The Vancouver Sun quoted us again for their November 28th “Tips for Buyers and Sellers” column … published on househunting.ca.

And of course we’d love it if you too relied on us for good solid information about getting the best mortgage for you and your family!

If the screen shot below is too small, be sure to read the original, whole article in our Newsletter Archives.

If the screen shot above is too small, be sure to read the original, whole article in our Newsletter Archives.

Yesterday Mike was interviewed for an article about potential dangers with low cost variable rate mortgages.

If you get a  low cost variable rate mortgage, you need to keep your eye on the future and have a plan in place when the rates start rising.

The article ran in today’s edition … in the Report on Business section and is titled:

New home buyers take risks with low mortgage rate

It’s a great article, especially for new home buyers so be sure to read it!

Click here for the article.

When looking for a condominium, be aware that different buildings may have very different types ownership.

Freehold Units

Most condos are freehold strata units, where typically you have fee simple ownership of your unit.  The land as well as common areas are owned collectively by all the owners.  With most freehold condos, you pay monthly strata fees for upkeep.

Leasehold Units

Here you have a lease from a landlord for the right to use the unit for a specific number of years.  Many leaseholds are created for 99 years, and you may only purchase your unit for the part of the lease that remains.

Co-op Units

With this arrangement you purchase shares in a co-operative association which owns the land and building including individual units and common areas, and you have a leasehold interest in your unit.  You usually pay monthly dues to the co-op board to cover the building’s taxes and upkeep.

Condo buying Tip

Monthly condo fees can affect how much home you can afford.  By choosing a property where the monthly fees are just $200 lower, you can boost your purchasing power by $18,000.

Averbach Mortgages can advise you on all your financing options, whatever type of property you are planning to buy. Call Justin at 604.736.1855

Here’s a market update from our friends at Macdonald Realty; Simon Clayton, Kristie Marsden, Jason Low, Sandra Ens, Jason Feinstadt and Jenny Stephanson.

Since the market correction last winter, the market has bounced back nicely to test previous highs, both in the number of sales and in benchmark prices. The summer of 2009 surprised many analysts and market-watchers with both its resiliency and fervour, and clients have asked what will happen in the fall and winter.

No one really knows what the market will do, but traditionally, the winter season has resulted in a slow-down in the market as families buckle down for the school year, weather patterns make buyer tours less pleasant, and holiday planning begins. Because there are fewer buyers, some sellers will decide that they can wait until these buyers return, which results in less supply to offset the drop in demand.

However, statistics show that house prices tend to be lower in the winter than in the summer which is why home price stats are seasonally adjusted. People who sell in the winter are more likely to be ready to sell and realistic rather than curious and unmotivated. Also, because there are fewer buyers, true negotiations between buyers and sellers are more likely to occur in place of auction-type multiple offer situations.

So what does this mean if you’re a buyer or seller? If you’re a buyer that has the flexibility to purchase during the winter months, your selection may become more limited, but if you find what you like, you will likely have a better opportunity to negotiate for your home rather than bid for it. If you’re a seller, a limited supply can work in your favour if you have a good realtor that can outline the unique features of your home.

Every situation is different, and each year presents a new set of challenges and opportunities that require professional analysis.

November 2009 Market Update

If you would like to learn more, please feel free to contact us by phone or by clicking on one of the links below:

Simon Clayton 604-764-0711

Kristie Marsden 778-836-4389

Jason Low 604-790-5276

Sandra Ens 604-263-1911

Jenny Stephanson 604-675-6214

Jason Feinstadt 604-263-1911

MacDonald Realty 604-263-1911

Selecting the length of your mortgage amortization period – the number of years it will take you to become mortgage free – is an important decision that will affect how much interest you pay over the life of your mortgage.

While the lending industry’s benchmark amortization period is 25 years, and this is the standard that is used by lenders when discussing mortgage offers, and usually the basis for mortgage calculators and payment tables, shorter or longer timeframes are available – to a maximum of 35 years.

Advantages of a Short Amortization:

The main reason to opt for a shorter amortization period is that you will 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 you the luxury of building up equity in your home sooner. Equity is the difference between any outstanding mortgage on your home and its market value.

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 the best option for you.

We will help you choose the amortization that best suits your unique requirements and ensures you have adequate cash flow. If you can comfortably afford the higher payments, are looking to save money on your mortgage or maybe you just don’t like the idea of carrying debt over a long period of time, we will discuss opting for a shorter amortization period.

Advantages of a Long Amortization:

Choosing a longer amortization period also has its advantages. For instance, it can get you into your dream home sooner than if you choose a shorter period. When you apply for a mortgage, lenders calculate the maximum regular payment you can afford.

They then use this figure to determine the maximum mortgage amount they are willing to lend to you.

While a shorter amortization period results in higher regular payments, a longer amortization period reduces the amount of your regular principal and interest payment by spreading your payments out over a longer time frame. As a result, you could qualify for a higher mortgage amount than you originally anticipated. Or you could qualify for your mortgage sooner than you had planned. Either way, you end up in your dream home sooner than you thought possible.

Again, this option is not for everyone. While a longer amortization period will appeal to many people because the regular mortgage payments can be comparable or even lower than paying rent, it does mean that you will pay more interest over the life of your mortgage.

You CAN Change Your Amortization Period

Still, regardless of which amortization period you select when you originally apply for your mortgage, you do not have to stick with that period throughout the life of your mortgage. You can always choose to shorten your amortization and save on interest costs by making extra payments when you can or an annual lump-sum principal pre-payment. If making pre-payments (in the form of extra, larger or lump-sum payments) is an option you’d like to have, I can ensure the mortgage you end up with will not penalize you for making these types of payments.

It also makes good financial sense for you to re-evaluate your amortization strategy every time your mortgage comes up for renewal (at the end of each term of your mortgage, whether this is three, five, 10 years, etcetera). That way, as you advance in your career and earn a larger salary and/or commission or bonus, you can choose an accelerated payment option (making larger or more frequent payments) or simply increase the frequency of your regular payments (ie, paying your mortgage every week or two weeks as opposed to once per month). Both of these features will take years off your amortization period and save you a considerable amount of money on interest throughout the life of your mortgage

As always, if you have questions about which mortgage amortization is best for you or how you can pay off your mortgage faster, please give us a call to discuss your options.

Call Justin Blacklock at 604.736.1855.

It’s great to know that people are reading our newsletters.  The Vancouver Sun picked up a bit from our last newsletter and quoted it in their October 31 roundup whis is also published on househunting.ca.