For your information - July 2008
All we hear lately in the news is rising oil prices and fears of inflation, yet our housing market continues to remain stable and our mortgage rates attractive. Unlike in the U.S., there is no "housing bubble" looming in Canada according to our Finance Minister. Our economic growth will fall below expectations, but our natural resources and budget surplus will keep us out of any serious economic trouble.
The Finance Department has initiated proactive and precautionary measures by tightening some of the rules for mortgage lending. The changes are primarily a message to both consumers and Banks that aggressive mortgage practices need to be monitored for the time being. Mortgage defaults are very low at .27%, in comparison to our 1990 recession when they were .65%, but they are still taking no chances
Most of the changes are directed towards first-time homebuyers, who may be leveraging themselves beyond reason. Borrowers can no longer buy with zero downpayment; a five per cent minimum downpayment will be required throughout Canada. Amortizing a mortgage for forty years to reduce monthly obligations has also been terminated, yet a thirty-five year amortization is acceptable. Credit rating requirements have also been increased. Conversely, income to debt ratio has been increased, meaning that we are allowed to qualify for more based on our incomes. These measures are effective October 15 although many banks have already stopped offering these features.
One of the more dynamic home financing packages now available is the mortgage and line of credit combination. These types of mortgages include your standard mortgage, with the remaining equity available through a homeowner's line of credit that grows for free as the mortgage is paid down. This allows quick and inexpensive future access to your equity should the financial need arise, and is currently at a rate of 4.75%. Typically this type of package is applicable when the total financing does not exceed 80% of the property value. A key benefit is that it avoids future applications to lenders and unnecessary expense, and should be the last mortgage you need if arranged correctly.
The mortgage landscape has been changing frequently and it is important to understand the effects on your "Mortgage Plan". It's financially prudent to be informed and that's what we do. Our responsibility is to ensure you have all the correct information and you are being treated fairly.
When you or someone you know need to examine and research your mortgage and financing options ... contact an advocate for the borrower, contact a "Mortgage Planner".
The Green House: Look to your mortgage for energy savings
Turn off the lights. Ease up on the air conditioning. Turn the thermostat down. Switch to energy-efficient appliances. We're all getting the "green" message. There are good, sound reasons for saving energy: from doing your bit at home to reduce the strain on the planet, to enjoying the bottom-line financial savings from a lower energy bill. There's also a growing list of financial grants and rebates designed to help you turn your home into a "green" house. Natural Resources Canada's ecoENERGY Retrofit program provides financial support to homeowners to help them implement energy saving projects that reduce greenhouse gases (GHGs) and air pollution. Click here to read more…
