Make Money Count

Must Know Mortgage Information

This week’s we zone in on home equity loans. There is a tug of war going on right now between interest rates and inflating asset prices that’ll dictate where housing prices will go over the next several years. This adds a lot of uncertainty to people looking to enter the real estate market for the first time, but it will also greatly impact those already in it looking to take out home equity. A short-term home equity loan may be your best option. You may have missed the episode live because you were watching an amazing Euro Finals, but have a listen to it now to learn some helpful tips for evaluating your home equity loan options.
Three helpful considerations in order to get the best product FOR YOU are:
1.      Time: Whatever amount of time you think you need the money for, add three months. Lenders will reduce rates if you are precise with the time you need the money for because they want to be able to lend your money right back out again after you paid it back. If you underestimate how long you need the money for, you’ll be forced to renew for another term and get hit with fees in the process.
2.      Amount: Similar to the time aspect, understating the amount of money you need also leads to extra fees if you go back to them for more. They will always try to give you less than you need as a result. So know your number, and make sure you get it or as close to it as you can where you know you won’t have to go back.
3.      Exit Strategy: This is by far the most important. Lenders always want to know how their borrowers plan to exit the deal. If you can communicate a clear and reliable plan to the lender for how the funds will be used and then returned, you’ll find they can be much more flexible on the rate they offer you.
These are important aspects of all home equity loan that lenders take very seriously. However, there are also questions that you as the borrower should be asking your lender before coming to an agreement:
1.      How long will it take to close the deal? The longer it takes, the your more debt continues to increase and your credit score decreases. Make sure your private lender can close the deal quickly.
2.      Are there any hidden fees? Once you get closer to the closing date, lenders know that time is no longer on your side and if there are any fees you don’t know about yet, you may find you don’t have a choice anymore. Ensure you know all the fees that may be involved, from the lender, any appraisal, and legal costs, before proceeding with the deal.
3.      Don’t be afraid to ask the lender if they have dealt with other borrowers in your situation, and if so, what rates did they pay. Lenders and brokers are governed by regulators and they aren’t allowed to unfairly price gauge their borrowers. Make sure a lender does not detect desperation in your voice and upcharge you because of it.
Information is your friend in this space. The more you know about what lenders are looking for in a good borrower and what you need from them, the more you will be able to save long-term.
#Cannect #HomeEquityLoan #HomeFinancing #MortgageBroker

Banks Profited $40 Billion Through The Pandemic

We hope you all had a great Canada Day weekend. This week’s episode takes a deep dive into the profitability of our Canadian big banks. Did you know that these banks, on average, have been profiting $4,000 per Canadian household over the last year? While the services of the banks are essential to households and our economy as a whole, it is important to know how to avoid being taken advantage of. Have a listen to this episode to get a better understanding.
Here are some important takeaways to consider.
Loyalty is not always your friend.
We have discussed this in a few episodes now, but for a good reason. If you are under the belief that your bank is your only option for credit, they will leverage that. A lot of borrowers have a mortgage with their bank with a collateral charge that exceeds the amount they borrowed and because of the stress test, they still can’t increase their mortgage. When the banks talk about your unsecured credit options, that’s when it’s time to call Cannect. The unsecured options will destroy your credit if you keep their balance maxed out for too long. Seek out other options, a mortgage broker will help you do that.
They’re called the Big Banks for a reason.
Their profitability comes from their size. They have the ability to hold off the competition because of their size and brand awareness. 20 years ago, only 20% of Canadians used a mortgage broker. Now that number is up to 40%, but still well-below the US at 80%. The banks’ residential mortgages become less profitable as more Canadians turn to mortgage brokers, but the banks went through this problem before with Trust companies. When companies, like Canada Trust, started providing discounted rates, it ate into the big banks’ market share. As a result, these companies were acquired by TD and other Big Banks.
The banks will always be able to adapt, so it’s always up to us as the consumers to recognize that we can be a David to their Goliath at times and learn about our opportunities to save through other options. Cannect agents are happy to discuss these options with you anytime.
Marcus Tzaferis and the Cannect Team
#Cannect #MortgageBroker #CanadianBanking

How To Refinance Your Mortgage

Marcus, Justin, & Matthew once again join Iain Grant, host of Newstalk's 1010 Radios' Ask The Expert, for a deep dive into the world of renegotiating and refinancing your mortgage.
Purchasing a home can be one of the most stressful situations in your life, and trying to renegotiate the terms of that purchase years down the line may seem like a daunting task that you're going to avoid at all costs. But truthfully, there may be a chance you're leaving thousands of dollars on the table as your equity sits doing nothing, so why not look into what options are on the table for you?
Refinancing is the term used to renegotiate the terms of your mortgage. Why would you do that? Well, perhaps you want to lower your month to month payments? Maybe you want to access some of the equity in your home now that it's gone up in value? Maybe you want to shorten how long it will take to pay off? Whatever the reason, you shouldn't be the one negotiating this contract.
The team at Cannect is trained to negotiate these terms and find you the best product available in the market today. Your bank might not be the best choice when it comes to your new mortgage. You're already a client of theirs, and they know how much this intimidates you. 
You shouldn't have to do this work. You should have the best options available to you all the time. Those options come from Cannect.
If you're looking for a stable investment, take a look at the Cannect Mortgage Fund.
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How a B-Mortgage Can Fix Bad Credit

Marcus, Justin, & Matthew join Newstalk 1010 host Iain Grant once again as the gang tackles the discussion of B-Mortgages and Bad Credit.
Don't forget to tune in Live every Sunday at 3pm for brand new episodes of Make Money Talk, The Mortgage Show on Newstalk 1010!
If you're looking for a stable investment, take a look at the Cannect Mortgage Fund.
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Mortgage Broker Explains Reverse Mortgages

Last weekend, Matt and Marcus took to Newstalk 1010 to discuss a product most people know of, but very few fully understand: the reverse mortgage.
People often go to their banks to inquire about it as an option to supplement retirement income, but that is not the best course of action for everyone. Have a listen to the episode to learn more about the reverse mortgage as a product and if it may be the best option for you.
We go into good detail on the episode, but one thing to take away is that it’s always ideal to give a mortgage broker as much detail as possible about your financial situation so that they can set you up with the right product. The products and rates you qualify for will depend on so many factors like how old you are, how much equity you have in your home, whether or not you have a pension or investments to supplement your retirement income.
A reverse mortgage may be your best option, but you might be able to qualify for a much cheaper home equity line of credit at that bank or elsewhere if you have enough pension or investment income supplementing your retirement. The rate difference on these two products can be 2-3%! Let a mortgage broker know your particular situation so you can get the best product available.
 
If you're looking for a stable investment, take a look at the Cannect Mortgage Fund.
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Qualifying Rates for Canadian Mortgages?

Join us for another Episode of Make Money Count, now recorded live every Sunday at 3pm EST on 1010 Newstalk.
Marcus shares his thoughts on the new qualifying stress test for Canadian mortgages, and shares his ideas on why that shouldn't be reason alone to rush into the market.
Starting June 1, Canadian home-buyers will face tougher mortgage stress test rules that will decrease the buying power of most borrowers. The move, announced by the country’s banking regulator in May, was in response to an overheated market that has already started to see signs of cooling.
Even prices in the country’s largest market have started to stall. The average selling price for the Greater Toronto Area was $1,090,992 in April, down slightly from $1,097,655 the previous month, according to the Toronto Regional Real Estate Board.
The new mortgage stress tests will affect Canadian homebuyers applying for or renewing a mortgage.
The new qualifying rate on uninsured mortgages – where the down payment is more 20 per cent or more – is now either two percentage points above the contract rate, or 5.25 per cent, whichever is higher.
Before June 1, any buyer whose down payment was 20 per cent of the purchase price or more had to show they could afford mortgage payments if the interest rate was two percentage points higher than what the bank is offering them or 4.79 per cent, whichever was higher.
 
If you're looking for a stable investment, take a look at the Cannect Mortgage Fund.
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Ask A Mortgage Expert! on Newstalk 1010 Radio

This past weekend, your two favorite podcast hosts took the show to Newstalk 1010 Radio! In this one-hour special, we highlighted the advantages of using a mortgage broker for unbiased financial advice instead of your bank, discussed the impact of COVID-19 on the landing landscape as well as the consumer, and took incoming calls from live listeners. Have a listen to the episode HERE (link).
A lot of you who have listened to previous Make Money Count episodes will already have heard a lot of the points discussed. But a couple of key points to always keep in mind:
1. Your bank’s priority is to their shareholders, not you.
Your bank knows that the average borrower thinks they are the only place to turn to when they need a mortgage or need any form of loan. They likely are not offering the best rate available to you, and they’ll limit your credit options if you need to access more capital in the future. A mortgage broker will shop you around with several different lenders to get you the best rate possible and will give you unbiased financial advice if you need to access home equity in the future.
2. Secured vs Unsecured debt: Go with secured.
If your bank only offered you credit cards and unsecured lines of credit when you needed help, the interest on it will be much tougher on your long-term finances than debt secured against your property. If you own property and have the equity in your home, the rates you will be able to get from secured debt will be much lower. If your bank won’t present secured options to you, go to a mortgage broker.
3. The Cannect difference? Salaried staff and a streamline process.
Any mortgage broker can help you, but our salaried staff won’t ever pressure you into making any decisions. All we want to do is lay out all the options for you to help you make the best decision FOR YOU. And with the help of our in-house technology, we have the ability to go directly to borrowers and investors. Without fees to 3rd parties, we can lend cheaper and generate greater returns for investors simultaneously.
Look out for us on more live shows in the near future. Feel free to call into them with any questions, or just reach out to us directly at 416-766-2666.
 
If you're looking for a stable investment, take a look at the Cannect Mortgage Fund.
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Weighted Average Cost of Capital

For those of you who are analytical thinkers, we’ve got a good one for you this week! This is the episode where we show you how Cannect, as a brokerage, lender, and investment fund, can maximize value and savings for you all at once. The weighted-average cost of capital (WACC) is the net, overall rate that a borrower pays to service all of their debt. Many people come to us in messy situations with multiple existing debts. The first thing we do is calculate their WACC. By refinancing and restructuring their debt, whether it be through a 1st mortgage refinance, a new home equity loan, or a mix of both, our goal is to get the borrower in a position where they are paying less money to service their debt annually than they were before. This may sound complicated, but have a listen to the episode where we describe this further and take you through real examples of improved financial situations where we helped people reduce annual debt payments.
A lot of people don’t see this as something they can do because of costs associated with breaking their debt agreement. Yes, these costs can be high at times, and sometimes just not worth it. We can apply the cost of breaking the debt agreement into your new debt servicing charges and see if it can save you money in the long term.
I’m sure many of you have also heard the saying “Time is Money”. That couldn’t be more true here. When analyzing an individual’s debt servicing situation, we account for not only its cost, but also the time it will take to pay the debt back. Can we get you into a situation to pay a certain debt faster, or do you see yourself being able to pay off a debt in the near future? These are additional factors that make every WACC and debt servicing solution unique.
If you didn’t even make it through 5 minutes of the episode, we get it. These situations are all complicated, stressful, and boring at times. These are the problems we find solutions to so you don’t have to. We will determine the best course of action to improve your debt servicing costs and overall financial position. 
Just give us a call, we’d be happy to help you just as we did in this episode.
#WACC #MortgageRates #InterestRates #Cannect #Investing

What Is A B-Mortgage?

We have a bit of a different podcast this week. Hopefully we can shed some light on a subject that has a bit of an undeserved stigma in the lending world. Most people don’t know what really separates the A side from the B side and what can be done to move you up. We dive into these topics and more.
What surprised you the most about each lending side? We may have an idea:
Owning several properties is a good thing, right?
Sure, but not to your bank. Owning real estate may be a great way to benefit from value appreciation and streams of income, but your bank will only see the liabilities and expenses of the ownership. A-lenders will always hesitate to approve you for a good rate if you own a lot of real estate, so you may find yourself on the B side for this reason alone.
Bad credit is SO easy to fix.
If credit is the only reason you don’t qualify for an A deal, you are in luck. If you have enough home equity to turn your unsecured debt into secured debt, it should not take long to lower your debt servicing costs and get you with an A-lender.
Everyone’s situation is unique, a mortgage broker can make a plan that’s best for YOU.
No two people are the same. You may be a high-salaried employee with a recent blemish on your credit report, a self-employed business owner with flawless credit, or you may have a strong salary and credit score, but own many properties: the A side is going to think twice before giving you an approval. By going to a mortgage broker, they can tailor a plan to perfectly fit your needs. At Cannect, we can do this for you for FREE. If you go to your bank, they will just tell you that you don’t qualify, maybe offer you a line-of-credit, or tell you to look at the B side. By going to a mortgage broker like Cannect, whether it’s finding you the best B deal available or giving you a small home equity loan to improve your credit, we can repair your particular situation and get you on the best path back to the A side and long-term savings.
Just because Ontario is back in a lock-down, it doesn’t mean you’re locked-down into high-cost capital. We hope you enjoy the spring and stay safe.
#Cannect #MakeMoneyCount #BMortgages

Inflation is Coming!

Inflation is coming, make sure your mortgage is ready. 
A Quick Guide to save money on your mortgage in the next two weeks!
Last week we found out that even though we have been in a lock-down, inflation has started to creep up. Yesterday the Bank of Canada (BoC) said that they are going to start slowing down their bond purchases. These two statements are directly linked to your mortgage rate. If you haven't compared your current rate to the rates available on the market, now is the time.
You can be forgiven for not wanting to deal with your mortgage over the past few months. But you should know that more than 80% of Canadians are losing money on their mortgages. 
It is almost certain that the rate on your mortgage is too high relative to what you should be paying. If you're an existing Cannect borrower, this doesn’t apply to you, our mortgage manager software analyses every mortgage file we have to identify savings and alerts an agent to notify you. BUT, if your mortgage was done directly with any lender in Canada, you should know that they have no obligation to inform you that you might be able to save money by paying them less in interest. 
You need to know that interest rates have already started increasing, they always start moving slowly and then move faster, that’s the way the market works. 
STEP 1:Let’s start off by addressing the elephant in the room! Here are the three main reasons you don’t want to even look at your mortgage:
You dread what the mortgage penalty to break it might be.No need to stress about this. In many cases, we can lower your rate with your existing lender. In others, we can reduce the penalty significantly, and at the very least we can monitor your mortgage until savings come available or your mortgage is coming closer to maturity.Thinking about collecting paperwork gives you anxiety.This is our job! Not yours, you focus on things you need to and let the Cannect team do this. Our technology and mortgage knowledge make the process easier than ordering a coffee.Shopping for the lowest rate SUCKS!There are so many rates out there, so many lenders, so many brokers. We know! That's why we have a team searching hundreds of lenders to get you the best rate, every time, guaranteed!
STEP 2:Once you have decided to move forward with analyzing your mortgage for possible savings, we need to figure out what type of interest rate you should be switching to.
Three factors should influence your decision as to what your next mortgage rate should be:Time: How long do you plan on keeping your mortgage for?Risk Appetite: How willing to absorb an interest rate increase are you, or how much are you willing to risk to save money with a variable rate mortgage?Where is the economy heading?
STEP 3:The way you answered the question from step 2 should leave you selecting one of 3 mortgage products today:
A 5 Year Fixed Rate starting at 1.60%A 5 Year Variable Rate starting at 1.0%A 10 Year Fixed Rate starting at 2.60% 
Rates are always changing, and although these are not likely to be lower anywhere else, we will constantly be checking. Trust is an important part of this process, you need to trust that the rates we provide you with are the lowest on the market. 
STEP 4:We get to work!At Cannect we work with hundreds of Canadians each and every month in an effort to reduce the interest they are paying on their mortgages. Our primary goal is to make the process of renegotiating your mortgage with your current lender, switching your mortgage to a new lender, or borrowing more money, as simple and easy as possible. We have it down to a science. No paperwork, just a phone call to identify what savings are available to you, and if the numbers make sense, two of our mortgage specialists will be dedicated to your file. We use our huge mortgage origination volumes to make sure you are getting the best mortgage rate on the market, and we use our amazing proprietary mortgage software to help collect and verify all your paperwork. Our service commitment is to do all the things you don't want to do. Want us to deal with your HR department to confirm employment, no problemo! Need someone to call your accountant? That’s us! No need to meet to sign paperwork either. Most of your paperwork can be collected virtually, with your approval. 
By now you understand that all of our services are paid for by the lenders we source mortgages with, and more importantly, our entire philosophy since inception is to provide Canadians with sound, unbiased mortgage advice. That means if doing a deal doesn't make sense for you, you're going to hear about it from one of our salaried employees first!
#Inflation #MakeMoneyCount #InterestRates

Is It Time For A Fixed Rate Mortgage?

Is it Time to Lock In?
Inflation may be taking us on a wild ride.
If you operated your household finances like a country here is what you would do right now:
1) Borrow as much money as you can at as low a fixed, long term interest rate as possible;
2) Invest in ways to increase your productivity and income well into the future.
This strategy increases your debt, but assuming you can invest in ways that earn income in excess of the interest you pay, your net worth will grow and at the end of the term of the debt, it will be easily refinance-able.
The best Five Year Fixed rate mortgages are typically reserved for borrowers with lower down payments who are purchasing rather than those with higher down payments or with greater equity positions looking to refinance.  Today the best 5 year fixed rate mortgage on the market is 1.39%.  The best variable rate on the market is 1.35% which is 1.10% below prime.
What we think we know:
The economy will likely experience a double dip recession. The long, hard winter of 2021, with renewed lock-downs, is exposing the gaps in the response of all governments to the COVID-19 crisis.  There will be real and lasting damage to the economy as a result.  
Low interest rates are here for the foreseeable future.  The Bank of Canada has used low rates like a surgeon uses powerful painkillers.  Premature cessation of either could be worse for the patient than the disease was.  
We are starting to recommend fixed rates in the 5-7 year tenor (we see little value in 10-year rates).  Our view is that all of the government’s actions at the moment are highly inflationary, and as the world normalizes that demand will recover faster than supply in the 18-36 month time frame.  5 and 7 year fixed rates appear to us not to reflect this eventuality.
Tomorrow the Bank of Canada will meet to offer guidance as to how the economy is doing and some economists predict we could see a, “Micro-cut”, this would mean a reduction in the overnight rate of 0.10% to 0.15%.  We don’t think that the central bank will resort to such a largely symbolic gesture - but it’s possible, if only to talk the Canadian dollar down from its currently lofty position.
Economists believe that although Canada will soon return to its previously robust economic ways we might have a little more rough water ahead. As the vaccine rollout slows and the second wave of COVID seems to be worse than the first, many warn that we are not out of the woods yet.  The government’s plans with respect to vaccination, as well as their fiscal and monetary plans, involve significant execution risk and will have unintended consequences.  These consequences are more likely than not to be inflationary.
Bay Street, heeding the possibility of meaningful inflation, touts the merits of gold or the stocks of the companies that mine it.  Alternatively, they advise an investment in Bitcoin.  We take no position on the merits of either.  We simply say that for the average Canadian with a variable-rate mortgage, converting it to a fixed rate is easier, cheaper, and less risky than evaluating an investment in precious metals or crypto-currency.  Bay Street stays silent on this for the obvious reason: the fees aren’t as high.
Remember that just before the onset of the COVID-19 pandemic, our economy was in robust shape.  This strength helped Canada to manage through a period of uncertainty and economic contraction unmatched in living memory.  Consumer spending has rebounded, at the same time that the savings rate has increased!
While there will be winners and losers as a result of the pandemic, we are generally positive on the prospects for the economy going forward.  A release of pent-up demand and significant infrastructure spend, combined with continued low borrowing rates, will mean a period of above-average economic growth.
To borrow from Alan Greenberg, the long-time Chairman of Bear, Stearns in the 1980s and 1990s - these difficult times will not last forever.  Further, in our experience, when the bad times end, they end suddenly and often violently.  And regrettably, nobody rings a bell the day before that happens.  Stay strong.  We’ll be out of the current crisis soon.
 
If you're looking for a stable investment to get you through these economic hardships, take a look at the Cannect Mortgage Fund.
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Fixed vs Variable Rates

Cannect has been providing 5-star rated home financing solutions to Canadians and helping build equity for investors for over 5 years.
With offices in Toronto and the GTA, Cannect has served thousands of borrowers and investors from Toronto, the GTA, and across Canada.
 
If you're looking for a stable investment, take a look at the Cannect Mortgage Fund.
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Notes:
0:00 - Marcus asks Justin if he takes the Fixed or Variable Rate right now.1:20 – What are the three decisions behind choosing a Fixed or Variable rate mortgages?3:00 – What are the risks involved with these different decisions?5:00 – What factors impact the price to borrow?5:45 – What might be an indicator for rising lending rates?8:00 – How important are COVID stimulus packages to the Canadian economy?9:15 – Why are the Fixed and Variable rates so close together right now? (Hotdogs & Hamburgers)11:12 – What to do if you are currently buying a property.12:00 – We are not out of the woods yet! What is in store for the future?14:00 – What direction could rates be headed next?15:05 – What to consider if taking a fixed rate.15:57 – What is the penalty to break a mortgage?17:42 – Marcus summarizes our conversation.
#Mortgages #Cannect #CanadianEconomy