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Category: Mortgage Refinancing

  • Should I Refinance My Mortgage in Response to the Low Interest Rates?

    You may be thinking of refinancing your mortgage given that the interest rates are unprecedentedly low.

    Refinancing your mortgage can help you preserve your credit score by using the equity in your home to consolidate high interest debt.

    This is often a great option because not only can you reduce interest, you can also reduce your overall monthly payments.

    Here’s a list of pros and cons that will help determine if mortgage refinancing is the right option for you!

    Should I refinance my mortgage? How exactly should I go about refinancing? Would the changes in mortgage regulations impact me?

    These are questions that a lot of people, who are considering refinancing, are wondering about. The answer is actually not that complicated – it simply means that you have to reach outside of the CMHC lender pool.

    Recently, CMHC changed its underwriting policies for new applications for insured mortgages.

    Though, the rules haven’t changed for refinancing, reaching outside the CMHC lender pool can provide you better refinancing options.

    Basically, CMHC is a high ratio insurance that banks are required to have on high ratio mortgages. High ratio mortgages are those where mortgage financing above 75% of the value of your property is required.

    The good news is that there are many lenders who extend mortgage financing to you and don’t require CMHC insurance. In fact, they can extend the financing for 80% of your home’s value (or even higher if you have good credit).

    There are quite a few trust companies, mortgage investment companies, credit unions, finance companies, private lenders, and even insurance companies that offer mortgage refinancing options.

    The prevalence of these lenders may not be that obvious to you because many don’t deal directly with the public and exclusively lend through brokers.

    Each broker has a market of consumers that they cater to and lenders who they work with to provide specialized financial products. For example, if the goal is to purchase a home, a broker who specializes in purchase mortgages is advantageous. Similarly, a broker who specializes in debt consolidation and restructuring is the right choice for someone who wants to consolidate debt.

    The trick is choosing the right broker to help you manage your financial restructuring.

    You’d be surprised to see how many different types of mortgages and refinancing options are available on the market (for people with all types of credit and income) – many of which don’t require CMHC.

    At DebtCare, we specialize in helping people with financial problems. We have an extensive network of higher risk lenders, who can help you save your home, when banks may not be able to.

    In addition to mortgage refinancing, we can help present you all other options you have to ensure that you can effectively manage your debt. If you’re looking into refinancing options or want to speak to a debt consultant, contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca

  • Pros and Cons of Refinancing Your Mortgage to Get Out of Debt

    Mortgage refinancing is a popular way to get out of debt, but is it the right option for you?

    During the ongoing COVID-19 pandemic, you may be looking for ways to reduce your debt load. If you own a home, you can use available equity to pay down your debts. Read on for the pros and cons.

    Pros

    • Refinancing your mortgage allows you to put debts into one payment.

    This can give you more freedom in your budget as you will have a fixed payment on a fixed schedule — so you will know exactly what you owe and when.

    This is an effective way to quickly deal with high-interest debt while managing your budget.

    • It lets you keep your house (unlike some cases of filing for insolvency).

    In some cases, filing for bankruptcy or a consumer proposal puts your assets — like your house — at risk.

    With a mortgage refinancing, your home is safe so long as you meet your payments.

    • You could save money if you get a lower interest rate.

    If you refinance for a lower mortgage rate, you could save money on your monthly mortgage payments if you bought your home at a time when interest rates were higher.

    • It doesn’t harm your credit score (at least not immediately).

    When you file for bankruptcy or a consumer proposal, your credit score takes an immediate hit and you are left with a low rating for five-to-seven years.

    With mortgage refinancing, however, that doesn’t happen. In fact, if you are using the equity to pay off high-interest debts, like credit cards, your credit score could go up!

    The caveat here is that if you default on your mortgage or miss a payment, your long-term credit score could still be affected.

    Cons

    • It could restart your amortization schedule.

    If you were five years into a 25-year mortgage term and decided to refinance, your term would reset to 25 years. This means you would be paying your mortgage for an extra five years.

    While you would be paying mostly interest for the last five years, it will be longer until you are mortgage-free.

    • You might get a higher interest rate.

    Depending on when you bought your house, your mortgage rate could actually go up.

    • You will have less equity to access later.

    By taking out equity now, it may be harder to access later (at least through a refinancing) and you’ll have to wait for it to accumulate again.

    • It may not be possible if you’re carrying too much debt.

    Like getting a mortgage to begin with, you have to qualify for a refinancing. If you’ve lost your income, your credit score is low, or you’re carrying too much debt, you may not qualify.

    (If this is the case, talk to a debt counsellor – they can help you clean up your finances so you can qualify.)

    • You may have to pay closing costs.

    Mortgage refinancing typically comes with closing costs and other fees. These numbers could affect your decision.

    • If you’re breaking your current mortgage term, it might not make financial sense.

    Breaking your current term early can come with additional costs.

    If mortgage refinancing won’t work for you, there may be another option that does, such as taking out a second mortgage, a home equity line of credit (HELOC), or another debt consolidation method.

    Whatever method you choose — refinancing or not — the important thing to keep in mind is that it will work so long as you keep your finances under control. Debt consolidation isn’t an invitation to start buying more. You need to have a plan for how to manage your money after refinancing (or your chosen debt management method) too.

    At DebtCare Canada, we can help you do both — explore options to deal with debt and create a plan to stay debt-free for good.

    We offer first mortgages, second mortgages, HELOCs, and more.

    Contact us today for a free consultation. Call or text 1-888-890-0888 or visit www.debtcare.ca.

  • How to Refinance Your Mortgage After You Have Destroyed Your Credit

    You want to refinance your mortgage, but is your credit up to the task?

    A number of things can contribute to a low credit score, a.k.a. bad credit. This includes:

    • Defaulting on a loan or bill payment.
    • Poor payment habits, such as missing due dates or only paying the minimum balance.
    • Accessing too many credit products.
    • And more.

    In some cases, you might have already owned your home before you ran into credit trouble and were able to keep your mortgage payments up to date. Refinancing your mortgage can be a great solution for getting out of debt and dealing with problem credit.

    For instance, if you have equity available and are able to refinance your mortgage and access it, you might be able to use that money to pay off your bad debts.

    Similarly, if your mortgage payments are making it hard to manage your budget because they’re too high, refinancing might allow you to have lower monthly payments and put more money back in your pocket.

    But now that you want to refinance, your bad credit score might make you a risk to traditional lenders, like the big banks.

    What can you do?

    The solution — mortgages based on equity.

    Traditional mortgages are based on your income, credit score, and the property criteria (for instance, estimated value).

    Equity-based mortgages are centered on the equity of a property — essentially how much money you have earned by paying down your mortgage. If your property value has increased (or decreased) this could also affect the available equity.

    If you are unable to provide traditional income sources (e.g. if you are self-employed) or if you’ve hurt your credit, an equity-based mortgage can be the perfect solution.

    This can allow you to:

    • Consolidate debt;
    • Pay off back taxes;
    • Finance home renovations or other major expenses,
    • And more.

    DebtCare Canada can find the best equity-based mortgages, including mortgage refinancing, home equity lines of credit, and more. We have a comprehensive list of lenders that offer credit to people in all different circumstances at the fairest rates.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Don’t Wait Too Long to Refinance Your Mortgage – Get Ahead of Rising Interest Rates

    If you’re interested in refinancing your mortgage, it’s better to act sooner rather than later.

    Why? Let’s break down the reasons.

    1. New Canadian mortgage regulations are making it harder to access financing.

    On January 1, 2018, the Canadian government implemented new mortgage rules onto federally-regulated lenders (such as banks). These lenders now have to implement a mortgage “stress test” on potential homebuyers, and those seeking mortgage refinancing.

    What this means is that if you were to get a new mortgage, or refinance an existing one, a federally-regulated lender would need to test your ability to afford the mortgage against a higher mortgage interest rate.

    If you had a mortgage rate of 3%, they might have to test your ability to pay against a 5% rate, for instance. They are also required to take your total housing-related debt (Gross Debt Service ratio – or GDS) and your total overall debt (Total Debt Service ratio – or TDS) into account.

    However, non-federally regulated lenders, like credit unions and private mortgage lenders, are not subject to the mortgage stress test regulations. Unlike big banks, they aren’t required to stress test your mortgage refinancing or take your GDS and TDS into account – but that could be changing.

    Earlier this year, a Reuters article cited three unnamed federal sources who said that the Canadian government is considering extending the stress test regulations to private lenders. This means that non-bank mortgage lenders would be required to use the same measurements for extending mortgage financing as the big banks.

    Canadian Finance Minister Bill Morneau denied the rumours, but the possibility is still there – and if it does happen, you’ll want to be prepared. Which is reason #1 why it may be better to seek mortgage refinancing now, rather than later.

    1. Property values are declining.

    Reason #2 has to do with value of your property. If you’re refinancing, you likely want to access the most equity possible.

    Unfortunately, home prices are rising slowly, perhaps due to the impact of the mortgage stress test and Canadian interest rate increases. And less homebuyers are able to access the market.

    More than 100,000 Canadians have been kept out of the housing market due to the stress test regulations, according to Mortgage Professionals Canada.

    If you’re thinking of refinancing your mortgage and this trend continues, it might mean that your property value could drop, too. And if private lenders are subjected to the same regulations, it could mean even less people entering the housing market – and even further property value declines.

    1. Mortgage rates are rising.

    Five-year fixed rate mortgages reached their lowest point in late 2016, according to Rate Hub. Since then, mortgage rates have gone up about 0.5% per year. At the beginning of 2019, the lowest fixed rates were around 3.29%.

    Variable mortgage rates are also on the rise (and subjected to Canadian interest rate increases).

    “Even with discounting, the best five-year variable mortgage rates are still up about 0.75% since this time last year,” says Rate Hub.

    The moral of all this is that if you’re considering mortgage refinancing – don’t wait.

    At DebtCare Canada we offer first mortgages, second mortgages, home equity lines of credit, and more.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit www.debtcare.ca.

  • Free Digital Property Value Assessment: Know What Your Home is Worth Without Paying for an Appraisal

    With rising interest rates and a changing housing market, it pays to know exactly what your home is worth.

    This can help you determine your equity position, weigh your financing options, and much more.

    Many home assessment tools cost money, but ours is different.

    Our digital property value assessment is completely free and looks at:

    • Your property history;
    • Comparable property sales in the area; and
    • Estimated property value* based on data.

    No one has to come to your home – simply email mgoldenberg@debtcare.ca with your name, address, and contact information and we will generate your report and email it to you within two business days.

    It’s as easy as that!

    *The information included in the digital property assessment comes from a third-party source and we have no control or responsibility over its accuracy.

  • TREB Has to Make Sold House Prices Public – What This Means for You

    An important court case involving the Toronto Real Estate Board (TREB) could have big benefits for consumers when it comes to sold house prices.

    For nearly seven years, TREB has been trying to keep sold house prices private — meaning only real estate agents or other mortgage professionals could access those figures.

    But on August 23, 2018, the Supreme Court of Canada turned down TREB’s appeal to keep home price data private.

    This means that consumers may be able to see historical sales listing data and prices online, whereas before that data was only available to real estate professionals.

    How does this affect the average consumer? It could be a big help. Consider the following:

    • With access to historical sales data, you’ll be able to see how much your house has sold for in the past.
    • You’ll be able to see how many times a house has sold in the past.
    • You’ll be able to see how much houses in your neighbourhood sell for to get an approximate idea of your home value.
    • If you’re considering putting an offer on a home, you’ll be able to see how much it has sold for in the past.
    • There will likely be greater competition and innovation in the Greater Toronto Area (GTA) real estate market, which could have a positive affect for consumers.

    This decision only affects GTA home data currently, but it may spread to other Canadian cities. Many real estate boards were watching the TREB court case to determine their own action. Now that a legal precedent has been set, it’s likely that other boards will follow suit.

    Similar real estate data has been available publicly in the U.S. for the past 10 years.

    As Canadian interest rates increase and new mortgage stress test rules are in place, it’s more important than ever for homeowners or potential homebuyers to understand the real estate market. This could help you decide whether you should keep or sell your home.

    Time will tell how exactly the court order plays out, but we are calling this a victory for consumers.

    Interested in buying a home or selling your house? DebtCare Canada can help. We offer first mortgages, second mortgages, home equity loans, and more.

    Contact us today for a free consultation. Call 1-888-890-0888 or visit https://debtcare.ca/.

  • Bank of Canada Mortgage Rates Stay at 1.25% After May 2018 Announcement

    The Bank of Canada mortgage rate is remaining at 1.25% for now.

    In an announcement on May 30, 2018 the Bank of Canada (BOC) said that the overnight interest will stay at 1.25%, at least until the next statement scheduled for July 11, 2018.

    The BOC said it is proceeding with caution, but that it still believes higher interest rates will be needed for the future.

    Since July of 2017, the BOC has raised Canadian interest rates (and correspondingly Canadian mortgage rates) from a record low of 0.5% to the current 1.25%. There have been three increases during that time, with the most recent hike happening in January of 2018.

    Despite the May 2018 hold, economists are predicting that the BOC will raise interest rates at least once more in 2018 — and it could be during the July 11 announcement. Currently, the predicted chances of a July interest rate increase are sitting at about 55%.

    What does this mean for your mortgage, or other debts?

    As you’re likely aware, the BOC interest rate affects all forms of unsecured debt. This can include the amount you owe on your credit cards, unsecured lines of credit, variable-rate mortgages, or any other forms of debt with a changing interest rate.

    Even if you have a debt with a fixed rate, such as fixed-rate mortgage or a fixed-rate loan, if you have a renewal coming up, the increasing interest rates might mean that your lender will renew your debt at a higher rate.

    Although Canadian interest rates are staying steady for now, it’s still important that you look at the overall picture. Consider the following:

    1. Don’t Rush into Too-Good-To-Be-True Deals

    Recently, some Big 6 banks have been offering heavy discounts on variable-rate mortgages. To recap, a variable-rate mortgage is one that changes with interest rates. If interest rates go down, your mortgage goes down. But if interest rates go up, your mortgage goes up.

    If you’re shopping for a mortgage, you’re up for a mortgage renewal, or you’re considering mortgage refinancing, these deals can look very tempting. But you need to consider the rest of the implications. If interest rates increase, as they are predicted to do, could you afford the hike? How much other debt do you carry and how would that be affected by an increase? You need to assess all the variables.

    A variable-rate mortgage could still be the best choice for you, but make sure you are comparing it to a fixed-rate mortgage and understanding that there is a greater chance of a variable-rate mortgage becoming unaffordable.

    1. Make a Plan for Your Debt

    The good news about the BOC keeping interest rates at 1.25% is that you have more time to pay down existing unsecured debt before rates increase again. So, if you haven’t yet made a plan to deal with your debt, now is the time to do so.

    Look into your debt consolidation options. It might be in your best interest to consolidate your debts into one fixed, monthly payment. This way your payment rates will remain the same no matter what happens with the interest rates, and your debt won’t rise any higher.

    1. Be Extremely Cautious About Taking on New Debt

    These interest rate increases aren’t going anywhere. In fact, this is just the beginning. The BOC has stated they still feel interest rates need to be higher. One of the reasons they kept interest rates low for so long was because Canadians needed to spend money to fuel the economy. Lower interest rates encouraged more Canadians to take out more loans, put more on credit cards, etc. But now the economy is relying less on consumer spending, which means that it will get more expensive to take out new debt and more expensive to pay back existing debt.

    If there’s a debt you’ve been considering taking out, really ask yourself if you can afford it. Take a look at your whole financial picture. Now might not be the right time to look into a new line of credit or to open up a new credit card. If you are already living paycheque to paycheque and making ends meet through loans, adding more debt is likely to only make the situation worse, especially as interest rates rise.

    Don’t wait until the next BOC interest rate increase to get your debt under control. Whether you’re affected by Canadian mortgage rates, interest rates, or just want to understand your financial picture, DebtCare Canada can help.

    We offer debt relief solutions, financing programs for loans and mortgages, and much more.

    Contact us today for a free consultation: www.debtcare.ca or 1-888-890-0888.

     

  • Surviving Rising Interest Rates – Locking Your Rate May Be the Best Time to Refinance

    So far in 2018 Canadian homeowners have experienced several major changes that could affect finances — new mortgage rules and rising interest rates

    First, let’s look at the new mortgage rules. On January 1, 2018, new Canadian mortgage rules came into effect. These regulations require lenders to stress test mortgages based on higher rates to make sure that house hunters and those up for mortgage renewal can afford their house.

    Second, the interest rates. Interest rates have increased three times since July of 2017. They are currently sitting at 1.25%, the highest they have been in nine years. For homeowners carrying a lot of debt, rising interest rates could mean financial turmoil.

    The Bank of Canada has indicated interest rates are going to keep increasing in 2018 and beyond. And the new mortgage rules seem to back that up — if regulators are stress testing mortgages for increased rates, it stands to reason that rates will keep increasing.

    So, what does that mean for homeowners?

    1. If you don’t have a locked-in mortgage rate or are close to your mortgage coming up for renewal, you may want to think about locking in. A fixed mortgage has standard monthly payments that don’t change with rising interest rates, unlike a variable-rate mortgage.
    2. If you are already locked in, anticipate that when you renew, unless there is a major downturn in the economy, your rates could be higher. The sooner you start planning for this, the better off you will be.
    3. Know that your equity position may change. Real estate is driven by supply and demand. New mortgage regulations and higher interest rates mean that buyers will be able to afford less, which may lead to reduced valuations and less equity.
    4. If you are carrying debt, that should be a further motivator to act. If interest rates increase further, and you’re carrying a lot of high-interest debt, that’s going to mean higher payments for you. Can you afford that?

    One common way of dealing with excess debt is mortgage refinancing. Now could be the ideal time to look at mortgage refinancing before interest rates increase again.

    Ask yourself, what would a new first mortgage look like if you folded in all of your debt?

    In some situations, you may not be able to refinance your first mortgage, or it might not make financial sense to do so. If that’s the case, you may want to consider a second mortgage. If debt is excessive, a second mortgage could mean far less interest than you are likely paying on credit cards.

    If you’re thinking about mortgage refinancing or a second mortgage as a possible debt solution, it’s best to speak with an experienced debt consultant first — one who will assess you and present you with all of the financial options available to you, the pros and cons, and guide you to the best financial plan.

    For more information about mortgage refinancing or second mortgages, please contact DebtCare Canada today by calling 1-800-890-0888.

  • Making Your House Work For You: Mortgage Refinancing to Get Out of Debt

    Mortgage RefinancingDebt: that one little word that elicits a number of intense feelings, usually all of which are negative. Debt is a fact of life, and unless you have been incredibly financially savvy and have managed to curb any spending that is outside your monthly intake, you are likely in some sort of debt. This may be manageable (automotive financing or a mortgage) or it could be overwhelming (numerous credit cards, personal loans, etc.). If you are in the latter position, ignoring a debt is the quickest way to get into further financial trouble.

    Wait. Stop letting that debt rule your life – it doesn’t have to, and letting it continue to do so will likely only make matters worse. You have some incredibly effective options available to you – one of which might be mortgage refinancing.

    Mortgage refinancing: simply put, mortgage refinancing involves swapping out an old mortgage for a new one (hopefully better), and then paying off the old loan with the new one. It is different from a second mortgage because, as mentioned, you are essentially paying off the first mortgage in full.

    If you are considering mortgage refinancing as a means to get out of debt, here are some important things to remember:

    1. You have to own a home to do this (obviously). Since you are increasing the lending limit on your current mortgage, a mortgage needs to exist in order to apply. You cannot obtain a new mortgage strictly to consolidate debt – to do this you need a personal loan or line of credit.
    2. Your credit needs to be in good standing. If you are maxed out or have several missed payments, and as a result your credit score is low and your report reflects this, your lending institution isn’t necessarily going to have much faith in your ability to repay your debt.
    3. Canadian Mortgage and Housing Corporation guidelines have set the total refinancing limit for mortgages at 80% of a home’s value, so if, once your mortgage is refinanced, you would owe more than 80% of that value, a total consolidation of your debts will not be possible.

    Considered these caveats and still think mortgage refinancing might be an intelligent route? That is great – now what? Your best choice is to visit a debt solutions specialist to discuss the process, one who can assist you in applying and eventually getting your finances back on track.

    If mortgage financing isn’t an option for you, that same debt specialist can sit down with you and discuss the other options available – you don’t have to do this alone.

    For more about mortgage refinancing or to learn about the various debt relief solutions out there, please contact DebtCare Canada today by calling 1-888-890-0888.

  • Mortgage Refinancing: A Viable Debt Solution?

    Mortgage RefinancingDebt in Canada has become a major problem for many individuals. The ease with which credit is granted by many credit companies sometimes makes it tough to avoid temptation, but the aftereffects can be distressing, especially if it gets to the point that it is hard to keep up with or make payments. There are many debt solutions out there, one of the most popular being mortgage refinancing.

    What is mortgage refinancing? When you refinance your mortgage to consolidate debt you are essentially using your home equity to pay off debt. Many people choose to refinance their mortgages to pay off debt because mortgage financing offers flexibility and often you can get a far lower interest rate as well as the convenience of a much more manageable single monthly payment.

    Over the past year there have been many changes to Canadian Mortgage and Housing Corporation (CMHC) rules, many of which make it tougher for homeowners to consolidate using mortgage refinancing. Previously CMHC would refinance as much as 95% of an individual’s home, and would offer lines of credit to do so. However, they no longer issue lines of credit to consolidate, and the amount has been lowered to 80%.

    The banks have backed these changes. As a general rule, banks will only grant refinancing if your new mortgage will not exceed 75% of your home’s current value (some approve at an even lower percentage). That means that if your new mortgage plus your unsecured debt is more than 75% of the value of your home, approval is not likely.

    CMHC insured mortgages are one of many mortgage options for refinancing your mortgage to pay off and consolidate debt. There are so many different types of companies outside of the banks who will compete for your business: credit unions, finance companies, trust companies, mortgage investment firms and even private individuals.

    What if your credit isn’t great? If you have less than stellar credit it might be harder to obtain mortgage refinancing for debt consolidation through a bank. Banks and finance companies like to see that those they invest in are not a high risk, and if your credit is bad you may be too risky. With that said, if you have good equity many other lenders may be willing to extend financing to you. If you seek mortgage refinancing as a debt solution but are unable to find approval, an alternative solution might be a better option. Non-mortgage refinancing debt consolidation, a consumer proposal or bankruptcy might be better suited to your situation.

    If you are thinking about mortgage refinancing as a possible debt solution, it is best to speak with an experienced debt consultant first, one who will assess you and present you with all of the financial options available to you, the pros and cons, and guide you to the best financial plan.

    For more information about mortgage refinancing please contact DebtCare Canada today by calling 1-800-890-0888.