MORTGAGE RATES

CLOSED TERM	BEST RATES*
6 Month	4.45%
1 Year	3.20%
2 Year	3.69%
3 Year	3.64%
4 Year	3.94%
5 Year	3.79%
7 Year	4.95%
10 Year	5.25%
Variable Rate	3.15%

* Rates may vary provincially and are subject to change without notice.
 Rates Last Updated: April 14, 2009

ONTARIO MORTGAGE RATES, ONTARIO MORTGAGES, CANADA BEST MORTGAGE RATES CALCULATOR, CANADIAN MORTGAGE RATES CALCULATOR, ONTARIO CANADA MORTGAGE RATE

Whether you are buying your first home, trading up to a larger home, building your dream home, or even trading down once the kids are out on their own, a house is probably the single biggest investment you will ever make.

As almost everyone who is buying a home will need financing,they are also interested and often need guidance on what to look for in a mortgage and how they can pay the least amount of interest over the term of the mortgage. This site is designed to help answer some of your questions. To let you know how much you can afford to spend and what your payments will be, suggest ways to save thousands in interest over the life of the mortgage, and present the special programs that some borrowers could participate in and save from.

                  Why it’s better to get a pre-approval mortgage?

A Pre-Approved mortgage is a Free and No-Obligation deal that lets you know before you go looking for your home or signing an offer to purchase, how much you can afford to borrow based on your qualification and personal credit rating.

Obtaining a pre-approval tells you exactly how much you can afford and guarantees your rate for up to 120 days. Now, you can buy a home with the confidence of knowing you qualify. It also shows the vendor you are serious about buying the home and keeps you several steps ahead of others in the market. 

Having a pre-approved mortgage will give you the confidence of knowing exactly what you can spend on a home before you start looking. You will also be protected against interest rate increases while you look for your new home. If you have a pre-approved mortgage, it's a simple matter of finalizing a few details which your Mortgage Specialist will explain to you.

Source: Right At Home Realty Inc., Brokerage

Mortgage Credit Rating

Your credit rating is a measure of your credit-worthiness or in other words, your record of borrowing and repayment. Without a credit rating, few institutions will lend you money.

Governed by provincial laws, the credit bureau - the clearing-house of information on consumers' use of credit - provides a credit history, which is a list of facts about how you handle debt. This information is gathered from financial institutions, retailers and other lenders. Most of your credit information remains on your file for seven years. In addition to negative information, positive information is also reported on your file.

Here is how to build a good credit rating:

• Pay your bills promptly, especially credit cards.
• Borrow only what you need and what you can afford.
• Try to pay off loans on time and as quickly as possible.
  
  Not only does it help your credit rating, you also save valuable interest costs.
  
• Checking Your Credit Rating
  
  As a consumer, it's your right to know your credit rating. Credit can be denied based on inaccurate or insufficient information. You may want to check your file if you aren't sure of your credit rating, if you are refused credit or if you plan to apply for a large amount of credit such as a mortgage. You can get a copy of your credit report through one of the many credit bureaus across Canada for free or for a nominal charge.
  
  Here are some guidelines:
  
  
• Contact your local credit bureau, which you can find in the yellow pages.
• Call to find out how you can review your file. You'll be asked to provide identification to ensure the confidentiality of your file. A written report may take two to three weeks.
• If you notice any errors and can offer written proof, your file will be changed immediately. If you can't supply written proof, give the facts to the credit bureau, which will then investigate. If your facts are confirmed, your file will be updated.
• If you see an error but proof cannot be found, what happens next depends on where you live. Each province has its own legislation relating to credit bureaus. The information you are challenging may be taken off your file or a note may be added, saying the information is "in dispute".
• If an error has been corrected, the credit bureau must notify members who have inquired about you during previous months (as required by provincial law).
  
  Dealing with a Credit Crisis?
  
  Chances are you have a credit problem if you:
  
  
• Can't make your minimum monthly payments on your credit cards,
• Take cash advances for living expenses,
• Aren't sure how much you owe and
• Never seem to be out of debt.
  
  Here are some tips to help you recover:
  
  
• Put away all of your credit cards.
• If you have several debts, consider consolidating them into one consumer loan. You'll save on the interest rate alone, especially if your debt is from credit cards.
• If slow payments are affecting your credit rating, consider contacting your creditors to see if you can make alternative arrangements. Be honest with your creditors. Let them know you're in difficulty and work with them to find the best way to meet your financial obligations.
• Try and figure out how you got into debt and stick to a plan to prevent it from happening again.
• Re-evaluate your spending habits and lifestyle.
• Seek the advice of a credit counselor if you can't sort things out yourself. There are several not-for-profit credit counseling agencies across Canada . An experienced counselor will sit down with you to look at your situation, discuss your options and help you develop a course of action.
• When you begin to recover financially, consider keeping

Mortgage Features

 

Choosing A Term You Can Live With

What term should you take? That's a good question. Before you look at the issue of term specifically, there are things you should consider:

When you're looking at term and interest rates, look also at what you can live with in terms of payment amounts, because trying to predict where interest rates are going is a tough job. There are many forces that affect Canadian interest rates - economic, political, domestic, and international.

Even the best economists cannot pinpoint this, so how can we. You can twist yourself into knots worrying what will happen. When the rates dropped in 1992 to their lowest in 35 years, no one thought that they will get that low again. They dropped even further. Since then we have enjoyed low rates and we don't think of rates going in the double digits again. That's wrong to assume as well. Who would have thought in 1978 that rates only 3 years later would go as high as 21.5%? Please check the graph below for a historical account.

Predicting interest rates is very much a gamble and one should be prepared to keep a close eye on the market.

Here's a suggestion: If you feel that rates are at a point you can live with and you want to guarantee that rate as long as possible, go with a long term (5 years, 7 years, and 10 years). If interest rates appear to be rising, take advantage of the lower rate for as long as possible, and remember, if you sell your property, you can take the mortgage with you to the new property or have someone assume the mortgage. It could prove to be a great selling feature if you have an assumable mortgage at very low rate.

If rates appear to be falling, you can choose a shorter term (6-month convertible or variable-rate mortgage) that offers the flexibility to lock-in to longer term at any time, just in case the rates start going the other way.

 

Fixed vs. Variable Rate Mortgages

With a fixed-rate mortgage, the interest rate is set for the term of the mortgage so that the monthly payment of principal and interest remains the same throughout the term. Regardless of whether rates move up or down, you know exactly how much your payments will be and this simplifies your personal budgeting. In a low rate climate, it is a good idea to take a longer term, fixed-rate mortgage for protection from upward fluctuations in interest rates.

A variable-rate mortgage (also called adjustable-rate) provides a lot of flexibility, especially when interest rates are on their way down. The rate is based on prime and can be adjusted monthly to reflect current rates. Typically, the mortgage payment remains constant, but the ratio between principal and interest fluctuates. When interest rates are falling, you pay less interest and more principal. If rates are rising, you pay more interest and less principal, and if they rise substantially, the original payment may not cover both the interest and principal. Any portion not paid is still owed, or you may be asked to increase your monthly payment. Make sure that your variable-rate mortgage is open or convertible to a fixed-rate mortgage at any time, so that when rates begin to rise, you can lock-in your rate for a specific term.

Closed and Open Mortgages - What's the Difference

An open mortgage allows you the flexibility to repay the mortgage at any time without penalty. Open mortgages are available in shorter terms, 6 months or 1 year only, and the interest rate is higher than closed mortgages by as much as 1%, or more. They are normally chosen if you are thinking of selling your home, or if expecting to pay off the whole mortgage from the sale of another property, or an inheritance (that would be nice).

A closed mortgage offers the security of fixed payment for terms from 6 months to 10 years. The interest rates are considerably lower than open, and if you are not planning on any one of the above reasons, then choose a closed mortgage. Nowadays, they offer as much as 20% prepayment of the original principal, and that is more than most of us can hope to prepay on a yearly basis. If one wanted to pay off the full mortgage prior to the maturity, a penalty would be charged to break that mortgage. The penalty is usually 3 months interest, or interest rate differential (I.R.D. - please refer to glossary for detailed explanation).

 

Amortization

The Amortization Period is the number of years it would take to repay the entire mortgage amount based on a set of fixed payments. The longer the amortization, the more interest is paid over the life of the mortgage. Therefore, when choosing the amortization period, careful planning should be done to meet your cash flows. Remember, the amortization can be easily shortened after the closing, by simply making arrangements to increase your payments.

 

MORTGAGE FEATURES - To Help You Become Mortgage-Free Faster

Monthly, bi-weekly, or weekly payments?

Once you have the mortgage amount, rate and amortization period, your monthly payment can be calculated. Now is the time to decide how often you want to make your payments, because by selecting the right payment frequency could literally mean thousands of dollars in savings. For example, on a $100,000 mortgage at 8% interest, amortized over 25 years, the monthly payments would be $763.21. However, by simply switching to bi-weekly payments (every two weeks) with payments of $381.61 (half of the monthly payment), there would be a saving of $30,484 in interest! Weekly payments of $190.80 will save $30,839 in interest, and you will be mortgage free in the 19'th year.

You notice that there is very little difference between weekly and bi-weekly payments, however. If you have other payments throughout the month, bi-weekly may be less stressful and easier to budget. If you are self-employed or commissioned, and your income varies greatly from week to week, it may be easier to pay monthly and use your prepayment privileges to knock the amortization period. Also, not all weekly and bi-weekly payments work the same as above. Let us show you how to manage your mortgage to your best advantage.

Most mortgages have the option to allow payments to be made on a weekly or bi-weekly basis. This option may be desirable for two reasons. The first is it can save you money as you can expect to pay off your mortgage about 4 years sooner. This can save you dramatically over the life of your mortgage.. The other reason why these options are so popular is that if your employer pays you on a weekly or bi-weekly basis, you can simplify your budgeting by making the payment line up with the way you paid.

Prepayments - Extra Payments against Principal

This is one of the most important features to look for when you are getting a mortgage. Having the prepayment privilege that works to your specific needs could mean a difference of thousands of dollars over the life of your mortgage. Although all financial institutions offer some form of prepayment privilege, the amount and how it can be applied varies from one to another. Some offer only up to 10%, once per year, and on the anniversary date. Then there are others that offer as high as 20% per year, and prepayments can be done throughout the whole year as long as the total does not exceed 20%. Ideally, you should work your prepayment privilege as often as possible throughout the year. Saving aside to make that big prepayment is not the best strategy. We have found that the small, regular prepayments will get you quicker to that mortgage burning party (I hope we're invited).

(TIP: Put your tax refund to good use. The average tax refund for Canadians in 1995 was $1,000. Even this amount will pay large dividends over the life of the mortgage)

Often times most mortgage shoppers are only looking at rates and overlooking this interest saving feature. That is why it is important to have a mortgage specialist make some recommendations for your specific needs. Not only can we find you the lowest rates, we can also get you the features that will work to your advantage.

Increase Your Regular Payment

The secret to borrowing is borrow early in your life. The reason is that the future value of the dollar decreases. Why we are bringing up this fact is that when you borrow early, your payments are set. As time goes, our incomes increase (hopefully), but our mortgage payments stay the same, provided you locked-in to a long term, fixed mortgage. Therefore, in the future we may be in a position to increase our payment on the mortgage, regardless if you are paying weekly, bi-weekly, or monthly. Any increase in payment is directly going to pay down the mortgage, thus saving you thousands down the road due to the effect of interest not compounding on that amount for the life of the mortgage. Neat little feature.

Again, this feature varies from bank to bank. Some allow increasing payment up to 10%, and others as high as 25% per year, some up to 15% only once in the term of the mortgage. If you increased your payments, should the need arise, you can go back to the original payments as well. A mortgage specialist will run a "Mortgage Reduction" model for you and make some recommendations.

Double-Up on Payments

A few lenders will allow you to double-up on your payments, and the extra payment goes directly in the principal. If you double-up once in the year, you have just achieved the benefits of the weekly or bi-weekly mortgage. This is a neat little feature for someone who prefers the monthly payments but wants the results of the weekly and bi-weekly payments. And some lenders allow you the flexibility to skip a payment if you have made a double payment previously. This defeats the purpose, but when times are tough, a neat little feature to have.

Early Renewal Option

This is a great feature to have when interest rates are on a rise. If you are locked-in to a term and the mortgage will be maturing in months or years down the road, and the mortgage rates are on a rise, you can renew your mortgage before the maturity and lock-in the low rates for a new term. You may not even have to pay anything out of pocket and still save over the term, especially if rates move up considerably.

Portable Mortgage

If you want to take your mortgage with you when you move, you can if your mortgage has a clause that allows you to do that. This option allows you to continue your savings on your lower rate if the going rates are higher, as well as avoid any penalties if you were to break that mortgage. If you need a larger mortgage for the new property, your existing mortgage amount can be increased. As for the associated costs, since a new mortgage document must be registered on title, legal fees and normal appraisal fees would be applicable.

Assumable Mortgage

If you are moving and don't want to take your mortgage with you, or you are selling and not buying, an assumable feature will allow the buyer(s) of your property to take over the mortgage, providing they meet the lender's qualifying criteria. By doing so, you will not pay any penalties as you are not breaking the mortgage contract. In fact, if your interest rate is lower than those available at the time, your assumable mortgage suddenly became a great selling feature for your property.

A word of caution here: Just because someone assumes your mortgage does not necessarily mean you are off the hook for the responsibility. You must get a release from the Mortgage Company to ensure that you are no longer liable for it. Some mortgage companies automatically offer a release, but with others, you must make the request, and do it through your lawyer.

Mortgage Life Insurance (optional)

Since your home is likely your single largest investment, you may want to protect that investment. Many financial institutions offer mortgage life insurance at an affordable and competitive price, and the requirements for eligibility are usually quite simple to meet. If you or your co-borrower (if you choose joint coverage) die, the insurance company will pay off your mortgage. Also, some institutions now offer job-loss and/or disability insurance to borrowers. The best thing to do in making a decision about how to insure your mortgage is to have an insurance agent work out the figures for a private term insurance and mortgage life insurance.

Exploring Your Many Mortgage Options

With so many new mortgage features being introduced in the Canadian marketplace, the choices for the consumer are immense.  Perhaps the most anxiety-ridden part of house hunting is figuring out how much you can afford. Your real estate Agent or a specialized Mortgage Consultant offers the expert, impartial mortgage advice you need, and can educate you on the range of mortgage types which are now available. The formula used to be simple. For decades, the thinking was that your monthly mortgage payment, including taxes and insurance, should not exceed 28 percent of your gross pay, and that all your loans, mortgage included, should not exceed 36 percent. Lenders used that formula to qualify people for loans, and people relied on lenders to tell them what they could afford. Today, lenders rarely use this cookie-cutter method. Some focus more on how much of a person’s monthly income goes toward paying off debt. Some do not use ratios at all. But whatever method lenders use, borrowers should play it safe and stick to the old formula, even if it means scaling back expectations. You may need to start with a condominium or a small house, look at your purchase as the first investment, and then move up. Do not assume that because a lender is willing to loan you a certain amount of money, you should take all of it. Instead, assess your financial situation, make a budget and decide how much you can afford to sink into a mortgage each month. Below is some of the Mortgage options currently available in the Canadian Market: With a fixed rate mortgage, the interest rate stays the same throughout the term of the loan, providing a measure of stability that some prefer.  A variable rate mortgage can allow the borrower to take advantage of low rates as it typically has an interest rate that is calculated on an ongoing basis at the Bank of Canada prime lending rate minus a set percentage.  A “closed” mortgage, on the other hand, usually allows for a set percentage of the principal to be prepaid without penalty.  A “closed” mortgage may also be renegotiated or refinanced in most cases with the payment of a penalty which varies from lender to lender.  High-Ratio Mortgages - while a conventional mortgage is a loan for up to 80% of the purchase price of a property, a high-ratio mortgage allows you to borrow up to 95–100% of the purchase price.  This type of mortgage must be insured.

 

Mortgage Refinancing / Renewing

 

Refinancing is the process that pays the existing mortgage and/or any other legal claims against the property and sets-up a completely new mortgage(s). There are many reasons as to why you should consider refinancing your mortgage:

Consolidate debts:

If your monthly bills have gotten out of control, you might be able to refinance your home and pay them off. The advantage of doing this is to lower your total monthly payments. You should have a mortgage specialist review your situation and make a recommendation.

Refinance a First & Second Mortgage into a new First:

If you have two mortgages on the same property, you can combine them into a new first mortgage, as long as the total amount does not exceed 90% of the value of the property. If the new mortgage is over 75% of the value of the property, normal CMHC/GE Capital premiums and guidelines apply, and one thing to remember here is that only outstanding amounts can be combined - any discharge penalties and costs must be paid separately at closing (please note that we have cash-back programs to help with these penalties).

Financing a Renovation:

If you are doing major renovations (spending over $15,000), it could be less painful monthly with a mortgage as opposed to a loan or line of credit.

Financing the purchase of other investments:

You can use the equity in your home to finance the purchase of investments, and also benefit from the lower carrying costs of a secured line of credit or mortgage and also write-off the interest costs against the taxable incomes.

Financing the purchase of investment property:

If you have the equity and have a desire to be a landlord, you could take equity out of your property by refinancing the mortgage to use towards the purchase of an investment property. This is also called leveraging of your assets.

Financing children's education:

The best thing we can do for our children is be good role models to them, teach them to be responsible citizens, and give them a good base with a good education. With the high cost of many things nowadays, as well as education, it is sometimes difficult to have that kind of money in the bank, but you many have it in the form of equity in your home. Education is something they will never lose on.

To refinance your mortgage today to your advantage, simply APPLY ONLINE NOW with no obligation whatsoever.

Closing Costs related to Refinancing:

The regular costs related to the refinancing process are: appraisal ($150-$214), legal fees & disbursements ($700-$1000), title insurance if survey not available ($225), CMHC/GE Capital Premium if mortgage is high-ratio (this cost can be added to mortgage), PST when CMHC/GE Capital premium is required, and any discharge penalties.

You should review your mortgage on a regular basis and keep up with new products and offers that are available - they may save you a bundle. When you break your mortgage contract to renew your mortgage at a new rate and a new term, you are faced with a prepayment charge to reimburse your financial institution for the lost interest income. Typically, this prepayment charge is based on the greater amount of either 3 months interest or the interest rate differential (IRD).

Early Renewal

Whether or not you should early-renew your mortgage depends on several factors. If the current rates are lower than the rate you have, compare the prepayment charge against the savings by having the lower rate, and this will point the way. Or, if you believe that interest rates will be higher at your existing renewal date, you can renew early to protect yourself from higher rates.

One thing to remember if you decide to early renew, is the prepayment charge will have to be paid up front. If there is room, you can add it to your mortgage, but you will have to go through a lawyer to redo the mortgage, and this cost will have to be taken into consideration when deciding which way to go. Some financial institutions will blend both rates for the new term.

Remember that we have the CASH-BACK programs that could pay for your prepayment charge. The savings in some situations run into the thousands of dollars.

Re-examine your mortgage from time to time, and at least once a year. There are thousands of dollars that could be saved in many situations, but they go unnoticed.

Switching / Renewing

When the mortgage is about to mature, most lenders will mail out their renewal agreements around 30 days before the mortgage matures. Often, this causes a lot of grief for many people, especially if rates start to climb just before the mortgage comes due.

We can guarantee your rates up to 120 days (4 months) before your mortgage comes due, and this service is free and with no obligations. Just this protection could and has saved thousands of dollars for our clients. Let's get it working for you, too.

When your mortgage is due for renewal, it's a great opportunity to make sure that you've got the right mortgage for your present needs. Since the mortgage is fully open at this time, this is the perfect opportunity to pay down your mortgage. Whatever you can afford, even a small amount, will have a significant impact in terms of interest you will save over the life of the mortgage. It is also a great opportunity at this time to consider a more frequent payment method, such as bi-weekly or weekly, if you are not already doing it. And of course, choosing the new term is important.

Another step you can take to save thousands of dollars in interest is if at renewal the rates are lower than the rate you just had, and you are comfortable with making those payments, keep the payments the same at the lower rate and start planning for the mortgage-burning party.

 

ONTARIO MORTGAGE RATES, ONTARIO MORTGAGES, CANADA BEST MORTGAGE RATES CALCULATOR, CANADIAN MORTGAGE RATES CALCULATOR, ONTARIO CANADA MORTGAGE RATE

Rental Comparison

 

We have assembled some tables to allow you to gauge the possibility of purchasing instead of renting.  The information is to be used as a guideline only, please send us a message for more specific information.

If it is at all possible to purchase, you will see that it pays to put the money in your pocket instead of your landlords.  Please have a look at the tables below:  

How Much Rent Do You Pay?
Monthly Rent	After 3 Years	After 4 Years	After 5 Years	After 6 Years
$500.00	$18,000	$24,000	$30,000	$36,000
$600.00	$21,600	$28,800	$36,000	$43,200
$700.00	$25,200	$33,600	$42,000	$50,400
$800.00	$28,800	$38,400	$48,000	$57,600
$900.00	$32,400	$43,200	$54,000	$64,800
$1,000.00	$36,000	$48,000	$60,000	$72,000

Comparison of Rental Income vs. Mortgage Payments
Rent Payment	Mortgage Payment	Mortgage Required	Down Payment Required	Purchase Price	Income Required
$500	$500	$69,840	$3,586	$71,723	$21,552
$600	$600	$83,808	$4,303	$86,068	$25,862
$700	$700	$97,776	$5,021	$100,412	$30,172
$800	$800	$111,745	$5,738	$114,757	$34,483
$900	$900	$125,713	$6,455	$129,102	$38,793
$1,000	$1,000	$139,681	$7,172	$143,446	$43,103
$1,100	$1,100	$153,649	$7,890	$157,791	$47,414
$1,200	$1,200	$167,617	$8,607	$172,135	$51,724
$1,300	$1,300	$181,585	$9,324	$186,480	$56,034
This Illustration Is Based on a Five Year Interest Rate of:  7.250%
The annual taxes are assumed to be 1.25% of the purchase price.

CANADA MORTGAGE CALCULATOR, ONTARIO MORTGAGE CALCULATOR, CANADA MORTGAGE CALCULATOR, ONTARIO MORTGAGE CALCULATOR,