Calgary Mortgage Rates & Info

RESIDENTIAL MORTGAGE RATES
EFFECTIVE: May 25, 2006

TERM (fixed)	Bank's Posted Rate (%)	BEST Broker Rate (%)	Monthly Product Update
6 month	5.90	5.75	Tips to pay off your mortgage quicker Tip#1 Increase your payment annually to the most you can afford The upside is that most lenders will allow you to reduce it again to the previous level if it turns out to be too great of a burden or your circumstances change. Tip #2 Prepayments give great return on investment If you pay an average of 5% in mortgage interest, for each $1,000 by which you reduce your mortgage principal, you will save $50 in after tax cash every year. If you are paying taxes at a marginal rate of 40%, you have to earn $108.33 each year to pay the interest on every $1,000 of principal outstanding ... a heavy burden, but also a tremendous reason for reducing this balance. Tip #3 Utilize your RRSP-driven tax rebate as a mortgage pre payment method Even if you can only prepay annually, make sure tax refunds are set aside for paying down your mortgage. Many Canadians borrow (at prime) to buy an RRSP to ensure the maximum rebate. When applied to the mortgage principal, this refund is a "gift that keeps on giving." Combining the refund with the tax-free interest earned on the RRSP over the subsequent years will quickly outpace the short-term interest costs of the RRSP loan. Tip #4 Increase the frequency of your payments Make accelerated bi-weekly payments to get a "free" principal reduction equivalent to one full mortgage payment every year - painlessly. Tip #5 Use you pre payment privileges Make use of double-up privileges wherever possible. Tell yourself that you will "skip-a-payment" whenever necessary ... then skip only when you absolutely must. Tip #6 Increase your mortgage payments at a set amount Round up your payments by adding even a nominal amount of say $10 per payment. The amount of interest you are saving will be unbelievable, and the extra money relatively painless to part with. Tip #7 Take advantage of your lump sum payments when available Pay a lump sum wherever possible by decreasing the principal of the mortgage. More of your payments will be allocated to principal rather than to interest, thereby accelerating the end of your mortgage. Tip #8 Stabilize your mortgage payments even when interest rate drop Keep payments the same when mortgage rates have fallen if the payment amount has not been a problem so far, thereby paying down the principal faster. Tip #9 Annual income increased why not increase your mortgage payments Raise payments in line with increased income on an after-tax basis. If your income increases, don't keep your mortgage payments the same.Although the disposable income may be fun to spend on unnecessary luxuries in the short-term, the long-term benefits of being mortgage free faster far outweighs the short-term sacrifice. Please contact: Allan Bowerman at (403) 660-5501
1 Yr. Open
1 Yr. Closed	6.35	5.15
2 Yr. Closed	6.40	5.20
3 Yr. Closed	6.45	5.30
4 Yr. Closed	6.55	5.30
5 Year Special	6.75	5.30
6 Yr. Closed
7 Yr. Closed	6.95	5.40
10Yr Closed	7.35	5.55
5 Yr Closed Variable Rate
5 Yr Open Variable Rate
Home Equity Line of Credit	5.75	5.75

*denotes a change

FOR MORE INFORMATION CONTACT:

Allan Bowerman
Mortgage Broker
The Mortgage Alliance Company of Canada
Phone: 403-278-6463
Toll free Fax: 1-866-495-6723

*Rates subject to change without notice

DID YOU KNOW ...

30, 35 and 40 year mortgages (amortization periods) are now available in Canada? Ask your mortgage broker how you can lower your monthly payments with these new products ....

The following article appeared in the Alberta Real Estate Association's (AREA) December 2004 newsletter for REALTORS

Mortgage Assumability

Enforcing Due on Sale Clauses

Contrary to popular belief, there is nothing in Alberta legislation that prohibits lending institutions from enforcing a due on sale clause. Generally speaking, lenders have the ability to declare the mortgage balance due and payable when the mortgaged property has been sold unless the lender has approved the buyer to assume the mortgage. However, the court does have the jurisdiction to rule in favour of the buyer if it deems that the lender does not have a good reason to refuse the assumption. Factors taken into consideration would include creditworthiness of the buyer, the terms of sale and whether the mortgage is in default.

In recent months, whether due to the increasing concerns about mortgage fraud or because of increased focus on the Law of Property Act, some lending institutions have flexed their muscles by refusing mortgage assumability. There are conflicting reports on when this is happening. There is the suggestion that lenders have been targeting transactions where they don’t expect buyers to apply to the court for relief from forfeiture if, for example, they are involved in illegal activities or have a bad credit history. Some of our members, however, have reported examples of refusals when they think the buyer is well-qualified.

MCAP, ING, and Maple Trust have officially announced a new policy of requiring buyers to qualify before the mortgage can be assumed. They have made presentations to our members about their policy. A Red Deer member also reports that Community Savings and Credit Union is asking for buyers to be qualified and apparently the policy varies upon the branch.

ATB has been enforcing due on sale clauses for some time now. In 15 out of the 16 court cases, the judge has ruled in favour of ATB. AREA intends to investigate the circumstances to get a clearer understanding of the issue.

Liability Implications

The law is clear about liability on the covenant (i.e., the ability of the lender to pursue the personal assets of the borrower in addition to foreclosing on the property). However, the rules have recently changed. Effective August 01, 2004, the Law of Property Act states that liability exists on all insured high ratio mortgages, not just those insured by CMHC. No liability exists on mortgages that are not high ratio, even if they are CMHC insured.

Another important but misunderstood point: the original borrower and subsequent buyers who assume a high ratio mortgage are all liable upon default of the mortgage. This has serious implications for both our members’ clients and REALTORS.

As of August 01, 2006, lenders will be required to insert a statement in all high ratio mortgages, naming the borrower and anyone who assumes the mortgage as personally liable for any default. Until this requirement becomes effective, REALTORS would be well advised to warn buyers of the consequences of obtaining a high ratio mortgage and of the possible consequences to sellers of allowing their mortgages to be assumed.

Because of the increase in mortgage fraud and the liability issue, organized real estate in Alberta would be wise not to lobby for automatic assumability for all mortgages. Each transaction must be judged according to the circumstances, and seller’s agents and buyer’s agents must use good judgment when attempting to negotiate for an assumable mortgage.

AREA will produce guidelines on this topic. Meanwhile, here are some words of advice:

Don’t market a property as having an assumable mortgage. Instead, indicate that it is possible the mortgage may be assumed.
Make offers to purchase conditional upon lender acceptance of the buyer.

Stay tuned for further details.