Zero down mortgages still exist!

Although zero-down mortgages - or those that don't require a down payment - technically went by the wayside when the Federal government tightened mortgage rules back in 2008, lenders and homebuyers have found ways around the rule with "cash back mortgages".
These products are reserved for those homebuyers who have great credit and income, but have found it difficult to save the $15,000 to $20,000 required for a minimum 5% down payment. In these situations, the lender will give the client 5% cash back on closing. When the down payment is requested by the real estate lawyer, the lender will provide the funds which will then be given to the vendor.
Of course, the cash back doesn't have to be used towards the down payment of a home. It can be returned to the buyer, provided they already have a down payment, to put into savings, towards new furniture, or any renovation projects they may need to tackle.
There is a catch for the convenience, however. These mortgages come with a higher interest rate than a typical five-year mortgage - but given today's low interest rates, they're still low compared to historical averages. Right now, you could probably get a cash back mortgage for around 5.29%. To qualify for these mortgages, you also have to have decent credit - sometimes as high as a 680 Beacon score. And, of course, with no down payment, your monthly mortgage payments will likely be a little higher than if you had saved the 5% down yourself.
Despite the drawbacks, this is still a great tool for someone who is looking to get into the real estate market, can afford the costs of homeownership, but was just having a bit of trouble saving for a down payment. If this sounds like you, contact me for more details!

A Break from Mortgages Thanks to General Motors

Lately I’ve been hanging out on Twitter and meeting some amazing ladies in some very amazing jobs.  So when the delightful @AdriaMacKenzie from General Motors announced the Cruze City Challenge, the words, “I’m in” were out of my mouth before a thought went through my head. 

With the forms filled out, the date assigned and the co-driver chosen I finally hit the panic button.  I thought I should at least know something about this car.  I looked it up on the website.  I liked the price, $15,000, and suited my budget.  Good gas mileage, 10 air bags, and it comes in red.  I was good to go. 

I arrived at the Challenge very nervous about the next few hours.  I knew I would have an iPad with my instruction (no clue how that worked) and all I had to do was pick the challenges I thought I could finish in my allotted time.  The first thing I heard when I arrived was “wow, someone close to my age” from the clearly middle age guy in charge of the cars.  Okay, this was going to be trouble.  I went inside and got my very cool jacket, instructions on the iPad and the key to my.... yes...wait for it.... RED CAR!!!

I headed out with my driving partner, a friend who knew the city well and we started knocking off the challenges.  We tweeted the challenges and people helped us out.  We need to wash a window, we tweeted, and someone tweeted back where they saw a window washer.  We rushed over and helped them out.  We need a postal code, we tweeted, and we got it.  We needed a newspaper, we tweeted, and we got it.  We needed to answer a trivia question, we googled, we tweeted and we got it.  All the time I had my head buried in the technology Mr. Helper played with the Stereo, the buttons, revved the engine, all the things you would expect an engineer to do.  (Do you know you can’t open the trunk when the car is moving?  Just Sayin)

The one challenge I had written off was the lurking request to go into a coffee shop and convince the staff to let me make a cappuccino for a stranger. Oh and the Chevrolet Logo had to be in the foam.  Yea right!  With nothing left on the list and ½ hour to spare I decided to tackle the video challenge.  Of course I picked the coolest coffee place in the heart of Scott Pilgrim territory, The Aroma Cafe, at Bathurst and Bloor.  The delightful staff was so much fun.  They let me make a cappuccino and even came up with some inventive methods for putting the logo in the foam.

So here’s to all the fab tweets, @LoireTaylor, @mcpolitics, @those2girls, @RobynConnolly, @jcmortgages and all the rest that stuck with me for 2 hours last night.  Thank you @AdriaMcKenzie and @GMCanda for all the fun.  The tasks were managable, we won, and the car was red!!

TD's Collateral Charge

This week TD is changing the way they register their mortgage charge. As of October 18, 2010 mortgages will now be registered as a collateral charge. TD believes that this will be a positive change for their consumers. I am not certain that I agree. Lets take a quick look at the facts and the pros and cons. Facts: Mortgage will be registered as a collateral charge. Mortgage can be registered in an amount equal to 125% of the value of the property. Pros According to TD's information releases: The flexibility to register the collateral charge for a higher amount than the current loan agreement so that if a customer wants to increase their mortgage in the future they can reuse the existing collateral charge and not incur any new registration fees The flexibility to switch to another lending product by using the existing collateral charge without incurring registration fees. Cons: Well, come maturity a borrower will no longer have the option to "switch" their mortgage to another lender. The charge will have to be discharged in full and a new mortgage placed. This means it makes it much more difficult and costly to move a mortgage at renewal. Depending on the wording of the collateral agreement, all of a customer's credit facilities at TD may be covered by the charge. This could mean that if a borrower wanted to discharge the mortgage they may also have to pay out other TD credit items such as Visas etc. Talk to your TD rep to get their take on what this means to you and your clients.

A handy financial resource

If you'd like to "know your stuff" before heading into a mortgage broker or financial planner's office, you may want to check out the Financial Consumer Agency of Canada's consumer publications. The government body has done a great job of outlining basic financial topics - from how to borrow on home equity to how to develop a household budget. It also offers a six-part section on credit cards - that addresses how to save with credit cards as well as how to shop around for a credit card - runs down the various mortgage products on the market place and tackles saving and investing topics. While meeting a mortgage broker in person is probably the best way to find the financial products that best suit your particular needs, it never hurts to head into a meeting with a basic understanding of your options. The FCAC's publications will provide you with the background you need to navigate the discussion in the direction you'd like it to go.