Tips on how to reduce your mortgage and save for the long term.

1. Always go biweekly on your mortgage payments and NOT monthly. Monthly payments will work out to 12 installments and biweekly will end up to be 13 monthly payments a year.

2. Always try to exercise your pre-payment privilege each year. Most banks yyou can put 10-20% on the original mortgage towards the principal. So when you have extra money, your tax refund or vacation pay, put it towards the mortgage principal.

3. Go variable but make your mortgage payments based on the fixed. This way you will be throwing more principal towards your mortgage

4.   Sometime’s it not only the mortgage that people have to pay. It is also the other debt such as car loans and credit cards. It is best to refinance the mortgage plus the debt and make one payment and that way you are able to save money and be more aggressive on your mortgage payment

That is why is important to speak to the mortgage broker to teach you all the options you can exercise.

Become an informed client.

For all your mortgage needs call: Eduarda (Eddie) Pita - 416-920-9931

Visit us online at www.eddiemac.ca

Borrowing: 10 things you need to know

You’re in the driver’s seat when it comes to borrowing money. You don’t need to book an appointment with your bank manager to ask for a loan anymore. Credit is easily available, as long as you have a good credit history, and lenders are anxious to get your business.


My advice is to shop around as carefully as you shop around for the stuff you buy on credit, such as cars, furniture and home renovations.


But before starting to compare loan rates and features, here are 10 things you should know about borrowing.


1. Your credit history is important

To know how good you look to potential lenders, check your credit report at Canada’s two major credit bureaus, Equifax and Transunion. A credit report is a snapshot of your credit history. It shows how quickly you pay your bills and how often you’ve had collection issues. It might even show you’ve been a victim of fraud or confused with another person. While you have the right to see your credit report, you can get a copy for free only if you send a written request with two pieces of ID. Online requests are faster, but will cost you money.

2. Your credit score is important to lenders

A credit score is not the same as a credit history. You’ll pay about $25 to get copy of your credit score by ordering it online from the credit bureaus. It’s based on a mathematical formula that considers your payment history and other factors, such as how much of your credit limit you have used. The score is a three-digit number, ranging from 300 (low) to 900 (high). The higher the better? There’s a great guide to understanding your credit report and credit score at the Financial Consumer Agency of Canada.

3. Make sure the information is accurate
Make sure the information in your credit report is correct and up to date. If it’s not, talk to the credit bureau. Remember, the credit bureau has to contact the credit granter (such as a bank or a cell phone company) to see if the information is incorrect. To avoid delays, you can also contact the credit granter and ask it to follow up with the credit bureau. Once an error is confirmed, the credit bureau has 30 days to correct your credit report (except in Alberta, where it’s 90 days). If the credit granter refuses to fix the error, you can submit a brief statement to the credit bureau, saying the information is in dispute. This will be added to your credit report.


4. You can improve your credit score
To polish your image as a borrower and raise your credit score, you should always pay your bills on time. If you can’t do this, pay at least the required minimum amount a few days before the due date. Try to keep your balance well below the credit limit on your credit card or line of credit. Finally, you should be careful about making a lot of credit applications at once. Your credit score suffers if too many potential lenders ask about your credit in too short a time. (It looks as if you’re desperate.)


5. You need to build up a credit history

Your credit score will be low if you don’t have a history of borrowing money and paying it back. You can build up a credit history by applying for a credit card and using it. Once there’s activity, the card issuer will tell the credit bureaus about your outstanding balance and your record of making payments on time. You may be asked to get a secured credit card, which means you have to deposit a sum of money with the card issuer. This reduces the risk if you default on your payments. Check out information about secured credit cards and a comparison of the rates and features. It’s easier to get a loan when someone co-signs with you. But if you can’t repay, the other person is on the hook.

6. You may need a co-signer
If you have a limited or poor credit history, you will be seen as a high-risk borrower. You may not be able to get credit unless you find someone with a high credit score to sign the loan with you. Lenders know a co-signer cuts the risk, since the other person has to make all the remaining payments if you stop. You’re asking for a big favour when getting friends or family to co-sign a loan. So, you should write a contract setting out the payment schedule. This won’t hold up in court if you default, but it makes the relationship more professional.


7. Be careful with a personal line of credit
A line of credit often has a lower interest rate than a loan. It’s certainly more flexible. Once you’re approved for a certain credit limit, you can take out as much as you want and pay back only a required minimum amount each month. But remember you’re making interest-only payments, so you can pay the monthly minimum and never make any progress on trimming your debt. Remember, too, that a line of credit has a floating rate that can go up. If you prefer fixed rates, stick to a conventional loan.


8. Secured or unsecured line of credit?
Financial institutions love lines of credit. They know it’s hard to resist temptation when you’re handed a large amount of potential spending power. A line of credit backed by your assets, such as investments or a principal residence, usually has a lower rate than an unsecured line of credit. Both are based on the bank’s prime rate, such as prime plus 1 per cent or prime plus 3 per cent. You can save money if you get a line of credit secured by your house at the same time you apply for a mortgage or refinance an existing mortgage. Always try to pay more than the minimum amount so that you’re not spinning on a treadmill of debt.


9. Credit cards are a costly way to borrow
Most standard credit cards have annual interest rates of 18 to 20 per cent. And you’ll pay 25 per cent or more if you miss making a couple of minimum payments in a year. If you carry a balance on your credit card from month to month, you will lose the grace period of 20 to 25 days on new purchases. Cash advances on a credit card are also costly, since there’s no grace period. You’ll pay interest from day one and a fee for cash advances as well. So, use the credit card as a convenient payment method, but look for low-cost credit elsewhere.


10. Avoid payday loans

A payday loan is one that you promise to pay back from your next pay cheque, usually in two weeks or less. These loans are offered by privately owned payday loan companies and cheque cashing outlets, not by the big banks. Lenders ask for proof you’re over 18, with a permanent address, regular income and active bank account. To be sure you repay, they ask you to write a post-dated cheque or authorize a direct withdrawal from your account. Payday loans are expensive because of all the fees that may be charged. On a $300 loan for two weeks, you can pay $50 in fees. That’s equivalent to a 435 per cent annual interest rate, according to the FCAC.

By Ellen Roseman | Thu Mar 17 2011

Courtesy of: http://www.moneyville.ca:80/article/845459--borrowing-10-things-you-need-to-know

For all your mortgage needs call: Eduarda (Eddie) Pita - 416-920-9931

What are your financial Steps to Take If You're Getting Divorced

If you're facing the emotional turmoil of an upcoming divorce, part of your worry is revolving around your personal finances. Divorce will affect your personal finances badly but, hopefully only in the short term. There are financial steps you should take during your divorce to shield yourself as much as possible.

1. Separate Your Credit Card Debts
Any debt (no matter in whose name) is open to a fifty-fifty split until the divorce is signed.

2. Remove Your Name from Your Spouse' Cards
Before you destroy any credit cards your spouse may have given you, call the creditor and remove yourself from the account. If you don't, the bank will continue to report the debt on your credit report, even if you are only a co-signee. This will increase your debt-to-income ratio by unfairly penalizing you for the debt of your spouse. Your credit score plummets if your spouse is late on their credit card payments.
3. Close Joint Bank Accounts
Separate your bank accounts while the divorce process is going on. If you still live in the same home, keep a bank account open for household expenses only and establish auto debits with payees, to prevent your spouse from withdrawing funds for his or her own ends.

 4. Decide if you want to sell the matrimonial house or buy the other spouse out.
Get a certified appraiser, and not a real estate agent to give you a letter of opinion, of what your house is worth. Pay the cost of the appraisal and get 2 or more reports (one from each party) to get an honest appraised value of your house.

5. Plan for the Future
You are about to become a one-income household. This may increase or reduce your lifestyle. To deal with the upcoming change to your personal finances, make plans for lowering your car payment, mortgage and any other large fixed payments and discover new ways to maximize your money.

Become an informed client.

For all your mortgage needs call: Eduarda (Eddie) Pita - 416-920-9931

Visit us online at www.eddiemac.ca

60% of Ontarians live paycheque-to-paycheque

Shutterstock

By John Goddard | Wed Sep 07 2011

Eight years working in administration for non-profit dance and theatre companies left Iona Frost professionally fulfilled but behind in her retirement savings goals.
She lived sensibly, meeting her rent, Internet and other payments, and getting into shows for free through bartering and volunteering.

Internet and other payments, and getting into shows for free through bartering and volunteering.

But her retirement-savings targets proved hard to hit, she says, putting her roughly into a category with a majority of other Ontario workers in a survey to be released Thursday by the Canadian Payroll Association.

Sixty per cent of those responding to an online poll this summer said they live paycheque-to-paycheque. Nationally, the figure stands at 57 per cent.

Most people said they likely need more than $750,000 to retire and they are not on track. Instead, they are getting into trouble with credit-card debt and overspending, unable even to keep three months worth of expenses on hand in case of emergency.

On the last score, Frost stands out as an exception.

“I have lived by that principle of three months savings,” she said Wednesday. “When something unforeseen comes along it can be a real blow, even an unexpected dental bill.”

At 37, her problems had been low pay and little room for advancement, which led her four months ago to upgrade her skills and establish herself as an independent consultant under the name SpringForward. One of her first clients was the salsa school Go Dance Mambo.

“So far so good,” she says. “I was able to make some great connections at my last job and one of my volunteer jobs turned into a business opportunity.”

In the survey, 74 per cent of Ontario respondents said they have saved less than one quarter toward their retirement savings target.

“Even the older age groups are not saving for retirement,” said association chairperson Dianne Winsor. “More than 40 per cent of Canadian employees 55 to 65 are still less than a quarter of the way.”

At 49, Khadijah Ignatova said she is behind as well.

Five years ago, she arrived in Canada from Bulgaria with a master’s degree in Russian language and literature. With help from Thorncliff Neighbourhood Office, she found a minimum-wage job as a security guard.

She meets her expenses, including rent, TTC pass and cellphone, she said. Instead of plunging her extra money into retirement savings, she plans to invest in a Masters of Education degree.

“I’m going to look for a decent job,” she said. “If I’m not able to save for retirement, I think I’ll find a way to survive.”

In the survey, 50 per cent of employees nationally and 53 per cent in Ontario reported they are saving 5 per cent or less of net earnings.

Financial advisors recommend that workers put 10 per cent into savings, said the association, which consists of professionals administering company payrolls and deductions.

A total of 2,070 employees responded to the survey between July 6 and Aug. 2, using something called a convenience sampling methodology.

Calculating a definitive margin of error is not possible with the methodology, researchers said, but would likely be in the range of plus or minus 2.2 per cent 19 times out of 20.

Courtesy of 

http://www.moneyville.ca/article/1050864--60-of-ontarians-live-paycheque-to-paycheque?bn=1

For all your mortgage needs call: Eduarda (Eddie) Pita - 416-920-9931

O que é a taxa de juro do Banco do Canadá?

Vamos falar sobre hipotecas:
O que é a taxa de juro do Banco do Canadá?
Por Eduarda Pita

A taxa de juro do Banco do Canadá é uma taxa de juro estabelecida pelo banco central e que é cobrada às principais instituições financeiras que dependem do banco central para os empréstimos do dia-a-dia de forma a cumprirem com as suas obrigações de liquidez e que neste momento está a um por cento.

Por sua vez, os bancos emprestam dinheiro ao público a três por cento, a chamada taxa de juro "prime". Esta taxa afecta todas as linhas de crédito – seguras ou não seguras – e também as hipotecas com juros variáveis.

A taxa de juro do Banco do Canadá é um mecanismo que o Governo utiliza para controlar a inflação no país. Os juros hipotecários são controlados pelos títulos do tesouro (BOND) e pelas acções (STOCK).

A taxa de juro "prime" varia mais do que a do Banco do Canadá, que normalmente se mantém por quatro a seis meses, podendo mesmo este tempo se prolongar por mais tempo.

O Banco do Canadá é representado por Mark Carney, que decidiu na passada segunda-feira (30) manter a taxa de juro igual.

As razões apresentadas para tal, foram as seguintes:

1. A Inflação subiu. Os Canadianos estão a sentir a subida do preço dos combustíveis, assim como no custo da comida.

2. O dólar Canadiano continua forte, o que é bom para a compra tanto do dólar americano como do euro. No entanto, não é bom para o sector industrial, porque as nossas exportações são afectadas pelo dólar. Com o dólar mais forte, o índice de exportações tende a diminuir. As pessoas que trabalham nas fábricas não constatam evolução profissional e, ao mesmo tempo, já não estão a fazer horas extraordinárias como faziam no passado.

3. Se a taxa de juro do Banco do Canadá subir torna-se favorável para os investidores e, em retorno, o dólar canadiano sobe.

4. No entanto, se o juro do Banco do Canadá se mantiver baixo, o mercado imobiliário torna-se mais forte e, desta forma, mais pessoas poderão comprar casa ou fazerem renovações. Assim, o sector da construção fica forte.

5. Apesar da nossa economia ser forte em conjunto com o grupo do G8, os acontecimentos mundiais não deixam de nos afectar. Nós não estamos imunes. Assim, os acontecimentos que se passam na Grécia, na Irlanda ou em Portugal irão ter um impacto no Canadá.

De constatar ainda que com o governo maioritário em Otava, o Banco do Canadá não quer aumentar o "prime" em breve. Sendo assim, esperemos para ver o que acontece na próxima reunião do dia 19 de Julho.

Por isso, por agora, quem tiver hipotecas com taxa de juro variável deve-se deixar ficar como está.

Eduarda (Eddie) Pita é uma Correctora Hipotecária (Mortgage Broker) que poderá ser contactada por e-mail: mortgages@eddiemac.ca ou por telefone: 416-920-9931

http://www.solnet.com/03jun11/financas/financ1.htm

Why variable rate mortgages are the way to go

Leanna Mamatis and her husband Rick knew exactly what they were after when they sold their home in North York and bought a new one in Markham.


They wanted more space, but not too much, and a swimming pool in the backyard.
Mamatis also knew what she was after on the mortgage. Even though interest rates are poised to increase, the couple decided to go with a variable rate mortgage for a three-year term.
“It’s lower than the fixed rate,” Mamatis said. “I’m not a financial expert, but it seems to me that interest rates are not going to go up too fast too soon. I just wanted to make the payments as minimal as possible in terms of the interest.”


With other pressing expenses, such as tuition and fees and lessons in music, karate, hockey and baseball for their four teenagers, making extra mortgage payments is not a priority right now, Mamatis added. “But if we can put a chunk of money down on the principal, then we will.”
Research shows that homeowners who take a variable rate mortgage can save much more over the life of a mortgage than those who stick with a fixed rate.


But that doesn’t mean variable rate mortgages, which go up and down with the prime rate, are right for everyone.


What looks best on paper may not be what fits your life.


If you opt for a fixed rate, you know that your payments will not change over the mortgage term. You’ll pay a higher interest rate in exchange for that peace of mind.

A quick glance at RateSupermarket.ca shows the great divide between fixed and variable.

For a $200,000 mortgage at a five-year fixed rate of 5.69 per cent, you’ll have a monthly payment of $1,243. If you kept that rate and term, over the 25-year life of the mortgage, you’d pay nearly $173,000 in interest.


If instead you took at variable rate of 2.85 per cent and could maintain the same rate for 25 years, your payments on a mortgage of the same amount would be $931 a month and the total interest $79,350.


Of course, those are assumptions that may not hold true.


That’s why home-buyers must give a lot of thought to their tolerance of risk and the state of their personal finances when they decide on a rate and a term.


Ask yourself, if you choose a variable rate, and rates go up, will you be able to afford the higher monthly payments?


A 2001 study by York University finance professor Moshe Milevsky found that variable-rate mortgages saved borrowers money 89 per cent of the time over fixed rates. An update in 2008 also came down on the side of variable rates.


Milevsky said in an interview that his study should be used with caution.


“It’s a lot like buying stocks and bonds,” he said. “While overwhelming research shows that stock outperform bonds most of the time. But there will be prolonged periods of time when bonds do better. That’s why we always tell people with investments if you can’t take the chance of losing money and you don’t have the risk appetite, don’t put all your money in stocks.”


The Bank of Canada, which kept interest rates at historic low levels to support the economy through the recession, is expected to begin raising rates later this year.


Mortgage broker Jeff Mayer of Mortgage Intelligence has clients with variable mortgages asking if they should lock-in with rates set to rise in the coming months.


“I tell them you have to look at the trends and the past history. The rates will go up in time, but the Bank of Canada usually only changes rates by 25 basis points [one-quarter of a percentage point] at a time,” he said.


The difference between a variable and fixed rate right now is one percentage point, and in some cases, even higher.


Broker Paula Roberts urges clients to think about the term of the mortgage.


“Most people automatically go to the five-year term. Sometimes they don’t even realize they have other options,” said Roberts, a broker with Mortgage Intelligence.


“People need to think about their plans for the next three to five years. If you know you’re going to be moving or having kids, you can take a shorter term. If you want the certainty of the fixed rate, you can choose a longer one.”


She also suggests that borrowers with a variable rate set their monthly payments at a higher amount, closer to the fixed rate. The excess will go directly to the mortgage principal and if you rates go up and you lock-in, there won’t be any payment shock.


“Start with your own financial goals and work backward from there. Interest rates can change, but so can things in your life, particularly for younger people. You may be changing jobs and moving away or starting a family in the next couple of years,” said Colette Delaney, senior vice-president at CIBC Mortgages, Lending and Insurance.


For instance, you probably have other financial goals such as saving for retirement, or your children’s education.


“Just because you take out a mortgage doesn’t mean you forget about all your other goals or saving a little bit each month. If rates move up, are you still going to be able to put money away in that RESP or take a holiday?


“It’s not just about looking at the interest rates today and choosing the lowest one; it’s about looking at the years to come and having a mortgage that will allow you to adapt.”

By Madhavi Acharya-Tom Yew | Mon May 2 2011

Courtesy of http://www.moneyville.ca:80/article/984007--why-variable-rate-mortgages-are-the-way-to-go

For all your mortgage needs call: Eduarda (Eddie) Pita - 416-920-9931

Canadians aim to pay mortgages sooner

OTTAWA — Recent Canadian homebuyers have a “a high level of financial literacy” and many are paying off their mortgages at accelerated rates, according to a Canada Mortgage and Housing Corp. survey released Wednesday.

The latest annual survey suggests many Canadians are taking heed or were already aware of the perils of taking on too much debt in the current low interest rate environment.


The survey of 3,512 recent mortgage buyers found 75 per cent of respondents agreed that it was “very important” to pay off their mortgages as soon as possible — and 39 per cent said they had set payments higher than the required minimum.


As well, 20 per cent said they had made at least one lump sum payment since obtaining their mortgage.


“As in 2010, the 2011 survey findings indicate that Canadians feel confident in how they manage their mortgage debt,” the CMHC report said.


“Over 80 per cent of recent buyers reported doing some level of household budgeting. While establishing this budget, a majority also reported that they had assessed, to some degree, the potential impact of rising interest rates on the budget, assessed to some degree the potential impact of a loss of income on the budget, or assessed to some degree the potential impact of rising expenses on the budget.”


The report adds that recent buyers also seem to good savers, with 80 per cent indicating they had contributed to a retirement, savings or education fund.


Overall, the survey suggested that Canadians taking on mortgage obligations were entering into debt with eyes wide open.


Bank of Canada governor Mark Carney warned as recently as last week that he was concerned about rising levels of indebtedness and that many Canadians appeared not to appreciate that rates will need to rise and mortgage servicing will become more onerous.


As well, Statistics Canada reported this week that household debt to disposable income had reached a record of above 147 per cent.


But according to the CMHC survey, eight in 10 respondents said they had researched mortgage terms and conditions carefully, 88 per cent had a good understanding of how big a mortgage they could afford and 81 per cent had some form of savings.


On average, homebuyers took 11 months to plan their purchase and recent buyers took about five weeks to research the best mortgage for them.


“The investment in homeownership is not entered into quickly,” the CMHC said.


However, homebuyers were not accessing all the help that is available.


It said research showed that during their mortgage research, just 23 per cent of first-time buyers received advice on budgeting and 18 per cent on managing debt.


In addition, the survey found that one in four recent buyers were not sure of where to go to receive reliable advice in case of financial difficulty.


CMHC said areas in which mortgage and financial professionals can offer advice and guidance are long-term mortgage and financial strategies, budgeting and managing debt.


The online survey of recent mortgage consumers was conducted between Feb. 25 and March 25.

For all your mortgage needs call: Eduarda (Eddie) Pita - 416-920-9931


Article courtesy of: http://www.moneyville.ca/article/1013270--canadians-aim-to-pay-mortgages-sooner-survey