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The mortgage renewal process is not as straight forward as it used to be. After the 2008 recession, the Bank of Canada lowered interest rates to essentially zero, making it really cheap to borrow money. It also meant that when it was time to renew your mortgage, you simply auto-renewed it. A lot has changed over the last 10+ years. The housing market in the Greater Toronto Area remains strong, interest rates are up, as are mortgage rates. Where it once made sense to auto-renew your mortgage or break your mortgage and switch to another lender, that’s not necessarily the case anymore. The convenience of auto-renewing is no longer a convenience. In fact, homeowners looking to save money come renewal time will need to make a little extra effort.

To find out how you could save thousands or even tens of thousands of dollars, read the following recent trends and tips on the mortgage renewal process.

Mortgage Stress Tests

As of January 1, 2018, everyone refinancing or looking to get a mortgage, from a federally regulated financial institution, like the big banks, has to pass a mortgage stress test. The stress test ensures you can afford the mortgage you qualify for if interest rates rise.

If you’re applying for a five-year fixed mortgage, you need to qualify for a loan with an interest rate that is higher than what the bank is willing to give you. The rate is two percentage points higher than the Bank of Canada’s five-year benchmark rate.

Previously, those who had less than a 20% down payment had to pass a stress test, but it was set at the Bank of Canada’s five-year rate, which is a little less strict than the new one.

New Mortgage Rule

Switching lenders has become increasingly more difficult. Many homeowners believe the current stress test only applies to first-time homebuyers. It doesn’t. It applies to virtually everyone.

You can take your mortgage to another lender to get a better rate, but you’ll need to pass the stress test all over again.

If you’re renewing your mortgage, you can avoid the pain of passing the stress test by sticking with your current lender. That might sound like a good idea, but it’s not. This prevents you from shopping around and securing a better rate.

Interest Rates Are on Their Way UpRecent Trends and Money Saving Tips for Canada’s Ever Evolving Mortgage Renewal Process

For more than 10 years, Canadians have been living in an environment where interest rates were essentially zero. Those days are over. Interest rates are on the way up. As a result, you can no longer expect rates to be lower when it comes time to renew your mortgage.

Those rising mortgage rates will affect the vast majority of homeowners. That’s because a quarter of fixed mortgage rates are due for renewal every year. Every four years, all households with a fixed mortgage will have to deal with higher interest rates.

Do Your Research and Start Shopping Early

The more informed you are, the better your chances are of getting better rates and terms when it comes time to renew your mortgage. That’s why it’s so important to do your research.

One of the first things you can do to ensure you get the best deal on your mortgage renewal process is to start shopping early. Time is of the essence. If you think you are going to stay with your current lender, most will let you renew early without penalty, but only if you renew in the final 120 days of your mortgage term.

In this competitive market though, chances are good your current lender will not be able to give you the best mortgage rate. Not only that, banks provide different rates to people depending on financial situation and the property you own.

That’s why it’s imperative that you take the time to shop around when it comes time to renew your mortgage.

Ask for Better Rates

Your current lender will make every effort to ensure you don’t check around for lower terms and rates when it comes time to renew your mortgage. Mortgage lenders will send existing clients renewal offers before your mortgage term is up. They’ll offer you a slight discount off their posted rate. To make it easy for you, they even enclose a letter you simply need to sign and send back.

Easy, but costly. Again, renewing your mortgage without shopping around mean you’re paying a higher mortgage rate than you need to. You can try and negotiate a lower rate with your current lender, but chances are good they won’t be able to provide you with a rate a new lender could.

Whether you decide to stay with your current lender or are thinking of switching, don’t accept the first mortgage rate they offer; ask for something better.

To find out what kind of mortgage or financial options are available to you, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

The Federal government continues to make major changes in mortgage classifications. And it has a big impact on your mortgage plan and costs. Before the 2017 changes, mortgages were classified as either high ratio (less than 20% down payment) or conventional (more than 20% equity). The Department of Finance has added another layer, with mortgages defined as either insured, insurable, or uninsurable.

Not all mortgages are insured. Traditional lenders will insist that you get mortgage loan insurance if your down payment is less than 20% of the home’s purchase price. On top of that, insurance is not available for homes with a purchase price of $1 million or more; that’s because you need to have a minimum down payment of 20%. That’s going to be tough for many people house hunting in the GTA, where the average cost of a detached home is well in excess of one million dollars.

So, what’s the difference between insured and uninsured mortgages and how will it affect you?

Insured Mortgage

Insured mortgages make up a huge portion of the mortgage market, and the rules governing insured mortgages generally have a big impact on buying power.

To qualify for an insured mortgage, you need to have a minimum 10% down payment (up from five percent) and less than a 20% down payment, the property must be valued at more than $500,000 and less than $1 million, and a maximum amortization of 25-years. It also cannot be a rental property.

On top of that, you need to pass a stress test, ensuring you can afford the mortgage if interest rates rise. If you’re applying for a fixed mortgage with a term of five years or more you need to qualify for the Bank of Canada’s posted rate, which is almost always higher than the rate homeowners apply for.

Speaking of interest rates, whether you qualify for an insured, insurable, or uninsured mortgage will have a huge impact on the amount of interest you pay.

While those looking to secure an insured mortgage must adhere to more stringent borrowing rules, they actually pay the lowest interest rates. Because these mortgages are insured, they are less risky for the big banks, and, as a result borrowing rates are cheaper.

Insurable Mortgage

An insurable mortgage is similar to an insured mortgage except that the borrower has saved up more than 20% for a down payment. The property must be valued at less than $1 million, the maximum amortization period is 25-years, and it cannot be a rental property.

You might have diligently saved up a sizeable down payment but that does not mean the big banks will reward you for that. The interest rate on insurable mortgages is actually slightly higher than insured rates.

Uninsured Mortgage

An uninsured mortgage is basically every mortgage that cannot be insured. This includes properties valued at over $1 million, rental properties, refinances, and amortization periods greater than 25 years.

Because these mortgages are not insured (default insurance protects the banks not you) the risk is higher for the lender. As a result, the interest rates charged on uninsured mortgages are the highest.

An uninsured mortgage costs more, but there are some benefits. They have longer amortization periods, they do not have to pass a stress test, and borrowers qualify at the lower contract rate.

Uninsured mortgages are backed by the lender or big bank. That’s why they have control over the qualifying criteria and interest rates.

Mortgage Insurance

When traditional lenders receive applications from those looking for a mortgage, who have a down payment of less than 20%, they are required to get a high-ratio mortgage-default insurance.

In Canada, mortgage loan insurance for insurable and insured mortgages are provided by the Canada Mortgage and Housing Corporation (CMHC—which is owned and run by the Canadian government), Genworth, and Canada Guaranty (both of which are privately run).

But nothing is free when it comes to banking and mortgages. The policy is paid by the mortgage lender, but the cost is passed down to you, the home buyer.

The insurance premium is a percentage of the home’s purchase price. But it is determined by the size of the down payment. The average percentage ranges between 1.7% and 4.0%.

That may not sound like a lot, but it adds up, and could cost you tens of thousands of dollars. You can choose to pay that extra cost all at once or tack it onto your monthly mortgage payment.

Keep in mind, the rules are different depending on which province you live in. Premiums in Ontario, Manitoba, and Quebec are subject to provincial sales tax, which cannot be added to the loan amount. That means you have to have add that money to your closing costs.

Is an Insured Mortgage Right for You?

The fact is, the majority of Canadian homeowners fall into the insured mortgage category—having a down payment of less than 20%. Unfortunately, qualifying for an insured mortgage means having to pay thousands and thousands of dollars in mortgage insurance.

Buying a $750,000 house with an insured mortgage, at 3.5%, means having to pay an additional $26,250 on top of your mortgage.

Having to pay mortgage insurance only applies if you get a loan with a traditional lender, like the big banks. If you use a non-traditional lender though, you will not need to pay for mortgage insurance. That’s because alternative lenders do not need to follow the same restrictive lending rules as all federally regulated institutions do.

Canadalend.com, Helping You Secure a Mortgage

The cost of a house in Canada, especially in big metropolitan areas like the GTA and Golden Horseshoe is beyond the reach of many Canadians. And those that are able to secure a mortgage, generally do so with a down payment of less than 20%. Instead of using a traditional lender, the licensed mortgage experts at Canadalend.com can show you how to save money by using an alternative lender.

The mortgage specialists at Canadalend.com are independent—that means they work for you, not the banks. And because they’re independent, they have access to hundreds of different lenders.

Many of these lenders specialize in providing mortgages and loans to those who have down payments of less than 20%, want to buy a home worth more than $1 million, have declared bankruptcy, have bad credit or even no credit, or have unreliable income.

To find out what kind of mortgage or financial options are available to you, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

Most Canadians dream of having a home. It takes a lot of discipline to get there, that’s because buying a house is expensive. And saving for a down payment can take a long time. It doesn’t get much easier when you actually own a home, you have mortgage payments to make, utility bills, property taxes, and upkeep. We all go into getting a mortgage and buying a home under the presumption that everything is going to work out. But what if it doesn’t?

What happens if you lose your job or your salary is cut? What happens to your home and mortgage if you declare bankruptcy? What happens when it comes time to renew a mortgage or even qualify for a new mortgage after declaring bankruptcy?

Below are some answers to those bankruptcy scenarios.

What Happens to My Home and Existing Mortgage?

Not all debts are wiped clean when you declare bankruptcy. Secured debts, like a mortgage, cannot be included in a bankruptcy. The laws surrounding a bankruptcy vary slightly from province to province, but, for the most part, that means you cannot keep a house in bankruptcy. Especially if you have substantial equity built up in the property.

It might not sound fair, but it isn’t really reasonable for the homeowner to keep all the money (equity) they’ve built up in their property at the same time the creditor’s debts are being discharged.

If substantial equity has been built up in the house, a bankruptcy trustee with either seize the house and sell it or make arrangements with the owner to repay the equity.

On the other hand, if you only have a little equity in the house, you can usually make arrangements with your lenders to keep paying your mortgage and keep the house after filing for bankruptcy.

What Happens When It Comes Time to Renew Your Mortgage?

When you renew a mortgage, you are making a new agreement with your current lender to extend the mortgage. If you declared bankruptcy and were able to keep your home, your existing lender may be willing to renew your mortgage.

Then again, there are some lenders who will not renew a mortgage when it comes to someone who has declared bankruptcy. The bank will allow you to keep the mortgage until it matures, but once it does, you have to locate a new lender. If that does happen, it will be difficult for you to find a new mortgage with a traditional lender.

There is one silver lining. If you are up-to-date on your mortgage payments and declared bankruptcy, and were allowed to keep your property, under Canadian bankruptcy law, a mortgage lender cannot foreclose on your home. That’s because you didn’t break any rules of the mortgage agreement.

If you are behind on your mortgage payments though the bank does not have to honour the agreement. And can foreclose on your mortgaged asset.

How Does Bankruptcy Affect a New Mortgage?

Buying a new home usually means getting a mortgage. To do this, you need to have a good credit score. But after declaring bankruptcy, depending on how much time has passed, chances are your credit score will be low.

Your credit score (on a scale of 300 to 900) shows lenders how likely you are to pay your bills on time. The higher the score, the more likely you are to pay your bills.

To get a new mortgage to buy a home, traditional lenders can insist on a minimum score of 680. That is, if they’re even willing to deal with you at all. The bigger the lender and loan you want to secure, the stricter they are with their lending practices.

In some cases, banks won’t even entertain looking at a mortgage application if you’ve declared bankruptcy. Others will entertain a new mortgage, but because you’ve declared bankruptcy, they may demand that you have a larger down payment and make you pay a much higher interest rate.

Time Is of the Essence

When it comes to bankruptcy, the amount of time after you declared bankruptcy determines if you can get a new mortgage. Traditional lenders will typically only give you a new mortgage or loan if at least two years have passed since your bankruptcy was discharged.

In the meantime, you need to work on getting your finances in order and boosting your credit score. But even that’s not as easy as it sounds. No matter how diligent you are with staying on top of minimum payments, just one 30-day late payment on your credit history can mean the difference between getting a new mortgage and not getting one.

Even if things go perfectly, it will still be difficult to secure a new mortgage right away. Banks may still be reluctant to deal with you. And higher interest rates could prevent you from getting a mortgage with the best rates.

What happens though if you want to get a new mortgage and buy a home before the two years are up? Forget it. The banks won’t give you the time of day.

Fortunately, there is another option for those who have declared bankruptcy and want to secure a new mortgage.

Canadalend.com, Helping Those in Bankruptcy Secure a Mortgage

Whether it’s an unexpected bill, expense, or you’re going through a divorce, people declare bankruptcy for many different reasons. None of which are reason enough to prevent you from getting a new mortgage. If you’ve declared bankruptcy and have been turned down by traditional lenders or want to see what kind of mortgage you qualify for, contact the licensed mortgage experts at Canadalend.com.

Because the mortgage specialists at Canadalend.com are independent, they have access to hundreds of different lenders. Many of them specialize in providing mortgages and loans to those who have declared bankruptcy, have bad credit, even no credit, or unreliable income.

How can these lenders provide more effective service than traditional lenders? Many of them are private, meaning they do not have to follow the same strict rules that all federally regulated institutions do; this includes the big banks.

To find out what kind of mortgage or financial options are available to you, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.

No one likes being in debt. It holds you back from achieving your financial goals. This might be why ‘getting out of debt’ is one of the most common New Year’s resolutions! While there are no quick, overnight ways to get out of debt, there are some steps you can take that will make a big difference. If you want help reaching your financial goals in 2019, consider these money saving tips in 2019.

Automate Your Savings

People get into debt for any number of reasons. One thing is certain though, no one likes being in debt, paying interest, or even late fees. Why throw your money away if you don’t have to? But for some reason, people don’t think twice about paying late fees. And they should. Late fees can add up fast.

Roughly 20% of credit card users incur a monthly late fee. And credit card companies are notorious for their late fee charges and high interest rates. This might explain why they rake in billions of dollars in annual late fees.

Paying bills on time will reduce the amount of interest you owe. It will also improve your credit score.

You can automate virtually any bill. Whether it’s a student loan or utility bill, automatic payments that connect to your bank account or credit card ensure that your bills are paid on time.

Here is a sampling of bills you should be able to automatically pay every month: car loans, student loans, mortgage, rent, credit cards, phone bulls, cable bills, electricity & gas bills, water, sewer and trash bills, and insurance premiums.

Some banks even have a feature that rounds up your debit card purchase to the nearest dollar and automatically transfers the different to a savings account.

Contribute to Your Retirement

You’re never too young, or old, to save for retirement. If your company offers a retirement savings option, that they match (even if it’s just a portion) take advantage of it. You can then invest this money any way you like. If you’re younger, you might want to put a large portion into higher risk investments, if you’re nearing retirement, you’ll want to take a defensive position, and invest in less risky equities.

If your employer does match what you put into an RRSP, it doesn’t make sense to not do it. Because it’s free money. If possible, contribute the maximum amount that your company will match.

Best of all, if you ever leave your job, your retirement plan goes with you.

Focus on Your Credit Score

Even if you have debt, you can take steps to help improve your credit score. Your credit score (300 to 900) is very important because it tells lenders how reliable you are at paying your bills on time; the higher your score, the more reliable you are. The lower the score, the greater the likelihood you are of defaulting.

A low credit score means you could be rejected by traditional lenders for a loan. There is a chance you might still be able to get a loan from the big banks if you have a low credit score, but it’ll cost you. The interest rate will be much higher, and they may not lend you as much as if you had a higher credit score. To get the best rates and terms, some lenders insist on a minimum score of 680.

Having a low credit score impacts more than just your relationship with the banks. A low credit score can affect whether or not you get a car, rent an apartment, secure a mortgage, or take out a home equity loan.

The best thing you can do to maintain a high credit score is make your payments on time and keep track of your credit score.

Check Your Debt and Create a Strategy

You already know you’re in debt. That’s no surprise. But it’s imperative that you keep an eye on your debt and what you’re spending your money on. Create a list of all your debts: list the total amount you own, the minimum monthly payment, and interest rate.

Creating a budget plan that helps manage your money will help you figure out how much you earn, spend, and save. It will also guide your spending, which will help you reach your 2019 financial goals.

Once you’ve created a list of all your debts, create a strategy for paying it off. Seeing the types of debts, the amounts, and interest rates will determine your strategy for paying them off.

• Debt with High Interest Rates: Paying off these debts first will result in paying less interest. Make minimum monthly payments on your debt and use any extra money to pay down the debt with the highest interest rate.
• Debt with Low Balances: For psychological reasons, some people prefer to pay down the debt with the lowest balance first. It feels like you’re making progress sooner. This can be a great motivator and help you stay on track to meet your goal of becoming debt-free. There is a trade-off though; it could mean paying more in interest over the long run.

Canadalend.com, Helping You

There is no one-size-fits-all approach to becoming debt free. Everyone gets into debt for different reasons. And no one strategy to becoming debt-free works for everyone. Think about where you’re at financially and what you’ve accomplished over the last year. Then, call the financial experts at Canadalend.com and let them help you set goals to make even better progress in 2019.

The licensed mortgage specialists at Canadalend.com are independent, which means they have access to hundreds of different lenders. Many of those lenders specialize in helping people secure home equity loans who are self-employed, new Canadians, have bruised credit, or even no credit, unreliable income, or even recently declared bankruptcy. They can help you refinance your mortgage or consolidate your debt to get you on track to saving more in 2019.

To find out what kind of mortgage or financial options are available to you, contact Canadalend.com today or apply online and a Canadalend.com mortgage specialist will set up an appointment at your earliest convenience.