Questions

What is a Mortgage Broker and Why Do I Need One?

Frankly, I’m not ever going to sell you anything. What I do is get the banks fighting over your mortgage so that you get the best rate possible. It’s no secret that mortgages can make banks and other lending institutions big money in the long run. With the market for lending being so competitive, my job as a mortgage broker is to get them fighting over your business.

You will never write a cheque to me (unless it’s for a birthday) and I will help you save tens or even hundreds of thousands of dollars in the long run. After all, that’s what it’s all about.

Can I Secure a Mortgage Without a Down Payment?
Never!
  • Increase the mortgage interest rate to obtain five percent.
Good Options
  1. Borrow money from family members.
  2. Set up a forced savings account through your bank.
    • The bank automatically withdraws set funds from your savings account and transfers to a specific mortgage account.
  3. Get an unsecured line of credit through your bank.
    • Immediately withdraw the line of credit, put it into a separate savings account, let it sit for three months and use it as the down payment. Remember, if you use this method your funds as are shown as a liability when qualifying.

Contact Daniel to understand your options. Start owning sooner.

Variable or Fixed rate?

While variable rates are generally lower than fixed, there are some important considerations to make before deciding.

  1. Are you prepared to see your mortgage rate rise by two to four percent?
  2. Can you afford to cover increased payments if the rate rises?

If you are not comfortable with a variable rate, consider a ‘frozen rate.’ Your mortgage payments remain variable but will not exceed a fixed rate. With a frozen rate you can still increase a payment without taking on the risk of risky fluctuations of variable rates.

How are Brokers paid?

Service to clients is free of charge. Lenders that best fit your mortgage needs pay the Broker. You have nothing to lose and everything to gain. Daniel and his team will find the right mortgage at know cost to you.

What closing costs should I be ready for?

Keep two percent of the purchasing price available for costs such as:

  • Inspection
    • $300-$500
  • Lawyer
    • $1000-$1200
  • Appraisal (if necessary)
    • $200-$300
  • Property Transfer Tax
    • One percent on the first $200,000 and two percent of the remainder.
    • Second time purchaser of property over $425,000.
    • First time purchaser of a property over $425,000 (properties below $425,000 are exempt).
  • GST/HST
  • Moving Costs
How can I pay down my mortgage faster?

There are three ways to pay down your mortgage quicker

  • Shorten your amortization period
  • Accelerated Bi-weekly payments
  • Annual Lump-sum payments

With Daniel, you get the advantage of annual assessments to review savings and options that work best for paying down your mortgage quicker, rather using lenders offering rates with heavy restrictions.

Can I write off the interest on my principle residence?

Yes. If your principal residence mortgage is used for a business entity or an investment the portion invested is tax deductible.

You will need a readvancable mortgage. With a readvancable mortgage, every time you pay down principle on your home you are granted that amount on a line of credit. Once those funds are available you can re-advance them into your investment or business entity, making them tax deductible.

Or, take investments such as RRSP or TFSA and pay down your mortgage. Re-advance the funds gained in the line of credit and re-purchase the investments, which are now tax deductible.

The Tax Deductable Mortgage Plan

A Tax Deductible Mortgage Plan (TDMP) is when you set up a readvanceable mortgage and sell your non-RRSP assets (stocks, non-registered mutual funds, etc.) to pay down your mortgage. Then take the credit earned on your line of credit and repurchase the same investment, which turns your mortgage interest into a tax deduction.

As you make principle payments your readvancing credit can be used for a business entity or investment. The interest on the line of credit is tax deductible, giving you a return on your income tax. Take these funds and pay down your mortgage, and once again, readvance the funds from your line of credit.

Using this method can pay off your mortgage twice as fast while contributing to an impressive financial portfolio, and reduce your payments by nearly 30 percent.

The Smith Manoeuvre

The Smith Maneuver converts your principle residence mortgage into a tax deductible debt.

The Goal:
  • Pay off your mortgage faster.
  • Benefit from tax deductions.
  • When you have paid your mortgage you have a large investment fund for retirement.

There are a number of lenders that offer The Smith Maneuver. Contact to discuss the best options and lenders.

Should I have a line of credit?

If you are using a line of credit the bank charges you 6% to borrow that money. A closed variable mortgage will only cost you 2.69%.

Your balance on a line of credit only decreases if you make additional payments above the interest cost. If a line of credit is held for more than a year the difference is staggering. Closed variable rates offer full repayment options and most lenders allow payment increases up to 20 percent and annual lump sum payments of 20 percent on the original principle.

Consider using a closed variable rate instead of your line of credit. Contact Daniel to discover options that will pay your home down sooner.

Do not use your home to buy unnecessary items

Always avoid paying off bills with equity. It’s far better to have a strict savings plan or recovery strategy from bad debt and unhealthy spending habits. Budgeting and saving is key to paying off the home of your dreams, giving you the financial freedom sooner.

However, if you decide to pay off higher interest loans with your equity, ?be sure to put the difference back onto your mortgage. You will pay down your mortgage faster and save money in the long term.

How can I win a free Vancouver Canucks tickets?

If you refer someone and an application is completed, your name will be put into a monthly draw for two tickets to a Vancouver Canucks game. It’s that simple. Good luck and Go Canucks!

Have Mortgage Questions?

Get in touch with daniel@citywidemortgage.ca or call (604) 561-6716.

I am here to help!