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Posts Tagged ‘HELOC’

Should We Worry About a US-Style Housing Meltdown?

Wednesday, December 5th, 2012

This is an article by Benjamin Tal, one of CIBC’s top economists who answers this question. I found it to be a great write up that expresses the differences between the US and Canadian housing economies.

“House prices in Canada will probably fall in the coming year or two, but any comparison  of the American market of 2006 reflects a deep misunderstanding of the credit landscapes of the pre-crash environment in the US and today’s Canadian market.

The Canadian housing market has more distinguishing attributes that separate it from the pre-crash US market. Yes, the debt-to-income ratio in Canada just broke the American record set in 2006, but comparing the three years heading into the US crash to the past three years in Canada reveals that the debt-to-income ratio in Canada has been rising at half the speed seen in the pre-crash US market. Even more important than the amount of debt is its quality. The distribution of the credit score in Canada has not changed dramatically in the past four years. That is very different than the experience seen in the US in the four years heading into the recession.

In the US an astonishing one-third of mortgages taken out in 2005 and 2006 were in negative equity position, and more than half had less than 5% equity. In Canada, the negative equity position is nil, and only 15-20% of new originations have an equity position of less than 15%.

In a final analysis, not all is well in the Canadian housing market. Home prices are overshooting their fundamentals, mainly in large cities such as Toronto and Vancouver. The recent slowing in sales activity will probably be followed by price adjustments in many cities across the country. But the Canada of today is very different than a pre-recession US. Therefore, when it comes to jitters regarding a US-type meltdown here at home, the only thing we have to fear is fear itself.”

Bank of Montreal BMO 2.99% Rate Special – Explained by Vancouver Mortgage Broker Rowan Smith

Monday, March 19th, 2012

Transcript of Video Blog:

Hi everybody. It’s Rowan Smith with the Mortgage Centre. I want to address Bank Montreal’s 2.99 percent offer that’s on the market and to explain some of the restrictions that people need to be aware of, some of the fine print. First off, yes, it’s one of the lowest rates historically ever offered, but it comes with some restrictions such as you can only have a 25 year amortization. Now, many people don’t think that this is a problem because they think I only want a 25 year amortization anyway and across a lot of Canada that is still absolutely the practice. Read the rest of this entry »

Line of Credit At Renewal – As Explained by Vancouver Mortgage Broker Rowan Smith

Thursday, October 13th, 2011

Transcript of Video Blog:

Hi, everybody. It’s Rowan Smith from the Mortgage Center. I want to talk today specifically about lines of credit. More importantly I want to talk about lines of credit that you want to keep but you maybe want to renegotiate maybe the mortgage in front of it. This is something that comes up from time to time. Read the rest of this entry »

Mortgage Line of Credit – When Can You Get One?

Wednesday, May 12th, 2010

Have you ever wondered if you can get a line of credit secured with your home? Maybe you wondered if you can get a line of credit along with your mortgage?

There are several specific criteria that need to be met in order for you to get a line of credit. The most important criteria is EQUITY.

Watch this video blog for more info and and a more in depth explanation.

Transcription of Video Blog:

Hey everybody, Rowan Smith with The Mortgage Centre. I want to talk today about lines of credit. More specifically, mortgage lines of credit. A lot of times people will come to me and they’ll want to get a line of credit, along with their financing for their purchase, for renovations and whatnot.

Now, generally, if it’s going to be a mortgage, you’re going to have to have 20% down payment or 20% equity in the property before you can start getting a line of credit. Because CMHC, who governs less than 20 percent down purchases, doesn’t not allow an interest only product at this time; they do, but no lenders really support it.

So you’ve got to have 20 percent down if you want to start getting the ability to have a line of credit. Now what I mean by that is if you have 20% down and you pay it down so that you now have 30% equity in the property, you could borrow that 30% to 20%, that 10%, you could get that in the form of a line of credit assuming that your income and credit qualify for it.

So, if you’ve just bought something with five percent down and want renovation funds, a line credit with the mortgage is not part of the option. What you can do is get an unsecured line of credit through your financial institution you bank with. They can supply that to you, you can use that. Now you will not get mortgage rates on that line of credit, but it’s really the only option.

Alternatively, there’s a Purchase Plus Improvements Program if you want money for renovations. I’ve covered it in detail in the prior blogs, please do a search and you can watch it. It’s a good three or four minutes and it explains how the Purchase Plus Improvements Program works, or Refinance Plus Improvements.

If you’re applying for a line of credit increase – maybe you already own your property, you’ve got a substantial equity position at home and you simply want to increase that line of credit, come and talk to me. There’s many institutions which we can stick a line of credit behind any other mortgage.

So if you’ve a RB Royal Bank first mortgage, we can stick a line of credit behind that and get you mortgage rates on that line of credit. You don’t have to go to your bank if that’s the case. It’s only the unsecured lines of credit which you need to speak with your bank about.

If you’d like any clarification on this or need a line of credit, please give me a call. It’s Rowan Smith from The Mortgage Centre.