One question you may have when purchasing your home is, “Do I need mortgage insurance?” The answer to this depends on the type of mortgage insurance and your loan. In Calgary, there are two types of mortgage insurance: high ratio mortgage insurance and mortgage critical injury/disability insurance.

High Ratio Mortgage Insurance

If you have a high-ratio mortgage, by Canadian law you are required to insure the mortgage. A high-ratio mortgage is one in which the homeowner has less than 20% down (previous to the change in mortgage laws in 2007, mortgage insurance was required for anyone with less than 25% down).  Mortgage insurance is designed to protect lenders against potential default.

Currently, few companies offer mortgage insurance in Canada. Canada Mortgage, Canada Mortgage and Housing Corporation (CMHC), and AIG are the main providers in Calgary.

If you have a high-ratio mortgage, your Calgary mortgage broker can give you an idea of how much you can expect to spend each month on your mortgage insurance. As a general rule, however, the higher your down payment, the less you will spend on mortgage insurance.

Mortgage Critical Injury/Disability Insurance

For most Canadians, their home is their largest debt. In the event you or your partner dies or becomes disabled, you are still responsible for the payments on your home. Mortgage critical injury/disability insurance is designed to help cover mortgage payments if you or your spouse dies or becomes disabled. Depending on the policy, the insurance will either provide a lump sum or pay the mortgage payments for you directly.

The cost of mortgage critical injury/disability insurance depends on the amount of the mortgage as well as the age of the homeowner(s). The more expensive your mortgage and the older you are, the more you will pay for this type of insurance.

Unlike high-ratio mortgage insurance, this type of mortgage insurance is not required and is designed more for peace of mind. If you are self-employed or do not have life insurance, it’s a good idea to purchase mortgage critical injury/disability insurance.

If you are considering mortgage insurance in the event of death or disability, keep in mind that only the named policyholder is insured. So if you insure your spouse and you end up becoming disabled, most policies will not provide a payout. For this reason, most companies include both parties listed on the home’s title.

While mortgage insurance is only required if you have a high-risk mortgage, anyone wanting the peace of mind that their mortgage payments are covered in the event of a tragedy should also consider mortgage critical injury/disability insurance.

This post Do I Need Mortgage Insurance? Calgary Mortgage Broker Answers Your Questions via the Mortgage Tips blog where you can get mortgage advise in Canada

One of the first things you will need to figure out when purchasing a home is how much your monthly mortgage payments will be. If you obtain a traditional mortgage, your monthly payments will be calculated based on a combination of principal and interest.

Principal and Interest
In order to understand how your mortgage payments are calculated, it’s important to understand two terms: principal and interest. Principal is the original amount you borrow for your home. So if you purchase a $200,000 home and put $40,000 as a down payment, you will need to borrow $160,000 from the bank. This amount is the principal.

Interest is the fee you pay to borrow the money and is typically set as a percentage of the amount of money borrowed. For homes, the average interest rate is about 5%. The interest rate you get on your loan will depend on a variety of factors, including current market rate and your credit rating. The interest rate plays a large role in the overall amount you will pay each month; the higher your interest rate, the larger your monthly payments.

Property taxes as also figured into your mortgage payment, depending on where you live.

Calculating Monthly Payments
Your monthly mortgage payments are a combination of your interest rate, the principal, and the length of the loan. A portion of your monthly payments goes towards interest and a portion towards principal. In the beginning, the amount of money that goes towards interest is much more than the amount going towards the principal. The amount of interest for each payment is amortized, meaning with each payment, a smaller amount goes towards interest and a larger amount goes towards principal. Your Calgary mortgage broker can provide you with an amortization schedule illustrating the amount of money from each payment that goes towards principal and interest each month.

In our example of a $160,000, 30-year loan at 5% interest, monthly payments would be $1,067 (plus taxes). Over the 30-year period of time, you will pay $384,209.00, with nearly $150,000.00 of that going towards interest.

Many lenders will allow you to save money on the amount of interest you pay by making bi-weekly payments instead of monthly payments. If you pay $533 every other week instead of $1,067 each month, you would end up saving $27,000.00 over the life of your loan. You would also pay your mortgage off five years sooner.

Understanding how your monthly payments are calculated can help you learn how much you can expect to pay for your home each month. Additionally, knowing how your payments are calculated can also help you learn how to pay off your loan faster and save money spent on interest.

This post How are Mortgage Payments Calculated? Calgary Mortgage Broker Answers Your Questions via the Mortgage Tips blog where you can get mortgage advise in Canada

Living Quarters: Canadian Options

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As with most countries, Canada offers a wide variety of options when it comes to choosing a place to call “home.” The choice you make will depend on several factors, including your budget, your space needs, and your desired location.

Below are some of the options you may want to consider:

- Room for rent – Some individuals who own a house or an apartment may rent out separate rooms in those dwellings. All of the tenants share the bathroom(s) and the kitchen.

- Studio apartment – These apartments are small and were primarily designed for just one person. Most consist of a single large room – that contains the kitchen and bedroom – and a separate bathroom.

- Apartments – Larger apartments are also available. These can range in size from one to three bedrooms. They also have separate living rooms, kitchens, and bathrooms.

- Duplex – A duplex is a single home that has been divided into two separate living areas. Each area is completely separate from the other, but residents may share a yard or driveway.

- Townhouses – Townhouses are small houses which are built in rows, so that they form a chain. Most of the homes in the chain are similar in appearance.

- Houses – Homes of all shapes and sizes are available throughout Canada. You can also choose to have a home built specifically to your specifications on an available lot.

- Condominiums – Condos are essentially apartments or townhouses that are owned, not rented. Owners are responsible for all of the internal upkeep on the property and must pay property taxes. They also pay a condo association fee which covers the costs of outdoor maintenance, such as lawn mowing.

Besides these options, there are also two other important choices you need to make: furnished or unfurnished and rent or buy.

Furnished or Unfurnished

In Canada, you can find homes and apartments that are furnished. This means that all of the necessary furnishings are included in the living area, such as beds and chairs. Furnished apartments and homes may be a good option when you are first moving to Canada, especially if you are immigrating from a distance. The cost of transporting your own couches and beds could be quite expensive.

Most people, however, choose to live in an unfurnished dwelling so that they can decorate in a manner they see fit. Some unfurnished homes and apartments will still come with kitchen appliances, such as refrigerators and stoves.

Rent or Buy

This is an important decision because it will also influence which types of property from the list above you focus on during your search for a place to live. Most new permanent residents choose to rent an apartment or home initially, so they can get a feel for the area, find a steady job, and do some leisurely research on the real estate available in their price range. However, there are also many newcomers to Canada who jump right in and purchase a home.

If you do choose to buy a home, townhouse, duplex, or condominium, then be aware that you will need to have money for a down payment. Most banks and mortgage providers will require a down payment of at least 10% of the total cost of the house. That means if you want to buy a $100,000 home, you’ll need a $10,000 down payment.

If you opt to rent an apartment, a room, a home, or a duplex, then you will also need to be prepared to pay some money upfront. Most landlords in Canada expect you to pay first and last month’s rent after you sign the lease. Many landlords will also require you to provide a reference’s contact information. The reference MUST be someone living in Canada. Your employer, for example, may be a good reference.

Regardless of whether your rent or buy, you can expect to pay between $350 and $2000 a month depending on the living quarters you select. As a general rule, you shouldn’t spend more than 50% of your income on housing costs, including your utility bills and mortgage/rent payments. That means you’ll want to establish a budget before you start house/apartment hunting in Canada.

Also, keep in mind that housing costs vary considerably, even within the same province. You can save money on your housing if you do some research and focus on areas outside of major cities.

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When you purchase a home, one thing you will need to be prepared for are the closing costs. Closing costs are the one-time fees you will need to pay when you close on your home after the final offer is accepted and your financing is in place. Because closing costs can be more expensive than initially anticipated, it’s important to understand what they include and how they are calculated.

As a general rule, your closing costs will probably include:

Mortgage insurance

A conventional mortgage is one in which you put a 20% down payment on your home. If you put between 5% and 19% down, your mortgage is considered high-ratio and requires mortgage insurance from either the Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial. CMHC or Genworth will charge a fee for providing this insurance, which will be rolled into your closing costs to be paid upfront. In some cases, you can also add it to your loan amount.

While your Calgary mortgage broker can help you determine exactly how much it will be, you can expect to pay between 1% and 3% of the principal amount you borrowed. For example, if you have a $200,000 loan and CMHC is charging you 2% for insurance, your fee will be $4,000.

Appraisal fees

A professional appraisal of your home and property is required and is usually included in closing costs. This confirms the value of your home. Note that appraisal fees are only required for conventional mortgages. If you purchase mortgage insurance, you won’t need an appraisal.

Land transfer fees

When you purchase a home in Calgary, you are also subject to a land transfer fee when a home or property goes from one owner to another. This amount varies depending on your province and ranges from .5% to 2% of the property value and must be paid upfront at closing.

Legal fees

You are also responsible for any attorney or notary fees incurred during the purchase of your property. At the very least, this will include fees for reviewing the offer and any counter offers and preparation of mortgage documents.

Fire/property insurance

You must have proof of property insurance before you close on your home, so you will need to purchase a policy that covers the replacement value of your new home and its contents.

In some instances, particularly when the seller is motivated, you can arrange for the seller to pay some of the closing costs in the contract. Knowing what to expect for closing costs can help you budget the right amount and ensure there are no unexpected expenses when you close on your home.

This post What will my Closing Costs be? Calgary Mortgage Broker Answers Your Questions via the Mortgage Tips blog where you can get mortgage advise in Canada

It is said that history repeats itself–A truism from fashion to auto design. It seems that what was once in vogue will eventually return

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to popularity. How many times have you heard someone say “Don’t throw that out, it will be ‘in’ again in ten years.” Admit it most of you have a few choice items hanging in your closet, with the faint hope that the Dynasty or Miami Vice look will meander its way back into the mainstream.We see the same trends in commercial and residential architecture and décor. Arched facades, tapestries, pillars and columns, are all reminiscent of styles that have repeated themselves from times of antiquity.

So what’s next? Perhaps we need look no further for inspiration than, say, the 4th century BC–and the advent of mosaic art. When we hear the word mosaic, many of us think of small square tiles, often used in bathrooms and typically installed in monochromatic sheets. True mosaic art couldn’t be more different.

Originally ancient artists formed their mosaics from water-smoothed pebbles, then from non-symmetrical pieces such as broken pottery and other scrap material. The mosaic would be a picture, perhaps a landscape, or mythological event. Churches throughout Europe incorporate intricate mosaics in their ceilings, walls, columns and floors depicting biblical events.

No one can say exactly when or precisely where the art of mosaic was born, but there is evidence of this form regaining popularity throughout the ages by various civilizations. The Greeks developed the first school for mosaic artisans. Originally created to decorate floors, the Romans took the popularity of the art to new heights using mosaics to decorate their walls. Archaeological evidence in Pompeii suggests that even common people would have simple mosaics adorning the walls of their homes. Over the centuries mosaics have experienced renewed popularity time and time again.

Far from little bathroom tiles, today’s incarnation of mosaics are the works of art so valued in previous ages. Intricate pictures and designs in motifs from ancient to contemporary genres, the mosaic can make a unique addition to almost any décor.

Dean Avey, owner of Artisan Mosaics in Toronto, Canada, points out that mosaic can find their way into almost every room of your home, as floor or wall coverings. His gallery displays a wide variety of mosaics, in various sizes and shapes. “All made meticulously by hand,” boasts Avey. Artisan carries a wide range of mosaic sizes that can be used in small applications such as the centrepiece of a kitchen backsplash on up to mammoth mosaic carpets with the look and feel of an Oriental rug. Most of Artisan’s mosaics are made from tiny, hand-cut pieces of marble, in a variety of textures. According to Avey, tumbled marble and slate mosaics are currently in vogue, as well as highly polished almost seamless patterns that are reminiscent of Italian wood inlay.

The practicality of ceramic tile, and its ever-increasing array of colour and texture choices, makes it popular with home and business owners. The status of hardwood flooring, for its warmth and richness, is also at a peak. Setting mosaic medallions or ‘emblemata’ within your tiles or hardwood is certain to set your choice of floor covering apart.

Mosaic carpets offer the rich beauty of a Persian rug in formal areas and foyers, with the practicality of stone for durability and ease of cleaning. The mosaic carpet has the added safety benefit of being set flush with the floor–particularly valuable in high traffic areas, and in spaces where accessibility is important.

Beautiful and practical, the mosaic is ideal for walls in kitchens and baths. No need for rooms that require frequent clean-ups to look clinical or utilitarian. Mosaics will add warmth and charm to these spaces where typically little art is found. Outdoors mosaics can be used in swimming pools and fountains, or as the centrepiece of a porch or patio.

Commercial applications are limitless. Restaurants and hotels, business foyers, and elegant restrooms; all will welcome the air of distinction mosaic art can bring to their décor. “Custom insignias will be popular with businesses, clubs and institutions,” says Avey, whose company will custom order a mosaic of your crest, coat of arms, or business logo.

The revival of mosaics means authentic art will find its way into less conventional spaces, like floors and patios, bathrooms and kitchens, as well as in commercial applications; a welcome opportunity for professional decorators, home and business owners. So once again, it is in with the old, the really, really old…

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If you are in need of a little extra money, whether you’re finding difficulty making ends meet or you want to take a vacation or remodel your home, a home equity loan may be a good option for you.

What is a home equity loan?

There are two types of home equity loans: a home equity line of credit and a home equity loan. Both are considered second mortgages that allow you to borrow money from the equity that has accumulated on your home. With a home equity line of credit, you use the equity in your home the same way you would a credit card. The balance is revolving, meaning you can make payments on your line of credit plus interest and continue to use it.

With a home equity loan, you are given a pre-approved amount of money in a lump sum, which you then make payments on. Whether you opt for a loan or line of credit, you must still meet the lender’s approval.

Is a home equity loan right for me?

Before you decide whether a home equity loan is right for you or not, it’s important to weigh the pros and cons. Advantages of a home equity loan or line of credit include:

You can use the money for whatever you want.

The money you receive from your home equity loan can be used for whatever you’d like, from making home improvements to paying down debt to paying cash for a new car.

Interest rates are lower than credit cards

The average rate for a home equity loan or line of credit right now is a little over 4%, while the average rate for a credit card is just over 11%. With a home equity loan, you save more money in interest.

Potential drawbacks to a home equity loan include:

Home equity loans are risky

Because a home equity loan is considered a second mortgage, if you can’t make the payments on your home equity loan, you are putting your home at risk for foreclosure.

Equity is not always dependable

In the event the equity in your home drops, if you go to sell your home, you may not be able to repay your home equity loan with actual equity. Instead, you must repay the loan yourself. Chances are, if you’ve taken out a home equity loan in the first place, you probably don’t have the cash to repay your loan sitting around.

As a general rule, home equity loans are a good idea for those who already have a significant amount of equity in their homes and are using their loan for a large, one-time purchase. On the other hand, if you are using a home equity loan as a way to live beyond your means, you may want to reconsider.

How do I apply for a home equity loan?

If a home equity loan sounds like something you are interested in, your Calgary mortgage broker can provide you with the paperwork and information you need to apply for your home equity

This post Is a Home Equity Loan Right for Me? Calgary Mortgage Broker Answers Your Questions via the Mortgage Tips blog where you can get mortgage advise in Canada

The Conference Board of Canada has recently found that the lack of affordable housing has left one-fifth of Canadians struggling to pay

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for their homes. They fear this number could increase as the mortgage rates rise from their recent lows. This means that currently, 20% of Canadians are affording their homes by cutting other costs that could personally affect them. A home is considered unaffordable if the costs exceed 30% of one’s pre-tax income.The current Canadian mortgage rate of 5.25% is being raised to 5.85%, up six-tenths of a percent. This move is being followed through by five of Canada’s largest banks and will affect all five-year mortgages. The report from the Conference Board of Canada comes just as CIBC and National Bank announce they too, were raising their mortgage lending rates by more than half of a percent, ahead of the Bank of Canada’s anticipated rate hike that is expected this summer. This likely spike in bank rates will end the historically low mortgage rates that have brought us into 2010.

The Conference Board of Canada claims the high debt loads that are being taken on by consumers are an attempt to get in before the mortgage hikes take effect. These same homebuyers are considered responsible for the housing market rebound that Canada has seen up until now. However, there is a fear that anxious consumers will continue to overextend themselves in an attempt to get into the housing market meanwhile, the level of Canadian incomes has remained relatively consistent, not providing enough of an increase to match the housing prices.

Much of the problem lies with the buyers who didn’t put a lot down, which means their mortgage payments are quite high. Combine this with an increased mortgage rate and the outcome will be homeowners with a serious affordability problem. If the current prime rate of 2.25% rises by 2.5 percentage points, which is an average cycle increase, a variable mortgage rate could cost a homeowner about 30% more per month.

A large segment of the housing population’s demands have not been met due to the heightened fees of construction, resulting in developers being focused on building homes aimed at people in the higher tax bracket. There is also a gap in rental availabilities as developers are building condos instead of apartments, leaving rental properties sporadic and expensive.

There is an element of concern that there could be more defaults on loans or more home foreclosures due to interest rate increases, but it is felt that most people will find ways to cut expenses to pay off their mortgages, which may pose a risk to Canada’s recovering economy. If you feel that you are in a position of needing to tend to a bad credit rating or financially prepare for the upcoming rate hikes, a private bad credit loan may be an affordable answer.

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When most people purchase a home, often the first question they ask is, “How much will my monthly mortgage payments be?” Mortgage rates are calculated based on a number of different factors, including the amount of your loan, length of loan, and the overall interest rate. One of the most important figures in determining your monthly mortgage payments is the prime rate.

Prime Rate Explained

The Canada Prime Rate is the lowest and best interest rate a borrower will offer a lender at any given time. These rates are given to borrowers who have excellent credit scores and are used as a baseline in determining your overall rates depending on your own credit history. You may have seen advertisements claiming interest rates on homes and cars “as low as 3%” or another similar number. These advertised rates are frequently prime rates.

The prime rate is calculated by the Bank of Canada and adjusted occasionally depending on the state of the economy. In times where the economy struggles and inflation is low, the prime rate is typically lower in order to encourage spending and boost the economy. In Canada, there are eight days per year that the Bank of Canada can announce prime rate changes if necessary. Keep in mind, however, that this doesn’t mean the prime rate will change on each of these dates.

Prime Rate’s Effect on Mortgage Payments

The prime rate also has a drastic effect on mortgage payments. While your Calgary mortgage broker can tell you exactly what your rate will be, the baseline rate in determining it will be the prime rate. For example, if the current prime rate in Canada is 3%, you know that your loan’s interest rate will most likely not be lower than 3%.

Quite simply, the higher the prime rate, the higher your mortgage payment will be. The highest prime rate in Canada was 22.75% in August, 1981. Compared to the March 2011 prime rate of 3%, your mortgage payments would still likely be smaller if you were to purchase a home today than 30 years ago at that record high.

When the bank calculates the interest rate on your loan, it will use the prime rate as a starting point and then determine, based on your credit and other factors, how far over the prime it will be. Often, a bank will refer to your loan rate as Prime plus the difference; for example, “Prime plus 1%” would mean your interest rate would be 4%.

The Canada Prime Rate is the starting point for determining mortgage rates and will have a large impact on your monthly mortgage payment. You can keep your payments and interest rate as low as possible by improving your credit score or maintaining your score if it is already excellent.

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Home renovation financing has matured into one of the most competitive aspects of today’s mortgage market, and equity-rich homeowners are benefiting from an unparalleled degree of flexibility and options.

When the client tells how they plan to spend and we will tell them what is the best value and the right product. Like most lenders has an extensive menu of options for those planning home makeovers, plus seasonal promotions and incentives that can sweeten the deal. For instance, if you are planning a small fix-up or improvement, such as $5,000 to $10,000 worth of paint, carpeting and appliances, it may be wise to use a premium credit card for the initial purpose to accumulate travel or merchandise points. Then, before the credit bill is due, you can take out a lower-cost personal loan or equity loan to pay it off.

Advantage of credit cards is that a warranty is offered on purchases, so there is some extra protection. For mid-size and larger projects, any- thing over $10,000 right up to six figures, the best bet is to use an equity line of credit. Based on your personal credit rating, amounts of up to 80 per cent of the equity in the home can be borrowed, in some cases even higher. For example, if your house was valued at $580,000 and you had a $170,000 mortgage, you could borrow $384,000 to fund a renovation. There is also Canada Mortgage and Housing Corporation mortgage insurance available that can increase the loan-to-value-ratio. The advantage of such credit lines is that you only pay interest on the amount of the money that is actually used, and the credit lines also offer flexibility in the case of cost overruns during a renovation. There are even credit cards linked to the line of credit for immediate access. Home equity loans are normally available at about two points above prime rates, but lower rates are available for those with a strong credit history. Other major lenders will sometimes even lend money on renovations that exceed the equity in the home. This is based on the future appraised value of the home once the renovations are complete, according to a professional appraisal, which the homeowner pays for.

Energy incentives

There are also instances where someone having a legal rental suite renovated into their house can qualify for lending based, at least partly, on the rental income. Only half of the rental income is normally counted as personal income. If you are tying energy savings into your renovation project, there are incentives to make financing easier. To qualify, you need to make renovations recommended under the federal governments ecoENERGY Retrofit program. These renovations must achieve at least a five-point improvement in your home’s energy efficiency rating CMHC has also added environmentally friendly features to its mortgage loan insurance. If you use CMHC insured financing to make energy-saving renovations or renovate your existing home to make it more energy-efficient, a 10 per cent refund on the Insurance premium may be available. You could also have the added flexibility of a longer amortization to a maximum of 40 years, significantly reducing your monthly payments.

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The current Calgary real estate market is advantageous to both buyers and sellers—housing prices are rising, meaning sellers and current homeowners have more equity, and at the same time interest rates remain low, which leaves buyers with lower monthly payments and less spent on interest over the life of the loan.

Sales of both homes and condos in Calgary grew in March of 2011 to 1,900 homes sold, an increase of 18% when compared to the previous month. Calgary property is in high demand, and the average selling prices of homes reflect this, with the average selling price rising or holding steady. In March 2011, the average selling price for a Calgary home was $462,000. Overall, it’s a great time to speak with a Calgary mortgage broker if you are considering purchasing a home. Homeowners who would like to sell shouldn’t have much problem either, as the average time on the market for a home was just 39 days in March.

So how does Calgary compare to the rest of the country? While the overall housing market can be considered strong, there are some differences in average home price, time on the market, and so forth. In Ottawa, for example, the average price of a residential home in March 2011 was $375,000. However, sales in March 2011 in Ottawa decreased 17% from the previous year to 1,200 sales in March.

British Columbia residents are also enjoying a strong housing market, perhaps the strongest in the country currently. Vancouver has seen the largest increase in home sales and prices in the province lately. In February 2011, home sales increased 5% from the previous year, with 6,400 homes sold. The average price of homes rose a whopping 18% from the year before to $587,000.

The Manitoba housing market isn’t as friendly as Calgary’s to buyers, and finding a home for sale in Winnipeg is more difficult than any other Canadian city according to one study by Re/Max. The Saskatchewan housing market has held steady sales and average home prices, which are lower than Calgary’s at $292,000 for the average home in February 2011. However, the average time on market in Saskatchewan is fairly close to Calgary at 41 days.

The Calgary real estate market, much like the rest of the country, is currently experiencing a rise in sales and average home prices while managing to keep interest rates low.

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