Introducing The Mortgage Minute

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What is this?

Yup, it’s another email. One that I acknowledge likely isn’t as exciting as a “Your order has been delivered” email, but am hoping is at least a notch above “Apples are 99 cents this week!”.

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This email, simply put, is about housing. It’s my conscious effort to try and consolidate anything and everything happening as it relates to real estate and mortgages in a concise, digestible format that makes everyone an expert during “real estate small talk”.

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We’re constantly flooded with information, especially as of late, that leaves our heads spinning and causes more confusion than clarity. Here’s my attempt at summarizing any relevant information about the current state of the housing market in a relatable way:So, what's going on in the world?

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On the heels of some sad news, we’re getting another holiday. Prime Minister Trudeau announced Canada will be getting a new federal holiday to mourn the loss of Queen Elizabeth II. It’s great to hear we’re getting another holiday, but why does this matter? For anyone who recently purchased a home, or plans to in the future, it’s important to ensure your closing date doesn’t fall on a statutory holiday as the banks won’t be open. Make sure you double check your purchase agreements!

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Ontario is about to get access to one of its first land lease projects. If you’re familiar with the concept, Dubai was notorious for not allowing individuals to own the land their homes are built on. You were effectively signing a 99-year lease in which you were required to pay an on-going fee to have your home situated on the land you didn't own. That concept is now being introduced in Ontario through Mattamy homes. Their new “Lakehaven” project in Innisfil is designed to provide homes at a much more reasonable price by eliminating the cost of the land from the equation. Similar to Dubai, homeowners would be responsible for paying an on-going fee in addition to their mortgage for the upkeep and maintenance of the sub-division (similar to a condo fee). What are your thoughts about not owning the land your home sits on? Let me know how you really feel!

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Everyone won’t stop talking about Trigger Rates. What is it and why should I care? Well, trigger rates only matter if you’re in a Static Variable Rate mortgage (typically available through banks like TD, BMO, CIBC, etc.). Put simply, if you have a variable rate, but your mortgage payment never changes regardless of the rates fluctuating, it means you’re in a Static Variable Rate mortgage product. We haven’t had to think about trigger rates for the last few decades since we’ve never seen 5 consecutive rate hikes occur like we have this year alone.

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When you have a Static Variable Mortgage, when the Bank of Canada raises its rates, even though your payment remains the same, the portion of your payment that goes towards principal vs. interest will slowly start to skew more towards interest. Now, a trigger rate is effectively the point when the rates have gone up too much that your entire monthly payment is only going towards interest - meaning you’re not paying down your mortgage at all. That’s a big no-no for the banks. When this occurs, the banks will send you a letter that requires a response from you within 30 days - it’ll include three options:

1. Increase your mortgage payment
2. Make a lump sum payment towards your mortgage
3. Convert into a fixed rate

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Struggling to understand which option is best for you? Reply to this email and I’d be happy to chat through it with you!

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Did you see the latest video to make the Netflix Top 10? Well, it sadly doesn't include my interview with Ahsan (@ahsanr786). I can't believe the world isn't interested in a 45-minute video about interest rate changes. Luckily for you, I'm sharing it in this email so you get exclusive access (I should mention it's already on YouTube - that makes me a celebrity, right?). Honestly speaking, this is a timely and relevant conversation for many folks. Interest rate headlines are primarily designed to drive fear and readership. Ahsan and I take a moment to discuss how to navigate the current market and how to be best prepared for your next real estate transaction. Click HERE to watch it now!