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Why Opt for a Mortgage Broker Over a Bank in 2024: A Strategic Guide to Mortgages
January 11, 2024
In the ever-changing landscape of today's real estate market, securing the right mortgage tailored to your needs has never been more crucial. Amidst the constant fluctuations in economic conditions and interest rates, navigating the myriad of available mortgage options can be daunting. This is where an experienced mortgage broker becomes your invaluable ally. In 2024, here are compelling reasons why selecting a mortgage broker over approaching a bank directly is the savvy choice:
- Objective Expertise: Mortgage brokers serve as your dedicated financial advisors, working exclusively in your best interest. With access to an extensive range of lenders, including major banks, credit unions, and alternative lenders, their focus is on identifying a mortgage that perfectly aligns with your unique financial situation, not merely selling you a bank's mortgage product.
- Extensive Lender Network: While banks are confined to offering their in-house products, mortgage brokers boast a vast network of lenders to choose from. They can procure mortgages with terms, rates, and conditions that cater precisely to your specific requirements, ensuring you secure the most advantageous deal.
- Tailored Solutions: Every homebuyer is distinct, with individual financial situations and goals. A mortgage broker customizes mortgage solutions to suit your needs, whether you're a first-time homebuyer, seeking to refinance, or looking for an investment property loan.
- Time and Cost Efficiency: Mortgage brokers excel at streamlining the mortgage application process. Their industry expertise allows them to expedite the approval process, potentially saving you weeks of waiting. Additionally, they often secure more favorable rates and terms, resulting in long-term financial savings.
- Independent Guidance: Acting as your financial advocate, a mortgage broker ensures you comprehend the terms and conditions of your mortgage agreement. They provide valuable insights and address your queries, empowering you to make informed decisions.
- Elimination of Guesswork: Navigating the intricate mortgage landscape can be overwhelming. Mortgage brokers simplify the process by presenting you with clear information and showcasing the best mortgage options available.
- Access to Exclusive Offers: Brokers frequently have access to exclusive mortgage deals and promotions not directly available through banks. These offers can translate into significant savings on your mortgage.
- Peace of Mind: Purchasing a home is one of the most significant financial decisions you'll make. With a mortgage broker by your side, you can have confidence that you're making the right choice for your financial future.
In 2024, as the Canadian real estate market continues to evolve, so do the complexities of mortgage options. A trusted mortgage broker acts as your ally, simplifying the process, saving you time and money, and ensuring you secure the best possible mortgage for your unique situation. When it comes to mortgage expertise, personalized solutions, and unbiased advice, choosing a mortgage broker is the intelligent choice for the informed homebuyer.
Bailey Simner
INVIS Mortgage Professional
204-346-2357
The Lowdown on Downpayments
January 04, 2024
I frequently receive inquiries about down payments! So, let me break down the details on how much you'll need and various ways to acquire it.
Determining the Amount:
It's not surprising that most Canadian homebuyers opt for the absolute minimum down payment. However, the minimum can vary, so it's crucial to understand the calculation.
- If you plan to reside in the home, you'll need 5% down for the first $500,000 of the purchase price and 10% for any amount over $500,000 up to $999,999. For a purchase price of $1,000,000 or more, the minimum down is 20%.
- To avoid the cost of mortgage default insurance, a down payment of at least 20% is necessary. Anything less than 20% requires this insurance, which is added to your mortgage principal.
- Purchasing a rental or recreational property? For non-principal residences, you'll need 20% down. There's a vacation/second home program by Genworth and CMHC that allows 5% down, but mortgage default insurance is required. Rental properties necessitate a 20% down payment.
- If you're new to Canada, permanent residents require the same down payment as Canadian citizens (5% for the first $500,000, 10% thereafter). Non-permanent residents need 10% down, and if you're not a resident of Canada, at least 35% down from your own resources is required.
Smart Ways to Secure a Down Payment:
If you're aiming for a second home, often the best way to obtain a down payment is to refinance your existing home. Here are some strategies for those saving for their first home:
- Financial Gift: If you're fortunate to have financial support from a relative, ensure to get a form signed stating it's a gift and not a loan.
- RRSP: You can withdraw up to $35,000 tax-free from your RRSP ($70,000 per couple), and the recent federal budget increased this from $25,000. Repayment is required over 15 years.
- TFSA/Investments: Use your TFSA for down payment savings, as you can withdraw and recontribute without losing TFSA room.
- Early Inheritance: Some parents and grandparents prefer assisting with home purchases while alive rather than waiting for an inheritance.
- Sell Assets: Consider selling assets like a vehicle or jewelry. Ensure to provide three months of bank statements to support your down payment.
- Money from Outside Canada: If bringing funds from outside Canada, have them in a Canadian account for at least 30 days before closing and provide three months of financial history from the original account.
Homebuyers are often closer to their property goals than they realize. Feel free to reach out anytime. Early advice can save time, money, and stress!
Bailey Simner
INVIS Mortgage Professional
Simner Mortgages
204-346-2357
How Mortgage Amortization Extensions May Provide Financial Breathing Room Amidst Economic Shifts
December 14, 2023
In light of recent inflation trends and a potential end to interest rate hikes by the Bank of Canada, Canadians are seeking ways to navigate the persistent challenges of the cost of living.
Despite these macroeconomic shifts, one strategy gaining attention for providing financial relief is the extension of mortgage amortization periods. In this post, I'll get into the intricacies of mortgage amortization extensions and explore how they might offer a crucial financial buffer.
Understanding Amortization Periods:
The amortization period is the timeline within which you aim to fully repay your mortgage through regular payments. An amortization extension, however, refers to any period beyond your initially qualified amortization. This extension can be a game-changer in managing your financial obligations.
Lender Options for Amortization Extensions:
Traditional prime lenders, regulated at the federal level, usually cap amortization extensions at 30 years. However, refinancing with them allows borrowers with shorter initial amortization periods (e.g., 20 years) to extend their term.
Alternatively, non-bank lenders, commonly known as alternative lenders, may offer extensions ranging from 35 to 40 years, provided the borrower has a down payment of at least 20% or has accumulated more than 20% equity.
Eligibility and Scenarios:
First-time home buyers typically face a maximum amortization period of 25 to 30 years, often constrained by the need for default mortgage insurance for down payments less than 20%. However, those with a down payment of 20% or more can extend their amortization beyond the standard limits.
Renewers, on the other hand, may have the option to extend their amortization at the time of renewal, allowing for adjustments to lower monthly payments. It's crucial to note that these options vary based on individual circumstances.
Important Considerations:
Extending your mortgage amortization outside of renewal necessitates refinancing, potentially incurring penalties and requiring requalification at prevailing interest rates. Despite these considerations, refinancing can be a viable solution in specific situations. To explore your options thoroughly, it's advisable to discuss your specific needs with a mortgage professional.
A Practical Example:
Consider a young couple who purchased their first home five years ago with a $750,000 mortgage at 3.5% interest, opting for a 25-year amortization. At renewal, with a remaining balance of $635,000 and rates at 5.39%, they contemplate extending their amortization to maintain their monthly payment. The impact on their monthly budget varies significantly based on the chosen amortization period, as illustrated below:
- 20 years: $4,409 (Increase of $664)
- 25 years: $3,926 (Increase of $181)
- 30 years: $3,622 (Decrease of $123)
- 35 years: $3,419 (Decrease of $326)
- 40 years: $3,278 (Decrease of $467)
It's essential to note that amortization periods exceeding 30 years are often associated with subprime lending and are presented here for illustrative purposes only.
Conclusion and Economic Update:
Extending your mortgage amortization can be a strategic financial move, offering flexibility in challenging economic times. However, careful consideration of the associated risks and benefits is crucial. For personalized guidance or to explore your refinancing options, don't hesitate to reach out to a trusted mortgage broker.
Bailey Simner
INVIS Mortgage Professional
Simner Mortgages
204-346-2357
Simplifying Your First Home Purchase: The Crucial Role of Mortgage Brokers for First-Time Homebuyers
December 08, 2023
Embarking on the journey of buying your first home is undeniably exciting, but it often involves navigating a complex landscape of mortgages. For first-time homebuyers taking the plunge into homeownership, teaming up with mortgage professionals, particularly mortgage brokers, can be an invaluable asset. In this blog post, we'll delve into the significance of collaborating with a mortgage broker when initiating a new purchase, focusing specifically on the needs of first-time homebuyers.
1. A Fresh Perspective on New Home Purchases:
The act of purchasing a new home signifies a monumental milestone, representing a significant stride towards financial independence and stability. Amid the excitement, it's crucial to navigate the intricacies of the mortgage landscape, and here's where the expertise of a mortgage broker comes into play.
2. Tailored Solutions Crafted for First-Time Homebuyers:
Mortgage brokers specialize in assisting first-time homebuyers. Their profound understanding of the unique challenges faced by those entering the real estate market for the first time empowers them to tailor mortgage solutions that perfectly align with the specific needs and aspirations of new homebuyers.
3. Demystifying the Mortgage Process for First-Time Homebuyers:
First-time homebuyers often find themselves in uncharted territory, and the guidance of mortgage brokers is crucial in demystifying the mortgage process. These professionals offer support and advice, ensuring that first-time buyers make well-informed decisions regarding their mortgage.
4. A Streamlined Home Buying Experience:
Buying a home involves a delicate dance of negotiations, paperwork, and financial decisions. Mortgage brokers act as facilitators, streamlining the entire experience for first-time homebuyers. By managing the details, they enable buyers to focus on finding their dream home without being overwhelmed by the intricacies of the mortgage process.
5. Tapping into a Diverse Network of Lenders:
One of the primary advantages of working with mortgage brokers is their extensive network of lenders. First-time homebuyers may not be aware of the multitude of mortgage options available, but mortgage brokers can leverage their connections to secure favorable terms from various lenders.
6. Empowering Homebuyers through Education:
First-time homebuyers often have questions and concerns about the mortgage process. Mortgage brokers play a pivotal role in educating homebuyers, ensuring they have a clear understanding of the terms, conditions, and implications of their mortgage commitment.
7. Negotiating Advantages for First-Time Homebuyers:
Mortgage brokers are adept negotiators, advocating on behalf of first-time homebuyers to secure the most favorable terms possible. Whether negotiating interest rates or navigating closing costs, their expertise can result in significant savings over the life of the mortgage.
In conclusion, for those taking their first steps into homeownership, the assistance of mortgage brokers is indispensable. Their role in simplifying the process of buying a home, providing tailored solutions for first-time homebuyers, and negotiating advantageous terms underscores the importance of enlisting the services of these mortgage professionals. If you're a first-time homebuyer contemplating a new purchase, consider the guidance of a mortgage broker to make your journey to homeownership a seamless and rewarding experience.
Your Mortgage Begins Here
Bailey Simner
INVIS Mortgage Professional
204-346-2357
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