Are you sure your mortgage is portable? If so, do you still qualify for your mortgage?

Who has not had second thoughts about deciding a mortgage term?  Are you trying to decide how long you want to live in your home before you move?  If you really had to move, did you know you can take your mortgage with you if you get the right product?  Enough with my questions, let's get them all answered as this week we discuss porting a mortgage. 

Two Facts:  

• When porting a mortgage you have to re-qualify with today's lending guidelines.
• You will want to consider porting a mortgage if your mortgage rate is lower than what is available today.

You can save money by making sure if you want to port your mortgage in the future you can.  Want to guess how many buyers make it to the 5 year mark of their mortgage term?   Just about 30%!!!!   Just remember that if rates go up higher than what you have, you don't have to refinance at that higher rate.

One of those couples that did not make it to year 5, I had to find another solution for as they could not port their mortgage like they wanted. 

The reason?  

They did not qualify for the mortgage in today's environment due to the recent rule changes.   This makes me almost as frustrated as watching a law enforcement officer talk on his cell phone while driving as the credit has already been granted why not let them move it! ??!  Did the risk change that much? I would humbly suggest only the rules have in most cases.

Since many people do not know the basics about porting a mortgage here are a couple things you might not be aware of when you have sold your current home and purchased a new one.

What is porting my mortgage?

Porting your mortgage is you transferring your mortgage from one property to your new home.  You are transferring the features, benefits and the rate.  

Why would you want to port your mortgage?

Since porting lets you transfer your rate to this new home its a way to save money if you have a lower interest rate than what is available right now.  You can also avoid prepayment charges that are applied when breaking a closed mortgage early, and depending on how that is calculated and where you are in your term this can be a big savings.

Will my lender let me move my mortgage?

Maybe.  Some lenders will not allow this to take place.  Make sure you tell your mortgage broker or specialist that you want privileges not just the rock bottom rate.   Less frills, means a lower rate, but the savings of taking some frills far outweigh overlooking them.  Since you don't know what will happen in your life, ensuring the mortgage is portable is in your benefit.  All porting clauses are different at each bank- So Ask!

For qualification of porting your mortgage, it's not just about the mortgage amount or the property value of the new place.

• It's about mortgage amortization.
• It's about tighter mortgage guidelines.
• It's about more rules from CMHC for mortgage qualification.
• It's about a Line of Credit interest calculation.
• It's about how they calculate variable income like commissions.
• It's about the stated income programs changing.
• It's changing rules on Rental income.
• It's about rising and more accurate heating costs.
• It's about how they verify income.

With mortgage amortization limits being lower, and lenders criteria being every increasingly tighter on what they can refinance.  It effectively means you have to re-qualify in most cases for the mortgage before you can move it over depending on where your mortgage is.

If you have changed employers or changed the way you are paid, be prepared for far more questions than you might have been asked previously.  This goes double if you are now self-employed.

Additionally the paper chasing you had to do when you first applied might have to be replicated and you might even need a couple more things this time as things have been changing in the last three years very fast.

Its all about this specific point in time. While your situation might not have changed, their lending criteria might have become much stricter.

Should I port my mortgage if I am moving?

  There are many things that go into the equation like:

• Current rate of mortgage Vs. best mortgage rates available now and what will save me the most amount of money.
• Payout penalties on your Mortgage.  Is it based on Interest Rate Differential, Posted rates, bond yields or discounted rates?

Even if you require a larger mortgage amount and you still want to keep the low rate we can blend the existing fixed rate with new funds at the current rate to get a better over all rate.

There are many factors that go into it, and every case is different.   If you have any doubts or want your numbers run to make sure you qualify ask a mortgage professional about this.  Plan ahead is always something I preach from my soap box!

This was not my topic I had scheduled for this week.  Rather a knee jerk reaction to an incident that happened recently.  It can save you money, so I deemed it worthy enough to be shared.    You do know how hard it is to make the world of finance fun don't you?  Personally I think saving money is having fun, and sharing my knowledge gives me a sense of purpose and joy.

If you want to opt in for my email list, or would like to give me any encouragement I would really appreciate the feedback.  The only way I will get better is if you keep giving me course corrections.  
  
After all, none of my clients pay me a cent for what I know, do, or share nor would I charge anything for my services.   I do get a token of appreciation here and there, and the occasional bottle of fermented red grapes.   Which any Calgary Mortgage broker would get a sense of satisfaction from!

Thanks for helping, sharing, and the likes.

Dependably yours, 

Michael

Heard about the doctor with perfect credit who was declined for a mortgage?

This week we are talking about Character, and Credit report surprises when you apply for a mortgage in Canada.

Did you know that some banks are now pulling credit reports from both credit reporting agencies when you submit a mortgage application? 

What does that have to do with saving you money?  I know that most of the readers are here because they are asking:





“How do I pay off my mortgage faster?” To them I say hang on, this is important too!    This is one of the tips that can save people thousands, as it could effect their interest rate on their mortgage!   It is not just about being on a budget to free yourself from mortgage debt.   





Most of my mortgage hacks won’t cost you anything and save you thousands after all.  The concepts discussed here will help give you a new way to look at the big picture.   

I have seen numerous clients totally shocked when I give them the news that they have a collection that is unpaid.   For most, this means that even if you have paid your bills perfectly something could jump up and bite you.  Take the case in point one of my clients who we will call "The Doctor" 

This doctor thought his credit was perfect.  

We did the application, I pulled his credit and that was fine.  When it got to the lender they declined it due to an unpaid collection on his account that was not on the report we pulled. 

He did not even know it was there, rather it was from something associated with some medicine he special ordered online and was not even a real debt. 

We had to resubmit to another lender, that did not pull that credit report, however the delay in the two submissions cost us a little on the interest rate. 

"The Rig Hand" is another client who was declined at one of my lenders because despite his perfect credit, something had fallen off his credit report that was still showing on the banks records as unpaid and written off.  We had to move him to another lender fast to get his conditions of financing met on his purchase and keep the home he wanted to buy.

The character part of the five C’s of Credit also means you should appear stable prior to the mortgage application.  

NO BUYING A NEW TRUCK, QUADS, big toys, or renewing a lease to a much higher payment.

NO CHANGING JOBS FOR A YEAR BEFORE, or less if you are getting a raise in the same industry.

NO MOVING AROUND, AND AROUND, and AROUND!

Many people ask how do they come up with my credit score?

Often they want to know where did that 679 score, or 534 score come from, and think it may be wrong.  My mortgage management course does show the exact percentages that make up your score. 

The FREE Package also includes:

• What impact does over Capitalization have on your total score?
• When to close a trade line?
• What are the lenders looking for on your credit?
• How do I get a better credit score?
• What should I pay off first if I am short on funds?
• What is the quickest way to repair my credit?
• What if it should not even be there in the first place?

You have all heard  the story about the couple that paid off their mortgage 10 years early, then put that extra money into their retirement savings package, and are now living on an acreage outside the city far sooner than their friends, and peers.  

You want to be them, or want to be able to be them.   We all know it’s never that easy, but with some help, and effort we can show you the way to get there as fast as possible.   That is what I am passionate about, helping people reach their goals.  That is why I became an independent mortgage broker in Calgary -I love helping people accomplish these goals.

If I put it all down here in one week would you read it?   I have offered them all in my package for free, yet very few of the thousands of people reading my blogs have asked!   As a gentle reminder, if you venture to my website, or email me, you can get the whole package right away! 
www.you-mortgage.com or  Email Me     Of course it will not have the fun factor of my blog.   

How to Avoid CMHC Fees: Strategies for Canadian Homebuyers

How to Avoid CMHC Fees: Strategies for Canadian Homebuyers

So, you're wondering how to avoid paying CMHC fees? Good news—there are a few options available that might save you from this added expense.

1. Ask your mortgage broker to insure through Sagen (formerly Genworth).
2. Ask your mortgage broker to insure through Canada Guaranty.
3. Save up a 20% down payment.

Did you know you have a choice when it comes to mortgage insurance providers?

Yes, I can already hear you cursing my name—sorry about that. But if you want to put down less than 20% on your mortgage, there’s no way around paying mortgage insurance fees. You might need to save up more money and wait a little longer. Let’s explore why waiting might be in your best interest—or why it might not be. We’ll also discuss why you might prefer one mortgage insurer over another.

Now vs. Later: The Big Decision

Buy a home now: If you buy now, you could capitalize on the increase in your home’s value during the time it would take you to save up a larger down payment. However, remember that you’ll be paying interest on the mortgage insurance premium if you roll it into your mortgage. The risk here is that if your home’s value drops, you’ll still owe those fees along with the full mortgage amount.

Save for a 20% down payment: Saving up to the 20% mark will eliminate the need for mortgage insurance. However, if home prices keep rising, you might find yourself chasing that threshold for longer than expected. What will mortgage rates look like then? What if the rules for down payments change, requiring you to save even more?

How Do Mortgage Insurance Fees Work?

All mortgage insurers calculate their fees as a percentage of the loan, based on the size of your down payment. The larger the mortgage, the more you’ll pay in fees.

• The highest fees (4.50%) are typically for self-employed individuals without traditional income verification who are borrowing up to 95% of the property value. If you’re self-employed and purchasing a home, these fees will apply unless you can verify your income traditionally.

Most buyers putting 5% down will pay 4.00% of the mortgage amount in insurance fees.

Here’s the sliding scale regulated by the federal government and consistent across all mortgage insurance providers:

• 5% down: 4.00%
• 10% down: 3.10%
• 15% down: 2.80%
• 20% down: No mortgage insurance required.

This means you can save a little by reaching the next threshold. You don’t necessarily need to reach 20%—even getting to 10% or 15% can reduce your insurance costs.

Why Bother with the Other Percentages?

Some lenders insure every deal, whether or not you’re required to pay the premiums. In some cases, the lender might absorb the cost, while in others, they might pass it on to you. Here’s a brief overview of the three major mortgage insurers in Canada:

What Is Sagen (formerly Genworth Canada)?

Founded in 1995, Sagen (previously known as Genworth Canada) is one of the largest private mortgage insurers in the country. They have helped over 25,000 families avoid losing their homes through various assistance programs. Sagen also offers special discounts and partnerships with various national home-related service providers.

What Is Canada Guaranty?

Established on April 16, 2010, Canada Guaranty is the only 100% Canadian-owned private mortgage insurance company. Owned by the Ontario Teachers’ Pension Plan and National Mortgage Guaranty Holdings Inc., they manage over $365 billion in insured mortgages. Canada Guaranty offers incentives for borrowers who purchase or renovate their homes to improve energy efficiency.

What Is CMHC?

The Canada Mortgage and Housing Corporation (CMHC) was established after World War II to help returning soldiers buy homes with lower down payments and easier terms. Today, CMHC is a Crown corporation and the largest mortgage insurer in Canada. They have a strong mandate to support affordable housing initiatives and have invested billions in housing for the homeless and social housing renovations. CMHC also offers a range of tools and apps to help Canadians navigate the homebuying process.

Need Help Saving for a Down Payment?

If you’re still reading, I’m impressed! If you need help or advice on saving for your mortgage down payment, I’m here for you. It’s not just about putting money in an account and watching it grow—it’s about maximizing returns, managing fees, budgeting, and cutting flexible expenses where possible.

Email me at michael.richmond@mortgagearchitects.ca and put "Send me the Mortgage Planner Workshop" in the subject line. I’ll get it to you shortly. I work full-time on mortgages and a couple of hours a week on this blog, so visit my website if you want to learn more: www.you-mortgage.com.

If you want something specific covered next week, leave a comment and let me know! Original content isn’t always easy, so your suggestions are welcome.

THANKS FOR YOUR SUPPORT, SHARES, AND LIKES!

What do you think? Please share your thoughts in the comments.

Dependably yours,

Michael Richmond
Independent Mortgage Broker & Team Leader

I felt like a hero! -Edited for better savings content

Recently, I got home from a day in the office, put on my roller blades, grabbed my dog’s special harness and headed out to give my sled dog a good run.  Along the trial in a park I noticed a commotion.   A suited man was running after three people, he grabbed a laptop bag, and tried to run the other way with it.   It turned into a huge tug of war, with the suited man loosing against these three fast.  I asked what is going on, and the sole female of the three said that this man stole her leather laptop bag.   I asked the suited man if this was true, and he said, “NO, these three were trying to steal it from me!”   

When I rolled a little closer my dog growled, I smelled booze, and noticed an empty bottle just off on the grass.   I knew then that it was not a drunk executive walking home picking a fight, rather three people were drinking in the park and wanted a new laptop.   I said, “If you can’t prove it’s yours, give it back.”

I got closer to the action on the grass as it turned into a wrestling match and punches being thrown in moments.  I started yelling, “Stop this now, or suffer the dire consequences!” in the most threatening voice I could muster.   

The two men eased up, and focused their attention on me, as I already had my phone in my hand and had dialed 911.  I lured them away with the threat that I was on the phone with 911 and it worked as they chased me while they kept repeating, “Hang up the phone! Hang up the phone!”

I said “NO WAY!”   

Another witness followed suit and we stood in solidarity side by side on our phones with 911.  The two males were both right in front of us telling us to get lost and hang up the phones.  I saw the fists coming at my face, time seemed to slow down just a tad for me.  Surprisingly being on wheels was not a overwhelming disadvantage, and I still was able to dodge his punches.  My new friend still on the phone with 911 was  not so lucky, as when a fist from the other male hit his face, his phone flew into the air backwards and he went down.  I could see and hear the girl of the trio in the background saying she was going to kill a witness’s puppy if they did not get out of the park immediately.

(SPOILER ALERT) If you have ever seen A Bugs’Life from Pixar, this moment in time was akin to the end of the movie where all the ants which outnumber the grasshoppers stand up to them and won’t take any more abuse from them. 

Out of nowhere one man runs up and tackles one of the trio, and another bystander starts to help with the one left on me and they begin to actively brawl on the ground and punches are being thrown left and right.  I take this moment of time to yell at 911 that things are getting messy so get here ASAP, and moments later I hear sirens, and a helicopter.  When I rolled by I saw them in the back of the police cars and they were hating. 

I don’t like bullies, never have, and I will not sit by as anybody gets taken advantage of.   We outnumber the bullies, we just have to all stand up.  


After I couple of complaints I have edited the blog as many were expecting more ways to save on your mortgage instead of me just trying to be awesome.   So onwards to this weeks tip:

Mortgage Savings TIP # 2 

Don't be bullied by any lender to just sign the renewal paperwork for your mortgage when it comes in the mail.   

Why?  Statistics show that lenders will often give new clients better rates, and rely on you signing at renewal without much of a negotiation if any at all.  If you don't call, write, or inquire,  you could loose out on thousands as they have better mortgage rates available than what they mail to you.   Shop around, check it out, let someone who is independent give you some free third party advice.   Don't leave it to the last minute and wait for the mortgage renewal paper in the mail, as you may be forced to stay there.  

Rates of mortgage lenders fluctuate all the time.   Often I have seen one lender change their rates three times in one day if they are trying to be very competitive.  

Some questions to ask are:

How long can your bank hold a renewal rate for you? 

Will they give you the lower rate if rates decide to drop? 

How will they protect you from rate swings in the future?

• If you wait too long you cant lock in at lower rates that might have been available last month, or even the month before.   
• Make sure you take advantage of any fluctuations between when you signed and your renewal date.  
• If you lock in make sure someone checks the rates for you.   We can lock in a low rate 120 days out, and if they drop we can give you that lower rate.  

WHICH WILL ALLOW YOU TO SAVE MONEY ON YOUR MORTGAGE!!!