Hybrid Mortgages - What are they?

Back in the 80's when interest rates were going up , a popular investing strategy was to go long and short. That's to say, you would take half your investments and lock  them in bonds at the 5 year rate and half in the one or two year rate. The idea is that you can never time exactly when rates will be at their peak or bottom so it's best to have half your investment in short term and half in long term. 

    Hybrid mortgages – also known as 50/50 mortgage products – include an equal mix of fixed-rate and variable-rate components within your single mortgage. This means you get the best of both worlds – the security of fixed repayments with the flexibility of a variable rate.

Although there was a time in recent years when mortgage experts considered a variable-rate mortgage as the obvious choice to save mortgage consumers money over the long term, with fixed rates remaining near historic lows, a 50/50 mortgage may be a great alternative for you.

In essence, since it’s extremely difficult to accurately predict rates over the long term, a 50/50 mortgage offers interest rate diversification, which can help reduce your level of risk.

If you opt for a 50/50 product, half of your mortgage is locked into a five-year fixed rate and half is at a five-year variable rate. You can lock in your variable-rate portion at any time without paying a penalty. As well, each portion of the 50/50 mortgage operates independently – like two separate mortgages – yet the product is registered as only one collateral charge.

The 50/50 mortgage product is well-suited to a variety of borrowers, including those who:

·         Would normally go fully variable but are afraid prime rate is at its bottom

·         Aren’t comfortable being locked into a fully fixed rate

·         Can’t decide between a fixed or variable mortgage

·         Savvy first-time home buyers

Some features of the 50/50 mortgage include:

·         20% annual lump-sum pre-payment privileges

·         20% annual payment increase ability

·         Portability (the option to transfer your existing loan amount to a new property without penalty)

As the 50/50 option is a fairly new offering, according to a recent study by the Canadian Association of Accredited Mortgage Professionals (CAAMP), 5% of Canadian mortgage holders have 50/50 mortgages compared to 28% with variable-rate mortgages and 68% with fixed-rate mortgages. But many experts believe the 50/50 mortgage is quickly gaining momentum. David Cooke is a senior mortgage broker at Dominion Lending Centres Westcor in Calgary. For more information contact him here.

The 5 Dumbest Things you can do if you have too much debt

If you’re struggling with too much debt you’re not alone. It seems as if the whole nation has a borrowing hangover. For years, credit was easy and many people became overextended. But we now live in an era of austerity and it’s time to get our affairs in order.

 The 5 strategies you may want to avoid:
 The first advice of experts in the field is to be sure you don't make your situation worse by making common mistakes. In particular try to avoid: · Paying only the minimum payment on your debt as this will results in the amount you owe actually growing and your problems will only become worse. ·
 Relying on friends and family as this can damage relationships with the most important people in your life. ·
 Unscrupulous credit counselors that demand cash upfront or high fees for help they promise, but don't deliver. ·
 Using new high-interest loan to pay off lower interest rate loans – while it may be easier to just have one payment but it will actually increase the amount you have to pay back. ·
Declaring bankruptcy – this can have permanent and severe consequences on your financial future, avoid if you can, especially when debt settlement may work for you... Debt Settlement For many people, working with a Debt Settlement company can actually be a great solution. You’ve probably heard a lot of advertising for these services recently, but what exactly do they do. Debt settlement is the process of negotiating with creditors to get them to forgive a big portion of your debt. Why would a credit card company do this? Well, it’s not out of the generosity of their heart. They have made the financial calculations and determined they are better off knowing for certain that they’ll get paid something rather than not knowing at all if they will get paid anything. Settlement companies work with individual consumers to determine a reasonable monthly amount that they can afford to pay against their debt load. The individual makes the affordable payment every month into a special-purpose account, and as these funds accumulate, the settlement company reaches out to creditors to negotiate a full and final actual settlement amount that they will take. Typically, these companies have excellent relationships with creditors and are negotiating on behalf of thousands of people every day. The amount of savings they can obtain for consumers can be significant. While each situation is different, it’s not uncommon for debt settlement companies to negotiate reductions of as much as 50% of the outstanding amount and help get their customer debt free in just a few years. There are a many debt-settlement agencies, so the next question is how to find a legitimate and trustworthy company to work with?
One great way to start is by visiting your local mortgage broker .. They offer a free, no-obligation consultation to evaluate your options. Then, if you chose to proceed, they will develop a plan that meets your specific needs and negotiate it on your behalf with your credit card companies . To learn how much of your debt can be reduced, and how quickly you can be debt free Contact David Cooke, your Calgary Mortgage broker at http://davidcooke.ca

Crystal Ball Time - Calgary housing prices are going up

Today's Calgary Herald had an article about how MLS sales had gone up substantially in May. How much? 27.9% as of May 28th. Year over year we are up over 7% from 2011. What does this mean for the Calgary housing market? Housing prices have already started to go up and are about to jump. What makes me feel confident that this is about to happen? There are a number of factors which lead me to believe this. 1- oil prices are sitting around $100 +. This means that the oil sands projects are profitable , conventional oil is profitable and so there's cash being spent. We are already seeing news articles on a shortage of trained workers. This means we will see more British ex-pats and Americans coming to Calgary. They will need housing. 2- Jim Flaherty seems to feel that mortgages are bad debt and keeps tightening the rules. I heard that he is going to lower the maximum allowable amount for home equity lines of credit (HELOC's) to 65% from 80% Any tightening of the rules will make fence sitters jump. 3 - While there are new homes being built, if demand goes up too quickly, builders will not be able to keep up and existing homes will increase in value. 4- finally as values for existing homes near the 2007 peak, people who bought homes at that time who want to move will put their homes up for sale and look for new digs. Remember, in Calgary, your average person moves once every 3 years. There are probably thousands who are chewing at the bit and ready to move as soon as they see they wont' lose on selling their present home. What does this mean for you? If your mortgage is coming due in the next 24 months, it is time to look at renewing. Mortgage rules are tightening and interest rates are going up as soon as the Bank of Canada feels Canadians are confident and the economy is secure. If you want to apply for a early renewal or are looking for a pre approval so that you can go house hunting , click here . Approvals are quick and easy when you use David Cooke as your Calgary mortgage broker.