Hidden Mortgage Fess are making a Come Back.

It's never a good thing when banks are predicting their profits to slide - which is expected to happen in 2013. As Rob Carrick mentions in this article in the Globe, it usually means they're going to find other ways to ding customers - like through excessive mortgage breakage fees.

You've likely heard a few horror stories of friends or relatives who tried to get out of their mortgage early. Maybe they had to relocate temporarily, and opted to sell their home in favour of renting another. Or maybe they wanted to move to a larger home, and realized a little too late that the rock-bottom rate they were paying on their existing mortgage was low because it didn't include portability features. 

These stories don't usually end well - and often involve hefty interest rate differential fees (that compensate the bank for the money it would have made had you kept your mortgage through the agreed upon term) as well as a host of other fees, such as reinvestment fees, discharge fees and transfer fees. 
 
Before you ever sign on the dotted line of a mortgage, it's wise to inquire about what will happen should you opt to pay off that mortgage in full, move to a larger or smaller house or refinance down the road. If you already have a mortgage and didn't have your mortgage breakage fees explained to you upon signing, it's wise to look into it now. Just in case your future home ownership plans will require extra funds.

If you have any questions or are thinking about breaking your mortgage, don't hesitate to give us a call. We can explain the pros and cons of such a move in person, and help you minimize the damage.

A Brief HIstory of Mortgages in Canada

When you make your mortgage payment every month (or every other week, if you're into paying your mortgage off faster), have you ever wondered what your mortgage may have looked like 100 years ago? No? Well, below is a brief history of how mortgages have come to evolve in Canada:

The War Measures Act

Canada's first mortgage lending program took effect in 1918, under the War Measures Act. At this time, the Federal government was the only lender - it appropriated $25 million to the provinces, intended to be re-lent for the construction of residential units and mortgage loans.
At this time, the maximum loan was to be between 80 and 90% of lending value, or $4,500 - whichever was smaller. Annual interest was charged at 5%, with 20-30 year contractual terms. The weirdest thing about these loans? They weren't amortized. For that 20-30 year contract, mortgage holders were only required to pay interest periodically, with the entire amount due at the end.
The Dominion Act

The War Measures Act was replaced by the Dominion Act in 1935. The major difference here was that the government gave up its position as the country's sole mortgage lender, and instead joined forces with institutional lenders - namely, insurance, trust and loan companies.
Under this act, the government provided 20% of the lending value, with the private lenders providing between 50 and 60%. The interest rate was still set at 5%, but these loans were set at 10-year terms, with the provision for a 10-year renewal.
These loans were amortized, and the payments looked much like the payments you make today - equal payments made up of a combination of principal and interest.
The National Housing Act

The National Housing Act was first introduced in 1938, and was amended in 1944 and again in 1954, when it became the Act that we recognize today.
This Act came with a number of changes, the most notable being the introduction of banks as private lenders. Because of the post-war housing boom, Canada needed more private lenders - and this Act was designed to add more funds into the mortgage pool.

These are a few of our favorite things.... from the news this week

Below are a few articles that we read this week, and just had to pass along. We hope you enjoy them! 

Canadians' love affair with debt moves beyond the home
The Globe and Mail
Yeah, yeah -- we know. Another article about debt. But this one is a little different. Below is one of our favourite, less-alarmist passages:
"Yes, Canadian interest rates will go up in a couple of years, maybe enough to sting some borrowers. The rise in rates, however, is going to be muted unless the rest of the world – and in particular the United States – undergoes a particularly robust expansion. The likelihood of that happening is pretty slim: for one thing, the economic problems outside of Canada are deep enough that inflation (which is one component of interest rates) is not going to be much of an issue for a long time."
Top 5 staging tips for home sellers
 If you're in the market to sell your home - or thinking about getting your home in tip top shape for the spring market - it couldn't hurt to brush up on your staging techniques. Our fave on this list? "Don't become a drive-by". Make sure the outside of your house looks just as great as the inside, so prospective buyers don't take one look and run off.
20 DIY centrepiece ideas
Just in case you're still searching for that perfect festive centrepiece, here is a list of 20 that you can make yourself!

Stress free Christmas on a budget – the “guy” way

Yesterday I wrote a blog post on how I deal with the stress and expense of Christmas.  I was inspired by my phone conversation with a girlfriend as we were lamenting how much we had to get done in a very short time.   On top of everything else a girlfriend sprung a last minute wedding on me and now I’m hosting a Bachelorette party on Dec 21^st.  But the guy she’s marring is perfect and I’m over ridden by her joy.  

When it was all said and done yesterday I went off to meet an old friend for a visit.  A bachelor friend who is amazing in every way.  When I started in on my Christmas rant, he raised his hand and shut me down.  Let me tell you how this works he said.  I listened and here’s what I gleamed from his tips for a stress free Christmas. 

1.       Exterior Illumination is fun:  He takes his time and spends hours in all the Big Box hardware stores looking at boxes of lights.  He knows every shade of white LED lights and never makes a mistake on his purchase.  He over spends, gets home, measures and takes half back.  After all you can never have too many trips to the hardware store.

2.       Shopping is fun and cheap:  He has a list and does his pre-cruise of the stores weeks and days in advance.  Then at 5:00pm on Christmas Eve he hits the stores.  According to him, stores start marking down their prices for Boxing Day late on Christmas Eve.  The stores are empty by now and he has the run of the place. (I didn’t know that)

3.       Groceries and Liquor:  After shopping he hits the grocery and liquor store.  No over spending here because time is of the essence and you have to stick to the list

4.       Entertaining:  Easy Peasy – Call all your friends in early December and book a lunch or dinner out and everyone pays their own.  (ha! No way was he getting away without paying for my drink)

5.       Decorating: After the exterior illumination he pulls out the pre-lit, pre decorated tree and plugs it in.  And then he goes to town on the interior lights.  More trips to the hardware store, more heaven on earth.

6.       Special Events:  Everything he needs is on his 60” plasma screen TV.  (I got an invite to drop by and watch “Elf” with hm.)

7.       Christmas Dinner:  Okay I got him on this one.  He goes to family but said he would love to host one.  The Royal York Hotel does Christmas dinners and raises the money for charity.  (I did not know this)

Could I have this kind of Christmas? I started to think about it and how my family would react.  There are some take aways for sure but the thing I learned was the value in keeping it simple.  The only one that would miss all my effort is probably me.  If he’ll come over and do my “exterior illumination” I think I can take it from there.  I never do the big box hardware store unless I have to.   

How I Deal with Holiday Stress........

With the holiday season already well underway, you're probably already feeling the holiday stress. Maybe you've already blown your holiday budget - or maybe you're still stressing over all the gifts you still have to buy. And then, of course, there's the cost and preparation of holiday dinners to worry about.

Relax. The holidays don't have to be a time to dread. Below are some strategies to make them more enjoyable:

1.Acknowledge your feelings.
 If you find yourself hyperventilating at the mere thought of the holidays, take some time to figure out why.
2. Simplify
If you're worried about money, set a budget to figure out exactly how much you can afford to spend -- and don't feel bad if you can't buy the most expensive gifts for everyone on your list. If it's the mere pressure of entertaining that's got you down, consider asking someone else to host Christmas dinner - or simplify it by making it a potluck.
3. Don't be afraid to create new traditions.
Sometimes we get so caught up with how the holidays "should"? play out that we put undue pressure on ourselves. Just because you used to buy a gift for every single member of your family doesn't mean you always have to do that. As families age and expand, it's not always necessary to continue the same old traditions. Consider gift exchanges or a group donation to a mutually-decided upon charity.
4. Talk it out.
Remember - if the holidays are stressful for you, they're probably stressful for others as well. Don't be afraid to talk about your feelings and discuss ways to alleviate stress.

Client Appreciation Night Part 1

Just thought I would share this picture of our client appreciation night last night.  Great seats and a great show.....  Our next event is Feb  18th at the Bon Jovi concert. 

Tales from the Trenches....the Dangers of Co-mingled Assets

Once upon a time there was a middle aged women with many children (5 to be exact) who had a good job, a good marriage and a beautiful home.  One day she came home from work and just as she was wondering what to serve for dinner the sheriff knocked on her door and told her she had to leave he was seizing the house for the mortgage company.  Stunned, but not stupid, she quickly called her lawyer who told her to pack as much stuff as she could get in her car, find an apartment and start divorce proceedings. 

As unusual as this story may seem to you we have seen it more than once.  So what happened?  The Husband had been self employed and the business had hit a bump.  Without discussion he went to see a mortgage broker who arranged to refinance the home.  He went home and told his wife about the resolve and told her she had to go to the lawyer and sign the documents.  Which she did.  Once the new mortgage was in place he never made a payment.  Her credit has always been immaculate but now it was showing 2 judgements against her from the mortgage company.  Once the house was sold (by the mortgage company) the judgements were paid but her credit was ruined for seven years.  She couldn't even get a new car.

So what should have happened?  The lender would have been smart to request ILA (independent legal advice) for both spouses.  BUT..... at the end of the day she signed a legal contract and left it to her husband  to take care of it.  The red flag should have been the refinance.  Since their credit was separate she had no idea how bad his was.  Never co-mingle anything until you have done your due-diligence.  If you're not sure what you should be doing get your own lawyer.  And if, like in this woman's case, it causes a rift between you and your partner then guess what.  The rift was coming anyway.