(June 3, 2022)

With all the talk about interest rate hikes, many customers are left wondering what is the best mortgage option when it comes to manageable payments. One might simply conclude that the lowest rate yields the lowest possible payment. This is mostly true, but there’s more to it than the rate. Here are some products and features that achieve the lowest possible payments in today’s challenging market:

1) Select the highest amortization possible

•the higher the amortization, the lower the payment •with a down payment of less than 20% on a home purchase, your maximum amortization is 25 years •when your down payment is 20% or higher, the maximum amortization increases to 30 years •when it comes to refinances it is mainly an industry standard to offer a 30 year amortization. However, keep in mind that a refinance is capped at an 80% loan to value ratio and full re-qualification is required. For example, if your property’s current market value is $800,000, to be eligible for a 30 year amortization your current mortgage cannot exceed $640,000 ($800,000 X 80%). Simply put, refinances are only possible if your loan-to-value ratio is 80% or less at which point the maximum allowable amortization is 30 years.
Here are some examples of monthly mortgage payments with 25 and 30 year amortization periods:

2) Choose a variable rate mortgage with a fixed payment

•even with recent increases to Prime Rate in the past few months, variable rate mortgages still generate lower monthly payments than current fixed term market rates.•But what if Prime Rate continues to increase further? If the thought of increasing rates and payments leave you unsettled, you can opt for a variable rate mortgage that has fixed payments. So, if prime rate increases, your monthly payment will remain the same, but the principle and interest allocations of the your starting payment will adjust accordingly:

DISCLAIMER: it is crucial to have an in-depth conversation with Marko Gelo (a licensed mortgage broker in BC and Alberta) before you consider a variable rate mortgage with a fixed payment. You need to be aware of your unique trigger rate and how it could impact you when your mortgage eventually renews. This product can be both amazing, or catastrophic, depending on your unique qualification circumstances.

3) Recast or Refinance your mortgage to a more manageable payment

The key to this strategy is to understand that you are expanding your amortization with the primary objective of lowering the payment. You will definitely achieve lower payments, but you will not be improving the rate of paying down your mortgage. However, at any time you can increase your payments or make lump sum contributions anytime throughout the term of your mortgage and in no time you can get back on the path and perhaps return to the amortization you were initially at.

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Eligibility for Temporary Residents seeking a mortgage in Canada with less than 20% down payment

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Single family homes in Calgary from the $300’s to the $800’s…Calgary real estate has it all

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Calgary still packs some good punch

head offices, quality of life, legendary entrepreneurial spirit

February 23, 2018
(Podcast Transcripts)

<Music Intro>“Cheap Money”…performed by MG

Today we’re going to point the spotlight on Calgary’s real estate market…we’re going to talk with, Realtor, John Darel of Maxwell Canyon Creek in Calgary and cover all 4 sections (north, south, west, east) of the city in terms of residential real estate statistics and trends.

It appears that any upward momentum that may have resulted from Alberta’s continuing recovery could very well be negated by the now infamous mortgage rule changes that were proposed on the first day of 2018…not to mention the ongoing volatility with anything oil-related.

Calgary may currently not be the powerhouse it once was, but STILL, it CERTAINLY pulls some substantial weight:

124 head offices still firmly entrenched in Calgary’s downtown core
second highest concentration of small businesses in Canada
according to The Economist Intelligence Unit, Calgary has consistently ranked in the TOP 5 most livable cities in the world since 2009
the most rapid transit service per million residents of any major Canadian city
branch office representation of nearly every major bank and investment bank in the world
and despite all the decade long recession-like environment, Calgary and Edmonton have still maintained the highest average weekly earnings of all Canadians at just over $1100

So, in many ways it’s definitely an economic gauge or precursor for the rest of the country…absolutely a market worth following and knowing about.

So let’s get right to it and hear what John Darel has to say…

Abbreviated Transcripts for John Darel interview:

Marko:
From what I’ve read recently in an article, it appears that Calgary South is leading the way for the month of January (2018)

John:
That’s correct, Calgary South topped all sections of the city with 113 single family unit sales, of which the community of Evergreen lead all others with 9 sales…so anyone living in Evergreen with intentions to sell, now is a good time aa there are a good number of buyers looking to purchase. The benchmark price for Calgary South $471,500. Lake Boavista Downs was the area (in Calgary South) with the greatest price appreciation for the month of January (7% increase to benchmark price, year over year).

Marko:
The highest transaction segment came from the prices ranging in $400k to $500k…the sweet spot of Calgary?

John:
Yes, extremely active price point in Calgary, and typical, too. As of the last 30 days there have been 206 sales and 578 active listings…this puts it on the low end of a balanced market (that’s about 2.8 months of supply) and potentially bumping in to a potential sellers market.

Marko:
With the anticipation leading up to the mortgage stress test rules on Jan 1, 2018, has January been more abundant than years past? Have you found that buyers rushed in to the market because of the new rules?

John:
Not really. We are basically on pace with 2017 numbers (January 2017)…2 more single family home sales during the same time last year and a nominal price increase of just over $700, so basically 0% change (in single family homes). But definitely an increased rate of activity and confidence to end 2017…we will probably see these number later on in the year when deals complete.

Marko:
Let’s move westward were the benchmark price is at $727,200. How has West Calgary been performing?

John:
The west Calgary region is a confident and consistent market. Aspen leads the region with price appreciation (4%) and highest benchmark price ($977,000). Also, a very positive indicator when you look back at how hard this upper market was hit during the down turn.

Marko:
And finally, what the vibe with East Calgary?

John:
Generally speaking, East Calgary is the most reasonably priced area. It lead the way with additions to the market for January with 39 additions to the market (18% increase year over year)….with West Calgary falling in a close second. Also hoping for the absorption rate to increase, as well.

Marko:
So 2018 for Calgary…expect much of the same as we saw in 2017?

John:
Ya, so year over year…no big surprises. Same amount of transactions, prices are similar…areas like any year…different factors that drive different things in certain areas (i.e. Altadore seems to maintain a very high level of interest and luxury properties in some areas selling less than 30 days)

Marko:
It’ll be interesting to see how things shake out for the rest of the year…let’s connect again, soon!

And now for the Mortgage Minute:

Bridge Financing is a common adder to an existing mortgage approval, basically, it’s an extended feature of your mortgage that is temporarily in effect to finance the equity trapped in your existing residence because the closing date is scheduled to occur AFTER the closing date of your new property. A bridge loan application always involves 2 properties; the one you currently reside in but not yet moved out of and the one you have purchased but not yet moved in to.

For example, let’s say your closing date for the purchase of your new home is 15 days before the closing date for the sale of your old home. Because the equity from your old home is still not available as it hasn’t officially closed, a bridge loan provides you with a short term loan to meet this shortfall. The bridge loan funds are exclusively for the down payment of your mortgage contract, thus, enabling the rest of your mortgage principle to fund. Once the sale of your old home is complete the bridge loan is paid off from the proceeds of the sale.

Bridge loans will typically extend for a period of 90 days and perhaps longer depending with the lender. Interest on the bridge loan is charged daily with an interest only payment (typically in the range of Prime +2 to as high as Prime +6).

Ending Note and Credits:

Alright, well that’s a wrap… I hope you got value out of todays episode. (and by the way, if you wanted to reach out to John Darel of Maxwell Canyon Creek in Calgary, for all your real estate needs, you can reach him at 403-861-2733 or visit his website at www.johndarelrealty.ca). And of course, feel free to reach out to me if you’d like to discuss anything we talked about in greater detail…or any other mortgage related matter, you can find me at markogelo.com or follow me on Facebook by searching Mortgagenomics Canada Podcast. Also, please don’t hesitate to share and tell your friends about Mortgagenomics Canada…the more listeners the better.
Thanks again for your time, talk to you later.

<Music Outro> “DJ Super Agent”…performed by Sleeping Lorry

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How to get the lowest possible payment on your mortgage