What should the length of my mortgage term be?
The length of mortgage terms varies widely – from six months right up to 25 years. As a rule of thumb, the shorter the term, the lower the interest rate the longer the term, the higher the rate.
While four or five year mortgages are what most home buyers typically choose, you may consider a short-term mortgage if you have a higher tolerance for risk, if you have time to watch rates or are not prepared to make a long-term commitment right now.
Before selecting your mortgage term, we suggest you answer the following questions:
1. Do you plan to sell your house in the short-term without buying another? If so, a short mortgage term may be the best option.
2. Do you believe that interest rates have bottomed out and are not likely to drop more? If that’s the case, a long mortgage term may be the right choice for you. Similarly, if you think rates are currently high, you may want to opt for a short to medium length mortgage term hoping that rates drop by the time your term expires.
3. Are you looking for security as a first-time home buyer? Then you may prefer a longer mortgage term, so that you can budget for and manage your monthly expenses.
4. Are you willing to follow interest rates closely and risk their being increased mortgage payments following a renewal? If that’s the case, a short mortgage term may best suit your needs.
Should you go with a short or long-term mortgage?
A longer-term mortgage is worth considering if you have a busy life and don’t have time to watch mortgage rates. Our 4, 5 and 7-year mortgages let you take advantage of today’s rates, while enjoying long-term security knowing the rate you sign up for is a sure thing.
If you want to keep your mortgage flexible right now, you can explore a shorter-term mortgage that usually allows you to take advantage of lower rates and save.
What is a fixed rate mortgage?
The interest rate on a fixed-rate mortgage is set for a pre-determined term – usually between 6 months to 25 years. This offers the security of knowing what you will be paying for the term selected. You can ask your mortgage broker for details on the available fixed rates today.
What is a variable rate mortgage?
A mortgage in which payments are fixed for a period of one to two years although interest rates may fluctuate from month to month depending on market conditions. If interest rates go down, more of the payment goes towards reducing the principal; if rates go up, a larger portion of the monthly payment goes towards covering the interest. RBC open variable rate mortgages allow prepayment of any amount (with certain minimums) on any payment date.You can ask your toronto mortgage broker for details on the available variable rates today.
Amanda Cluett is an experienced Toronto Mortgage Broker Also specializing in Bad Credit Mortgage in Toronto for more articles and information visit Ontario Mortgage
How Much Home Can I Afford?
To determine affordability you will first need to know your taxable income along with the amount of any debt outstanding and the monthly payments. Assuming it is your principal residence you are purchasing; calculate 32% of your income for use toward a mortgage payment, property taxes and heating costs. If applicable, half of the estimated monthly condominium maintenance fees will also be included in this calculation.
Second, calculate 40% of your taxable income and deduct all of your monthly debt payments, including car loans, credit cards, lines of credit payments. The lesser of the first or second calculation will be used to help determine how much of your income may be used towards housing related payments, including your mortgage payment. These calculations are based on lenders usual guidelines.
In addition to considering what the ratios say you can afford, make sure you calculate how much you think you can afford. If the payment amount you are comfortable with is less than 32% of your income you may want to settle for the lower amount rather than stretch yourself financially. Make sure you do not leave yourself house poor. Structure your payments so that you can still afford simple luxuries.
If you have any questions on what you can afford you can contact your toronto mortgage broker today and they can help you with figuring out what you can afford.
Minimum down payment needed for a home
A minimum down payment of 5% is required to purchase a home, subject to certain maximum price restrictions. For instance, in the Greater Vancouver area the maximum purchase price with 5% down is $250,000. Any purchase price in excess of $250,000 requires a minimum of 10% as a down payment. In addition to the down payment, you must also be able to show that you can cover the applicable closing costs (i.e. legal fees and disbursements, appraisal fees and a survey certificate, where applicable).
Regardless of the amount of your down payment, at least 5% of it must be from your own cash resources or a gift from a family member. It cannot be borrowed.
Lenders will generally accept a gift from a family member as an acceptable down payment provided a letter stating it is a true gift, not a loan, is signed by the donor. Where the mortgage loan insurance is provided by Canada Mortgage and Housing Corporation (CMHC), the gift money must be in the your possession before the application is sent in to CMHC for approval.
Mortgages with less than 25% down must have mortgage loan insurance provided by either CMHC or GE.
Amanda Cluett is an experienced Toronto Mortgage Broker Also specializing in Bad Credit Mortgage in Toronto for more articles and information visit Ontario Mortgage
Value of a Home Inspection in Toronto
When most home owners and buyers think of home inspection they think of hassle. Any experienced Toronto mortgage broker will advise you to not only get a home inspection but prepare yourself for the outcome. It is important that both home owners and buyers realize that this is a very important part of the home buying process. Whether you are a home buyer looking to obtain a mortgage or you are a home owner looking to sell your property a home inspection is important.
Buyers need to remember when looking for their dream home in Ontario that a very important part of the home buying process is the home inspection. Most buyers find it hard to remain objective, unattached, and unemotional about the place they have coined as their dream house. This whirlwind of home buyer emotions can affect the home buyers judgment.
In order to receive the most accurate knowledge about the condition of a home, always get an impartial third party opinion from a home inspection professional. Remember you are not required to get a home inspection but your experienced Ontario mortgage broker will agree that it is a way to protect you as the offer is usually dependent upon the home inspection.
What this means in plain English is that if the inspector finds huge problems you have the chance to back out of the offer and look for other properties to call home. It you decide that you do not want to walk away from your dream home it also gives you some bargaining room to get a discount on the initial agreed upon price or to have repairs made before you close on the house.
Sellers need to remember that an inspection is just as important for them. Any professional Ontario mortgage broker might even suggest that you get an inspection prior to putting your house on the market. It is better that a seller does not wait to the buyer home inspection to uncover hidden problems after they have already accepted an offer from the buyer.
As a seller your decision to wait can eventually cost you thousands in a lower negotiated selling price. More often Ontario home sellers are choosing to have a home inspection when selling their home to help find critical areas of concern before they list.
Although this is an initial added expense it can save you thousands when it is time to sign the papers and hand over the keys. The choice to have the property inspected prior to listing will help you to decide whether to do the repairs for whatever problems arise during the initial inspection or reveal the problems during negotiations.
Whether the inspection is done by the buyer, seller, or both, keep in mind that it is impossible for an inspector to find everything that may be wrong with a home or problems that might arise in the future. However, qualified and experienced home inspectors can spot the vast majority of problems and both buyers and sellers can rest knowing that everything possible has been done for the home to have a thorough inspection.
Amanda Cluett is an experienced Toronto Mortgage Broker Also specializing in Bad Credit Mortgage in Toronto for more articles and information visit Ontario Mortgage
How Important is Your Credit?
When you are looking for a loan, mortgage, or credit card, your personal credit report is what lenders look at to make their decision. There are many factors that can affect your credit, some of which are:
– Number of credit accounts
– History of Credit accounts
– Amount of credit available and the balance owing in each account
– How regular you make your payments
– How often and how recently you have applied for credit
Debt Ratios
Determining your debt ratio can help you determine if they are willing to take the risk in giving you a mortgage. Traditional GDS and TDS ratios are 32% and 40% and if you exceed these debt ratios, mortgage lenders generally wont approve your loan. However, some lenders have different standards and some lenders are willing to let you exceed these ratios if you have a good credit rating. Mortgage lenders look at all your credit card bills, any loans, and how that mortgage would impact your ability to pay if they were to give it to you.
How to figure out your Debt Ratios
To figure out your GDS you work out your mortgage payment (including principal & interest) plus realty taxes + heat + 1/2 your condo fees (if applicable) for the year. Then you take your annual income and divide it by this. Giving you your Gross Debt Service Ratio (GDS).
To figure out your TDS you work out your mortgage payment (including principal and interest) plus realty taxes + heat + 1/2 your condo fees (if applicable) for the year. Plus you add all your other commitments. These other commitments may include personal loans, credit card debt, car leases, support payments and/or alimony, student loans and mortgages on other properties. Many lenders have different methods of calculating credit card debt. Sometimes they will include 5% of the APPROVED credit limit (even though they have nil balances) or they use 5% of the outstanding balance at the time of the application. Again you take your annual income and divide it by the total debt and this give you your Total Debt Service Ratio (TDS).
A Good Tip
It is very important that you maintain a good credit profile. By paying your bills on time, you stay in good credit standing. A good tip to remember is to review your credit report every year to detect any inaccuracies or possible identity fraud. If by any chance you do detect any fraud make sure you contact Human Resources Development Canada (HRDC) and your local police department.
Amanda Cluett is an experienced Toronto Mortgage Broker Also specializing in Bad Credit Mortgage in Toronto for more articles and information visit Ontario Mortgage
Introduction to Starting a New Online Home Business
If your time would not allow you to work in an office because of so many errands to do like sending the kids to school, buy things at the grocery store and more, and then you can just do business right at your own home with online home business. Having this kind of job will allow you to do the things that you need to do at home and at the same time earn money just like as if you are working in an office.
There are so much that you need to know when you want to start an online home business, the very first thing that you need to do is to decide what type of product or service do you want to offer. If you do not have an idea, you can try browsing online, look for the different online home business using search engines. Online business websites provide online users some detailed instructions regarding the business, like setting up the business itself, advertising, and how to find your business online, quickly and easily. Through the use of forums, you can talk with your fellow business owners, you can ask what type of campaign or procedure should you use to effectively market your business online or you can even ask some advice on what product or service should you offer. Try connecting with other online home business owners like you by joining the forums. Ask them about how they have managed their business and personal activities or any other queries that you may have in mind.
Using search engines can also be helpful, use Yahoo, MSN or Google, make sure you are up to date with the current issues about online home business. Just look for whatever it is you want to know by typing the word and in an instant the results of your search will all be there.
When you start to put up your own store, you can be a virtual store owner and join any internet auction online. Most store owners today use the net for billing and payment. This is a convenient way of transaction for you and your customers. There are so many site builders online that can help you make your own website to help sell your products or services online, with just $5 a month, you can already make your own, without hassle.
The secret to success is putting 100% of you into it. The success of your business depends on how much effort you have exerted on it, the interest that you have for it and the love that you have for your business. Make sure that you have all these and the success will be within reach.
For your new online home business opportunity, with a proven track record and a highy motivated team visit us at: