Archive for the ‘mortgage’ Category

Self Employed Canadians Looking For a Mortgage

Tuesday, October 8th, 2013

Home Owner pictureWhile freelancers, contractors, entrepreneurs and small business owners are considered an excellent and reliable customer group, it’s not always easy for someone who is self-employed to get mortgage financing. Salaried employees prove their income with their T4 slips. The self-employed on the other hand have a much harder time proving their earnings because they use accounting techniques to report lower income so that taxes are reduced as much as possible.  This can make it harder to prove to lenders that they can afford to make their mortgage payments.


That’s why professional advice is so important. Based on your situation, I will advise you on the type of information you need to present to improve your options and get the best possible terms. For instance, by showing the following I can paint a picture that will mitigate lender risk:

  • Documentation to prove income – tax assessments, tax returns, financial statements, contracts
  • Proof of a registered or incorporated business
  • Good cash flow
  • That you are up to date with your property and income tax payments
  • Strong credit history
  • Solid net worth
  • Savings
  • Long job tenure / residential history, and
  • A significant downpayment.


I also have access to lenders that are not federally regulated and take a less stringent approach when it comes to self-employed borrowers. In fact, your mortgage broker has access to over 50 lenders, including major banks, credit unions, trust and insurance companies, and other national, regional and private lenders.


Many mortgage product options are available for Self-employed individuals also. Recently I helped a Self-employed customer find a near-perfect home in Cochrane. Well, actually the realtor found it, but I gave the realtor a valuable tool that expanded the home search criteria. The tool is a mortgage product called Purchase Plus Improvement. It allowed the customer to add a finished basement to a home that otherwise would have not met their criteria. All the work was done and paid for with inexpensive mortgage money!


Most of all, working with me allows you to delegate the many time-consuming and frustrating tasks associated with securing a mortgage, so you can stay focused on running your business. Also, I will typically work around your hectic schedule.


If you are self employed, you already know it makes sense to go to a specialist to get the job done. Call me and I’ll get started right away!

Jay Meakin

Mortgage Associate – (Mortgage Intelligence)
1535 – 19 Street NW
Calgary AB T2N 2K2
P: (403)861-7399
F: 1-(888)651-4550

We hope you enjoyed this weeks guest blog post courtesy of one of our Home Sweet Home Team preferred mortgage specialists. If you already have qualified for a mortgage and are interested in buying a Calgary home please Contact Us today or post the features that you are looking for in a home on our Post Your Wants Page and we will find you your dream home!

Home Sweet Home Team



Canadian Fixed Mortgage Rates On The Rise

Tuesday, June 11th, 2013

After months of warning, Canadian Fixed Mortgage Rates are set to increase from the record low rates they are currently at. Mortgage specialists are recommending that you lock in at these low rates while you still have a chance!








The spike in mortgage rates is a response from lenders to the Canadian Bond yields rising. Despite the rise in fixed mortgage rates, variable mortgage rates will remain the same. It is expected that the variable mortgage rate will remain the status quo going in to 2014. The hike in fixed mortgage rates are not anticipated to be huge, however, it will increase a few points.

Speak to your preferred mortgage broker about locking in to your mortgage rate before it’s too late!

If you would like more information about home financing or any information regarding Calgary properties please Contact Us today!



Why Homebuyers Should Go Short On Amortizations

Monday, April 29th, 2013

With a mortgage, there are many options for you depending on your financial situation. Both variable and five-year mortgages are now available for less than 3 per cent, but those low rates won’t last forever.

Finance Minister, Jim Flaherty, decision last year to tighten the rules for mortgage insurance by reducing the maximum amortization from 30 to 25 years was the right one for Canadians to reduce household debt.

Some critics argued that this measure brought about the slowdown of the real estate markets due to the hike in minimum monthly payments for an insured mortgage. Many Canadians who would have bought homes could no longer qualify under this new rule.

However, let’s look at the numbers to see how this would help all the Canadians that are planning to take advantage of today’s low rates by buying a home or renewing a mortgage:

The average price of a home sold in Calgary in the month of February 2013 was $457,111. Assuming the average downpayment for a home would be close to 20 per cent, that would mean a $365,000 mortgage.

At a variable-rate mortgage of 3 per cent interest with 25 year amortization, your monthly payments would be $1,727.35 with a total of $518,203 paid including $153,203 of interest over 25 years (or 300 payments). However, if we switch to a 20 year amortization period, our monthly payments would of course increase to $2,020.89, but our total overall payments now total $485,013 with only $120,013 of interest payments. That’s a savings of over $33,000 in interest costs!

Do your own calculations using my Mortgage Calculator and you will see how much money you can save just by choosing a lesser amortization period. Even if you have to renew the mortgage later on, you will have a smaller balance to deal with. As we’ve seen, a lot can happen with interest rates in that time. For example, within the past decade, the prime rate (which drives variable-rate mortgages) rose by as much as 1.75 per cent in less than one year and term mortgage rates have varied even more.

So if you are looking for a new mortgage or renewing this year, choose the lowest amortization period you can afford and save your money!


5 Questions to Ask Your Mortgage Broker

Wednesday, March 6th, 2013

Getting financing approval from a mortgage broker can be one of the biggest roadblocks a first-time home buyer has to go through to become a home owner. It’s not always easy to find the right mortgage broker; a mortgage broker that is trustworthy, ethical, and is willing to work towards your best interest.








To help you in your search to find your preferred mortgage broker we have 5 questions that you should always ask your mortgage broker.

1. How long have you been in the business? (Ideally, at least two to five years)

2. How many lenders does your team have “top-tier status” with? (Preferably six to seven or more)

3. Is the rate you’re quoting me the lowest rate for that term on that lender’s broker rate sheet? (If not, why not?)

4. How much volume did your team do last year? (Ideally $100-million-plus)

5. Do you do over 50 per cent of your business with one lender? (If so, why?)


If you have more questions about mortgage brokers or acquiring financing to purchase a home, please contact us today. We can refer you to one of our preferred, highly experienced mortgage brokers that will help you along with the process.

Make this mistake and you’ll lose thousands when refinancing your mortgage

Thursday, January 10th, 2013

I had just borrowed about a quarter-million dollars and my question was simple: “How do I pay you back?”

The woman on the other end of the phone, however, couldn’t tell me. Ten days had passed since I signed the papers to refinance my home and, with the holidays approaching, I was worried my first payment would be late. She tried to soothe me with perhaps the most misunderstood phrase of the refinancing process: “Don’t worry. You get to skip a payment.”

Had I listened to her, it would have cost me thousands of dollars. And if you are one of the millions of homeowners who will refinance in 2013, it could cost you, too.

If your new year’s resolution is to save money or get control of the family budget, refinancing remains a really good option. But the idea that “skipping” the first payment can be pain free, financially speaking, is a myth, repeated over and over by loan officers like mine. Sometimes they are lying, sometimes they are misinformed and sometimes they are just trying to get an annoying borrower like me off the phone. But with rare exception, they are giving bad advice. (News flash: Whenever a bank seems to be doing you a favor, it probably has a hand in your wallet.)

Real estate transactions are already confusing enough. There are questions surrounding when you make your last payment on the old loan, when you make your first payment on the new loan, how many extra days of interest you pay toward both your old and your new loan, and when you are paying for both loans. We’ll get to those tricky issues in a moment, but the priciest mistake you might make in a refinance is also the simplest one to correct.

You’ve heard this before, but this time, it’s probably true: mortgage interest rates are at historic lows, and there may never be a better time to refinance. It’s hard to imagine rates going any lower than the 3 percent range they are at now, but it’s easy to imagine that, at the first signs of a real economic recovery or real inflation, they will climb sharply during 2013. The low interest rates that the Federal Reserve has imposed to boost the economy have been punishing for many, notably savers, who can barely earn 1 percent interest on their bank accounts and certificates of deposit. The one perk for consumers from the Fed’s interest rate policy is the ability to get cheap home and auto loans. If you haven’t refinanced your mortgage in the past 24 months or so, you are missing out.

Fortunately, many American homeowners have gotten the message. According to the Mortgage Bankers Association, mortgage holders engaged in $1.3 trillion worth of refinancing in 2012. In fact, more than four out of five new mortgages in 2012 were refinanced loans, not home purchases.

I wish there were a way to know how many of those borrowers chose to skip that first payment.

‘Can I get that in writing?’ ‘No’
My loan officer was lazy, I believe, and — knowing that my loan had closed and all the commissions were guaranteed — just wanted me off the phone as soon as possible. My call was unusual. I am always overly cautious when I set up any kind of new loan payment, as the chances for error are great: a wrong loan number on a check, a bad address, etc. So I always make the first payment early to make sure nothing goes wrong. That good habit proved profitable this time.

When I signed my loan papers, there were no payment instructions in my closing documents (not terribly unusual). My loan officer said I would receive payment coupons later. But when 10 days passed, and I heard nothing, I called. She sent me to the bank’s customer service line, where I was informed that there was no record of my loan. (Did that mean I didn’t have to pay it back? Sadly, No.) Customer service transferred me back to my loan officer. She assured me that their computers would catch up to my urge to pay the loan, and I’d get payment information soon. Incredulous that they seemed not to want my money, I persisted. She tapped a few keys on her keyboard, made me wait a minute, then told me that my loan had funded on Dec. 5, so I didn’t have to make a payment until Feb. 1.

“But my documents say repayment begins Jan. 1,” I said. “So you’re saying there will be no late fees if I don’t pay Jan. 1?”

“Yes,” she said.

“Can I get that in writing.?”

“No. I can’t do that.”

At that point, I did what any mature consumer would do: I laughed. And then I muttered something about the 100 pieces of paper they just made me sign, with innocuous documents putting the finest point on everything you can imagine, like the form I initialed in multiple places agreeing that, yes, I am known by Bob, Robert, Bobby, Robby and various other nicknames. Yet I couldn’t get the bank to put something in writing saying when I should make my loan payment?

My loan officer didn’t laugh, but eventually she put me on the phone with a supervisor who sounded very grave. She’d done additional research, she said, and found out that the reason customer service couldn’t find my loan was because it had already been sold to another bank. We called that bank together and found out my loan actually funded on Nov. 30, so my first payment was indeed due on Jan. 1. And I would have been liable for about an $80 late fee if I had listened to my loan officer. The manager profusely apologized.

Steep penalty anyway
But I’m not writing to warn you about late fees. There’s a much bigger culprit here you have to worry about. Had I followed my loan officer’s advice and skipped a payment, even if the bank waived the late fee (which the manager said was likely), I would have paid a steep penalty anyway. You’ve probably guessed the punch line: there’s no such thing as skipping a payment. In reality, homeowners are borrowing that money and extending the loan term for an extra month. The payment will be tacked onto the end of the loan, with interest. How much? If it’s a conventional loan, that’s 30 years’ worth of interest. Effectively, you are borrowing one month’s payment for 30 years. Ouch!

“Skipping is a misnomer. A better description would be ‘deferring with additional interest added,'” said Jack Guttentag, a professor emeritus at the University of Pennsylvania who also runs a consumer education website called

Just how much extra interest can skipping that first payment cost you? There are too many variables to create a decent rule of thumb. But here’s an illustration from Guttentag’s site with deliberately round numbers. Skip the first payment of $500 on a $100,000 loan at 6 percent, and you will pay an additional $2,993 in interest during the 30 years.

Forget the $75 late fee. That’s real money. As Guttentag puts it, “a payment that is miniscule to one is a fortune to another.”

Some loan officers say they only won’t offer the “skip-a-payment” option unless the refinance closes toward the end of the month, when the homeowner might have trouble coming up with the extra cash for closing costs and a fresh mortgage payment close together. Others say they offer it all the time.

To be clear: Most borrowers don’t actually complete their 30-year loans before moving or refinancing, so few would end up paying that high a penalty. Also, it’s important to note that my bank didn’t even hold the loan, so they weren’t profiting from the “skip-a-payment” advice. I believe this is usually a lazy mistake, not a greedy one. Still, the basic truth holds. Don’t be tempted to skip a payment when you refinance unless you really, really need the cash for some unusual expense (Christmas credit card bills are probably not the best reason.)

Skipped payments are not to be confused with other loan closing related interest payments, including:

*Your last payment on the old loan. You can’t skip that, either. If your loan closes near the end of the month, you should still make the scheduled payment to your old bank. Why? Interest is actually paid in arrears, meaning you pay at the end of the month the cost of borrowing the money for that month. It’s confusing, because mortgage payments are really two payments at once — last month’s interest and next month’s principal. To keep it simple, if your loan closes on the Nov. 30, you will be paying November’s interest with your Dec. 1 payment, along with December’s principal. You won’t need to make the December principal payment if you refinance on Nov. 30, but most folks pay far more in interest than principal because they are early in their loan’s term, so the overpayment won’t be large. Just pay it to avoid late fees, and enjoy any refund that comes your way.

*Pre-paid interest. When your loan closes in the middle of the month, your new bank will make you pay up-front (as opposed to in arrears) daily interest for the remaining days of the month. If you close on the 20th, you’ll pay 10 more days of interest payments. That’s OK, it means you won’t owe the money on the back end of the loan.

*Money for nothing: The three-day (or more) overlap. There’s an odd quirk in most refinancing deals in which there are several days when the homeowner will be paying interest on the same loan to both banks. In most states, consumers have a three-day “right of rescission” after signing their refinancing papers, meaning they can cancel the new loan if they get buyer’s remorse. Such regret laws are very consumer-friendly and are necessary because of nefarious loan officers who tricked consumers into bad deals in the past. But, in this case, the consumer-friendly law is also costly, as it means both banks have liability for the loan during that rescission period, and are both entitled to collect interest. Note: The regret period is usually three business days, so if your closing stretches over a weekend, the double-interest period can be even more costly.

It’s important to keep all these quirky, refinance-related interest payments straight when talking to your loan officer, so you’ll know what to do when he or she suggests you can skip a payment. None of this should scare you away from refinancing, which is really the only way you can make the recession work for you.

But remember, you are refinancing to save money, and you probably shopped around trying to save $50 here or $100 there on closing costs; don’t lose thousands of dollars because of one false move after closing.


Do You Need a Co-signer or a Guarantor

Thursday, September 29th, 2011

At some point we all need someone to lean on. For a few mortgage applicants, that someone is a co-signer or guarantor. If you’re expecting to use someone else to help you finance your home it’s important to be aware of the differences between a co-signer and a guarantor so let’s clear those up.

Despite the fact that people often use both terms interchangeably they actually have very different rights and responsibilities attached to them. A co-signer is viewed as a co-owner even though they won’t be the one making the payments. This is because the co-signers name also appears on the title holding them equally accountable. A guarantor, on the other hand, basically acts as the payment enforcer and while they will also be held liable should the applicant default they don’t appear on the title.

You may be asked to use a co-signer in order to cover a gap in income. Remember that your co-signers name will also appear on the title so they will need to sign all of the mortgage documents as well. Their name will remain on the title until you are able to qualify for the mortgage on your own.

Guarantors are called upon when the applicant has a qualifying income along with credit issues. This means that the guarantor’s credit will need to be checked. The lender will also ask this person to disclose their assets, liabilities and income.

If you have any concerns about qualifying for a mortgage please contact yourbank/mortgage broker . I know that adding a co-signer or guarantor to your mortgage isn’t always ideal so let’s see if together they can devise other mortgage strategies to meet your needs.

Banks bump up mortgage rates

Monday, March 29th, 2010

Mortgage rates have begun to rise from their record lows, with news Monday that several Canadian banks are increasing several fixed mortgage rates by up to 6/10ths of a percentage point.

The biggest jump is attached to the popular five-year fixed closed rate, which moves from 5.25 per cent to 5.85 per cent at Royal Bank, TD Canada Trust, and Laurentian Bank. That’s the posted rate, which is routinely discounted by the big banks.

RBC’s new discounted rate for the five-year term also rises 6/10ths of a percentage point to 4.59 per cent. TD’s rises the same amount to 4.55 per cent. The discounted rate at Laurentian moves up to 4.54 per cent.

How much difference will that make? A $200,000 mortgage amortized over 25 years costs $1,051 a month at a rate of 3.99 per cent. At 4.59 per cent, that jumps $66 a month to $1,117.


Mortgage rate increase: Is it time to lock in?

The banks also raised their three-year and four-year fixed closed rates. The posted three-year rate at Royal Bank and Laurentian climbs one-fifth of a percentage point to 4.35 per cent, while the posted rate at TD jumps 4/10ths of a point to 4.70 per cent.

The posted four-year rate at all three banks jumps 4/10ths of a percentage point to 5.34 per cent.

Other banks are expected to follow suit. The new rates, effective Tuesday, represent the first hike in Canadian mortgage rates since last October. The posted five-year rate is now back to where it was for much of last summer.

New mortgage rules that go into effect next month require borrowers to qualify at the five-year rate, rather than the old three-year standard, even if they are applying for a variable rate mortgage.

Variable rates expected to rise soon

Variable mortgage rates, which rise in tandem with the Bank of Canada’s key overnight lending rate, are not affected by Monday’s announcement. But they are likely to be heading up soon too.

Bank of Canada governor Mark Carney warned last week that inflation was higher than expected. That had some market watchers forecasting that the central bank could move to raise its key lending rate as early as June. The possibility of an earlier rate hike sent bond yields up, and that appears to have prompted Monday’s mortgage increase. Fixed mortgage rates tend to move higher when long-term bond yields rise.

The key rate has been at a rock-bottom 0.25 per cent since April 2009 to help the economy recover.

A report out Monday from CIBC World Markets said rising rates shouldn’t be enough to derail the stock market rally — pointing out that the market is historically strong six months before and after rate increases.

A survey released last week by RBC found almost two-thirds of respondents expected the cost of servicing a mortgage to rise this year.

Government of Canada Makes a Few Changes & A pre-approval will hold all-time low rates for up to 120 days.

Wednesday, February 17th, 2010

The Short Version

The Federal Government has taken some steps to protect consumers buying homes now so they
will be able to make payments when rates go back to their long term average of about 6%.

Highlights – Not Much Has Changed:
1. All borrowers will qualify at the 5 year rate – from 3.79% to 4.09% – which is where we
have been qualifying buyers for the last 4 years anyway.
2. People refinancing can only withdraw a maximum of 90% of the appraised value of their
home. Most of our refi’s are at 80% so this does not affect most of our clients.
3. 20% down is now needed for investment properties that are not owner-occupied. Most
clients put 20% down anyway so this does not change much for investors either.
4. Amortization period and down payment remain unchanged at 35 years max and 5% down

The Detailed Version – Government of Canada Takes Action

“Canada’s housing market is healthy, stable and supported by our country’s solid economic
fundamentals,” said Minister Flaherty. “Our Government is acting to help prevent Canadian
households from getting overextended, and acting to help prevent lenders from facilitating it.”
The Government will therefore adjust the rules for government-backed insured mortgages
as follows, and are effective April 19, 2010:

1. Require that all borrowers meet the standards for a five-year fixed rate mortgage even if
they choose a mortgage with a lower interest rate and shorter term. This initiative will
help Canadians prepare for higher interest rates in the future.
2. Lower the maximum amount Canadians can withdraw in refinancing their mortgages to
90 per cent from 95 per cent of the value of their homes. This will help ensure home
ownership is a more effective way to save.
3. Require a minimum down payment of 20 per cent for government-backed mortgage
insurance on non-owner-occupied properties purchased for speculation.

Mark noted the above in the Calgary Sun a few weeks ago. See attached.
• 5-year, fixed rates now range between 3.79% and 4.09% – the lowest in about 70 years.
• Variable rates are Prime-0.35%, or 2.25% – .35% = 1.90% AND you can lock-in at best
bank rates before rates go up. Banks lock you in at Posted – 1% = 5.65% -1% = 4.65%!

The data included on this website is deemed to be reliable, but is not guaranteed to be accurate by the Calgary Real Estate Board. The trademarks REALTOR®, REALTORS® and the REALTOR® logo are controlled by The Canadian Real Estate Association (CREA) and identify real estate professionals who are members of CREA. Used under license.