Earlier today, federal Finance Minister Jim Flaherty tabled the federal budget. Several measures affect Canada's housing and mortgage industry.
• Temporary home renovations tax credit of up to $1,350 for eligible home renovations and alterations
• Increase in the home buyers RSP plan, withdrawal limit increased to $25,000 from the current $20,000
• A new first time home buyers tax credit that will provide up to $750 in tax relief for closing costs
• Broad based personal tax reductions including an increase in the personal exemption and increases to the limits for the two lowest tax brackets
Source: Canadian Association of Accredited Mortgage Professionals
www.caamp.org
Tuesday, January 27, 2009
The Credit Crunch & Your Mortgage: how to make the best of a complicated situation
The global economy has cooled, credit markets have tightened, and it has been particularly cold here in Alberta --what a way to start 2009. While the headline stories may not be appealing, these challenging economic times have created a tremendous opportunity to homeowners looking to decrease their monthly expenses.
In response to the contraction of credit markets over the past 16 months, governments around the World have cut overnight lending rates to historic lows. Similarly, mortgage lending interest rates in Canada have dropped well below historical average lending rates. This new climate has created an opportunity for homeowners with existing mortgages to refinance, therefore, significantly lowering the cost of their mortgage.
For example, a $285,000 mortgage financed in late 2007 with an interest rate of 5.89% will have monthly payments of $1,804.86/month. If that same mortgage were replaced with a new mortgage for $285,000, total monthly payments would be $1,560.02 --a savings of $244.84/month. Over the remaining term of the mortgage, this homeowner will save over $10,000 in monthly mortgage payments!
To find out how much you could potentially save, call one of the qualified Alberta Mortgage Professionals at 780-479-2222, or apply online at www.albertamortgagecentre.com.
In response to the contraction of credit markets over the past 16 months, governments around the World have cut overnight lending rates to historic lows. Similarly, mortgage lending interest rates in Canada have dropped well below historical average lending rates. This new climate has created an opportunity for homeowners with existing mortgages to refinance, therefore, significantly lowering the cost of their mortgage.
For example, a $285,000 mortgage financed in late 2007 with an interest rate of 5.89% will have monthly payments of $1,804.86/month. If that same mortgage were replaced with a new mortgage for $285,000, total monthly payments would be $1,560.02 --a savings of $244.84/month. Over the remaining term of the mortgage, this homeowner will save over $10,000 in monthly mortgage payments!
To find out how much you could potentially save, call one of the qualified Alberta Mortgage Professionals at 780-479-2222, or apply online at www.albertamortgagecentre.com.
Monday, January 12, 2009
Do Fixed and Variable Rate Mortgages Move in Unicen?
As we near the announcement of the Canadian Federal Budget next week, many potential and existing homeowners are expecting interest rates to drop --significantly. Accordingly, many people are similarly predicting mortgage interest rates to drop comfortably. While this prediction may come true, it is possible for the Bank of Canada to decrease its Prime Lending Rate without having any impact on Fixed Mortgage Interest Rates.
The reason a drop in the Bank's Prime Lending Rate does not necessarily equate to a drop in Canadian Mortgage Lenders' available Fixed Rate Mortgages is because the two are generally affected by a different set of factors, are designed to accomplish somewhat different objectives, and are controlled by an altogether different set of parties.
The Prime Lending Rate is a reflection of the Bank Canada's Overnight Lending Rate --which is the rate at which financial institutions are able to access short term funds. The Bank of Canada works with the Government of Canada to achieve targeted objectives set out by the Minister of Finance and Parliament. As a result of this relationship, the Prime Rate is often set in a way to maximize its positive effect(s) on the economy.
In contrast, Fixed Rate Mortgages are based on the Canadian Bond Market and therefore functions in response to market fluctuations and activity. As a result of this discrepancy between Fixed and Variable Rate Mortgage Interest Rates, it is possible for both to be moving in opposite directions --such as when the Government is looking to curb inflation while companies are seeking out capital investment.
For more information about Fixed and Variable Rate Mortgages, contact one of the qualified Alberta Mortgage Professionals or visit www.albertamortgagecentre.com or call 780-479-2222.
The reason a drop in the Bank's Prime Lending Rate does not necessarily equate to a drop in Canadian Mortgage Lenders' available Fixed Rate Mortgages is because the two are generally affected by a different set of factors, are designed to accomplish somewhat different objectives, and are controlled by an altogether different set of parties.
The Prime Lending Rate is a reflection of the Bank Canada's Overnight Lending Rate --which is the rate at which financial institutions are able to access short term funds. The Bank of Canada works with the Government of Canada to achieve targeted objectives set out by the Minister of Finance and Parliament. As a result of this relationship, the Prime Rate is often set in a way to maximize its positive effect(s) on the economy.
In contrast, Fixed Rate Mortgages are based on the Canadian Bond Market and therefore functions in response to market fluctuations and activity. As a result of this discrepancy between Fixed and Variable Rate Mortgage Interest Rates, it is possible for both to be moving in opposite directions --such as when the Government is looking to curb inflation while companies are seeking out capital investment.
For more information about Fixed and Variable Rate Mortgages, contact one of the qualified Alberta Mortgage Professionals or visit www.albertamortgagecentre.com or call 780-479-2222.
Friday, January 2, 2009
Debt Consolidation Mortgages: How do they work?
What is debt consolidation?
Debt consolidation (in the context of a real estate) is when an individual converts their high interest, short term debt (credit cars, personal loans, unsecured loans, car loans, etc) into a lower cost loan in the form of a mortgage or secured line of credit. The money that is used to replace the high interest debt comes in the form of a loan registered against the borrower's property for the value its existing equity. Through debt consolidation, individuals can drastically reduce their monthly payments and overall cost of debt and simplify their lives by replacing a multitude of payments with a single monthly pre-authorized mortgage/interest payment.
Can anyone get a debt consolidation mortgage/line of credit?
Debt consolidation mortgages and lines of credit are only available to individuals who already own real estate, and have some established equity in the property. If you own your own home and have some existing equity, you can possibly qualify for a debt consolidation loan --regardless of your current credit situation. If you own a home, you can qualify!
How does a debt consolidation mortgage/line of credit really work?
Lets say that you as an individual have $312,000.00 in debt ($250,000 mortgage, $40,000 in car loans, and $22,000 in credit card debt), which has a total monthly payment of $2913.67
After consolidating the same debt with a new mortgage at even 5.75%, the same $312,000.00 of total debt would have a mortgage payment of $1950.07
By consolidating your debt in this example, you save $963.60 each month without making any changes to your lifestyle or spending patterns! If you were to set aside $500.00 of the $963.60 saved each month, by the end of your 5 year mortgage term, you will have saved $30,000.00 without making any spending cuts, and actually having an additional $463.60 to spend each month!
With these savings in hand, you can not only save money each month on payments, but you will also be protecting your credit rating, reduce your interest expenses and have the ability to better your lifestyle and save for the the future.
If you own your own home, these savings can become a reality!
For more information about debt consolidation and mortgage refinancing, call one of the mortgage brokers at Alberta Mortgage at 780-479-2222 or visit www.albertamortgagecentre.com
Debt consolidation (in the context of a real estate) is when an individual converts their high interest, short term debt (credit cars, personal loans, unsecured loans, car loans, etc) into a lower cost loan in the form of a mortgage or secured line of credit. The money that is used to replace the high interest debt comes in the form of a loan registered against the borrower's property for the value its existing equity. Through debt consolidation, individuals can drastically reduce their monthly payments and overall cost of debt and simplify their lives by replacing a multitude of payments with a single monthly pre-authorized mortgage/interest payment.
Can anyone get a debt consolidation mortgage/line of credit?
Debt consolidation mortgages and lines of credit are only available to individuals who already own real estate, and have some established equity in the property. If you own your own home and have some existing equity, you can possibly qualify for a debt consolidation loan --regardless of your current credit situation. If you own a home, you can qualify!
How does a debt consolidation mortgage/line of credit really work?
Lets say that you as an individual have $312,000.00 in debt ($250,000 mortgage, $40,000 in car loans, and $22,000 in credit card debt), which has a total monthly payment of $2913.67
After consolidating the same debt with a new mortgage at even 5.75%, the same $312,000.00 of total debt would have a mortgage payment of $1950.07
By consolidating your debt in this example, you save $963.60 each month without making any changes to your lifestyle or spending patterns! If you were to set aside $500.00 of the $963.60 saved each month, by the end of your 5 year mortgage term, you will have saved $30,000.00 without making any spending cuts, and actually having an additional $463.60 to spend each month!
With these savings in hand, you can not only save money each month on payments, but you will also be protecting your credit rating, reduce your interest expenses and have the ability to better your lifestyle and save for the the future.
If you own your own home, these savings can become a reality!
For more information about debt consolidation and mortgage refinancing, call one of the mortgage brokers at Alberta Mortgage at 780-479-2222 or visit www.albertamortgagecentre.com
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