What Amortization Period is Best when Selecting a Mortgage?

What amortization will work best for me?


The lending industry’s benchmark amortization period is 25 years, and this is also the standard used by lenders when discussing mortgage offers, as well as the basis for mortgage calculators and payment tables. Shorter or longer time-frames are also available – up to 30 or even 35 years. 


The main reason to opt for a shorter amortization period is that you’ll become mortgage-free sooner. And since you’re agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced. A shorter amortization also affords the luxury of building up equity in your home sooner. While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. 


Because you’re reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you’re paid commission or if you’re buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be your best option.


Lastly, and very importantly, depending on the interest rate being offered, a longer amortization period might be to your advantage, especially if you are investing in the property as a rental or for a longer period of time. For instance, if you are offered an interest rate in the 3 to 4 percent range, your cost of borrowing relative to inflation is so low, you might as well use more of the lenders money while you can. If you have extra cash, invest it separately from your real estate until a time when interest rates go up, and then put the money onto the mortgage so that you have a lower debt. 


If you have any questions about real estate, mortgages, or investing, send me an e-mail. 

CMHC Says that House Prices will Continue to Rise in the Near Future. Employment, Immigration, and Low Mortgage Rates are Positive.

The Canada Mortgage and Housing Corporation says that house prices will continue to rise in the near future. The average price will probably level out in 2011 to an average of $367,500 and then rise to $372,400 in 2012. Factors such as employment, immigration, and low mortgage rates remain supportive for the housing sector as a whole.

CMHC also predicts relatively flat mortgage rates through 2011, and that they will moderately increase in 2012. Good news for mortgage borrowers over the next twelve months. Overall, housing starts are also expected to be strong, with 183,900 new builds predicted for the second quarter of 2012.

For anyone thinking of investing in real estate over the near-term, CMHC brings welcome news.

Happy Investing : )

Interest Rates to Remain Low. Cheap Loans Will Continue for the Near-Term. More Variable Rates and Inflation the Result.

Yesterday's news from the federal reserve that interest rates will remain low for two years provided a sigh of relief for investors and those looking to buy homes over the next little while. 


According to the Globe and Mail:


"High unemployment, tapped-out consumers and a depressed housing market led the Federal Reserve to say Tuesday that the outlook for recovery in the world’s largest economy is now so tepid that short-term interest rates will probably remain at emergency, near-zero levels until mid-2013."


The Federal Reserve initially lowered rates to the 0 - 0.25% level following the financial crisis in 2008, but the elusive recovery has caused rates to remain largely unchanged since that time. With two more years added to the low rate environment, the markets now have some degree of certainty regarding the Fed's decisions going forward, and an assurance that cheap money will be plentiful for investors and home buyers in the near-term.


What's the move for those thinking of buying real-estate any time soon? In the current interest rate environment, consider variable rates to save you some cash as any raise in rates going forward is becoming unlikely. And for investors? Be very wary of holding cash as inflation is sure to eat away at your savings quickly. 


For more from the Globe and Mail:


http://www.theglobeandmail.com/report-on-business/economy/interest-rates/fed-promises-two-years-of-low-rates/article2124029/


Happy Investing and contact me if you have any home buying or financial questions.

New Condo Development in Kingston. Plans and Prices for Anna Lane are Available.

Pricing and floor plans / layouts have been revealed for Kingston's newest condominium development downtown. Located on Queen Street, "Anna Lane" is aiming to provide affordable living for Kingstonians who want an urban lifestyle.


The suites will be brand new, which is definitely a plus for those who do not want to do much maintenance or any renovations, but it looks like prices are not as low as many had originally expected. Ranging from $141,000 to $315,000, plus parking and taxes, there is a wide range of opportunities. In addition, units range in size from small bachelor apartments to relatively large 3 bedroom units.


For your information, I have attached a list of the unit prices below:





Personally, I might consider owning one to rent out to students in the area, but at about $300,000 for a 2 bedroom unit, they might only be practical to live in in order to cover the mortgage payments and taxes.


For those who want additional information, just send me an e-mail and I will gladly give you more information and tell you how you might proceed.

German Real Estate for Canadians: Dundee International REIT

For investors looking for extra diversification in their equity or real estate portfolios, Dundee International REIT will begin trading on public markets in Canada very soon. In an initial public offering made available via select banking houses, the company recently raised $410 million dollars that it will use to buy up office space throughout Germany that is currently leased mostly by Germany's largest postal carrier, Deutsche Post AG.

The yield on units of Dundee International REIT are expected to be in the neighbourhood of 8 percent, very respectable in today's low-rate environment. Also, Germany's economic and monetary climate is much healthier than many other regions of the world. With a European debt crisis, and much of the continent's banks and investors unwilling to expand their holdings, Canadian investors have found a great opportunity to gain valuable pieces of European / German real-estate at a reasonable price.
Happy Investing : )

What is the Most Affordable Place to Live in Canada? What is the Most Expensive Place to Live?

Thinking about finding an affordable place to live? For the second year in a row Mercer consulting has labelled Ottawa the cheapest of Canada's five largest cities to live in.

"The company, which annually ranks more than 200 metropolitan centres worldwide based on their affordability for visitors, said rent prices remain reasonable in the nation’s capital, while the price of transport, food, clothing, household goods and entertainment have also remained lower than in other parts of the country."

"Toronto led as the most expensive Canadian city. The city jumped 17 spots on the Mercer study, when compared to last year, bypassing Vancouver, which has held the title of most-expensive Canadian city for years."

But what is the most expensive city in the world to live in?

"The firm said the most expensive city on the planet in 2011 is Luanda, Angola."

What is the cheapest city in the world to live in? Karachi, Pakistan. 

"London was ranked 18th, while New York, Los Angeles and Chicago were ranked 32nd, 77th and 108th respectively."

Excerpts are from the Ottawa Citizen.

Canadian Home Prices May Soon Peak. Statistics Canada Reveals Healthy Gains in Home Prices.

"Thursday was the Statistics Canada New Housing Price Index, which averages the prices of new homes across the country. It rose 0.4 per cent in May over April, buoyed by the country's highest monthly increase in Regina, at 1.7 per cent. This was followed by 1 per cent in Kitchener-Cambridge-Waterloo, Ont., and 0.9 per cent in Toronto and Oshawa, Ont. The notable increase in Regina comes as the cost of land, building materials and labour continues to rise in that city. Meanwhile, developers in the Ontario cities that saw prices rise cited market competition as the driving factor."

"When comparing last May to the same month in 2010, Windsor and Victoria led the cities where prices dropped, with new homes costing an average of 4.4 per cent and 1.7 per cent less than a year ago, respectively. On a year-to-year basis, the national index rose 1.9 per cent, with the largest gains in St. John's (4.7 per cent), Toronto and Oshawa (4.3 per cent each)."

Source: CTV NEWS