Well the local Cambridge real estate mareket is still hot. The MLS has taken on 498 new residential listings and has reported 271 sales.
Interest rates are holding steady. Five year money is available for as low as 3.79% for five years.
Purpose built multi-unit properties are still hot. Some buildings selling with a cap rate as low as 5%.
Our new 40 unit condo propject in East Galt (10 Cheese Factory Rd) is starting to gain momentum. Many interested parties. Prices start at $187,100 for a 3 bedroom unit. If you know somebody looking for a great place to start as a first time home owner or investor, please make sure they check this project out. We'll be open this weekend both Saturday and Sunday from 2 to 4pm.
If you have any real estate or mortgage questions, don't be shy. Karen and I are here to serve you.
Well unless you’re living under a rock, you’re probably aware of the recent changes to the Canadian mortgage rules. If you’re not, no offence but here they are.
Effective March 18, 2011.
The maximum amortization period will decrease from its current 35 years to 30 years on all new “insured” mortgages with a loan to value ratio greater than 80%.
The maximum amount a Homeowner can refinance their properties has been decreased from 90% to 85%.
Mortgage insurance will no longer be available on secured lines of credit or otherwise known as HELOC’s. (Short for “Home equity line of credit”).
So what does all this mean?
First of all, let me start off with HELOC’s. What I found very interesting with this particular change was most of the lenders we do business with had stopped offering this option a long time ago. In all honesty, I wasn’t aware there were lenders still out there offering this product so really “who cares!”
As for lowering the amortization periods from 35 years to 30 years, I feel this was a very good move on the government’s part because…
It will help Canadians build equity in their homes faster.
It lowers the maximum amount someone can borrow without the need of jacking up interest rates.
So for example if you were borrowing $250,000 at 3.75%...
A 35 year amortization would leave you with a monthly payment of $1,065.50 (principle & interest).
A 30 year amortization increases the payment on that same borrowed amount to $1,153.69 (principle & interest) which is obviously a difference of $88.18 a month.
Makes sense so far right? Agreed, but where I have a problem is the concept of lowering somebody’s ability of refinancing their home from 90% to 85%. Why?
Well the governments answer is they don’t want Canadians to be able to re-finance our homes to buy boats and big screen TV’s.
Thanks for the advice on how to spend my money Mr. Flaherty but I don’t recall the government using that same element of prudence when it came to spending of $1 Billion on the G20 summit in Toronto that was nothing but a waste of time and a real embarrassment to our Country.
Hey, I’m all for practicing prudence but in my experience as a mortgage agent, I didn’t have people re-financing to buy toys. What they were re-financing for was to pay back the bandit banks and credit card companies because of the exorbitant amount of interest they charge and never mind the lack of regulations that don’t exist when it comes to obtaining this credit in the first place.
I equate this move to be equivalent to firing all the lifeguards in the public pools. Let’s face consumer credit is just too easily obtained and unfortunately people from time to time get in trouble with this easy access to credit. Their only saving grace was the fact that one could use the equity in their homes to pay those credit cards off and make life less stressful with such high payments.
But now that there’s less money available, I have to assume that this move will cause more people to sell rather than re-finance which will obviously create more listings in the market place and of course if the laws of supply and demand prevail, this will cause home prices to go down.
It would be nice to have a government that has the balls to stand up to the banks and demand them to change their policies on consumer credit as opposed to playing politics and trying to make it look like they’re acting for the greater good.
Paying your mortgage off the traditional way takes 25 to 40 years and costs about TWICE the purchase price of your home. Here are some effective ways to pay off your mortgage sooner, build equity faster and save thousands in interest.
• Change your payments. Simply increasing your payment frequency to bi-weekly or weekly costs nothing and can save thousands of dollars over the life of your mortgage. If you can afford to pay a little extra, consider accelerated bi-weekly or weekly payments—these are equivalent to making one extra monthly payment per year which results in substantial savings. Or you can make a lump sum payment which can realize savings several times as great over the life of your mortgage.
• All-in-one mortgage. Instead of making extra payments, consider switching to a mortgage that pays off the principal faster without costing you anything more. All-in-one mortgages combine a line-of-credit mortgage with a chequing account to reduce interest costs and pay off your mortgage in as little as half the time, without changing your spending habits. You deposit your pay into the all-in-one account and pay bills as you normally would. While you’re not using your money, it’s used to reduce your daily loan balance. Over the life of the loan, this can save hundreds of thousands of dollars in interest!
• Merged account mortgage. If you’d rather not refinance your existing mortgage to switch to an all-in-one mortgage, consider a merged account mortgage. This system uses your existing mortgage (any type of first mortgage will work), an advanced line-of-credit (ALOC), and specialized software that makes a connection between your bank account, ALOC and mortgage. Each time you deposit income into your account, the software automatically generates an interest cancellation on your mortgage. The result is that a 30-year mortgage can be paid off in about 8 to 11 years, with no change to your lifestyle or refinancing of your existing mortgage.
To help decide which of these options is the best way for you to become mortgage-free sooner, call us today for a free analysis at 1-877-904-9222 or apply online at http://www.mrfinancial.ca