Renew your Mortgage with Ottawa Mortgage Broker: Capital Mortgages

Shopping For A Mortgage In 4 Easy Steps

Purchasing a house is one of life’s most exciting experiences. It is a major life change and one of the most important financial decisions you will ever make. However, a dream home can suddenly turn into a nightmare experience if you are not sure which steps to take. Finding the right home does not have to be a hassle and our “shopping for a mortgage in 4 easy steps” will show you what to do so that you can avoid major headaches.

First Step – Selecting the Right Loan

How long do you plan to live in your new house? If change is in the future (baby or possible job transfer), you might want to think short term, an adjustable rate mortgage will give you the lowest payments for a few years. However, if you plan to be in the new home for decades, go with a fixed rate interest loan. This way, your payment will not drastically increase without warning.

Second Step – Go with a Mortgage Professional

A mortgage broker can be one of your best friends when it comes to buying a home. Choose someone with knowledge and experience with mortgages, and check with more than one source before making up your mind. Select a person you can easily communicate with.

Third Step – Understand Your Loan Costs

Before you sign any loan papers make sure to go over all your costs and understand things like fees, points, and insurance. You’ll want to check with two sources:

* Good faith estimate – lists all closing costs including fees. Just remember, this is just an estimate, and some items may be subject to change.

* Truth in mortgage documents – this document tells you what your annual percentage rate will be and discloses important information about your loan terms. This is the best way to ensure you are not hit with some unexpected fees which increase your costs significantly.

Fourth Step – Know How Interest Rates Move

Loan interest rates are affected by the bond market. This information is vital to understanding your mortgage. Mortgages are sold, and when this happens, interest rates and bond rates are affected differently. When one goes up, the other goes down. This movement can be as often as two times a day. Your mortgage broker is the best person to talk to about how this works.

As you can see, it is as simple as 1-2-3-4. These four steps will help to simplify your home buying process and make life a little easier.


Pre-Qualified, Pre-Approved Mortages Ottawa, Ontario

Should I Buy a House Now?

Thinking of buying a home in today’s economy? While recent predictions on the state of the Canadian housing market are not exactly promising, there is good evidence that now is a good a time as any to start shopping for a home. International economists say that Canadian homes up for sale in the market are overvalued, which can dictate the state of the Canadian housing market in the immediate future. Predictions of Duetsche Bank analysts point to this same conclusion when they say that real estate in the national housing market is higher than the median and higher compared to average rental rates. However, these numbers are not likely to lead the Canadian market to a crash anytime soon. Here’s why.

Higher Chances for a Soft Landing
Instead of a catastrophic real estate crash, experts are expecting a softer landing or one characterized by the gradual lowering of real estate prices and the number of sales, and none of the sudden depreciation and drops in prices that indicate a market crash. One reason why this is likely is because demand is keeping up with supply. Records show that the numbers of newly-built homes and condos being sold are on par with historical averages. Sales are so steady, in fact, that claims of overbuilding, with no demand to counteract the investment in real estate in big cities like Toronto and Vancouver are largely unfounded. If there is one area of concern, it could be that there may be a slight disparity in the kind of real estate properties being put up for sale and properties that buyers are looking for. For example , there is an increasing trend towards the building of one-bedroom condos, when data suggests that more and more families are looking for apartments, condos and homes offering family-friendly accommodation.

What Experts are Saying
Experts will not hesitate to tell anyone with the money to buy right now, just as prices are getting comfortable. If buyers have the money now, there is no need to wait for housing prices to fall. Homeowners can weather lowered real estate prices during this period by putting down the highest down payment they can afford to build equity on the property and to opt for a fixed home mortgage.

At Capital Mortgages in Ottawa we strive to be your personal mortgage broker for life.

Questions to ask before buying a rental property

Owning a rental property can be a profitable investment — but it’s not for everyone. Here are some questions to ask yourself before you take the plunge.

If you’re thinking of purchasing an investment property to rent out to tenants, you will need to do some serious research. There’s much more to being a landlord than putting up an ad on Craigslist — it’s like taking on a second job. You will need to factor in realistic financial projections, and carefully weigh the pros and cons of your decision.

Here are a few things to consider before purchasing a rental property.

1. Do you have enough saved for the down payment?
Under Canada’s new mortgage rules, you must come up with a down payment of at least 20 per cent for a small rental property holding from one to four units. This rule does not apply to borrowers whose principal residence also includes rental units.

2. How much income will the property generate?

You will need to do some research into the neighbourhood. What does rent typically cost, and what is the vacancy rate in that area? Don’t assume that you will always have a tenant — according to the Canada Mortgage and Housing Corporation (CMHC), the average vacancy rate in Canada’s 35 major centres is 2.5 per cent. To be safe, assume a four or five per cent vacancy rate into your financial projections, and don’t forget to calculate potential costs, such as repairs and maintenance.

3. Can you be a successful landlord?

Being a landlord is a second job. It’s not just about finding a tenant and letting the money come in every month. Not only do you have to be available to field emergency calls and keep up with maintenance such as routine fixes, yard work and even shovelling snow, but if you rent to the wrong tenant, you might have even bigger problems to deal with, such as non-payment of rent. Hiring a property manager can help, but that will greatly reduce your monthly profit from the property — and you never want to be in a negative cash-flow situation.

4. How will deductions affect your profits?

By deducting certain expenses from your income, you can reduce the taxes that you owe. Applicable expenses include mortgage interest, property tax, insurance, property management, maintenance and utility bills. You can also deduct any losses from your rental property. If your expenses exceed your rental income, you can subtract your losses from any other source of income you have coming in.

Purchasing a rental property can be a great way to diversify your investment portfolio, but it is a big commitment. Being a landlord is time-consuming, and not for people who are interested in an easy, passive income stream.

Want to learn more? Check out the Canada Revenue Agency’s Rental Income Guide, where you can get more information on deductible expenses, and most other issues regarding rental property.