e-Newsletter | September 2019
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Welcome to the September issue of my monthly newsletter!
This month’s edition looks at 6 things a co-signor should consider, as well as how mortgage brokers can help you at any stage in your life.
I would love to hear from you if you have any questions.
Thank you for your continued support and referrals!
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Steven Porter
CRMS CLHMA ABR SRES
Mortgage Agent, Certified Luxury Mortgage Specialist
P 905-878-7213
C 905.875.2582
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Brokerage #12728
14 Martin Street, Milton, ON, L9T 2P9
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Buying a home can feel like a journey. Whether it’s your first or your 10th, there are many steps to go through and things you should be aware of. The trend towards using mortgage brokers to arrange mortgage financing is continually increasing. Why has this shift occurred? Well, very simply put, TOP-NOTCH SERVICE and UNBIASED ADVICE!
Banks are regularly cutting back on employees and are continually centralizing operations to save money. This doesn’t bode well for the consumer. Unlike individual banking representatives, who often move from one branch to another hoping to advance in the corporations, your mortgage broker works to form a lifelong relationship with you, helping with your needs now, and down the road.
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Today, many banks are buying out smaller trust companies to expand their portfolios. Most major banks lend out money through these trust arms at reduced rates. By sticking to just one bank, you lose access to hundreds of other financing arms – including offerings from multiple banks, credit unions and trust companies that may have better rates, products and terms to offer you.
Mortgage brokers get paid by the lenders so their service is offered to you without charge. What else can you ask for? Better rates, personalized service, flexibility and products at no cost to you. Some will say that the fee is built into the payment, but this is not so.
It costs the banks approximately 40 per cent less to generate a mortgage through a broker than a branch, as there is no overhead to pay if the bank doesn’t get a client’s business. Instead, the mortgage broker bears the entire cost of day-to-day business activity.
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Co-signing on a loan may seem like an easy way to help a loved one (child, family member, friend, etc.). In today’s market conditions, a co-signor can offer a solution to overcome the high market prices and stress testing measures that are now in place for Canadian borrowers. For example, for a borrower with an imperfect credit score or not enough income to qualify, adding a co-signor can satisfy a lenders need to lessen the risk associated of providing you with funds. However, when becoming a co-signor there are some considerations.
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1. If you act as a co-signor or guarantor, you are entrusting your entire credit history to the borrowers. What this mean is that late payments on the loan will not only hurt them, but it will also impact you.
2. Understand your current situation—taxes, legal, and estate. Co-signing is a large obligation that could harm you financially if the primary borrowers cannot pay.
3. Try to understand, upfront, how many years the co-borrower agreement will be in place and understand what changes can made mid-term if the borrower becomes able to assume the original mortgage on their own.
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4. Consider the implications this will have regarding your personal income taxes. You may have an obligation to pay capital gains taxes – it’s wise to talk to an accountant prior to signing on the dotted line.
5. Co-signors should seek independent legal advice to ensure they fully understand their rights, obligations and the implications. A lawyer can lay it out clearly for you as well as help to point out any things you should take note of.
6. Carefully think about the character and stability of the people that you are being asked to co-sign for. Do you trust them? Are you aware of their financial situation to some degree? Are you willing to put yourself at risk potentially to take on this responsibility? Another consideration is to think about your finances down the road and determine how much flexibility will be needed for yourself and your family. If you have plans of your own that will require a loan, refinancing your home, etc. being a co-signor can have an impact.
Co-signing for a loan is a large responsibility but when it is set-up correctly and all options are considered, it can be an excellent way to help a family member, child, or friend reach their dream of homeownership. If you are considering being a co-signor or wondering if you will require a co-signor on your mortgage, reach out to a mortgage professional. They are always happy to answer any questions and guide you through processes like this.
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Your furnace or boiler is a large energy user. Consider:
- If health permits, keeping your thermostat at 20°C or below
- Lowering your thermostat at night and when no one’s home
- Checking the furnace filter once a month during the heating season (change or clean when dirty)
- Having a professional tune-up of your heating system at least every other year
- Replacing your older furnace with a higher efficiency model
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