The decision to choose a fixed or variable rate is not always an easy one. It should depend on your tolerance for risk as well as your ability to withstand increases in mortgage payments. You can sometimes expect a financial reward for going with the variable rate, although the precise magnitude will ebb and flow depending on the economic environment.

Fixed rate mortgages often appeal to clients who want stability in their payments, manage a tight monthly budget, or are generally more conservative. For example, young couples with large mortgages relative to their income might be better off opting for the peace of mind that a fixed-rate brings.

A variable rate mortgage often allows the borrower to take advantage of lower rates – the interest rate is calculated on an ongoing basis at a lenders’ prime rate minus a pre-determined percentage. For example, if the prime mortgage rate is 5.5 percent, the holder of a prime minus 0.5 percent mortgage would pay a 5.0 percent variable interest rate.

As a consumer, the best option is to have a candid discussion with your mortgage professional to ensure you have a full understanding of the risks and rewards of each type of mortgage. Call me today at 416-674-2318 and let’s get started.

Most home maintenance activities are seasonal. During winter months, it is important to follow routine maintenance procedures, by checking your home carefully for any problems arising and taking corrective action as soon as possible. These include:

• Check and clean or replace furnace air filters each month during the heating season. Ventilation system, such as heat recovery ventilator, filters should be checked every two months.
• After consulting your hot water tank owner’s manual, drain off a dishpan full of water from the clean-out valve at the bottom of your hot water tank to control sediment and maintain efficiency.
• Clean the humidifier two or three times during the winter season.
• Vacuum bathroom fan grilles.
• Vacuum fire and smoke detectors, as dust or spider webs can prevent them from functioning.
• Vacuum radiator grilles on back of refrigerators and freezers, and empty and clean drip trays.
• Check gauge on all fire extinguishers; recharge or replace if necessary.
• Check fire escape routes, door and window locks and hardware, and lighting around outside of house; ensure family has good security habits.
• Check the basement floor drain to ensure the trap contains water. Refill with water if necessary.
• Monitor your home for excessive moisture levels—for example, condensation on your windows, which can cause significant damage over time and pose serious health problems—and take corrective action.
• Check all faucets for signs of dripping and change washers as needed. Faucets requiring frequent replacement of washers may be in need of repair.
• If you have a plumbing fixture that is not used frequently, such as a laundry tub or spare bathroom sink, tub or shower stall, run some water briefly to keep water in the trap.
• Clean drains in dishwasher, sinks, bathtubs and shower stalls.
• Test plumbing shut-off valves to ensure they are working and to prevent them from seizing.
• Examine windows and doors for ice accumulation or cold air leaks. If found, make a note to repair or replace in the spring.
• Examine attic for frost accumulation. Check roof for ice dams or icicles. There shouldn’t be excessive frost or staining of the underside of the roof, or ice dams on the roof surface.
• Check electrical cords, plugs and outlets for all indoor and outdoor seasonal lights to ensure fire safety: if worn, or if plugs or cords feel warm to the touch, replace immediately.

The advantages for home buyers to obtain a mortgage pre-approval.

Obtaining a Pre-approval

A mortgage pre-approval from a mortgage lender says you are approved for a mortgage before you have selected a specific property. You simply fill out a mortgage application and provide the lender with income documentation and consent to pull your credit report and evaluate your finances for credit worthiness. The lender will process your application like a traditional mortgage request and will advise you the amount of money that you can borrow.

Knowing Your Budget

One of the big advantages of going through this pre-approval process is that you now know your borrowing limit. You know exactly how much money you can borrow for your home purchase. You also know how much your mortgage payment will be. People often spend time looking at properties that they could never afford or be approved for but when you have a pre-approval in hand you know exactly which properties you should search.

Negotiating With Strength

Having a mortgage pre-approval will give you increased negotiating power. When you look at properties as a pre-approved buyer, real estate agents and sellers will treat you as a preferred customer. Buyers who are not pre-approved represent a degree of uncertainty for the seller so when you make an offer to purchase a property it will be treated as a priority because the seller knows that your offer will essentially result in a sure deal. This means that the seller can agree to your offer and get a guaranteed amount of money instead of wasting time on a potential offer associated with uncertainty of mortgage approval. If a buyer without a pre-approval is chosen, that buyer may not qualify for a loan in the amount that is needed so the sale would fall through and the seller would be right back where he started. Being pre-approved will automatically give your offer a lot more weight when it comes to negotiating with sellers and your odds of getting the house that you want will dramatically improve.

To get pre-approved, call me today at 416-674-2318 and let’s get started, or send me a quick email: garry.grewal@dominionlending.ca

Bank representatives typically have only a few mortgage products available. Independent mortgage brokers have access to many lenders (various banks, credit unions, trust companies and private lenders) to help you put together the mortgage that works best for you!

Although almost everyone wants a mortgage with the best rates, terms and conditions possible, yet many people still take the mortgage product offered by their bank without shopping around. However, when dealing with a bank, you are only negotiating with one lender and only for their limited line-up of products. Even if you have been a long time customer of a bank, it does not mean you will be offered the best rate or product possible.

Long-held beliefs sometimes include the idea that mortgage brokers are only for people who have bad credit or were turned down by a bank. Unfortunately, anyone with this kind of outdated thinking could be losing thousands of dollars! All homebuyers and homeowners can save time and money by enlisting the services of a broker.

I have years of experience in the financial industry and know how to keep my clients happy. It starts with listening to them so as to better understand their situation and their needs. Not every borrower is the same and many face challenges. My financial background allows me to examine all available mortgage options to determine which one best suits a particular need. I

have access to many competing lending institutions, including banks, trust companies and even private individuals. Widespread access to lenders guarantees a completely unbiased recommendation every time with only the best interest of the client in mind. There are other potential cost savings. For example, a particular lender may have a special rate offer for a specific mortgage term. If you are rate-shopping on your own and don’t know who is sponsoring the offer, you can’t take advantage of the special pricing.

At mortgage renewal, many homeowners take the renewal quote and choose a term and rate offered by the lender without realizing that a mortgage broker may be able to save them up to one percentage point off the posted rate. This can translate into thousands of dollars in savings over a five-year term. To ensure you get the best rate, just call me at 416-674-2318 four months before you renew an existing mortgage or consider a new home purchase. Starting early can be a money saver because a broker can usually guarantee an interest rate for 90-120 days. Should rates drop in the meantime, you would of course get the lower rate.

If your credit rating is important to you, then you also need to consider that when you take it upon yourself to shop from lender to lender, there is an accumulation of inquires on your credit bureau report, affecting your credit rating and ultimately the rate and terms of your mortgage. This is not the case with me, since with a single inquiry I can obtain many competing lenders to quote on your business.

Finally, fees payable are an important misconception that should be clarified. Some people think that using a broker will be costly and that there will be an upfront fee. In most cases, there is no fee at all because the lender that provides the mortgage pays the broker’s fee for obtaining the business. As you would expect, a fee may be charged to clients with impaired credit or when private money is used, although this compensates for the time and effort required to negotiate the mortgage.

Your income (capacity to repay) usually indicates how much money you can borrow, but your credit report (repayment history) will usually determine whether you can borrow additional money. Past credit behaviours are categorized into five predictive characteristics used by the credit bureau to determine your credit score.

Past Payment Performance (35%): Fewer late payments, judgments, liens or collections, are better. Recent late payments weigh more than those two years past.

Credit Utilization (30%): Low balances (at or below 30% of available credit limit) on a few cards are better than high balances on one or two cards. Several cards can be a detriment.

Credit History (15%): The longer accounts have been open and in good standing, the better. Avoid “credit surfing” – opening new accounts and closing established ones will negatively impact on a credit score.

Types of Credit in Use (10%): Traditional banking or retail accounts score higher than finance company accounts especially those that offer deferred payment options.

Previous Inquiries (10%): Seeking new credit over a short period of time can be associated with higher risk. Administrative inquiries by credit grantors do not affect the credit score.

How do you fare? Individuals may obtain a copy of their personal credit report from Equifax Canada Inc. or TransUnion Canada directly. Call me at 416-674-2318 to find out how to obtain a copy of your record.