Yesterday Bank of Montreal announced a new fixed 5 year rate mortgage that has set a new all time low for mortgage rates in Canada. Is it the lowest rate? Yes. Is it the best mortgage? Maybe not. Watch the video below to learn why.

Click here to view the embedded video.

I’m happy to announce the Son Of A Broker Facebook Friday the 13th contest! Lets change your luck this coming Friday the 13th and give the traditionally unlucky day a new meaning.  I’m running a contest giving away a $50 gift card to Oliver & Bonacini which can be used at any of their fine establishments across the city.  The contest is so easy to participate in that even my Dad figured out how to join. All you have to do is “like” my facebook page.

Step #1 – Visit Facebook.com/sonofabroker

Step #2 – “LIKE”

Step #3 – Cross your fingers, put on your lucky shoes and don’t wash your lucky shirt for a week.

On Friday, January 13th,  I’ll draw one lucky winner from my “like” list using www.random.org. The lucky winner gets the $50 gift card towards any O&B restaurant including my favourite, Canadiana inspired, Bannock. Good luck.

Several weeks ago I went about buying a new set of downhill skis for the upcoming season. I had no clue what was available on the market and I didn’t have the time to go into a ski shop and chat with the sales rep. Instead, I did my research online. Within an hour I narrowed down a selection of hundreds of skis to just one. I couldn’t believe the quality of information available including interviews with the manufacturers’ sales reps, price quotes and candid video testimonials of skiers who tested the same skis that I bought. The entire process was amazing and the experience gave me the confidence to buy the skis online all without ever consulting an expert.

When it comes to shopping online, I’m not alone. Statistics Canada reports that in 2010, 51% of Canadian internet users ordered goods or services online. Not surprising considering the number of people buying concert tickets, airline tickets, booking hotels, or buying electronics like iphones and cameras. But how good is the internet when it comes to shopping for more personalized and “technical” goods and services like skis or mortgages? Well, shopping for skis online obviously works, so what about shopping online for a mortgage?

The experience of a mortgage borrower shopping online can’t be much different than my experience shopping for skis. Just like skis, mortgages are technical and come in different shapes, sizes and brands each designed for a specific purpose. Narrowing down your search can be a challenge with every broker, bank and specialty website vying to grab your attention. The noise can be overwhelming. So should you feel confident shopping for a mortgage online?

Lets face it, mortgages remain the single largest expense a typical household will incur. I think few people feel confident making a decision based solely on information gathered from a website without consulting a professional. But, with better and better mortgage sites appearing, the ability to shop completely online for a mortgage may one day become a reality. Mortgage websites have evolved into reliable resources helping you, the borrower, find relevant information to help choose the right mortgage.

Take the popular mortgage site ratehub.ca a one of kind website that not only serves as a search engine to find Canada’s best rates but serves as a platform to educate and empower borrowers to make informed mortgage decisions. A great feature of the site is that neither a financial institution nor a mortgage broker runs it so the information and advice are neutral.

If you’re shopping online for a mortgage it’s tough to know what sites are current and offer reliable information. A few things to look out for when browsing a mortgage site include:

1. Sites that engage visitors through social media like Twitter and Facebook. A site that engages their audience is likely to be careful about the quality of content they’re sharing online.
2. If the broker is blogging, check to see how recent their posts are.  It’s a great way of determining whether someone is “home” and actively working the site. It also helps you to determine if the content is relevant and current.
3. Check for testimonials on a brokers website. As brokers we crave affirmation that we’re doing a good job and we love to share our success with the world. It’s also surprisingly obvious when someone is faking testimonials on their own site.

I’ve written enough mortgages in my career to know that there isn’t a one size fits all mortgage solution. We live in a dynamic and ever changing world and the needs of each borrower are unique. Having said that you shouldn’t shy away from educating yourself online and engaging mortgage websites. They provide a wealth of relevant information that can help you level the playing field so that when you do engage a mortgage professional you are doing so well informed.

Now, if only it would snow I could use those skis that I bought online!

Earlier this fall I partnered up with a great website called Ratehub.ca. The site is unlike anything else you’ll find online. For starters, it’s not run by a financial institution or mortgage broker so the information and rates you find there are all 3rd party provided and as unbiased as possible. Not only is the team that runs the site highly specialized and cutting edge they also have a great sense of you humor and know how to have fun.

About a month ago they uploaded a post on their blog entitled Christopher Molder: Meet the Man Behind the Mortgage Rate where they quized me on all aspects of my life including hobbies and future ambitions. They even managed to dig up some old pictures of me in another life as a musician! Did you know that I used to play the accordion in a Toronto based Latin Band? Here is an excerpt:

What did you do before you were in the mortgage business? Any odd jobs?

 As a second generation mortgage broker it feels like I’ve been in the mortgage business forever. During university I held summer jobs with various mortgage lenders. I also worked for a promotional staffing company which gave me awesome experience engaging consumers in unique settings for various clients. Read more.

This past Spring I attended the Hot Docs film festival with my friend and real estate colleague Mark Savel of Savelandthecity.com fame. We watched a great film by British film director Anthony Baxter entitled “You’ve Been Trumped”. The film documents the David vs. Goliath like struggle of a local small town Scottish community attempting to save a scientifically unique and beautiful spot of coastal sand dunes from Trump’s plan for a monolithic golf course.

Click here to view the embedded video.

I have never had much admiration for Mr. Trump, I can’t align my views on business, wealth or success with his and this film certainly didn’t do him any favours.  So it is completely ironic that I should rely on him to help me promote my business.

I had heard rumours that in his book Trump: Think Like A Billionaire, Mr. Trump does an admirable job of selling the services of a mortgage broker. I recently decided to search for myself and low and behold I found one of the most sincere and useful explanations as to why a borrower should use a mortgage broker. I quote Donald:

A good way to get a mortgage is to pass the buck to somebody else. Shopping around and comparing mortgages can be time-consuming, so it may save you time to pay someone to do your shopping for you. (Note: in Canada you generally don’t pay for the services of a mortgage broker) Get a mortgage broker, but get a good one. These people are engaged daily in the world of mortgages, which means that they have to know where to get the best rates, who is offering the best conditions, and generally, where it’s advantageous to apply.

In the long run, you will probably pay less for everything if you get a good mortgage broker, since the broker will know what kind of hidden charges there are and steer you clear of various problems[...]

Ask you real estate broker to recommend a mortgage broker, or get a referral from friends, colleagues, and neighbours who have recently taken on mortgages. Like your real estate broker or your lawyer, the mortgage broker should be someone you feel comfortable working with – and someone you know whill not sideline your best interests in favor of their own financial considerations.

The Donald’s quote is perfect and hits on all the highlights of the advantages of using a good mortgage broker. So thank you Mr. Trump, I still don’t know about all the other stuff but I guess you are alright.

Not sure if you have found the right mortgage broker? Checkout some of our testimonials from clients who have experienced the difference a mortgage broker can make.

I like to share with my readers the small successes of my online exploits. Last week I was quoted in two separate Financial Post articles about mortgage interest rates. The recognition, as insignificant as it may be, is very satisfying and reassures me that my blogging is achieving its goal. The purpose of this blog is to share the knowledge and experience of over 30 years in the mortgage business with you.  Getting media attention means that I am exceeding the scope of my blog!

The first article is regarding a large drop in bond yields last week which have an effect on fixed rate mortgage rates. Bonds down, but banks slow to cut rates

The second article is about sudden changes to variable rate mortgages late last week. RBC blinks, boosts variable mortgages

Enjoy!

Christopher Molder – Son Of A Broker

The mortgage headlines here in Toronto and across the country have been dominated by the January 17th announcement by Finance Minister Jim Flaherty. The new mortgage rules will have bite and definitely effect the ability of young Canadians and marginalized borrowers to participate in the market.

It will be interesting to see how the changes will effect home prices. If prices and sales continue to surge forward in the bigger markets like Toronto and Vancouver despite the changes then I think it would be safe to say that we are in the midst of an ugly real estate bubble. I would expect to see some slowing down.

One of the changes announced is in regards to home equity lines of credit (HELOCs). A popular financing tool that has been targeted due to misuse by consumers.  Flaherty’s announcement just underlines that the Canadian Government won’t insure HELOCs in excess of 80% loan-to-value.  When they were first introduced into the market, lenders used glossy photographs of couples in convertibles and boats to sell the product. The message was clear encouraging borrowers to use their home as the proverbial “ATM machine”. The truth is that HELOCs, when managed properly, are a very important tool in managing household debt and finances. Given the opportunity and discipline a HELOC is a great financing option.

I am having an on going conversation with a client who bought a house last year and contacted me concerned about his burgeoning consumer debt. He expressed that he could make the minimum monthly payments but was having difficulty making any significant headway and asked for guidance.  My advice was to start by tracking spending and create a budget. It seems like a mundane and boring exercise however once the habit is formed the budgeting is very revealing. Often times it is obvious where to find cashflow to pay down debt. In this Moneyville.ca post you will find 7 online budgeting tools to get you started.

That wraps up The Mortgage Radar for this week. If you have any questions or would like to contact me to have me work with you on your mortgage please don’t hesitate to get in touch. Keep in mind that the services of a mortgage broker like myself don’t cost you anything as I get compensated by the lender. 416.461.0204ext2

This week there were two mortgage related headlines that we wanted to communicate to you.

1. The Minister of Finance announced 3 changes to mortgage rules that will come into effect on March 18th 2011.

2. Making less head lines than usual the Bank of Canada met and decided to keep the prime rate unchanged.

What does this mean to you?
Of the 3 changes announced by Jim Flaherty two are relevant and we have received a number of questions regarding them.

The first change is a decrease from the maximum amortization allowed in a CMHC insured (high ratio or greater the 80% loan-to-value) mortgage. Previously we could qualify borrowers based on a 35 year amortization that will now decrease to 30 years.The effect is that borrowers will qualify for less mortgage money.

If you already have a high ratio mortgage at 35 or 40 years this change will not effect your mortgage. It will only effect new borrowers who don’t have 20% down payment and are stretching to qualify. If you know of a first time home buyer who is thinking of getting into the market this year they may want to act before the changes take place.

The other change is a decrease to allowable refinance loan-to-values. Previously you could refinance your home up to 90% of market value. In an effort to force Canadians to save and not use their homes as an ATM machine the amount has been reduced to 85%. If you are currently in a situation where you feel that a refinance to a lower rate or to consolidate consumer debt is right for you then it would be a good idea to contact us to make sure that an opportunity doesn’t go by.

Mortgages are very dynamic and the guidance that we offer is based on the circumstances of each individual. If you would like to review your mortgage to make sure that you are still on track please call we’d love to hear from you. Remember that the services of a mortgage broker like myself are free of charge to you. Get me to work for you.

Chris Molder -Son Of A Broker
416.461.0204

Good news from the Bank of Canada this morning if you have a variable rate mortgage or line of credit. In their last meeting for 2010 the Bank of Canada has decided to leave the prime rate unchanged citing that while the global recovery is rolling out as expected there are some increased risks. You can read the full press report here.

What does this mean to you?
If you are in a variable rate mortgage or have a line of credit your monthly  payments will not change. The retail bank prime rate will remain at 3.00%.

Should you lock in?
Although there was a slight increase to fixed rate mortgages last week, today it is still possible to lock into a fixed 5 year at 3.79%.  Despite the low rates we don’t see any significant reason to convert a prime minus variable rate mortgage as the prime seems to be stable as well as fixed rates.

If have a variable rate mortgage at Prime + X then it would certainly be advantageous to consider refinancing into a Prime – 70 (2.30%) mortgage today.

Contact me to help you arrange your mortgage and remember the service of a mortgage broker like myself is free of charge to you.

A few months ago my Dad added a couple of posts to this blog in the “Files of the Broker” section. One of his post was about “Oddball Property Private Mortgage Financing“  where he explained the challenges of financing unique homes and told the story of how he used his Mortgage Investment Corporation to finance a property that once served as a townhall, firehall and jail in the small community of Coldwater Onatrio. Helen Morris further explores why Unique Abodes Often Require Special Mortgage Financing. If you are in this boat give us a shout we may be able to help.

Are you disappointed with the 2-3% that you are earning in your RRSP and wondering if there is another safe haven to invest your money at a fixed rate of return? Consider investing in your mortgage. Your own mortgage is actually RRSP eligible making it a very intriguing investment that sparks the imagination of a lot of would be investors. Rob Carrick, personal finance writer at The Globe & Mail, presents a very comprehensive overview of this rare but interesting strategy of Making A Return On Your Mortgage.

Mortgages are strange dynamic creatures and there is something about time and compounding interest that make it difficult for us to fully grasp what small adjustments to payment frequency or extra payments can translate into. As a mortgage broker I am constantly consulting with clients to see how reallocation of cash flow can benefit the client so that they get out of debt sooner and pay the least amount of interest to their bank.  Here’s an interesting spin How $10 a Week Can Translate Into A New Car.

Lastly, today’s most significant real estate news is about affordability of homes in Toronto. Counter this with headlines being made in Paris. What Crisis? Paris Property Prices Hit Record

That Rounds up The Mortgage Radar to kick off the week. If you have any questions, comments or would like to explore the possibility of using my services to help arrange your mortgage get in touch with me via e-mail or by phone 416.461.0204ext2. Remember I get compensated by the lender through a finders fee so you don’t pay for my service.