MORTGAGE: Options for mortgage holders during conservative times

In today’s slower markets, anyone with variable income (some of your clients perhaps) should be aware of the options available to reduce monthly mortgage payments. Below a few recommendations are outlined for mortgagees to consider during these conservative times.

Extend the amortization on your mortgage:
Most, if not all lenders will allow you to re-extend your amortization to the original amortization of your mortgage without cost or penalty – this could potentially drop your payment substantially depending on how many years you have taken off your amortization. In some cases lenders will allow you to extend beyond your original amortization. A 35 year amortization is the maximum. Consult your lender to determine your options.

Decelerate your payments:
If you are making accelerated payments, adjust them to a non-accelerated option.

Create a safety net:
Obtain an emergency secured line of credit if you haven’t already – with most lenders you can usually go up to 80% loan to value on your property (primary residence) with a secured line of credit, so if you have 30% equity in your home, subject to qualification, you could obtain a line of credit limit for 10% of your home value. Secured lines of credit usually cost about $450-500 to set up (legal, appraisal etc.). This cost is usually worth it because a secured line of credit has a lower rate than an unsecured one, and payments can be interest only.

Refinance now while your income average is attractive:
If you think you’re likely to need funds for something in the near future, keep in mind that for self employed applicants lenders require a 2 year income average for qualifying purposes. If your 2006/07 income average is a lot better than your 2007/08 will be, then consider doing the refinance now, before 2008 taxes are done (if you wait too long the lender will require an 07/08 income average for qualifying purposes). In some cases lenders are already factoring in that certain industries will be slower in 2009 so they are more conservative with lending to applicants in those industries.

All these options are easily reversible as conditions improve which we know they will.

Any questions on the above or mortgage needs touch base with a local area mortgage experts:

Susan Groot
BMO Bank of Montreal
250-515-2336
susan.groot@bmo.com

Vic Hamilton
Bayfield Mortgage
250.833.9183
1.866.252.4526
vic@sunwave.net

Sue Foubert
TD Canada Trust
250.833.8790
sue.foubert@td.com

Corine Hild
Tekemar
250.832.8766
1.800.658.2345
child@sunwave.net