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Use my years of experience to make your mortgage process stress free. I am available at any time convenient to you and simplify the entire process to you. It is my belief that each client presents a unique challenge, has unique needs and therefore requires a unique approach. I will discuss your needs and goals at the beginning and find not only a solution, but a process that works for you. Of course, I welcome and appreciate any referrals! Enjoy.
Is a Re-Finance Worth it For You? See Here.
How to Check if Re-Financing Today Will Save or Cost You Money
Depending on your current interest rate, you may be thinking of looking into a re-finance to take advantage of todays low rates. Of course, as you probably know it isnt just as easy as switching your mortgage out for a lower rate, there are several costs and factors you need to consider. Things such as penalty to break your mortgage and closing costs on a new mortgage are all determining factors in the decision to re-finance or not. Were going to show you how to break down the costs and make an educated decision. Of course, the below is only to give you a guideline and although fairly accurate, should not be used as a quote or promise of any kind. (Seems obvious but we have to write that, youd be surprised). Now that the legal mumbo-jumbo is out of the way, heres what you do:
Determine what your penalty is. Unless your mortgage is open, then there will be a penalty to pay it off early. If your mortgage is a variable rate, then you will be paying 3 months interest only which is a simple calculation.
Mortgage Balance x Interest Rate = A
A 12 = B
B x 3 = 3 months interest penalty.
$300,000 balance at 2.30% (300k x 2.30% = $6,900. $6,900 12 = $575 x 3 months = $1,725
If you are on a fixed rate then your penalty will be the greater of three months interest (above) or Interest Rate Differential (IRD). IRD is where the lender takes your current rate and puts it against the rate being offered for the term that most closely matches the time remaining on your mortgage term. So if you have 2 years left on your mortgage, they would use the 2 year term. The math for this is slightly more complicated.
Current Rate Reinvestment Rate = A
Mortgage Balance x A = B
B 365 x Number of days left to maturity = IRD Penalty.
Lets see an example using a mortgage balance of $300,000 with an interest rate of 3.19% with 2 years left on the term and a current 2 year rate of 2.29%. Remember, these numbers are for example purposes only.
Ex. 3.19% 2.29% = 0.90%. $300,000 x 0.90% = $2,700 365 x 730 = $5,399.81 IRD penalty
You can also take into consideration your pre-payment privileges on the balance.
So now that you are able to calculate your penalty all on your own, lets move to step two
Get an estimate of any closing costs you are likely to incur. For this example we will use the IRD results from above and assume our mortgage balance is $300,000 at 3.19%, we will also estimate the following:
Appraisal cost: $350
Legal Fees: $1,500
Penalty using IRD method: $5,399.81
Now that you know what it will cost you to break your mortgage and close a new one, its time to determine your potential savings on a new mortgage. Again, we will assume our balance is $300,000 with our current interest rate at 3.19% and our potential new rate being 2.64%.
Over the last two years remaining on your term, you would be paying roughly $16,500 of interest at the 3.19%
and on the first two years of your new mortgage at 2.64% you would be paying about $14,500 of interest, a savings of around $2,000. Or you can look at your existing payments of $1,449.14/month vs your new payments of $1,364.90 a savings of $84.24/month. Over two years $2,021.76. This of course does not outweigh the cost of breaking the mortgage and would therefore be better to wait until your penalty is lower. In the case where you are paying three months interest, then it would be worth it to re-finance.
Keep in mind you should always double check with your mortgage broker to be sure what the penalty is. In a lot of cases, they may be able to get you a discount on the penalty or help you avoid legal fees and appraisals costs. If you are thinking about re-financing to get your rate lowered, check in with us and well let you know where you stand. Hope this helps you understand your mortgage a little better.
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Bank of Canada increases overnight rate target to 1 1/4 per cent
The Bank of Canada today increased its target for the overnight rate to 1 1/4 per cent. The Bank Rate is correspondingly 1 1/2 per cent and the deposit rate is 1 per cent. Recent data have been strong, inflation is close to target, and the economy is operating roughly at capacity. However, uncertainty surrounding the future of the North American Free Trade Agreement (NAFTA) is clouding the economic outlook.
The global economy continues to strengthen, with growth expected to average 3 1/2 per cent over the projection horizon. Growth in advanced economies is projected to be stronger than in the Banks October Monetary Policy Report(MPR). In particular, there are signs of increasing momentum in the US economy, which will be boosted further by recent tax changes. Global commodity prices are higher, although the benefits to Canada are being diluted by wider spreads between benchmark world and Canadian oil prices.
In Canada, real GDP growth is expected to slow to 2.2 per cent in 2018 and 1.6 per cent in 2019, following an estimated 3.0 per cent in 2017. Growth is expected to remain above potential through the first quarter of 2018 and then slow to a rate close to potential for the rest of the projection horizon.
Fourth Quarter Housing Market Trends Seal 2017 as ‘the Year of the Condo’
According to the Royal LePage House Price Survey, Canadas residential real estate market saw strong, but slowing year-over-year price growth in the fourth quarter of 2017. While year-over-year aggregate appreciation remained high in the Greater Toronto Area (GTA) and Greater Vancouver, two-storey and bungalow home values softened in the GTA, slightly declining on a quarter-over-quarter basis. Meanwhile, in both Greater Vancouver and the GTA, condominium prices continued to outpace all other property types, primarily due to growing affordability constraints within these markets.
The Royal LePage National House Price Composite, compiled from proprietary property data in 53 of the nations largest real estate markets, showed that the price of a home in Canada increased 10.8 per cent year-over-year to $626,042 in the fourth quarter of 2017. When broken out by housing type, the median price of a two-storey home rose 11.1 per cent year-over-year to $741,924, and the median price of a bungalow climbed 7.1 per cent to $522,963.
During the same period, the median price of a condominium appreciated faster than any other housing type studied, rising 14.3 per cent to $420,823 on a year-over-year basis. This trend was predominantly driven by the significant price gains witnessed in many of the countrys largest condominium markets. In the GTA, the median price of a condominium increased 19.5 per cent year-over-year to $476,421, while in the City of Toronto, the segment saw a similar gain of 19.6 per cent year-over-year to $515,578. In Greater Vancouver, condominiums also followed a similar price trajectory during the quarter, rising 20.2 per cent to $651,885, while the median price of a condominium unit in the City of Vancouver rose 18.7 per cent to $775,806. Many suburban markets across the GTA and Lower Mainland of British Columbia posted strong year-over-year condominium price gains of 20 per cent or more as well, with the segment appreciating at a faster rate than detached homes, which had previously led the charge.
To prospective homeowners in our largest cities, condominiums represent the last bastion of affordability, said Phil Soper, president and CEO, Royal LePage. This is especially true for first-time buyers whose purchasing power has been reduced by tightening mortgage regulations. Click here for more.