For homeowners in Vancouver, BC, tapping into the equity built within your home can be a strategic way to meet financial goals, manage debt, or fund major projects. The big question is: Should you opt for a second mortgage or refinance your existing one? Making the right choice requires understanding the key differences between these options and how they align with your financial objectives. In this blog, we’ll break down everything you need to know, helping you streamline your financial journey while spotlighting GLM Mortgage Group as your go-to experts for tailored mortgage solutions.

What’s the Difference Between Second Mortgages vs. Refinancing?

When homeowners need extra funds, they typically explore either taking out a second mortgage or refinancing their existing mortgage. Here’s a breakdown of how they differ:

• Second Mortgage: A second mortgage allows you to borrow against your home’s equity without altering your original mortgage. This option is ideal if you need funds for specific purposes like home renovations, debt consolidation, or large expenses. However, it does mean an additional monthly payment on top of your existing mortgage.
• Refinancing: Mortgage refinancing involves replacing your current mortgage with a new one that better suits your financial situation. This can help you secure a lower interest rate, extend your payment term, or consolidate debt into a single payment. Refinancing can be an effective way to improve cash flow, but it requires careful evaluation to ensure it aligns with your financial goals.

Choosing the Right Second Mortgage: HELOC vs. Home Equity Loan

Within the realm of second mortgages, you’ll encounter two popular options:

• Home Equity Line of Credit (HELOC): A HELOC functions like a credit card, offering you a revolving line of credit based on your home’s equity. It’s a flexible solution for ongoing expenses, allowing you to borrow as needed and only pay interest on the amount you use.
• Home Equity Loan: A home equity loan provides a one-time lump sum payment, perfect for large-scale projects or debt consolidation. Unlike a HELOC, the funds are fixed and can’t be replenished once used.

Both options have their pros and cons, and your choice will depend on your unique financial goals, the amount of equity in your home, and your long-term plans.

Key Factors to Consider When Choosing Between Second Mortgage vs. Refinancing

When determining whether a second mortgage or refinancing is right for you, several factors come into play:

1. Current Interest Rates: If interest rates have dropped significantly since you first took out your mortgage, refinancing could help you secure a lower rate and reduce your monthly payments. However, if rates have stayed the same or risen, a second mortgage might be more cost-effective.
2. Your Financial Goals: Are you looking for a lump sum to cover a one-time expense, or do you need ongoing access to funds? If you need flexibility, a HELOC may be the better option. If you want to consolidate debt into one manageable payment, refinancing might be the way to go.
3. Available Equity: The amount of equity in your home will determine how much you can borrow, whether you opt for a second mortgage or refinance. Keep in mind that taking on more debt requires careful budgeting and planning to ensure you can manage the payments.
4. Cost Considerations: Refinancing usually involves fees like appraisal costs, legal fees, and possible penalties for breaking your existing mortgage term. On the other hand, second mortgages typically come with higher interest rates compared to your primary mortgage. Weigh these costs carefully when making your decision.

Streamlining Your Financial Journey with GLM Mortgage Group

At GLM Mortgage Group, we understand that navigating the complexities of second mortgages or refinancing in Vancouver, BC, can be overwhelming. From choosing the right neighborhood to budgeting for closing costs, each financial step requires careful planning. Our team specializes in tailoring solutions that align with your unique needs, whether that’s a second mortgage, refinancing, or first-time homebuyer programs.

We’ve emphasized the importance of personalized financial planning in previous discussions, whether you’re weighing the benefits of renting vs. buying or understanding the tax implications of rental properties. In every scenario, the focus is on empowering you with the right tools and knowledge to achieve financial security and growth.

Why Work with GLM Mortgage Group?

When navigating the complexities of second mortgages or refinancing in Vancouver, BC, having a reliable mortgage broker by your side makes all the difference. GLM Mortgage Group is dedicated to simplifying your financial journey, ensuring you make informed decisions every step of the way. Whether you’re exploring first-time homebuyer programs, budgeting for closing costs, or understanding mortgage default insurance, our expert team offers personalized solutions tailored to your needs.

At GLM Mortgage Group, we don’t just provide mortgages – we offer a clear path to financial empowerment. Our comprehensive approach includes:

• Expert guidance on second mortgages vs. refinancing
• Personalized financial strategies that align with your goals
• Simplified mortgage processes tailored to Vancouver homeowners
• Ongoing support and financial advice for all stages of homeownership

Take Control of Your Financial Future Today

Your home is way more than just a place to live – it’s a powerful financial tool. Whether you’re looking to unlock equity, manage debt, or invest in home improvements, GLM Mortgage Group is here to help you navigate your options with confidence. Contact us today to learn how we can guide you through second mortgages, refinancing, and beyond.

By optimizing your search terms and working with GLM Mortgage Group, you’ll gain the financial flexibility and peace of mind needed to achieve your goals. Don’t wait – take the next step toward financial freedom today!

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A refinance is an important part of the mortgage process. You will hear us say it a lot and you will likely see many more blogs about it in the future. 

In simple terms, a mortgage refinance is a new mortgage on your home. It involves paying out your existing mortgage, with a new mortgage. This new mortgage can be with your existing lender, as a no penalty, no break, ‘increase and blend’ with the existing balance. Or the mortgage can be totally moved to a different lender. 

There are many reasons why it could be a good idea to apply for mortgage refinancing, but below is a list of very common reasons:

• You are planning to renovate your house
• You are thinking about buying a rental or vacation property
• You want to pay for your child’s education fund
• You are thinking about entering a new business venture, but do not have the capital to proceed.
• Refinancing your home is a strategy to consolidate all your debts
• Interest rates have dropped to the point that refinancing your home can lower your borrowing costs. 

When you are restarting your mortgage, you will have some options:

Fixed-rate mortgage: You will pay the same monthly payments and interest rate for the duration of the mortgage term.

Variable-rate mortgage: Your monthly payments and the interest rate of your mortgage will fluctuate depending on market conditions.

Hybrid or combined rate mortgage: Terms may include fixed and adjustable rates.

As we discussed recently in the FAQs about home refinancing, Mortgage refinancing may offer lower interest rates but entering into this type of agreement is ONLY beneficial or advantageous to the borrower under certain circumstances. Therefore, you must do some research about the current value of your property as well as what the market rates in your region are. If the present situation is close to ideal and the projected state of the market in the foreseeable future is relatively stable, then it’s the right time to apply for a loan. 

Mortgage Refinance Example:

1. Let’s assume your home is worth $1,000,000.
2. 80% of the value of $1,000,000 is $800,000 – so this $800,000 is the maximum amount of mortgage we can usually put on the home. But you could certainly go for less.
3. Let’s assume the current balance owing on your mortgage is $300,000.
4. We subtract the amount of the EXISTING mortgage ($300,000) from the NEW mortgage (in this case the $800,000 maximum): $800,000 – $300,000 = $500,000.
5. This $500,000 is the MAXIMUM amount we have to work with after your existing mortgage, in this example, has been paid off.
6. This $500,000 surplus can be used however you’d like:  If there is $50,000 in debt, this could be paid out at the lower refi rate, and you’d still have $450,000 leftover. You could renovate your home, invest, pay for education or pretty much anything else.

The numbers used above are for example purposes only, and are very general in nature. Again, you certainly would NOT need to refinance the maximum 80% amount of the value of the home, if this much new mortgage is not required. If no additional equity is needed, you may just want your existing mortgage but at a lower rate – which is called an early renewal.

Lastly, it is important to understand that there is a penalty to break the existing mortgage and refinance into a new mortgage. The penalty will be either 3 Months Interest Cost (if you have a variable rate) or an Interest Rate Differential (if you have a fixed rate). It’s always best to reach out to your current lender to confirm this penalty and factor that into the refinance calculations to assess its worthiness.

We recommend reaching out to us if you have any additional questions on refinancing. Above we listed the most common reasons to apply for a mortgage refinance, but there are other reasons on top of that. 

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Rent to Own Mortgage

A Rent to Own contract could be the answer for someone who is renting but is also having a hard time getting their down payment together. Rent to Own contracts usually are between 1 and 5 years long and can give the client the time they need to implement strategies on increasing their down payment or even improving their credit.  As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding Rent to Own Mortgages.

In the Lower Mainland, Rent to Own is becoming more popular as housing prices are increasing, and renting seems inevitable. In fact, there are properties that are being built with Rent to Own financing in mind.

Initially, the contract is signed just between the renter (the buyer) and the Landlord (the seller) that states an agreed price, length of time of Rent to Own, and market rent (typical rent of a similar property) with the excess going toward down payment (usually $200 – $400/month). The lender is not involved yet.

For example, market rent for your property goes for around $1000.00. You agree to pay the Landlord $1400.00/month. The extra $400/month goes into an account that the Landlord has in place for you for the down payment. This is a great example of  a Rent to Own situation.

Regardless of the lender, the Landlord must keep pristine records of the extra money coming in and can show the history of any excess deposit. When the Rent to Own is registered on title, there will be a clear indication as to how much of the monthly payments are directed toward the deposit.

The client will want to work with a team of property purchase professionals that will strategize Action Steps to make a seamless Rent to Own experience. The client`s team would be:

1. MORTGAGE PROFESSIONAL

• Get pre-approved! In the pre-approval process, the Mortgage Professional will be able to advise on improving credit or the need to increase employment income if need be.
• As well, the Mortgage Professional understands lender policies and guidelines for Rent to Own contracts and will be able to advise on how to properly set up the Rent to Own.

2. SOLICITOR/LAWYER

• Make sure that your lawyer is familiar with Rent to Own contracts and that they work closely with the Mortgage Professional who knows what the lender is going to expect. This relationship is very important and one that should not be overlooked.

The down payment continues to grow over the life of the Rent to Own contract. At any time, you can add lump payments to the down payment, simply by giving the Landlord a bigger rent check. Keep in mind, the Rent to Own contract could stipulate that the down payment is non-refundable. Make sure you read the fine print and work closely with your mortgage professional and lawyer so that you clearly understand the terms of your Rent to Own contract.

The bank does not get involved until the time the renter (the buyer) makes an offer to purchase to the Landlord (the seller). The person paying for the rent to own does not have to qualify for a mortgage at this point because the Landlord continues to carry the mortgage on the property.

Rent to Own Properties can also be facilitated through a company such as a condominium developer. For example, the developer could offer a Rent to Own contract when entering a rental lease with an owner-occupied property that the client wants to rent.

The client may be charged a contract fee upfront (for example $10,000) to enter the Rent to Own contract. At times all or a portion of this contract fee can be used toward the down payment pending on what has been negotiated within the Rent to Own contract.

Over the course of the Rent to Own some of the obstacles to financing you will consider are:

• How to improve your credit rating
• Consider applying for an RRSP loan to further establish credit and take advantage of tax benefits
• Consider refinancing any outstanding credit
• Consider job changes to increase employment income
• Consider other sources to increase down payment

Rent To Own contracts are more than just paying rent to the Landlord and applying the rent toward the purchase of the property. There are details that you need to know when entering into a Rent To Own Contract. If you need help setting up a Rent to Own contract or for more information regarding this topic please reach out.

GLM Mortgage | Dominion Lending Centres is here to walk your mortgage planning path with you. Give us a call at 604-259-1486 and find out what your mortgage options are!

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Bridge Financing

Bridge Financing, also commonly referred to as a “Bridge Loan”, is a way to help literally bridge the gap between closing on your current house and your new place. This product allows you to carry the mortgage on two properties for a specified amount of time and for typically a maximum of 90 days. As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding Bridge Financing.

How does Bridge financing work? These short-term loan products use your current home’s equity to cover some of the costs of your new home (for example, could be used for a down payment.) That way, you don’t have to miss out on your dream home while waiting on the cash from the sale of your current house.

What is the cost of Bridge Financing? You will be charged an interest rate on the amount of funds you are borrowing. This will be based on the lender’s prime rate and will vary. You can expect to pay prime plus 2-5%. You can also plan to pay an administrative fee. This will vary pending on the lender and can range from $200-$695.

Similar to most other financial decisions, there will always be advantages and disadvantages for Bridge financing. Here are a few things you should be aware of:

One of the most popular advantages of acquiring Bridge financing is financial flexibility. With this product, you will be able to use the equity you’ve built in your current home to secure the new purchase of your dream home. Since you will be able to access those funds via equity, you won’t have to stress about the sale closing of your current home before you close on your new home.

Although most terms for Bridge financing products are short, the interest rate will be similar to open rate mortgages, which are often higher than the interest rate you may have locked in with your current mortgage. If for some reason your sale agreement falls through on your current house, you may have to make up for the payments until a new sale is finalized.

To qualify for Bridge financing you will need:

• Have a current mortgage in good standing with equity
• A copy of the Sale Agreement for the home you’re selling
• A copy of the Purchase Agreement for the home you’re buying
• Valid pre-approval (with document review) with the lender of your choice

Like your home buying situation, your home financing needs are unique. Bridge financing may be the right solution for you if you would like the following…

• You’ve found your dream property and do not want to wait on submitting your offer
• You can’t afford a down payment without the money from your current home’s equity
• You want time between closing dates

If you’re a homeowner aged 55 and over, rather than taking out a regular Bridge loan, you could take out a CHIP Open Mortgage with HomeEquity Bank. The CHIP Open Mortgage can assist you in purchasing a new home when your existing property has not yet been sold.

Let’s have a look at this case study together…

• Meet the Ellis family, a couple in their early 70s who live in the Greater Vancouver Area in a home worth $1.3 million. Looking to downsize, they’re keeping an eagle eye on available properties on Vancouver Island, and finally find their dream home at a price tag of $550,000. Afraid to lose it, they act quickly to purchase the new place before selling their existing home — but don’t qualify for a large enough traditional loan, putting the dream they have for their future in jeopardy.
• This product is a CHIP Open Mortgage (A Reverse Mortgage with no pre-payment penalties) The couple was able to access $600,000, allowing them to purchase their new place outright and cover the costs of their move. With no repayments, the couple were able to properly prepare their home for sale and repaid the CHIP Open in full once the house sold.

Please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice. At GLM Mortgage Group, we are with our clients for the entire journey. From the beginning, we can identify client needs, any possible roadblocks, and give a variety of tailored solutions.

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Our Discovery Call

A Discovery Call is our first touchpoint with your client. We make a quick 5–10-minute phone call to simply connect with the client and gather some basic information regarding a mortgage pre-approval. After we ask the client all necessary intake questions, we will either send them a link to our online application form OR create and give them a custom game plan for the future.

Once your client completes the online application, we will have a more thorough knowledge of the client, giving us access to the client’s Credit Bureau, etc… We will use these details to create a custom plan for your client.

A few questions that we will always ask during a Discovery Call are:

• Employment
  • Are they an employee or self-employed?
  • What is their annual income?
  • Do they receive any additional income?
• Property
  • What price range suits their needs?
  • Are they currently working with a realtor?
  • What type of property appeals to them?
• Credit
  • What is their credit like?
  • Have they ever had issues (past or present) with collections/bankruptcies?
  • Do you have any car/student loans?
• Down Payment
  • Do they have any funds saved for the down payment? How much?
  • Where did this down payment come from? How long have they had it?
  • Are they a First Time Home Buyer?

Our online application can be completed from your mobile phone, laptop, or tablet. Your client’s application stays “live” for 36 hours. To put it simply, this means that the application can be re-opened and closed at the client’s convenience to ensure all information is filled out in the given period. It’s not uncommon for us to send a reminder to your client to finish the app before the 36-hour deadline ends or reach out to us for any help.

Through every step of our Discovery Call process, we update both the realtors and clients. We provide the realtor a quick summary email giving our professional opinions on what we think their client can afford after we connect on the phone. We also update the realtor when the pre-approval is completed. As for the clients, they are receiving multiple calls/emails from us along the way keeping them up to speed. Our clients can feel at ease knowing that WE are on top of things taking care of them!

During our Discovery Call, when we are asking our intake questions, we can usually gather a rough idea of their projected purchase price with their liabilities accounted for.

For example:

• Every $20,000 of income earns approximately $100,000 borrowing power
• Every $13,000 of credit card/ line of credit debt subtracts approximately $100,000
• Every $400 monthly car payment subtracts approximately $100,000 borrowing power

Let’s review this case study…

Joe Smith earns $80,000 per year. His wife Sarah earns $60,000 per year. The total household income is $140,000 annually. This income is equal to $700,000 borrowing power. The couple has one car payment at $400 a month. They have about $6,000 in credit card debt collectively.

These liabilities decrease the couple’s borrowing power by $150,000, leaving them able to borrow $550,000. Joe and Sarah do have $75,000 in savings. We add their savings to their purchase power, and they are now able to look for properties in the price range of $625,000. Discovery call.

If having us reach out to YOUR clients for a discovery call is something you may be interested in, please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice. At GLM Mortgage Group, we are with our clients for the entire journey. Fr

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First Time Home Buyer’s Program

The First Time Home Buyer’s Program otherwise referred to as the FTHBI is a Canadian Government program, which contributes up to 10% to the down payment for First Time Home Buyers. This is an effort to support borrowers in their first home purchase to reduce their monthly mortgage payments, without contributing to their financial burdens. This program is a “shared equity” mortgage with the government of Canada, where you put 5% down on an existing home and they match your down payment and put another 5% down for you without any out-of-pocket or upfront costs.  If you are looking at purchasing a newly constructed home, there are options for down payments from 5-10%.

As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding the First Time Home Buyer’s Program.

To be eligible for this government incentive program you must:

• Be a first-time homebuyer
  • Exception if you have been renting and NOT owned a property for the last 4 years
• Total household income must be under $120,000
• You must have the minimum 5% down payment from your own resources
  • This means that the 5% down payment cannot be from a line of credit, loan, or gift.

Some limitations to the program that are non-negotiable are:

• Must be owner-occupied (no rentals)
• Property must be in Canada
• Must be owner-occupied year-round
• Must be an insured mortgage (less than 20% down payment)
• Mortgage can be maximum four times your annual income (or the maximum amount of $480,000 plus down payment)
• Must pay back the “shared-equity” at the time of property sale or within 25 years (whichever comes first)

This program is a popular option in BC with property values coming in at an all-time high and mortgage rates at an all-time low. Although this can be helpful in reducing your monthly mortgage payments, it does come with a few catches. Since the government of Canada will be matching your 5% down payment, they now own 5% equity in YOUR home.

In summary, this means that when you sell your house (or after 25 years) you will be paying 5% of that equity back to the government. This can feel unfair to some people as the value in their home increases, so does the 5% “shared home equity”. If your property is worth more at 25 years (or sells for more than the time of purchase) the “shared home equity” also increases, meaning they could potentially require you to pay back MORE than the original amount they lent to you at the time of purchase.

Let’s have a look at this case study:

• Joe Smith is looking to make his first-time home purchase with his annual income of $85,000. The property he is looking at has a purchase price of $325,000, with his 5% down payment he can put $16,250 down. That brings his requested mortgage amount to $308,750 leaving him with monthly payments of $1,405.
• If Joe Smith decided to use the FTHBI with his annual income of $85,000 to put down $16,250, the government of Canada would chip in the same 5% of $16,250 and now Joe has a down payment of $32,500. Joe’s requested mortgage amount would then be $292,500 leaving him with monthly payments of $1,331.
• If Joe Smith utilized this FTHBI program, he would be saving $22,200 over the life of his mortgage.

FTHBI is a federal government initiative to help first-time homebuyers into the housing market. It is important that you understand the ins and outs of this product and work with a professional Mortgage Broker. Your Mortgage Broker will be able to look at your individual situation and walk you through your options and advise if this product would be of benefit to you.

If you are interested in an First Time Home Buyer’s Program, please click this link, and feel free to use the free tools to help answer any questions you may have.

https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive

Please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation for First Time Home Buyer’s Program and give you the best advice.

At GLM Mortgage Group, we are with our clients for the entire journey. From the beginning, we can identify client needs, any possible roadblocks, and give a variety of tailored solutions. If any, please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice.. 

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How Mortgage Rates Work

The topic of how Mortgage Rates work is a long, complicated series of moving puzzle pieces that work together perfectly. Today we are going to break it down as best we can. During the process of taking out your first mortgage, you will learn that the interest rate is the “payable fee” your lender has calculated for you in exchange for borrowing their money.

As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding How Mortgage Rates Work.

When applying for a mortgage, the lender you decide to choose may offer various interest rate options. Mortgage rates are constantly changing due to the Canadian economy (Fixed rates) and Global economy (Variable rates). Each time you renew your mortgage term, you re-negotiate your mortgage interest rate… Simply, this means at the time of term renewal, your new mortgage interest rate may cause your monthly payments to increase or decrease.

The lender of your choice will set the interest rate for your mortgage.

Here are a few of the factors that they use to help determine your cost:

• The length of your mortgage term (higher length in the term usually have higher rates)
• Their current Prime and Posted Interest Rate
• If you qualify for a discounted rate
• Type of interest you choose (fixed, variable, or combination)
• Your credit history
• If you’re Self Employed/ Employee

For example, with credit, lenders will assess your bureau report to decide if they will lend you money. They will also use this document to determine how much interest they will charge on the money you will agree to borrow. The better your credit is, the easier it will be for you to get a mortgage. Even if you have poor or little to no credit history, there will always be options like B lenders and private lenders depending on your specific file details.

On the topic of Mortgage Rates, you will very commonly hear three words: Prime, Posted, and Discounted Rates. These are all different. To put it simply, a Prime Rate is the rate the lenders use to determine their posted interest rate. A Posted Rate is the interest rate that the lenders advertise for their products (these can change regularly).

A Discounted Rate is lower than the lender’s Posted Rates. Along with those keywords, there are two more words you will need to know about. These important terms are called Fixed and Variable Interest Rates. A Fixed interest rate will stay the same for the length of your term.

Fixed Mortgage Rates will work the best for you if you need the following:

• Your payments stay the same over the term of your mortgage
• You want to know in advance how much principal you’ll pay by the end of the term
• Keep your interest rate the same because you think market interest rates will go up

A Variable Mortgage Rate can increase and decrease during the length of your term. This means that when you choose a Variable Rate Mortgage, your interest rate may be lower than if you selected a Fixed rate.

This type of Mortgage Rates may be best for you if you can accommodate the following:

• Your interest rate changing
• Your monthly mortgage payments potentially increasing or decreasing

In a Variable Rate Mortgage (commonly referred to as AVRM) the interest rate can go up, meaning more of your monthly payment goes towards the interest and less to the principal. If rates go down, more of your payment goes to the principal, which means you can pay the mortgage off faster.

The best advice on Mortgage Rates is the advice that comes from your Mortgage Broker because they can analyze your needs and start underwriting your information. With their expert advice, together you can create a perfectly “tailored-to-you” plan.

If any of the topics mentioned on Mortgage Rates sound like something you may be interested in, please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice. At GLM Mortgage Group, we are with our clients for the entire journey. From the beginning, we can identify client needs, any possible roadblocks, and give a variety of tailored solutions.

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Refinancing Your Home Investment in BC

Refinancing Your Home Investment in BC means that you are simply replacing your existing mortgage with a new mortgage on different terms. To find out if you qualify, your lender will calculate your “loan to value” ratio by dividing the balance owing on your mortgage and any other debts secured by your property into the current value of your property. If your “loan to value” ratio is 80% or under, you will most likely be approved. Similar to acquiring your first mortgage, the lender will also request to look at your monthly income and debts by requesting specific documents from you. As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with your refinancing journey.

A few of the most common documents requested by lenders for Refinancing Your Home Investment are:

• Credit Bureau
• T4 Slips (2 years)
• Notice of Assessment (2 years, showing ZERO balance owing)
• Job Letter
• Most Recent Paystub
• Current Mortgage Statement (showing current mortgage balance)
• Recent Property Tax Bill

Across Canada, property values have jumped 34 percent since March of 2020. In B.C., locations outside of Vancouver saw the most increase, such as Chilliwack where assessments increased 36.5 percent in November, compared with 16 percent in Vancouver. With interest rates being at the “all-time low” and BC Home Assessments coming in at an “all-time high” it’s an interesting time to be on the market. This is where a Refinancing product can help you and your existing mortgage investment best. Refinancing is needed whenever you need or want to make changes to your mortgage agreement, whether your mortgage is up for renewal or not.

Some commonly made changes that require Refinancing Your Home Investment are:

• Increasing your mortgage amount to borrow money
• Changing your rate before the end of your term
• Changing the amortization period

There are several different solutions/steps to Refinancing your mortgage. We have provided two below that include breaking your current mortgage contract early and taking out a home equity line of credit, with your current lender. Each solution /step comes with unique benefits and features.

Breaking your Existing Mortgage Contract early

• This option is most common when you are looking to get a lower interest rate or access the equity in your home. To summarize, you would be replacing your existing mortgage with a new mortgage on different terms, with a new lender.

Add a Home Equity Line of Credit (HELOC)

• This type of product is most common when you are looking to access the equity in your home investment with your current lender and/or a new lender. A HELOC will work in a way that is like a credit card, but because this loan is secured to your home, interest rates are much lower.

There are many benefits that come with Refinancing Your Home Investment. These benefits can allow you to easily do things you previously weren’t able to do… Such as:

• Paying for a home renovation,
• Consolidating your current debts,
• Re-investing by purchasing a rental property
• Freeing up cashflow for various reasons such as paying for your children’s schooling/activities, medical expenses, any unexpected large expenses, etc.

To summarize the purpose and benefit of a Refinancing Your Home Investment…

• Potential to get a lower Interest Rate
• Potential to Consolidate Debt and Reduce your Monthly Debt Payments
• Allows you to switch to a Fixed or Variable Rate
• Accessing the Equity in your Home for various reasons such as home renovations and/or future reinvestment such as purchasing an investment property

In summary, you will need to make sure you factor in all the fees and costs before you take the next step in your Refinancing Your Home Investment journey. You will need to pay appraisal costs, legal fees, and possible pre-payment charges or penalties if you’re breaking your current mortgage early.

If any of the Refinancing Your Home Investment sounds like something you may be interested in, please reach out and one of our Senior Broker Partners would be more than happy to assess your unique situation and give you the best advice. At GLM Mortgage Group, we are with our clients for the entire journey. From the beginning, we can identify client needs, any possible roadblocks, and give a variety of tailored solutions.

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Increasing Your Purchase Power

Most individuals that we connect with to discuss a Mortgage Pre-Approval also want to know how we can go about Increasing Your Purchase Power. More often than not, those individuals could afford to make mortgage payments. Usually, they already pay monthly rent in the same amount as a mortgage, or perhaps even more! As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with your Purchasing journey.

Part of our process as Mortgage Brokers at GLM Mortgage Group is to connect with new clients with a Discovery Call, which involves key questions on important factors of a Mortgage Approval. We spend 10 minutes gathering information on income, credit, and down payment and with that, can provide a possible purchase price, and a piece of mind to shop within one’s budget.

Sometimes at the end of the conversation, we find that an individual may not be able to purchase within the price range they had planned to and brings us back to the drawing board to discuss options and a gameplan for the Increasing Your Purchase Power in the future.

Now, the reason that someone may not qualify for a mortgage that they could afford payments on, is due to the Stress Test, which newest rules were released in June 2021 and decreased borrowing power by 25%. To pass the mortgage Stress Test, you need to qualify at the contract mortgage rate plus 2% or the benchmark rate of 5.25%, whichever is higher. The purpose of the Stress Test is to ensure that should interest rates rise – a borrower will still be able to afford their mortgage payment.

This is a tactic by the Bank of Canada to ensure that consumers can withstand rising interest rates, as well as tackle household debt issues in Canada by preventing consumers from getting into further debt – but it greatly affects your purchase power, as you will qualify for less.

There are a few options to consider, that can help Increasing Your Purchase Power, potentially bypass the Stress Test and qualify for the purchase you are hoping to make.

First, down payment – if you have 20% down payment, this can provide various options that will allow you bypass the Stress Test, which will increase purchase power. Local credit unions are provincially regulated and therefore can allow you to bypass the Stress Test, although this comes with a slight rate premium. Secondly, having a 20% down payment can also make Alternative Lending an option – but be sure you understand this, as it may be easier to qualify, but these interest rates will be higher and could cost you more in the long run.

Nonetheless, with a 20% down payment – there are two viable options to Increasing Your Purchase Power in the Pre-Approval stage.

Further advice that we share with new clients, when we find they may not qualify for what they hoped is bringing a Co-signor to the mortgage. This could be a friend or family member that will be on the mortgage with you, and on the title of the property as little as 1%. We would be able to factor their income, assets, and debts into the equation to increase the purchase power. The primary borrower is still responsible for making mortgage payments, but the co-signor is there as a back up, and is required to make payments should the primary borrower default.

Another solution to Increasing Your Purchase Power is to increase the down payment.

This could mean putting your plans to purchase on hold for another 12 months while you continue to save, perhaps withdrawing RRSP or other Investments or even a gift from a family member may be possible. Given the current market conditions, we are seeing family members offer financial aid to their kids and grandkids to make home ownership possible for them.

Lastly, to help with Increasing Your Purchase Power, you can INcrease household income and DEcrease household debt. Although these options have a positive effect on purchase power, it takes time to see these effects take place. Perhaps obtaining a second part time job is possible, to increase income – but keep in mind, lenders will want to see this sustained for 2 years to consider the income. Also, decreasing debt will increase purchase power significantly.

For every $14,000 of debt that we carry, or $400/month payment, our borrowing power is decreased by $100,000. If you have a significant down payment, it’s always more advantageous for qualifying, to use a portion to pay down debts. It’s important to understand tips like this as they will contribute to Increasing Your Purchase Power.

At GLM Mortgage Group, we are with our clients for the entire journey. From the Discovery Call, we can identify client needs, any possible roadblocks, and a variety of solutions. Our brokers know how to Increasing Your Purchase Power and know how to assess your unique situation, giving the right advice so you can best move forward in your plans to purchase a home.

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Personalities of Your Mortgage

Asking the right questions and understanding the Personalities of Your Mortgage is an important part of the mortgage process as it will allow you to understand which mortgage product is right for you! An important aspect of a mortgage is its flexibility and terms, such as how the penalty is calculated if you break your mortgage. As one of the Top 3 Rated Mortgage Brokers in Vancouver, we would be more than happy to assist you with understanding every personality of your mortgage.

Keep in mind that statistically, 70% (7 out of 10 people) of mortgages are broken within the first 3 years. This could be due to a variety of reasons, including life events: matrimonial breakdown, job transfer, downsizing, consolidation of consumer debts, or refinancing to take advantage of lower interest rates. If a mortgage is broken before the contract term (usually 5 years) there will be a penalty that you will need to pay. This is yet another reason as to why you should get to know the Personalities of Your Mortgage.

A variable-rate mortgage (one that fluctuates with the bank of Canada) depending on the lender, usually incurs a 3-month interest penalty. A fixed-rate mortgage (a set rate that is usually higher than a variable rate mortgage) incurs a penalty of the interest accumulated for the remainder of the term. For example, if you decide to sell your house in year 2 of the 5-year term, you will have to pay 3 years of interest to get out of the mortgage – which may be very costly! Depending on the Lender, you may not be able to break your mortgage at all! The terms surrounding the penalty are crucial to know before you commit to a specific mortgage.

Personalities of Your Mortgage- Prepayment privileges:

This means how much extra you can put toward your mortgage principal, both monthly and annually. Make sure to consider the minimum and maximum payment allowed. Depending on the lender, the payment amount might have specific parameters. In other words, the payment amount might be specified such as a minimum payment of $1000.00 monthly, or a maximum payment of 20% annually. If there is no flexibility in the mortgage product you may not be able to make any extra payments.

Personalities of Your Mortgage- Portable Mortgage:

As a family’s needs grow one may need to sell their existing property to buy another and it may be a good idea to port the existing mortgage to the new property. If portability is an option, you need to make sure you understand the restrictions tied to the portability of the mortgage product you are looking at. Depending on the lender there could be a time restriction such as having to sell your present home AND buy your new home within 30 days. Never be afraid to reach out and ask questions regarding the Personalities of Your Mortgage.

Personalities of Your Mortgage- Blend & Extend:

Another important question is that if you can port your mortgage, can you add further money to purchase your next property? This is known as BLEND AND EXTEND. This takes your present mortgage and its rate and adds new funds to the existing mortgage with the current rates to purchase the new home. It is a little more complicated but certainly can be done. The challenge with BLEND AND EXTEND is that your mortgage renewal dates can land on significantly different timelines and when it comes to selling and ending your mortgage there could be significant penalties to break if it is not set up wisely.

There are many Personalities of Your Mortgage, an important one is if it can be assumed which can make a property more desirable to a buyer. If interest rates have increased since you’ve bought the property it can be very advantageous for the buyer to purchase your property with an assumable mortgage. An assumable mortgage is transferred with no change in its terms. The buyer assumes all responsibility for repayment.

But be careful! The original lender needs to agree to this transfer and the buyer may be charged an assumption fee.

Now, to simplify a mortgage term you hear often, let’s talk about Amortization. This means the length of the mortgage if you were to pay it off with the present terms of the current mortgage contract. For instance, if you have a mortgage that is a 5-year term at a specific interest rate, the amortization is the amount of time it would take to pay off the mortgage using the specific payment outlined within the current contract.

If you have less than 20% down payment (or equity) your amortization period is legislated to 25 years. There is no amortization flexibility if you have less than 20% down payment (or equity). If you have more than 20% down payment (or equity) your amortization period can be extended to 30 years. The longer you amortize your mortgage, the smaller your payments are.

You will take that much longer to pay off your mortgage if you amortize for a longer period.

It is VERY important to get clear answers on what the terms of your mortgage are. It makes all the difference in future planning and can impact you in very significant ways. Of course, the rate is important. You don’t want to be paying more than you should be. But if the rate is too low, beware! If it is too good to be true, it probably is! There are likely some hidden costs that you don’t know about. Whether it is a penalty to break, restrictions on porting or assumptions, or even an administrative cost. Always ask questions and be sure to find out the “in’s and out’s“ and the Personalities of Your Mortgage.

At GLM Mortgage Group, we know what questions to ask. We have relationships with the lenders that you know about and the lenders you don’t. We would be pleased to educate you on the financial options available to you regarding the Personalities of Your Mortgage.  Call us anytime for a FREE consultation on the mortgage products available to you.

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