Capital Mortgages opened in January 1999 and has since serviced thousands of clients and arranged several billion dollars in mortgages in Ottawa area.

What To Know About Re-Financing Your Mortgage Throughout COVID-19

What To Know About Re-Financing Your Mortgage Throughout COVID-19

The ongoing pandemic has thrown all of us for a loop, with many people either being temporarily laid off, having their salaries cut or being let go altogether. It’s a scary and unprecedented time that is leading a large percentage of Canadians to consider whether they should refinance their mortgages. Doing so will allow them to give themselves a safety net by potentially resetting their rate to be lower, reducing their payments or pulling out equity from their homes in the event of job loss.

Here are a few factors you should keep in mind when planning to refinance your mortgage:

  1. Refinances are not urgent for lenders – Your refinance request will be a third priority (or lower) for lenders after new purchase and lender switches. Coupled with the high demand for refinancing right now, keep in mind that it might take a lender longer to reply on your application.
  2. You may be required to pay a penalty – You’ll have to pay a penalty if you break an existing closed mortgage to refinance. These fees can range from $1,000 to several thousand dollars – check your mortgage contract to determine how your lender will calculate your penalty. Here is a helpful list of penalty calculators by major lenders. 
  3. Employer verification will be strict – Given the situation we’re currently living through, your lender might make you prove that you will not be laid off during the economic shutdown if you don’t work a job that has been deemed to be essential
  4. Fluctuating ratesKeep in mind that mortgage rates are fluctuating often right now, even though the Bank of Canada slashed its overnight rate in March. Make sure you’re not overpaying for a fixed or variable mortgage and consider a cheap shorter term if you’re able to find one. Rates will likely return to normal once we’re through the worst of the pandemic.
  5. Opt for a home equity line of credit – A HELOC is a great alternative to using credit cards for a source of emergency liquidity. Payments are usually interest-only and you can generally borrow at your lender’s prime rate plus a variable of approximately +0.5% to 1%, versus the higher interest rates of credit cards. Note that you’ll need an excellent credit score and stable employment to be approved.

 

Refinancing your home can be a complex decision when considering all of the factors involved. Don’t hesitate to give us a call at 613-228-3888 if you require more clarity on your mortgage’s details, we’d be happy to walk you through it.

New Mortgage Rules 2018: What You Need To Know

If you own a home in Canada, are currently house-hunting, or are looking to buy sometime in the near future, you’ve no doubt been following the news closely for the past few months. As soon as word hit that the Office of the Superintendent of Financial Institutions (OSFI) would be introducing new mortgage rules at the start of 2018, people started scrambling to understand what this would mean for them and their home purchases.

 

Now that January is here, and the new mortgage regulations have been implemented, you may be feeling more confused than ever. Read on to learn more about the new mortgage rules introduced on January 1, 2018, and how they might affect you this year:

 

What Are The New Rules?

There are a number of changes but the one garnering the most attention, and the one that will affect the most people, is the introduction of a stress test for all mortgage applicants. Now, regardless of the size of their down-payment, home buyers will have to show that they can afford their mortgage payments should interest rates increase. Under the new mortgage “stress test”, potential home buyers will need to qualify for a mortgage at a rate either 2% higher than the mortgage rate they qualified for, or at the Bank of Canada’s ‘benchmark’ rate.

 

Why Are The New Rules Being Introduced?

While taking into account the rapidly rising prices seen in the Canadian real estate in the past few years, the new rules are aimed at cooling the housing market and keeping things under control. In the past decade, Ottawa has made six regulatory changes to the mortgage market in an attempt to limit the amount of debt taken on by Canadians and financial institutions in Canada.

 

Who Will Be Most Affected?

The new mortgage rules will likely affect around 100,000 Canadian home buyers, as well as those looking to refinance their mortgages in 2018. Home buyers will have less purchasing power than they would have done before the rules were implemented on January 1st .This could mean that home buyers will have to settle for a less expensive home than they had originally anticipated, or will have to wait to save up a larger down-payment. Homeowners looking to refinance their mortgage in 2018 will have to qualify according to the higher stress-state rates rather than the actual mortgage rate. This means that homeowners may have to settle for a smaller mortgage.

 

The team at Capital Mortgages happily extends our services to help you understand the 2018 mortgage rules and how they will affect you, your family, and your finances. We have summarized the new rules as best we can in this blog post for you but, should you have any further questions, please do not hesitate to reach out and speak with one of our experienced mortgage brokers today.

 

Capital Mortgages specializes as a service-oriented brokerage that prides itself on integrity and maintaining a service level second to none in the industry.

Refinancing Your Mortgage – What You Need To Know

There are a number of reasons why you might consider refinancing your property. One of these could be to capitalize on the equity you’ve built up in your home. For example, using the equity in your home can be a lower cost way of accessing funds than taking out a traditional loan. To learn more about whether refinancing could benefit you, we’ve gathered together some important information on the ways in which a refinance can be used:

 

Take advantage of low interest rates

Over the years interest rates can fluctuate and, since the time you took out your original mortgage, the interest may have moved. Through refinancing, you are able to take advantage of these new, potentially lower, rates and lower your payments.

 

Consolidate debt

If you are burdened by large monthly payments on multiple high interest credit card debt, you can refinance your mortgage to consolidate your debt into your mortgage at a lower interest rate, thus allowing you to save money and increase your cash flow.

 

Combine multiple mortgages into one

Paying various installments for multiple mortgages can be stressful. With refinancing, you are able to consolidate these mortgages into one with a fixed interest rate and possibly a longer repayment duration.

 

Access the equity in your home

An added bonus of home ownership is that you have access to financing at more competitive rates than unsecured loans or lines of credit. You can use the equity in your home to pay off debts, free up an amount of cash to do some home renovations, buy an additional property, invest in stocks, or for university tuitions. Since a mortgage is a secured loan, the interest applied is considerably lower than that of an unsecured loan.

 

If you would like to learn more about mortgage refinancing, please give the team at Capital Mortgages a call today. By carefully studying the status of your current mortgage and comparing it to your income and other debts, we can help you pick the refinance solution that best suits your current financial status.

Capital Mortgages specializes as a service-oriented brokerage that prides itself on integrity and maintaining a service level second to none in the industry.

What to do after a major storm damages your property

Are you wondering how to deal with a fallen tree that has damaged your home or property after a major storm? Here are some things to keep in mind:

Does Your Insurance Cover It?

Most home insurance coverage includes damage that results when your property is struck by flooding or a severe storm. It’s likely that you will be covered if a tree falls and damages any part of your house. If the insurance company finds that the tree was unhealthy or damaged before the storm struck, then you may not be covered. Moreover, if they could prove that the tree was weak and just about to fall, then it’s unlikely that you will be paid for compensation.

The Insurance Bureau of Canada recommends you check in with your insurance provider in getting the exact details of what’s included and excluded in your policy. If a tree falls on your property but doesn’t do damage, then it’s the homeowner’s responsibility to hire an arborist for the tree removal.

Wind Damage

It’s a good idea to do a quick inspection of the surrounding trees to check and see if they’re weak or about to fall. You also have the option to contact the city and have them carry out a tree inspection in your area. Remember to ask for permission from the municipality if you need to chop off branches from large-sized trees.

Neighbour’s Trees

For concerns regarding your neighbour’s trees and how it could fall and damage your property, it is best to call the city and discuss due to legality. Tree cutting companies may cut trees if they are found to be interfering with the power lines. If a tree falls and hurts an individual, you should immediately call emergency services.

The Aftermath Of A Storm

Once a storm has passed, it’s time to assess the damages. When you find that your house has been damaged by a tree, the first step is to determine the tree’s owner. If the tree is on city property, call and report it in. If it belongs to you or your neighbor, call an arborist to have it removed. Then call your insurance company and file a claim. Make sure to take photos and videos for visual evidence. Fallen trees that block the roads should be reported immediately. Trees that have fallen on power lines should be reported as well.

Renew your Mortgage with Ottawa Mortgage Broker: Capital Mortgages

Buying a Second Home: Are You Ready?

Buying a Second Home: Are You Ready?
Buying a Second Home: Are You Ready?

Life is pretty good when you are successful and making good money. Your mortgage isn’t even an issue anymore, your income is steady, you have great credit, and you are leaning towards exploring profitable opportunities in the housing market. You have the cash and the credit so why not take a little risk if it means increased financial gains?

If you want to expand your real estate portfolio, purchasing a vacation home or investment property may be something you are interested in pursuing. But making this type of decision should be done with serious consideration. Ask yourself a few questions first before spending your money.

HOW TO KNOW YOU’RE READY TO BUY A SECOND HOME

If disposable income describes your financial situation, then you are ready. Instead of spending your extra cash on frivolous purchases, you rather invest in real estate

Beyond money, age plays an important role when buying a second home. When you are older, you have more free time to devote to a second home.

WHAT TO CONSIDER BEFORE BUYING A SECOND HOME:

The level of commitment?

You must analyze your personality realistically. Do you have any personality traits that would make such a purchase more of a liability than an asset? Purchasing a second home will give you responsibilities that you may have no desire to for.

How will this impact me financially?

Money available to spend doesn’t necessarily mean money to blow. So many expenses come with owning a second home, and you don’t want all your money tied up in something that it can’t easily be pulled out of. A turnkey may be your best option, low cost that generates consistent cash flow.

The Cash You Have Available

Can you handle putting down at least 25 percent of the purchase price for a second home? Anything can occur, and you don’t want to be financially strapped when an emergency occurs.

Maintenance costs are always that cost that sneaks up on you, growing more expensive as time goes by. Factor in all cost so that you know what you are getting yourself into.

What are the tax implications?

Nobody wants trouble with the tax man – different rules apply for second homes and vacation homes, Seek the counsel of your mortgage broker to understand better the tax implications of buying a second

THE NEIGHBORHOODS AND AREAS FOR YOU

Location plays a significant role in any real estate purchase. It affects both the price you pay for your home the selling price you can ask for if you chose to sell. Pick a location that will benefit you in the long run.

Renew your Mortgage with Ottawa Mortgage Broker: Capital Mortgages

These Numbers Are The Key To Understanding Your Finances

If you are interested in improving your financial well-being, it can be as easy as understanding some basic numbers. In fact, just a few sets of numbers are the key to understanding your finances today and in the future. Let’s take a closer look those numbers.

1. Net Worth

It’s simple to determine net worth. All you need to do is subtract debt from assets. For instance:

Assets

* Autos* Home* Home furnishings* Personal belongings* Savings account* Checking account* Investments (stocks, bonds, etc.)

Debts (Liabilities)

* Car loans* Home mortgage* Credit card debt* Student loans* Balance of any loans that remains unpaid

Once you discover net worth, it might be a negative number, and this is not good. To improve net worth you have two basic options:

* Increase assets* Lessen debts

2. Equity in the Home

Equity is one of the most important assets you can have. To determine equity, subtract the home’s current value (including appreciation and home improvements) from the mortgage balance. Here is an example. You owe $68,000 on a home and today it would sell for $145,000 (present market value). Subtract 68K from 145K and you get 77K. The home’s equity is an asset of $77,000. In some cases, you could have an “underwater mortgage” and this means you owe more than the property is worth.

To improve home equity, try these strategies:

* Upgrade the kitchen* Upgrade the bathrooms* Do your own improvement work to help increase greatly a home’s value.

3. Gross Earnings

If you receive a regular paycheck, gross income is the amount you’re paid before all payroll deductions. This is the number you must enter on your income tax forms each year. It is not the number to use when you make out a household budget. Instead, you will need to use another number.

4. Take Home Pay

This is also called net income and is the amount you end up with each payday. This is the amount you have to pay bills and all other expenses, and the figure you need for determining the household budget.

5. Monthly Expenses

Everything you must pay out each month is your total monthly expenses. It includes food, utilities, clothes, transportation, housing, and entertainment. This number is so important because you have direct control over personal spending, and it’s a good place to start when it comes to improving your financial picture.

6. Rate of Inflation

Inflation rates today have a huge effect on the future. You need to account for this number when you figure out a plan for the future and retirement. Remember, as inflation goes up, buying power goes down. The average inflation rate has been about three percent annually, but this can vary all the way from ten percent to almost zero.

When you plan for retirement, be sure to include an estimate of inflation over a period of years. Perhaps the best strategy is to overestimate, to ensure you’ll have enough for those golden years.

 

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

Solutions for getting through tough financial times

Economic stresses can happen to the most careful individuals. You may think
you are prepared by planning, budgeting and saving, but unexpected issues can
arise for various reasons. Identifying areas where you are the most vulnerable
and making contingency plans is one aspect of the solution, but sometimes
these efforts are inadequate. You need to know what to do if there is a loss of
employment, health issues or a divorce. Here are some solutions for getting
through tough financial times.

Even before you try to find solutions, you must have the knowledge about what
your economic picture is under normal times and whether or not you are over-
extended in the event of a fiscal emergency. Good record-keeping is always a
smart approach to financial issues. If you can avoid the tough times, it is better
than finding a solution after the fact. However, here are some pointers for when
you have financial problems on the horizon.

Ask for help as early in the process as possible. Don’t let yourself be stopped
by embarrassment or nervousness about approaching your mortgage company
or insurer. Delay can affect your credit rating and can cause negative balances
to grow quickly. Mortgage lenders understand that helping the borrower to get
through the stressful situation is preferable to having a defaulted property on
their books.

When you reach out to the lender, be sure you have the entire picture of your
financial situation. You should be prepared to explain what event(s) have created
the crisis. Have a detailed budget that shows your income and expenses,
assets and a current credit report. If you have alternative income sources, they
can be important. You should also explore any insurance coverage that might be
available on credit cards or mortgages.

Bring any documentation that applies to your situation. You might have a letter of
dismissal, insurance policies, fees on the property or documentation about your
home ownership. Save time by having these available for the lender or insurer.

Be brave about asking questions. You may not know all the options available to
you, but you can ask questions of the lender or insurer. You can ask for solutions
such as deferring payments, capitalization of past due amounts or increasing
the mortgage amortization term. There are many ideas which may apply in your
particular situation. Finding the best solutions for getting through tough financial
times will require some determination on your part.

Ottawa Mortgage Refinance Your Property

Why You Should Refinance Your Mortgage

In hard economic times, you may be looking for ways to cut costs, but saving money is not the only reason why you should refinance your mortgage. You can use cash freed up to build a retirement account, do a remodeling project or send your child to college. You can take advantage of built up equity to buy a boat or car, or to take that vacation you have been wishing for.

One of the reasons for a refinance is to gain a sizable amount of cash from the equity that has been built up over the months or years. The cash that is available can be used for any number of large projects or purchases. For example, you may want to send a child to college or renovate the home itself to make it more functional or attractive. You may want to purchase a vehicle or a boat. In effect, you are giving yourself a loan.

If you are trying to cut monthly costs related to housing, refinancing the principal amount is a good way to do so. There are two ways in which the monthly payment can be reduced. A refinance can spread the remaining principal balance over a longer period. If you are able to negotiate a significantly lower interest rate, the monthly payments will also be reduced. You could keep the payoff amount the same as the existing loan and pay less every month.

Locking in a lower interest rate is an advantage in itself. Interest rates may be significantly lower than when the original loan was acquired. You might be able to get a better rate because of an improved credit history. The switch from a variable rate to a fixed rate may be a wise financial move for you. Stability in the payment amount will benefit in budgeting and planning.

Consolidating high interest rate loans into a lower rate home equity loan is an excellent reason for a refinance choice. Credit card interest rates tend to be much higher than mortgage interest rates. By rolling these high rate loans into a home loan, you could save thousands in interest payments over the loan period.

The reasons why you should refinance your mortgage are varied. The main feature may be that you have access to lump sum amounts or to more working capital each month. When you are proactive in managing your finances, you are able to enjoy the possessions that you have readily.

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

Stress Test Your Mortgage to Ensure Your Housing Costs Will Remain Affordable

For those who are taking out a mortgage for the first time, knowledge of the effect of changing mortgage rates may be very limited. About one-third of first time borrowers expect the interest rate to remain the same over the next five years. Unfortunately, this expectation can result in loss of the home with even a small increase in the rate. Here are some tips to stress test your mortgage to ensure your housing costs will remain affordable.

A stress test tool is useful in doing the calculations for you. The components that make up the results include the original mortgage amount, today’s rate, the future rate estimate, the amortization in years and the term in months. The tool calculates the current monthly payment. The stress is applied to determine what effect the increased rate would have on monthly payments.  Check out our cool tools at http://capitalmortgages.com/resources/mortgage-calculators/

Experts estimate that about half of Canadian home buyers could handle a 200 point increase. For many others though, they either don’t know what the effects would be, or are likely to be unable to handle the increased cost. Educating yourself on the cost of a rate increase is just the first step in determining a plan of action. This is particularly important if you intended to refinance the existing loan after five or more years. Assuming that the rate would not go up during that time is short-sighted.

There are some steps that you can take to avoid losing the home due to the inability to afford a rate increase. For example, you can inflate the loan payments to pay down the principal faster at the lower rate. Even a few dollar extra every month is certain to drop the balance significantly during the early months. Another suggestion is to pay down the other financial obligations so that you can afford the increased payments when they hit.

The goal is to be aware of the need for additional funds as required by the terms of the present home loan. In most instances, approval for a refinance will depend upon the relationship between housing expenses and total income. Total housing costs should not exceed one third of the take-home income.

Stress test your mortgage to ensure your housing costs will remain affordable. This should be done before taking out the loan, optimally, but if you already have a variable loan at today’s low rates, you should plan ahead. Ideally, you will be prepared for the almost certain upward trend in monthly payments that will happen with a rate increase.

Need a stress test done by a qualified Mortgage Broker?  Give us a call today.