Mortgages, Real Estate, and Life in 2024

Posted on January 6, 2024January 6, 2024 by markogel@gmail.com

(Jan 6, 2024)

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With all the uncertainty these days, it’s easy to succumb to the negative energy amplified by various media outlets like television, social media, and news publications. The year ahead in real estate, mortgages, and life, in general, will be a rollercoaster ride of challenges and triumphs. However, the key to not only surviving but also thriving lies in recognizing the fine line between acknowledging what is out of our control and empowering ourselves to focus on what we can control and influence. Rather than dwelling on the broad spectrum of things we CANNOT control, let’s shift our focus to what we CAN control: our thoughts, finances, and health. These elements form the foundation upon which we can build resilience and drive positive change:

THOUGHTS: Our mindset shapes our reality. Choosing to focus on the positive aspects of life, personal growth, and the potential for improvement can pave the way for a more favourable outcome.
HEALTH: In the pursuit of a prosperous life, our physical and mental well-being must take center stage. Prioritizing health through exercise, a balanced diet, and mindfulness ensures we have the vitality to navigate challenges.
FINANCES: While global economic forces may sway, our financial decisions remain within OUR grasp. Smart financial planning, budgeting, and investing empower us to weather storms and capitalize on opportunities.

A particularly valuable resource in times of uncertainty is the Andex Chart. If you’re not familiar with it, today’s your lucky day! It’s long been described as the document-version symbol of resilience and growth. The Andex Chart is a visual representation of North America’s key financial metrics since 1934. Click here to be redirected to one of the many available online. The chart illustrates the upward trajectory of good fortune, showcasing how, despite valleys and setbacks, the overall trend is consistently upward. This factual analysis will normalize any pessimistic outlook you may currently be fixated on. Whenever you’re feeling down about your finances, net worth, or business, put your reader glasses on and locate an Andex Chart. Just stare at it. It’s a one-page illustrative diagram that includes virtually every relevant financial North American metric and charts it against global events. For example, since 2020, the average inflation rate is approximately 6.2%, but for the 30 years prior, the average never exceeded 2.1%. The last time we averaged 6.2% was the entire decade of the 80s. Despite challenging periods from 1970 to 1990, Canadian stocks rose by about 24%! And all this amid historic negative events (Arab Oil Embargo in the early ’70’s, 22.75% Prime Rate in the early ’80s, and and the infamous Black Monday of the late ’80’s). Pretty crazy, right? Fear not, and have faith in the sacred Andex Chart. It serves as a reminder that the key to success lies in perseverance and a long-term perspective.

Now, focusing on mortgage holders and their journey of survival, evolution, and thriving, we are approaching a period of transition. Some will transition from sub 2% interest rate mortgages to a more long-term average 5% interest rate environment, as a significant number of mortgages are set to expire in 2024 and continue throughout 2025. Others will enter a market intensely contested and surrounded by conditions and outcomes not seen or experienced in decades. So, if you’re faced with a mortgage renewal in the coming year, brace yourself for the shock of new terms. On the other hand, if you’re about to enter the market, you’re committing to today’s reality—higher interest rates, post-inflationary standards, and crisis-ridden real estate supply and affordability issues. A pessimist might say, “pick your poison.” Personally, I’ll be looking at things from an Andex Chart point of view. What is happening at this time is normal, and it will continue to occur in the future. It’s a time to regroup, to adjust, to pivot. It’s not the end; it’s a new beginning. And with new beginnings come new plans and fresh mindsets.

If you’re a mortgage holder renewing at a higher rate, accept that renewal periods are not always optimal times to lock in new rates and terms. However, maintain optimism. Mortgage renewal time is an opportunity to make changes in your financial situation, without penalties. For those anticipating a higher and unmanageable rate, a simple fix may be to increase your amortization. Or, by consolidating substantial credit card debt or lingering personal line of credit balance, you can achieve a drastic reduction in outgoing cash flow. What may seem demoralizing from a mortgaging perspective could be rejuvenating from a personal finance and mental health standpoint. Amortizations and balances can always be managed and improved over time as interest rates and personal income improve.

If you’re entering the market with your first purchase, accept that you may need to adjust your purchase expectations downward, scale back your current lifestyle, improve your employment prospects, or a combination of these. It’s not your fault that you live in an unaffordable market, but going forward, there won’t be any handouts. Commit to a plan to achieve your real estate goals; get pre-qualified for a mortgage and realize where your shortcomings are. Once again, as exemplified by the Andex Chart, your entrance into real estate may appear challenging at first, but with perseverance and a long-term perspective, the challenge will diminish over time.

For current homeowners looking to sell their homes, whether upgrading to a larger home or downsizing to a smaller one, there are crucial considerations in both mortgage qualification and the real estate market. Upgraders should be prepared for a thorough mortgage pre-qualification, accounting for criteria they likely were not aware of when they last purchased a property. This includes the 2% mortgage stress test, minimum down payment thresholds for various mortgage programs (20% minimum for properties exceeding $1M), the elevated interest rate environment, excessive mortgage break penalties, and non-eligible employment (newly self-employed, change in career path, etc.). Downgraders should also be aware that even though they are looking to purchase a property of lesser value, such as a condo, there are other property expenses that could exceed what they were previously accustomed to (strata fees, special levies, etc.).

As we stand on the brink of a new year filled with uncertainties, it’s essential to recognize the duality of our world—the uncontrollable external forces and the empowering elements within our reach. By focusing on what we can control—our thoughts, finances, and health—we not only weather the storms but also contribute to the upward trajectory of our personal and collective destinies. Embrace the chaos, compete passionately, and let the burning desire for improvement guide your journey. In the grand tapestry of life, the trend is, and always has been, onward and upward.

Want to discuss what 2024 holds for you? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

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What’s the difference between a mortgage renewal and a mortgage refinance?

Posted on November 29, 2023November 22, 2023 by markogel@gmail.com

(Nov 29, 2023)

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While the terms renewal and refinance may seem interchangeable, they represent distinct differences. “Mortgage renewal” is the classification given to a mortgage application that is simply renewing to a new interest rate and term. No new funds are requested at maturity; the mortgage principal maintains its balance and continues on the path of its existing amortization schedule. “Mortgage refinance” is when new funds are added to the existing mortgage principal, resulting in a larger mortgage amount and the option to alter the amortization schedule.

Determining whether it’s a renewal or a refinance mortgage is important for a couple of reasons. Firstly, when it comes to interest rates, you are likely to get a better rate when renewing your mortgage. There are opportunities to get similar rate offerings for refinances, but a few backend specifications of the existing mortgage have to line up (I’ll defer to these details in a future post). After the rate difference, the next significant consideration against refinances is the inclusion of administrative fees. As mentioned above, when completing a mortgage renewal, there is no cost to you (the applicant). However, for refinances, there are a couple of fees to be aware of: appraisal and legal. Depending on where you live in Canada, your legal fee will range from $600 to as high as $1,800, depending on the complexity of the refinance (the more items the lawyer is instructed to pay out, the higher the legal fees). The appraisal fee depends on the property’s size and its proximity to the nearest appraiser, usually around $250 to $400 per appraisal. In most instances, fees get worked into your equity and get tacked on to the new mortgage balance, sidestepping any potential for out-of-pocket expenses.

Mortgage Renewal Key Points

Although adding new funds to an existing mortgage balance at maturity would deem the mortgage a refinance, there is a small allowance for new funds to be added for mortgage renewals. Most lenders will allow for a one-time bump up of $3,000 to cover potential fees or payout penalties of the outgoing lender (when I say bump up, I mean the $3,000 getting tacked on to your new mortgage principal). This is a great loophole for those who prefer to renew ahead of their maturity date, rather than paying the break penalty; they could tack on the outgoing penalty fee to their renewed mortgage (provided their break penalty is less than $3,000). You could also increase your mortgage balance and still be deemed a mortgage renewal if your existing mortgage has an existing HELOC or collateral charge. This is comparable to a pre-approved mortgage principal booster that can be activated at any time in the future. If you are currently in a mortgage with an additional component like a HELOC, this applies to you. If any of your existing HELOC is unused prior to your new renewal, you can simply draw the unused portion and claim it as your renewed mortgage principal at the time of the renewal—a great little hack to classify your mortgage as a renewal, thereby qualifying for fully discounted rates and a fee-free transaction (no legal costs, no appraisal costs). Remember the two key points of mortgage renewals: (i) lower rates (most of the time), and (ii) no legal fees to complete the transaction.

Mortgage Refinance Key Points

The most common triggers that result in a mortgage refinance are increasing your mortgage balance and expanding your amortization. Increasing your amortization at renewal time is technically allowed, but it is limited. Essentially, you only have the option to revert back to the starting amortization since your last mortgage event. For example, if your mortgage is coming due next month, and the remaining amortization is at 20 years, you would have the option of renewing back to its starting amortization period since your last mortgage transaction event. So if your amortization was initially set at 25 years, you could technically reset the amortization accordingly. Conversely, for a mortgage refinance, you can reset the amortization as high as 35 years if you so desire. But heads up, for every 5-year increase of amortization that you seek after 25 years, some lenders will add a premium to the interest rate. The most common gateway to a mortgage refinance is the good old debt consolidation. This is when you pay off a bunch of high-interest debt like credit cards and other consumer loans, rolling them all into your new mortgage, which significantly reduces your monthly mortgage payment (thereby eliminating all your other monthly payments of the previous debts you just consolidated). Simply put, it’s the big reset or game-changer for many embroiled homeowners who were looking for a break and some extra breathing room. In summary, any change to an existing mortgage essentially deems the mortgage transaction a refinance. The following are some of the more common changes that lead to a mortgage refinance: removing or adding someone to the mortgage, increasing the mortgage amount, and expanding the amortization.

In Summary

It’s important to understand the distinction between mortgage renewal and mortgage refinance. While a renewal typically offers better interest rates and involves minimal costs, a refinance allows for adjustments in both the mortgage amount and amortization schedule. Key considerations include potential administrative fees associated with refinancing, as well as the flexibility of adding small funds during a renewal. Ultimately, whether it’s the pursuit of lower rates or the need for a financial reset through debt consolidation, recognizing the nuances between these two processes empowers homeowners to make informed decisions tailored to their unique circumstances.

Make sense? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

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My mortgage is coming due and I’m switching to another bank, is it gonna cost me anything?

Posted on November 22, 2023 by markogel@gmail.com

(Nov 22, 2023)

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The process of renewing your mortgage is a pivotal moment that ultimately influences your financial landscape for the coming years (in Canada, that’s typically a repeat frequency of 5-year terms). As your mortgage maturity date approaches, the question of whether to renew with your existing lender or explore options with a different bank often arises. Beyond the considerations of interest rates and terms, a more pressing question occupies the mind of a homeowner: Are there any fees if I choose to renew with another bank? The short answer to this question is, no, not for you. While there are costs associated with switching to a new lender, it’s the new lender that covers these expenses, considering them part of the “cost of doing business.”

Before deciding to switch, it’s essential to do a quick cost analysis. Reach out to a mortgage broker well before your maturity date, and discuss your current lender’s renewal offer. A competent broker should quickly assess whether they can match or surpass your current offer. If a better deal is on the table, the next step involves some math: calculate your new payment and the overall savings throughout the mortgage term. For instance, if a lower rate translates to a $100 reduction in your monthly interest charges, the accumulated savings over a 5-year fixed term could amount to $6,000. This financial gain becomes the deciding factor: is the monthly reduction and the long-term savings worth your time? If not, take the simpler plan and sign off with your current lender for the higher offer.

For those with the penny-saved-is-a-penny-earned mindset, the process of switching lenders and requalifying is always a worthwhile effort. However, others may find it less compelling.

What’s involved in this process, you ask? When switching to another lender, keep in mind that they don’t know you, so a complete application, income and property documents, and signing with a mobile agent are required. The good news? There’s no direct cost to you – only an investment of your time.

How long does the qualification process take, and what’s required?

The first step is completing the application. If you’re dealing with me, the online application takes about 5 minutes, with questions you can answer off the top of your head. After completing the application, a custom document request list is generated and sent separately. Once your documents are received, your application is adjudicated within 3 days. If approved, you sign the lender’s commitment, satisfying any remaining conditions. The lender then works behind the scenes, preparing formal documents and instructions for their legal signing agent. Your role? Waiting for a call from the signing agent for a doorstep signing wherever is convenient for you. The rest – handling funds, modifying title registration, and updating home insurance details – is managed by your mortgage broker, the lender, and its legal team.

In summary, switching to another lender for your mortgage renewal is a fee-less transaction. However, the primary hurdle preventing many from taking this step is the effort involved. Surprisingly, a significant number of homeowners renew at the first offer from their existing lender. Don’t fall into this trap. Make the call, crunch the numbers, and then decide – the figures will often speak for themselves and guide your decision-making process.

Mortgage coming due? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

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604-800-9593 cell/text | Vancouver (Click Here to schedule a call with Marko!)

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Is now the right time to choose a variable rate mortgage?

Posted on October 14, 2023November 3, 2023 by markogel@gmail.com

(Oct 14, 2023)

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In a world where financial stability often hangs in the balance, making the right decisions regarding your mortgage can be a pivotal moment in securing your economic future. As of March 2022, we embarked on an unprecedented journey through a rate-hiking cycle, witnessing the prime rate surge from a modest 2.45% to its current towering 7.20% – a jaw-dropping 193% increase. The ripples of this upward trajectory have undeniably reached Canadian households, leaving many grappling with unforeseen financial hardships. However, history often reveals a silver lining in the cloud of uncertainty. In the 1980s, when interest rates skyrocketed by 82%, they subsequently plummeted by 27% within a brief five-month window, followed by another remarkable 33% decrease over the subsequent five months. So, as we stand where many believe to be at or near a peak in prime rate today, currently perched at 7.20%, a glimpse into the past suggests the possibility of a descent, and if mirrored to the trajectory of the 1980’s that could equate to a descent to approximately 5.25% in the next five months, and if history persists a subsequent drop to 3.5%. Skeptics may dub it “too good to be true,” but what if history continues to write a similar script? Whichever way you examine it, this scenario appears far more enticing than the prevailing fixed-rate offerings in the market today.

Let’s put the current mortgage market into perspective. At the time of publishing this blog post, a competitive 5-year fixed-rate mortgage, particularly for high-ratio borrowers, stands at 5.84%. This rate, while offering stability, leaves you contractually locked into your rate and payment, regardless of potential market shifts. In contrast, a competitive variable rate mortgage, set at Prime – 0.95% (based on the current Prime Rate of 7.20%), presents a compelling alternative. Now, consider the historical precedent we’ve explored, where interest rates in the 1980s saw a steep climb followed by a remarkable descent…today that same 27% drop from 7.20% would equate to about 5.25% and after that, another 33% drop to ~3.47%. If this historical trend holds any weight, the variable rate mortgage becomes a tantalizing prospect. In light of these comparisons, the variable rate mortgage demands your attention as a prudent choice in today’s ever-changing financial landscape. With history as our guide, this option is not just intriguing; it’s a serious contender worthy of your consideration.

Moreover, when considering a variable rate mortgage, it’s crucial to keep in mind a few key features that set it apart from fixed-rate counterparts. Firstly, variable rate mortgages offer the flexibility of allowing you to lock in at prevailing fixed rates at any point during the mortgage’s term, without incurring any penalties. This unique advantage enables you to adapt to changing market conditions or your personal financial situation with ease. Additionally, the break penalties associated with variable rate mortgages are typically fixed at a straightforward three months’ worth of interest. Unlike fixed-rate mortgages, where penalties may be calculated based on an interest rate differential, variable rates mitigate the complexity and potential financial risk associated with these penalties. These features not only enhance the appeal of variable rate mortgages but also underscore the importance of exploring this mortgage option.

Wondering if a variable rate mortgage makes sense for you? Call or text Marko Gelo right now to secure your discounted variable rate at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

DISCLAIMER: The contents of this blog post are derived solely from my personal analysis and perspective. I must emphasize that I am not an economist, nor have I received this information from any external source. My analysis is based on historical Prime Rate data for Canada, and I’ve conducted manual calculations to develop the hypothesis presented here. While I sincerely hope that my conclusions, drawn from an examination of data charts and graphs, hold true, it is essential to clarify that these findings are not verified, confirmed, or endorsed by any authoritative source or expert in the field. The intention behind this blog post is purely to encourage individuals to explore their mortgage options fully. Rather than dismissing variable rate mortgages outright, I advocate for their consideration in the ever-evolving financial landscape. Making informed choices is of paramount importance when it comes to such significant financial decisions.

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604-800-9593 cell/text | Vancouver (Click Here to schedule a call with Marko!)

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What to do when your mortgage is up for renewal?

Posted on October 2, 2023October 6, 2023 by markogel@gmail.com

(Oct 1, 2023)

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The maturity of your mortgage term can be both a moment of uncertainty and an opportunity for financial reassessment. As homeowners, we all reach this juncture sooner or later. So, what should you do when your mortgage is coming due? This blog aims to guide you through the essential considerations, options, and steps to help you make an informed decision that aligns with your financial goals and circumstances.

Assess Your Current Financial Situation by completing a mortgage application with an experienced mortgage broker

By completing a mortgage application with an experienced mortgage broker, you are inadvertently initiating the beginning stages of an in-depth personal financial assessment. Not only are you inputting your application details, but you are doing so into a powerful mortgage adjudication software that calculates your debt service ratios, net worth, and many other critical and eye-opening metrics. Additionally, upon completing your mortgage application, a mortgage broker will also inquire about and retrieve your most current credit rating – this is likely the most critical metric of all, as many people are often unaware that they may be trending in a negative direction that could ultimately damage their credit score and set them up for failure down the road. So, when your mortgage comes up for renewal, take advantage of this opportunity and, at the very least, engage with an experienced mortgage broker to summarize and offer perspective about your current financial standing. The end result is always positive; you either feel validated that you are on the right path, or, more importantly, you are happy that a weak spot has been identified so that it can immediately be remedied, thereby keeping your score on a positive trajectory into the future. Again, I cannot stress the importance of this—seize the opportunity of your mortgage renewal window and seek the services of an experienced mortgage broker for a free consultation.

Understand Your Mortgage Terms:

A mortgage broker plays a critical role in helping mortgage holders fully comprehend the intricacies of their existing mortgage agreement, including terms, conditions, interest rates, payment schedules, and potential penalties for early repayment. Mortgage brokers are well-versed in a wide array of mortgage products from various lenders, providing invaluable expertise. By not seeking the services of a mortgage broker and blindly accepting your current lender’s offer, you may miss out on countless opportunities and tailored solutions available to you. Utilizing a mortgage broker is undeniably in your best interest, take advantage of this opportunity and contact your go-to mortgage broker, or use it as an opportunity to start a relationship with a mortgage broker.

Explore Your Mortgage Renewal Options:

When your mortgage is coming due, one option is to renew your existing mortgage with your current lender. They will typically offer you a renewal package with terms and interest rates. However, this is also an opportunity to negotiate for better terms or explore other options with different lenders. Seek the services of a mortgage broker, this will guarantee more exposure to other lenders. More lenders equates to more offers which ultimately equates to lower rates!

Consider a Refinance rather than simply renewing:

Mortgage renewals, in contrast to mortgage refinances, involve maintaining your current mortgage balance and keeping the existing amortization schedule intact. During renewals, no other changes to the mortgage are typically allowed, including the addition or removal of individuals, increasing mortgage funds, or consolidating debts. It’s a straightforward process aimed at updating the terms and interest rate without altering the core structure of the mortgage. Requalification is not required, just a simple signature for acceptance.
In contrast, mortgage refinances offer a range of flexibility and options for mortgage holders. When refinancing, you can make several changes to your mortgage, such as extending the amortization period to reduce monthly payments, accessing extra funds to address outstanding debts, adding or removing individuals from the mortgage, among other possibilities. However, it’s important to note that choosing to refinance requires re-qualification, which entails providing updated income documentation and undergoing a credit check once again to ensure eligibility for the new terms and adjustments.

Use a Mortgage Broker!

Mortgage brokers deal with and represent several lenders, this is a huge benefit to you! Don’t simply take the word of your lender, they only offer their own product and rate…they are definitely aware of the competing offers, but they are not obligated to offer them to you. Many renewal offers state their higher posted rates rather than their fully discounted rates. Always call a mortgage broker to (at the very least) ensure that the rates that are being offered to you are even competitive. Make the call, you’ll be glad you did.

Is your mortgage coming due? Wondering what to do? Call or text Marko Gelo right now at 604-800-9593, or Click Here to schedule a free, no-obligation phone call with Marko. You can also call Marko on WhatsApp.

Don’t want to miss out on the next blog post? Click Here to have future issues emailed directly to your inbox!

Contact Marko, he’s a Mortgage Broker!

604-800-9593 cell/text | Vancouver (Click Here to schedule a call with Marko!)

403-606-3751 cell only | Calgary (Click Here to schedule a call with Marko!)

Call Marko via WhatsApp!

Email: gelo.m@mortgagecentre.com

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Upcoming mortgage renewal have you stressed about payment shock?

Posted on January 19, 2023January 20, 2023 by markogel@gmail.com

(January 19, 2023)

Mortgage renewal time is often a celebratory moment for a homeowner as it marks the end of another successful tenure of completed principal and interest payments. However, these days are a totally different story. With all the aggressive rate hikes in 2022, many mortgage holders are wondering how their next mortgage term will feel like. Will your payment remain the same, or will it skyrocket?

If your mortgage is approaching its maturity in the next 12 months and you’re wondering what things will look like for you, reach out now to begin strategizing – while time is on your side. Reply to this email right now, or Click Here to schedule a call with Marko Gelo.

Why start planning 12 months ahead of your maturity date?

Take time to prepare and plan. The actual renewal date is a limited window of opportunity that allows the mortgage holder to make changes to their mortgage (without incurring a fee/penalty). More importantly, it is critical to understand that this window of opportunity is only available for 24 hours. So whatever change you want to make to your mortgage (debt consolidation, equity take-out, extended amortization, etc), you need to ensure all your ducks are in line. For most mortgage holders, the renewal date sneaks up on them without warning and leaves them no time to consider other options or solutions. And in order to avoid late charges or auto-renewal to a much higher interest rate mortgage, the mortgage holder resorts to the path of least resistance and opts in for one of the default options bestowed upon them from the lender. At this stage of the game, you are not in a position of power. Prepare and plan AHEAD of your maturity date.
Gearing up ahead of your maturity date also allows you time to repair or improve any shortcomings in your application if you are planning a product change or departure from your existing lender at renewal. For example, starting the process at least 6 months ahead gives you time to identify, diagnose and repair a credit issue (6 months is a minimum, but 12 months is ideal). This is critical because had you not corrected the issue, you may not have qualified for what you had in mind. Just as an athlete performs stretches to prepare ahead of a crucial match, so does a mortgage applicant in anticipation of submitting for approval.
Prior to your maturity date, register for Marko’s Renewal-Rate Tracker which ensures your application is constantly being tendered to the market. The Renewal-Rate Tracker seeks out the best rates in the market and locks you in for 4 months – and it doesn’t stop there! Even though you may be locked in for a rate, the tracker continues to scour the market in the event rates drop further. To register for Marko’s Renewal-Rate Tracker, send an email to teamgelo@mortgagecentre.com and type, “Register Me for the Tracker!” in the subject field.
and lastly, some lenders allow for a reduced break penalty in the final year of their term. So depending on which lender you are currently with, it may make sense to break out of your term ahead of your maturity date to transfer to another product or lender.

If you or someone you know is within one year of your mortgage renewal, call Marko right now (or Click Here to schedule a call) to begin preparation for your next term.