Going from a Variable Rate to a Fixed Rate Mortgage

With the anticipation of rates going down, some homeowners may be considering switching from a variable-rate mortgage to a fixed-rate mortgage to lock in their next term.

Switching from a variable-rate mortgage to a fixed-rate mortgage can offer stability in your monthly payments, protecting you from potential interest rate hikes, along with some other benefits:

• • Stability in Payments: As mentioned, with a fixed-rate mortgage, your monthly payments remain consistent throughout the life of the loan, providing predictability and making budgeting easier. This stability protects you from potential fluctuations in interest rates that could otherwise increase your payments with a variable-rate mortgage.

  • Protection Against Interest Rate Increases: One of the main reasons to switch to a fixed-rate mortgage is to ensure you are protected from rising interest rates in the market. If interest rates rise, your mortgage rate and monthly payments remain unaffected, providing financial security and peace of mind.

  • Long-Term Planning: Fixed-rate mortgages are ideal for long-term planning and financial stability. You can accurately forecast your housing expenses over the entire loan term, making it easier to manage your overall budget and financial goals.

  • Risk Management: By locking in a fixed interest rate, you mitigate the risk of future interest rate hikes, which could significantly increase your borrowing costs with a variable-rate mortgage. This risk management strategy can provide financial protection and reduce uncertainty.

  • Potential Savings: In certain economic environments, fixed-rate mortgages may offer lower interest rates compared to variable-rate mortgages. By refinancing to a fixed-rate loan when rates are favorable, you could potentially secure a lower overall interest rate and save money over the life of the loan.

  • Easier Financial Planning: Fixed-rate mortgages simplify financial planning by eliminating the need to anticipate and adapt to changes in interest rates. You can confidently plan for other financial goals and expenditures without the uncertainty of fluctuating mortgage payments.

Overall, transitioning from a variable rate to a fixed rate mortgage offers stability, protection, and peace of mind, making it a favourable option for many homeowners, particularly those seeking long-term financial security.

• Published by my DLC Marketing Team

What does June’s rate cut mean for you?

So, the Bank of Canada finally cut interest rates…what does that mean for you?

If you have a Fixed Mortgage, this does not mean anything for you. You will carry on as you have for the duration of the term of your mortgage, until it is time for you to renew. At which point you will then weigh your options.

If you have a Variable Rate Mortgage or a Home Equity Line of Credit (HELOC), this means that you are finally about to experience some payment relief – but how much exactly?

With a rate cut of 0.25%, clients will see a monthly decrease of about $15 for every $100,000 of your mortgage loan. (i.e. your mortgage is $400,000, your payments will decrease by about $60/month)

If we manage to see a 1% total rate cut by the end of the year (as some economists are predicting), clients would then see a monthly decrease of about $58 per $100,000. (i.e. your mortgage is $400,000, your payments will decrease by about $234/month)

Lower interest rates also mean that you pay less interest per payment, which results in your mortgage getting paid down faster.

0.25% is not much by any means, but it is a step in the right direction. We will continue to look to the Bank of Canada to provide us with more insight moving forward and hope that this is the start of a positive trend for mortgage borrowers.

If you have any questions about how the rate cut affects you, or if you would like to explore your mortgage options, please do not hesitate to reach out.

The best way to prepare for your Mortgage Renewal is to stay ahead of the curve and understand all of your options. Here are a few things to consider doing when your mortgage is up for renewal….

• Get a Better Rate: At renewal time, it’s easy to explore other lenders for a preferable interest rate without breaking your mortgage. With interest rates expected to start coming down next month, reaching out and exploring the market could potentially save you a significant amount of money!
• Consolidate Debt: Renewal time is also an excellent opportunity to assess your existing debt and decide whether consolidating it into your mortgage is beneficial. Whether it’s holiday credit card debt, car loans, education loans, or other debts, consolidating your mortgage streamlines your payments into one, potentially at a lower interest rate compared to other sources.
• Invest in Renovations:Do you have home improvement projects waiting to be tackled? Renewal time provides a great opportunity to tap into your home equity for renovations, whether it’s your dream kitchen, bathroom upgrades, or even investing in a vacation property. Utilizing your equity can bring your renovation dreams to life.
• Adjust Your Mortgage Product: Not satisfied with your current mortgage product? Whether it’s fluctuations in variable rates or seeking a different payment or amortization schedule, renewal time allows you to switch things up. You can lock in a fixed rate for stability or opt for a variable rate if you anticipate changes in interest rates. Adjusting your mortgage product can align it better with your financial goals.

The most important things you can do for yourself around renewal time, are ask questions and seek a second opinion. Having a conversation with a mortgage professional can and will go a long way towards helping you achieve your financial goals.

One of the important factors in home ownership is understanding things like your credit score.  It is often overlooked and some people don’t pay much attention to this metric until they begin the mortgage discussion.

Credit scores range from 300 to 900, the higher your credit score the better. If you are one of the few who are able to achieve a score of 900 (which is quite rare), you would then be considered a “Unicorn”! Ideally, you should be aiming for a credit score of at least 680(or better) for at least one of the borrowers on the mortgage application.

This score is based on spending habits and behaviours including:

• Previous payment history and track record of paying your credit accounts on time
• Your current level of debt and how much credit you use
• How long you have had your credit in good standing
• Number of credit lines you have open

If you want to improve your credit score, you absolutely can. It can be a gradual process, but it is well worth it. Here are some tips to help you get started.

Pay Your Bills: This seems pretty straightforward, but it is not that simple. You not only have to pay the bills, but you have to do so in full AND on time whenever possible.  Paying bills on time is one of the key behaviors lenders and creditors look for when deciding to grant you a loan or mortgage. If you are unable to afford the full amount, a good tip is to at least pay the minimum required as shown on your monthly statement to prevent any flags on your account.

Pay Your Debts: Whether you have credit card debt, a car loan, a line of credit, or a mortgage, the goal should be to pay your debt off as quickly as possible. To make the most impact, start by paying the lowest debt items first and then work towards the larger amounts. By removing the low-debt items, you also remove the interest payments on those loans which frees up money that can be put towards paying off larger items.

Stay Within Your Limit: This is key when it comes to managing debt and maintaining a good credit score. Using all or most of your available credit is not advised. Your goal should be to use 30% or less of your available credit. For instance, if you have a limit of $1000 on your credit card, you should never go over $300. NOTE: If you find you need more credit, it is better to increase the limit versus utilizing more than 30% of what is available each month.

Credit and Loan Application Management: Reduce the number of credit card or loan applications you submit. When you submit too many credit card applications, your credit score will go down, and multiple applications in a short period can do more damage. You’re best to apply for one or two cards and wait to see if you are accepted before attempting further applications.

If you have questions about your credit score, don’t hesitate to reach out. Whether you want to check your score or find out how you can improve it, my door is always open.

Your mortgage amortization period is the number of years it will take you to pay off your mortgage. Depending on your choice of amortization period, it will affect how quickly you become mortgage-free; as well as how much interest you pay over the lifetime of your mortgage. A longer amortization could mean smaller payments, but in the long run, it means more interest. Whereas a shorter amortizations results in paying less interest, but larger payments in comparison.

Amortization Benchmarks

A 25-year period is the standard length of amortization used by the majority of lenders. While this is the standard, it is not the only option when it comes to your mortgage. Mortgage amortizations can be as short as 5 years and as long 50, depending on the lender.

Benefits of a Shorter Amortization (<25)

Opting for a shorter amortization period will result in paying less interest overall during the life of your mortgage. Choosing this amortization schedule means you will also become mortgage-free faster and have access to your home equity sooner! However, if you choose to pay off your mortgage over a shorter time frame, you will have higher payments per month. If your income is irregular, you are at the maximum end of your monthly budget or this is your first home, you may not benefit from a shorter amortization and having more cash flow tied up in your monthly mortgage payments.

Benefits of a Longer Amortization (>25)

When it comes to choosing a longer amortization period, there are still advantages. The first is that you have smaller monthly mortgage payments, which can make home ownership less daunting for first-time buyers as well as free up additional monthly cash flow for other bills or endeavors. A longer amortization also has its advantages when it comes to buying a home as choosing a longer amortization period can often get you into your dream home sooner, due to utilizing standard mortgage payments versus accelerated. In some cases, with your payments happening over a larger period, you may also qualify for a slightly higher value mortgage than a shorter amortization depending on your situation.

Keep in Mind

It is important to mention that you are not stuck with the amortization schedule you choose at the time you get your mortgage. You can shorten or lengthen your amortization; as well as consider making extra payments on your mortgage at a later date.

Mortgage Renewal is a great time to review your amortization and payment schedules, and make changes if they are no longer working for you.

If you have any questions about this or any other mortgage related inquires, please don’t hesitate to reach out!

• Published by my DLC Marketing Team

If you have a basement suite or rental property and you are currently looking for a tenant, there are some things to know! Whether this is your first tenant or you have other rental properties, it is a good idea to familiarize yourself with the specifics to ensure a harmonious tenancy.

As always, your responsibility as the landlord is to keep your rental properties in good condition and ensure they meet health, safety, and housing standards. However, as a landlord, you also have additional responsibilities around the rental agreement and tenant regulations.

Tenancy Agreement

Landlords are required to prepare a written agreement for every tenancy. Bear in mind, if this agreement is not prepared the standard terms for your province will still apply, especially if a security deposit is paid. This agreement should clearly outline the following:

• Who the agreement is between
• The length of the tenancy
• Rent amount and due date
• Required deposits (if any)
• Pet restrictions (if any)
• Additional terms (smoking or non-smoking, etc)

The tenancy agreement should also outline if there is the ability to add a roommate, and whether or not utilities, parking, storage, laundry, etc. are included.

Deposits

Typically, a security or damage deposit is requested by the landlord to establish tenancy and cover any unexpected issues that may arise. The deposit can be no more than half of the first month’s rent.

If you are charging a pet deposit fee, note that guide or service pets are exempt from any damage deposits. In addition, you cannot charge fees beyond the pet damage deposit.

Move In

To ensure the move-in goes smoothly, tenants and landlords should schedule a move-in time that works for everyone. At the beginning of the tenancy, you may also consider an inspection before the new tenant has moved in to ensure everyone is on the same page and the condition of the unit is clear in regard to any potential damages or fixes needed.

As a landlord, you are also responsible for changing the locks (at your cost) should the new tenant request it.

Additional Considerations

As a landlord, you will want to assess the suitability of any new tenant before signing the agreement. There are a few things you can do to ensure a smooth process and the right choice of tenant:

• Ask for proof of identity
• Thoroughly check all references
• Contact previous landlords to ask about rental and payment history
• Conduct a credit check to confirm income and financial suitability
• Get the names of all persons to be living in the rental unit

Once you have reviewed the above, you will be in a good position to determine if the potential tenant is a good fit for the rental space.

However, keep in mind that you cannot refuse to rent to a tenant based on any discriminatory aspects such as race, gender, sexual orientation, religion, etc. In addition, you cannot refuse to rent to individuals on income assistance.

While it can seem like a lot, with the proper preparation and understanding of tenant laws and regulations in your area, you can ensure a smooth and successful rental process!

• Published by my DLC Marketing Team

In the ever-changing landscape of mortgage rates, the importance of securing the best deal paramount. For the first time in what seems like forever, we have re-entered a rate declining market. While this is exciting news, it can come with its own set of concerns, like, “How will I know when it’s the right time? Is this really the lowest rate?”. Both are valid.

I want to share one of the most powerful tools we as brokers, have in our arsenal – and that is what is known as, the Rate Float Down.

What are Rate Float Downs?

Rate Float Downs are a unique feature that allow us to take advantage of potential interest rate drops even after you’ve locked in your mortgage rate. Think of it as Rate Insurance. If rates were to flip and go back up, your rate would remain locked in. If rates continue to fall, the Rate Float Down makes sure that you can capitalize on the lower rate.

How Do They Work?

When you lock in your interest rate, you’re essentially securing a specific rate for a set period. However, if market rates decrease before your loan closes, as brokers, we can request a Rate Float Down through our partnering lenders and banks, which adjusts your rate to the lower prevailing market rate, making sure that you are always getting the best rate available, saving you money over the life of your loan.

How Can You Benefit?

1. Financial Savings: By monitoring market trends and employing Rate Float Downs strategically, we aim to maximize your savings on interest payments.
2. Peace of Mind: Market conditions can be unpredictable, but Rate Float Downs offer a layer of protection. You can rest easy knowing that if rates drop, you won’t miss out on potential savings.
3. Customized Solutions: A commitment to providing tailored solutions means I am always exploring innovative ways to optimize your mortgage terms. Rate Float Downs allow us to adapt to changing market dynamics with your best interests in mind.

If you’re in the process of securing a mortgage, or know someone who is, now is the perfect time to consider taking advantage of a falling rate environment. I am here to guide you through the process, ensuring you make informed decisions that align with your financial goals.

Feel free to reach out to further discuss how Rate Float Downs can work for you or to explore other ways to enhance your mortgage experience.

Get to know the important basics before you choose your mortgage.

You have to be sure you select what is most important to you – lower rates or flexibility. Before you choose a mortgage, take some time to study mortgage types:

Closed Mortgage: If you want consistency with respect to rates and the length of your mortgage agreement, a closed mortgage is best for you. Interest rates are typically lower (and do not change with the length of the term). However, a closed mortgage does not offer much flexibility in paying off your mortgage sooner – with the exception of a once-a-year lump sum payment up to 20% of your entire mortgage.

• Predictability and consistency with respect to payment amount
• Often comes with lower interest rates
• Limited flexibility with paying down the mortgage faster
• Cannot change interest rate during the term of mortgage

Convertible Mortgage: Want the best of both worlds? Then consider a convertible mortgage. Convertible mortgages are flexible yet offer minimal risk. Often with a lower interest rate than an open mortgage, convertible mortgages provide the opportunity to switch to a longer-term closed mortgage without penalty.

• Provides an opportunity to take advantage of lower interest rates and switch to a closed rate without penalty
• Offers lower interest rates than an open mortgage

Open Mortgage: If you are looking for flexibility with regard to paying off your mortgage, consider an open mortgage. No penalty is incurred if you decide to make lump sump payments or pay off your mortgage before the term expires; however, this flexibility comes often with a higher interest rate – which can result in higher monthly payments.

• Maximum flexibility; no penalty for making lump sum payments or paying off your entire mortgage before the term expires
• Higher interest rate
• Best for those looking to pay off their mortgage as soon as possible

• Published by my DLC Marketing Team

Avoid Costly Mistakes When Building a New Home.

Building a new home is a super exciting endeavour, as you opt to create the perfect space for you and your family. However, building a home is not without its costs and potential surprises… to mitigate bumps on your homebuilding journey and avoid costly mistakes, consider the following tips:

Set a Realistic Budget

When building your own home, it is vital to be realistic about your budget and what you can afford. Making a list of wants versus needs can be a good way to determine what is required, and where you can spend extra money should your budget allow for it. When constructing your budget, don’t forget to include construction costs from materials to labour, as well as permits, inspections, landscaping and unforeseen contingencies. The contingency fund should be approximately 10-15% of your budget put aside to cover unforeseen issues or changes.

Hire Reputable Individuals

From your architect and your contractor to your landscaper and inspector, it is vital to have the right people in the right positions. This will ensure that you not only get the best advice, but experienced individuals will also help to steer you through the process and mitigate potential issues. Be sure to do your research, ask for references and ensure the individual(s) you hire are licensed and insured.

While you’re researching individuals, it can also be a good idea to get multiple quotes. While you may have a contractor you like, reaching out to other individuals can help ensure you’re getting the best rate.

Review Contracts Carefully

Read and understand all contracts and agreements thoroughly between your contractor and yourself, your designer, your home inspector, etc. Ensure that everything is in writing and that you and your builder are on the same page regarding expectations, timelines, and costs.

Make and Follow Your Plan

Once you have your budget and the right people on the project, it is time to make a plan. You must work with an architect or designer to ensure that your new home aligns with your needs, lifestyle and budget. This should also include future plans – do you want to have children? Plan on adopting a pet or two? Possibly need space for an older family member in a few years? Getting this right from the beginning will help to avoid potential changes to the plan down the line, which will reduce expansions to cost and timelines.

Choose Your Materials Carefully

Choosing to invest in energy-efficient features and materials can help you to reduce long-term utility costs. While initially these installations may be more costly, they will work to save you money in the long run. Whenever possible, make sure these materials are also as durable as possible to ensure longevity and low maintenance requirements.

Secure the Necessary Permits

Ensure that you obtain all required permits and approvals before starting construction. One of the most important reasons to do this is to ensure that the work being done is safe, but having permits and inspections is also vital to ensure you can get insurance on your new build. Non-permitted renovations or build additions, changes, etc. can result in trouble securing insurance, on top of fines and other potentially costly issues.

Invest in Inspections

Having inspections done throughout the process of building your home can save you issues down the line by ensuring that all the installations are done correctly and safely and that your house meets the proper codes for electrical, plumbing, etc.

By taking proper steps and being proactive throughout the home-building process, you can minimize the risk of costly mistakes and ensure that your new home meets your expectations while staying within your budget.

• Published by my DLC Marketing Team

Is your mortgage coming up for renewal? Are you aware of all of the options renewing your mortgage can afford you?

Get a Better Rate
Are you aware that when you receive notice that your mortgage is coming up for renewal, this is the best time to shop around for a more favourable interest rate? At renewal time, it is easy to shop around or switch lenders for a preferable interest rate, as it doesn’t break your mortgage. With interest rates expected to come down as we move into the New Year, taking the time to reach out to me and shopping the market could help save you money.

Consolidate Debt
Renewal time is a great time to take a look at your existing debt and determine whether or not you want to consolidate it onto your mortgage. For some, this means consolidating your credit card debt, for others it could be car loans, education loands, etc. Regardless of the type of debt, consolidating into your mortgage allows for one easy payment instead of juggling multiple loans. Plus, in most cases, the interest rate on your mortgage is less than you would be charged with credit card companies.

Start on that Reno
Do you have projects around the house you’ve been wanting to get started on? Renewal time is a great opportunity for you to look at utilizing some of your home equity to help with home renovations so you can finally have that dream kitchen, updated bathroom OR you can use it to look purchasing a vacation/rental property.

Change Your Mortgage Product
Perhaps you’re finding that your variable-rate or adjustable-rate mortgages are fluctuating too much and you want to lock in. Alternatively, maybe you want to switch to variable as interest rates start to level out. You can also utilize your renewal time to take advantage of a different payment or amortization schedule to help pay off your mortgage faster.

Change Your Lender
Perhaps a different bank/lender has a lower rate or a mortgage product with terms that better suit your needs. You want to use renewal time as an opportunity to ensure that you are getting the value you want out of your mortgage.

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Regardless of how you feel about your current mortgage and what changes you may want to make, if your mortgage is coming up for renewal, don’t hesitate to reach out. I am more than happy to review your situation and discuss any changes that would be beneficial towards achieving your goals.

• Published by the DLC Marketing Team