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19
Nov
Loan Credit
“ Your Solution Center „
The first thing most people think of when they come to the realization that they want to buy a home is “oh no, what kind of mortgage do I need to get my home?” Most people are aware that there are many different kinda of mortgages, but many , especially first time home buyers, may not be familiar with the differences between the types of mortgages readily available in Canada.
Mortgage rates in Canada still seem to be hanging at a good low-point compared to their all time highs. Although it may seem that Canadian mortgage rates have seen some small jumps recently through decisions made by the financial institutions, these jumps are minor enough to not really be felt by many and they still have kept Canadian mortgage rates low.
When comparing the 2008 mortgage rates to the 2009 mortgage rates for most mortgage lending groups such as banks and independent mortgage broker’s in Canada it makes it evident how amazing it is regards to changes within one year. Or in other words it is amazing what a difference a simple year can make.
Conventional - This type of loan is only presented to you if you have at least 25% of the purchase price available for a down payment. So if the home you wish to buy is $210,000 and you have $45,000 available for the down payment, you may qualify for a conventional mortgage.
High Ratio - Available to clients who are able to lay down between 5% to 25% of the purchase cost as a down payment. These usually need to be insured through the Canada Mortgage and Housing Corporation. Purchasing this insurance lets you qualify for a mortgage when you have less than 25% available for the down payment.
CHMC 5% Downpayment Program - This was originally for first time homeowners, and this lets you qualify for a loan even if you only have 5% available for a down payment.
Open - Allows you to pay off part or all of the mortgage at any time without penalties. The interest rates are usually higher, though.
Looking back at 2008 and comparing the fixed-rate (closed-rate) mortgages to those present in the 2009 Canadian mortgage market would put a big smile on any home buyers face. It seems that waiting just a year was an excellent decision. And those who could not wait and just had to buy in 2008 better have hoped they jumped into a variable-rate mortgage at the time; and now is a not a bad time to switch that into a closed-rate, if that is an option your lending company offers.
Rates in October-2008 went from 7.05% for a 3-year fixed-rate and 7.20% for a 5-year fixed-rate to their current values in October 2009 at around 4.35% for a 3-year fixed rate and 5.49% for a 5-year fixed rate.
When looking at most home buyers it seems that there is a large trend to select a 5-year fixed-rate mortgage. Playing it safe with numbers makes the buyer feel comfortable. However, many mortgage experts suggest that the 3-year term is worth looking into as well because it offers a low rate plus it covers several years of a secure interest rate for home buyers. With options beyond that point to compare what the market is doing and so you don’t get locked into that rate for “too long”.
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Photo By Boris Veldhuijzen van Zanten
I’m going to be kicking off a series of posts of lists with important people in the industry, but best of all they’re local to you. Twitter is an interesting way to connect with leaders in the industry and a personal level which hopefully develops into a business opportunity. Being able to see the behaviors, attitudes and advice these experts are giving lets you get a good feel for the person you’re thinking about working with.
