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Mortgage

How Much Did You REALLY Pay For Your Home? – How to reduce the amount of mortgage interest you pay.

Tue, 13th November, 2012 - Posted by Sean Kavanagh - (0) Comment

Have you ever sat down and calculated how much money you are actually paying for your home? If asked, most people will quote their purchase price as how much money they paid for their house. However, the amount of money that you actually pay for your house is significantly more than that.

Confused? Well consider this: A $300,000 mortgage amortized over 25 years at a rate of 3.29% will end up costing you an extra $139,423.88 in interest payments. With some help from your Real Estate Agent and your bank or mortgage broker, you can find ways to drastically reduce the interest you will pay on your mortgage and become mortgage free quicker.

Consider our happy newlyweds Dick and Jane. They live in Burlington, Ontario and their Burlington Real estate Agent has found them a three-bedroom, two-storey home. They owe $300,000 on their 25 year mortgage at 3.29%. Right now, they are making monthly payments of $1,464.76. Let’s see what happens if Dick and Jane decide they wanted to pay off their mortgage a little quicker.

1st scenario: If Dick and Jane simply increase their monthly mortgage payment by doubling up 1 payment/year, they can pay off their mortgage in 22.2 years and save $18,113.96 in interest costs. By doubling up 2 payments/yr, you can pay the mortgage off in 19.9 years and save $31,972.12 in interest payments.

2nd scenario: If Dick and Jane paid every two weeks instead of monthly, they pay off their mortgage in 22 years instead of 25 years, and save $18,723.44 in interest costs.

3rd scenario: If Dick and Jane keep making their current monthly payment, but add an additional payment of $5,000 once a year, they pay off their mortgage in 17.3 years and save $47,159.25 in interest.

NOW, if Dick and Jane are really ambitious and set forward a very aggressive plan to make 2 double up payments a year (4 Bi-Weekly payments), switch to paying every 2 weeks and make an additional annual payment of $5000 towards the principal of the mortgage, how much would they save and how quickly would they be mortgage free?

Well, instead of paying $139,423.88 in Interest payments over 25 years, Dick and Jane will pay $70,581.44 in interest and be mortgage free in 13.7 years! That is an interest savings of $68,842.12.

If you are thinking of taking advantage of the low variable mortgage rates available right now, consider making payments on the mortgage at the 5 year fixed rate. This way you will put a significant dent in the principal of the mortgage and you won’t feel the pinch once interest rates climb up to that level down the road….because these rates won’t stay this low forever!

If you are looking for a Real Estate agent who can, not only find you your dream home, but show you how to pay off your mortgage quicker, please call me today and I can walk you through all of your options so you know what is available to you. You can reach me, Sean Kavanagh, at 905-220-9198 or by email at sean.kavanagh@century21.ca

Category : Buyers / Mortgage

No more 30-year amortizations! – Ottawa tightening mortgage rules again!

Thu, 21st June, 2012 - Posted by Sean Kavanagh - (0) Comment

The federal government is moving again to tighten the rules on mortgage lending in Canada amid growing concerns that the housing market is overheated and household debt levels are climbing to perilous levels, according to the Globe and Mail.

As debt levels continue to reach record levels and the housing market has showed no signs of slowing down, the government is looking to tightening lending practices. With interest rates at record lows, they can only go up from here. This is the issue that scares the government. If home owners are at their debt limit now, what will happen to them once the interest rates rise?

Due to what is happening in the world economy, the Bank of Canada is expected to keep the interest rates low for some time. Tightening up the lending policy is the government’s measure to curb the increased household debt load while we are still enjoying these historic low interest rates.

The finance minister confirmed that the amortization will be reduced once again from 30 years to 25 years and the limit on borrowing equity will be reduced from 85% to 80%. Changing the amortization to 25 years will result in homeowners paying more in monthly payments but paying off their mortgage quicker.
This will mark the 4 tightening measure in the last 4 years. Recent figures from Statistics Canada show the average ratio of debt-to-disposable income climbed to 152 per cent, up from 150.6 per cent at the end of 2011.

Considering Buying or Selling a Home?

Phone – 905-220-9198
Email – sean.kavanagh@century21.ca
Facebook – seankavanaghc21

For more information on buying or selling real estate in Burlington, Hamilton, Oakville, or Toronto, or if you have questions about current market trends, staging properties or interest rate information, I’d be happy to answer all of your questions to accommodate all of your real estate needs.

Building Lasting Relationships and Exceeding Expectations

Oakville Real Estate – CENTURY 21 Miller –TOP TEN Office*
______________________________________________________________________________
Office: 905.845.9180 | Fax: 905.845.7674 | millerrealestate@century21.ca
Oakville Real Estate, Burlington Real Estate, Milton Real Estate, Mississauga
*For CENTURY 21 Canada in 2010 and 2011, Based on Gross Closed Commission

Category : Market Updates / Mortgage

Low Mortgage Rates – Too Good To Be True?

Mon, 23rd January, 2012 - Posted by Sean Kavanagh - (0) Comment


What you should know about deeply discounted mortgage rates

You’ve heard the expressions ‘cheapest isn’t always best’ OR ‘you get what you pay for’. This also applies to shopping for the best mortgage rates. When you are looking at paying off your largest investment over 25-30 years, it is easy to jump on the lowest rate available. But, the low-rate mortgages could actually cost you more in the long run.

Check The Fine Print: These low rate mortgages often are the least flexible when it comes to paying off the mortgage or getting out of the mortgage before the term is up. For instance, is the mortgage fully closed? That means you’re not leaving the lender unless you sell your house, so your options are limited and you have no negotiating power if your needs change in the next 5 years.
Low or no prepayments: Many mortgage options allow home owners to pay up to 20% of the outstanding principal each year, where low-rate mortgages may only allow 10%. Many lenders will also allow you to make unlimited double up payments throughout the year, where low-rate mortgages may not allow any double up payments.
Maximum 25-year amortization: Many first time home buyers need the extra flexibility of having a 30 year mortgage. The low-rate mortgages can take away flexibility you may need later.

For the same reasons I caution buyers about hiring a discount brokerage to handle their real estate transactions, I also caution you about signing up for the lowest mortgage rate on the market. You always get what you pay for and the cheapest isn’t always the best.

If you are considering a discounted mortgage rate, call me first to discuss what to look for in the contract. I will help you find the right combination of low rate and contract terms that will meet both your current and future financial needs.

Considering Buying or Selling Your Home?

For more information on buying or selling real estate in Burlington, Hamilton, Oakville, or Toronto, or if you have questions about current market trends, staging properties or mortgage interest rate information, I’d be happy to answer all of your questions to accommodate all of your real estate needs.


Sean Kavanagh
Sales Representative

For more information on my Home Buying or Home Selling System, contact me at
Email: sean.kavanagh@century21.ca
Web: www.seansells.ca
Facebook page: SeanKavanaghC21

Building Lasting Relationships and Exceeding Expectations

Masters Diamond Award Winner – 2010 & 2011, Masters Ruby Award Winner – 2009

Oakville Real Estate – CENTURY 21 Miller –TOP TEN Office*
______________________________________________________________________________
Office: 905.845.9180 | Fax: 905.845.7674 | millerrealestate@century21.ca
Oakville Real Estate, Burlington Real Estate, Milton Real Estate, Mississauga
*For CENTURY 21 Canada in 2010 and 2011, Based on Gross Closed Commission

Category : Buyers / Mortgage

Housing Prices To Remain Stable Into 2012

Fri, 9th September, 2011 - Posted by Sean Kavanagh - (0) Comment

The Canadian housing market will grow at a much slower pace compared to the surge seen in the past decade. Home resales are expected to grow by 0.9 per cent this year and remain unchanged in 2012, while home prices will increase by 4.4 per cent this year and 0.4 per cent in 2012.

Garth Turner will have you believe that the federal government’s policy to allow 40 year amortized mortgages with no money down was the root cause in the recent market instability and skyrocketing pricing, but other economists look at a few more contributing factors to paint a broader picture. These factors include a global recession and domestic policy changes — such as a sharp drop in interest rates, three rounds of mortgage rule changes and the introduction of the HST in Ontario and British Columbia. The view by many is that less turbulent economic and policy environments will support a smoother process going forward.

Interest rates will remain low well into next year but the growth rate will continue to slow. We will see a steady increase in prices, just not escalating at the pace we have seen in the past few years.

For more information on market activity, please do not hesitate to write or call. I am also offering FREE home evaluations for anyone interested in know what properties are selling for in their neighbourhood.

Category : Market Updates / Mortgage / Real Estate

How Much Will My Closing Costs Be?

Thu, 27th January, 2011 - Posted by Sean Kavanagh - (0) Comment

It is always a shame when you hear about someone having a huge financial surprise on the day of closing. On the day you are making the biggest purchase of your life, many forget to calculate all of the other expenses that are to be paid on closing. These expenses will not be rolled into your mortgage, so be sure to calculate them all on top of the money you had planned to put down as your down payment. Typically, you should set aside 2 to 3 percent of the purchase price to cover costs such as:

Home Inspection – A written report is prepared by a qualified inspector who assesses the property for any defects or poor maintenance. It helps let you know what repairs and maintenance are required, and if the property is structurally sound.
Appraisal –It is required to make sure the property is acceptable as a security for the mortgage, to determine what the property is worth based on sales of comparable properties, and if what you paid for is close to the appraised value of the property.
Legal Fees/ Disbursements – The lawyer will prepare mortgage documents for you to sign and register your name on the title as the owner of the property once the deal closes. Ask your lawyer for a quote on his/her fees to close the deal and mortgage, including disbursements (courier costs, registration fee, photocopying, etc.). You may shop around to see what other lawyers charge and choose whoever you are comfortable dealing with.
Title Insurance or Survey fees – ensures the property is acceptable as security for the mortgage. Survey fees can usually be avoided if you can get an acceptable copy of survey from the previous owner.
Land transfer Tax – for certain provinces; usually based on the percentage of the purchase value. In Toronto, be sure to calculate the municipal tax as well.
Prepaid expenses – can include utilities, water, sewage, property tax, and oil in tank prepaid by the seller beyond your closing date.
Property Tax Holdback – Holdback required by the lender if the lender is the one collecting and paying for the property tax in order for them to have sufficient funds available to pay the next installment due.
Fire Insurance – usually required by the lender to be in place (as confirmed by the lawyer) by the time you go and sign the mortgage papers with your lawyer; ensures the borrower has adequate coverage to pay off the mortgage for the property in the event of fire or other damages.
Mortgage Protection Insurance Premiums – optional; paid monthly and covers the mortgage amount in case of death, disability, loss of employment or critical illness depending on the policy you choose.
Mortgage Insurance Premium (CMHC) – typically incurred if your mortgage amount exceeds 80% of loan-to-value; paid to the insurer as a one-time fee that can usually be added to the mortgage amount.
Mortgage Processing Fee – In unique situations, this is a fee brokers/lenders charge to process applications and is disclosed before an applicant signs the mortgage commitment.
Other fees – GST (Goods and Services Tax) or HST (Harmonized Sales Tax) for new homes, utility connection charges etc.
Moving Costs

You should always be sure to clarify with your real estate agent, lawyer and lender about all of the costs you can expect on the day of closing. That day is supposed to be one of your happiest days and unexpected surprises can be avoided by asking these simple questions. For more information on buying or selling homes, feel free to call me, Sean Kavanagh, today at 905-220-9198 and I will be happy to answer all of your real estate questions.

Category : Burlington / Mortgage / Real Estate

Let’s Murder Your Mortgage

Tue, 29th September, 2009 - Posted by Sean Kavanagh - (0) Comment

Have you ever thought about paying off your mortgage quicker?  Have you ever had some money you wanted to invest, but just didn’t know where to put your money?  Bumping up your mortgage payment can save you a fortune over the years ahead.

Consider our happy newlyweds Dick and Jane. They live in Burlington, Ontario in a three-bedroom, two-storey home. They owe $200,000 on their mortgage at 6.5 per cent. Right now, they are making monthly payments of $1,340 and are on track to pay off their house in 25 years. Based on their current schedule, they will wind up paying more than $200,000 in interest over the life of their mortgage.  See what happens if Dick and Jane decided they wanted to pay off their mortgage a little quicker.

1st scenario: If Dick and Jane simply increase their monthly mortgage payment by $180 to $1,520 a month, they can pay off their mortgage in 19 years and save $53,510 in interest costs.

2nd scenario: If Dick and Jane split their current monthly payment in two and pay every two weeks instead of monthly, they increase their total mortgage payments from $16,075 a year to $17,415 a year. That means they pay off their mortgage in 21 years instead of 25 years, and save nearly $40,000 in interest costs.

3rd scenario: If Dick and Jane keep making their current monthly payment, but add an additional payment of $7,000 once a year, they pay off their mortgage in 13 years and save $107,000 in interest.

In most cases, homeowners can arrange to take advantage of any of these options simply by calling their bank. But whatever strategy Dick and Jane choose, they should resist the temptation to choose banks’ latest mortgage “deal,” which consists of the ability to skip a payment once a year. While that may seem enticing, such a strategy would stretch out Dick and Jane’s mortgage payments to almost 31 years. They would pay a whopping $263,000 in interest costs over the life of their mortgage, or $61,000 more than if they had stuck with the original 25-year monthly payment schedule.

For more help on how to pay off your mortgage quicker, please contact me today so we can chat about saving thousands of dollars in interest by adding a few dollars per month to your mortgage payments.

Category : Mortgage

Mortgage Rate Update

Thu, 10th September, 2009 - Posted by Sean Kavanagh - (0) Comment

Mortgage rates have eased slightly for both the fixed rates & the variable rate mortgages.

The 5 year fixed rate has finally come back down below 4% to 3.99%.  The variable has also moved down to prime (2.25%) plus .15% on a 3 year term & prime plus .20% on a 5 year term.  The variable seems to be the way to go, as the economists are now predicting that the Bank of Canada rate will not move until 2011.  Even though, the recession is over, they are saying that the recovery will be slow and gradual which will not stimulate inflation.

The economists are also predicting that it will be well beyond 3 years before the bank prime hits 4%.

Bryan Guertin of Mortgage Intelligence in Oakvile recommends that clients take advantage of the variable mortgage, but increase their payments to where it would be on a fixed rate of 4%.  This way they will make a huge dent in their first 3 years.  Bryan has also put together a recent bulletin from CMHC showing their market research and an explanation of how the market rebounded so quickly.  For a copy of this report, please send me an email and I would be happy to share it with you.

For more information on buying or selling real estate in Burlington, Hamilton, Oakville, or Toronto Ontario, or if you have questions about current market trends, mortgages or interest rate information, please visit the Sean Kavanagh Real Estate Resource Centre at www.seansells.ca, or at www.seankavanagh.ca   I’d be happy to answer any questions to accommodate all of your real estate needs.  Follow me on TWITTER or FACEBOOK!  You can also contact me at 905-220-9198 or at www.realestatechat.ca as I am now a moderator on the Ontario Real Estate chat forum as well as the Burlington, Ontario sub-forum.

I look forward to hearing from you!

Sean Kavanagh

Building Lasting Relationships and Exceeding Expectations

Category : Mortgage

Mortgage Rate Update

Wed, 9th September, 2009 - Posted by Sean Kavanagh - (0) Comment

Mortgage rates have eased slightly for both the fixed rates & the variable rate mortgages.

The 5 year fixed rate has finally come back down below 4% to 3.99%.  The variable has also moved down to prime (2.25%) plus .15% on a 3 year term & prime plus .20% on a 5 year term.  The variable seems to be the way to go, as the economists are now predicting that the Bank of Canada rate will not move until 2011.  Even though, the recession is over, they are saying that the recovery will be slow and gradual which will not stimulate inflation.

The economists are also predicting that it will be well beyond 3 years before the bank prime hits 4%.

Bryan Guertin of Mortgage Intelligence in Oakvile recommends that clients take advantage of the variable mortgage, but increase their payments to where it would be on a fixed rate of 4%.  This way they will make a huge dent in their first 3 years.  Bryan has also put together a recent bulletin from CMHC showing their market research and an explanation of how the market rebounded so quickly.  For a copy of this report, please send me an email and I would be happy to share it with you.

For more information on buying or selling real estate in Burlington, Hamilton, Oakville, or Toronto Ontario, or if you have questions about current market trends, mortgages or interest rate information, please visit the Sean Kavanagh Real Estate Resource Centre at www.seansells.ca, or at www.seankavanagh.ca   I’d be happy to answer any questions to accommodate all of your real estate needs.  Follow me on TWITTER or FACEBOOK!  You can also contact me at 905-220-9198 or at www.realestatechat.ca as I am now a moderator on the Ontario Real Estate chat forum as well as the Burlington, Ontario sub-forum.

I look forward to hearing from you!

Sean Kavanagh

Building Lasting Relationships and Exceeding Expectations

Category : Mortgage

Interest rates may be on the rise

Fri, 29th May, 2009 - Posted by Sean Kavanagh - (0) Comment

If you have been considering buying a house, refinancing to see if it you can save money by lowering your monthly payments, or are interested in taking some equity out to pay for some renovations, pay for some upcoming large purchases, or even just to use that money to go on that much needed vacation, then now is the time to consult a mortgage broker and find out whether now is the right time for you and your family.

Also, for First Time Home Buyers I recommend that you get locked into a pre-approval at the current rates!

The following article appeared on Candian Mortgage Trends and explains why you should consider acting now!

Canada’s 5-year bond closed Wednesday at 2.56%…after it’s biggest 2-day jump in eight months.
As most know, fixed mortgage rates are linked to bond yields. Certain non-bank lenders have already reacted by raising rates 0.05% to 0.20%.

While no big banks have moved yet, they may be getting anxious. The cost of funds on 5-year money has soared roughly 30% (relatively, not absolutely) in the last month. The spread between banks’ advertised 5-year rate (3.95%) and bond yields is now down to 1.39% from about 2.00% a month ago. When you factor in branch discretion (i.e., the additional discounts offered to some customers), the spread is often even narrower.

It is difficult to imagine the Big 5 not raising rates if yields move higher. A lender email from yesterday said: “rates are artificially low. Watch for fixed rate increases.” Indeed, it seems some lenders are taking extra pains to avoid raising rates and giving up market share.

For more information on buying or selling real estate in Burlington or Oakville, Ontario, or if you have questions about current market trends, mortgages or interest rate information, please visit me again on my website www.seansells.ca or call me at 905-220-9198 and I’d be glad to answer any questions to accommodate all of your real estate needs. I can also be reached at www.realestatechat.ca as I am now a moderator on the Ontario Real Estate chat forum as well as the Burlington, Ontario sub-forum.

I look forward to hearing from you!

Category : Market Updates / Mortgage

Interest Rate Watch – May 15, 2009

Sat, 16th May, 2009 - Posted by Sean Kavanagh - (0) Comment

Term          Rate
6 Months    4.25%
1 Year        2.90%
2 Years      2.85%
3 Years      3.05%
4 Years      3.59%
5 Years      3.59%
7 Years      4.95%
10 Years    5.05%
Prime        2.25%
Variable     2.85%

Let me help save you money! Send me your email address or give me a call and I’ll send you periodical interest rate updates, along with any other market information you may be interested in.
Buyers and sellers can find everything they need to make the most informed choices on properties in Burlington or Oakville by calling 905-220-9198 or by visiting my real estate resource centre at www.seansells.ca.

Sean Kavanagh

Category : Mortgage
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