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Welcome to My Mortgage Broker

Greetings!


In this issue - economic updates, rule changes and mortgage strategies to reduce the overall cost of your mortgage.  There has been some movement this week in fixed rates and the difference between lender rates is even greater than usual.  So, if you are in the market and need a rate hold - through the summer - give me a call.

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Mortgage Rule Changes    

Effective April 18th,2011

The Canadian government will no longer provide government backing for non-amortizing  (interest only) home equity lines of credit.  This means the big banks will no longer offer lines of credit beyond 80% loan to value secured against a home while mortgage lenders will no longer be able to provide lines of credit.  

 
 Variable Rate or Home Equity Line of Credit.

For investors which should you choose? 


For those using equity from your home for the down payment to purchase rental properties, do you set up a secured line of credit or a variable rate mortgage.on your home?  There are features of both products and investors should consider their objective before choosing which option works best.   

A secured line of credit offers an open account where you can take out money at any time, make interest only payments on that money and repay the money at any time.  On the other side, the cost of borrowing is higher with a line of credit.  The interest rate is higher than a variable rate mortgage (over 3.5% today).  The interest is also calculated monthly.

With a variable rate mortgage you do not have an open account to borrow money, you make payments on the entire mortgage amount and you pay a penalty if you pay it off before then end of a closed term.  On the other side, the cost of borrowing is less because the interest rate is lower (2.2% today).  Interest is calculated semi-annually.   

So, what do you do?

If you need the flexibility short term for your portfolio then the line of credit may be a good choice.  However, the lower cost of borrowing from the variable  mortgage - even with a penalty if you had pay if off early to refinance again for more money for another purchase - is still better than paying the higher interest for the line of credit.  In fact, a penalty of 3 months interest on the payout of a variable rate mortgage is lower than the additional cost of borrowing for less than 3 months of interest only payments on the line of credit.  So, it is important to take the overall costs associated with investing into consideration when you plan your mortgage financing. 

 

    

  

 Economic Update

David Rosenberg, Chief Economist and Strategist at Gluskin Sheff, remains a contrarian voice on the US economic recovery, and he is also sticking to his argument that Canada is in pretty good shape - and that includes the country's housing market. 

 

That market has taken a few knocks recently, even attracting derision from the foreign press. The Wall Street Journal ran an article on Tuesday arguing that Canadian home prices are on a fresh tear, even as income growth lags record-high debt levels. 

 

"All that has raised worry at the country's central bank, which repeatedly has warned about rising debt levels, and among some economists, who say the market is ripe for a correction - maybe a steep one," the Wall Street Journal

 

But Rosenberg counters these observations. Yes, debt levels are a concern, but he notes that homebuilders have shown some discipline in cutting back production, to an extent that didn't exist in the United States at the peak of its housing market. In Canada, single-family housing starts have fallen 20% from year-ago levels.  

Visit my blog for the entire article.  Visit www.MyBcMortgage.ca

 

Pauline's Picks
Canada's Best Places to Live - check it out

http://list.moneysense.ca/rankings/best-places-to-live/2011/Default.aspx?sp2=1&d1=a&sc1=0

                   Volume 4
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    Apr 2011  
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Bank of Canada
Prime - remains at 3.00%. 

Bond Yields - Fixed rates rise.

 

5-year fixed rates are effected in part by the bond yield. This happens because of the gap between the bond yield and fixed rates.

 

Canadian 5 yr bond yields markets +.4bps to 2.80. Fixed rates at 4.39% are 

  within in the comfort zone Some lenders are still offering lower rates but pressure will increase to raise rates.  

     

Best fixed rates still available.  Call Pauline for details.

  My Money Coach

Check out this excellent resource for money saving and budget tips.
www.
mybcmortgage.ca/
learning-centre/resources
 

  If you own your own business can you get a mortgage?

 

As an independant mortgage broker I help my clients to establish a plan of action to help achieve their financial and life goals. 

 

I work with many real estate investors to develop a plan on how to maximize their portfolio while keeping their overall cost of borrowing down.  

 
I recently helped clients to buy another rental property.  

After considering their entire real estate portfolio we adjusted their mix of rates, terms and lenders to allow them to make another purchase  and consider other opportunities. 






TheMortgageCenterLogoPauline Tonkin
   The Mortgage Centre - Elder Mortgage
101 - 566 Lougheed Hwy, Coquitlam BC
Phone: 604-813-8402