Mortgages Explained Canada | Regina Mortgage Broker Kevin Carlson Goes Over The Basics (2020)
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- เผยแพร่เมื่อ 25 ก.ค. 2024
- Mortgage broker Kevin Carlson from Regina Saskatchewan explains the basics of mortgage lending in Canada. Understanding how mortgages are structured will help homeowners make the best decisions to be able to save interest costs and pay their mortgage off faster.
Video Chapters
0:00 Intro
0:24 Amortization & Term
1:07 Maximum Amortization
1:26 Terms
2:08 Open vs Closed
2:55 Fixed Rate
3:12 Variable Rate
3:55 Fixed vs Variable
4:42 Pre-Payment Privileges
5:13 Conclusion
A mortgage is just loan secured against your home but it's not structured like any other type of loan financing. A term loan like for the purchase of a vehicle, is set up for one set amount of years called a term. These terms can be anywhere from 2 to 7 years. The payments are set up so that the loan is paid in full at the end of the term. Mortgages for the purchase of a home are somewhat different.
If you've ever had just a standard loan like a student loan or car loan, you know that those loans are set up as like a term so the terms can be anywhere between say 3 years, 5 and sometimes even 7 years to pay the life of the loan off. The payments are set up as such that there will be a zero balance at the end of the term. Mortgages really aren't set up that way, initially. When you go to purchase a home if you were to set up mortgage up for a term of only 5 maybe 7 years and your mortgage is over 2 or 3 hundred thousand dollars, the payments might be a bit excessive. For that reason mortgages are split up into shorter terms over a longer amortization, so that is the entire life of the mortgage. If you're purchasing a home with less than 20% down payment the maximum amortization available is 25 years. If you're putting more than 20% down or you're mortgaging your house for no more than 80% of its value then you can have a maximum amortization of up to 30 years. The terms that are available to split up your mortgage amortization into is anything from 6 months up to a 10 year term.
One of the big questions that I often ask for home buyers especially is how long do you think you'll be in this home. Will you be in it for 1 or 2 years or will it be longer. I always try to match the term of the mortgage with their ownership goals so if they're only looking at being in the house for a couple years then a 5 year fixed and closed term is really not for them. I look to put them into something much shorter to avoid any penalties. So let's go over the different types of mortgages there are
An open term mortgage where you're allowed to pay the mortgage out anytime you want without any penalty. An open term mortgage is for people who aren't sure how much longer they're going to be in that mortgage and in that house, it's typically for people who are just needing short term mortgage money and they're going to be moving on soon. I don't recommend open mortgages for very long at all if you have an open mortgage the interest rates going to be a little bit higher than if you had a closed term mortgage. On the other side there is a closed mortgage, so a closed mortgage means that you can't just pay it out whenever you want and you need to keep a keen eye on that term. A closed mortgage you could be exposed to some penalty if you pay the mortgage out before the term is up.
Mortgages can be done in 2 basic different ways, fixed and variable. Fixed rate mortgages are just like it sounds, it's a mortgage is a fixed rate for a given term and those are available anywhere between that 6 month and the 10 year term. Variable rate mortgages ride the prime rate and terms available 3 or 5 years. The rate is determined on the Bank of Canada prime lending rate. Typically your variable rate will be prime minus a certain amount, anywhere between say 1/2% to 1%. If the prime rate starts climbing and you start getting nervous, you are actually allowed to lock that rate in later so even though you took a variable rate.
With both of the fixed rate and variable rate mortgages over and above your just your regular payment you're actually allowed to do what's called pre payments, so over and above your regular payments you're allowed to do pre payment privileges of usually up to 15% of the original mortgage amount as a lump sum once per year and you're also allowed to increase your payments by typically at least 10% if not 15% sometimes 20% to your original payment to reduce your amortization a lot faster and pay your mortgage off quicker.
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Website: www.KevinCarlson.ca
Instagram: / kevin.carlson.amp
Twitter: / kevincarlsonamp
Kevin Carlson - Mortgage Broker - FCAA Lic. 315902
Verico Xeva Mortgage - FCAA Lic. 509752
Great video Kevin! I am going to link this in my next video.
Thank you for uploading this. Very useful.
To the point and very detailed! Thank you Kevin!!
I learned a lot.thank you
Informative and gets straight to the point.
Thanks Justin.
Great video! You speak with confidence. Thanks for your knowledge, Kevin!
Thanks. Glad you liked it.
Soo sooo helpful . Thank you.
Glad it was helpful!
Thanks very much for this video. Very informative.
Thanks Matthew. Also, thanks for subscribing.
I am so grateful to expeditetools,com for the help .THey helped me with a transfer of $40,000 yesterday .
Excellent video!
Thank you very much!
what are the 3 books about mortages that you would recommend for a student in uni?=
I’m about to learn the hard way on a 5yr fixed that I will be paying off early. I now know why banks have profits in the billions.
Hey kevin, i have a one question for you. I am on work permit and i am thinking to buy home in sarnia as a rental property with the downpayment of 20% on the amount that would be available on that time for that property, let say for now 200,000 . So, upto what rate i would pay and for how many years.I hope you understand my question and will reply to me.
Thanks for the information
Hey Kunal. Thank you for your comment. I would need to have more information in order to answer your question accurately. Please feel free to contact me directly through my website. It would be my pleasure to assist you.
Hi Kevin, I have mortgage since last 10 years and I always take 2 years fixed term. And I think I made a mistake for not taking a variable rate due to lower interest rate. I don't like to lock my mortgage for 5 years because anything can happen in future plan and might sell my home. So based on this video I think variable is the best now and can sell and move If I want and pay only 3 months unterest rate and can fixed it any time in future if interest rate go high. What you suggest?
Hey Robin. It's really just the last year or so that variable rates have been quite a bit lower than fixed (5 year anyway). Anytime a client tells me that they will be looking to sell within a few years, I always recommend a variable rate though. Two year terms isn't a bad way to go but you probably have been paying more interest than you would be in a variable.
@@KevinCarlsonMortgages Hi Kevin, thanks for reply and yes you are right I paid so much in interest for past years for fixed rate and now I got smart and don't want to pay more to bank. Yes, variable is the best to go..thanks again👍
You are very welcome. I'm glad my comments were of help.
How do people in Canada end up with 85 year mortgages? It sounds like if rates go up, the payment stays the same and the interest is rolled into the principle. Asking because I've seen a lot on X lately that many Canadians now have 50, 60, and even 80 year mortgages now because of the rate hikes. To Americans this seems strange because raising variable rates increases your payment, but does not increase the term.
With an adjustable rate mortgage, the payment does increase. It's with variable rate mortgages that the payment remains the same and the amount of principal that gets paid with the payment goes down. I typically recommend only adjustable rate mortgages.
Hello sir its really informative video, I am from India and also dealing with same profession morgej lander, I have 5 years of experience in india still in it and now I am very soon move to Canada with PR, I really love this profession and still I will continue work with this if I get opportunity from morgej landers, but 1st do not have policy and process experience for canada if any online course can i will do it, plz suggest me if u know this type course.....
Sorry Atmiya. I have no idea where you would be able to find online courses. You might try contacting the national association for our industry called Mortgage Professionals Canada. They may be able to help.
@@KevinCarlsonMortgages i will move to Saskatchewan regina, so is there any opportunity for morgej landers to work with them
sounds like they have created an impossible wall of b.s. for the next generation
Hey Kevin!
I am an immigrant in canada.
I am on Work permit and lets say that i have a job with around 24000$ annual income.
I am looking to buy a property worth $300,000 in Windsor, Ontario.
But my purpose of buying house is little bit different. I want to buy the property to rent out to the students or anyone willing to rent it. What could be the mortgage per month with 5% downpayment? And if i make arrangements of 20% downpayment then will thay be helpful in mortgage per month for renting out ??
I know i sound bit confusing 😁
But to sum up will it be worth to buy a property just to rent out for a source of income ??
I am expecting a detailed reply 😉😇😁
Thanks for your questions Mr. Patel. Here is the detailed response you requested. Given your income and 5% down payment you "may" qualify for the purchase of a home up to $150,000.00. If the home is to be a rental property as you mentioned, the minimum down payment would be 20%. Down payment of less than 20% is for the purchase of a residence for you yourself to live in.
Thank you Kevin!! ✌🏼
@@kingpatel7892 Quickloan in less than 1week get up to $500-$1m with a 10% interest rate for a period of one year for only CANADA and USA citizens terms and conditions applies contact on whatsapp +1 (347) 896-9847
Hi, We offer BPM services to US mortgage client and would like to offer the same. Can you help me with this?
No thanks
Hello, I am a British citizen and thinking of settling in Canada . I have a question for you , in the UK , we have interest only mortgages for buy to let properties , do you have something like that in Canada ? If you have any email address for us , I can also try to contact you by email . Kind regards.
We do have interest only mortgages here in Canada but they are called secured lines of credit or home equity line of credit (HELOC). You can send me an email through the contact form on my website. I would be happy to correspond with you. KevinCarlson.ca
@@KevinCarlsonMortgages , thank you so much Kevin for your reply . I have googled the option you mentioned but that needs your home to be put as a security , right ? In the uk , you can pay 25% deposit and the buy to let property is yours for 25 years on interest only mortgage . You can change the lender before your lease expires and pay the first lender off and renew your lease . That way , you have an ongoing rental income . Is there something similar in Canada , Kevin? Thank you again for your precious time . God bless 😊
A mortgage is a loan with the property as security.
Hi again Kevin , yes I understand what you said . One final question before we move to Canada , is it possible to have HELOC on my second property if there is an HELOC on my first property which is interest only ? I am asking because if the answer is yes , then I can possibly try to pay the first loan off with the second one. Thank you ever so much