I've been to enough weddings this summer to last a lifetime, but all was not lost on me....
After the last one on Vancouver Island, I got to thinking about how each couple had vows that were similar.
All the words spoken were of meaning and purpose. They had the same undertone and were fashioned to convey the way they felt about each other and the promise they were undertaking. It is special to be a part of union's like that, and to those that I had the honor to do so, I thank you.
But it got me thinking...
And for those that know me, that can take me to some strange places indeed.
But this time it was hyper-focused which was a nice change and saved me a few hours...haha
I was comparing the relationship that a Mortgage Broker has with a new and or existing client to that of one of Marriage between 2 loved ones.
So let me give you my thoughts...
As a Mortgage Broker we should almost be taking vows each time we meet a client for the first time.
Perhaps something like this....
"I Kevyn, take you Frederick Hampton III, to be my new client."
"I promise to love, honor and obey all of your wishes and commands as long as they make sense to do so"
"I promise to be honest, up front and explain all of the things I will be acting for and doing on your behalf"
"I will not forget that I am a guide and teacher, and will do my best to make sure you understand everything to the level that you can make an informed decision."
"I will never forsake our relationship. I will return your calls and emails in a timely fashion, and will answer all your questions with the patience that a new Mother shows her brand new baby"
"I will provide ongoing service to you once our deal has funded. I will keep in touch regularly, and continue to be available when you need me"
"By the power vested in me by FICOM and under the MBA, I now pronounce us, Client and acting Mortgage Broker."
Those are the feelings I try to convey each time I sit across the table with a new or ongoing client.
Those are the things my late Father Jack has instilled in both Chad and I, and we will continue to practice until our time is up as well.
We were taught well, and will continue to surround ourselves with Brokers who fit the same model and can contribute to our Happy Family.
Until next time, now you know. And as G.I. Joe used to say...
"knowing is half the battle" (they also used to say..."got to get tough"...but I didn't know where I could fit that in.)
check out my website if you have a chance for anything new to do with the Mortgage Brokers Act or upcoming changes.
www.kevynoyhenart.ca
Kevyn
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Wednesday, August 31, 2011
Friday, August 26, 2011
Simplifying the Terminology....(Part V)
Wow, what a monumental week it has been.
New office will be up and running come the culmination of the long weekend...
Took the kids to the PNE and even rode a few rides myself...
Have been coordinating the trades to fix up a clients house so she can refinance it after a relative pretty much destroyed it. (more on this in the coming days as I want to get into what you as the provider of a service are willing to do above and beyond your call of duty to make a sale?)
My last installment in this series is today, but feel free to ask me in an email (koyhenart@shaw.ca) or submit the question from my webpage (www.kevynoyhenart.ca) and I would love to make it simpler for you to understand.
I know I did not cover all of the terms involved in the whole process of a mortgage, but I did my best to cover the pertinent ones that always come up in conversation with a new client.
I hope you enjoyed the 5 part series and I would love your feedback if you have time.
If you have a topic you would like me to write about, mention that as well.
Enjoy another sunny weekend on the coast or wherever you may be.
Kevyn
New office will be up and running come the culmination of the long weekend...
Took the kids to the PNE and even rode a few rides myself...
Have been coordinating the trades to fix up a clients house so she can refinance it after a relative pretty much destroyed it. (more on this in the coming days as I want to get into what you as the provider of a service are willing to do above and beyond your call of duty to make a sale?)
My last installment in this series is today, but feel free to ask me in an email (koyhenart@shaw.ca) or submit the question from my webpage (www.kevynoyhenart.ca) and I would love to make it simpler for you to understand.
A blended rate mortgage may be used if you want (or need) to increase the amount of your present mortgage. This could happen if you want to use up some of the equity in your house, maybe for renovations, or to buy a weekend cottage. Perhaps you are moving and need a larger mortgage to be able to purchase the new house. This option is worth considering if your present mortgage has a low interest rate, or if you wish to avoid the penalty.. With this option you get to keep the balance of your present mortgage interest rate, with only the new amount at today's mortgage rates. Because you are keeping the terms of your current mortgage, there is no penalty involved. If your present mortgage rate is higher than those being offered at the present time, it could be worth paying off your present mortgage and obtaining a new, bigger mortgage at today's rates. Please discuss the current policies of the different lending institutions with your mortgage broker, to help you decide whether or not this strategy will benefit you. Holdback: An amount of money required to be withheld by the lender during the construction or renovation of a house to ensure that construction is satisfactorily completed at every stage. There are also cases where an owner has decided to renovate but has not completed the renovation. If you try to refinance at this point, a Lender may consider funding, but would withhold a portion of the funds until 97-98% completion. Renewal: At the end of a mortgage term, the mortgage may "roll over" on new terms and conditions acceptable to both the lender and the borrower. This is known as renewing a mortgage. Otherwise, the lender is entitled to be repaid in full. In this case, the borrower may seek alternative financing. As more and more banks put more and more resources into their retention teams, you will be contacted 6 months out from your term ending. |
I know I did not cover all of the terms involved in the whole process of a mortgage, but I did my best to cover the pertinent ones that always come up in conversation with a new client.
I hope you enjoyed the 5 part series and I would love your feedback if you have time.
If you have a topic you would like me to write about, mention that as well.
Enjoy another sunny weekend on the coast or wherever you may be.
Kevyn
Wednesday, August 17, 2011
Simplifying the Terminology....(Part IV)
Did something different this morning. I drove in about an hour and a half later than I normally do. Funny how your perspective can change when you do something in a different manner than you are accustomed to.
Traffic seemed to flow about the same rate through the George Massey Tunnel into Richmond, but there was one difference. There was less aggressive drivers on the road @ 9 am then there are at 7:30 am. Who knew.
I wonder how much of that has to do with coffee?
Anyways here is part 4 of my 5 part series....
Adjustable Rate Mortgages: An adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate—not the payment per say—fluctuates. In other words, the minimum mortgage payment will not always be the same every month. How often it changes depends on the Lender and their policy. Ask your mortgage broker how often the lender may change the rate and what their policy is.
Why go for one of these?
The main difference between an ARM and a more traditional fixed rate mortgage is that the payments typically start off quite low. This makes the mortgage appealing to homeowners that may want a particular repayment plan. However, the interest rate of the ARM can change at any point, and when it does, it typically raises the payments.
How about this doozy of a term that seems to be the talk these days in Canada....
Debt Consolidation: Debt consolidation is basically taking out one loan to pay off many other loans. In other words, rather than paying several different credit card bills individually, you're taking all of them and combining them into one payment every month. Doing this makes use of the equity in your home to pay off all your credit cards, so that your responsibility is now with the lender, rather than the credit card companies.
Some of the Advantages of Doing so..
Obviously, if you have 5 or more credit cards, it can be difficult remembering to pay them all on month every time. It will help greatly with this, as it rolls all those payments into one monthly payment, rather than 5 or more.
Another advantage of debt consolidation is that it can give you a much lower interest rate. A typical fixed rate mortgage today of 3.59% (5 year fixed as of today) offers a much lower interest rate. A lot lower than the traditional 18-25% interest rate on most credit cards. In this regard, debt consolidation can save you money.
And last up today for those who may be thinking of either buying a rental/revenue producing property, or may have already done so, keep this in mind when you go to sell it....
Capital gains: This is the profit of the sale on assets that were bought at a lower price and sold for more. Commonly, capital gains are earned on property, bonds and stocks. A capital gains tax is the tax that is charged on capital gains. Not every country in the world implements a capital gains tax, however, both Canada and the United States do.
In Canada, the current capital gains tax rate is at 50%. There are exceptions, however. If you’re interested in finding out the tax rate for capital gains you intend to realize, it’s best to contact your accountant or tax attorney.
To get a good idea of how taxes work on capital gains, here is a simple example.
Say the profit you’ve realized is $100.
50% of that, or $50, would be taxed at your marginal tax rate.
If your marginal tax rate was 43%, your capital gains tax would be $21.50.
Therefore, you would be left with $78.50. If you’ve experienced capital losses (the opposite of capital gains) within the past three years, you may use these to offset capital gains tax paid during those years.
As always, it pays to stay informed and to have a few experts working with you on your PLAN.
If you need a referral to an accountant and financial advisor, I have paired myself with a few outstanding individuals who would be more than willing to sit down and help you to determine your best route to where you want to be. Check some of them out at www.kevynoyhenart.ca under the Business directory section.
Enjoy this fabulous Wednesday, unless you choose otherwise.
Kevyn
Traffic seemed to flow about the same rate through the George Massey Tunnel into Richmond, but there was one difference. There was less aggressive drivers on the road @ 9 am then there are at 7:30 am. Who knew.
I wonder how much of that has to do with coffee?
Anyways here is part 4 of my 5 part series....
Adjustable Rate Mortgages: An adjustable-rate mortgage (ARM) is a type of mortgage in which the interest rate—not the payment per say—fluctuates. In other words, the minimum mortgage payment will not always be the same every month. How often it changes depends on the Lender and their policy. Ask your mortgage broker how often the lender may change the rate and what their policy is.
Why go for one of these?
The main difference between an ARM and a more traditional fixed rate mortgage is that the payments typically start off quite low. This makes the mortgage appealing to homeowners that may want a particular repayment plan. However, the interest rate of the ARM can change at any point, and when it does, it typically raises the payments.
How about this doozy of a term that seems to be the talk these days in Canada....
Debt Consolidation: Debt consolidation is basically taking out one loan to pay off many other loans. In other words, rather than paying several different credit card bills individually, you're taking all of them and combining them into one payment every month. Doing this makes use of the equity in your home to pay off all your credit cards, so that your responsibility is now with the lender, rather than the credit card companies.
Some of the Advantages of Doing so..
Obviously, if you have 5 or more credit cards, it can be difficult remembering to pay them all on month every time. It will help greatly with this, as it rolls all those payments into one monthly payment, rather than 5 or more.
Another advantage of debt consolidation is that it can give you a much lower interest rate. A typical fixed rate mortgage today of 3.59% (5 year fixed as of today) offers a much lower interest rate. A lot lower than the traditional 18-25% interest rate on most credit cards. In this regard, debt consolidation can save you money.
And last up today for those who may be thinking of either buying a rental/revenue producing property, or may have already done so, keep this in mind when you go to sell it....
Capital gains: This is the profit of the sale on assets that were bought at a lower price and sold for more. Commonly, capital gains are earned on property, bonds and stocks. A capital gains tax is the tax that is charged on capital gains. Not every country in the world implements a capital gains tax, however, both Canada and the United States do.
In Canada, the current capital gains tax rate is at 50%. There are exceptions, however. If you’re interested in finding out the tax rate for capital gains you intend to realize, it’s best to contact your accountant or tax attorney.
To get a good idea of how taxes work on capital gains, here is a simple example.
Say the profit you’ve realized is $100.
50% of that, or $50, would be taxed at your marginal tax rate.
If your marginal tax rate was 43%, your capital gains tax would be $21.50.
Therefore, you would be left with $78.50. If you’ve experienced capital losses (the opposite of capital gains) within the past three years, you may use these to offset capital gains tax paid during those years.
As always, it pays to stay informed and to have a few experts working with you on your PLAN.
If you need a referral to an accountant and financial advisor, I have paired myself with a few outstanding individuals who would be more than willing to sit down and help you to determine your best route to where you want to be. Check some of them out at www.kevynoyhenart.ca under the Business directory section.
Enjoy this fabulous Wednesday, unless you choose otherwise.
Kevyn
Tuesday, August 16, 2011
Simplifying the Terminology....(Part III)
Where to start....
Oh yeah. For that Jackass that decided to hit the overpass on highway 99 yesterday at around 3pm, I sure hope they throw the book at you.
Couple that with a 5 car pile up on the Alex Fraser Bridge and there was no way to get home until after 10pm last night.
But there was a benefit to it believe it or not. I got to have Dinner with my 2 younger brothers and my Mother. An otherwise nice evening that had the potential to be ugly...
In continuing on with the theme of the past few blogs...here we go.
Appraisal: The process of determining the value of property, usually for lending purposes. This value may or may not be the same as the purchase price of the home.
A few more notes on this as well. The inspection portion or home visit of the process is normally only about 10 minutes. They come in and take a few pictures, get an idea of the home and what it is worth and the rest is done on computer back at the office.
Your appraisal is compared to similar type properties in the same area to determine a value. Your BC Assessed value is not always a less amount.
Closing Costs: Various expenses associated with purchasing a home. These costs can include, but are not limited to, legal/notary fees and disbursements, property land transfer taxes, as well as adjustments for prepaid property taxes or condominium common expenses, if any.
You can use a loose calculation of about 1.5% of the purchase price to determine your closing costs.
eg. if you agreed to purchase a place for $250 K, the costs close this mortgage with the Notary would be about $3750.
Conditional Offer: An offer to purchase subject to conditions. These conditions may relate to financing, or the sale of an existing home. Usually a time limit in which the specified conditions must be satisfied is stipulated. You may here us advise you to make your offer to purchase subject to financing. This means that if we cannot find financing for you, you can get out of the contract.
A smart idea would be to know ahead of time just how much you can purchase by having your broker run your numbers. It takes us on average about 15 minutes and we can give you an idea of how much.
Last one for today and it applies to those looking to refinance their current mortgage...
Maturity Date: Last day of the term of the mortgage agreement simply put. When we need to run the calculations to determine whether your penalty would be IRD, which I covered yesterday, or 3 months interest, we need to know when your contracted mortgage runs out.
Hope this is either helping you understand more of what goes in to a mortgage contract, or at least refreshing what you already know.
If you are going to enter into a debt that is going to take half a lifetime to pay off on average, then you should know all of that which goes in to it.
If you have any questions regarding these or any other terms and or conditions you may have, I am never too busy for a phone call or to answer an email.
Let me help you understand and be more comfortable with the process.
OR for those of you a little more industrious than the next, feel free to look through my webpage to find the answers you seek. www.kevynoyhenart.ca
Enjoy the late summer sunshine unless you choose otherwise.
Kevyn
Oh yeah. For that Jackass that decided to hit the overpass on highway 99 yesterday at around 3pm, I sure hope they throw the book at you.
Couple that with a 5 car pile up on the Alex Fraser Bridge and there was no way to get home until after 10pm last night.
But there was a benefit to it believe it or not. I got to have Dinner with my 2 younger brothers and my Mother. An otherwise nice evening that had the potential to be ugly...
In continuing on with the theme of the past few blogs...here we go.
Appraisal: The process of determining the value of property, usually for lending purposes. This value may or may not be the same as the purchase price of the home.
A few more notes on this as well. The inspection portion or home visit of the process is normally only about 10 minutes. They come in and take a few pictures, get an idea of the home and what it is worth and the rest is done on computer back at the office.
Your appraisal is compared to similar type properties in the same area to determine a value. Your BC Assessed value is not always a less amount.
Closing Costs: Various expenses associated with purchasing a home. These costs can include, but are not limited to, legal/notary fees and disbursements, property land transfer taxes, as well as adjustments for prepaid property taxes or condominium common expenses, if any.
You can use a loose calculation of about 1.5% of the purchase price to determine your closing costs.
eg. if you agreed to purchase a place for $250 K, the costs close this mortgage with the Notary would be about $3750.
Conditional Offer: An offer to purchase subject to conditions. These conditions may relate to financing, or the sale of an existing home. Usually a time limit in which the specified conditions must be satisfied is stipulated. You may here us advise you to make your offer to purchase subject to financing. This means that if we cannot find financing for you, you can get out of the contract.
A smart idea would be to know ahead of time just how much you can purchase by having your broker run your numbers. It takes us on average about 15 minutes and we can give you an idea of how much.
Last one for today and it applies to those looking to refinance their current mortgage...
Maturity Date: Last day of the term of the mortgage agreement simply put. When we need to run the calculations to determine whether your penalty would be IRD, which I covered yesterday, or 3 months interest, we need to know when your contracted mortgage runs out.
Hope this is either helping you understand more of what goes in to a mortgage contract, or at least refreshing what you already know.
If you are going to enter into a debt that is going to take half a lifetime to pay off on average, then you should know all of that which goes in to it.
If you have any questions regarding these or any other terms and or conditions you may have, I am never too busy for a phone call or to answer an email.
Let me help you understand and be more comfortable with the process.
OR for those of you a little more industrious than the next, feel free to look through my webpage to find the answers you seek. www.kevynoyhenart.ca
Enjoy the late summer sunshine unless you choose otherwise.
Kevyn
Monday, August 15, 2011
Simplifying the terminology....(Part II)
Whirlwind weekend for me....
Drove up to Kelowna for a wedding on Saturday evening and had a blast. Thanks to Susan and Pete Solymosi and an honorable mention to Deb White for having us attend. What a special moment to be able to share with a loving family and some great people.
Needless to say we partied hard, and one of us (I'll give you a hint...not me) felt it the next day.
Drove back last night through Summerland and Penticton so we could take advantage of the BC Grown fruit stands...and boy did we ever. Might have even hit the odd winery ;)
Here I am back at the office raring to go on a Monday.
In continuing fashion, here is part II of the common overlooked things we Mortgage Brokers assume that everyone understands.
LTV: simply means Loan to Value. If you take what your you have as an outstanding balance on your mortgage and compare it to what your home is worth, you get what we call the LTV.
In the Lending world to keep your loan conventional, you have to keep your mortgage under 80% of what your home is worth, or 80% Loan to value.
Closed Mortgage: A mortgage agreement that cannot be prepaid, renegotiated or refinanced before maturity, except according to its terms. This is where the expertise of your Broker comes in. On the surface a rate may look better than a similar rate just because it is lower. But, in simplest terms possible, it is like comparing apples to oranges.
Like fruit, mortgages come in different sizes, shapes and flavours. You may be able to save $10 per payment by going with a lower rate, but that product line may carry with it some clauses written in that may restrict you from paying out your mortgage and refinancing. More on this subject in a future blog...or write me and ask for more info.
Open mortgage: A mortgage which can be prepaid at any time, without requiring the payment of additional fees. A product that has its advantages if used properly and fits in with a well designed plan. It is a tool that you have at yours and your Brokers disposal, but may not necessarily be the correct product or fit for your endeavour.
Yes there are no penalties, but for the most part the rates are higher. There is a break even point when you compare the the 2 usually around the 7-8 month mark for the most part ( have to run the calculations to be 100% sure ). So if you are planning on paying off your entire mortgage in less than this time frame, it may make sense to use this type of financing. If you are not 100% sure about repayment, perhaps a closed mortgage makes more sense with the lower rate....need to speak to an expert and have it mapped out for you to make the appropriate decision.
15/15 or 20/20: These are both prepayment privileges that are written in to your closed mortgage products. They allow you to make up to, in the case of the 15/15 ( same applies for the 20/20, its just 5% more) extra payments on to your outstanding mortgage amount each year. You can make and extra 15% on your set monthly payments, and 15% extra of the outstanding balance each year, without penalty.
This extra 15% each month is a great way to hedge the Variable rate product against future rate hikes while still saving the difference in interest today versus a fixed rate product.
And last but not least today....
Interest Rate Differential Amount (IRD) : An IRD amount is a compensation charge that may apply if you pay off your mortgage principal prior to the maturity date or pay the mortgage principal down beyond the prepayment privilege amount. The IRD amount is calculated on the amount being prepaid using an interest rate equal to the difference between your existing mortgage interest rate and the interest rate that we can now charge when re-lending the funds for the remaining term of the mortgage.
So if you had 2 years left on your 5 year term, the IRD would be calculated using what the lender could lend your balance out at on their 2 year rate, not the 5 year rate that you originally had your contract written on.
If you want to know more about how the IRD is calculated I would be more than willing to show you the calculation and how it is derived.
You can always find more in depth knowledge on my webpage at www.kevynoyhenart.ca Feel free to click through and find a few links that may be helpful in your quest of Home ownership. Conversely you can always get me on my phone as well.
Enjoy this wonderful Monday here on the west Coast of BC. Or if you are abroad, there as well.
Kevyn
Drove up to Kelowna for a wedding on Saturday evening and had a blast. Thanks to Susan and Pete Solymosi and an honorable mention to Deb White for having us attend. What a special moment to be able to share with a loving family and some great people.
Needless to say we partied hard, and one of us (I'll give you a hint...not me) felt it the next day.
Drove back last night through Summerland and Penticton so we could take advantage of the BC Grown fruit stands...and boy did we ever. Might have even hit the odd winery ;)
Here I am back at the office raring to go on a Monday.
In continuing fashion, here is part II of the common overlooked things we Mortgage Brokers assume that everyone understands.
LTV: simply means Loan to Value. If you take what your you have as an outstanding balance on your mortgage and compare it to what your home is worth, you get what we call the LTV.
In the Lending world to keep your loan conventional, you have to keep your mortgage under 80% of what your home is worth, or 80% Loan to value.
Closed Mortgage: A mortgage agreement that cannot be prepaid, renegotiated or refinanced before maturity, except according to its terms. This is where the expertise of your Broker comes in. On the surface a rate may look better than a similar rate just because it is lower. But, in simplest terms possible, it is like comparing apples to oranges.
Like fruit, mortgages come in different sizes, shapes and flavours. You may be able to save $10 per payment by going with a lower rate, but that product line may carry with it some clauses written in that may restrict you from paying out your mortgage and refinancing. More on this subject in a future blog...or write me and ask for more info.
Open mortgage: A mortgage which can be prepaid at any time, without requiring the payment of additional fees. A product that has its advantages if used properly and fits in with a well designed plan. It is a tool that you have at yours and your Brokers disposal, but may not necessarily be the correct product or fit for your endeavour.
Yes there are no penalties, but for the most part the rates are higher. There is a break even point when you compare the the 2 usually around the 7-8 month mark for the most part ( have to run the calculations to be 100% sure ). So if you are planning on paying off your entire mortgage in less than this time frame, it may make sense to use this type of financing. If you are not 100% sure about repayment, perhaps a closed mortgage makes more sense with the lower rate....need to speak to an expert and have it mapped out for you to make the appropriate decision.
15/15 or 20/20: These are both prepayment privileges that are written in to your closed mortgage products. They allow you to make up to, in the case of the 15/15 ( same applies for the 20/20, its just 5% more) extra payments on to your outstanding mortgage amount each year. You can make and extra 15% on your set monthly payments, and 15% extra of the outstanding balance each year, without penalty.
This extra 15% each month is a great way to hedge the Variable rate product against future rate hikes while still saving the difference in interest today versus a fixed rate product.
And last but not least today....
Interest Rate Differential Amount (IRD) : An IRD amount is a compensation charge that may apply if you pay off your mortgage principal prior to the maturity date or pay the mortgage principal down beyond the prepayment privilege amount. The IRD amount is calculated on the amount being prepaid using an interest rate equal to the difference between your existing mortgage interest rate and the interest rate that we can now charge when re-lending the funds for the remaining term of the mortgage.
So if you had 2 years left on your 5 year term, the IRD would be calculated using what the lender could lend your balance out at on their 2 year rate, not the 5 year rate that you originally had your contract written on.
If you want to know more about how the IRD is calculated I would be more than willing to show you the calculation and how it is derived.
You can always find more in depth knowledge on my webpage at www.kevynoyhenart.ca Feel free to click through and find a few links that may be helpful in your quest of Home ownership. Conversely you can always get me on my phone as well.
Enjoy this wonderful Monday here on the west Coast of BC. Or if you are abroad, there as well.
Kevyn
Friday, August 12, 2011
simplifying the terminilogy....(Part I)
Have you ever been to a mechanic to have your vehicle fixed only to get lost in his or her translation of what is wrong?
How about a Doctor's office and his diagnosis of your bruised ankle sounding like some death sentence?
Or what about when you go to order a medium black coffee from Starbucks and they repeat your order as a Grande Columbian dark roast that's about a 5 on the roasting chart????
I mean come on I get it, but seriously for one minute, just put yourself in the layman's shoes.
That's where I try to make a point of keeping things simple for clients.
But even then, sometimes you forget.
Hence over the next couple of days I will break down some of the mystique of our terminology....
As an industry insider, you can get lost sometimes in who you are speaking to. It's ok to use the acronyms when talking to an underwriter (the person on the Lending side of the equation who weighs the risk of the deal and determines the conditions to lending), but not the best practice when talking to a first time home buyer.
So today I am going to summarize a few common terms that sometimes get overlooked, or taken for granted....
Amortization: Simply put, the length of time that your mortgage or loan payment will be split up over. So if we took an amortization of 30 years, your mortgage would be calculated on 360 months of repayment.
Blended payment: This simply means that your payment has 2 components. The first part being the principal portion and the second the interest portion. The principal goes to lowering the balance on your mortgage and the interest goes to the bank or lending institution as the price for doing business.
Sometimes you hear the following 2 items. There is a reason behind why we ask you so many darned questions...
GROSS DEBT SERVICE RATIO – 32%
GDSR is the ratio of your gross income, reduced to 32% of that amount that can be allocated to mortgage debt, property taxes, ½ condo fees, an allocation towards heat (very important in Canada). i.e. $50,000.00 gross income = $4,166.00 per month = $1,330.00 applicable monies
$1,330.00 - $75.00 heat – monthly taxes – ½ condo fees = balance allowance for mortgage payments
TOTAL DEBT SERVICE RATIO - 40%
TDSR is the ratio of your gross income, reduced to 40% of that amount that can be allocated to (see above) mortgage debt, property taxes, ½ condo fees an allocation towards heat and all other outside committed payments.
Outside Committed Payments (auto loans, auto leases, credit card payments, lines of credit, student loan payments, loans, alimony, child support payments, personal guarantees on other person’s loans – i.e. son’s motorcycle loan, personal guarantee on daughter’s mortgage)
i.e. $50,000.00 gross income =$4,166.00 per month = $1,330.00 applicable monies
$1,330.00 - $75.00 heat – monthly taxes – ½ condo fees – all monthly committed payments = balance allowable for mortgage payments.
These calculations determine, in the eyes of Lenders, your ability to service the mortgage debt load.
And last on the docket for today's blog is.....
Term: This is the time frame that you can lock your interest rate in for. If you choose a 5 year fixed term @ 3.59% (today's rate), you get that rate secured to your mortgage for the next 60 months worth of payments.
Did you know on average, most Canadians refinance before their 5 year term is up? Somewhere between years 2 and 3.
You are not stuck with only a 5 year option. You can choose any of the following terms...
6 months, 1 year, 2 year, 3 year, 4 year, 5 year, 7 year, 10 year
There are more options and that is why you need a professional to help you choose. You need to weigh all your options and have a plan in place to fit your needs and lifestyle.
My website has a few links to other areas of mortgage financing that you may need some more information on. feel free to click through and read. www.kevynoyhenart.ca
Join me on Monday when I follow up this blog with my next round of magic code words decodified....
Same bat time...same bat channel!
Enjoy the weekend unless you choose otherwise.
Kevyn
How about a Doctor's office and his diagnosis of your bruised ankle sounding like some death sentence?
Or what about when you go to order a medium black coffee from Starbucks and they repeat your order as a Grande Columbian dark roast that's about a 5 on the roasting chart????
I mean come on I get it, but seriously for one minute, just put yourself in the layman's shoes.
That's where I try to make a point of keeping things simple for clients.
But even then, sometimes you forget.
Hence over the next couple of days I will break down some of the mystique of our terminology....
As an industry insider, you can get lost sometimes in who you are speaking to. It's ok to use the acronyms when talking to an underwriter (the person on the Lending side of the equation who weighs the risk of the deal and determines the conditions to lending), but not the best practice when talking to a first time home buyer.
So today I am going to summarize a few common terms that sometimes get overlooked, or taken for granted....
Amortization: Simply put, the length of time that your mortgage or loan payment will be split up over. So if we took an amortization of 30 years, your mortgage would be calculated on 360 months of repayment.
Blended payment: This simply means that your payment has 2 components. The first part being the principal portion and the second the interest portion. The principal goes to lowering the balance on your mortgage and the interest goes to the bank or lending institution as the price for doing business.
Sometimes you hear the following 2 items. There is a reason behind why we ask you so many darned questions...
GROSS DEBT SERVICE RATIO – 32%
GDSR is the ratio of your gross income, reduced to 32% of that amount that can be allocated to mortgage debt, property taxes, ½ condo fees, an allocation towards heat (very important in Canada). i.e. $50,000.00 gross income = $4,166.00 per month = $1,330.00 applicable monies
$1,330.00 - $75.00 heat – monthly taxes – ½ condo fees = balance allowance for mortgage payments
TOTAL DEBT SERVICE RATIO - 40%
TDSR is the ratio of your gross income, reduced to 40% of that amount that can be allocated to (see above) mortgage debt, property taxes, ½ condo fees an allocation towards heat and all other outside committed payments.
Outside Committed Payments (auto loans, auto leases, credit card payments, lines of credit, student loan payments, loans, alimony, child support payments, personal guarantees on other person’s loans – i.e. son’s motorcycle loan, personal guarantee on daughter’s mortgage)
i.e. $50,000.00 gross income =$4,166.00 per month = $1,330.00 applicable monies
$1,330.00 - $75.00 heat – monthly taxes – ½ condo fees – all monthly committed payments = balance allowable for mortgage payments.
These calculations determine, in the eyes of Lenders, your ability to service the mortgage debt load.
And last on the docket for today's blog is.....
Term: This is the time frame that you can lock your interest rate in for. If you choose a 5 year fixed term @ 3.59% (today's rate), you get that rate secured to your mortgage for the next 60 months worth of payments.
Did you know on average, most Canadians refinance before their 5 year term is up? Somewhere between years 2 and 3.
You are not stuck with only a 5 year option. You can choose any of the following terms...
6 months, 1 year, 2 year, 3 year, 4 year, 5 year, 7 year, 10 year
There are more options and that is why you need a professional to help you choose. You need to weigh all your options and have a plan in place to fit your needs and lifestyle.
My website has a few links to other areas of mortgage financing that you may need some more information on. feel free to click through and read. www.kevynoyhenart.ca
Join me on Monday when I follow up this blog with my next round of magic code words decodified....
Same bat time...same bat channel!
Enjoy the weekend unless you choose otherwise.
Kevyn
Thursday, August 11, 2011
Why there is no need to panic !
Hmmmm how to open this....
Ok simply put it will be.
The massive debt problems in the United States and Europe have taken the pressure off of Canadians with any sort of amassed debt they may be carrying over and above what is considered a normal amount.
Remember when the BOC Governor, Mr. Mark Carney and the Finance Minister, Mr. Jim Flaherty were warning not too long ago that high personal debt levels could become unmanageable?
Especially when the Interest rates would begin to rise...
Well, interest rates aren’t going anywhere for now.
Our National debt problem is mild when compared to the US and some of our cousins from across the Atlantic. The issue here in Canada is personal debt. It has hit record levels in relation to income and continues to grow, although at markedly slower levels than before.
The massive global economic upsets do us no good in helping to lower personal debt, but they do make it easy to carry that debt.
The gist of it all...
With economic growth coming from the US frustratingly weak, Canada is bound to feel the effects. Debt-cutting from our southern neighbor and some of the cross Atlantic cousins of ours could further restrict growth around the world.
The BOC is also all tied up by the fact that an Interest rate increase here while the rate remains low in the United States would drive our dollar higher. That would be horrible for our manufacturing sector because of its Export based products.
All of this means that the average Canadian with their above average debt loads will get a reprieve from the higher interest rates they’ve been warned about for more than a year.
There are a few consequences that may come of this, but I won't bore you with weakened job growth or slower than expected housing starts...
This is why now more than ever, you should take action in reducing your debts, even while borrowing more may seem attractive with these ultra low Interest rates.
Does that make sense?
Ultimately what I am saying is this:
It will not matter much in 6 months time if the Economy has affected your job status to the point of a reduction in hours or perhaps being laid off. No it won't matter much then that you have this ultra-low interest rate on a massive mortgage.
What will matter is this....What monthly payment you need to make.
Make a conscious effort to stay within your means. Tread carefully my friends....do not let the rates fool you. When you are hitting rock bottom like we are now, there is no where to go but up.
Make sure you are on the right side of that curve.
Click through to my website and see some additional information to go with this blog.
www.kevynoyhenart.ca
I am never too busy to answer your questions.
Enjoy this fantastic day.
Kev
Ok simply put it will be.
The massive debt problems in the United States and Europe have taken the pressure off of Canadians with any sort of amassed debt they may be carrying over and above what is considered a normal amount.
Remember when the BOC Governor, Mr. Mark Carney and the Finance Minister, Mr. Jim Flaherty were warning not too long ago that high personal debt levels could become unmanageable?
Especially when the Interest rates would begin to rise...
Well, interest rates aren’t going anywhere for now.
Our National debt problem is mild when compared to the US and some of our cousins from across the Atlantic. The issue here in Canada is personal debt. It has hit record levels in relation to income and continues to grow, although at markedly slower levels than before.
The massive global economic upsets do us no good in helping to lower personal debt, but they do make it easy to carry that debt.
The gist of it all...
With economic growth coming from the US frustratingly weak, Canada is bound to feel the effects. Debt-cutting from our southern neighbor and some of the cross Atlantic cousins of ours could further restrict growth around the world.
The BOC is also all tied up by the fact that an Interest rate increase here while the rate remains low in the United States would drive our dollar higher. That would be horrible for our manufacturing sector because of its Export based products.
All of this means that the average Canadian with their above average debt loads will get a reprieve from the higher interest rates they’ve been warned about for more than a year.
There are a few consequences that may come of this, but I won't bore you with weakened job growth or slower than expected housing starts...
This is why now more than ever, you should take action in reducing your debts, even while borrowing more may seem attractive with these ultra low Interest rates.
Does that make sense?
Ultimately what I am saying is this:
It will not matter much in 6 months time if the Economy has affected your job status to the point of a reduction in hours or perhaps being laid off. No it won't matter much then that you have this ultra-low interest rate on a massive mortgage.
What will matter is this....What monthly payment you need to make.
Make a conscious effort to stay within your means. Tread carefully my friends....do not let the rates fool you. When you are hitting rock bottom like we are now, there is no where to go but up.
Make sure you are on the right side of that curve.
Click through to my website and see some additional information to go with this blog.
www.kevynoyhenart.ca
I am never too busy to answer your questions.
Enjoy this fantastic day.
Kev
Friday, August 5, 2011
Accountability is the key !
As I drove in to work this morning, like most mornings my thoughts got the better of me.
They got me thinking about what I need to be successful.
Or, for a while there, what more do I need to be successful.
And after a few minutes of contemplation, I realized something. Everybody is born into this world with the ability to be successful. What they sometimes lack is the willingness to do the dirty work in order to become that which they dream about.
So, in other words, we already possess that which we need.
Now how do we go about pulling or extracting that given ability out?
Well here is a simple idea that costs absolutely nothing !
Find yourself an accountability partner!!!
What is that you ask?
Well, lets look at it from a business perspective. You need to find yourself someone you can trust first off. Trust will be huge in this endeavour as you will want to share all of your hopes and dreams as well as intimate knowledge of your business plan in detail. You will not want to hold anything back in this regard as the more the other person knows the more ways in which they can help you out each day/week/month/year etc.
An accountability partner in a sales environment will help you much the same as a workout partner would when it comes to training for a Marathon.
How so?
Well usually the first week is great when it comes to training. You're gung ho...up before your alarm...spring in your step...pushing the pace and ready for anything.
Then it happens. The alarm goes off...you roll over to shut it off and you realize how sore you are. You realize that the forecast for sunshine long term has now been updated and its raining.
Guess what...if you were just running with yourself and nobody else, there would be a pretty good chance of you staying in bed that extra hour wouldn't there?
But if you have that partner meeting you on the street corner at 6:30 am...there is no way you're going to let him down. Nobody wants to be made fun of because they didn't want to run in the rain do they!
Little do you know that they had the same conversation with themselves in bed that morning too.
That is where the power of it comes in to play. You are there for each other. In good times and more importantly through the challenging times that often happen in Sales or in exercise or life.
This concept can be used for anything. It is simple. It costs you nothing other than time to share your plans.
The benefits far outweigh the negatives. Just make sure you choose the right partner for you.
If you are stubborn, make sure you choose someone who can handle your pig headed-ness. If you are lacking will, make sure you get someone who has some to spare.
I use my brother and business partner. We have strengths and weaknesses that complement each other. And we won't put up with each others BS.
As for today...quit procrastinating...go find someone right now and share your plan. You will be well on your way to success.
Enjoy this fantastic Friday...and go make Katy Perry's 5th #1 song a reality tonight ! ( by the way that has not happened since Michael Jackson's Bad album)
Until next time...
Kevyn
They got me thinking about what I need to be successful.
Or, for a while there, what more do I need to be successful.
And after a few minutes of contemplation, I realized something. Everybody is born into this world with the ability to be successful. What they sometimes lack is the willingness to do the dirty work in order to become that which they dream about.
So, in other words, we already possess that which we need.
Now how do we go about pulling or extracting that given ability out?
Well here is a simple idea that costs absolutely nothing !
Find yourself an accountability partner!!!
What is that you ask?
Well, lets look at it from a business perspective. You need to find yourself someone you can trust first off. Trust will be huge in this endeavour as you will want to share all of your hopes and dreams as well as intimate knowledge of your business plan in detail. You will not want to hold anything back in this regard as the more the other person knows the more ways in which they can help you out each day/week/month/year etc.
An accountability partner in a sales environment will help you much the same as a workout partner would when it comes to training for a Marathon.
How so?
Well usually the first week is great when it comes to training. You're gung ho...up before your alarm...spring in your step...pushing the pace and ready for anything.
Then it happens. The alarm goes off...you roll over to shut it off and you realize how sore you are. You realize that the forecast for sunshine long term has now been updated and its raining.
Guess what...if you were just running with yourself and nobody else, there would be a pretty good chance of you staying in bed that extra hour wouldn't there?
But if you have that partner meeting you on the street corner at 6:30 am...there is no way you're going to let him down. Nobody wants to be made fun of because they didn't want to run in the rain do they!
Little do you know that they had the same conversation with themselves in bed that morning too.
That is where the power of it comes in to play. You are there for each other. In good times and more importantly through the challenging times that often happen in Sales or in exercise or life.
This concept can be used for anything. It is simple. It costs you nothing other than time to share your plans.
The benefits far outweigh the negatives. Just make sure you choose the right partner for you.
If you are stubborn, make sure you choose someone who can handle your pig headed-ness. If you are lacking will, make sure you get someone who has some to spare.
I use my brother and business partner. We have strengths and weaknesses that complement each other. And we won't put up with each others BS.
As for today...quit procrastinating...go find someone right now and share your plan. You will be well on your way to success.
Enjoy this fantastic Friday...and go make Katy Perry's 5th #1 song a reality tonight ! ( by the way that has not happened since Michael Jackson's Bad album)
Until next time...
Kevyn
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