Make Money Count

This week’s episode is all about breaking your mortgage and the penalties associated with it. We had three callers, along with Iain, explain their current mortgage situation and what they face to get out of it. As you’ll hear, sometimes the penalties are minimal and your lender will try to hide that from you, but other times it is substantial. Have a listen to this episode to learn how the penalties get calculated yourself. There is so much to take away from the scenarios these callers are facing. As long as you have a fixed-rate mortgage, the break penalty calculation will always remain the same: Step 1: Calculate the discount you received from your bank by subtracting the rate they gave you from the 5-year fixed posted rate at that time. Step 2: Find the difference between the current posted rate you’d pay for a mortgage to finish your term and the discount you received. Step 3: Calculate the Interest Rate Differential (IRD) by taking the difference between the rate you received and the step 2 difference. Step 4: Divide the IRD by 12 to get the Monthly IRD. This is what the bank wants to recover from you from leaving your deal early. Multiply the monthly IRD by the remaining balance and the number of months remaining on your term to get your penalty to break. If you don’t want to take the time to calculate this, no problem. Cannect will do it for you. Just give us a call and we’ll let you know if the numbers work for you to save long-term. Podcast Notes: 0:00 - Intro 2:02 - Iain tells the story about his break penalty. 5:45 - Marcus explains why it is best to have various financial products from various banks. 8:25 - Calculating mortgage penalties. 11:39 - Daniel calls in to discuss his mortgage penalty. 23:00 - Josh calls in to discuss his mortgage penalty. 31:30 - Additional tricks and tips for Josh’s situation. 34:58 - Marcus explains his recommendation of Mortgage Financial Corporations. 36:21 - Sandy calls in to discuss switching away from her current Scotiabank mortgage.

This week’s episode is about private lenders. Dealing with them can be tricky. They often see good borrowers in desperate situations. These lenders often have to pay a lot of third party fees for deal origination and advisor commissions, so they need to make that up from the borrower. Without information, these borrowers can be exploited as a result. Have a listen to the episode to get the details. As we mentioned in the episode, a lot MICs out there have to pay fees to brokers to get them deals and to advisors to get them lending capital. These simultaneously increase the rates and fees they have to charge borrowers to lend money and decrease the rate of return for investors. Cannect’s ability to generate its own deals and raise its own investment capital means that people can borrow at a cheaper rate and investors can earn a better return. Cannect prices based on only two things: home equity and exit strategy, so we never take advantage of a borrower’s level of desperation to price higher. If the rate you get from a private lender sounds ridiculous when you have a lot of equity in your home, it probably is. Cannect will have a better rate for you and our salaried staff will work with you to get to lower cost capital afterwards.  Give us a call today: 416-766-2666 Notes: 0:00 - Intro 1:15 - What is a private lender? 6:45 - How Cannect is different from other private lenders. 13:20 - Marcus provides a solution for lending behind a collateralized charge in second or third position. 16:35 - The elegance in the solution is the exit. 19:10 - Marcus outlines Cannect’s cheaper pricing terms to a prospective borrower. 25:44 - Cannect’s requirements to offer a home equity loan. 27:13 - Marcus explains the bank’s incentives to a caller examining a refinance. #MakeMoneyCount #Cannect #Mortgages

This week’s episode had it all: Caller questions, tips for evaluating your mortgage breaking options, and classics from the Travelling Wilburys. Our callers each had situations that everyday borrowers can relate to. Being turned away from borrowing more due to being self employed, and needing money to support a small business that is struggling from COVID. So many people have experienced these situations and they are exactly why Cannect exists. Have a listen to hear how Cannect can help. Some key points that we really want to emphasize are: 1.      Even if you know to break your mortgage to save long-term, call us to help reduce your break penalty. Determining whether or not you should break your mortgage is not as hard as you think. It just comes down to one calculation: The amount you would pay in interest on your current mortgage over the rest of the term, minus the amount you’d pay in interest over that time period if you broke it and secured a lower rate, minus the penalty to break your mortgage. This penalty tends to be quite high, and it is usually the factor that prevents people from going through with a mortgage break. If you think that may be the case, still give us a call and see if we can reduce this for you. We have found that over the last ten years, we have been able to engineer a break penalty 20%-25% lower than initial quote from the bank to break it. Those savings go directly into your pocket, no one else’s. 2.      Your bank may match a lower rate you get elsewhere, but it will still come at a cost. As soon as the bank offers to reduce your rate to match a competitor, they will factor that discount into the break penalty you’d be charged to get out of it. It’s not going down; it’s going up to make up for the reduction in their interest income. Big banks are legally allowed to charge higher break penalties than other mortgage lending institutions. Even if they disclosure this to you directly and say that you ‘probably won’t have to break’, remember that 75% of Canadians break their mortgage before the end of their term. Even if your bank matches the offer you get elsewhere, it will usually come at the cost of a higher break penalty. Breaking your mortgage is always an option to you as a borrower to improve your long-term savings. You can determine the savings yourself based on rates you see online, but give us a call to get that pre-approval and really get that exact savings number. Who knows, maybe we’ll even be able to get that penalty reduced to save you even more. 0:00 - Intro 1:38 -  Marcus discusses how the banks make their profits and how you can reduce the amount you pay them. 5:42 - Cannect’s approach and goal to helping you as a borrower or an investor, with an example purchase scenario. 13:03 - Marcus discusses how Cannect can price home equity loans through its website and fund within 24 hours when banks turn you away from borrowing more. 20:25 - Borrowers may look to resolve their financial situations now that we are emerging from the pandemic. 24:10 - Justin explains how businesses can get commercial loans, private or through a B lender, if their bank says no. 27:56 - The worst thing banks can do to their borrowers is waste their time. 36:55 - How banks make up for having to match a lower rate from a broker. 39:46 - Important facts about Cannect’s investment fund.

This week’s show zones in on the home equity loan. There is a tug of war going on right now between interest rates and inflating asset prices that’ll dictate where housing prices will go over the next several years. This adds a lot of uncertainty to people looking to enter the real estate market for the first time, but it will also greatly impact those already in it looking to take out home equity. A short-term home equity loan may be your best option. You may have missed the episode live because you were watching an amazing Euro Finals, but have a listen to it now to learn some helpful tips for evaluating your home equity loan options. Three helpful considerations in order to get the best product FOR YOU are: 1.      Time: Whatever amount of time you think you need the money for, add three months. Lenders will reduce rates if you are precise with the time you need the money for because they want to be able to lend your money right back out again after you paid it back. If you underestimate how long you need the money for, you’ll be forced to renew for another term and get hit with fees in the process. 2.      Amount: Similar to the time aspect, understating the amount of money you need also leads to extra fees if you go back to them for more. They will always try to give you less than you need as a result. So know your number, and make sure you get it or as close to it as you can where you know you won’t have to go back. 3.      Exit Strategy: This is by far the most important. Lenders always want to know how their borrowers plan to exit the deal. If you can communicate a clear and reliable plan to the lender for how the funds will be used and then returned, you’ll find they can be much more flexible on the rate they offer you. These are important aspects of all home equity loan that lenders take very seriously. However, there are also questions that you as the borrower should be asking your lender before coming to an agreement: 1.      How long will it take to close the deal? The longer it takes, the your more debt continues to increase and your credit score decreases. Make sure your private lender can close the deal quickly. 2.      Are there any hidden fees? Once you get closer to the closing date, lenders know that time is no longer on your side and if there are any fees you don’t know about yet, you may find you don’t have a choice anymore. Ensure you know all the fees that may be involved, from the lender, any appraisal, and legal costs, before proceeding with the deal. 3.      Don’t be afraid to ask the lender if they have dealt with other borrowers in your situation, and if so, what rates did they pay. Lenders and brokers are governed by regulators and they aren’t allowed to unfairly price gauge their borrowers. Make sure a lender does not detect desperation in your voice and upcharge you because of it. Information is your friend in this space. The more you know about what lenders are looking for in a good borrower and what you need from them, the more you will be able to save long-term. #Cannect #HomeEquityLoan #HomeFinancing #MortgageBroker

We hope you all had a great Canada Day weekend. This week’s episode takes a deep dive into the profitability of our Canadian big banks. Did you know that these banks, on average, have been profiting $4,000 per Canadian household over the last year? While the services of the banks are essential to households and our economy as a whole, it is important to know how to avoid being taken advantage of. Have a listen to this episode to get a better understanding. Here are some important takeaways to consider. Loyalty is not always your friend. We have discussed this in a few episodes now, but for a good reason. If you are under the belief that your bank is your only option for credit, they will leverage that. A lot of borrowers have a mortgage with their bank with a collateral charge that exceeds the amount they borrowed and because of the stress test, they still can’t increase their mortgage. When the banks talk about your unsecured credit options, that’s when it’s time to call Cannect. The unsecured options will destroy your credit if you keep their balance maxed out for too long. Seek out other options, a mortgage broker will help you do that. They’re called the Big Banks for a reason. Their profitability comes from their size. They have the ability to hold off the competition because of their size and brand awareness. 20 years ago, only 20% of Canadians used a mortgage broker. Now that number is up to 40%, but still well-below the US at 80%. The banks’ residential mortgages become less profitable as more Canadians turn to mortgage brokers, but the banks went through this problem before with Trust companies. When companies, like Canada Trust, started providing discounted rates, it ate into the big banks’ market share. As a result, these companies were acquired by TD and other Big Banks. The banks will always be able to adapt, so it’s always up to us as the consumers to recognize that we can be a David to their Goliath at times and learn about our opportunities to save through other options. Cannect agents are happy to discuss these options with you anytime. Marcus Tzaferis and the Cannect Team #Cannect #MortgageBroker #CanadianBanking

arcus, Justin, & Matthew join Newstalk 1010 host Iain Grant once again as the gang tackles the discussion of B-Mortgages and Bad Credit. Don't forget to tune in Live every Sunday at 3pm for brand new episodes of Make Money Talk, The Mortgage Show on Newstalk 1010! Visit https://www.Cannect.ca for more details.

Last weekend, Matt and Marcus took to Newstalk 1010 to discuss a product most people know of, but very few fully understand: the reverse mortgage. People often go to their banks to inquire about it as an option to supplement retirement income, but that is not the best course of action for everyone. Have a listen to the episode to learn more about the reverse mortgage as a product and if it may be the best option for you. We go into good detail on the episode, but one thing to take away is that it’s always ideal to give a mortgage broker as much detail as possible about your financial situation so that they can set you up with the right product. The products and rates you qualify for will depend on so many factors like how old you are, how much equity you have in your home, whether or not you have a pension or investments to supplement your retirement income. A reverse mortgage may be your best option, but you might be able to qualify for a much cheaper home equity line of credit at that bank or elsewhere if you have enough pension or investment income supplementing your retirement. The rate difference on these two products can be 2-3%! Let a mortgage broker know your particular situation so you can get the best product available. Marcus Tzaferis and the Cannect Team #Cannect #ReverseMortgage #HomeFinancing

Join us for another Episode of Make Money Count, now recorded live every Sunday at 3pm EST on 1010 Newstalk. Marcus shares his thoughts on the new qualifying stress test for Canadian mortgages, and shares his ideas on why that shouldn't be reason alone to rush into the market. Starting June 1, Canadian home-buyers will face tougher mortgage stress test rules that will decrease the buying power of most borrowers. The move, announced by the country’s banking regulator in May, was in response to an overheated market that has already started to see signs of cooling. Even prices in the country’s largest market have started to stall. The average selling price for the Greater Toronto Area was $1,090,992 in April, down slightly from $1,097,655 the previous month, according to the Toronto Regional Real Estate Board. The new mortgage stress tests will affect Canadian homebuyers applying for or renewing a mortgage. The new qualifying rate on uninsured mortgages – where the down payment is more 20 per cent or more – is now either two percentage points above the contract rate, or 5.25 per cent, whichever is higher. Before June 1, any buyer whose down payment was 20 per cent of the purchase price or more had to show they could afford mortgage payments if the interest rate was two percentage points higher than what the bank is offering them or 4.79 per cent, whichever was higher.