What If Mortgage Rates Went Up?

What If Mortgage Rates Went Up?

 

Economic forecasters from coast to coast anticipate that The Bank of Canada will keep its key lending rate low. As it has remained unchanged for the past 25 months, it is anticipated that we will see minor changes through late 2013. Estimations are that 2014 will likely see more significant changes, and these changes will be impactful to the general consumer.

How impactful? 
Well let’s take a look at an example including the recent changes that we have seen to the amortization effective June, 2012.

If you had a $100,000.00 mortgage at the rate of 2.94%:

  • With an amortization of 30 years, your monthly payment would be $417.44
  • With an amortization of 25 years, your monthly payment would be $470.14
  • The difference is $52.72

If you had a $100,000.00 mortgage at modestly increased rate of 3.44%:

  • With an amortization of 30 years, your monthly payment would be $444.35
  • With an amortization of 25 years, your monthly payment would be $496.11
  • The difference of $51.76

 

These numbers may seem rather insignificant, but be mindful that the average residential home price in Canada was $368,000.00 in October 2012.

Based on the above information this difference with the amortization reduction and the inevitable rate increase is $78.67 per month x 3.68 = $289.50 monthly increase. Whatever your mortgage goals may be, today or in the future, these numbers are worth paying attention to.

Keeping up to date and apprised of the current market conditions, products and rates via your CENTUM Mortgage Professional, like myself, can in fact save you thousands of dollars. The above example based on a five year mortgage term turns into a savings of $16,346.40 over the sixty months.

Be aware of some of the posted “Best Rates”. If it sounds too good to be true it probably is. This can be the case with a large amount of “special” promotions. They can have tight constraints for early payouts, and in some cases you can’t pay the mortgages out during the term of the mortgage! Reduced anniversary payments and any changes to your monthly payments can command high administration fees.

If you would like more information about how I, as a CENTUM Mortgage Professional, can assist you in ensuring that your best interests are looked after, please do not hesitate to get in touch with me.

Paramjeet Nagi
Licence #: M08007836
Phone: (416) 884-1770
Web site: www.mygtamortgage.com
Web: www.pnagi.com

 

 


Choosing the Right Sales Representative/Broker

 

Choosing the Right Sales Representative/Broker


 

Choosing the Right Sales Representative/Broker
 

Your sales representative is a trained professional who knows all aspects of the real estate market. A sales representative will save you time, money and aggravation.

As with purchasing a home, you want to list with the sales representative who is the expert in your location. After all, potential purchasers will be calling this same "area expert" to inquire about houses for sale. There will be a few sales representatives who are knowledgeable about your neighbourhood. Call them up and interview them. You need to feel comfortable with him or her, after all, they will be working for you.


 

Should You Go With a Non-Exclusive or Exclusive Listing Arrangement?
If you enter into this type of arrangement with your sales representative, you are giving him or her the exclusive right to find a purchaser for your home. With this type of agreement, no other sales representative will bring potential buyers to your home, because only the listing sales representative is entitled to the commission.

You may consider this type of arrangement in a Sellers' Market during which time there are more people interested in purchasing a home than there are homes available.

Understand Market Conditions
The real estate market is in constant flux, not only as a whole but in particular areas as well. Knowing what is going on in the overall and local real estate markets will help you understand how these conditions can affect the sale of your home. We've designed the following comparison to help give you an overview of the three significant market positions. When you meet with your sales representative, ask about the current state of the market.

Buyers Market:
The supply of homes on the market exceeds demand.

Characteristics: High inventory of homes. Few buyers compared to availability. Homes usually stay on the market longer. Prices are stable or perhaps dropping.
Implications: Buyers spend more time looking for a home, and when they negotiate, they usually have more leverage.

Sellers Market:
The number of potential buyers exceeds the supply of homes on the market.

Characteristics: There is a smaller inventory of homes with many buyers. Homes sell quickly. Prices usually increase.
Implications: Prices may be higher or perhaps climbing. Buying decisions must be made quickly. Conditional offers may be rejected.

Balanced Market:

The number of homes on the market is roughly equal to the demand.

Characteristics: Demand equals supply. Sellers accept reasonable offers. Homes sell within a reasonable time period. Prices generally remain stable.
Implications: There is less tension among buyers and sellers. There is a reasonable number of homes to choose from. 

Jeet Nagi,Broker

www.pnagi.com

 


Toronto Sales Up 14.5% in May

 

Toronto Sales Up 14.5% in May

 

Greater Toronto Realtors reported 5,142 transactions through the TorontoMLS® System during the first 14 days of May 2012. This result was up by more than 14.5 per cent in comparison to the first 14 days of May 2011. The number of new listings continued to grow at a slower pace than sales – up 13 per cent year-over-year to 8,749.

“Annual growth in sales was experienced across the GTA for all major home types in the first half of May. Sales growth was strongest for the condominium apartment segment. While the condo market has generally been the best supplied market over the past year, we have continued to see enough demand to exert moderate upward pressure on average selling prices in this market segment,” said Toronto Real Estate Board President Richard Silver.

The average selling price for transactions in the first 14 days of May was $517,242 – up by six per cent compared to the same period in 2011.

“A shortage of listings in the low-rise segment of the market has resulted in a lot of competition between buyers and above average annual rates of price growth. Tight market conditions are expected to remain in place for the balance of 2012,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

Summary of TorontoMLS® Sales and Average Price

 

 

May 1 - 14

 

 

2012

 

2011

 

 

Sales

Average Price

Sales

Average Price

 

City of Toronto ("416")

1,959

$572,159

1,763

$547,659

 

Rest of GTA ("905")

3,183

$483,443

2,725

$448,126

 

GTA

 

5,142

 

$517,242

 

4,488

 

$487,225

 

 

TorontoMLS® Sales & Average Price By Home Type

 

 

May 1 - 14, 2012

 

Sales

Average Price

 

416

905

Total

416

905

Total

             

Detached

691

1,832

2,523

835,522

576,845

647,692

Yr./Yr. % Change

6%

17%

14%

5%

8%

6%

Semi-Detached

225

343

568

595,962

401,779

478,700

Yr./Yr. % Change

2%

13%

8%

8%

12%

9%

Townhouse

238

590

828

465,499

359,475

389,951

Yr./Yr. % Change

17%

17%

17%

15%

5%

8%

Condo Apartment

784

326

1,110

370,224

291,673

347,154

Yr./Yr. % Change

18%

18%

18%

4%

9%

5%

 


Toronto Home Sales Up 18% in April

 

Toronto Home Sales Up 18% in April

Greater Toronto Realtors reported 10,350 transactions through the TorontoMLS® System in April 2012. This level of sales was 18 per cent higher than the 8,778 firm deals reported in April 2011. The strongest sales growth was reported in the single-detached market segment, with transactions of this home type up by 22%compared to a year ago.

“Interest in single-detached homes has been very high, both in the City of Toronto and surrounding regions. Growth in single-detached listings has not kept up with demand, which means competition between buyers in this market segment increased. With this in mind, it was no surprise that the strongest annual price increase was also experienced in the single-detached segment,” said Toronto Real Estate Board President, Richard Silver.

The average price for April 2012 transactions was $517,556 – up 8.5 per cent compared to April 2011. While price growth was strongest for single-detached homes, the better-supplied condominium apartment segment experienced a more moderate annual rate of price growth, at four per cent.

“Monthly mortgage payments remain affordable for home buyers in the Greater Toronto Area. While interest rates are generally expected to increase over the next two years, the extent and timing of rate hikes has been thrown into question by slower than expected economic growth in the first quarter of this year. On net, borrowing costs are expected to remain a positive factor influencing home sales through 2012,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.

See Toronto Real Estate Market Watch report »


Average Toronto area price up 10.5%

 

Average Toronto area price up 10.5%

 

Greater Toronto Realtors reported 9,690 sales through the TorontoMLS® System in March 2012. This result was up by almost eight per cent in comparison to the 8,986 deals reported during the same period in 2011.

“The GTA resale market has not suffered from a lack of willing buyers this year. Buyers have been spurred on by the positive affordability picture brought about by low mortgage rates,” said Toronto Real Estate Board President Richard Silver. “The challenge has been a lack of inventory. Many listings have attracted multiple interested buyers. Strong competition has led to annual rates of price growth well above the long-term average.”

The average selling price in the GTA was $504,117 in March – up by 10.5 per cent in comparison to March 2011.

“The number of new listings was up last month in comparison to March 2011. However, based on the historic relationship between price and listings, the GTA resale market should be better supplied. If competition between buyers remains as strong as it is right now, we will almost certainly see an average selling price above $500,000 for 2012 as a whole,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.


Toronto Mid-March Sales Up 7%

 

During the first 14 days of March, Greater Toronto Realtors reported 4,215 transactions through the Toronto MLS® system, representing a 7% increase compared to the same period in 2011. The number of new listings was down by 2% year-over-year to 6,970.

"Home buyers continue to benefit from the affordable housing situation in the GTA. Immigration to Toronto and surrounding areas adds to the pool of home buyers every year. The economic and ethnic diversity found in the GTA consistently attracts newcomers and foreign investment,” said Toronto Real Estate Board (TREB) President Richard Silver.

The average selling price for transactions between March 1 and 14 was $502,155 – up by more than nine per cent compared to the first 14 days of March 2011. On average, homes sold for 100 per cent of the asking price within three weeks.

“Strong competition between home buyers in many parts of the GTA has resulted in sellers realizing their asking price in a short period of time. The fact that homes are selling for 100 per cent of the asking price, on average, suggests that sellers are very much in tune with the current market situation and know the fair market value of their home,” said Jason Mercer, TREB’s Senior Manager of Market Analysis.


Buying A Home - Getting Started The Very First Step !!!

Getting Started The Very First Step

The first question you're bound to ask is, "How much home can I afford?" That depends on a number of factors:

Your selected location. Are you set on a specific area? Downtown? The suburbs? A rural setting?

Your preferred type of home. Detached? Semi? Duplex? High-rise? Link? Townhouse? New or Resale? There are a variety of home styles you will want to explore.

Your income. After all, it's not just the mortgage you have to take into account. There are property taxes, utilities, and in some cases condo or strata fees. As a general rule of thumb, your monthly home-carrying cost should not exceed 30-35% of your income.

Market conditions. Is it a buyer's, sellers or balanced market?

There are also additional costs to keep in mind. It's a good idea to work out exactly what you want and what you can afford before you begin the search. Be specific! After all, you don't want to suddenly come to the realization that your dream house has come with a nightmare of bills and expenses. Stick to looking at houses in your price range. The more you've thought it out, the better your sales representative can meet your needs.

A part of deciding just what you can afford can be accomplished by meeting with your bank or a mortgage broker and negotiating a pre-approved mortgage. There are many types of mortgages and many different terms. Research all of your options. This ensures that there are no surprises once you're ready to make an offer.

Once you've figured out your monthly expenses and what you can afford, you can start your search. It could happen that the first home you see is the one you want; or you might look at home after home with none of them catching your interest. Rest assured, the home you're looking for is out there, and when you find it, you're ready to make an offer. If your offer is accepted, the next steps are closing and moving into your new home.

Purchasing a home is easy once you put your plans into action.

Jeet Nagi, Broker

Remax Real Estate Centre Inc.

Ph: 1-866-456-1177

www.pnagi.com

 


Toronto Area Listing Up 14.4%

 

Greater Toronto Realtors reported 3,679 sales through the first 14 days of July 2012, representing a 5.6 per cent increase compared to the 3,484 sales reported for the same period in 2011. New listings were up by 14.4 per cent over the same time frame.

“Housing demand remained strong in the first half of July. Sales growth occurred in the regions surrounding the City of Toronto. In the City of Toronto, where sales were down, the relatively higher cost of home ownership likely prompted some buyers to purchase elsewhere in the GTA. Higher costs in the City of Toronto include the upfront payment of the additional land transfer tax,” said Toronto Real Estate Board (TREB) President Ann Hannah.

The average selling price in the first half of July was $473,466 – up by 2.3 per cent compared to last year. On average, homes sold for 98 per cent of the asking price in 25 days – in line with July 2011. Price growth was strongest in the City of Toronto, climbing by 3.5 per cent to $496,645.

“A better supplied market contributed to a slower annual rate of price growth in July relative to the first half of 2012,” said Jason Mercer, TREB’s Senior Manager of Market Analysis. “As buyers benefit from more choice in the second half of this year, expect price growth to slow to a more sustainable pace.”


Time to Renew your Mortgage

 

 

 

Lowest Rates* in Canada
  Term       Our Rate                  Bank Rate Bank Rate
  3 Yr Fixed         2.84%                       4.55% 4.55%
  5 Yr Fixed         3.15%                       5.65% 5.65%
  Variable         2.90%                       3.35% 3.35%
Updated: May 15, 2012
We have the best rates on
a wide range of products.

 

 

Renewal Time?

Is your mortgage coming up for renewal soon? When it comes time to renew, make sure you don't step blindly into another long term contract. Studies have shown that the majority of Canadians simply sign off on the mortgage renewal documents that arrive in the mail and end up staying with their current lender, but this does not always get them the best mortgage rate or the best mortgage product for their needs. Historically the bank posted rate is what you will be offered in a standard renewal. As a CENTUM Mortgage Professional, I can negotiate a better rate for you.

Keep in mind that interest rates are at a historical low, yet rate isn't everything. Having some flexibility in your mortgage at a slightly higher rate could be advantageous in the long run. Studies have shown that many people aren't aware of their mortgage options. Make sure you spend the time to research the right mortgage product, rates, and terms. Here are few common mortgage options for consideration:

Prepayment:

This allows you to pay extra onto your mortgage (on top of your regular payments) without paying a penalty. Prepayment options range from the ability to pay 0 - 30% of the original amount borrowed to allow you to become mortgage free faster. Typical prepayments seemed to be in the 20% per year with some banks offering no restrictions on the dates or amount of these payments and some allowing anniversary payments only and one lump sum.

Portability:

This option allows you to move your mortgage to a new home after you've sold your current one. Depending on the lender and mortgage product, there may be some time restrictions. For example, some lenders allow 90 days to port your mortgage to a new home, however you will have to pay the penalty up front and then get reimbursed. If you don't port within 90 days, the penalty will not be reimbursed as you have broken your mortgage term. Penalties are most often calculated at three month's interest or the Interest Rate Differential, whichever is usually higher.

Mortgage Increase:

If you think you want to plan renovations, purchase a vacation home or help finance your children’s education  then you may want to give some thought to this option. This option allows you to increase the amount of your mortgage. There will be fees for this, such as appraisal ($200 - $400) and legal ($700 -$1000) and you will need to provide income documents and all of the same documents required for a new mortgage application.

Mortgage Transfer:
If your mortgage term is up for renewal and you have no intention of moving from your existing property then this may be an option for you. A mortgage transfer allows you to move your existing mortgage to a new lender. There are minimal costs involved to the consumer as lenders primarily will absorb the cost to process a mortgage transfer. You will still need to provide all of the documents required for a mortgage application and there may be a appraisal cost but there should be little or no legal costs involved of which range from $700-$1000 normally.

Mortgage flexibility isn't for everyone. You'll have to consider what is happening in your life and whether or not any of these options are right for you. This is where I can help research different mortgage products offered by various lenders to ensure that you are getting the best rate and product possible. Having a qualified CENTUM Mortgage Professional working for you doesn’t cost you anything, but the advantages can save you thousands of dollars over the life of your mortgage.

If you would like more information about how I, as a CENTUM Mortgage Professional, can assist you in ensuring that your best interests are looked after, please do not hesitate to get in touch with me.

Paramjeet Nagi
Licence #: M08007836
Phone: (416) 884-1770 Web:www.mygtamortgage.com

 

 


Buy First or Sell First?

 

Buy First or Sell First?
Lowest Rates* in Canada
Term Our Rate Bank Rate
3 Yr Fixed 2.84% 4.55%
5 Yr Fixed 3.15% 5.65%
Variable 2.95% 3.35%

We have the best rates on
a wide range of products.


Buy First or Sell First?
When considering a move to a new home, the typical dilemma for many homeowners is whether to buy or sell first. There is no "right" answer, but there are some benefits to both sides, depending on your circumstances.
Buy First if...
It’s a seller’s market
When the number of buyers outnumbers the market’s inventory, homes can sell within days. If this is the case, chances are your home will sell quickly, making buying first a less risky option. Keep in mind though that your offer will be contingent on your home selling, making your offer less attractive to the seller, especially if there are multiple offers.

The deal is too good to wait
If you find a deal that is just too good to pass up, you may be tempted to buy first. But take care; you will have to carry the cost of 2 homes, until you sell. Also, consider that your selling price at this stage is not yet known, so you are taking a bit of a gamble.

You have found your dream home, at the right price
This of course is an emotional decision, and if you can shoulder the extra debt while you wait to sell, then it may be worth it, especially if you have interests in a specific property.
Sell First because...
You will have the ability to negotiate
Especially if you are not under pressure to sell, giving you the luxury of time to negotiate top dollar for your home.

You will have more buying power
Because your home is already sold you will know exactly how much money you have to work with. 

You will have the power of an unconditional offer
This will provide you with more negotiating leverage to buy your next home.
You have options with whatever you decide to do, but before you make a decision make sure you:
Get your finances in order: Get pre-approved for a mortgage and contact your real estate professional to help you find a new home.

Get your house ready to sell: Paint the walls, clean out the garage and closets, spruce up the yard. Talk with your real estate professional about the listing price and timing.
Good luck and happy house hunting! 
If you would like more information about how I, as a CENTUM Mortgage Professional, can assist you in ensuring that your best interests are looked after, please do not hesitate to get in touch with me.
Paramjeet Nagi
Licence #: M08007836
Phone: (416) 884-1770
E-mail: paramjeet_nagi@centum.ca 
Web: www.centum.ca/Paramjeet_Nagi 


*The posted rates on this newsletter represent the best typical discounted rate available from our preferred lenders to borrowers with strong credit of 680 beacon or greater, qualifying income and assets, and no late payments. Rates may vary between geographic regions and the posted rate on this newsletter may not be available in your area. We understand that no two consumer mortgage requirements or credit profiles are identical, so please contact me to discuss your individual requirements. Lender rates change often and are subject to change without notice. 

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