More and more Canadians are beginning to bounce back from the recent economic slide and are considering purchasing a home. For many individuals, this is going to be the first time they’ve approached the process of finding a house to call their own. Homes can range anywhere from $100,000 to $1,000,000 – so many first-time buyers need to consider mortgage options.

Negotiating a mortgage agreement can be a complicated task. For this reason Canadians often seek out the assistance of a mortgage agent – someone qualified to “shop around” with banks, credit unions and other institutions in order to find the best rates and conditions for a particular lifestyle. The certified mortgage brokers we have at Mississauga Mortgage are an excellent choice for individuals who don’t have time to sort through the many options available to them. But we’re also a great choice for people who want to talk to someone in the know about mortgages in Mississauga without feeling the kind of pressure they might find at their bank.

Mortgage rates, terms, conditions and fees can be overwhelming, so we’re going to be posting a series of articles to help first-time buyers understand the mortgage process. For this very first post, we’ll go over the mortgage payment system and some preliminary terms you should become familiar with.

The Mortgage Payment

The first payment new home owners will need to commit to is the down payment. This is the amount that the purchaser puts towards the listed value of the home. Typically, most people will put up 20% of the purchase price, but there’s room to negotiate. The more you put towards the down payment, though, the less you’ll need to finance for the rest of the cost. This usually translates into lower monthly payments. Depending on your circumstance and the property you’re interested in, our mortgage brokers can advise you how much money you should put towards the down payment.
Once you’ve signed a mortgage agreement and paid your down payment, you’ll have to start making the monthly payment. The monthly payment is determined by the following costs:
• Principle: The total amount of money borrowed after the down payment.
• Interest: The amount you’re being charged for the loan – expressed as a percentage of the principle.
• Taxes: Money used to pay property taxes are usually held by a third-party who releases the funds when the taxes are due
• Insurance: Mortgages almost always require insurance to protect against losses from fire, theft, floods, etc.

Our mortgage agents will be happy to walk you through this process further. Check back here for our next post where we’ll discuss two different types of plans: The fixed-rate mortgage and the adjustable-rate mortgage.

These days, everyone is going green! Whether it is using reusable water bottles or grocery bags, driving environmentally- friendly cars, or implementing new recycling programs, it is clear that environmentally- friendly practices have become more prevalent in recent years. With the incredible rising popularity of green practices, it is not surprising that eco-friendly homes are becoming more common. Homes built with the environment’s well-being in mind present tons of benefit— and not only for the environment!
To give you an idea of just how great eco-friendly homes are, here is a short list of a few benefits:
• Environmental benefits: By using less energy and fewer harmful materials, green homes contribute to the conservation of natural resources like water, wind, sun, and geothermal energy.
• Health benefits: By using non-toxic and non-volatile materials, green homes can eliminate many health issues. Living in an environmentally- friendly home will result in improved air quality, and could even help alleviate respiratory problems. Additionally, because eco-friendly homes use fewer artificial materials, less mould and mildew will develop over time.
• Financial benefits: Operating a green home is much less expensive than operating a normal home. Living in an environmentally friendly home, you will discover that heating/cooling costs will be lower, resulting in reduced energy bill payments. Another thing to consider is that the market demand for green homes is continuously rising. If you invest in one now, it will increase in value for the future.
Clearly, there are plenty of incentives to purchase a green home. If you are interested in purchasing a green home in the GTA, Mississauga has tons of options! In the Streetsville Glen development, for example, energy star features are standard and buyers can choose optional upgraded packages. One package includes an upgraded building envelope and another combines the upgraded building envelope with upgraded heating, cooling and air filtering systems.

Once you find a green home you would like to purchase, you will need to secure a practical and affordable mortgage. To make sure you get the best rate possible, it is an excellent idea to enlist the help of a professional mortgage broker. For a reliable mortgage broker in Mississauga, come to Mississauga Mortgage. At Mississauga Mortgage, we specialize in securing affordable residential, commercial, industrial, and construction mortgages.

We are committed to getting our clients the best possible mortgage rates in Mississauga. By taking advantage of a Mississauga Mortgage broker, you can eliminate the stress of negotiating with lending institutions directly and rest assured that you’ll get the most affordable rates. For more information about Mississauga Mortgage, visit http://mississauga-mortgage.com/.

Mississauga, one of the fastest growing cities in Canada, is the 6th largest city in the nation. The location of one of Canada’s largest financial districts, the Mississauga housing market is booming. With a wide variety of work opportunities, tons of entertainment centers, and a high quality of living, it’s no wonder why it’s becoming such a popular place to live.

Mississauga is a center for a variety of industries including warehousing, manufacturing, electronic equipment and chemical sectors. It is the home of more than 50 Fortune 500 companies; Hewlett-Packard, Microsoft, Pepsi, and Wal-Mart are just a few. Mississauga also boasts award-winning architecture with its curvy Absolute World Towers.

Families living in Mississauga can enjoy a bevy of entertainment, including the popular indoor gaming centre,Playdium, and the impressive Square One shopping center. With 481 parks and a multitude of community centers, there are tons of opportunities for fun! Plus, it’s minutes away from Toronto—giving residents the opportunity to visit the big city without having the worry and frustration of living in the downtown core.
Mississauga offers a variety of housing developments, from quiet suburb properties to modern condominiums.

The value of single family homes, condos, and apartments in Mississauga have steadily increased in the past decade despite the snags in the housing market. The average price of a home in Mississauga is approximately $340,000. In order to afford this, most people require a mortgage. Mississauga Mortgage’s mortgage agents are dedicated to finding you the best mortgage rates in Mississauga, Ontario.

We specialize in securing residential, commercial, industrial, and construction mortgages in the Mississauga area. For more information on mortgage rates, mortgage rates for those who are self-employed, and information on credit, visit the Mississauga Mortgage website. You can also read more in our blog that offers valuable information on debt consolidation and refinancing. If you’re looking for a mortgage in Mississauga and want quality service from knowledgeable mortgage brokers, contact us through our website.

Here are the meeting dates for the Bank of Canada for 2011.  These are the dates that Marc Carney & Co. meet to decided the interest rate policy for the country.  These dates are very important for the economy and those of us in Mississauga with variable rate mortgage.  The prime rate for your mortgage is directly dependent on this.  I will also warn you before each meeting, but here they are.  The dates are always on a Tuesday, except for September, because of labour day when it is on a Wednesday:

18 January
1 March
12 April
31 May
19 July
7 September
25 October
6 December

As we mentioned in the previous blog, Joe & Mary have two obstacles that they have to overcome:

1) They will have to come up with equity to bring their mortgage below the maximum of 95% of the value of the property. (95% of $90,195 = $85,685.) However, their mortgage balance at renewal is $86,498, so they will have to pay in $86,498-$85,685 = $813 in equity to qualify for the mortgage.
2) Mortgage insurers such as CMHC and Genworth will not insure borrowers who have credit scores below 620. As I stated before, any mortgage that has a Loan to Value (LTV) higher than 80% is a high ratio mortgage and prime lenders will require it to be insured with a mortgage insurer. Thus, if Joe & Mary, or one of them, have damaged their credit so that their credit scores are below 620 they will no longer qualify for the mortgage insurer’s requirements and thus neither for a mortgage.

From all of this then we can see the following:

1) If your mortgage renewal is four or five years from today then you should have enough equity in your home to qualify for a mortgage. If your mortgage renewal is in 2009 I suggest that you do some estimations of your property value and then calculate your Loan to Value to ensure that it is below 95%. If it is above 95% make sure that you have access to equity to make up the difference. You will be able to borrow the difference, but only if your debt service ratios are not too high.
2) More than equity in our homes it is essential that we know how our credit works, what damages it and what builds it. Your credit worthiness is more important that your income! (Have you though why?) Check equifax.ca regularly to see the status of your credit. Although the report that you as a consumer sees at Equifax does not disclose your actual credit score it gives enough information that will enable you to judge your credit worthiness. If Joe and Mary have damaged their credit scores then no prime lender will borrow to them and they will be in default of their mortgage.

Their are many things that I could not mention here, just because there is not enough space for it. Things like debt service ratios and various options available to you through a mortgage broker (that banks don’t offer) are very important, but we ran out of space. It would be my privilege to meet with anyone who requires more information and a solution. You can compare other scenarios to determine your best mortgage options here.

Let’s use numbers that are easy to work with so that we can understand the concepts rather than having to struggle with the math:

Joe & Mary purchased a $100,000 home in Mississauga, in 2006 with a 5% down payment. They worked with a mortgage broker to get them an excellent 5 year mortgage rate of 5.09%. The math would be as follows:
Purchase Price: $100,000
Minus Down Payment: $5,000
Balance: $95,000
Plus Mortgage Insurance: $2,612.50
Final Mortgage Amount: $97,612.50

Let’s assume the following about the housing market over the five years of their mortgage term:
2006 & 2007 – Market appreciated by 5%
2008 & 2009 – Market depreciates by 10% per year
2010 – Market appreciates by 1%
Thus, after 5 years and at the time of their mortgage renewal, their Mississauga home would have an approximate value of $90,195. Equally, Joe & Mary would have an approximate mortgage balance of $86,498 (assuming they paid monthly and nothing extra). This means that their new mortgage would have a Loan to Value (LTV) of 95.9%

FYI: LTV = Mortgage Amount/Property Value ($86,498/$90,195 = 95.9%)

This presents at least two potential problems for Joe & Mary:
1) In Canada we don’t have insured mortgages with less than 5% equity (They only have 4.1% equity).
2) They would have to re-qualify for both the lender and the mortgage insurer’s requirements.

In the next blog we will look at their qualification criteria and how this could cause them to lose their home and what they can do to prevent this.

Stay tuned….and let me have your questions and comments.

Most people in the real estate business agree that it will take approximately two years before the real estate market in the GTA and thus Mississauga will start to correct itself so we see positive gains again.  As I mentioned before, if your mortgage is low compared to the value of your home you should not have a problem getting a mortgage (assuming your credit worthiness is reasonable).

However, what if you bought a home in 2007 with a down payment of less than 20%?  This would mean that you have an insured mortgage which your mortgage lender insured with one of Canada’s major mortgage insurers, CMHC, Genworth Financial or AIG.  Most people in Canada don’t understand the relationship that lenders have with the mortgage insurers, so maybe we will discuss this topic a little later. Suffice to say that if you have a down payment less than 20% you will have to qualify for both the lender’s and mortgage insurer’s requirements. This is because no mortgage lender will give you an insured mortgage loan without approval from the mortgage insurer. In a normal, improving housing market, the average borrower only insures his/her mortgage once. Why? The combination of the increased property value and their decreased mortgage balance over the mortgage term will cause them to have more than 20% equity in their home at the time of their mortgage renewal, thus no mortgage insurance is required. If a mortgage is not insured a mortgage lender can issue a mortgage approval solely on its own lending guidelines.

FYI: Equity = Property Value – Mortgage Balance

Let’s use an example of a home in a decreasing property value market, analyze the details and compile a checklist of what borrowers have to do to protect themselves from potentially losing their homes when it comes to mortgage renewal time. We will do this in the next blog.

Well we have all seen the reports that property prices are declining.   Although we know the press likes a good story, and declining property prices do make a good story these days, there is truth to property values decreasing, by how much in Mississauga, that is not clear.  Even if only half the stats are true about declines, as home owners in Mississauga it is still prudent to reflect on how this might affect us.  I hope this helps you to review your mortgage status so that you don’t stand a chance of loosing your home when it comes to refinancing time.  This is particularly applicable to those of us whose mortgages are up for renewal in 2009 or 2010.

If you have more than 30% equity in your home and your credit is good you should not have a problem getting a mortgage.  However, if you have less than 20% equity in your home I will write a series of articles to help you protect your home, which is probably your greatest asset.  Stay tuned for more shortly or give me a call to discuss!