RENEW YOUR MORTGAGE THE RIGHT WAY!
If you are contemplating renewing your mortgage then you should really consider the opportunity that is before you. There are many things that may have changed since you first took out the mortgage. You may be looking to use your home equity to fund a renovation project on your home. Alternatively, you may want to use that equity in other ways, such as purchasing a cottage or holiday home. You may also want to make some long-term investments to secure your future.
There is also the option of putting your other high-interest debts into your mortgage when it is up for renewal. This is one way that Canadians are able to reduce their debt and save on interest payments. In fact, there are many ways to save money when you renew your mortgage.
Saving Money with Your Mortgage Renewal
There are three basic things you need to do to get the best deal on yourmortgage renewal. Be prepared, create a plan, and set an early meeting with a broker.
This means dont be caught off-guard when your mortgage comes up for renewal or you will miss the opportunity to get the best rate and one that suits your needs. You can start talking with lenders a couple of months before your mortgage is up for renewal. Keep in mind that the longer you wait, the less chance you have to save money.
Create a plan
Before you start talking to your broker about renewing your mortgage, decide what you want to do. Consider the best way to use the equity you have earned on your home. You can also take the opportunity to change mortgage lenders. There is no need to stay with your current provider. A mortgage renewal presents a chance to find a lender who better fits what you want in a financial institution.
Meet a broker
Before you decide on whether to sign with your current lender or switch to a new one, meet with a mortgage broker. These are professionals who can offer you advice based on your unique situation. They can also help you find better lending terms if that is what you are looking for.
While it can take a little extra effort on your part, getting a mortgage that works for you is worth the effort. It is important that you are prepared when you renew your mortgage so that you can make the most of the equity you have. This means you need to be ready on your renewal date, have a clear idea of what you want to do with your equity and set a meeting with your broker well in advance.
Call me today if youd like to save money on your next mortgage renewal! 416-568-5111
Minister Morneau announces new benchmark rate for qualifying insured mortgages
For many Canadians, their home is the most important investment they will make in their lifetime. That is why the Government of Canada has introduced measures to help more Canadians achieve their housing needs while also taking measured actions to contain risks in the housing market. A stable and healthy housing market is part of a strong economy, which is vital to building and supporting a strong middle class.
Today, Minister of Finance, Bill Morneau, announced changes to the benchmark rate used to determine the minimum qualifying rate for insured mortgages, also known as the stress test. These changes will come into effect on April 6, 2020. The new benchmark rate will be the weekly median 5-year fixed insured mortgage rate from mortgage insurance applications, plus 2%.
This follows a recent review by federal financial agencies which concluded that the minimum qualifying rate should be more dynamic to better reflect the evolution of market conditions. Overall, the review concluded that mortgage standards are working to ensure that home buyers are able to afford their homes even if interest rates rise, incomes change, or families are faced with unforeseen expenses. This adjustment to the stress test will allow it to be more representative of the mortgage rates offered by lenders and more responsive to market conditions.
The Office of the Superintendent of Financial Institutions (OSFI) also announced today that it is considering the same new benchmark rate to determine the minimum qualifying rate for uninsured mortgages. OSFI is seeking input from interested stakeholders on this proposal before March 17, 2020.
The Contagion of Fear
Fears of a possible coronavirus pandemic are sweeping the world. Markets are jittery with little hard data to go on.
With the first case now reported in Canada, many are recalling the 2003 SARS where Canada was one of the epicenters. Arguably the biggest (economic) lesson from that experience is that fear is the biggest risk to the outlook.
The impact of the SARS pandemic on the Canadian economy is difficult to estimate, confounded as it was by the slowing US economy, the invasion of Iraq and other events, but the Bank of Canada estimated -0.6ppt hit to annualized growth in Q2-2003, or just over 0.1% on the level of GDP.
While it is premature to predict the path of todays coronavirus outbreak, we estimate that a SARS-equivalent pandemic today could have a similar impact on the Canadian economy with an estimated hit of just over 0.1% on the level of GDP by mid-2020, at which point a pandemic should be contained. This estimate is subject to a significant degree of uncertainty with risks skewed to a potentially larger impact.
The effect should not be significant enough to trigger a broader economic malaise, but could this finally push Governor Poloz over the line to proactively stimulate the economy in his next rate call?