering to stay or not to stay with your current lender, so that he or she can assess your current situation and figure out if it is worth it for you to either stay or move your mortgage. Sometimes after doing the calculations the mortgage professional will advise you that it is not worth your time and money to switch and better to just stick with your current lender, and other times the mortgage professional will advise you that it is in fact beneficial for you to switch your mortgage to a new lender due to their lower rates and other promotions.

to stay or not to stay

The most obvious reason to switch

The most obvious reason to switch your mortgage would be for many the lower mortgage interest rate that the other lender is offering. But there are other reasons why people switch their mortgage, such as not being happy with the service levels of the current lender, and wanting to take advantage of the mortgage products the other lender has to offer that the existing lender does not have.

The most obvious reason to stay

Perhaps the most obvious reason to stay with your current mortgage lender at renewal time is because of the relationship that you have developed with them throughout the years of your mortgage with the lender. Some home owners who have mortgages with the big banks want to stay with them at renewal time to take advantage of the other bank products that they may potentially be able to get approved for and receive discounts on for staying with the bank.

At Trusterra Mortgage we are here to answer your questions and help you make the right decisions when it comes to your mortgage. Don’t hesitate to Contact Us!

 

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Mortgage Renewal

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It’s Mortgage Renewal time

Is your mortgage coming up for renewal within the next several months? Don’t settle for less. If you don’t look around you’ll never know if your existing lender is offering you the best mortgage renewal package. This is where we come in. As a mortgage brokerage we shop around on behalf of our clients to make sure they get the best overall suited mortgage product for their mortgage renewal needs. And never compare yourself with another person’s mortgage as everyone’s personal situation could be different, which in turn will require customized approaches towards getting the right mortgage at mortgage renewal time.

mortgage renewal

 

 

 

 

 

 

 

 

 

Different Reasons for mortgage renewals

So you’ve been thinking lately about what to do with your mortgage. Contact us and lets think about it together. You’ve also heard that the lower your mortgage balance is the higher your home equity would be and the more money you can access from your home. That is true, as your mortgage balance decreases the percentage of the equity you can access from your home increases.

Here are some reasons why you should contact us:

  • You want to do a mortgage renewal for a better rate than what your current lender has offering you
  • You want to do a mortgage renewal to consolidate your debts and pay a lower interest rate on the new larger mortgage amount
  • You want to do a mortgage renewal with a new lender to add a home equity line of credit to your house
  • You want to do a mortgage renewal so you can change lenders to a new one because you’ve heard good things about them and like their offerings, or have other accounts with the new lender
  • You have other personal doing a mortgage renewal with a new lender

Perks to switch to a new lender

The lenders have internal perks, unadvertised for the general public for switching your mortgage that only the mortgage broker community knows about. For example, if we switch your mortgage the new lender could cover the legal, appraisal, and the discharge fees. Therefore not only are you benefiting with getting expert unbiased professional advice for your renewal from Trusterra Mortgage, you are also getting competitive mortgage rates, and are switching your mortgage at minimal cost to you.

 

If you recently got a new mortgage or renewed your existing one, you can always give us your details and let us know when to contact you for when the time comes to renew again by using our free Mortgage Renewal Reminder Service.

Ready to start or maybe you have some questions to ask first? Contact us and we’d be happy to help you.

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Americans buying Canadian Real Estate

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Americans buying Canadian Real Estate

With the value of the Canadian dollar being so low in comparison to the US dollar, it’s never been a better time as it is now for Americans buying Canadian real estate.

Now that the U.S. dollar has so much buying power here in Canada, American’s are finding it difficult to avoid the opportunity to invest in their second home, or vacation property in such places as cottage country in Alberta or Ontario.

If you have considered the possibility of purchasing real estate in Canada we can help you with any mortgage related matters. As well, we would be able to connect you to Realtors in the area you are considering to buy. Contact us to find out more about your options.

Americans buying Canadian real estate

Americans buying Canadian real estate are finding many options of properties to choose from with reasonable down payment requirements from the Canadian lenders.

Another good reason why Americans are buying Canadian real estate is due to their close proximity to Canada, the longest border in the world and only a few hours away in many instances.

Having very similar credit score rating systems in Canada and the United States of America the Canadian lenders accept U.S. credit reports and employment making the mortgage application process fairly routine and the same as the American would go through in the U.S.

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Mortgage Calculator

Mortgage Calculator

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Mortgage Calculator

With the advancement of the world wide web, and the progress of technology making it easier than ever for the consumer to perform research online for almost every subject under the cloud, more people are also using online mortgage calculators to find out how much their potential monthly mortgage payments would be, or how much they can get approved for.

Trusterra Mortgage also offers a mortgage calculator for visitors to explore their options. For basic calculations the mortgage calculator will get the job done, but for more advanced and accurate results it is always best to consult directly with a mortgage professional. That is why we here at Trusterra Mortgage always take the extra steps and time to really understand our clients need to be able to better serve them and provide the best suitable information and advice for our client. mortgage calculator

As mortgage professionals we have access to an advanced industry grade professional mortgage calculator that takes into consideration all the needed numbers and information in order to provide accurate results.

Whether you are ready now to apply for a mortgage or just wondering how much you could get approved for, or want to know what would be your monthly mortgage payments, we suggest that you Contact Us, at no cost to you of course, and let us help you and answer all your mortgage related questions.

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Low Interest Rates Good Reason to Lower Debt

Low Interest Rates Good Reason to Lower Debt

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Low Interest Rates Good Reason to Lower Debt

In a press release on February 6, 2015 Lucie Tedesco Commissioner Financial Consumer Agency of Canada stated that just because interest rates have gone down, referring to the recent Bank of Canada decision to lower the overnight rate, does not mean that Canadians “should take on more debt.” In fact the low interest rates good reason to lower debt.

 

Low Interest Rates Good Reason to Lower Debt
picture courtesy of the Financial Post

To many mortgagers (owing money borrowed on real estate) or those with loans whose payments are calculated based on the Prime rate, which in turn is calculated on the Bank of Canada’s overnight rate, low interest rates can be a double edged sword. Especially if you can’t control your spending; however if you are able to curve your appetite for borrowing, then for you low interest rates good reason to lower debt as you can pay more towards your principal and less towards interest payments.

Commissioner Tedesco went on to say that “Canadians should look at this low interest-rate environment as an opportunity to pay debt down, rather than to accumulate more, even for a larger house, a newer car or a winter vacation.” We should be realistic and be ready for when interest rates will increase.

For its part the Financial Consumer Agency of Canada has developed tools and resources to assist the consumer with managing their debt obligations and can be found at “How to Beat that Debt.”

To read the full press release from Lucie Tedesco Commissioner Financial Consumer Agency of Canada click here.

Trusterra Mortgage is here to help. If you currently have a mortgage and are considering to consolidate your debt, or want to get the lower interest rates that are available currently, contact us to see what options are available for you and we’ll assess your current financial situation to see whether it is worth it for you to break your mortgage to refinance it or not.

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Bank of Canada Rate Cut

Bank of Canada Rate Cut

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Bank of Canada Rate Cut

The Bank of Canada rate cut could be just around the corner. Analysts are predicting that due to the not-so good Canadian economy outlook, there is the possibility the Bank of Canada rate cut could be more real than fiction at its next interest rate announcement on March 4, 2015.

It was the surprise of the year, and we’ve barely started the new year, when the Governor of the Bank of Canada Stephen Poloz announced last week on Wednesday January 21 that they were lowering the key lending interest rate. Not to our surprise, this week Chartered Banks and other institutional lenders begin dropping their prime lending rate in response to the Bank of Canada’s rate cut. The Prime Rate is now at 2.85%.

Bank of Canada rate cut
picture courtesy of CBC

There are several indicators confirming the poor performance of the Canadian economy, such as the Statistics Canada labor market revisions, big 6 banks not lowering their prime rate equal to the Bank of Canada’s rate cut by 25 basis points and only lowering theirs by 15 basis points and another worry is the drop in oil prices which the Bank of Canada suggests is their main concern that could potentially get worse and impact not only the Alberta economy which is largely based on the oil sand productions, but also to resonate nation wide.

 

It’s a wait and see game at this point. After all, in the past 5 years there were many naysayers and predictions with what will happen with the prime lending rate, but at the end it never changed until 5 years later, and to our surprise, it went down instead of up.

What are your thoughts about the recent Bank of Canada rate cut, and future ones? How do you feel the Canadian economy is doing right now and where will we be next year this time?

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Why Your Credit Score is Important

Why Your Credit Score is Important

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Why Your Credit Score is Important why your credit score is important

As part of our coverage of November Financial Literacy Month #FLM2014, in this blog we will share with you information about the importance of why your credit score is important.

In Canada, and the United States having a strong credit score or what we call in the industry a beacon score, with a rich history of on time debt repayment is very important and goes a long way when it comes to applying for a mortgage or any other type of a loan.

We will focus our discussion in this blog on the Canadian mortgage market and why your credit score is important.

If you have good credit it will be that much easier to get approved for a mortgage. Throughout your lifetime of spending and purchasing items using your credit card or a line of credit or both, and as well other credit items such as car loans, these transactions are all recorded by the two credit bureaus here in Canada, namely Equifax and Transunion. These credit bureaus use mathematical algorithms to create your credit score based on your spending, credit limits, credit balances, and whether you pay back on time every month your debt obligations or not. They even take to account how many days or months you are late with making your payments and use this information when building and updating your beacon score.

Equifax_Transunion

The reason why your credit score is important for getting approved for a loan, such as a mortgage, is because the creditor or the mortgagee relies on the credit report to decide your credit worthiness and repayment ability if they were to give you a loan or a mortgage respectively.

The starting point for your beacon score, once your name and first credit activity is recorded in the bureau’s database normally is 650. From this point onwards, it is hoped that the borrower pays back their loan or debt on a monthly basis, and as they do, their beacon score begins to climb; eventually rising above 700.

The opposite is true if the borrower cannot or does not make payments on time and is late, their credit score will start to drop below 650 making it difficult for them to get approved for a loan or a mortgage from traditional creditors / lenders. Many times borrowers with poor credit scores have no choice but to wait on their plans to buy a home and get a mortgage until their repayment history improves and their beacon score begins to rise again. Or they have to apply for a mortgage on unfavorable terms from a secondary or private lender who will charge a premium to approve the loan, but will overlook and be forgiving for the poor credit history and beacon score. The premium includes a much higher interest rate, lender fee, and shorter mortgage terms, normally one or two years. This is another reason why your credit score is important.

We always recommend that you pull your own credit reports from Equifax and Transunion every year or two to see what information about you is stored in their records. There are several advantages to doing this. Firstly by doing your own credit check to your name, there is no negative ‘hit’ to your beacon score unlike when you apply for a loan or a mortgage and the lender does a credit check on you. Secondly, you can see if your personal information is correct and up to date. Thirdly, you will get a detailed historical overview of your credit spending, which will show, for example, the payment you made on time to the particular credit card company or your car lease or whatever else, was actually reported by them and recorded in the credit report. An example of a potential issue is with old student loans or credit card accounts that you had asked to be closed. The student loan that you paid back in full is not shown to be paid off and still active in your credit report, and the credit card that you paid back and thought was closed is still showing as open with a balance in the credit report. These errors need to be corrected right away because they will have a negative impact on your beacon score. By doing a credit check you can find out about these abnormalities and rectify the matter.

This is why your credit score is important, because in Canada, for that matter in North America, much of the lending is based on the borrower’s credit strength and healthy history of making payments on time and being able to manage your debts responsibly.

If you are in a position right now with a low beacon score and bad credit history, and no major bank or lender will give you a credit card, we can help. Contact us and we will help you get a credit card so that you can start to rebuild your credit history and beacon score.

Another group of borrowers are those who are new to Canada and don’t have any credit history here and want to buy real estate right away. If you fall under this category, we can also help you get a mortgage without having a credit history or beacon score. Review our information about the New to Canada mortgage product and contact us for further details and to get your mortgage application process started.

why your credit score is important

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Variable vs Adjustable Rate Mortgage

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Variable vs Adjustable Rate Mortgage

Did you know there are two types of mortgages whose interest rate can change as per the change in the lending institutions prime rate? That’s right, the two types are the Variable Rate Mortgage and the Adjustable Rate Mortgage.

You now might be asking what is the difference between a variable vs adjustable rate mortgage. In this post we provide a general overview of each one and hopefully provide a clear explanation to your question what is the difference between a variable vs adjustable rate mortgage.

variable vs adjustable rate mortgage

Adjustable Rate Mortgage – ARM

Payments automatically adjust with changes in the prime rate of the lending institution your mortgage is with to ensure that you maintain the original amortization schedule of your mortgage. The rate varies during the term of the adjustable rate mortgage.

The interest rate can change from time to time because it changes when the prime rate changes.

If your adjustable rate mortgage interest rate decreases, the payment amount also decreases..

If your interest rate rises, the mortgage payment amount will also increase.

One advantage of this product is you can have the ability to potentially lower, short-term interest rates.

 

Variable Rate Mortgage – VRM

The main difference with a variable vs adjustable rate mortgage is that the mortgage payments with the variable product remains fixed for the duration of the term; as the interest rate changes with any fluctuations in the prime rate. If the prime rate decreases, more of the mortgage payment will go towards paying off the principal; if the prime rate increases, more of the mortgage payment will go towards interest costs.

Your amortization period (number of years to repay the mortgage) may vary and be longer if rates have risen or be shorter if rates have fallen since the start of the term.

 

With both the Variable Rate Mortgage and the Adjustable Rate Mortgage you can always convert your mortgage into a fixed rate mortgage should you feel that the prime rate is rising or don’t have the tolerance anymore of rate fluctuations. Most of the time, the variable and adjustable interest rates are lower than the fixed rates.

If you still are not sure of which one is better or what the main differences are between a variable vs adjustable rate mortgage we encourage you to contact us with your questions and we would be happy to answer them. You may also like to add your remarks and questions in the comment section below.

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Variable Rate vs Fixed Rate Mortgage

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Variable Rate vs Fixed Rate Mortgage

This is probably one of the most popular and famous questions of all times in the real estate mortgage financing world; variable rate vs fixed rate mortgage. Which one is better? or Which one is worse? How do you decide which mortgage product is good for you?

variable rate vs fixed rate mortgage

To look at variable rate vs fixed rate mortgage as a question for your own good would be right for everyone depending on their own unique needs and tolerances.

A fixed rate mortgage has a rate guaranty for the term of the mortgage. For example, if you get the 5 year closed fixed rate, then, you are guaranteed to hold on to your rate for the full five years without it changing. There is a sense of security and closure for you knowing that you don’t have to worry about the fixed rate changing during the life of your mortgage term.  Even if you are an investor of real estate, this type of a mortgage can be beneficial to you because you know exactly what the interest rate will be and can calculate your R.O.I. accurately and work into your formula other expenses, which would allow you to know exactly what your net income could be each year. One down side to a fixed rate mortgage is the fact that if you ever decide to break the term / contract in the middle of it, the penalty can be significantly higher than if you were to break a variable mortgage.

A variable rate mortgage many times starts with a much lower interest rate than its counterpart fixed term rate. The variable interest rate is a discount that you would get from the lender against it’s prime lending rate. For those who are not tolerant of minor rate adjustments throughout the term of a variable rate mortgage, this product might not be your cup of tea. Currently the Bank of Canada has not changed its stance on the prime lending rate and it has not changed since September 9, 2010. However, the lenders have changed their discounts off of the prime rate. Several years ago you could have been approved for a variable rate as low as Prime minus .90%. Since then the current average discount for the closed variable rate is Prime -.50%. If you are planning to break your mortgage in the middle of its term, the penalty for the closed variable rate mortgage is three months interest payments, which for the majority of the time comes out a lot less than if you were to break a closed fixed rate mortgage that uses a formula called interest rate differential to calculate the penalty amount.

However, overall, statistics have shown that you can save more money if you go with a variable rate vs fixed rate mortgage. As of the date of writing this post the 5 year fixed closed mortgage is 2.99% and the 5 year closed variable mortgage is Prime -.50% = 2.50%.

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Will Bank of Canada Lower Interest Rates

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Will Bank of Canada Lower Interest Rates

On Wednesday, 16 July 2014, the Bank of Canada will announce its decision on the target for the overnight rate. What do you think will happen tomorrow, will Bank of Canada Lower Interest Rates, or will they stay the same, or even go up?

Since September 2010 the Bank of Canada has not changed it’s overnight lending rate, and we must wonder if the rate will be moving up at some point, if not now, when? As the Bank of Canada’s overnight lending rate remains untouched, the Canadian Chartered Banks and other lending institutions maintain their Prime lending rate at 3.00%.

The Governor of the Bank of Canada Mr. Stephen Poloz and his team of advisers working at the Bank of Canada must look at many variables and factors affecting the Canadian economy and based on that decide if it is timely to raise or lower the interest rate.

If we were to make any predictions, it would be towards the decision being one of maintaining the overnight rate the same and not touching it. However, in his previous interest rate announcement Mr. Poloz did give hints that they are not ruling out a rate decrease either.

It will be interesting to see what happens tomorrow. What do you think will happen, will Bank of Canada lower interest rates?

We’d like to hear from you,

Take our Facebook survey below, or go directly to our Trusterra Mortgage Facebook page and take the survey there.

 

 Will the Bank of Canada Lower Interest Rates

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