4 Smart Features that will boost the value of your property

Smart Home Devices

 

People have a lot of different ideas on how they want their home to look. Some want a modern look while others like traditional cottages. But one thing that more and more people want is smart technology in their homes. This adds value and desirability to your home making it easier to sell for the asking price.

 

In a recent survey, 35% of first time home buyers put smart technology as a priority in their home purchase.
What is a smart home? A smart home is a residence that uses internet-connected devices to enable the remote monitoring and management of appliances and systems, such as lighting and heating.

Smart thermostat – Is a thermostat that can be controlled remotely by your smart phone and will eventually learn your heating and cooling patterns. You can turn up the A/C in the summer from your office and the house will be cool by the time you get home. These features are convenient but they also help you save money on home heating and cooling costs.

Connected Lights – allow you to turn on or dim lights at different times of the day. Combined with a Smart thermostat they can help you to save half your average energy costs.

Smart Locks – these are really cool ! You can program your front door to unlock when guests arrive using Bluetooth or WiFi or some smart phones.

Wireless Security – We have all seen photos of burglars stealing packages from the front door of a home , or perhaps you have seen the TV ad of the lady at the spa who can see 2 unsavory looking guys at her front door and speaking to them and scaring them off. You may have seen the YouTube video of a house that caught fire in Ft. MacMurray and the firefighters extinguishing the blaze. The home owners were able to watch this from a hotel room in Edmonton. Check with your insurance company, you may qualify for a large discount in your rates by having this home security.

As always you can learn more or contact Ryan at www.ryanmajeau.ca

Contributed by David of Dominion Lending Centres

A History of Rates

Hisoty of Mortgage Rates

 

At the moment, rates are on the rise. Some people are wondering what is the ‘normal’ rate for mortgage. While continually moving up and down slightly this image shows the history of mortgage rates over the last 60 years!

 

How would your mortgage payment compare if some of these rates were still current?

 

While the price of properties has increased substantially since 1958, lets compare some of the ‘old’ rates vs today’s  rates.

 

 

 


Payments

If you had a mortgage of $400,000 your monthly payments would be;

Mortgage Rate

Mortgage

If you have an annual household income of $120,000, assuming all other metrics are the same, you would qualify for the following mortgages based on their historical interest rates;

Mortgage Rates

 

You can see how much of a difference the interest rate can make.  While we have enjoyed historically low interest rates the last few years, they are not guaranteed to stay.   The government’s stress test, which is at 5.34% for high ratio mortgages, would even be considered a low mortgage rate when compared to the past.

When getting a mortgage and planning your home purchase, make sure you are talking about all options and possible scenarios.  You don’t want to find yourself not able to make future payments because of a market change.  Working with me is having a lifelong advisor, who will be there to help through all the ups and downs with mortgage financing.

Contact Ryan today for more information www.ryanmajeau.ca

More stress on the stress test?

Stress Test

 

With many lenders recently raising their mortgage interest rates, the word on the street is the Bank of Canada may be increasing the stress test or qualifying rate that they set for mortgages.  People who do not already have a locked in pre-approval may find themselves having to re-qualify and could potentially fall short of their home purchase.

 

 

Currently for a high ratio mortgage the rate in which you need to qualify against is 5.14%.  Current mortgage rates are sitting around 3.44% for a high ratio mortgage.

  • What can you afford based on your income?
  • What could you afford?
  • What might you be able to afford if the rate increases?

Lets do some math.

Say your household income is $120,000, great credit, no major debts and approximately 5% for a down payment.

If you were to qualify against the ACTUAL interest rate of 3.44% you would qualify for a $700,000 purchase price.

Since you currently have to qualify against 5.14%, you would be able to purchase a home for approximately $585,000.

WHAT IF the rate increases to 5.45%, then you’d only qualify for roughly $570,000.


The rate should not increase to an alarming rate that will undermine all real estate transactions.  However, if you were already stressed out about being near your maximum purchase price with the current restrictions, will you be able to handle even more?

Did you know that I can get you pre-approved and with a 120 day rate guarantee that also grandfathers in today’s qualifying rate?  That can save you from rate increases for the next few months!

As always, please reach out with any questions or learn more on my website.

Mortgage Insurance 101

Mortgage Insurance

Mortgages with less than 20% of a down payment are considered ‘high-ratio” and are subject to mortgage loan insurance. Lenders consider this type of loan a little more risky since the client has very little equity in the property to start off with, especially once you add the insurance premium and you are in a high 90% loan to value situation. If the market were to dip just a little the equity and net value of the property would be $0, or less. To compensate for any potential loss, borrows with high ratio mortgages are required to buy this insurance which is typically added into the mortgage loan. Having this insurance allows lenders to offer these clients competitive interest rates on their mortgage, where without, the interest rate might be so high that the client can no longer afford to purchase that property

If you put down 20% or more of the purchase price on your principal residence, you can skip having to pay this insurance which can costs thousands, in most cases.  Depending on loan purpose, down payment source, applicant details, and other factors there can be mortgage insurance ‘top-up’ premiums which are in addition to the standard rate, and also insurance for lower loan to value mortgages. There are certainly some exceptions to the rules.

There are 3 main insurers in Canada and they are CMHC – Canada Mortgage and Housing Corporation, Genworth Canada, and Canada Guaranty.  While most of the ‘typical’ standard mortgages we see can be insured by any of these companies, there are some different products and requirements between them.  A lender or mortgage broker might request a certain insurer for multiple reasons.  IE; lender preference, property type, property location, property use, loan to value, applicant income, applicant credit score, applicant employment type, mortgage type, loan purpose, etc.

This is another benefit of working with a mortgage broker. I have access to more than just one lender’s set of guidelines. I can take your application to multiple lenders and multiple insurers if needed to ensure we get the deal closed with the best terms for YOU, the client.

Contact Ryan today for more details www.ryanmajeau.ca

Below is the Standard Premium Rate Chart from Genworth Canada

Mortgage Insurance

 

 

 

 

 

 

 

 

Speculating the Speculation Tax

 

BC’s new speculation tax has already seen some changes since its inception just a couple months ago.

This picture shows a great flow chart about if you would have to pay the tax depending on your situation.

Here are some details that are current as of today.

 

 

 

Area

The tax applies in the Metro Vancouver Regional District (excluding Bowen Island and Electoral Area A, except the part of the electoral area that is the UBC and University Endowment Lands), the Capital Regional District (excluding the Gulf Islands and Juan de Fuca), Kelowna-West Kelowna, Nanaimo-Lantzville (excluding Protection Island), Abbotsford, Chilliwack, and Mission.

Continue reading “Speculating the Speculation Tax”

How an extra $100 can save you $30,000

Did you know that putting an extra $100 from each pay check towards your mortgage could pay it off 5 years faster and save you over $30,000 in interest!

 

 

 

My purpose is to not only help you get a mortgage initially, it is to also help you set goals and make plans to be mortgage free as soon as possible!  I can show you how making extra monthly or lump sum payments can effect your mortgage.  And together we can make a plan that can save you thousands of YOUR dollars!

Continue reading “How an extra $100 can save you $30,000”

Mortgage Monday – An example of ‘read the fine print’!

Mortgage Contract Fine PrintDid you know that there are banks who offer mortgages that the only way out of, is to sell your house?!?

You read that right!  In the fine print of some mortgages, we have seen the clause ‘to be only paid out via bona fide sale’ (ie: sell your house).

So if you want to access equity for investments, renovations, etc… No, sell your house.

If you want to refinance your home for a lower rate… No, sell your house.

You want to rent it out and buy a new home… No, sell your house.

The full story goes Mr and Mrs A. have lived in their home for years.  They got their mortgage through their bank ‘who they’ve dealt with for years’.  They started out with a healthy down payment so with their regular payments and the increase in value of the home they are sitting on quite a lot of equity.  Since they have a 17 year old son and 18 year old daughter they figured ‘why not use some of our equity to pay for their university tuition vs getting student loans’.  A very common and frequent request.  Once we asked for a mortgage statement we found the clause ‘to be only paid out via bona fide sale’.  Meaning, sell your house, take some equity, and use the rest to buy a different home.  They had well over $400,000 of THEIR money sitting in their property as equity and just wanted to access some of it, without moving!  I unfortunately had to read them the meaning of this clause, and it didn’t sit well with Mr and Mrs A.  So they contacted their bank and was told ‘well we will let you out of your mortgage IF you PAY a 12 MONTH penalty’ (like they were doing the clients a favor)!!  Most lenders charge 3 months, but even that calculation can calculate quite different depending on who your lender is.  But 12 months!?!  They never got anything of extraordinary value to begin with.  Nothing that would have led them into knowingly signing a contract with this type of clause.  But are now stuck between either paying for university out of pocket, or access their equity while paying their bank a $35,000+ fee!

So long story short….  Use a mortgage broker!  Someone who deals with these contracts daily and can help you navigate the complex world of mortgages.  While your bank may have a few different products available, we have access to dozens of lenders all of whom offer multiple products!  If you decide to go to your bank on your own, make sure you READ THE FINE PRINT and know what you are signing!