Mortgage Matters

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What a difference a year makes!

Economic forecasting seems to be getting more and more difficult. Who would have thought a year ago that interest rates would fall to the current level? We had an increase in fixed rates that started in 2007 and pretty much continued to December 2008. During this time many buyers thinking this was the trend decided to lock into fixed rates. Homebuyers locked in their mortgage at the 5 year fixed rate, which was around 5.75%.  Today we can get a 5-year rate as low as 4.29%. If you have a fixed rate mortgage it makes sense to re-evaluate whether it would be worthwhile to switch to a lower interest rate mortgage.

Breaking your mortgage will result in a prepayment penalty payable to your current lender.  The question is whether the savings from the lower interest rate is enough to cover the penalties and any closing costs on the new mortgage. Each situation would have to be addressed on an individual basis. I have run into several cases where there has been a significant benefit to switching to a lower rate.

Here is one such scenario:

• Mortgage amount - $188,393
• Term - 5 yr term with 2 yrs remaining on mortgage, - 22 year amortization
• Interest rate at 5.75% - interest payable over next two years - $20,923
• Interest rate of 4.29% - interest payable over next two years - $15,587
• Difference equals $5336
• Prepayment penalty of $1,865 – 3 months interest penalty

Difference in monthly payment: $153.95

The other huge benefit is that you are now in a 5 year mortgage at a rate of 4.29%, imagine the additional savings you will receive from the remaining 3 years.

Mortgages Economic Forecast, Mortgage Savings

What is used to calculate my score?

 

Your payment history, on your credit cards and loan repayments ie. Car loan, student loan. Missed payments are reflected on your credit bureau which impacts your credit score negatively.

Collections show up on your credit bureau ie. Cell phone and utility companies do not report monthly to your credit bureau however if you have a delinquent account with them they report the collection to the credit bureau.  I have also seen unpaid rents and unpaid family responsibility.

To obtain your credit score the scoring system looks how close you are to your credit limit.  Ie. If you owe more than 50% of your limit, slight impact on your credit score, if you owe more than 80% a greater impact.  I have seen a client’s credit scores go down 100 points as she was over the limit on her credit card.

The credit bureau also looks at how often you are looking for new credit and the length of time you have had credit.

 

For further information on your credit bureau or to order a free credit report which you will receive via Canada Mail visit http://www.equifax.com/contact_us/en_ca  this form can also be found on my website http://www.designermortgages.ca/EFXCreditReportRequestForm.pdf

 

Written by: Charmaine Idzerda (AMP) Mortgage Broker

Verico Designer Mortgages Inc. 

Tel. 1.866.824.8057

Mortgages Credit Report, Credit Score

Charmaine Idzerda - Verico Designer Mortgages Inc.
Voted Best Mortgage Broker in the 2009 Readers Choice Award

 THANK YOU!

The Burlington Post has advised me that I was voted #1 in the Mortgage Broker/Consultant category for the 2009 Readers Choice. 

A big THANK YOU to all my clients, business partners and colleagues for your confidence in me, I really appreciate your support. I could not have done this without your help.

I sincerely appreciate your continuing support and if there is anything that I can do to help you, please do not hesitate to contact me.

Sincerely,

Charmaine Idzerda, AMP
Mortgage Broker

Verico Designer Mortgage inc.
#5

Bus: 905.336.5997
Toll Free: 1.866.824.8057
Fax: 1.866.824.8057

 

Mortgages 2009 Readers Digest, Best Mortgage Broker, Charmaine Idzerda

Effective January 29, 2009, any Canadian who spends money on home renovations will be eligible to receive up to $1,350 in tax relief thanks to the new Home Renovation Tax Credit proposed in Harper Government’s Economic Action Plan. “Every time Canadians invest in home renovations, they are helping to create construction and building-supplies jobs in their own communities,” said the Prime Minister. “By providing an incentive for Canadians to invest in their homes, we are also encouraging them to invest in local jobs.”To highlight the kind of projects that will be eligible under this plan, the Prime Minister visited an Ottawa-area home renovation site and met with a local contractor who will be better able to protect and
create jobs thanks to the additional home renovation projects that will be encouraged through this tax credit. The Home renovation Tax Credit will provide a one-year, temporary 15% income tax credit on eligible home renovation expenditures for work performed, or goods acquired between January 27, 2009 and February 1, 2010. The credit may be claimed on eligible expenditures exceeding $1,000 but no more than $10,000. The Home Renovation Tax Credit is one of several initiatives to help homeowners and homebuyers that is contained within the Harper Government’s Economic Action Plan. Before homeowners, homebuyers, and local construction and building supply workers can benefit from these new initiatives, Parliament must pass the 2009-2010 Federal Budget.
(Source: Office of the Prime Minister - pm.gc.ca)

Mortgages, Reviews Home Renovation Tax Credit