Last Week TD Canada Trust introduced additional flexible payment features that will give customers more choice and control over their lives when they really need it.
■Pay down your mortgage ahead of schedule and you may have the ability to reduce your payments later for up to 4 months
New and renewing customers who pay down their mortgage ahead of schedule may qualify to later take advantage of a temporary reduction in their regular mortgage payment amount, an option that may be helpful in the event of short-term income reduction
■Pay down your mortgage ahead of schedule and you may have the ability to take a break later for up to 4 months
By paying ahead, not only do you get the benefit of paying off your mortgage faster, you also have more flexibility and control and may qualify to take a temporary break later when you really need it. This added flexibility can make things easier in many situations such as a maternity leave, caring for a loved one or temporary job loss.
■Pay down your mortgage on schedule and you may have the ability to defer or reduce a payment later
A major event can throw anyone off track. If you've been paying your mortgage on schedule and are unexpectedly facing a major expense or an unanticipated reduction of income, at TD Canada Trust you may be able to defer or reduce one monthly mortgage payment a year up to four times during the life of their mortgage.
Interest continues to accrue during each of these events and is added to the outstanding balance at the time of each regular payment date.
ADDITIONAL INFORMATION:
Frequently Asked Questions below:
What is Skip a payment?
Customers can skip the equivalent of one monthly mortgage payment per calendar year up to a maximum of four monthly mortgage payments over the life of their mortgage (Amortization Period).
What is a Payment Reduction?
There are two types of Payment Reductions:
1. Prepaid Payment Reduction:
Mortgage customers who have taken advantage of prepayment privileges and have paid down their mortgage balance ahead of their contractual amortization schedule are eligible for a Payment Reduction. The period of time that a customer can take a Payment Reduction is dependent on the prepaid amount accumulated and the current Principal and Interest Payment to a maximum of 4 monthly payments.
2. Non prepaid Payment Reduction:
This feature applies to Mortgage customers who would like to reduce the equivalent of one regular monthly Principal and Interest mortgage payment without having to prepay. Customers can reduce the equivalent of one monthly mortgage payment per calendar year up to a maximum of four monthly mortgage payments over the life of their mortgage (Amortization Period).
What is a Payment Vacation?
Mortgage customers, who have taken advantage of prepayment privileges and have paid down their mortgage balance ahead of their contractual amortization schedule, are eligible for a Payment Vacation. The period of time that a customer can take a Payment Vacation which cannot exceed 4 months and is dependent on the prepaid amount accumulated and the current Principal and Interest Payment
Qualifying for flexible mortgage payment features
Customers must meet the following conditions and obtain TD approval:
A) Customer's mortgage and other credit must be in good standing at all times, for all features
B) Mortgage balance must not exceed the lesser of 90% loan-to-value (LTV), or the original principal amount borrowed, for all features at the time of request
C) Customers must have made additional payments by either lump sum or increased frequency to be eligible for a prepaid reduction or vacation features.
D) Must be new mortgage customers or current customers who renew their mortgage on or after January 24th
Note that customers are required to continue to pay their realty taxes and creditor insurance payments, if applicable.
Monday, January 31, 2011
Friday, January 28, 2011
A little bit more on the new mortgage rules
|
I’ve had a lot of email this week asking for clarification on the
Federal Government’s new rules surrounding mortgage borrowing in Canada.
Basically, these new rules affect you if:
a) You have, or were planning to get, a 35-year amortization. The
maximum amortization available to Canadians, after the new rules take effect,
will be 30 years.
b) You're planning to refinance your existing mortgage. Previously, you were allowed to refinance up to 90% of the value of your home. That number is now 85%. c) You were planning on acquiring a HELOC (or Home Equity Line of Credit) to complete those home renovations you've been planning. The government has announced that it will no longer insure these mortgages - meaning lenders are going to have to take on the associated risk themselves. Something they may or may not be willing to do, moving forward.
While those are the new rules in a nutshell, there were a lot of
questions left unanswered with the government's announcement.
For example, when will the new rules take effect? According to CMHC,
if you submit your application before March 18th, you'll make it in under the
deadline - even if the deal in question closes after that date. So if
you were thinking about any of the above mortgage products, now's the time to
make the move!
If you already have an existing 35-year amortization, you're not quite
out of the woods. If you plan on moving to a more expensive home in the
future - one that will require you to increase the size of your
mortgage - you won't be able to keep that 35-year amortization. If
you're able to port your mortgage and keep it the exact same amount, you can
hold onto the 35-year amortization.
As always, if you have any further questions surrounding the new
mortgage rules, please feel free to give me a call. If I don't have the
answer, I'll be sure to find it for you!
|
Thursday, January 20, 2011
Mortgage saavy - It's up to You!
I've processed a lot of mortgages in the last week. Some good, some tricky, and some were amazing. Let me tell you the story about an amazing mortgage success story not to brag because it had more to do with the client than it did with me.
Last June a young lady came to my office because she was thinking of buying a house. She had been out of university for 4 years and was working in her field of study. She was happy with her job, had decent car almost paid for, her student loan was under control and she had managed to save some money for a down payment. We filled in a basic application and I told her what information she needed to get together for the lender. A few days later I had all her information in my office and got her a very complete pre-approved mortgage. The only thing the lender was waiting to see was her offer of purchase and a copy of her MLS listing. We discussed her price range, the type of property a bank would have no trouble lending on and we discussed condo vs freehold.
Over the next several months my client's pre-approved mortgage sat in a file waiting for her to find a perfect home. Every time the mortgage rates changed we notified the lender and they adjusted her rate giving her a new extended time line to buy. The lender's policy was to hold the rate for 4 months and every time we adjusted the rate we extended her deadline. Because we had done such a good job on her pre-approval the lender was willing to do whatever it took to help the client.
This week my client found the perfect house, made and offer and within minutes of sending me her final information had a mortgage and was able to sign her waiver. No hassle, no nail biting, and no conditions. And the best part of all - a five year mortgage at 3.49%.
My point is this. If you want a perfect mortgage you need to be a perfect client. And by that I don't mean you need to have a perfectly under control life. You need to get your information organized. The more work you do up front the better your pre-approval and the less hassle you have when you make an offer.
So many times I have people tell me they had such a great experience with the financing and I always say "well, pat your self on the back because you did all the work". I am just the adviser and it's always so nice to work with someone that I can listen to and they can listen to me.
Last June a young lady came to my office because she was thinking of buying a house. She had been out of university for 4 years and was working in her field of study. She was happy with her job, had decent car almost paid for, her student loan was under control and she had managed to save some money for a down payment. We filled in a basic application and I told her what information she needed to get together for the lender. A few days later I had all her information in my office and got her a very complete pre-approved mortgage. The only thing the lender was waiting to see was her offer of purchase and a copy of her MLS listing. We discussed her price range, the type of property a bank would have no trouble lending on and we discussed condo vs freehold.
Over the next several months my client's pre-approved mortgage sat in a file waiting for her to find a perfect home. Every time the mortgage rates changed we notified the lender and they adjusted her rate giving her a new extended time line to buy. The lender's policy was to hold the rate for 4 months and every time we adjusted the rate we extended her deadline. Because we had done such a good job on her pre-approval the lender was willing to do whatever it took to help the client.
This week my client found the perfect house, made and offer and within minutes of sending me her final information had a mortgage and was able to sign her waiver. No hassle, no nail biting, and no conditions. And the best part of all - a five year mortgage at 3.49%.
My point is this. If you want a perfect mortgage you need to be a perfect client. And by that I don't mean you need to have a perfectly under control life. You need to get your information organized. The more work you do up front the better your pre-approval and the less hassle you have when you make an offer.
So many times I have people tell me they had such a great experience with the financing and I always say "well, pat your self on the back because you did all the work". I am just the adviser and it's always so nice to work with someone that I can listen to and they can listen to me.
Monday, January 17, 2011
Mr Flaherty What Are You Thinking?
Today's announced changes to the rules governing mortgage lending are just another indication of how out of touch our politicians are with reality. While I applaud any effort to create economic stability, it should be well thought out and actually have a positive impact.
Today's announcements include:
The most significant of which is reducing the available amortization period. The 35 year (and even 40 year) amortization is not the cause of household financial woes in Canada. Reducing the amortization does little to nothing to reduce Canadian debt loads. The impact of reducing the amortization period will be to simply reduce the amount of mortgage a home-owner or prospective home-owner can qualify for. This means a trickle down which will take some first time buyers out of the market and put additional downward pressure on house prices. This measure effectively penalizes those who purchased with a 35 or 40 year amortization in previous years, and therefore were willing to pay a higher amount for a home because of the reduced carrying cost of an extended amortization.
If a household is prepared to spend $1000/month on housing then that number is not going to change because of a reduced amortization. It simply means they can buy less house leaving a smaller market for those trying to sell their home, who perhaps purchased with a higher amortization. The only real impact this change has is to increase the likelihood that those that purchased at the peak with minimal equity will end up with negative equity. This does not alleviate problems but in fact causes more problems. People are more likely to ‘walk away' from an asset with negative equity in tough times rather than fight through to protect an asset with real or perceived long term value. Mr. Flaherty you are effectively jeopardizing the equity that you purport to be protecting.
To see the full announcement visit the Government of Canada's web site.
Today's announcements include:
- Reducing maximum amortization to 30 years
- Reducing Loan to Value of refinances from 90% to 85%
- Removing the ability to insure high ratio HELOCS (Home Equity Line of Credit)
The most significant of which is reducing the available amortization period. The 35 year (and even 40 year) amortization is not the cause of household financial woes in Canada. Reducing the amortization does little to nothing to reduce Canadian debt loads. The impact of reducing the amortization period will be to simply reduce the amount of mortgage a home-owner or prospective home-owner can qualify for. This means a trickle down which will take some first time buyers out of the market and put additional downward pressure on house prices. This measure effectively penalizes those who purchased with a 35 or 40 year amortization in previous years, and therefore were willing to pay a higher amount for a home because of the reduced carrying cost of an extended amortization.
If a household is prepared to spend $1000/month on housing then that number is not going to change because of a reduced amortization. It simply means they can buy less house leaving a smaller market for those trying to sell their home, who perhaps purchased with a higher amortization. The only real impact this change has is to increase the likelihood that those that purchased at the peak with minimal equity will end up with negative equity. This does not alleviate problems but in fact causes more problems. People are more likely to ‘walk away' from an asset with negative equity in tough times rather than fight through to protect an asset with real or perceived long term value. Mr. Flaherty you are effectively jeopardizing the equity that you purport to be protecting.
To see the full announcement visit the Government of Canada's web site.
Friday, January 14, 2011
The Benefits of Non Bank Lenders
If Canada's five chartered banks were the only institutions allowed to lend money in the form of mortgages in this country, rates would be sky-high, and the selection of mortgage products would be rather slim. Thankfully, we have non-bank lenders to keep the Big Banks on their toes.
While these lenders may not invest the same number of dollars in fancy advertising campaigns, they're nevertheless an excellent option for savvy consumers who are looking for a good mortgage deal.
Because non-bank lenders don't have to support the overhead costs of brick-and-mortar branches, and instead opt to go through the mortgage broker channel, they're able to offer better rates. In addition, because they're seeking to steal market share from the dominating big banks, they're much more likely to offer unique mortgage features - such as better prepayment options, flexible payment frequencies, and unique products such as cash-back mortgages - while at the same time offering a little more flexibility when it comes to clients with lower credit scores, or those that are self-employed or commission-based.
While non-bank lenders aren't considered "banks" in the traditional sense, they're still required to follow all the same regulations and underwriting guidelines as their bank counterparts. They also have access to the same default insurance options as the big banks - whether that's through CMHC, Genworth, or United Guaranty.
Not all non-bank lenders are "sub-prime" (in fact, there are very few of these lenders left in Canada), and while it's true that many of them are foreign-owned, there are many homegrown institutions here as well. Their models have seen success across the globe, and continue to thrive here in Canada.
If you're in the market for a new mortgage or a renewal, I invite you to head into your local bank branch to see what type of deal they can offer you. Then pop me an email and I'll scour the rest of the country's lenders - and likely save you a few percentage points off your mortgage
Tuesday, January 11, 2011
3 Things that affect your Credit Score that will shock you!
If you don't pay your bills you don't expect a very good credit rating. That is obvious. But what if I were to tell you about the hidden things that you get rated on. I have people sit in front of me quite often who think they have perfect credit only to hit the floor when I tell them otherwise. Here are the three most common things I see.
1) Going over your limit - if your credit card has a limit of $1,000 because you have decided you never want more access to credit then that amount and you, in a pinch, need to put something on your credit card that takes you over your limit something happens. You've been a good client and the bank allows the overage so you think "I must be okay". Well you want to watch out for this one. Once you go over half your limit your credit score changes. The credit bureau does not differentiate between a limit of $1,000 and a limit of $10,000. It only knows you are maxing out your available credit. Your contract may also be affected. Some credit cards have built in penalties for going over your limit. Over the limit automatically rates as an R2 on your bureau. It may also trigger some interest charges even if you pay it off by the due date. Over the limit can also apply to once the interest is added on. Let's say your line of credit or credit card limit is $5,000 and you have drawn down to the max. At month end the lender will send you a statement that shows your $5,000 balance and then they add on the interest you owe them and viola, you are over your limit. I see this one a lot especially on Home Owner Credit Lines. Once over the limit your interest can be affected and I've seen them jump by as much as 19%.
2) Trusting Someone Else to Pay a Bill in Your Name. You have an internet, cable, hydro bill in your name and you are sharing living space with other people who share the expense. Suddenly you graduate or whatever and you take off for Thailand and leave the final payment in charge of someone else in the house. When you come home and want to buy a car you might be surprised to find out your credit rating sucks because you have a collection. I recently had a young girl in my office who's roommates swore up and down they paid the final cable bill. After investigating she found out they did indeed pay the bill but they didn't return the cable box and so she was billed, bill not paid because everyone had moved and so the bill went to Collection.
3) Permission for Bad Behavior. All too often I tell someone they have missed a payment or they've been late on a payment only to hear them tell me they phoned the lender and made arrangements to pay late or skip the payment in question. The person "you spoke to" could be just about anybody in the bank. Perhaps you called after hours and the cleaner picked up the line. Okay that's a joke but seriously. The minute we hear it's okay we breath a sigh of relief and go on our merry way. Whenever you make an arrangement with a lender make sure you ask how it will affect your credit rating. Get everything they say in writing. Better yet - don't ever do it.
That's my three tips for today. Over the next little while I will give you some other tid bits of info about your credit score. You may want to subscribe to this blog so you don't miss a thing.
As always, your comments and questions are always welcome.
1) Going over your limit - if your credit card has a limit of $1,000 because you have decided you never want more access to credit then that amount and you, in a pinch, need to put something on your credit card that takes you over your limit something happens. You've been a good client and the bank allows the overage so you think "I must be okay". Well you want to watch out for this one. Once you go over half your limit your credit score changes. The credit bureau does not differentiate between a limit of $1,000 and a limit of $10,000. It only knows you are maxing out your available credit. Your contract may also be affected. Some credit cards have built in penalties for going over your limit. Over the limit automatically rates as an R2 on your bureau. It may also trigger some interest charges even if you pay it off by the due date. Over the limit can also apply to once the interest is added on. Let's say your line of credit or credit card limit is $5,000 and you have drawn down to the max. At month end the lender will send you a statement that shows your $5,000 balance and then they add on the interest you owe them and viola, you are over your limit. I see this one a lot especially on Home Owner Credit Lines. Once over the limit your interest can be affected and I've seen them jump by as much as 19%.
2) Trusting Someone Else to Pay a Bill in Your Name. You have an internet, cable, hydro bill in your name and you are sharing living space with other people who share the expense. Suddenly you graduate or whatever and you take off for Thailand and leave the final payment in charge of someone else in the house. When you come home and want to buy a car you might be surprised to find out your credit rating sucks because you have a collection. I recently had a young girl in my office who's roommates swore up and down they paid the final cable bill. After investigating she found out they did indeed pay the bill but they didn't return the cable box and so she was billed, bill not paid because everyone had moved and so the bill went to Collection.
3) Permission for Bad Behavior. All too often I tell someone they have missed a payment or they've been late on a payment only to hear them tell me they phoned the lender and made arrangements to pay late or skip the payment in question. The person "you spoke to" could be just about anybody in the bank. Perhaps you called after hours and the cleaner picked up the line. Okay that's a joke but seriously. The minute we hear it's okay we breath a sigh of relief and go on our merry way. Whenever you make an arrangement with a lender make sure you ask how it will affect your credit rating. Get everything they say in writing. Better yet - don't ever do it.
That's my three tips for today. Over the next little while I will give you some other tid bits of info about your credit score. You may want to subscribe to this blog so you don't miss a thing.
As always, your comments and questions are always welcome.
Monday, January 10, 2011
Talk to a Financial Planner about Managing your debt? Give me a break!
I'm going insane. Really really insane. I'm wondering how all these articles and so called experts can give you financial advise. Time and time again we see quotes from a major bank, a financial planning company, blah blah blah......
The biggest problem with Canadians and their finances is that there is nowhere to turn for unbiased advise. Everyone in the financial world makes money by you doing something with the product they're talking about. Sadly I'm no different. FSCO (the Financial Services Commissioner of Ontario) dictates how I make money under my license. And no where do I get to charge a fee to give you impartial advise.
Here's one of the articles I'm talking about:
http://www.moneyville.ca/blog/post/917592--talk-to-an-advisor-about-managing-your-debt
So this article paints a cozy picture of you having a friendly chat with your financial planner at a major bank. Just what do you think this employee's review will say at the end of the year if you never end up with a single product from their bank? Well I'll tell you what it will say.... "customer's seen vs. closing ratio needs improvement". I'm not saying banks are to blame. They are in the business of making money not bailing you out of debt. They are in the business of reviewing your financial situation to see how they can make money for their shareholders. As a shareholder I appreciate their efforts. If they don't make lots of money my retirement plan goes south.
But where is the service that pulls your credit bureau and goes over it with a fine tooth comb for you? Where is the service that shows you how much actual interest you are paying on your debts vs. the interest rate disclosed? Where is the service that looks at all the options across the board and makes recommendations and let's you pick and action the appropriate solution? As near as I can tell it's not out there.
I guess I rant because that would be my dream job. I try to give as much free advise as I can but I have to close mortgages so my kids can go to University and I can plan to retire. I see a lot of people and I can tell you there are no two mortgage applications alike. In 25 years of credit this is way more complicated than a "debt consolidation" or "simple" savings plan. At the end of the day I am dealing with people's relationship with money. Some relationships are healthier than others. Some are balanced and some are intense. I learned a long time ago it's not about what you need it's about what you can manage.
Anybody can do this!! And I mean anybody. If only I were independently wealthy and could spend my time helping others. :(
The biggest problem with Canadians and their finances is that there is nowhere to turn for unbiased advise. Everyone in the financial world makes money by you doing something with the product they're talking about. Sadly I'm no different. FSCO (the Financial Services Commissioner of Ontario) dictates how I make money under my license. And no where do I get to charge a fee to give you impartial advise.
Here's one of the articles I'm talking about:
http://www.moneyville.ca/blog/post/917592--talk-to-an-advisor-about-managing-your-debt
So this article paints a cozy picture of you having a friendly chat with your financial planner at a major bank. Just what do you think this employee's review will say at the end of the year if you never end up with a single product from their bank? Well I'll tell you what it will say.... "customer's seen vs. closing ratio needs improvement". I'm not saying banks are to blame. They are in the business of making money not bailing you out of debt. They are in the business of reviewing your financial situation to see how they can make money for their shareholders. As a shareholder I appreciate their efforts. If they don't make lots of money my retirement plan goes south.
But where is the service that pulls your credit bureau and goes over it with a fine tooth comb for you? Where is the service that shows you how much actual interest you are paying on your debts vs. the interest rate disclosed? Where is the service that looks at all the options across the board and makes recommendations and let's you pick and action the appropriate solution? As near as I can tell it's not out there.
I guess I rant because that would be my dream job. I try to give as much free advise as I can but I have to close mortgages so my kids can go to University and I can plan to retire. I see a lot of people and I can tell you there are no two mortgage applications alike. In 25 years of credit this is way more complicated than a "debt consolidation" or "simple" savings plan. At the end of the day I am dealing with people's relationship with money. Some relationships are healthier than others. Some are balanced and some are intense. I learned a long time ago it's not about what you need it's about what you can manage.
Anybody can do this!! And I mean anybody. If only I were independently wealthy and could spend my time helping others. :(
Subscribe to:
Posts (Atom)