It has been a very odd kind of summer as we’ve all become used to staying close to home, wearing masks and being aware of social distancing. What would have been unusual a year ago is now part of our "everyday."
Housing markets are upbeat with activity and prices in many areas trending upward in part due to historically-low mortgage interest rates. As expected, the Bank of Canada announced today that there's no change to the Key Rate, which was held at 0.25%.
Whenever you’re considering a move, count on my neighbourhood knowledge and smart negotiating to guide you through the home buying and selling process. You may be confident that I have adopted strategies and implemented recommended safety measures to help keep you safe as we continue on the path forward.
There Are 30-Year Mortgage Amortizations
The past 6 months have certainly been stressful. Renewing a mortgage, looking for options to reduce monthly payments? Even though the maximum amortization period for insured mortgages is capped at 25 years, Lenders do offer Conventional Mortgages with 30-year amortizations and may even be able to extend special 30-year options.
A longer amortization period typically means lower monthly payments but there’s less paid toward the mortgage principal each month and in the long run, it means paying more interest. Having a mortgage with a longer amortization doesn’t mean you can’t pay off your mortgage sooner. Check with the Lender about prepayment privileges for down the road.
Your Business Could Be the Condo Board’s Business
Been working from home these past few months?
Check your insurance policy to see if working from home impacts your coverage. The residential condo complex may have a clause in the declaration stating that the complex is strictly residential. So you may not be able to use your place as an office or for other business purposes.
The Board may get involved if an owner has business associates, employees, clients, or patients on the premises or if parking becomes an issue.
Tips for Increasing Borrowing Power
In today’s real estate market, knowing how Lenders calculate borrowing criteria, and how you’ll be able to borrow, is extremely important. A few techniques that will help you get approved and moved!
1. Minimize credit lines – Clear outstanding balances on unsecured credit lines, credit cards or other loans. Cancel credit cards you’re not using.
2. Report all income – Lenders typically look at the previous two years income, so the more income shown, the more borrowing power there may be. That also means having tax returns up to date.
3. Split liabilities and debts with your partner – Check with your accountant. If you’re just going for the loan yourself and your partner isn’t going to be on the mortgage, then it can work in your favour to split your liabilities with them. For example, if you split expenses such as cost of living, a Lender may determine that you’re able to service a much higher loan.
4. Some Lenders “specialize” in approving different styles of income - You might work 9 to 5, or be a contractor, or consultant. You may own a small business. By choosing a Lender that favours your type of income you may be able to boost borrowing power.
5. Get the right type of loan – A lower interest rate is always the initial focus, but look at amortization – 25 or even 30 years. Ask about pre-payment options and portability.
6. Focus on saving - It’s not easy, but with a larger down payment, you’ll have
RCR Realty, Brokerage
1-12612 Highway 50, Bolton ON L7E 1T6