Victoria Mortgage Investment Corporation

Archive for March, 2010

A Shoe Short Story

March 30th, 2010 | 2 Comments »

My wife truly loves a good pair of shoes. Over the years she has built a fine collection of well over 100 shoes; I’m sure that there are much larger collections hidden away in other people’s home closets! The interesting point is that as much as she may love the look of shoes, her daily choice selection is normally based on comfort.

For most people, getting into a mortgage is much easier than getting out of it if they find that they have made the wrong choice. Making the wrong choice can be a source of stress with potentially large financial and emotional costs to be paid. The mortgage you select should be comfortable and flexible, fitting with your lifestyle expectations. It is very important that your mortgage leaves some financial room for you to still be able to enjoy the things in life that are important to you. Feeling ‘mortgage poor’ can be somewhat like being forced to walk a long distance in the wrong pair of shoes.

It is important to spend time up front looking at the economic realities of your cash flow prior signing your mortgage documents.

What I would recommend for many clients is to try living within a budget based on the proposed mortgage payment prior to committing to it.

Paul Croy

affordability, borrowing, mortgage, real estate, risk

Interest Rates on the Rise?

March 23rd, 2010 | Leave a Reply »

The Bank of Canada has signaled that they do not expect to hold present interest rate levels past the end of June…..

See the March 11, 2010, Business Week article, Canada January New Home Prices Rise 0.4%, Seventh Straight Gain

We are presently enjoying the lowest interest rates seen since the Korean War, and the only thing we can absolutely count on is that rates will inevitably rise. The ‘experts’ cannot seem to agree on when or by how much, but the varied opinions range upwards to an increase of 2.0% – 2.5% by the end of 2011.

I believe that now is the time to become pro-active and ensure that you take advantage of the present interest rate environment. Do you wish to explore the possibility of ‘renegotiating’ an existing mortgage? Would you like to ‘lock-in’ an interest rate for an upcoming purchase? Does your mortgage ‘mature’ in the next few months? Fixed rate vs. variable rate?

Our mortgage professionals are your best source for mortgage advice and can explain all your available options.

Walt Neufeld

borrowing, canada, Housing Market, mortgage, mortgage lending, rates, real estate, risk

What term mortgage should I choose?

March 22nd, 2010 | Leave a Reply »

Historically, the shortest term mortgage (ie. 6 month terms for 25 years) has been the least expensive route when financing your home.

Floating has been less expensive than fixed mortgages as institutions do not have to build in a hedge to offset interest fluctuations.

Longer terms provide stability against interest fate fluctuations as well as not having to deal with the paperwork and the stress of numerous renewals.

Here are some questions that you should consider:

1) Are you able to tolerate interest rate fluctuations and do you have the temperament to not worry about them?

2) What do you think interest rates are going to do?

3) What are your personal plans? Do you have a growing family and need more space? Are the kids leaving home and you want a smaller place? Is there a chance you can be transferred? (ie. I think I will be transferred in 3 years so I want a 3 year mortgage.)

My advice is to take a mortgage that fits your needs. Talk to your banker, accountant, lawyer, mortgage broker, etc. There is wisdom in much counsel.

Rory Campbell

borrowing, rates, real estate, risk

Changes to Lending Guidelines for Insured Products

March 19th, 2010 | Leave a Reply »

Jim Flaherty, Canada’s Minister of Finance, announced new lending guidelines for Canadian Mortgage and Housing Corporation (CMHC) backed mortgage loans in a recent announcement.

The new rules are as follows:

1. All borrowers must qualify for a mortgage using the five year fixed rate regardless of the term chosen.

2. When refinancing a home, Canadians will only be able to refinance up to 90% of the value instead of the previous 95%.

3. If you want to purchase revenue property CMHC will no longer insure you. You’ll need to put 20% down to take out a conventional mortgage.

These changes will take effect April 19, 2010.

What does this mean to the consumer who is presently trying to qualify for the maximum mortgage amount? I would recommend putting your plans in motion for purchase or refinance before the rapidly approaching deadline.

See the Government of Canada Department of Finance website for more details

Chris Pahl

borrowing, Canadian, mortgage, real estate

Interesting Times for Canadian Mortgage Borrowers

March 15th, 2010 | Leave a Reply »

Those of us who have been working in the mortgage industry for more than just a few years will agree that these are most interesting times. Borrowers who took advantage of variable rate mortgage offerings a few years back are now confronted with the hard question, “Do I look at locking into a fixed longer term mortgage or do I continue to “float” at a deeply discounted interest rate?” The one thing that I have learned about this business is that there is nothing more constant than change. Rates go up and rates go down. Rate volatility can happen for many reasons and some times not for the reasons a borrower expects, like a tight supply of mortgage funds or a Financial Institution’s Fund Matching requirements.

I agree that there are many economic reasons not to expect large increases in Canadian Mortgage Interest rates in the near future. However, based on the Bank of Canada’s position calling for an increase to the prime rate starting this summer, current mortgage underwriting guidelines that get less flexible every day, plus a recent trend that shows an increase in the 5 to 10 year Canadian Government Bond Rates, it may now be time to take a hard, honest look at the affordability issue of mortgage payments.

If interest rate were to jump 1%, 2% or 3%, would you still be comfortable with your shelter costs? Always remember that we are dealing with historically low mortgage interest rates. Some lenders offer the option of a split mortgage term. This permits a mortgagor to leave a portion of their mortgage floating while at the same time locking in a portion at a fixed longer term. This may well be a product that borrowers will start to embrace as a prudent option over the coming months.

Paul Croy

borrowers, Canadian, fixed rate, mortgage, rates, variable rate

Use RRSPs as a Down Payment…

March 11th, 2010 | Leave a Reply »

This program allows the home purchaser(s) to borrow up to $25,000 from their RRSPs. They do not have to pay tax or interest while using the funds as part or all of their down payment. This also applies to the spouse or partner allowing as much as $50,000 to be put towards the down payment.

CRA News Release

To qualify, the following criteria must be met:

- Participants must be either first time home buyers or cannot have owned a home for four years plus a day.

- The loan must be paid back to the RRSP over 15 years. The first payment is due within the year that the funds were borrowed and 1/15 of the loan must be paid back annually.

- Participants must be residents of Canada.

- The property must be owner occupied.

- Funds being drawn from the RRSP must have been invested for at least 90 days.

This program has proved both helpful and popular with many Canadian home buyers. Be sure to consider this option when buying your home.

Len Shorkey

borrowing, cra, finance, rrsp

Video: Why Do You Work at Great Pacific?

March 09th, 2010 | Leave a Reply »

Paul E. Croy explains why he likes to work at Great Pacific Mortgage & Investments. He also talks about balancing investment portfolios and mentions MICs are suitable for replacing bonds or fixed income portions of a portfolio.