2010 | MorCan Direct - Part 2
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Jul 23
Uncategorised

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 →

Jul 23
Newsletter

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 →

Apr 13
Newsletter

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 →

Apr 7
Newsletter

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 →

Apr 7
Newsletter

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 →

Apr 7
Newsletter

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 →

Apr 7
General

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 →

Apr 7
General

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 →

Apr 7
General

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 →