Hello friends in Brampton and the GTA. I sincerely hope that you are yours are in good health. Now that the longest spring in memory is finally ending, it’s nice to see people out and about and safely enjoying the sunny weather.
Homebuyers and owners in Brampton and the GTA have been asking many questions about their situation and the best way forward. I’ve summarized the most common questions here:
Rates are now lower than the rate I have. Should I break my mortgage?
Locking in a low rate now is a good way to get some reassurance in an uncertain future. You may be able to save considerable money over the long term and not be out of pocket to complete the transaction. However, if you are only partway through your fixed term, you’ll need to pay a penalty to get out of your mortgage. Whether you can benefit or not typically depends on that penalty amount. If this is a question that’s on your mind, I would be happy to provide you with a detailed analysis so you can determine if the benefit outweighs the cost.
I need to deal with my high credit card balances, what can I do?
If you have enough equity in your home (20% or more), you might have the option of refinancing your mortgage and rolling all your debts into a new low-interest mortgage. You’ll get a cash flow boost and going to one manageable monthly payment will give you immediate stress relief. Your lender will need to qualify you so if you’re dealing with reduced income, we may need to put this on hold until your situation improves. I can complete an analysis to see if you can benefit. I can also discuss other options if refinancing doesn’t work for you.
What about my mortgage renewal?
A lost job or drop in income will be an issue if you want to move to a new lender for a lower rate. I would need to do a review of your situation to determine if you can shop the market or if it is best to stay with your current lender. You may need to renew with your current lender at their best offer, or use an open mortgage for a few months, with a plan to move to a lower-rate closed mortgage without penalty as soon as your finances stabilize. Regardless of your situation, it’s important to talk early about your renewal in order to avoid any last-minute decisions.
I have a variable-rate mortgage, should I lock in?
If you have a deep discount variable-rate mortgage, you are in a very good position given the recent drops in the prime rate. Variable mortgages can be converted to fixed without penalty, which provides long term peace of mind knowing you have security for the next five years. While the rate environment is still settling, it might be best to enjoy your lower rate for now and then we can re-evaluate in 6 to 12 months.
Should I take advantage of the mortgage payment deferral?
The immediate relief is compelling but please only consider this if it is absolutely necessary. Your lender will add the interest accrued during the skipped period to your outstanding balance, which increases your mortgage amount and possibly your mortgage payments. You could instead borrow from a Line of Credit and make interest-only payments until your financial stress begins to ease. There are other options available that I can discuss with you.
Should I take a fixed or variable mortgage rate?
This is a very frequently asked questions and the answer is always the same, it depends on you – your risk tolerance, where rates are expected to go, and personal preference. With the rate environment changing all the time, what may be the right decision for you today, could be different next month. Let’s have a conversation so I can clearly understand your plans and current situation.
I heard it has recently become easier to qualify for a mortgage, is that true?
Yes! The qualifying rate has been lowered to 4.94%. This is great news because this is the rate used in stress tests for both insured and uninsured mortgages, and a lower rate means it is easier for borrowers to qualify. For the first time since the beginning of 2018, when the stress test was put in place, the mortgage qualifying rate is under 5%. If you want to know how much you can qualify for, please let me know.
Do you have a question on your mind? Please contact me anytime. Everyone in Brampton and the GTA – be safe, be well, and be happy! And know that I am here to help you.
