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My Rates

6 Months 4.75%
1 Year 2.19%
2 Years 1.99%
3 Years 2.19%
4 Years 2.29%
5 Years 2.39%
7 Years 2.79%
10 Years 2.99%
*Rates subject to change and OAC
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M18000217
BROKERAGE LICENSE ID
11947
Nick Holloway Mortgage Agent

Nick Holloway

Mortgage Agent


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2725 Queensview Dr Suite 500, Ottawa, Ontario

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Many Canadian homeowners pay too much for their homes because they are not getting the best mortgage financing available in the market.

 

The mortgage process can be intimidating for homeowners, and some financial institutions don't make the process any easier.

 

But I’m here to help!

 

I have access to various mortgage products at my fingertips and I work with you to determine the best product that will fit your immediate financial needs and future goals. I will save you money by sourcing the best products at the best rates – not only on your first mortgage but through every subsequent renewal. So whether you're buying a home, renewing your mortgage, refinancing, renovating, investing, or consolidating your debts — I’m the Mortgage Broker who can help you get the right financing, from the right lender, at the right rate.

 

 


BLOG / NEWS Updates

Mortgage repayment options - Which one is right for me?

By Nick Holloway - When borrowers are finalizing their mortgage options, they need to decide how they want to schedule the regular payments. There are many options to choose from, while my general recommendation leans toward choosing a repayment schedule which fits best with the households budgeting needs and requirements. You can select your regular mortgage payment amounts on a monthly, semi-monthly, bi-weekly, or weekly basis. Alternatively, you can opt to pay down your mortgage loan principal balance quicker by using an accelerated bi-weekly or accelerated weekly repayment schedule. To understand the repayment schedule, we must initially understand the parameters of the repayment period, which is referred to as the amortization schedule, commonly set to 25 years in Canada. Each regular payment is broken out into a principal and interest component, noting the amortization schedule reduces the overall principal balance owed over time. As a result, the balance of the payment amount applied to principal balance increases and likewise decreases the interest component over time. In other words, you only pay interest on the remaining principal balance at the time of making your payment, basing the necessary interest calculation on this principal balance and period elapsed from the preceding regular payment being received by the lender. What repayment frequency should I choose? We can break this out into two main categories, a regular repayment, or an accelerated repayment schedule. The regular repayment schedule will amortize the loan to match the amortization period, which we will set herein at 25 years for the sake of consistency. Noting that you are only paying interest on the balance of the principal at each regular payment interval, the increase in frequency from say a monthly to bi-weekly payment doesnt have a significant bearing on the overall interest costs over the lifetime of the mortgage. To make a quick comparison, we can annualize the projected payment amount by multiplying the monthly payment by 12, the bi-weekly by 26 and the weekly by 52, then comparing the sum of those differences. For example, if we take an initial $500,000 mortgage principal balance with a 2.5% contract interest rate compounded semi-annually, the regular monthly principal and interest payment comes to $2,239.83. The annualized payment total is $26,877.97, with the bi-weekly totalling $26,862.99 ($14.98 less than monthly), followed by the weekly totalling $26,856.57 ($21.40 less than monthly). What is an accelerated repayment schedule? The accelerated repayment schedule is calculated by simply taking the regular monthly payment amount, then dividing this amount in two for the accelerated bi-weekly or dividing in four with the accelerated weekly schedule. Essentially, this results in increasing the overall amount of your payment contributions over time as the borrower is making the dollar equivalent of 13 monthly payments over the span of a 12 month period. If we carry over from the above example and annualize this amount, we have $26,877.97 + $2,239.83 = $29,117.80. The effect of this increase in your overall payment contributions results in an acceleration of the principal balance being paid down over time, which reduces the timeframe of a 25 year amortization to around 22 years and 5 months to extinguish the principal balance in this example. If we hold these same parameters constant, the projected interest costs over the lifetime of the mortgage are $171,949.34 for the regular monthly payment, which is reduced to $152,296.60 with the accelerated bi-weekly option. The benefit is an overall interest saving of $19,652.74 over the lifetime of the mortgage loan, however this benefit is moderated by an increase in the regular payment amount which has the effect of reducing the households overall cashflow. Are there other ways to pay down the principal quicker? Mortgages in Canada come with a variety of pre-payment privileges which allow the increase of your regular payment amount and/or applying lump sum payments which similarly have the effect of paying the mortgage principal down quicker than the amortization schedule selected. Arguably, these pre-payment privileges can be tailored to more exact specifics of the borrowers overall goal and budgeting requirements in respect of increasing the pace of principal paydown, while still managing the cashflow needs of the household. These strategies are however not mutually exclusive since the pre-payment privileges can be combined with the accelerated repayment schedule to suit the borrowers requirements accordingly. As with many things in life, one size doesnt fit all.

Minimum Mortgage Qualification Rate change from 4.79% to 5.25% as of June 1, 2021

By Nick Holloway We have been provided confirmation yesterday that the new minimum qualification rate will be the greater of the borrowers mortgage contract rate plus 2%, or 5.25% as of June 1, 2021. This is an increase of 0.46% from the current minimum mortgage qualification rate applied at 4.79% (or 2% above contract rate). Are all mortgages required to adhere to the change? In short, yes this will be applied to all residential mortgages in Canada, regardless of the Loan to Value (LTV). The changes were originally outlined by an open letter from the Office of the Superintendent of Financial Institutions (OFSI) on April 8th, 2021 as changes to existing Guideline B-20 - Residential Mortgage Underwriting Practices and Procedures. The changes indicated by OFSI was anticipated to apply to all mortgages which are uninsured (i.e., residential mortgages with a down payment of 20% or more). The initial announcement did not apply to insured mortgages (i.e., residential mortgages with a down payment of less than 20% and requiring mortgage default insurance) as the Minister of Finance sets the minimum qualifying rate for all insured mortgages. However, the announcement released yesterday by the Department of Finance Canada has confirmed the Federal Government will align with OFSI new rules by establishing the new minimum qualification rate for all insured mortgages approved on June 1st, 2021 or later. Will this affect my mortgage qualification? If you have received a mortgage approval for a purchase, transfer/switch, or refinance before the change to the new rules, there will be no change to your approval as these will be considered based on the previous qualification rate, even if the funding date occurs after the June 1, 2021 change. It has been indicated in the OFSI website that it is up to lenders discretion whether the old rules can be applied to pre-approvals, although it should be noted this differs from the Ministry of Finance announcement yesterday which categorically states the new rules apply to all mortgage approved on June 1, 2021, or later (indicating a mortgage approval is required with an accepted offer and/or subject property in place). As these announcements are different in their exact verbiage and we are reliant on lenders specific guidance, it would be prudent to assume that any current pre-approvals which turn to an approval on or after June 1, 2021 will be required to follow to the new mortgage qualification rules. What is the impact of the change in respect of affordability? Mortgage qualification is based on calculating Debt Servicing Ratios. The first being Gross Debt Servicing ratio (GDS) and secondly the Total Debt Servicing ratio (TDS). To simplify my example, I shall apply only the GDS ratio to a maximum permitted percentage of 39% with an assumption that there are not sufficient outstanding debts which would trigger the maximum TDS ratio. The GDS is the sum of Principal and Interest mortgage payment using the minimum qualification rate with a 25-year amortization, Property Tax and Heat (commonly referred to as PITH), divided by the households verifiable gross income amount. If we assume a household income totals $100k while applying an amount of $4,000 for property tax and $1,200 for heat each year, the maximum amount the borrowers mortgage qualifies for under the 4.79% rate equals $494,400. We can think of this as a Debt to Income ratio of 4.944, in other words for every $20,226 of annual income equates to $100k in mortgage qualified. By applying the increase in the minimum qualification rate from 4.79% to 5.25% with all other parameters being equal, this is a reduction in the loan maximum to $472,660, with a Debt to Income ratio now at 4.7266, or for every $21,1567 of annual income for each $100k in mortgage qualified. While the TDS ratios are dependant on property taxes and heat which can vary the exact amounts of the approval and changes, we can establish from the above numbers the impact in this example is a reduction of 4.6% in the total loan maximum under the new rules.

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