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Real estate in Toronto and the Greater Toronto Area continues to post solid quarterly and year-over-year gains. While many have been predicting real estate in the GTA will experience a correction or soft landing, that hasn’t happened. In fact, housing prices in the GTA continue to notch higher month after month. Thanks to low interest rates, strong demand, and solid economic growth, many see buying a home in the GTA as an excellent long-term investment.

Toronto Real Estate Remains Hot After 20 Years

Housing in the GTA continues to confound critics who have been calling for a real estate price correction for years now—especially after the U.S. housing market crashed in 2008. But that hasn’t happened.

In fact, since 2008, the real estate market in Toronto and the GTA has experienced solid, sustainable growth. It’s not as if the demand for real estate in the biggest city in Canada is a new phenomenon. The housing boom in Toronto has been going for two decades.

And that shouldn’t be a big surprise. With a population of 2.6 million, Toronto is the biggest city in the country, and the third largest in North America. The GTA has a population of more than six million. The economy is solid and the city regularly ranks amongst the most livable cities in the world.

According to one index, which looks at cost of living, food security, business environment, infrastructure, and other factors, Toronto is the top North American city to live in.1

2015 Was a Record Year for Toronto Real Estate

Because of these reasons, Toronto remains one of the best real estate markets, rewarding homeowners with strong annual price gains. In 2015, the number of homes sold in the GTA increased 9.25% year-over-year to 101,299, the first time the annual figure topped 100,000. In 2014, 92,782 homes exchanged hands.2

The average price of all home types sold in the GTA in 2015 increased 9.8% year-over-year to $622,217. The biggest increases came from detached homes. In Toronto, the price of a detached home climbed 12.6% to $1.04 million. For a detached home in the surrounding “905” area, the price increased 12.1% to $728,015.

That said, all types of properties realized solid gains in 2015. The price of a semi-detached property in Toronto rose 10.1% to $736,082. The same property in the 905 area was up 11% at $492,643.

The price of a townhouse in Toronto jumped 10 to $542,406, while in the 905 area the price increased 10.3% to $449,218. Even condominiums were a great investment, with the price appreciating five percent to $405,589 in Toronto and by the same amount in the 905 area to $317,572.

Momentum Carries into 2016 with Record Numbers in May

The momentum over the last number of years carried into 2016 with strong growth in the first five months of the year. In May, both sales and prices reached record levels in Toronto and the GTA.3

The number of home sales in May 2016 reached a record 12,870, a 10.6% increase over the 11,640 sold in May 2015. The average price of all housing types in the GTA climbed 15.7% in May to $751,908, with detached homes experiencing the strongest price appreciation. In Toronto, the average price of a property was up 8.9% at $782,051. In the 905 area, the average price increased more than $100,000 (20.1%) to $734,924.

In May, the average sale price for a detached home in the city of Toronto rose 15.2% to a record $1.28 million. In the rest of the GTA, the price of a detached home climbed 21.2% to $891,870.

The price of a semi-detached property in the city of Toronto was up 7.1% at $834,883, while in the 905 area the price of a semi-detached home increased 19% to $586,849. Townhouses continue to be an excellent investment, rising 12.9% in Toronto to $626,305 and 17.2% in the rest of the GTA to $527,503. The same goes for condominiums: prices climbed five percent in Toronto to $442,520 and 8.7% in the 905 area to $347,431.

Canadalend.com, Helping Those in the GTA Find the Best Financial Products

You need three elements to keep a housing market strong: supply, demand, and affordability. There is a lot of demand in the GTA for real estate and the supply is limited.

As for affordability, home ownership in the city of Toronto and the GTA is an excellent long-term investment. Thanks to a relatively strong regional economy in the GTA and low borrowing costs, first-time homebuyers can feel confident about both their purchase and ability to pay for their home over the life of the mortgage.

If you’re looking at purchasing your first home in Toronto or the GTA or moving up, the independent, licensed agents at Canadalend.com can help you navigate the often confusing world of mortgages.purchasing your first home in Toronto or the GTA or moving up, the independent, licensed agents at Canadalend.com can help you navigate the often confusing world of mortgages.

At Canadalend.com , we understand that there is more to getting a mortgage than just the lowest interest rate. In addition to finding a competitive interest rate, you’ll also need to consider the mortgage term (the length of time you commit to the current mortgage rate; the most common term in Canada is five years) and amortization period (how long will it take you to pay off your mortgage is full).

Your Canadalend.com agent will help you determine which type of mortgage is best for you. The experts at Canadalend.com will also help you find the mortgage term and amortization period best suited to your financial and lifestyle needs.

To get you the best financial products, our agents draw from hundreds of banks and lenders to help you secure the mortgage product best suited to you. Canada’s big banks only offer you their own in-house financial products, whether they suit your needs or not.

To find out what kind of mortgage products are best for you, contact Canadalend.com today. Or apply o nline and a Canadalend.com lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.

Sources:

1. “Toronto And Montreal Are The Best Cities To Live In, According To The Economist,” huffingtonpost.com, January 28, 2016; http://www.huffingtonpost.ca/2015/01/28/toronto-montreal-best-cities_n_6563024.html.
2. “GTA Realtors Report Record Year for TREB MLS Home Sales,” trebhome.com, January 6, 2016; http://www.trebhome.com/market_news/release_market_updates/news2015/nr_market_watch_1215.htm.
3. “GTA Realtors Release Monthly Resale Housing Market Figures, trebhome.com, June 3, 2016; http://www.trebhome.com/market_news/release_market_updates/news2016/nr_market_watch_0516.htm.

Should you go with a closed, open, or convertible mortgage ? There are a lot of factors you need to consider when assessing your financial and lifestyle goals and how quickly you want to pay off your mortgage .

What Is a Closed Mortgage?

A closed mortgage is a good option for those who are not on the fast track to paying off their mortgage. With a closed mortgage, you agree on a term, which can range from half a year to 10 years. The initial interest rate for a closed-term mortgage is usually lower than the rate for fully open mortgages. As a result, many homeowners choose a closed mortgage because it allows them to save on interest costs.

At the same time, a closed mortgage comes with a number of penalties. You need to pay a prepayment charge if you want to renegotiate the interest rate, prepay more than your mortgage allows, or pay off your mortgage balance before the term is up.

The fees are not inconsequential. The penalty is usually three months of interest or the interest rate differential, depending on which one is higher.

So, if you do not intend to sell the property before the term is up or refinance, or if you have no intention of prepaying any portion of the mortgage above what is allowed, a closed mortgage might make the most financial sense.

What Is an Open Mortgage?

Open mortgages are an attractive option for those who want to pay off their mortgage as fast as possible. With an open mortgage, repayment terms are much more flexible than with a closed mortgage. It can be repaid either in part or in full at any point without a penalty. Open mortgages can also be converted to any other term at anytime—all without incurring a penalty charge.

This kind of flexibility is not free. Interest rates for open mortgages tend to be higher than rates for a closed mortgage because of the prepayment flexibility.

While the interest rate will be higher, an open mortgage has a lot of short-term advantages. For example, an open mortgage is advantageous for those who have an income that varies. If you’re self-employed and earn an extra $2,500, it can be applied to the mortgage without penalty.

An open mortgage is also a great idea for those who expect their income to increase or those who want to pay down their mortgage as fast as possible. The faster you pay down your mortgage, the less interest you pay.

What Is a Convertible Mortgage?

A convertible mortgage gives you the same benefits as a closed mortgage, but it can be converted to a longer-term closed mortgage at any point without any penalty fees.

Why would you want a convertible mortgage? A convertible mortgage might be a good option if you think mortgage rates are going to decrease in the near-term. A convertible mortgage could also be a great idea if you’ve found your dream home but need more time to decide which mortgage option is right for you in the long term.

Helping Those in Toronto Find the Best Mortgage

At Canadalend.com , our independent, licensed agents will sit down with you and help determine which type of mortgage is best for you. As the country’s leading low-cost private mortgage solution provider , Canadalend.com will explain the advantages and disadvantages of an open mortgage, closed mortgage, and convertible mortgage.

Our agents draw from hundreds of banks and lenders to help you secure the mortgage products best suited to your financial and lifestyle needs.

To find out what kind of mortgage product is best for you, contact Canadalend.com today. Or apply o nline and a Canadalend.com lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.

“A fixed mortgage or a variable mortgage ?” It’s one of the most common questions first-time home buyers or those renewing a mortgage in Toronto ask, and it can be a complicated decision. To decide which one is best for you, you need to make a comparison and determine which one fits your long-term financial and lifestyle needs.

What is a Fixed Mortgage Rate?

A fixed-rate mortgage is a mortgage where the interest rate is set, or fixed, and will not change over the duration of the term of the mortgage, regardless of the amortization period.

If interest rates are low and you don’t think they’ll fall any further, a fixed mortgage rate might be right for you; in fact, the majority of mortgages in Toronto are fixed-rate mortgages. Most people like fixed-rate mortgagesbecause they provide stability and the locked-in rate means you know how much principal and interest you pay on each mortgage payment.

What Is a Variable Mortgage Rate?

If you think interest rates are going to fall, you might want to consider a variable-rate mortgage.

A variable-rate mortgage, often called a floating-rate mortgage , is a mortgage with an interest rate that fluctuates over the life of the term. A variable-rate mortgage is quoted as prime+/- a specific amount. While the prime lending rate could fluctuate, the quote (relationship to prime) will stay the same over the duration of the term.

The Bank of Canada adjusts the prime rate depending on the strength of the economy. If inflation is high, the Bank will increase the prime rate to make borrowing more expensive and when inflation is low, the Bank will cut the prime rate to encourage borrowing.

If the Bank of Canada lowers the prime interest rate, your mortgage rate will go down and a bigger amount of your mortgage payment goes toward the principal—and the faster your mortgage gets paid off.

Conversely, if the Bank of Canada raises its key lending rate, your mortgage rate will go up and a small amount of your mortgage payment will go toward the principal. Because less is going toward the principal, the amortization period of your mortgage is extended.

Which is Better? A Fixed or Variable Mortgage Rate?

There is no one-size-fits-all approach to mortgages in Toronto . You need to decide which one fits your comfort level and financial needs.

There is a risk/reward payoff with a variable-rate mortgage. Many people chose one because the interest rate is usually lower than that of a fixed-rate mortgage.

Right now, interest rates are near historic lows, but they will start to increase. And because they are so low, it’s quite possible rates could double over the next year or so. This will greatly impact how much of your mortgage payment goes to paying down the principal.

The benefits of a fixed rate mortgage is that you know exactly what the interest rate is over the life of your mortgage. One of the downsides of a fixed mortgage rate is that you cannot take advantage of a lower interest rate. As a homeowner, you need to ask yourself if it’s important to know exactly what your interest rate is going to be over the next five or 10 years.

Canadalend.com—Helping You Find the Best Mortgage Products

The busy spring home buying season is here. But before you buy your dream home, it’s important to talk to one of Canadalend.com’s independent licensed agents so you know how much of a house you can afford. They’ll also help you decide whether a fixed-rate mortgage or variable-rate mortgage is best for you.

As the nation’s leading low-cost private mortgage solution provider , Canadalend.com agents draw from hundreds of banks and lenders to help you secure the mortgage products best suited to your financial needs. Many of these lenders specialize in providing mortgages to clients that are self-employed, have a recent employment history, have bruised credit, and/or have declared bankruptcy,

To find out whether a fixed-rate mortgage or a variable-rate mortgage is better for you, contact Canadalend.com today or apply online and a Canadalend.com lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.

A commercial (or industrial mortgage) mortgage can help you finance a new commercial property, expand an existing premise, or even consolidate business debt. With interest rates near record lows, it’s a great time to consider a commercial mortgage.

What is a Commercial or Industrial Mortgage?

Where a residential mortgage is typically taken out by an individual borrower, a commercial mortgage is a loan secured by a company or businesses and the commercial property, such as an office building, hotel, industrial warehouse, shopping centre, or apartment complex, is used as collateral.

Commercial mortgages are a popular option for businesses looking to purchase or refinance income producing properties because it typically provides long-term funding that can range from $500,000 to $1.0 million (for a smaller commercial mortgage) to well over $2.0 million.

Because of the structure and purpose of a commercial mortgage , the rules for obtaining a commercial mortgage are more demanding than a simple residential loan. In addition to assessing credit history and doing a detailed analysis of the business in question, it’s important to understand that commercial mortgage rates are higher than residential rates.

Commercial Mortgage Properties

A number of properties can be classified as a commercial property. The most obvious types of commercial properties you would consider for a commercial mortgage would include an office, retail property, or industrial property.

Residential real estate is also eligible for a commercial mortgage but only if it is purchased as an investment property. Residential investment properties fall into three different categories: pure residential (1-4 units), pure residential (5 or more unites) and residential commercial mix.

These kinds of residential properties include: high-rise and mid-rise condominiums, single family homes (townhouses etc.), apartments/condominiums designed for rental purposes, retirement and nursing homes, student housing developments, and mixed use property development (residential component must represent at least 80% of the overall project).

Basic Types of Commercial Mortgages

Once you decide what kind of property you are financing and secure funding, it’s important to decide on what kind of commercial loan is best for your company. Below are four different types of commercial loans to consider.

Fixed-Rate Amortized Commercial Mortgages

A fixed-rate amortized commercial mortgage is a loan where the interest rate never changes and the monthly payments are the same. This is a great option for those looking to lock in low interest rates.

With a fixed-rate amortized commercial loan, a higher percentage of the monthly payment goes toward interest in the beginning. The closer you get to paying off the loan, the ratio will be reversed, and a larger portion goes to the principal.

For example, in the initial stages of the fixed-rate amortized commercial loan, 95% might go toward interest while just 5.0% goes toward the principal. The ratio is reversed the closer you get towards the end of the loan.

Variable Rate Amortized Commercial Mortgages

With a variable rate commercial loan the interest rate fluctuates. A variable rate commercial loan is a great idea when rates are low, and could go even lower. On the flip side, it means less of the monthly payment goes to the principal if the rates increase. This also means the amortization period will be extended.

While there is more inherent risk with a variable rate commercial mortgage, it can save you a lot of money if you think interest rates are going to be low for a long period. Keep in mind, if interest rates do rise, the monthly payments will also rise.

Interest Only Commercial Mortgages

An interest only commercial loan is a great option for businesses that have little capital and or need their payments to be as low as possible in the beginning. That’s because, with an interest only loan you only pay the interest portion of the loan. This also means no money is going toward the principal loan amount.

In theory, you can never pay off a loan by making interest only payments. With an interest only commercial mortgage, the “interest only” portion of the loan only lasts for a set period of time. After which, you need to start paying both the principal and the interest. Compared to just paying the interest, this blended payment will be considerably higher.

Commercial Balloon Mortgage

A commercial balloon mortgage is a loan where the borrower makes small, regular payments that go towards the principal and interest. At the end of the amortization period, (usually 5-10 years) the remainder of the loan is due in a lump sum.

That said, with a commercial balloon loan, you can make additional payments during the term of the mortgage. This will reduce the lump sum needed to pay off the loan at the end of the amortization period. And help pay off the loan more quickly.

Many businesses who take out a commercial balloon payment will refinance into an amortized loan (fixed or variable) after a few years to avoid having to make the final balloon payment.

Canadalend.com—Your Commercial Mortgage Experts

There is a lot to consider when it comes to securing a commercial loan mortgage. In addition to understanding what kind of property it is you want to finance you need to determine which type of commercial mortgage loan is best suited to your corporate needs.

At the same times, Canada’s big banks make it difficult for businesses to qualify for a commercial mortgage. If your business is new, struggling, or in debt, it could be difficult to secure a commercial loan.

As the country’s leading private commercial mortgage professionals Canadalend.com is dedicated to helping your business meet its short and long-term cash flow needs. Unlike Canada’s big banks, which only offer their own products, whether they suit your needs or not, the licensed, independent agents at Canadalend.com have access to hundreds of commercial mortgage lenders. Many of which specialize in providing commercial mortgages to clients with bruised credit or have filed for bankruptcy.

To apply for a commercial mortgage, contact Canadalend.com today. Or apply online and a Canadalend.com lending specialist will help you set up an appointment for a free personal consultation at your earliest convenience.