10 THINGS TO CONSIDER BEFORE YOUR MORTGAGE RENEWS

1.     Have you explored all your options and had a second opinion? Once you receive your mortgage renewal statement from your existing bank, there’s nothing easier than simply signing on for another term. But while this may make sense in many cases, your family or financial situation may have changed over time. We can look for opportunities that could better meet your needs right now. Also, did you get the best rate from your existing bank?  Let us shop the entire Canadian mortgage market to ensure that you did… you simple then compare our option/quote with what your bank has offered you to ensure they were competitive and fair… after all haven’t you earned the best possible rate based on your loyalty to them for the last few years? 2.     Are you comfortable with your payments? If you’ve been feeling financially strapped each month making your mortgage payments, this could be the time to reduce them to a more easily managed level. On the other hand, if you’re earning more, why not pay down your mortgage faster and save thousands of dollars in interest over time? 3.     Do you need cash flow for other things? Your priorities may have shifted since you first bought your home, and your cash flow needs can shift too. Things like paying for a child’s university education, planning a career change, or a major purchase such as a vacation property may call for spending money on things other than your home. You may be able to refinance your mortgage to take this into account. 4.     Can you handle fluctuating rates? Some homeowners are nervous about any hikes in interest rates, while others are comfortable to go with the flow. Rates are tough to predict. It’s best to base your decision on your personal situation, not what you read in the news, and tailor your mortgage renewal around your needs. We can help you decide whether to opt for fixed or variable rates — and we don’t want you to lose any sleep over your decision! 5.     Will you sell soon? If you are likely to sell soon, consider a shorter-term mortgage or one that has flexible terms so you’re not penalized if you sell your house before the mortgage comes due. 6.     Are you thinking about a major renovation?  You know that projects such as a new kitchen or an addition can make your home more valuable. But the cost of having the work done can tie up a lot of money. Before you renew, look at all your financing options, which may include getting an additional line of credit or keeping your monthly mortgage payments low so you have money on hand to finance the renovations. 7.     When do you want to be “mortgage-free”?  If you’re planning extended time away from work or perhaps an early retirement, it may make sense to pay down your mortgage sooner rather than later. While increasing your payments will raise your monthly costs now, you’ll ultimately save on interest in the long term and can prepare for that fabulous, mortgage-free lifestyle. 8.     Could you use your home equity to fulfill other goals? Refinancing your mortgage can be one way to free up cash you need for other things, which could even include buying another property. Mortgage renewal time is an ideal occasion to review all your options. 9.     Have your insurance needs changed? If your financial situation has changed since you first took out your mortgage, review whether you need the same level of insurance in place to cover mortgage obligations. 10.  Are you getting the best rates and terms? In a competitive mortgage environment, your good credit history can make refinancing work to your advantage. We analyze mortgage markets daily to ensure you don’t miss any money-saving opportunities.

What is your credit score and how it's calculated

The credit score is also referred to as a FICO Score and is a mathematical formulae created by Fair Isaac and Company. The credit score is used by most companies to see if you are a good credit risk or not. Equifax and Trans Union will crunch the numbers from the credit report, and spit out a number somewhere between 300 and 900, or even no number or R for Reject.  A score over 680+ is considered excellent. How Scores Are Calculated FACTOR WEIGHT POINTS Payment History Bankruptcies, late payments, past due accounts and wage attachments, collections, judgments 35% 315 Amounts Owed Amount owed on accounts, proportion of balance to total credit limit 30% 270 Length of Credit History Time since accounts opened, time since account activity 15% 135 New Credit Number of recent inquiries, number of recently opened accounts 10% 90 Types of Credit Number of various types of accounts (credit cards, retail cards, mortgage, line of credit, loans etc) 10% 90 POTENTIAL TOTALS 100% 900 How you can improve your credit score 1.     Order a copy of your credit report annually, review it carefully and correct any significant errors: a.     www.equifax.ca b.     www.transunion.ca 2.     Pay your bills on time 3.     If you have a questionable credit history, you should open a few new accounts, use them responsibly, and pay them off on time 4.     Don’t open accounts then don’t use them.  Having 6 or 7 of the same type of credit card does not work in your favour 5.     Have a credit card or instalment loan can help boost your score, so long as you don’t have a high balance 6.     Keep balances low in relation to the available credit.  If the credit limit is say $10,000, keeping the balance below $2,500 (or 25% of the limit) will improve your score, balances over $7,500 (75% of the limit) will decrease the score.  Going over the limit has an even more negative effect 7.     Pay off credit card debt instead of moving it around to lower rate cards.  Moving balances to other credit cards and closing out the old account can hurt the score.

Strong Sales and Price Growth in July

Greater Toronto Area REALTORS® reported 8,544 residential sales through the TorontoMLS system in July 2013. Total sales were up by 16% compared to July 2012. Over the same period, new listings added to TorontoMLS and active listings at the end of the month were up, but by a substantially smaller rate of increase compared to sales.

“Last month’s sales represented the best July result since 2009 and was the third best July result on record. Despite recent increases in average borrowing costs, home buyers are still finding affordable home ownership options in the GTA,” said Toronto Real Estate Board President Dianne Usher.

“We are a year removed from the onset of stricter mortgage lending guidelines and many households who put their decision to purchase a home on hold have reactivated their search. An increasing number of these households are getting deals done,” continued Ms. Usher.

Reflecting tighter market conditions, the average selling price for July sales was up on a year over-year basis by 8% to $513,246. The low-rise market segment continued to be the driver of overall price growth. It should be noted, however, that the average condominium apartment price was also up by more than the rate of inflation on an annual basis. The MLS® Home Price Index (HPI) was also up on a year-over-year basis for all major home types.

“We are forecasting continued average price growth for the remainder of 2013 and through 2014 as well. Months of inventory for low-rise homes remains near record lows, suggesting that sellers’ market conditions will remain in place in the second half of 2013. An increase in listings in 2014 would lead to more balanced market conditions and a slower pace of price growth next year, albeit still above the rate of inflation,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

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