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Thursday, June 26, 2014

Breaking a closed mortgage can be Costly



A recent article in the Toronto Star highlighted a little known secret that the banks don’t want you to notice when you sign the paperwork on a mortgage. If you take a 5 year term and need to end the mortgage early whether it’s because of illness , divorce , a job transfer or any other possible reason, if you are less than half way through the term, a condition called Interest Rate Differential kicks in rather than the 3 months interest option.
    In the Star article, a RBC mortgage holder found he could not afford his home and he wanted to sell the home and get out of the mortgage. He was hit with a $13,000 penalty when money was already stretched to the limit. On one of the last pages of a mortgage commitment it often states how the IRD is calculated. When you get your mortgage at a discounted rate, there’s a posted rate shown at the bank. This rate is often 1 1/2%  higher than the rate you received. While you feel great receiving this rate, it can come back to bite you in the butt.
       IRD;s are calculated based on the difference between the posted rate and your rate multiplied by the number of months remaining in the mortgage term. The highest IRD I have heard of a client paying was $90,000.
           A good mortgage broker will ask you if there’s any chance you will have to end the mortgage before the end of the term.  If there’s a possibility we take you to a mortgage company or a trust company rather than a bank. These lenders do not calculate the IRD based on a posted rate as they do not have one. They often will just charge the 3 month interest penalty and leave it at that.
      This is one more reason why you should see a mortgage broker for your home financing needs rather than going to a big bank
Bookmark and ShareContact me if you need more information on this topic.  David Cooke, your Calgary mortgage broker. The Toronto Star article

Monday, June 16, 2014

How would you like 10% of your CMHC fees back?


Taxes keep going up, the cost of gasoline is going up. How are you going to get ahead these days? You need to find rebates, deals and money back offers. Here's one from CMHC. If you can make your home more energy efficient or if you buy a home that is already Ener Guide rated at 82 or above you qualify for a rebate of up to 10% of your CMHC fees. Take a look at your mortgage documents and you may have paid $11-12,000 in fees when you bought your home. You could get $1100 to $1200 back just for proving your home meets the energy efficiency ratings. 
   Now here's the item your realtor or bank do not tell you. If you make your home for energy efficient 4 years after your purchase, you can still apply for the rebate. How sweet is that?
 This rebate is also available through the private mortgage insurers, Genworth and Canada Guaranty  .  You do have to prove that you have improved the energy efficiency and you need to do this with an energy audit. A full explanation is available from CMHC and I have added the link to the bottom of this article. If you need more information contact me, David Cooke, your Calgary mortgage broker.



CMHC fee rebate explained  

Tuesday, June 10, 2014

Purchase Plus Improvements explained


So you found the perfect house in your price range, close to schools, and shopping but the kitchen is from 1956. Your down payment will clean out your bank account and you won't be able to afford to renovate for at least a few years. How about a program where you could have the renovations done soon after possession date? Would that interest you? Here's a great video that explains the process. Contact me if you have any questions.

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