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Opportunity Arises to go from Renter to Homeowner – Chilliwack BC

renter to homeowner - Chilliwack Mortgage Broker

 

As a Chilliwack mortgage broker, we tend to experience similar seasonal changes as our local real estate partners do, with some exceptions. Purchase season will often slow down around Christmas, picking back up in February and continue snowballing until it reaches it’s peak in the early summer weeks; however, this year appears to be drastically different than previous years. Rather than slowing down in mid July – mid August (often prime vacation time), the pace of home buying/selling doesn’t seem to be slowing down anytime soon. Therefore, us being Chilliwack mortgage brokers, we took it upon ourselves to do a little digging and come up with some sort of conclusion as to why this may be.

 

3     things became clear to us:

1)      Home values have decreased as much as 10% since 2018 and as of recent, this decrease in home value has reached as much as 19.49%.

2)      Interest rates have significantly dropped compared to last year as much as 0.90%

3)      The Bank of Canada recently lowered its stress test rate from 5.34% – 5.19%

To some, the change in Chilliwack’s real estate might not seem to be hugely different, to others this change can take someone from a full-time renter to a first-time homeowner.

Below is a comparison to show Chilliwacks new interest rates/housing costs, and how these changes have increased purchasing power for many Canadians.

 

August 2018

Mortgage amount = $500,000

Interest rate (5 year fixed) = 3.79%

Amortization = 30 years

Monthly mortgage payment = $2318.53

 

August 2019

Mortgage amount = $450,000

Interest rate (5 year fixed) = 2.89%

Amortization = 30 years

Monthly mortgage payment = $1866.48

 

That is a $452.05 difference in monthly mortgage payments!

 

 

Government Introduces a Real Blunder of a Program for Home Buyers’

Here are my thoughts regarding the government’s offer of an interest-free loan in exchange for a percentage of ownership in your home.

On January 17, 2017 the BC liberals introduced something similar called the BC Home Partnership Program. The program offered to match home buyers’ down-payment costs with an interest-free loan for the first five years. When NDP took power back in March of 2018, they removed the program stating that,Home Buyers - Chilliwack Mortgage Broker

            “When the program was first introduced, it was anticipated it would provide 42,000 loans over a three-year period, however, as of January 31, 2018, there were fewer than 3,000 loans approved.”

While the program sounded advantageous and enticing, popularity was minimal simply due to an unachievable list of requirements and restrictions. These restrictions filtered several prospective buyers wanting to part-take in the program. In addition, the return was not equivalent when comparing to the hoops Canadian homebuyers needed to jump through. Furthermore, lenders reacted to the program by putting a repayment factor on the interest-free loan that hindered the initial benefit of not having to make payments for the first five years.

Moving forward, I predict that we will have even fewer loans approved as the number of insured mortgages in addition to the CMHC incentive, would be capped using a formula (4X your annual income up to a max of $480,000). In simpler terms, Fraser Valley home buyers making $60,000 a year, would qualify for a $240,000 purchase (that really doesn’t get you a whole lot).

We’re not yet certain as to how this will be implemented, but if there is a repayment factor attached to the loan, it will have very little impact on helping Canadians get into the housing market.

At this point I would not be surprised if there is further action taken by CMHC, allowing for 30-year amortizations for those that have less than 20% down-payment. I personally think this is a terrible idea, sure your monthly payment might be a few dollars less, but it ultimately extends the life of the loan and increases interest over time.

Should they proceed with the extended amortization strategy, I would expect it to take place closer to elections in an attempt to try and leverage themselves.

If the government is concerned about helping Canadians get into the housing market, they should consider lowering the stress test rate.

For more information on the 2019 Federal Budget, visit: https://www.theglobeandmail.com/politics/article-federal-budget-2019-highlights-10-things-you-need-to-know/

Do you qualify to buy a home? Give our team to find out 604.615.1315

5 Investments Myths You Should Know to Help Build Prosperity

Investments - Chilliwack Mortgage Broker
In January we were proud to introduce our new Wealth Management Division supported by the whole BRMC family. So as we go forward we are going to use our existing Abbotsford, Chilliwack and Mission Mortgage platform to also educate, motivate and create content to help you understand what a Financial Planner can do for you.

So without further delay here is some info quick retirement savings thoughts.

 

  • Myth 1- Paying high fees is okay if you get the performance right??

The average cost of owning a mutual fund is 3.17% per year!
Below is the impact of fees on fictitious ending account balance:
Tom: $100,000 growing at 7% (minus 3% in annual fees) = $324,340
Jerry: $100,000 growing at 7% (minus 2% in annual fees) = $432,194
Trent: $100,000 growing at 7% (minus 1% in annual fees) = $574,349
Same investment amount, same returns, and Trent has nearly twice as much money as his friend Tom.
By simply removing expensive mutual funds from your life and replacing them with low-cost index funds guided by a competent advisor, you will have made a major step in recouping up to 70% of your potential future nest egg.

 

  • Myth 2: What’s the point in saving $50 bucks a pay cheque??

Well although 50 dollars per pay period doesn’t seem like much, if you start those habits at a young age you will be surprised at what it does for you. If you start saving $50 dollars bi-weekly when you are 25 and assume a 7% return with 1% inflation this will leave you with $256,331 when you are 65.
Take into effect that you should and could start to increase your amounts you contribute as you get older and that is nothing to laugh at. But remember it’s never too late to start saving for retirement at any age, even if you are not 25 anymore. Today is the best day to get on track regardless of age.

 

  • Myth 3: Our returns? What you see is what you get

Average returns are like online dating profile photos. They paint a better portrait than the reality. When the mutual fund advertises a specific return, it’s never the return you actually earn. Why? Because the returns you see in the brochure are known as “Time Weighted Returns.” Sounds complicated, but it’s really not …
Time weighted returns assume that investors have ALL of their money in the fund the entire year and don’t take any withdrawals. But the reality is, we typically make contributions throughout the year
And if we contribute more during times of the year when the fund is performing well (a common theme we learned, as investors chase performance) and less during times when it’s not performing, we are going to have a much different return than what is advertised.

 

  • Myth 4- Your bank advisor has your best interest at heart.

As someone who worked for the banks for 7 years let me let you in on the inner workings of a branch. When you walk into an investment meeting the first thing the advisor will do is sit you down and ask you questions about risk tolerance, and then this program will spit out which fund you should invest in.
While the banks themselves have thousands of mutual funds at their disposal, they usually only offer you the 5 funds they want to push. These funds are often “fund of funds” and have many mutual funds within them. This leads to very high fees. The advisor will very seldom give you other options from this as it is outside their comfort level. As an investment advisor I want you to pay the least amount of fees while getting great return. The bank advisors just aren’t educated enough to provide the high level of advice you deserve.

 

  • Myth 5: Invest with us — we’ll beat the market.

When I hear other advisors bragging about this it makes me roll my eyes and lose interest almost immediately. If an advisor is bragging about beating the market check out the last 5 years or ten years to make sure. Maybe you found the one guy smarter then Warren Buffet. Maybe not though. From 1984 to 1998 — a full 15 years — only eight out of 200 fund managers beat the Vanguard 500 Index. While an advisor can provide calming presence and financial planning tools and guiding your asset mix to ensure your portfolio is customized to your needs, beating the market is unrealistic. Clients that work with an advisors typically make 2% more on their investments because of communication and risk strategies (buying when its down, selling when its high) , not by beating the market. If an advisor brags about this. Run.

By Referral Mortgage Consultants*

“Click, Call, Chat – Award Winning Brokers”

Dave 604 897 2741 Jordi 604 615 1312 www.ChilliwackMortgageBroker.com

www.AbbotsfordsMortgageBroker.com

 www.BRMC.ca

 www.PeaceOfficeMortgageBroker.com

Connect with us on!  BRMC Facebook

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We’re active on Facebook, Twitter, LinkedIn & YouTube. We really appreciate reviews! Good or Bad please let the world hear your voice! Connect with us for ongoing industry news items, contests & prizes.

*By Referral Mortgage Consultants – doing business as BRMC is: Verico Preferred Financing Inc / Verico Canadian 1st Mortgage Corp which have a co-brokering agreement and there is a common Mortgage relationship and are licensed with the Verico Dreyer Group. Mortgage ownership, that employees of both Mortgage companies may review, advise and help process the Mortgage files. That Verico Preferred Financing Inc & Verico Canadian 1st Mortgage Corp share the some expense and income from mortgages. Kim Langille Featured on thess site is an unlicensed mortgage assistant only, not a Mortgage Consultant. Jordi Browne featured on this site is the Mortgage Broker of record. “The Broker” is Jordi Browne. Jordi Browne also holds a Life Insurance License and represents Verico Canadian 1st Mortgage Corp. Dave Browne featured on this site has a Life Insurance License too but is an independent agent– Jordi and Dave Browne co-broker life insurance files and share expenses, all income retained by Verico Canadian 1st Mortgage Corp.

No Longer Your Parents’ Mortgage!

mortgage-broker

A need for a mortgage broker has never been greater then it is today. Lenders are no longer cookie cutter like they have been in the past.  Previously you would have a mortgage with very similar mortgage rules and terms with slight variances in rates.  Very easy to choose between.

Now the banks have flipped everything on its head and it is like comparing apples to screwdrivers (I would have said oranges but it is more confusing then just comparing two fruits)

Here is some recent changes that is making it more confusing for the public.

TD recently changed their prime rate from 2.70% to 2.85%.  That means all current variable rate clients received a .15% increase on their rates.  Changing a prime rate is not uncommon but this usually takes place when the Bank of Canada adjust its lending rate.  On top of that no other lenders have changed their prime rate?

They were nice enough to lower the discount they give off the prime rate to -.50%. That means clients get 2.35% for their variable rate (TD previously gave.35% off the 2.70% prime rate to give you a 2.35% variable rate)

Effectively they just increased all the rates to their loyal client base that took variables. I guess they are hoping the public has short term memories.

Royal Bank just increased their fixed rates.  Once again not uncommon!  But RBC did it differently this time.  They have two sets of rates.  A lower rate for people who take 25 year amortizations and a higher rate for people who take 30 year amortizations

These are just a few of the changes that have come through the industry over the last little bit on top of all the rule changes by the government.

Needless to say….call a mortgage broker before making any decisions. We would be more then happy to give you advice on what ever you have been told by the banks.

 

By Referral Mortgage Consultants*

“Click, Call, Chat – Award Winning Brokers”
Dave 604 897 2741 Jordi 604 615 1312 www.ChilliwackMortgageBroker.com

www.AbbotsfordsMortgageBroker.com

www.BRMC.ca

www.PeaceOfficeMortgageBroker.com

Connect with us on!  BRMC Facebook

BRMC Google review Chilliwack Office

BRMC Google review Abbotsford Office

BRMC Google review Mission Office

http://www.linkedin.com/company/2410358

https://twitter.com/brmcmortgages

http://www.youtube.com/user/BRMCmortgages

We’re active on Facebook, Twitter, LinkedIn & YouTube. We really appreciate reviews! Good or Bad please let the world hear your voice! Connect with us for ongoing industry news items, contests & prizes.

*By Referral Mortgage Consultants – doing business as BRMC is: Verico Preferred Financing Inc / Verico Canadian 1st Mortgage Corp which have a co-brokering agreement and there is a common Mortgage relationship and are licensed with the Verico Dreyer Group. Mortgage ownership, that employees of both Mortgage companies may review, advise and help process the Mortgage files. That Verico Preferred Financing Inc & Verico Canadian 1st Mortgage Corp share the some expense and income from mortgages. Kim Langille Featured on thess site is an unlicensed mortgage assistant only, not a Mortgage Consultant. Jordi Browne featured on this site is the Mortgage Broker of record. “The Broker” is Jordi Browne. Jordi Browne also holds a Life Insurance License and represents Verico Canadian 1st Mortgage Corp. Dave Browne featured on this site has a Life Insurance License too but is an independent agent– Jordi and Dave Browne co-broker life insurance files and share expenses, all income retained by Verico Canadian 1st Mortgage Corp.