Renegotiating your mortgage at renewal time is an excellent way to save money and ensure that you have the best mortgage product for your financial situation. “51% of Canadian homeowners don’t plan on changing lenders when their mortgage comes up for renewal — and 9% weren’t even aware that they could switch lenders to get a better rate.” says Shaistha Khan by Rates.ca. Here are five reasons why you should explore your options for mortgage renewal instead of staying with the same lender’s offer:

Get a Better Interest Rate
One of the most significant benefits of exploring your options for mortgage renewal is the chance to get a better interest rate. Interest rates can fluctuate significantly over the term of a mortgage, and you may be able to find a better rate at the time of renewal. Even a small decrease in your interest rate can save you thousands of dollars over the life of your mortgage.

The above illustrates the different approximate interest rates currently offered by 4 lenders in today’s market. When comparing Lender 1 and Lender 4, there is a financial difference of $343.68 per month ($20,620.80 over your 5 year term), not to mention that you will end up paying approximately $28,863 more in interest with Lender 1 over your term.

Save Money on Fees
In addition to interest rates, mortgage products can vary in terms of fees and penalties. By exploring your options for mortgage renewal, you may be able to find a mortgage product with lower fees or more favourable penalties. This can save you money if you need to break your mortgage early or make changes to your mortgage terms. Also, the majority of lenders will cover the costs for you to switch your mortgage to their institution.

Improve Your Financial Situation
Your financial situation can change significantly over the term of your mortgage. If you’ve experienced a change in income, lifestyle, or financial goals, exploring your options for mortgage renewal can help you find a product that better suits your current needs. For example, you may be able to switch from a fixed-rate to a variable-rate mortgage if your income has increased, or you may want to switch to a shorter term if you’re planning to retire soon. Another option for those struggling with cashflow is to extend their amortization out to 30 years.

Access Equity in Your Home
If you’ve built up equity in your home over the term of your mortgage, exploring your options for renewal can help you access that equity. You may be able to refinance your mortgage and take out a larger loan, using the extra funds to pay off debt, make renovations, or invest in other assets. This can be a great way to leverage your home’s value and improve your overall financial situation.

Don’t be fooled by low interest rates
The lowest mortgage rate doesn’t always mean the best deal. Here are some things to consider when researching, lenders, mortgage terms & interest rates.
Not all mortgages are the same, even if they have similar rates
Beware of “Restricted Mortgage Products” that may have hidden terms and conditions
Read the fine print to ensure you’re not committing to a bonafide sales clause (the need to sell your home in order to break the contract/term) or other unfavorable terms
Look for flexible mortgage options with reasonable prepayment privileges and penalty calculations
Don’t be lured by rates that seem too good to be true – they probably are

In conclusion, exploring your options for mortgage renewal is a smart financial move that can help you save money, access equity, and improve your overall financial situation. By taking the time to research different mortgage products and negotiate with lenders, you can find a product that meets your current needs and provides the best value over the long term. Before you sign on the dotted line, make sure you do your research and understand all the terms and conditions of your mortgage agreement. Your financial future may depend on it.

Debt is a financial tool that allows individuals and businesses to borrow money to achieve their financial goals. However, not all debt is created equal. Some debt can be considered “good debt,” while other debt is known as “bad debt.” Understanding the difference between the two can help you make better financial decisions and avoid unnecessary financial stress.

Good Debt

Good debt is an investment that is likely to increase in value over time or has the potential to generate income.

Examples of good debt include student loans, mortgages, and business loans. These types of debt are investments that can help you achieve long-term financial goals, such as earning a degree, owning a home, or starting a business.

Student loans are a common form of good debt. By investing in education, individuals can increase their earning potential and improve their career prospects. While student loans can be costly, the long-term benefits of earning a degree often outweigh the cost of borrowing.
Similarly, a mortgage is considered good debt because it allows you to invest in a home, which is likely to increase in value over time. Homeownership can also provide a stable living environment and the ability to build equity. While a mortgage may involve a large initial investment, it can lead to significant long-term financial benefits.

Business loans are another type of good debt. By borrowing money to start or expand a business, entrepreneurs can create new opportunities for income and growth. While there are always risks associated with starting a business, taking out a loan can provide the financial support needed to achieve long-term success.

Bad Debt

In contrast, bad debt is any debt that is used to finance purchases that are unlikely to increase in value or generate income. Examples of bad debt include credit card debt, car loans, and payday loans. These types of debt are often associated with high-interest rates and can quickly spiral out of control, leading to financial distress.

Credit card debt is one of the most common types of bad debt. Credit cards often come with high-interest rates, and many individuals use them to finance non-essential purchases, such as vacations or shopping sprees. While
it may be convenient to use a credit card for these types of purchases, it can quickly lead to a cycle of debt that is difficult to break.

Car loans are another form of bad debt. While it may be necessary to borrow money to purchase a vehicle, cars typically decrease in value over time, making it difficult to recoup the initial investment. Additionally, car loans often come with high-interest rates & payments, which can add up over time and lead to financial stress.

Payday loans are perhaps the most dangerous type of bad debt. These loans often come with exorbitant interest rates and are designed to prey on individuals who are in desperate need of cash. While payday loans may provide a short-term solution to a financial problem, the repayment plans make it hard to get ahead & pay off your initial borrowings.

How is debt considered when purchasing a property?
When applying for a mortgage, the lender will always look at your credit history & debts. Your debts balances are added to your application and are calculated differently depending on the type of debt. The calculation rules also vary between lenders, but here are some general guidelines:
Credit Cards = 3% of balance
Unsecured Personal Line of Credits = 3% of balance
Personal Loans & Vehicle Loans = Total monthly payment
Student Loans not in repayment = 1 to 3% of balance
Student Loans in repayment = Total monthly payment
Secured Line of Credit (HELOC) = Balance amortized over a 25 year period
Other mortgages = Total Principal & Interest payment

In general, it is important to avoid bad debt whenever possible. While it may be tempting to use credit cards or take out loans for non-essential purchases, it can quickly lead to financial problems that are difficult to overcome. Instead,focus on building good debt that can help you achieve long-term financial goals and improve your overall financial health. One of the keys to managing debt effectively is to create a budget and stick to it. By tracking your expenses and prioritizing your financial goals, you can make informed decisions about when and how to borrow money.

Additionally, it is important to educate yourself about the terms and conditions of any loans or credit cards you are considering, and to avoid borrowing more than you can realistically afford to repay.

In conclusion, good debt and bad debt are two very different financial tools that can have a significant impact on your overall financial health. While good debt can help you achieve long-term financial goals and improve your overall financial health, bad debt can quickly lead to financial stress and hardship. It’s important to carefully consider the purpose of any debt, the interest rates, and your ability to repay the debt before taking on any financial obligations. By focusing on building good debt and avoiding bad debt, individuals and businesses can work towards a more secure financial future. Remember, debt can be a tool, but it’s important to use it wisely.

When considering a mortgage, one of the biggest decisions you will make is whether to go for a fixed or variable rate. A variable-rate mortgage can offer flexibility and potentially lower interest rates, but also carries the risk of interest rate increases.

You may think in today’s times with higher interest rates than we’ve seen over the past couple of years that you would be crazy to take the variable interest rate route, but what if I told you weren’t?

We are going to dive into the benefits of a variable rate mortgage and paint a little picture that may sway how you think. Our objective is to educate homeowners/buyers with ALL the benefits so they can make an educated decision.

Potential for lower interest rates
One of the main advantages of a variable rate mortgage is that you likely end up paying less interest over the course of your mortgage when interest rates are down. This is because your mortgage rate is tied to the prime rate, which can fluctuate based on factors such as the Bank of Canada’s overnight rate, inflation, and economic growth. If the prime rate decreases, your mortgage rate will decrease, which means you could end up paying less interest. This can save you thousands of dollars in interest charges over the life of your mortgage. It’s important to keep in mind that we may be at the peak of Bank of Canada rate increases. Many of us are hoping to see a downward trend in variable rates over the next year or so.

Flexibility
A variable rate mortgage can offer more flexibility than a fixed rate mortgage. With a fixed rate mortgage, you’re locked into a specific interest rate and payment amount for the entire term of your mortgage, which can make it difficult to make changes if your financial situation changes. With a variable rate mortgage, your payment amount can change if your interest rate changes, which can give you more flexibility to adjust your budget if needed. This can be particularly important if you are self-employed, have a variable income or if your job is in a field where salaries are less predictable.

Option to lock in your rate
Although a variable rate mortgage is subject to fluctuations in the market, most lenders will allow you to switch to a fixed rate mortgage at any point during your term. This can be particularly appealing if interest rates are low and you want to lock in that rate for the remainder of your mortgage. This way, you can enjoy the flexibility of a variable rate mortgage while still having the option to switch to a fixed rate if necessary.

Lower penalties for breaking your mortgage
Breaking a mortgage before the end of its term can result in penalties, which can be significant. With a variable rate mortgage, the penalty for breaking your mortgage early is typically three months of interest, whereas with a fixed rate mortgage, it can be much higher. This can be particularly important if you anticipate needing to sell your home or refinance in the near future.

We have explored the general benefits to a fixed rate mortgage, but wanted to show a scenario with today’s rates and industry numbers. Currently fixed rates are generally lower than the variable rate on mortgages today in Canada. For example;
$375,000 mortgage
Fixed with a 5 year term = Monthly Payment – $2147
Variable Monthly Payment – $2355

With this scenario there are two important things to note. 1. With a fixed rate you are locked into the rate for the entire term. Your payment is $2147/month for 5 years. 2. The variable rate is currently over $200 more a month, however, as prime fluctuates over the 5 years, so does your mortgage payment.

If prime was to head south in the range of pre pandemic numbers, your monthly payment would be $1962, which would be saving you money each month.
*Above numbers are hypothetical and for illustrative purposes only. This is not a commitment to lend, pre-approval or approval.

In conclusion, a variable rate mortgage can be a great choice for those who value flexibility, have a risk tolerance and the potential for lower interest rates, However, it’s important to remember that a variable rate mortgage is subject to fluctuations in the market, which can lead to higher payments if interest rates increase. It’s important to consult with a mortgage professional to determine if a variable rate mortgage is right for you and to understand the risks and benefits associated with this type of mortgage.

It has become apparently harder for the younger generation to purchase their first home. With the interest rates and stress test, and let’s not forget the price of homes, entering home ownership isn’t easy. However, there has been a trend over the past couple of years – what we call the Bank of Mom and Dad.

There are many reasons why a parent may choose to help their kids flea the nest and become home owners, and this blog is to help you – The Parents – help your kids, if that’s what YOU choose.

“The purchase of a residence is one of the most significant financial milestones in your life. It provides both monetary prosperity and emotional security.”
– Suze Orman

Help With the Down Payment
I would say this is the most common way parents choose to help their kids, because it’s completely subjective to what you want and can afford to give. You have the choice to loan OR gift the money – but this should be determined prior to any transactions or purchases. Have a conversation and lay out your expectations in advance and it doesn’t hurt to get it in writing to protect both of you in the event someone isn’t remembering right.
If you chose to gift the money to your kid a gift letter would be required for the lender, which your Mortgage Professional would provide you. They will want to know where the money came from and the funds are in fact a gift from yourself.

Co-sign the Mortgage
If your kid does not qualify for the mortgage on their own, due to low income and/or credit issues, you may consider co-signing.. This is another great way to help them qualify, however with every financial decision there are risks. It is important to ensure you understand the benefits and risks you are taking by co-singing for the mortgage. Yes you share the liability, but you also share the asset. Co-signing can be for the life of the debt OR you can have an “exit” plan once your kid is able to qualify on their own. Understanding why your kid does not qualify on their own will help you establish an agreement and the steps you both need to take to ensure the success of yourself and your kid. It is important to remember that the mortgage will show up on your credit bureau as a liability, which may affect your credit and/or future borrowing power.

Loan the Money
If you are financially stable enough to loan the purchase price or part of it to your kid this is another way you can help them enter home ownership. You can establish what the payback conditions are, and make it legal by involving a lawyer to represent both you and your kid. The benefit to loaning them the money is you can decide on how much interest to charge. Maybe you decide to offer an interest rate lower than they are able to get from a bank or lender. It’s important to remember that if the money is to be paid back, the lender will require the mortgage applicant to debt service this new loan as a debts in their application.
Utilize the “Refi & Buy” Strategy
If you have a young child or children and are wondering “Will they ever be able to afford to buy a home?”, this strategy may help. Many parents are considering purchasing investment properties now, that they children can either live in and rent during college or university, or that they can sell & gift the money to the children to help get started on adulthood. The value of homes tend to have an upward trend, allowing you to invest now and capitalize on the equity at a later date. Buying an investment property requires a minimum down payment of 20%. If you don’t quite have the cash to purchase a property now, but it’s still something you’re interested in, you can consider using the equity in your current home as a down payment towards the next home.
Final Thoughts
If you have the means and desire to help your kid buy a home there are many ways to do so, just do it smartly. Remember, have the conversations prior to any exchange of money, set out your expectations in writing and have fun shopping for your kids first home.

Buying a property can be overwhelming. Knowing who does what, where your money goes and all the ins and outs will provide you with some peace of mind when it comes to your deposit. Typically, when purchasing you are required to put a deposit down through your realtor. Buyers are typically relieved to find out that their deposit counts towards their overall down payment & closing costs.

As the buyer – when an Agreement of Purchase and Sale is made, your deposit serves the main purpose of providing security to the seller. This reassures the seller that you are serious about your offer and not as likely to back out of the transaction once things are finalized.

There is no pre-determined amount required by law, however, ‘acceptable’ varies depending on location. Typically your deposit is due within 24 hours of the Agreement of Purchase and Sale being accepted.

“When you are serious about buying, it is important to have your deposit funds readily available.”

So you’ve found a property, you have an accepted Agreement of Purchase and Sale, and you are ready to provide your deposit, but where does it go?

Deposit to Realtor
Your deposit will start at the listing brokerage, held in trust. Not to worry these accounts are regulated and audited. The money held in these accounts does not go toward the brokerage’s overhead expenses. While your money is sitting in trust (until it makes its way to the solicitor) it will be insured in the event a claim needs to be made (this is extremely rare).
If you made an offer with a condition of financing and you are unable to secure financing, your deposit would be returned to you in full, without any penalties. **As long as your Agreement of Purchase and Sale does not state otherwise, read everything before signing.
We have now given our listing brokerage our deposit, where will it go next?

Deposit to Lawyer
Once all conditions of the sale are met and you are getting everything in order to close your property, your deposit will be transferred and held by your lawyer.
The deposit is applied to the final purchase price on closing day and becomes part of your down payment (your down payment is determined by you and your mortgage agent) and the deposit would have been taken into account when getting approved for financing. Your lawyer will prepare a statement of adjustments, to let you know how much is owed upon closing OR if no financing was required, your closing costs would come out of the deposit and the difference would be given back to you by your lawyer.
Your lawyer should contact you prior to closing to review all documents with you showing where the deposit was taken into consideration.

Final Thoughts
A deposit is part of your down payment and is made in good faith to show sellers you are a serious buyer. The money is then held in trust (not given to the seller) until the mutually agreed upon closing date. The deposit you give is insured all the way through until close when it is handed off to the seller. When speaking with your mortgage agent ensure you provide proof of deposit so they can factor this in when qualifying you for a mortgage and add it to your down payment.

Getting pre-approved is a crucial first step when buying a home. It tells you how much you can spend on a home between your down payment and the approved loan amount. Sometimes, though, the pre-approval amount is lower than what you expect, throwing a wrench in your plans.

Here are five ways to increase your pre-approval amount if this happens to you.

1. Lower your Debts

Your debt-to-income ratio measures your outstanding debts to your monthly income. If the percentage of your committed income is too high, you might not qualify for the mortgage amount you want.

Before applying for a mortgage, try paying your high-interest consumer debts down or off if you can. This will likely increase how much you can afford in a mortgage, giving you a higher pre-approval amount.

2. Increase your Credit Score

Lenders dive deep into your credit score & repayment history when pre-approving you for a loan. Therefore, you might not qualify for as much as you hoped if you don’t have a fair or good credit score.

Before applying for a loan, check your credit and determine where to make changes to increase your score. Consider bringing any late payments current and lowering your outstanding credit card debt to decrease your credit utilization rate as a couple of first steps.

3. Change your Mortgage Terms

Sometimes, the mortgage terms make your pre-approval loan amount lower than you’d like. For example, variable rates are currently higher than fixed rates. With the Stress Test, you would currently qualify for less if choosing a variable rate. Work with your Mortgage Broker to see which loan offers the best options for your situation.

4. Make a Larger Down Payment

If you have more capital saved, consider putting it down on the home. A larger down payment means you need to borrow less from the lender, and they may be able to approve you for a higher purchase price.

If you don’t have the money saved, consider a gifted down payment from family or a government assistance proram, such as the First-Time Home Buyer Incentive.

5. Find a Co-Signer

If you have close friends or family with great credit, consider asking them to co-sign your mortgage. It’s best to ask someone with a high income and low debt who can add to your capability, but use caution. When someone co-signs your loan, they are as financially responsible as you for the payments.

Final Thoughts

Getting pre-approved for a higher amount is possible; it just may take a little work and time. However, before requesting a higher amount, ensure you can afford the higher payment. The more you borrow, the higher your mortgage payment will be. Even if you’re approved for your max amount, it’s a good idea to complete an in depth budget sheet to ensure you can afford the expenses outside of your new home.

Recessions can feel scary. Suddenly thousands of people are without jobs, and there’s less money circulating in the economy. But, before a recession hits, most Canadians can feel it coming.

Here’s what to look for and how to react should a recession hit Canada in 2023.

What is a Recession?
A recession occurs after six months of negative gross domestic product (GDP). GDP refers to a situation where a country’s economy is contracting or shrinking, rather than growing. A negative GDP can be a sign of economic recession or depression. This may result in people losing their jobs, businesses closing, and consumers buckling up and spending less money.

Why do Recessions Happen?
Recessions are naturally a part of the economic cycles and must happen to regulate the monetary policy, but that doesn’t help consumers who can’t make ends meet.

Some common reasons recessions occur include the following:

Out-of-control inflation – If the government has to step in to handle inflation, it can raise interest rates considerably, which deflates most businesses’ capabilities
Negative economic events – The pandemic is a good example of a negative economic event no one saw coming, and it swept the entire world
Debt bubbles – When businesses have excessive debt, and interest rates increase to the point they can’t afford their loans, it hurts the economy.
What Happens to Canadians during a Recession?

Now that you know why a recession might occur, how does it affect consumers?

If the economy goes into recession, it means companies create fewer products. With production slowdown usually comes layoffs and businesses closing. This can also affect the stock market and, eventually, consumer spending because consumers become too afraid to spend the money they have.

This creates a vicious cycle. Consumers don’t spend, so businesses stop producing, which means more layoffs and a hiring freeze. Consumer confidence falls, and the entire country goes into what feels like a depression.

Fortunately, a recession isn’t a depression. Recessions are temporary, usually less than one year, and depressions last.

How the Government Helps?
Just as the government steps in when the economy suffers from high inflation, they also help with a recession.

Instead of increasing interest rates, they typically lower them. This makes it easier for businesses and consumers to borrow and recycle money throughout the economy. As a result, businesses can get back to producing more and eventually hire more help, and consumers’ confidence will increase in the economy, allowing them to spend again.

Preparing for a Recession

If you’re worried about a recession occurring, here’s how to prepare:

Spend only on necessities
Don’t go into debt
Increase your emergency fund
Consider additional income streams
Review your budget and investment plan
Remain calm, and don’t bail out of your investments

Final Thoughts

Recessions don’t last forever, so don’t make drastic changes to account for them. When the recession passes, you’ll be back to your ‘old ways’ and can spend with more confidence. But, for the time being, prepare yourself for the worst so you don’t suffer financially if the economy hits rock bottom.

If the holidays left you with a mountain of credit card debt and less money in your bank account than you’d like, you might consider refinancing.

It won’t solve every homeowner’s problem, and not every homeowner will be eligible, but it may help you start the New Year fresh.
Reasons to Consider Refinancing after the Holidays

There are many benefits of refinancing after the holidays. Here’s what to consider when deciding.

Can you get a Better Rate?

If you can secure a better interest rate now, you’ll lower your payment and save money. Not only might your monthly payment decrease, but you’ll save thousands of dollars over the loan’s term.

If you have a prepayment penalty, determine how long it would take you to recoup the costs with your monthly savings. Sometimes it still makes sense to refinance, even with a prepayment penalty. A qualified Mortgage Professional can help you with these calculations.

Do you Have Equity you can Use?
If you have home equity, you might be able to borrow it, using the funds to pay off your debts. Most homeowners can borrow up to 80% of their home’s value, using the difference between their mortgage payoff and the new loan amount to pay off high-interest consumer debts.

Do you Need a Month to Gather More Money?

When you refinance your mortgage, there are usually at least 30 days between closing and your first payment due date. However, this may give you some freedom in your mortgage due dates, allowing you to save more money to make your payment on time as you recover from holiday spending.

Can you Afford a Shorter Term?

You may consider a shorter-term loan if you have more room in your budget for a larger mortgage payment. This enables you to own your home faster and decreases your interest rate. Paying less interest can save you thousands of dollars over the loan’s term, putting more money in your pocket.

When to Consider a Longer Term?

Maybe you don’t have any debts to consolidate but you feel like you’re living paycheque to paycheque. Stretching out your amortization to 25 or 30 years will decrease your mortgage payments and allow for more cash flow. You can use these savings to lower any financial stress you may be feeling and build up a savings account.

What to Consider When Refinancing

Before refinancing your mortgage, here are some considerations:
Is your credit in good shape?
You don’t need a perfect credit score, but lenders will pay close attention to your payment history. For example, if you’ve made mortgage payments late recently, they may not lend you more money than you owe.

Do you have a prepayment penalty?
Be sure to understand the implications of refinancing. For example, if you’re subject to a penalty if you break your mortgage early, determine the cost and whether it still makes sense to refinance.

Will you use the money saved appropriately?
If you refinance and save money, will you allocate the funds to your high-interest credit card debt or spend it irresponsibly? Using the funds appropriately is the only way to ensure you get out of debt and make refinancing work in your favour.
Final Thoughts

It may make sense to refinance after the holidays if you qualify for an affordable rate and will use the funds properly.

Don’t refinance just to refinance. Instead, have a purpose and a plan, and use it. The key is to use the funds accumulated to get out of debt and help yourself get ahead financially.

It’s hard to believe it’s the middle of December and 2023 is right around the corner. For those shopping for a home or in a variable rate mortgage, the New Year can’t come soon enough. On December 7th, 2022, we experienced the last Prime Rate increase of the year. Many economists believe that this may be the last one for a while and are hoping for a more stable market going forward. In addition to that, some are predicting interest rates may start to decrease by the last quarter of 2023 and/or early 2024.

Inflation & Rate Hikes
Not only did Canadians have to deal with the highest inflation rates we have seen in over 40 years, but they also experienced some of the highest Prime Rate increases since April 2001 when Prime was at 6.50%.
With all these rate hikes, many are left wondering if they should convert their variable-rate mortgages to a fixed rate. Let’s go over the pros & cons of locking in.

Why you might want to lock in
This year we have seen Prime increase 7 times totalling a 4% increase since January 2022. With that said, I don’t blame you for considering locking in! Let’s break down the type of variable-rate mortgages before we get started.

Adjustable Variable-Rate Mortgages
Your payment increases and decreases with Prime Rate adjustments. The only thing guaranteed for your term (ex. 5-year term) is the discount off of Prime Rate, ex. Prime – 1.00%. As of today, if we use this example, your rate would be Prime (6.45%) – 1.00% = 5.45%. With this type of mortgage, your lender typically notifies you of any Prime Rate changes and adjusts your mortgage payment automatically on your behalf.
Static Variable-Rate Mortgages
This is when you are at a variable rate, but your payment stays the same. How does this work? Because your payment does not adjust automatically, the interest within your payment will increase or decrease as Prime changes. Since we have been in a rising rate environment, more interest is being paid to the lender with each Prime Rate increase and less principal is being paid off for your home. Instead of your payment increasing, the lender adjusts your amortization (the period of which you have to repay your total loan, ex. 25 years stretched out to 35 years). However, they can only do that for so long before your whole payment turns into interest and you are no longer paying the principal off. At this point, the lender contacts you and gives you three options: switch to a fixed rate, make a lump sum payment or increase your payments to bring your amortization back in line.

Either option can be worrisome because your payments have either been increasing for the majority of 2022 or now you have been contacted by your bank to adjust your payments significantly. These increases have resulted in a payment difference of hundreds of dollars per month since you first got your mortgage and now you’re considering a fixed rate.

What would it look like if you locked in now?
You may have a couple of options if you’re thinking about locking into a fixed rate, such as staying with your existing lender or switching lenders to find a better rate/mortgage product.

Your lender will provide you with a quote for current fixed rates, but as an example, I’ll use 5.29% for an insurable mortgage. While this may seem like a no-brainer, if you remember my example above of Prime – 1.0% = 5.45% and now fixed rates are similar or lower. While this rarely happens, it’s important to remember the pros and cons of a fixed-rate mortgage.

Pros and Cons of Fixed Rate Mortgages
The obvious benefit of a fixed-rate mortgage is that the payment stays the same for the duration of your term (ex. 5 years). This means no more up and down with Prime Rate changes. That said, you must consider your short and long-term plans when committing to a fixed rate and a new term with your lender. Fixed-rate mortgages tend to have higher penalties in a declining rate environment. So if rates start to drop in the future, as some economists predict will happen by the end of 2023 or early 2024, you may be stuck in your new fixed-rate mortgage because the penalty is too high to break. When rates dropped significantly during the pandemic, many homeowners faced penalties upward of $20,000! So if you think that there is a chance that you may break your new fixed-rate mortgage term, you may want to consider staying in a variable-rate mortgage (which is only a 3-month simple interest penalty).

Final Thoughts
Now that you understand the pros and cons of a variable-rate mortgage, the decision is ultimately yours!

Ask yourselves these few questions:
Are you comfortable staying at your fixed rate for the full term, even if rates drop in the future? If so, consider a fixed rate.
Do you need to know exactly what your payment is every month so that you can budget and keep up with your cost of living? If so, consider a fixed rate.
Are you losing sleep at night worrying about your mortgage payment? If so, consider a fixed rate.
Do you plan to move, upsize or downsize, during your new term (ex. 5 years)? If so, consider staying variable.
Will you need to access equity within your term, consolidate debts, do a renovation or make a large purchase? If so, consider staying variable.
Will you need to add or remove someone from your mortgage within your term? If so, consider staying variable.

An advantage of using a Mortgage Broker/Agent is that I am here to help you understand your options so that you can make an informed decision. If you still have questions or want to run some payment comparisons before you make any commitments.

During the pandemic, millions of people moved. Everyone moved for different reasons, and while 84% of Canadians didn’t need a change due to the pandemic, there were many more first-time buyers during that time, with 53% of buyers in 2021 first-time buyers. So how many moved in or out of Canada?

The results might be surprising.

Where did Canadians Go?

According to Statistics Canada, more than 89,000 people moved away from Ontario. Around 20,000 went to British Columbia, and another 20,000 went to Quebec. Also, approximately 12,000 moved to Nova Scotia, and 23,000 moved to Maritime.

Toronto used to be one of the hottest areas of Canada, but in 2020 and 2021, more people left Toronto. As a result, it was one of the only Canadian cities to lose population during the pandemic.

Why Did Most People Move During the Pandemic?

Homeowners that sold their homes and moved elsewhere did for various reasons. Many wanted more space. With the lockdowns in place, they couldn’t function in the homes they had, with kids doing school from home and parents working from home, everyone needed more space.

Others moved to find more affordable housing. Those that couldn’t afford where they lived because of temporary shutdowns looked for affordable housing elsewhere during the pandemic.

First-time homebuyers, though, did so because they wanted a secure investment and more stability. In addition, almost 35% of first-time buyers did so because they wanted to take advantage of rock-bottom interest rates that they hadn’t seen in a while.

Where did First-Time Buyers Come From?

Most first-time homebuyers lived with friends or family when they bought their first home during the pandemic. Over 40% rented with other friends or family, and 29% lived with family but didn’t pay rent.

Of the first-time homebuyers, 20% were renters for over ten years before they decided to buy a home. On the other hand, 41% of first-time buyers rented for 5 – 9 years before buying a home.

Final Thoughts

Canadians are still moving even with the pandemic somewhat behind us. The largest influx of people moving to different areas has slowed, but many continue to look for more affordable housing or more room as more companies move to remote positions.

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