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WHAT IS AN UNINSURABLE MORTGAGE? With the mortgage rule changes in recent years, lenders have had to make some adjustments to their rate offerings. There are different tiers and rate pricing based on the following 3 categories:... 1) Insured a mortgage that is insured with mortgage default insurance through one of Canada’s mortgage insurers, CMHC, Genworth or Canada Guaranty. A mortgage insurance premium based on a percentage of the loan amount is added to and paid along with the mortgage 2) Insurable a mortgage that may not need mortgage insurance (20% or more down payment) but would qualify under the mortgage insurers rules. The client doesn’t have to pay an insurance premium but the lender has the option to if they choose. 3) Uninsurable a mortgage that does not meet mortgage insurer rules such as refinances or mortgages with an amortization longer than 25-years. No insurance premium required. Insured mortgages are the safest type of mortgage loan for the banks and the most cost-effective way of lending mortgage money, so clients seeking or in need of an insured mortgage will get the best rate offering on the market. Insured as well as Insurable mortgages can be bundled and sold as Mortgage Backed Securities (MBS) meaning banks can get that money back quickly so they can lend more out. While Insured mortgages get the best rates, Insurable mortgages are typically a close second. If a mortgage is Uninsurable that means the banks have to lend their own money and have to commit to that loan for the full term at least. This makes it a more expensive loan for the bank, so they pass the cost on to the consumer as a premium on the rate typically 10-20 basis-points. While there are rumours that the Government may start to allow refinances and 30-year amortizations to be insured again, no formal announcements are expected in the next few months. In the meantime, consumers looking to tap into the equity they’ve built (consolidation, investment, home renovations) or wanting to keep their payments as low as they can (30-year amortization) are paying the price. If either a refinance or a longer amortization is something you are considering, it’s wise to have a free analysis of your mortgage done so you can make an informed decision.

TRANSFERS AND SWITCHES Transfer/Switches are when you opt to transfer your mortgage to a new lender in order to take advantage of a lower rate. A transfer/switch does not include additional money to the existing mortgage balance owing, your mortgage amount will remain the same, however lenders will allow you to increase the mortgage up to $3,000 to cover legal costs, possible appraisal fees and if applicable, penalty fees more on that below. *Note: If you do require new mon...Continue reading

MARCH IS FRAUD PREVENTION MONTH You may have seen advertisements warning you to be aware of phishing schemes and other scams. In the past week, I have received fraudulent emails claiming to be Shaw Cable, RBC and even the FBI. These are easy to spot because of mistakes in the letterhead, spelling mistakes and formal language that would fit in well in the 19th century. What is not as well-known is mortgage fraud. Fraudulent mortgages cost lenders every year. These losses resul...t in higher costs and interest rates for consumers so fraud ends up costing all of us money. What types of fraud should you be aware of? Fraud for Shelter this is when an applicant gives false information concerning their income or job status in order to obtain a mortgage to buy a home. While they may plan on paying off the mortgage in full this is still fraud. Another form of fraud is when you sign a declaration at the lawyer’s office saying that you will be living in the property when you have no intention of living there. Fraud for Profit a friend says they know someone who needs to buy a house now but their credit won’t be satisfactory for another 3 or 4 months. They ask you to say you are the buyer and provide your credit history in exchange for $5,000 for your trouble. The problem for you the straw buyer is when they flip the home and run off with the profits leaving you on the hook for a mortgage and having to deal with legal authorities as well. Foreclosure Fraud a fraudster approaches a homeowner who is in financial trouble with a debt-consolidation scheme that involves the owner paying an upfront fee and signing over title to the home to the fraudster. the home owner receives cash from the fraudster to address immediate bills and remains in the home paying rent or consolidated debt payments to the fraudster the fraudster pockets all of the owner’s payments and ignores bills and taxes, which leads to debt-collection procedures against the owner the fraudster may re-mortgage or sell the property to an accomplice, leaving the owner without the property title, homeless and still in debt Title Fraud This is when someone forges your identity and either sells your property or takes out a mortgage on the property. Buying title insurance for a home under $500,000 can cost you between $50 and $175 and covers any legal fees you have to pay to regain your property.

4 Key Things You Need To Know About A Second Mortgage Many homeowners are vaguely aware of the fact that you can take out a second loan on your home. You hear y...our friends mention it or perhaps a family member close to you has gone through the processbut do you truly know what it means to take out a second mortgage? We have taken all the questions we get asked about second mortgages and compiled it into 4 key points. A SECOND MORTGAGE IS BASED ON THE EQUITY IN YOUR HOME The total loan amount that the second mortgage lender will offer you will depend on the equity that has been built up in your home. Second mortgages allow you to access up to 95% of the equity you have in your property. For instance: House Value $850,000 95% LTV (maximum mortgage amount) $807,500.00 First Mortgage $550,000.00 Amount Available Through Second $257,500.00 INTEREST RATES WILL VARY AND BE HIGHER THAN YOUR FIRST MORTGAGE This is because when a lender agrees to a second mortgage, they are taking a higher risk as he gets second priority in case of default. With that being said, we have options and solutions such as working with private lenders that can help you obtain a reduced rate and the right product for your mortgage situation. Typically, you can expect an interest rate of 6.95%-19.95% with lender and broker fees included. YOUR PAYMENT CAN BE AS LOW AS INTEREST ONLY PAYMENTS One of the advantages of selecting to use a second mortgage is the fact that the payments are attractive. You can pay interest only payments or you can also select to pay the interest plus the principle loan amount. You can work with your mortgage broker to discuss options and what would work best with your situation. THERE ARE ADDITIONAL FEES TO CONSIDER Since we want to have you understand ALL the fees associated, it is important to know that setting up a second mortgage will require you to pay: *note dollar amounts are approximations An appraisal fee to assess the value of your home: $300 Legal fees to set it up: $2,000 Lenders & Broker fees: 1-5% Second mortgages are a great option for many and may be a better solution than a refinance or a Home Equity Loan (HELOC). If you are interested in learning more or want to find out if a second mortgage is right for you, please contact us. We can guarantee we can guide you the process from start to finish!

GUARANTOR VS CO-SIGNER A Guarantor, when it comes to mortgages, is exactly what it sounds likethey Guarantee the mortgage for another person if they are unab...le to pay back the loan. Guarantor’s or co-signers are often used if someone has: Damaged or poor credit Insufficient income In most cases, someone with poor credit and/or insufficient income has a more challenging time securing a mortgage. Adding a guarantor can help get the file approved as the lender is assured that he or she will be paid, should the mortgage holder default. Many people will assume that a co-signer and a guarantor are the same thing. This is not the case thoughthere are key differences that you should know before becoming a guarantor on a mortgage. 1. Whose name is on the loan? This may seem like a small detail, but when it comes to loans, whose name is on it matters! With a guarantor, their name will not be on the title of the property, but it will be on the mortgage. With a co-signor, this changes in that their name will be on the mortgage and on the title of the property. In addition to this, for a guarantor mortgage the guarantor must be a spouse. With a co-signer this is not the case, and you can utilize whomever agrees and meets the qualifications. 2. What’s the Risk? For the people seeking a guarantor, a portion of risk is alleviated because they have the guarantee of the guarantor. However, for the guarantor, there is a heightened risk. They are responsible for the entire amount of the loan if the borrower defaults at any time. With this in mind, lenders require the guarantor(s), in addition to the borrower(s), to qualify for the loan they are looking to borrow. They must meet the following lending requirements which include: . Credit Check . Disclosure of income . Disclosure of Liabilities . Disclosure of Assets It is also highly advisable that a potential guarantor seek legal advice before signing for the loanand this should be a separate attorney from the one that is involved in the mortgage transaction. Seeking out proper legal advice can allow the potential guarantor to ensure they fully understand the contract, the loan, and any other details. One final note that should be evaluated by any potential guarantors, is the relationship with the person you will be signing for. You are taking a risk and taking on a lot of responsibility for this person and it is advisable that you know the person well and trust them. 3. What other Variables are there to Consider for Guarantors? There are a few other things that a guarantor will want to consider before finalizing anything. One of these is the fact that if you are a guarantor, you may not be able to qualify for a large loan or mortgage on your own. Look at your goals and future (or current) expenses before taking on this additional responsibility. As a final note to guarantors, they may want to consider creditor insurance (amount varies based on the loan) to protect themselves and their assets. 4. Can your relationship with your bank dictate if I need a Guarantor? In some cases, yes! If you have a long-standing relationship with your current bank and they have seen your ability to responsibly handle debt-repayment, they may consider not requiring you to have a guarantor. This is not always the case, but it is an option that your mortgage broker may review with you. These 4 facts along with the mortgage broker’s advice, can help you decide if you want to be a guarantor, or if you truly require a guarantor mortgage after all! If you have any other questions about guarantors or co-signers, we encourage you to reach out to US we know we will be happy to help!

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