What the Bank of Canada Rate Drops Mean for You

Latest News Nicole Perri 6 Feb

With the Bank of Canada rate decreases throughout 2024 into 2025, I thought this would be a great opportunity to update you on what this means for your mortgage.

If you’re on a variable-rate mortgage, this will result in a slight decrease in your mortgage payments to match the current rates giving you more cash flow each month!

For example, if your mortgage balance is $750,000 at the previous 5.45% interest rate your approx. compounded monthly payment was likely $4,583. With the new rate of 5.20% your approx. compounded monthly payment on an adjustable-rate mortgage will be $4,472.26. This is an estimated $110.74/m decrease on your payment.

For those of you who are on fixed-rate mortgages* or have renewals coming up, this reduction in interest rates could make it easier on you at renewal time. The decrease in interest rates gives you more borrowing power in the market – this means your money can go further!

*Remember, the drop in the Bank of Canada fixed rates may not result in the same drop for fixed mortgages as with variable rates. The decrease in interest rates will however open up new variable options and, depending on your lender may still provide you to take advantage of lowered rates.

This is the same for first-time buyers! Lower interest rates mean you now have more borrowing power in the marketplace, which could help you find that perfect home by allowing you to allocate monthly funds to your mortgage more comfortably.

In more good news, The Bank of Canada is anticipated to continue these quarter-point rate cuts, taking the overnight rate down to potentially 2.75% in 2025.

Whether you’re a current homeowner, looking to renew, or wanting to purchase, this is exciting news for Canadians across the country!

However, keep in mind rate is not the be-all-end-all of mortgages. It is important to keep in mind that factors such as type of mortgage, down payment amount, payment schedule, amortization, and more will also affect your mortgage and affordability.

If you want more information about your specific mortgage and how this affects your situation, please don’t hesitate to reach out to Nicole Perri today!

HUGE NEWS: Insured Mortgage Cap Increases

Latest News Nicole Perri 6 Dec

To all Canadian Homeowners with a property valued at $1,500,000 or less or looking to purchase!! This week you are going to have access to even more mortgage products at a lower rate.

On December 15th, 2024, the Canadian government changed the game for anyone who is renewing or purchasing a property valued at $1,500,000 or less. Now let’s see how this is going to help you!

I am Renewing my mortgage after December 15th, 2024 and my property is worth $1,500,000 or less:

Before December 15th if you had a property worth more than $1,000,000 you would have had access to a smaller pool of mortgage products under the uninsured category. These products also came at a higher rate than insured products. So now you have access to more options and best rates!! This will save you thousands of dollars over the term of your mortgage.

I am Purchasing a property after December 15th, 2024 and the property is worth $1,500,000 or less:

Similarly to renewal clients, you will now have access to more mortgage products and better rates. That is already a HUGE win. The second great item that comes into play is downpayment. You will now be able to put less money down, freeing up savings for you use elsewhere.

Before December 15th, 2024

 

 After December 15th, 2024

 
Purchase Price $1,500,000 $1,500,000
Down Payment in a Percent (%) 20%

5% on the first $500,000 & 10% on the next $1,000,000
Down Payment in Dollars ($) $300,000 $125,000

 

If you are looking to see if these changes help you, reach out and we can chat about your mortgage situation!

 

Nicole Perri, Mortgage Agent Level 2

Email: nperri@dominionlending.ca

Phone: (289) 828-6425

 

Buying a Pre-Construction?

Latest News Nicole Perri 6 Nov

On December 15th, 2024 buying a pre-construction just got a bit more accessible!

Anyone looking to purchase a new construction home will now have two new options:

1. Access to a 30 Year Amortization

2. Put less than 20% Down Payment

These two changes will allow Canadians to free up some cash flow by having the option to extend their amortization to 30 years compared to the previous 25 years. It will also result in needing to put less down allowing you to enter the market quicker by having to save less money upfront for the down payment.

What is considered a pre-construction?

The home must not have been previously occupied, though newly constructed condos with interim occupancy will still qualify.

 

If a new build is something you are looking into purchasing, reach out today to get qualified!

 

Nicole Perri, Mortgage Agent Level 2

Email: nperri@dominionlending.ca

Phone: (289) 828-6425

Stress Test Removed for All Renewal Switches

Latest News Nicole Perri 11 Oct

Another Government of Canada mortgage update?!?

Effective November 21st, 2024 all mortgages that come up for renewal will no longer have to go through the stress test when switching lenders. This change is a positive for every Canadian homeowner because it will remove the barrier of a higher qualification you faced before.

What is the Stress Test?

In 2016, the Office of the Superintendent of Financial Institutions (OSFI) introduced the Stress Test as a buffer to ensure every mortgage borrower could afford their mortgage payments if interest rates rise. Banks are required to test your mortgage application by a minimum of 5.25% OR your actual rate + 2%, whichever is higher.

What are the savings you could see from this change?

If you take advantage of switching to another lender at renewal it could save you thousands over the term of your mortgage. For example, you have a $500,000 uninsured mortgage with a 25 Year Amortization. You are looking to switch lenders who are offering a 5-year fixed rate of 5%. Your current lender is offering a 5-year fixed rate of 5.25%. This 0.25% difference can result in:

  • Current Lender Monthly Payment (5.25%): $2,979.59
  • New Lender Monthly Payment (5%): $2,908.02
  • Savings over the term of your mortgage from switching lenders: $6,013

This example is one of many in the future once this change comes into effect. It will allow homeowners to save thousands of dollars over their term.

If you have any questions about your mortgage renewal please reach out to me at nperri@dominionlending.ca!

Mortgage Update – Add a Suite to Your Mortgage

Latest News Nicole Perri 11 Oct

The Government of Canada announced a new change on October 8th, 2024 enabling homeowners to add secondary suites to their property.

Many homeowners have extra space they may want to convert into rental suites, such as an unused basement, or a garage that could be converted into a laneway home. Historically, the cost of renovating, combined with municipal red tape, has made this both difficult and expensive.

Recent municipal zoning reforms in Canada’s major cities are creating new opportunities for homeowners to add additional suites and increase density. New rental suites would provide more homes for Canadians and could provide an important source of income for seniors continuing to age at home.

Here are the details for lenders and insurers to offer this new insured mortgage refinancing product, effective January 15, 2025.

Parameters

  • This measure will apply to all borrowers seeking to access mortgage insurance in Canada to add more units (secondary suites). These borrowers must satisfy the following requirements:
    • Already own their properties;
    • The borrower or a close relative are occupying one of the current units;
    • Intend to construct additional units; and,
    • The additional unit(s) must not be used as a short-term rental.
  • Refinancing: Insured refinancing will be allowed for the purpose of building additional unit(s).

We haven’t seen an insured Refinance since 2016!!

  • Legal units: The new units must be fully self-contained units (e.g., basement suites with separate entrances, laneway homes) and meet municipal zoning requirements.
  • Number of units: Maximum of four dwelling units including the existing unit.
  • Maximum Property Value Limit: The “as improved” value of the eligible residential property against which the loan is secured must be less than $2 million.
  • Maximum Loan-to-Value limit: Up to 90% of the property value, including the value added by the secondary suite(s), in combination with any other outstanding loans secured by the property.
  • Maximum amortization: 30 years.
  • Additional financing must not exceed the project costs.

Other Parameters

  • Effective date: These measures will be available for mortgage insurance applications that lenders submit to mortgage insurers on or after January 15, 2025.
  • All other eligibility criteria for government-guaranteed mortgage insurance will continue to apply.

Source: Government of Canada Website

If this sounds like something you would be interested in doing, please reach out! My email is nperri@dominionlending.ca, I look forward to hearing from you.