Mortgage Rate Hype

As you have seen in the media, BMO is offering a 5 year fixed rate of 2.99%. This mortgage is a no-frills mortgage product which means they have taken away all of the flexibility of the mortgage to offer you this low rate. This mortgage only allows you 10% pre-payment options (when the standard is 20%) and you cannot pay off this mortgage unless through a bona fide sale.

What the hype should be about is that Mortgage Brokers have many great lenders offering lower rates than 2.99% for 5 years with all of the normal mortgage frills. With these mortgages some of the features include full pre-payment options, portability & it's assumable.

It's worth it to check out your options and don't let the media lead you astray. You may think taking a no-frill product won't affect you, but a lot can change in 5 years so why not take a great rate and have all the mortgage features available to you if you need them.

Purchase Plus Improvements

Can’t find your dream home, buy a house and make it your dream home! Most people don’t realize that you can get additional funds with your mortgage to do improvements.

Purchase plus improvements is a great way to take advantage of low rates and make your house into your dream home. Once you put an offer on a house, you will need to get quotes based on the improvements you would like to complete. It’s important to only pick improvements you know you will actually have completed. We then send the quotes to the lender and they will include the extra funds into your mortgage proceeds. When the home purchase completes the mortgage funds will be advanced however the lawyer will hold back the improvement money. The reason for this is the lender wants to be sure that you complete the renovations and not just take a trip to Hawaii instead. So you will need to hire a contractor who is okay with not being paid until everything is complete or have some funds to pay for everything (get some points on your credit cards), once the improvements are complete the lawyer will then release the funds to you.

Here are a few points to keep in mind when doing purchase plus improvements:

• If going through Genworth as your mortgage insurer the max improvements they will allow is 20% of the purchase price. With CMHC it’s 10% of the purchase price.
• Appliances do not count as improvements to the property.
• Every lender has their own guidelines when it comes to doing purchase plus improvements. Some require an appraisal before and after the improvements are made, some require receipts once complete and others require an appraiser to verify the work is complete.
• Some lenders set a time frame for how soon you have to complete the improvements.
• You will receive the best available rate offered by the lender. Your rate does not get increased because you are borrowing extra funds.

If you would like more information on purchase plus improvements please feel free to call either of us anytime!