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1.85%** Variable Rate Mortgage, Might Be Available For a Limited Time.

1.85%** Variable Rate Mortgage, Might Be Available For a Limited Time.

REFINANCE ONLY

QUALIFIED INCOME AND CREDIT ONLY

We want to switch you from your current mortgage to a Prime -1.10% Variable Rate Mortgage, that would mean an effective mortgage rate of 1.85%**. If the Bank of Canada’s last rate cut gets factored into the Prime Rate the new prime would be 2.95% and you would be 1.10% lower than that.

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March 16, 2020 -

Controlled Demolition?

Controlled Demolition?

The Bank of Canada (BoC) has been telling us that it needs to increase rates. The frequency and amplification of their message has been steadily rising. As their message becomes louder, the market begins to make its own noise.

Continue reading →

November 20, 2018 -

Mortgage Renewal Time for 50% of Canada: 4 Reasons You Will Pay More and Have Fewer Choices Than Before

Mortgage Renewal Time for 50% of Canada: 4 Reasons You Will Pay More and Have Fewer Choices Than Before

Actions taken by the Canadian Banks and the Canadian Government will make renewing your mortgage more costly than ever before. Homeowners looking to access the equity in their homes will discover that new underwriting guidelines now limit their ability to borrow regardless of how much equity they have in their homes.

Today’s newsletter will focus on four factors that will make shopping at mortgage renewal time harder than before and what we can do to help.

Continue reading →

May 1, 2018 -

F*#k….Mortgage Rates are Heading Higher, Right After Christmas!

F*#k….Mortgage Rates are Heading Higher, Right After Christmas!

Canada’s unemployment rate has fallen to its lowest level in over 40 years. In December 78,600 jobs were created. As a result every Canadian Bank is predicting the Bank of Canada will increase the overnight lending rate by 0.25% on January 17th, 2018. This means we will likely be starting the year off with an increase in our Variable Rate Mortgage payments.

Continue reading →

January 9, 2018 -

The Mortgage Rules are Changing Tomorrow.

The Mortgage Rules are Changing Tomorrow.

Friday December 29th, 2017 is the last day Canadians will be able to qualify for a mortgage at their contract rate. As of January 1st, 2018 all mortgagors will need to qualify at the Bank of Canada’s prescribed 5 year rate, or 2% higher than their contract rate, whichever is greater. This means about 20% less money available to qualified borrowers across the board.

Continue reading →

December 28, 2017 -

Navigating the New Mortgage Rules

Navigating the New Mortgage Rules

Canada’s new mortgage rules are designed to make it harder for you to qualify for the mortgage you have right now and they are being introduced on January 1st, 2018. The new rules will affect at least 15% of Canadians. Whether you are looking to borrow more money against your home or simply want to move to a different lender for a better rate, you will be affected. Canadians will be forced to borrow less money as the income required to qualify for a mortgage will increase by about 20%. The Government of Canada is making it harder to shop for a better mortgage and more difficult to access the equity in your home, we believe that this will result in higher mortgages rates for some consumers.

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October 23, 2017 -

Do I Still Qualify for a Good Mortgage?

Do I Still Qualify for a Good Mortgage?

In the 15 years that I have been brokering mortgages it has never been harder or more expensive to get mortgage financing for consumers who are even slightly on the fringe of being classified an “A” Borrower. Who falls into this category? As long as it isn’t you or I, who cares, right? But wait, it is me, and it might be you too!

Continue reading →

September 28, 2017 -

The Bank of Canada Wants You to Take a Fixed Rate Mortgage. Should You?

The Bank of Canada Wants You to Take a Fixed Rate Mortgage. Should You?

Newton’s third law states that for every action there is an equal and opposite reaction. Newton can probably help us figure out how many more interest rates hikes we have in store for us. His law may also be useful in countering the claim the interest rates will continue to increase in the next two years without pause.

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September 13, 2017 -

Should You Be Scared of Your Variable Rate Mortgage?

Should You Be Scared of Your Variable Rate Mortgage?

The market now believes that the likelihood of a rate hike on July 12th is 22%, down from 35% before the inflation numbers were released last week. In these newsletters we try to predict what the Bank of Canada (BoC) will do and how it will affect your mortgage. Over the past 14 years we have been incredibly successful at guiding Canadians with our sound, unbiased advice. We base our advice on the economic indicators we feel are most relevant to the Bank of Canada’s upcoming actions and on what the Bank of Canada tells us in their press releases and meetings.

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June 26, 2017 -

Why You Should Use A Broker

Why You Should Use A Broker

According to the Bank of Canada, home buyers who work with a broker save more money than those who work directly with a bank.

And when you think about it, brokerages like MorCan Direct are much more likely to help you – here’s why:

Continue reading →

June 22, 2017 -

Taxes and Rent Control are Not A Wafer Thin Mint. But Toronto Housing is Mr.Creosote.

Taxes and Rent Control are Not A Wafer Thin Mint. But Toronto Housing is Mr.Creosote.

Yesterday the incredibly popular Premiere of Ontario (her approval rating is sub 20%), held a press conference. The purpose was not to discuss how dangerous a desperate politician is. It was to show what types of policies a desperate politician can come up with in a pinch. Fresh off of helping her predecessor cover up a Gas plant debacle that cost each and every person who lives in Ontario in excess of $1,500, she has decided to affect meaningful change in the housing market.

Let’s start off with the three policy changes that will have the greatest impact.

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April 21, 2017 -

Negative Interest Rate Mortgage?

Negative Interest Rate Mortgage?

A major trend in the world economy is for Central Banks to favour reducing interest rates to negative levels in an attempt to spurn financial growth. Currently, economies that account for about 25% of global economic output are governed by negative rates and this is trending higher. It’s OK to be excited about lower mortgage rates, but you should also be concerned about our increased dependency at the macro level to rely on such low rates.

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June 22, 2016 -

Canadian Mortgage Rates Are Moving Higher. Why?

Canadian Mortgage Rates Are Moving Higher. Why?

Fixed Rate Mortgages have increased from their lows of 2.49% to their current level at 2.79%. Variable Rate Mortgages were recently being offered at rates as low as 1.85% or Prime (2.70%) minus 0.85%. Now customers are lucky to find them at 2.2% or Prime (2.70%) minus 0.50%. We managed to signal to our clients that mortgage rates were on the rise in our September 30th, 2015 newsletter (which you can read here).

The reason for today’s newsletter is twofold. First, it is to inform you that you should not rush to lock in a variable or fixed rate in today’s market. Secondly, it is to provide some explanation as to why we have seen both variable and fixed rates increase.

It is important to understand that fixed rates and variable rates move for different reasons. Although Bond yields and Bankers’ Acceptances Rates are up over the summer and fall, this doesn’t fully explain why we’ve seen such an increase in variable and fixed rate mortgages. Continue reading →

November 26, 2015 -

Marcus Discusses Canadian Mortgage Debt

Marcus Discusses Canadian Mortgage Debt

Did you catch CBC’s The National discussing increasing Canadian mortgage debt with MorCan Direct last night?

Canadian real estate owners have found themselves in an enviable position over the past 10 to 15 years. Our property values continue to increase and, with few exceptions, the cost to borrow continues to decrease. In 2015 alone, we saw the Bank of Canada reduce interest rates twice. Continue reading →

November 4, 2015 -

Real People, Real Mortgages: Dilip & Geeta [Penalties and Fees]

Real People, Real Mortgages: Dilip & Geeta [Penalties and Fees]

Dilip and Geeta purchased their first home in 2012. They went to their Big 5 bank who had a 5 year fixed rate of 4.79%, but offered them a ‘discounted’ rate in the mid 3’s. This summer they finally got fed up hearing how their friends were all paying closer to 2.0% on 5 year variables. They went to their bank to ask about switching into a lower rate variable. Continue reading →

October 14, 2015 -

Variable Rates Are on the Move! Now’s the Time to Act.

Variable Rates Are on the Move! Now’s the Time to Act.

Now’s the time to act. The ultra low variable rates we’ve enjoyed for most of the year are going into hibernation. Last week a few leading lenders tightened up their guidelines for qualifying borrowers. Over the weekend a few more lessened the discount off the prime rate they’ve been offering, by up to 15 basis points. And tonight, alas, everyone else seems to be following suit.

Continue reading →

September 30, 2015 -

Real People, Real Mortgages: Danny [Self-Employed]

Real People, Real Mortgages: Danny [Self-Employed]

Danny was a self-employed contractor who owned both his principal residence and a rental property. He had been using as many deductions as possible at tax time, so his taxable income was quite low in comparison to the amount of business he had performed.  His income was also quite varied from year to year. Because of the deductions and variations, his bank would only offer him a new mortgage with a hefty premium attached. Continue reading →

September 30, 2015 -

The American Federal Reserve Just left Rates Unchanged: How will this affect your mortgage?

The American Federal Reserve Just left Rates Unchanged: How will this affect your mortgage?

The Market Response:

Government of Canada Bond Yields immediately dropped by 5% in the wake of the announcement. The Loonie on the other hand rose slightly, while a further dip was likely had there been a rate hike. Oil wasn’t noticeably affected by the announcement, but overall the markets certainly approved.

What the Federal Reserve Said:

“Monetary Policy will remain significantly accommodative for quite some time.”

US GDP expanded at 2.25% in the first half of 2015 which was stronger than the Fed expected. However, Inflation is running below the Feds objective.”

There are many factors at play that lead to the Fed’s decision to keep rates where they are and maintain an accommodative monetary policy.

These factors are as follows:

  1. Global Economic Risks. This means that U.S. rates are partly determined by how bad the situation in China becomes.
  2. Lower Inflation. Due to weak oil prices and a stronger US Dollar it is taking longer for Inflation to get to the Federal Reserve’s 2% target.
  3. Labour Market. The employment rate is still not where the Fed would like it to be. Clearly employment is a big factor in the decision to keep rates where they are.

Although most Fed insiders continue to believe that rates will increase in 2015, some participants now believe that a rate hike should be put off until 2016. But regardless of when the hike occurs, and by how much, the Fed was very clear that their policies would remain highly accommodative for some time. If and when rates do begin to increase, they will likely increase very slowly and be accompanied by continued monetary stimulus.

What does this mean for your mortgage?

Continue reading →

September 17, 2015 -

Real People, Real Mortgages: Margot & George [Credit Solutions]

Real People, Real Mortgages: Margot & George [Credit Solutions]

George lost his job a month before Margot had their first baby. Turning to their bank, they were offered a lot of unsecured debt at high interest rates which they accepted in a panic. Over the next few months, with increasing living expenses for the baby, their credit began a downward spiral. When George finally returned to work, their credit was so low the same bank that had previously been so generous now wouldn’t even renew their mortgage. Continue reading →

September 15, 2015 -

Canadian Economic Limbo

Canadian Economic Limbo

Unsure what to make of the Canadian economy? Don’t worry, you’re not alone. 

Economists, bankers, politicians, even the venerable Bank of Canada (BoC) can’t agree where we stand at the moment. The BoC is stuck in a holding pattern hoping that the two rate cuts it delivered to the market this year will be enough to create some sustainable economic growth.

Yesterday the BoC decided to keep the Overnight rate as is. The Bank also released a statement discussing the major factors at play in the Canadian economy. Here are some highlights from a statement that really didn’t say much.
Continue reading →

September 10, 2015 -

Rates Have Dropped. Switch to a Variable Rate Now!

Rates Have Dropped. Switch to a Variable Rate Now!

How Much Will They Drop?

The Bank of Canada just dropped The Overnight Rate to 0.50%. Now it is up to Banks to decide whether or not they will decrease the Prime Lending Rate. Although every Bank in Canada is supposed to be making their own decision on this, they always seem to agree on the amount of a rate cut that we, the consumer, should receive. Look for the Banks to reduce the Prime rate by 0.10% leading to new and improved Variable rates below the 2% mark. Continue reading →

July 15, 2015 -

How Greece Will Affect Your Mortgage

How Greece Will Affect Your Mortgage

Picture Greece and Germany as two neighbours. They live on a leafy residential street in Toronto’s Beaches area. Germany has made some improvements to its home. They have high efficiency windows, rooftop solar panels, and a rain barrel. The German’s leave for work each day at 6am and don’t return until after dark. Despite this full schedule, they even managed to set up a neighbourhood committee with some of the other neighbours – something like the EU. Continue reading →

July 4, 2015 -

Renewing Your Mortgage

Renewing Your Mortgage

Your mortgages renewal is a great time to investigate the other options that are available in the market. Banks send out mortgage renewal agreements to their clients with a goal of having people who aren’t informed lock into rates that are higher than what is being offered to the market. There are few steps involved in making sure that your renewal is a seamless process that leaves you better off. MorCan Direct tracks all of their clients mortgages to identify times when it makes sense to either break their mortgage or simply what product to renew into when the their mortgage comes to maturity. The most important

  • Keep track of your mortgage so that you can start shopping 120 days (4 months) before your mortgage renews.
  • Know what kind of mortgage you have. (i.e. is it transferrable?)
  • Know your financial goals and what you would like your new mortgage to be.
  • Review your bank’s offer, but beware of locking into a mortgage that doesn’t give you refinancing options! We suggest to stay away from the big banks and to use a mortgage broker as they have access to non-balance sheet lenders.
  • Qualify for the rate with the following information:
    1. Credit Score
    2. Income
    3. Mortgage Details
  • We’ll send you a document request form outlining what paperwork we will need in order to get you approved.
  • Once we have received the paperwork, we will send it to the lender for approval
  • After the mortgage is approved, we will send you the approval to sign.
  • Your bank will let you know that your mortgage has been transferred.

 

Important note: Do not just auto renew your mortgage! Yes, it might be simpler, less confusing and less work. However, this is your time to revamp your mortgage! You can get a lower interest rate, lower your payments or switch to a mortgage that has more flexibility in case you want to break it down the road! Never underestimate the power of being informed, and acting when the time is right!

May 22, 2015 -

Renewing Your Mortgage Can Be Really Expensive

Renewing Your Mortgage Can Be Really Expensive

too high? Looking to consolidate some of your debt? There are a few keys to ensuring that you get the best rate when renegotiating a mortgage.

  1. Be Prepared:

When you or someone you know is renegotiating a mortgage, you must be prepared. In order to keep your interest rate as low as possible, you should evaluate your credit risk before shopping. We recommend checking your own credit to ensure that there are no derogatory items on your report that could unexpectedly hurt your score, or old employment information that could impact the way your lender views your application. In addition to your credit score it is important to review your property value, income and existing mortgage. Knowing this information before negotiating your mortgage gives you the upper hand.

MorCan Direct offers a service that does this for free. One of our specialists would be more than happy to walk you through our comprehensive 4 step process. This process involves appraising the value of your home, and thoroughly reviewing your credit and income. Whether you have 1 month or 4 years left on your mortgage, we think that you will impressed with the information that MorCan can provide you!

  1. Understand Your Rate:

It’s important to understand the range of products that are offered in the mortgage market. There are many available discounted mortgage offers, but sometimes they come with very strict limitations. A good broker will be able to walk you through all the options available to you. The Internet is a good resource when looking for a mortgage. However, just like when searching for any other type of advice, there can be some misinformation.

  1. Be Wary of Bankers Offering Discounts:

Banks are competing for your business, which is a really good thing! However, you need to be more careful than ever before when getting a mortgage from your bank. Penalties that are levied on unsuspecting consumers for breaking mortgages are at all-time highs. It is common to see mortgage penalties in excess of 6% of a mortgage balance. Banks are manufacturing these incredible penalties by creatively charging “Interest Rate Differential Penalties”.

When a consumer sees a “Mortgage Rate Discount” on their mortgage offer sheet at a bank, they get excited about how much lower their rate is than the bank’s posted rate. They believe that the bank is helping them. This is not the case. The bank is simply stating that in the future, when that same client wants to break their mortgage, they will be using that discount to inflate the penalty that they charge.

 

Steps Banks Take to Create High Mortgage Penalties: 

Step 1

When you get a 5 year fixed rate mortgage from a bank, they will tell you what their posted 5 year fixed rate is. For argument’s sake let’s say it’s 5%.

Step 2

Then they will tell you that, because you are such a valuable client to them, they will offer you a rate of 3%. Wow! That’s a 2% discount off of their “Posted Rate”.

Step 3

This may cause you to get so excited that you don’t pay close attention to the rest of the document you are signing. What you won’t realize is that, at the back of that contract in fine print, there is an explanation as to how they will be calculating your penalty. Should you ever decide to break your mortgage, they intend to recoup all the money they will lose in interest by instead charging you a penalty.

Step 4

So, you decide you want to break your mortgage. Let’s say you only have 2 years left in your term. The bank begins to calculate how much you owe them.

Remember your rate was posted at 5% and discounted to 3%. Because you have 2 years left, the bank will then discount their posted 2 year rate by the same amount that they discounted your 5 year fixed rate. Let’s say the 2 year posted rate is 3%, discounted by 2%, making it a rate of 1%. In this case, they will subtract 1% from the mortgage rate you originally offered. Then that difference (2%) will be applied to your entire mortgage amount over the remaining term, and voila! A really high penalty.

Step 5

You end up paying the penalty.

Does this mean you shouldn’t ever get a mortgage from a bank? No. However, there are a lot of things to be aware of when you are looking to renegotiate a mortgage. Getting help from a knowledgeable mortgage professional is really important. If you or someone you know has any questions about renegotiating or breaking a mortgage please do not hesitate to contact us. As many of our clients have already discovered we have very creative ways to discount those evil mortgage penalties.

May 22, 2015 -

Home Equity Line of Credit

Home Equity Line of Credit

A Home Equity Line of Credit (HELOC, if you are someone that knows way too much about mortgages) is of great value to many mortgage shoppers who are looking for flexibility. It allows a borrower to obtain an extremely low interest rate on a line of credit by using the equity in their home as collateral. Typically, HELOC’s are priced at or near the Prime Rate.

Many borrowers find HELOC’s to be perfect debt vehicles to use when purchasing a second or third property, making investments, supplementing their cash flow (if their income relies on lump sum payments) or financing their small business. It is unlikely that a financial institution will offer a line of credit at a lower rate than their HELOC, unless you are a publicly traded company.

Benefits of a HELOC:

  1. Tax Deductible: If you are using the funds available on your HELOC to make investments, it is very easy to calculate the amount of interest being paid and therefore the amount of the deduction you are eligible for on your income taxes.
  2. Easy on your monthly Cash Flow: Since most HELOC’s are interest only, the payments are much lower than a traditional mortgage. While mortgages must have an amortization of no more than 30 years, a HELOC can be interest only without every paying down the principal owing.
  3. Once and Done: After you pay down your HELOC the money should still be available to you (be careful, sometimes this is not the case, see #1 in list below). Part of the allure of a good HELOC is that the borrower is able to re-borrow on the line of credit without paying to obtain a new loan facility. Even if your HELOC is one that might require approval to re borrow on it, it is unlikely that you will have to pay legal fees for future advances once the mortgage charge has been registered.

Things to look out for:

  1. Higher Interest Rates: In most cases a Variable Rate Mortgage is a better option than a HELOC. HELOCS are typically priced at least 1% higher than Variable Rate Mortgages, while the penalty to break a Variable Rate Mortgage is about 0.50%.
  2. More Underwriting or Approval: Be careful, not all HELOC’s are created equal. Some lenders like to reduce the total amount of your available credit when you pay down the HELOC so be careful. The best way to avoid this is to be upfront with your lender. Let them know that you want your HELOC fully available at all times. Although this may not seem important the key to having the HELOC is being able to use it at a moment’s notice when you really need it. There is an old saying about Banks only handing out umbrellas when the sun is shining that should be given credence when negotiating your HELOC.
  3. Collateral Mortgage Charge: Obtaining a HELOC typically means that your lender will be registering a mortgage charge on your property for the value of your home or more. This allows them to re-advance more credit if required. Collateral mortgages are more expensive to discharge and will certainly limit your ability to borrow anymore against your home. Like any good mortgage decision, make sure you have a good plan before your make your final decision.

If you are looking for a HELOC, enlist the advice of a great Mortgage Advisor who can offer you sound, unbiased mortgage advice and walk you through the pros and cons of taking a HELOC as they pertain to you personally.

May 22, 2015 -

Debt Consolidation

Debt Consolidation

One of the best uses for the equity in your home is to pay off higher interest rate debts. Expenses can seem to surprise us at any point in our lives. Many Canadians worry about their debt burdens. If you find yourself servicing unsecured debts month after month without really attacking the principal, it might be time to consider using the equity available in your home to reduce the amount of interest you are paying.

Unsecured debts can become a real burden. Banks like to offer their clients unsecured lines of credit and credit cards whenever possible because the amount of interest they collect on unsecured debt is much higher than what they can collect on a mortgage. When considering how to tackle a life event that will have a negative impact on your pocket book, the key is to speak to someone early on to create a plan. Like any major event in your life, planning is the key to reducing unnecessary stress and expense. It is probably not in your best interest to only speak to 1 bank about what the best solution to handling an increased debt load may be. Work with someone who will guide you through the process and offer Sound, Unbiased Mortgage Advice. Regardless as to why your credit cards and lines of credit have high balances, a good mortgage broker can help you find a solution. When you consider that the average line of credit has an interest rate of 10% and the average credit card has a rate of 20%, refinancing your mortgage at close to 2% to pay off your higher interest rate debt makes a lot of sense. Set a timeline, set payments that you can manage, and start paying off the principal of the debt you owe, not just the interest.

May 22, 2015 -

How to Refinance Your Property

How to Refinance Your Property

Why Refinance?

  • Consolidate Debt

Credit cards charge a higher interest rate than your mortgage lender does. It may make sense for you to pay off your loans using the equity from your home.

  • Unlock Home Equity

Lots of people use a Home Equity Line of Credit (HELOC) to finance renovations, go on vacation, or pay for tuition. What you do with it is up to you!

  • Get a Lower Interest Rate

Have you ever experienced rate envy? When you got your rate it was considered low, but now there are others getting even lower interest rates! It may make sense for you to break your mortgage and refinance into one that has a lower rate.

How Do I Refinance?

 

  • Break Your Mortgage

This method costs a bit of money up front, but don’t let that scare you away. This will save you more money in the long run! A mortgage agent will be able to let you know if this is the right method of refinancing for you. Learn more about breaking your mortgage here.

  • Add a Home Equity Line of Credit (HELOC)

A HELOC is secured by the equity in your home. Your lender sets the “ceiling amount” that you can borrow, but within those parameters you can withdraw any amount at any time during the draw period. There are a few risks associate with acquiring a HELOC, so make sure you check with your mortgage agent to see if it’s a good fit for your situation. To read more about HELOC’s click here.

  • Blended Mortgages

Did you know that with some lenders you can combine your existing mortgage rate with the rate from a new mortgage? This combined rate might not be the most competitive rate on the market, but it will help lower your interest rate without having to pay a penalty.

Steps to Refinancing:

  • Decide why you want to refinance your mortgage. If it’s to access equity, decide how much you’d like to access. (Maximum amount is 80% of your home’s appraised value.)
  • Order an appraisal (a mortgage agent can do this for you) to see how much equity is available. Your mortgage agent will also go through refinancing strategies with you, based on your financial information.
  • Submit necessary paperwork for approval:
  • Appraisal
  • Income
  • Credit Score
  • Mortgage Details
  • After it’s approved, we will send the approval to you for signing.
  • Once your lawyer receives the necessary documents, they will schedule a time for you to come in and sign. They will let you know if there is anything else you need to bring.
May 22, 2015 -

Breaking Your Mortgage Made Easy

Breaking Your Mortgage Made Easy

Hundreds of people are breaking their mortgages and switching into lower, variable rates. When you are deciding whether or not to break your mortgage there are a few things you should consider first.

  1. Your rate.
    If your rate 1-2% higher than what is on the market now, it is probably time to switch to a lower rate.
  2. Your penalty to break.
    This is the penalty that protects lenders against losses. There are different ways that this is calculated and it depends on if you are with the Bank or with a “Non-Balance Sheet” lender.

This process can get confusing without the help of a Mortgage Agent. Working with MorCan Direct will provide you with access to some tricks to reduce these penalties and keep your mortgage lender in check when they are calculating penalties.

The number one way to save the most money on your mortgage is to stay informed. Below is an overview of how the penalty to break your mortgage is calculated. However, we highly suggest that you speak with a mortgage agent to see if breaking your mortgage is the right choice for your financial situation.

When you go to break your mortgage, you could end up paying 1 of 2 calculated penalties: 3 Months Interest Penalty or IRD Penalty. This is decided based on which one is higher.

1) 3 Month Interest Penalty

  1. The three month interest penalty is calculated by taking your current mortgage balance multiplying it by your current interest rate and multiplying that by 3.

2) Balance Sheet Lender (Bank) IRD Penalty

  1. You start with the original undiscounted or “posted” mortgage rate. Let’s say 5 year fixed rate at 6%, but the bank offered you a 2% discount, so your rate was actually 4%.
  2. Then figure out how many years you have left in your term. Let’s say 2 years, and the 2 year fixed rate is 3%. However, since your original rate was discounted this one is too by the same amount. That makes it 1%.
  3. You will also need to figure out the difference between these two rates (4% – 1% = 3%).
  4. Your penalty will be 3% multiplied by your mortgage amount – to make the math easy let’s say it’s $100,000. Then this will be multiplied by the remaining amount of time left in your term (2 years).
  5. ($100,000 x [4%-1%]) x 2 = $6000

MorCan Math

3) Non-Balance Sheet Lender IRD Penalty

  1. This is calculated almost the same as the Balance Sheet Lender, except for one critical change. Non-Balance Sheet Lenders do not have “posted” and “discounted” rates. The rate you get is the rate they use to calculate the penalty.
  2. So, if you got a 5 year fixed rate at 4%, using all the same other numbers to calculate the penalty it would equal:
    1. ($100,000 x [4%-3%]) x 2 = $2000
  3. For this reason alone, it is worth looking into using Non-Balance Sheet Lenders to finance your mortgage.

Banks do not have your best interest in mind when they calculate your mortgage rate or penalty to break your mortgage. Banks are profit centers that profit only by making a spread on the difference between the rate of interest that they pay you for your deposits and the rate of interest they charge you to borrow money. The more money you have on deposit with the Bank, the more valuable you are as a client, and therefore the better the interest rate you are offered on your debts. With a Mortgage Broker every client has access to those great rates.

As always, a competent Mortgage Broker is your best source of information. If you’re considering breaking your mortgage, it’s best to speak to a Mortgage Specialist before making any final decisions. We can tell you if and when it makes sense to break a mortgage, without breaking the bank.

May 22, 2015 -

Purchase Process

Purchase Process

1. Pre-approval

This part of the process is optional. However, it will help you find a house that meets your “list of requirements” and stays within your budget. We highly recommend you find out the maximum amount you can spend on a home before you go out looking. We know how easy it is to become attached to a property that financially just doesn’t make sense right now.

You can get an estimate on your own using our Affordability Calculator, or you can call one of our agents at 416.766.9000 and they will be happy to walk you through it.

After you have a figure in mind, find a realtor and go house hunting!

Note: You will still need to get approved even if you have been pre-approved. The pre-approval process is to give you a better idea of what you can afford. The approval process is mandatory for qualifying for a mortgage.

2. Approval

Involve us in your shopping. If you haven’t gotten pre-approved, no worries, you can start the process here. When you find a home that you like send us the listing. We can quickly evaluate what financing options are available to you and let you know any pitfalls that may be present. Our team buys and sells real estate too. Having another set of eyes can be helpful.

Once you have found your home, your realtor will put in an offer of purchase. This is where the approval process takes off!

You or your real estate agent will need to send us a copy of your agreement of purchase and sale after your offer to purchase has been accepted. The best offers are the ones with fewer conditions. Just think about it, if you were selling your home, you would probably prefer the buyers who had all their ducks in a row. By showing us the house you want to buy before you put your offer in we can get you an approval in advance and you can avoid making an offer conditional on financing!

To begin your application we will need the following information:

  • Credit score
  • Income
  • Mortgage Details (amount & rate)
  • Any other important details

 

Then one of our mortgage agents will send you a document request form. This form will outline all the necessary documentation in order to complete your application.

After you have sent all the necessary paperwork and chosen what mortgage product you would like, we will send you the mortgage approval to sign. We will also follow up with a phone call to make sure everything is to your satisfaction.

Next, your lawyer will get all the documents and will schedule a time for you to come in to sign them. On the day of closing, the lender will send the funds to your lawyer who will register a charge on the property. Then they will hand over the keys, and you’ll start moving into your new home!

Check out this “vintage” MorCan Direct video from our archives explaining Your Mortgage in 5 Steps.

May 22, 2015 -

Purchase Plus Improvements

Purchase Plus Improvements

Did you know, that there are mortgages that are tailored for buying “fixer-uppers”? Do you have your eye on a home that has great bones, but just needs a bit of TLC here and there? Well, I bet you didn’t know that you can put as little as a 5% down payment and still qualify for a mortgage that turns that “fixer-upper” into your dream home. Here’s a few guidelines and rules to qualify:

  • Loan-to-Value Limits
    1. After the initial purchase advance, you can make 4 other advances.
    2. Lending value is based on either the improved property value or the sum of the purchase price and the costs of improvements, whichever is less.
  • Property
    1. It can have a maximum of 4 units
    2. 1 unit must be owner occupied
    3. New constructions or existing properties
    4. Estimated remaining economic life of the property should be a minimum of 25 years
    5. Must be readily marketable as a residential home.
  • Terms & Rate
    1. Your rate can be fixed or variable.
    2. For fixed rates where the term is 5 years or more, the contract rate is applied
    3. For fixed or variable rates where the term is less than 5 years, the qualifying interest rate is either the contract rate or the 5 year benchmark rate, depending on which is greater
  • Insurance Premium
    1. Due to the nature of this loan, and depending on the Loan-to-Value, you may be charged an insurance premium. Don’t worry, this is not additional fee you have to pay, it will be included in your mortgage.
      • Up to 65% LTV : 0.60% premium
      • 65.01% to 75% : 0.75% premium
      • 75.01% to 80%: 1.25% premium
      • 80.01% to 85%: 1.80% premium
      • 85.01% to 90%: 2.40% premium
      • 90.01% to 95%: 3.15% premium
  • Borrower
    1. We will need information about your income, down payment and credit.
    2. Gifted down payments from family members are allowed, but they have to be verified and non-repayable
  • Debt Ratios
    1. For an LTV that is greater than 80% and a credit score of less than 680, GDS ratios should be less than 35% and TDS should less than 42%
    2. For an LTV that is greater than 80% and a credit score over 680, GDS ratios should be less than 39% and TDS should be less than 44%.
  • Documents
    1. If your improvements are more than 20% of the property’s purchase price or more than $40,000, you will need to supply additional documents such as cost estimates and contracts.
May 22, 2015 -

Summer Is Coming…And So Are Some More CMHC Rule Changes.

Summer Is Coming…And So Are Some More CMHC Rule Changes.

With extremely low interest rates and little likelihood of a rate hike anytime soon, we all knew that the Federal Government would be tinkering with mortgage insurance to stem the rising house prices in Canada. The latest round of rule changes scheduled to take place on or after June 30th, 2015 target Canadians who are buying homes with less than 20% down and who might not be able to prove their income. Continue reading →

May 12, 2015 -

How the Canadian Economy Could Affect Your Mortgage

How the Canadian Economy Could Affect Your Mortgage

The Canadian economy is slipping. In fact, we may see our first quarterly economic contraction since the second quarter of 2011. But before you stock up on canned beans, this isn’t all bad. It could mean that lower variable rates are on the horizon. It won’t happen immediately, but we doubt this is the lowest our variable rate mortgages will go (as long our Banks share the coming overnight rate discount with us.) Continue reading →

March 21, 2015 -

SURPRISE! The Bank of Canada Just Reduced the Prime Rate

SURPRISE! The Bank of Canada Just Reduced the Prime Rate

This is big news for a market that was not expecting a drop in the Prime Rate today.

As mentioned in our last newsletter the price of oil will have a dramatic impact on mortgage rates this year, and this is probably just the beginning.

This is obviously great news for Variable Rate Mortgage Holders. It could also be great news for Fixed Rate Mortgage holders, as long as they act quickly. Continue reading →

January 21, 2015 -

How The Price of Oil Should Keep Your Mortgage Variable!

oil field

The United States Economy seems to be coming back, big time. Over the past 5 years, the level of stimulus that has been applied to reinvigorate the American economy has been incredible.

We have seen:

  • Monetary Stimulus with incredibly low interest rates and massive Government Bond buying program which reached $85 Billion a month.
  • Fiscal Stimulus with increased Government spending on social welfare programs and infrastructure.

And now we are seeing a new form of Fiscal Stimulus. The Government of United States has used its muscle to increase the domestic production of oil to a level not matched by any country in the world.

America’s oil is its piggy bank. It has long been understood by the US Government that the United States has great reserves of oil, which can be unlocked with some technological advances and great sacrifice to the environment. The full environmental impact of unlocking this oil is still not understood. The economic impact, however, soon will be. Continue reading →

December 8, 2014 -

Is It Time to Switch Into a Lower Mortgage Rate?

Fixed Rate Mortgages are at all-time lows. Variable Rate Mortgages are proving to be the best product on the market yet again, and The Bank of Canada has all but committed itself to a Prime Rate of 3.0% for the indefinite future.

So, what does this mean for you?

We think you should break your mortgage. Well not everyone. Here are a few tips that will help you decide whether breaking your mortgage makes sense for you. Continue reading →

April 15, 2014 -

MorCan Direct in the News

Marcus Tzaferis on CBC News Aug 15, 2013

 

Marcus dicusses interest rates on CP24

 

Marcus discusses the effects of the New Mortgage Rules on CP24

 

Marcus on CBC The National explaining the New Mortgage Rules

 

Phil Edwards Gives his reaction to Mortgage Rule Changes

 

Marcus Tzaferis discusses Mortgage rates drop on CBC: The National

 

April 1, 2014 -

CMHC is Getting More Expensive

CMHC is Getting More Expensive

On Friday CMHC announced that it was increasing its Mortgage Insurance Premiums. Canadians looking to purchase with a Down Payment that is less than 20% should be prepared to see a slight increase on the price they get charged for Mortgage Insurance. Continue reading →

March 3, 2014 -

Is it time to Switch to a Variable Rate?

The Bank of Canada left The Overnight Rate unchanged last week. As always we need to read into what they said and how they issued their statement to understand what they are thinking and how the market will respond. We believe there are 2 important takeaways from the Report. Continue reading →

January 28, 2014 -

Happy Holidays

This year we sponsored a contest on CFRB 1010. We asked listeners to tell us why their family memebers should be flown back to Toronto for the Holidays.

Want to listen to the ad?

Here is what it sounded like when we did the giveaway.

We hope that everyone enjoys the holidays surrounded by their loved ones.We realise that sometimes because of certain constraints, financial or otherwise this isnt possible, our hearts go out to those folks who are less fortunate, and we are glad we could help just one lovely family this year.

Happy Holidays from your friends at MorCan Direct.

 

mmanhighres

December 20, 2013 -

The Canadian Dollar and Your Mortgage

 

Canadian Dollar

 

Strong Housing Market and Weak Canadian Dollar.

If you gain any comfort in knowing that the Canadian Dollar is strong you will probably have a stressful year in 2014. The Bank of Canada may be working behind the scenes to get the Canadian Dollar weaker relative to the US Dollar. A weaker Canadian Dollar will mean that exports to the United States will increase and hopefully stimulate a lagging Canadian economy. Continue reading →

December 5, 2013 -

Not All Variable Rates Are Created Equal.

Not All Variable Rates Are Created Equal.

So… You want to get a Variable Rate Mortgage.

Be careful, some of the offers out there right now will end up costing you a lot more than you think.

Rates on Variable Rate Mortgages are currently ranging from 2.4% (0.60% below Prime) to 2.7% (0.30% below Prime). The difference between the lowest rate available and a slightly higher rate can mean all the difference in the world. When we hear that certain Lenders are offering really low Variable Rate Mortgages we get a little worried. Lenders will occasionally offer a discount to their peers on Variable Rate Mortgages in order to draw Borrowers in. When those same Borrowers are looking to lock into a Fixed Rate Mortgage down the road, look out! Continue reading →

November 14, 2013 -

Competition in the Canadian Mortgage industry

Competition in the Canadian Mortgage industry

The following is a summary of some important points we have drawn from the above article which was produced by the Bank of Canada.

It is important to note that this article was produced with the intent of identifying ways that Bank of Canada’s monetary policy would have a greater impact on Canadians. In short, how the lowering of rates by the Bank of Canada could be translated more directly into savings for Canadians. This report looked very specifically at the Canadian Mortgage Market, and here are few conclusions: Continue reading →

November 4, 2013 -

Balance Sheet vs. Non Balance Sheet

Balance Sheet vs. Non Balance Sheet

A “Balance Sheet Lender” is any chartered bank in Canada. They are referred to as “Balance Sheet Lenders” because they hold your mortgage on their books as an asset. These Lenders can only increase the value of their asset (your mortgage) by increasing the spread between their cost of funds and the rate at which you pay interest on your mortgage. The opportunities to do this occur when a variable rate client is looking to lock into a fixed rate and when a client’s mortgage is maturing. Everyone realizes that there are penalties associated with breaking a variable rate mortgage (3 months interest) and that even with a maturing mortgage there is a level of inconvenience associated with collecting documentation and moving to another lender for a slight decrease in rate. “Balance Sheet Lenders” will use these barriers to exit to their advantage and charge marginally higher rates to existing clients. Continue reading →

October 24, 2013 -

Is The Bank of Canada hinting that we should go Variable?

Is The Bank of Canada hinting that we should go Variable?

Is the Bank of Canada hinting that we should all have Variable Rate Mortgages? Did you read our last newsletter?.

The Bank of Canada speaks a little differently than we do, so let me translate.

First, they said it by dropping one line that was in all of their reports over the past few years:

“Over time, as the normalization of these conditions unfolds, a gradual normalization of policy interest rates can also be expected…”

 They replaced it with this line: 

“the substantial monetary policy stimulus currently in place remains appropriate”

Then they said they were worried that prices don’t seem to be moving up as they expected despite of all the new money that was printed. Here is how they said that:

“the fact that inflation has been persistently below target means that downside risks to inflation assume increasing importance.”

The Bank of Canada doesn’t think they will have to act to slow growth until at least the end of 2015, which means no movement in the Prime Rate for at least 2 years. Continue reading →

October 24, 2013 -

Take the Variable Rate

Take the Variable Rate

Variable Rate Mortgages (VRM’s) are gaining in popularity in Canada, and with good reason.

Five year fixed rates have been hovering around 3.5% for the past several months and Canadians are starting to see the benefits of a nice low rate locked at prime – 0.5%. Canada’s Prime Rate is at 3% right now, and probably will be for another year or two, so maybe it’s time for you to consider a VRM?

Variable Rate Mortgages aren’t for the faint of heart. Mortgage rates move up and down on a weekly if not daily basis and if you think this may cause you to lose some sleep it might not be worth the stress. If however you feel you can handle the uncertainty, a Variable Rate Mortgage will probably save you some money over the next few years. We believe that there are some keys to saving money and protecting yourself in a VRM. Continue reading →

October 17, 2013 -

CMHC Announces it will be Rationing Mortgage Backed Securities

CMHC Announces it will be Rationing Mortgage Backed Securities

Yesterday we posted an article on our Facebook page discussing the next attempt to slow down Canada’s housing market. The Government of Canada, through its wholly owned Crown Corporation CMHC, has decided to begin limiting the dollar amount of mortgages Canada’s Mortgage Lenders will be able to have guaranteed by the Canadian Government. This newsletter will seek to show how we got here and what the impact on the Canadian Mortgage Market will be.

Continue reading →

August 7, 2013 -

Head Winds and Tail Winds; look where you want to go.

Head Winds and Tail Winds; look where you want to go.

Factors that will affect mortgage rates in the short and medium term.

When my Father was teaching my Brother and me how to drive he had some great words of wisdom that I can relate to our economy. I thought it might be fun to look at what is keeping our economy driving safely on the road and what might be tugging us towards to a ditch or into an accident. I am of course cleaning up the language and not yelling at you while I write this newsletter. Continue reading →

May 30, 2013 -

Minister of Finance’s involvement in the Canadian Mortgage Market

Yesterday Marcus Tzaferis appeared on CP24 to discuss the Minister of Finance’s involvement in the Canadian Mortgage Market. Consumers seem to be a little worried that the Minister’s tinkering could increase mortgage rates. Fortunately low rates are still available through Mortgage Brokers across Canada. Have a look at the video here.

If you or someone you know is looking for a mortgage a good Mortgage Broker continues to be your best source. As a reminder MorCan Direct continues to offer a 5 Year Fixed Rate Mortgage at 2.79%, our goal is to provide sound, unbiased, mortgage advice. If we can help you we will. Our extremely well educated agents are on salary and strive to exceed any expectations you have when looking for mortgage advice.

March 27, 2013 -

How the Bank of Canada Just Affected Your Mortgage.

How the Bank of Canada Just Affected Your Mortgage.

With a movement towards lower rates for a longer period of time what should you do?

This Newsletter will explain what the Bank of Canada said at this morning’s meetings and aid you in your mortgage decision making process.
The Bank of Canada and most economic indicators suggest that our economy is struggling and we need low rates and economic stimulus to support it well into the future. Whether you have a Fixed or Variable Rate Mortgage right now, or have an impending mortgage decision to make in the next 6 to 8 months reading this newsletter could really help. Continue reading →

March 6, 2013 -

Mortgage Rates will head higher, but for how long?

Mortgage Rates will head higher, but for how long?

The American Federal Reserve is finishing the second day of a two day meeting today. We expect the Federal Reserve to make an announcement today that will contribute to the recent rally we are seeing in Equities Markets. This morning we saw lower than expected GDP numbers come out of the U.S.. Coupled with unemployment and no sign of inflation this makes a stronger case for the members of the Federal Reserve to continue their program of stimulating the economy with low interest rates and a monthly infusion of $85 Million into Bonds. Continue reading →

January 30, 2013 -

Canadian Banks Look to Increase Fees & Mortgage Penalties

For 2013 we can expect a fragile US economy, a flat Canadian housing market, low returns on North American Equity Markets, low growth in developed countries, increasing Central Bank debt and continued stress on Insurance Companies, Pension Funds and Banks to generate returns.

The Good News: Low mortgage rates for Canadians for the foreseeable future.

The Bad News: If the Banks aren’t making money in the financial markets, you will pay for it! Continue reading →

January 9, 2013 -

The Impact of B20 – New Underwriting Guidelines

OSFI – the regulator of all Canadian Financial Institutions has imposed underwriting guidelines for Residential Mortgages on all regulated lenders and CMHC.  These underwriting guidelines are known as B20 and have been created at the insistence of the Financial Stability Board, the financial oversight organization of all G20 nations.  The creation of these guidelines is a direct result of the financial crisis caused by poor American mortgage lending practices.

Here we will provide a brief overview of the components of B20 in general terms and explain what it means to Borrowers, Mortgage Brokers and Lenders. Continue reading →

October 30, 2012 -

When Is The Best Time To Lock Into One Of These Low Fixed Rate Mortgages?

We have been featuring fixed rate mortgages as low as 3.89% on a 10 year and 2.94% on a 5 year fixed rate. These rate specials come and go as the yield on the Government of Canada 5 year Bond oscillates. Although it is my belief that rates will not move lower than they are right now, they may stay this low for some time, and that means Canadians have to make a decision. Does it make better sense to lock into a short term fixed rate like a 1 year or a 2 year fixed rate and save some money in the short term? Or should one take advantage of the longer term fixed rates now, on the off chance the inflation that everyone is worried about does creep into the market leaving us in a sea of 5%++ mortgage rates.

Continue reading →

September 24, 2012 -

Big Changes are Coming!

Three months ago, Finance Minister Jim Flaherty told banks to tighten lending on their own. Now he’s doing it for them. The Department of Finance released a number of mortgage rules last Thursday that will mean large changes to housing in the years to come.

Their main purpose for these changes is to slow down the booming housing market, by restricting buying power, and reduce household debt without increasing interest rates. To stop there being a rush to get a mortgage prior to the rule changes, the government only gave until July 9th to implement the changes. So, if you haven’t made your purchase offer prior to this date and submitted for approval the changes may affect you. Continue reading →

June 26, 2012 -

Rates Could Head Even Lower!

The Bank of Canada met yesterday in the middle of more worldwide economic uncertainty. It is no surprise that they were a little more “dovish” in their speech. For those of us who don’t speak economist, this means that the Bank of Canada is not concerned with inflation and therefore not looking to increase interest rates in the near or foreseeable future. The news coming out of Europe and to a lesser extent the United States and Canada will at a minimum hold the Bank of Canada from raising our countries prime rate longer than initially anticipated by the market. Continue reading →

June 6, 2012 -

High Risk, Lower Rate! Why?

By now you’ll have probably heard something about Mortgage Default Insurance. This is the Government sponsored insurance that makes it less risky for Banks to give mortgages. This insurance must be purchased by the lender for mortgages where the client has a small down payment (less than 20% of the property value), commonly known as High Ratio mortgages. It can also be purchased for Conventional Mortgages where the Borrower holds greater than 20% in equity in the property. This insurance is provided through CMHC and to a lesser extent Genworth and Canada Guarantee. Continue reading →

May 10, 2012 -

If You Aren’t Careful You May Wind Up With A Subprime Mortgage.

In case you didn’t see the article yesterday on CBC

Seeking the advice of a mortgage professional is becoming more important with each mortgage change that hits the Canadian market. In the past few years we have seen the Government institute guidelines for Lenders that are aimed at slowing the Canadian housing market and reducing household debt. It is important that Consumers understand how each of these changes has affected mortgages. In the past few years we have seen amortizations shorten, qualifying rates increase and lending policies tighten. The Canadian housing market may now be showing some signs of slowing. The question is, have these changes had the desired effect on making Canadian debt more secure now? Are we able to withstand an increase in interest rates and/or a decrease in housing prices? Continue reading →

April 17, 2012 -

Marcus Talks to CBC and the huffington post about SubPrime Borrowing

As the big banks get choosier about who they’ll lend money to in this hot housing market, Canada’s once-small subprime mortgage industry is quietly booming. The Canadian Real Estate Association released figures Monday showing Canadian home sales rose 2.5 per cent in March, and the average Canadian home sold for $369,677 last month. That was actually a slight decline from the level of a year ago, but it comes on the heels of almost uninterrupted strong gains over the previous two years. Continue reading →

April 16, 2012 -

Interest Rates Will Be Going Up!

Interest Rates Will Be Going Up!

If you are sitting on the sidelines watching these amazing fixed rates fade in and out you should probably know that they are going to be fading out again. Five year Canadian Bond Yields are up to 1.6% as of today and this will make it difficult for the major lenders to keep their rates at their current levels. Continue reading →

March 29, 2012 -

Mortgage Penalties Unmasked

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Mortgage Penalties Unmasked

If you have a fixed rate mortgage, you may be able to get a better interest rate or even acquire additional funding by breaking your mortgage. Unfortunately, you will have to go through your disgruntled lender and the subsequent prepayment penalty.  The penalty protects lenders against losses and usually represents the profit the lender was going to make on your mortgage had you not broken it early. Continue reading →

February 17, 2012 -

Changes In The Canadian Mortgage Industry?

Over the last decade house prices in Canada have doubled and the market continues to grow. The demand for property is illustrated by the fact that there are 173 sky scrapers being built in Toronto, the highest number in North America.  New York, with nearly four times the population, has only 96 under construction, while Chicago has just 17.

The continued growth is due to the strength of the Canadian economy and The Bank of Canada keeping interest rates at record lows, with our five year fixed rate currently at 2.99%.  The low fixed rate, combined with mortgage insurance underwritten by the Canadian Mortgage and Housing Corporation (CMHC), has led to financial institutions lending out record amounts to both Canadians and foreign speculators who have hoovered up property in Canada.  Additionally, the competition for property is so intense it has pushed house prices up to the highest levels ever, meaning the average Canadian needs to take on even bigger loans to afford the ever increasing price of housing in Canada. Continue reading →

February 11, 2012 -

Happy New Year?

Last week the Bank of Canada announced that it was to leave its benchmark rate untouched, marking the eleventh consecutive occasion Mark Carney and his cohorts have opted for the policy of the passive monetarist. While this will come as music to the ears of our variable rate customers, the overall tone of the Bank’s report was one of a foreboding nature, sprinkled with caveats and doused with doubt. The bulk of concern centred on the increasing dangers of Canadian household debt, now at a startling 154% and showing no signs of abating. Continue reading →

January 24, 2012 -

Low Rate Frenzy!

John Benstead and the rest of the MorCan team discuss low rates on CBC international.

January 20, 2012 -

With all these Turkeys flying around, is it time to head back into the Foxhole?

I derived this title from a report we wrote in December of 2008 when we had 1 office and went by the name Mortgage Marcus. With your help we have now grown to 3 offices and will be opening number 4 just before Christmas. In that December 3rd, 2008 report we advised all of our clients to consider the safety of a short term fixed rate to combat the increasing premium being priced on variable rate mortgages. It would seem that history is starting to repeat itself. Continue reading →

October 12, 2011 -

No Change In Our Prime Rate For Some Time To Come

Two months can seem like an eternity in the fickle world of finance. Two months can see the optimistic foundations, on which future plans were based, crumble, dissolve in a sea of uncertainty and wash away the hope that lingered previously. On Thursday, the Bank of Canada announced it was to keep its overnight rate untouched once again. Talk had turned to “heightened financial uncertainty”, to contracting domestic growth levels and to US levels of growth which would be “weaker than previously anticipated”. A marked difference from the July 19th meeting, which adopted altogether more optimistic tones and foretold of a time in the near future when the monetary policy “will be withdrawn”, sentiments which were conspicuous by their absence at the latest meeting. Continue reading →

September 14, 2011 -

When the Best-laid Plans of Bankers and Economists go Awry

For the best part of 2011, speculation on the future of Canadian interest rates were dominated by predictions of rate hikes to come before the end of 2011. Many of the banks’ own economists were citing increasing household debt, decreasing affordability in parts of the Canadian housing market and a need to eradicate inflationary fears as contributory factors which would fuel the inevitable rise.  However, the continued stagnation of the US economy, further lamented by its S&P downgrade and increasingly frequent mutterings of the, dare not say it aloud, “double dip” have represented somewhat of a game changer for all concerned. With the US Federal Reserve now signalling its intent to keep its key interest rate near zero through to the middle of 2013 and inflationary worries subsiding on home shores, the Bank of Canada (BoC) looks increasingly likely to keep interest rates fixed at current levels until at least the second quarter of 2012. Continue reading →

September 2, 2011 -

The US Debt Crisis and Your Mortgage

After a month of nail biting, furrowed brows and bated breath in the US, a resolution has finally been met. The Republicans and Democrats have reached an agreement to allow the debt ceiling to be raised, bringing an end to an arduous negotiation process which had all the civility and amicability of a Paul McCartney divorce settlement. So now that we edge away from the precipice and the four horsemen have been rerouted back towards Athens, it is time to assess the winners and losers arising from this war of attrition. President Obama is not happy, John Boehner is not happy and we’re even led to believe that somewhere beneath Michelle Bauchman’s taut, leathery exterior lies a disgruntled frown eager to show itself. So who are the winners in this torrid affair? The answer appears to be the Canadian mortgage holder. Continue reading →

August 9, 2011 -

The Rates, They Are A-Changin’… Just Not Quite Yet

In a time characterized by widespread economic turmoil across the US and Europe, there was a certain comfort to be taken in the mundanity of the Bank of Canada’s (BoC) report today. As almost unanimously predicted, the BoC left overnight rates unchanged at 1%, meaning the prime rate stays pegged at 3% and the variable rate mortgage holders of Canada continue to prosper. However, there were some nods towards a rate increase approaching on the horizon.  The quote of the day being the warning that monetary stimulus “will be withdrawn”, a statement whose severity is underscored by the omission of the word “eventually”, which was mentioned at the BoC’s May 31st meeting. Continue reading →

July 20, 2011 -

The Importance of Being Prudent

The laws of gravity dictate that what goes up must come down but I’m afraid, when it comes to the laws of economics and interest rates, what goes down must come up. Ultra-low interest rates are only a short-term solution and not sustainable in the long run. This is something which all economists agree on. Unfortunately this is the point where the common consensus ends and opinions diverge. The issue which is most divisive amongst the experts at the moment is exactly when these rate hikes will begin. As recently as a month ago many experts were predicting that rates would remain at their current levels until as late as March of 2012. A tumultuous week in the markets has seen many of these experts revise their predictions, with many now citing September as the month to bring a halt to the rate freeze. Continue reading →

June 30, 2011 -

The Carney Conundrum

Citizens’ of Vancouver awoke today to the realization that their most prized assets maybe reaching a tipping point and not one invoked by the drunken swaying of Canucks fans. Mark Carney, in a talk yesterday (June 16, 2011), gave some thinly veiled, ominous warnings to the Canadian home-buyer about the potential for the existence of a bubble in the Vancouver market. Although Mr. Carney avoided use of the dreaded b-word he suggested the Vancouver market has become increasingly similar to a “financial asset market” with favourable borrowing conditions lending themselves to a market fed by fear and greed. With recent reports suggesting the Vancouver market lies third behind only Hong Kong and Sydney on the hierarchy of over-inflated property values and the average home in Vancouver now priced at 11.5 times the average household income levels it is hardly surprising Carney opted to speak out. Continue reading →

June 17, 2011 -

Same Prime, Different Day

It’s that time again. When Mark Carney and his cohorts ascend Mount Olympus once more for the latest round of talks to decide the immediate future for Canadian mortgage holders. The prevailing feeling however is that little will result from this month’s scheming and plotting. Another meeting will pass with rates unchanged and the variable rate mortgage holders can rest easily until July 19th signals the next round of talks. While some speculators (who clearly haven’t been paying enough attention to Morcan Direct’s blog) earlier in the year cited this meeting as the one to kick off a series of interest rate rises, it now appears those speculators were somewhat premature in their estimations. Recent developments have meant it is now highly unlikely we will see a rate increase tomorrow. Continue reading →

May 31, 2011 -

Are Mortgage Rate Discounts Slimming Down for the Summer?

In the last week we’ve seen a reduction in the discounts lenders are offering on their variable rate mortgages (VRM). While heavy discounts of 0.80-0.90% have been common place in the Canadian mortgage market for a while now it seems these discounts are slowly being eroded by the lenders. Lenders are citing the narrowing of spreads (i.e. the difference between the cost of lending and the rate charged) culminating in decreased profit margins on VRMs. Continue reading →

May 5, 2011 -

Bubble? Or Just a lot of Hot Air?

A casual spectator of the Canadian housing market could be forgiven for feeling slightly overwhelmed in the last couple of weeks. It seems everybody has an opinion on the state of the housing market… unless you’re the leader of one of the country’s embattled political parties, who seem to be trying their best not to address the elephant in the room. Two weeks ago we saw fixed rates rise by at least 25 basis points for lenders across Canada. This was followed by IMF’s World Economic Output Report, the Bank of Canada’s Monetary Policy Report and a controversial and somewhat apocalyptic report on the housing market in The Globe and Mail. With the degree of information being crammed down our throats of late it can seem a daunting task to decipher these reports and that is why we, at Morcan Direct, have taken it on ourselves to relay what all this information means for you and your mortgage. Continue reading →

April 18, 2011 -

TD, CIBC Raise Mortgage Rates – Should You Lock In Now?

Jim Flaherty’s announcement last month enforcing stricter mortgage regulations was a call to arms on Bay Street. The street, which plays host to Toronto’s financial almighty, would play scene to a duel more commonly associated with America’s Old West rather than Canada’s financial epicenter. The big banks of Canada waited anxiously, eyeballing their opponents, to see who would be the first to reach for the trigger. On Monday (February 7th) of this week they got their answer as TD Canada Trust shot their posted 5-year fixed closed rate up 25 basis points. As is usually the case in these matters of nerve, once the first shot rings out more will follow as was to prove the case as CIBC responded by increasing their 5 year closed fixed rate 25 basis points later on that day. So what will be left for the borrower when the dust clears and the banks finally holster their pistols? Continue reading →

February 9, 2011 -

Jim Flaherty Changes Canadian Mortgage Rules

Today (January 17th, 2011) Finance Minister Jim Flaherty announced three new changes to Canada’s mortgage rules. The three changes are as follows:

1) A reduction of maximum amortization from 30 to 35 years for insured mortgages, or in other words mortgages that normally exceed 80% of the properties value.
2) Lowering the maximum amount Canadians can borrow in refinancing their homes to 85% from 90% of the value.
3) Withdrawing the backing of government insurance on home equity lines of credit (HELOC’s). Continue reading →

January 17, 2011 -

Mortgages: the Solution, Not the Problem

The year was 2005. Tiger Woods was beginning what was sure to be a long and blissful marriage to wife Elin, Mel Gibson was the darling of Hollywood after steering “Passion of the Christ” to over $600 million at the box office and US house prices were at record highs after 5 consecutive years of stellar growth. Life was good. Little did we know that Mel was on the verge of a very public break down, Tiger was about to get caught with his pants down and the US economy was standing on the precipice of financial meltdown. The housing market was built on a foundation of weak lending standards, rising personal debt and a speculative fever which had gripped the nation and it was a foundation which was about to crumble, claiming with it some of the largest institutions on Wall Street. Continue reading →

December 22, 2010 -

The Case for Variable Rates Strengthens

“To do nothing at all is the most difficult thing in the world, the most difficult and the most intellectual.”
– Oscar Wilde

Governor Carney will be hoping that the words of Mr. Wilde ring true in the coming months if his plans to revive the declining Canadian economy prove successful. In the face of decreased exports, poor progress in the US Government’s efforts to revive their economy and with little sign of the problems in the EU abating, the Bank of Canada (BoC) has opted against changing interest rates, as it announced on Thursday, last week. After raising its benchmark lending rate three times this year it came as no surprise to see Carney play it safe in the face of continuing international uncertainty and decreasing growth fuelled largely by a decrease in exports. The Bank of Canada’s Financial System Review for December highlighted the current plight of the European financial system as a key risk to Canada’s economic prospects. Although the report points out Canada has limited direct exposure to the sovereign debt of the likes of Greece and Ireland, were these problems to spread to more prominent members of the EU, such as Spain, it could reek havoc on the global bank funding markets. Given this level of uncertainty it would certainly seem prudent to follow a “wait and see” strategy and leave interest rates unaltered, until the degree of damage can be better understood. Continue reading →

December 15, 2010 -

4 Things to Consider Before You Break Your Mortgage

Variable will be the winner for the next couple of years. The Bank of Canada came out on October 19th and decided to keep interest rates unchanged. This was no surprise. What may have been slightly surprising to those focused on the consistent gains of the North American equity markets was the language used in the statement that followed the decision. The Bank of Canada revised its forecasts for growth downward for 2012, leading us to believe that they see something on the horizon that will slow Canadian growth.

The Bank realizes that the eventual reduction of stimulus being poured into the Untied States will have a dramatic effect on the Canadian economy. In this current term of economic uncertainty the United States Government is propping up its economy with incredible sums of money. Some of this money is very transparently entering the economy through mortgage buy back plans, cash for clunkers, employment generating schemes, and infrastructure spending. The rest of it is entering the economy a little more secretly, through debt and equity market purchases by the Federal Reserve. Once these schemes are relaxed, or as the Federal Reserve would have us say, “When quantitative easing is reduced”, surely some change will occur? Continue reading →

October 27, 2010 -

Variable Rate Mortgages Still Best

Variable rate mortgages and good information are still by far the best two ways to ensure you are saving money on your mortgages. The Bank of Canada meets tomorrow and most economists forecast an increase in our country’s overnight rate. This is probably the safe bet.  However, I believe that there is a strong argument for the Bank of Canada to hold rates as they are. Continue reading →

September 7, 2010 -

Bank of Canada Raises Key Rate

The Bank of Canada (B.O.C.) raised its key policy rate 25 bps to 0.75%, as was expected. This will mean an increase in variable rate mortgage rates by the same amount. In a statement released, The B.O.C. echoed its previous sentiments:

“Given the considerable uncertainty surrounding the outlook, any further reduction of monetary stimulus would have to be weighed carefully against domestic and global economic developments.” Continue reading →

July 27, 2010 -

Your Best Interest, Not Just About Rates

When it comes to mortgages there is a very strong focus on rates and how and where to get the lowest rate in the market. We have stood behind our guarantee that we offer the lowest rates in the market but we would like to stress the fact that there is more to the mortgage story. Although the rate determines the amount of interest you will be paying over the course of the term there are other factors to consider that will potentially save you thousands of dollars over the entire life of your mortgage. Continue reading →

July 23, 2010 -

6 Things You Should Know Before Closing Your Mortgage.

1. Balance Sheet vs. Non-Balance Sheet Lender

There are two different types of lenders that exist in Canada; Balance Sheet Lenders and Non-Balance Sheet Lenders. A “Balance Sheet Lender” is any chartered bank in Canada. They are referred to as “Balance Sheet Lenders” because they hold your mortgage on their books as an asset. These Lenders can only increase the value of their asset (your mortgage) by increasing the spread between their cost of funds and the rate at which you pay interest on your mortgage. A “Non Balance Sheet Lender” is a mortgage servicer that has the same motivation as you, they want you to be their client and stay as their client based on rate alone. Since your mortgage is guaranteed by the Canadian Government there is only one rate that you can be charged, there is no ability for the lender or servicer to increase your interest rate, and due to the efficiency of the market they cannot make more money by selling you a higher rate when you lock into a fixed rate mortgage from a variable, or when you renegotiate your mortgage at maturity. Continue reading →

July 23, 2010 -

Interest and CMHC Changes

Interest rates have been steadily increasing over the past few weeks. This should come as no surprise to anyone reading these newsletters. We do anticipate that rates will increase further before slowing down and probably heading back down to lower levels. Royal Bank is increasing their rates tonight, on the back of stronger bond yields which telegraph the mortgage market moves.

The consensus at the major Canadian Banks is for an increase of the prime rate by 2.5% over the next year and a half. Some banks feel that rates will increase faster than others, but the consensus has changed dramatically. It is entertaining that the group that previously believed that we were in the worst recession since the 1930’s; now sees growth from Canada and the United States coming in at record levels.

We don’t scare that easily. Continue reading →

April 13, 2010 -

The Bank of Canada: A Brief History

The Bank of Canada: A Brief History

The Bank of Canada is the nation’s central bank. Established in 1935 through the Bank of Canada Act, the BoC’s main goal is to promote the economic and financial interests of Canada.

Before the 1930’s there was no need for central banking due to Canada’s scattered and primarily rural economy. The branch bank network that existed in Canada was able to meet the nation’s needs. The larger banks were able to deal with government business with ease and the branch network developed a system for clearing cheques between banks.
Continue reading →

April 7, 2010 -

The ecoEnergy Retrofit – Homes Program

The ecoEnergy Retrofit – Homes Program

As part of the Government of Canada’s Economic Action Plan, the ecoEnergy Retrofit – Homes Program has been expanded to aid 200,000 homeowners in covering the cost of making their homes more energy efficient. The time-sensitive program includes a $300 million increase in funding over two years. In other words, the program provides non-taxable grants to those that have carried out renovations that improve the energy efficiency of their property.

The question is: Does your property qualify? The grant is offered to owners of low-rise residential properties. For example; single detached and attached homes, small multi-unit residential buildings (including apartment buildings of three storey’s or less), mobile homes that are on a permanent foundation and floating homes that are permanently moored all are eligible for the grant. The only restrictions on the types of homes mentioned are the age of the home so make sure your home is not newly built and has been occupied for more than six months. Even if you are in the process of building a house you will not be entitled to the program because the idea behind the grant is to help older homes adhere to a greener energy condition.
Continue reading →

April 7, 2010 -

The Home Buyers Plan – Will it work for you?

Several conditions apply so before you delve into your RRSP make sure you meet said conditions.

  • You must be a Canadian Resident.
  • The portion of the RRSP you plan to use towards the purchase of your new home must be in your RRSP account for more than 90 days.
  • You must be a first time home buyer. (You or your spouse/common-law partner have not owned a home for at least four years before the date of the RRSP withdrawal.)
  • A written contract for the home’s purchase is mandatory.
  • You must use the home as your primary residence.

Continue reading →

April 7, 2010 -

Getting the Most out of Your Payments

When it comes to your mortgage there are several payment frequencies you can choose from. The payment frequency refers to how often you will make mortgage payments. Not all payments offer savings on interest or will help you pay down your mortgage faster. Here is a simple breakdown of each payment type to help you choose the option that most suits your situation.

Continue reading →

April 7, 2010 -

Fixed Rate vs Variable Rate: The Conundrum

Hamlet once asked, “To be or not to be?” That is no longer today’s question. Nowadays, we are plagued by a different query. It is better to go with a fixed rate or a variable rate mortgage? We need to know how beneficial it would be to lock into a longer-term fixed mortgage rate or stay in a variable rate. Short term rates are at a tremendous low and the pressure is on for rates to build in the coming years. So, what’ll it be? Fixed or variable; which is the better option?

Generally borrowers save money by staying in variable products and weathering the storm of fluctuating rates. Since 1975, approximately 80% of the time, the cost effective route for borrowers was to stay variable. The spread between 5 year fixed mortgage rates and variable rates has been widening further in recent years. It is now close to an all time high.

There are four important points to consider before we jump to any conclusions in thinking the variable rate is the way to go.

  • We have been locked in a long-term declining rate environment since the early 1980’s.
  • The Bank of Canada’s overnight rate is now as low as it can possibly be. There is no further downside for variable rates.
  • Posted rates do not tell the whole story. The actual rates that borrowers negotiate have fallen much closer to fixed and floating in recent years than suggested by headline figures.
  • During the late 1970’s and the late 1980’s, fixed rates were advantageous (ahead of a period of rising interest rates, as is the case now).

Continue reading →

April 7, 2010 -

Common Costs of Owning a Home

Common Costs of Owning a Home

The great thing about purchasing your very first home is that you can stand in the middle of your backyard or on your balcony and scream at the top of your lungs, “I’m a home owner!” Well don’t yell that loud, your neighbours might call the cops instead of ringing your doorbell with a freshly baked welcome-to-the-neighbourhood pie. At Morcan Direct we want you to move into your first home and get right to the expressing-your-joy-about-being-a-home-owner-and-getting-a-slice-of-that-delicious-pie phase without a headache. In order for you to have that smooth transition here’s a list of common costs faced by new home owners. Continue reading →

April 7, 2010 -

Cash Back Mortgages: Not all They’re Cracked Up to Be

Buying a home can be one of the most financially stressful decisions we are faced with in our life times. Many first time home buyers feel like ripping out their hair while trying to come up with their down payment. You may have heard about the Cash-Back mortgage and think it sounds like a dream. Who wouldn’t want to buy a house with some down payment and get that money back on closing? We’ve been in this business a long time and we’re here to give it to you straight: cash-back mortgages may sound appealing but in the end they’re not always the best option. Continue reading →

April 7, 2010 -

What is Bridge Financing?

Congratulations, you’ve found your dream home! There is a problem though, the owner of your dream home has to close the deal within a month, and you can’t sell your current property that quickly. Enter bridge financing, your best way to seal the deal. This type of financing is a hefty short-term loan that serves as a link between the period when you own, and are paying for two homes. Continue reading →

April 7, 2010 -

What’s an Appraisal, and Why is it Important?

No two homes are alike. For this reason you will need to have your new home appraised before the lender approves your mortgage loan. So, what exactly is an appraisal? An appraisal is a judgment of worth by a professional. The appraiser will visit your home and inspect the size, condition, quality and function. The appraiser will then produce a detailed report using comparisons to the sale prices of similar homes in the area, determining the value of your home. Continue reading →

April 7, 2010 -

Amortize It!

You may have heard the word “amortization” thrown around in the financial world. The definition of amortization is the act of paying off debt in regular installments over a period of time. It applies directly to your mortgage! Why you ask? Simple, because the amortization of a mortgage refers to the total number of years required to pay back the entire borrowed amount.

Until recently, in Canada, the longest amortization period on a mortgage was 25 years. Now, some lenders offer an amortization of up to 40 years. Some people prefer a longer amortization period to ensure smaller mortgage payments. However, it can be to your advantage to choose the shortest amortization that you can afford because in the long run, you will save thousands of dollars in interest. Continue reading →

April 7, 2010 -

Healthy, But Sensitive.

Our economy seems relatively healthy, but let’s not forget how sensitive it is.

The Government of Canada and the Bank of Canada have been carefully working to strengthen our Canadian economy throughout this economic crisis. At the inception we saw a commitment from the Bank of Canada to keep interest rates low. Now that our housing market is over heating, we are met with media dominating press releases from the Minister of Finance, telegraphing a desire to slow down the red hot housing market and the rate at which Canadian homeowners are harnessing the debt in their homes. Continue reading →

March 3, 2010 -

The Home Renovation Tax Credit

The HRTC (Home Renovation Tax Credit) is a non-refundable tax credit for improvements to your eligible dwelling. How do you know if your dwelling is eligible? Well, the Government of Canada considers an eligible dwelling to be an individual’s principal residence (or a family’s residence) at any time between January 27th, 2009 and February 1st, 2010. This means that any dwelling you own, occupy and use personally can qualify, even your cottage! Continue reading →

January 1, 2010 -

The Good, the Bad and the Ugly.

The Bank of Canada must soon decide whether or not to increase interest rates. It is the Canadian Housing Market, the American Dollar and the American Consumer, that will have great influence over this decision in 2010.

This decision will not be easy. We are wedged between a sizzling housing market, being driven by our extremely low borrowing rates on one side and a badly beaten USD, which is affecting our exports to the US. Continue reading →

December 14, 2009 -

Making Assumptions on Assumable Mortgages

Everyone knows the old saying about making assumptions. “When you assume you make an…”you get it. There is one instance where assumptions are the right thing to do – when it comes to your mortgage. The purchase of a new home can be quite costly and usually entails some form of financing to make the purchase a possibility. More often than not a potential buyer takes out a mortgage for the purchase. Our experienced brokers will help you with this alternative to the traditional mortgage: an assumable mortgage.

Continue reading →

December 8, 2009 -

Why MorCan?

Why MorCan?

We value your business, we know you have a world of options and we are happy you are working with us. We commit to you that we will do everything in our powers to ensure that this process goes smoothly for you. Lower mortgage rates are just the beginning with us. We know you will find that our commitment to sound, unbiased mortgage advice and excellent service are unparalleled. Continue reading →

March 15, 2009 -

The 6 Year Strategy

Canadians looking to refinance their existing mortgage or purchase a new home within the next 6 months should obtain a 1 year Fixed Rate Mortgage. This will allow the well informed consumer to lock into a Variable Rate Mortgage (VRM) with a more favorable interest rate in the next 12 to 18 months. It is our belief that the premium currently being charged on these VRM’s will disappear.

Like any financial product VRM’s are priced by the market. We strongly believe that VRM’s will decrease in price to consumers over the next 12 to 18 months. This decrease will be a result of an increase in mortgage lender demand for VRM’s and a decrease in the cost associated with those lenders holding VRM’s.

We will go on to explain why this has happened, what we expect will happen in the future and how the Canadian mortgage consumer will be able to benefit from a 6 year strategy. Continue reading →

March 6, 2009 -
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