Mortgage Tips Shaun Serafini 18 Aug


When it comes to mortgages, it is easy to focus on the rates and your current situation, but the reality is that life happens and when it does, rates won’t be the only thing that matter. Trust me. In my experience doing mortgages, the one constant that I can tell you is that “life happens” and mortgage penalties are often a very serious concern when it does.

At the end of the day, a mortgage is a contract between you (the homeowner) and the bank / lender. As such, there are often penalties involved if the contract is ever broken. This is something that every homeowner agrees to when the mortgage paperwork is signed, but it can be easy to forget – until you’re paying the price. These things do happen – approximately 6 out of 10 mortgages in Canada are broken within 3 years. 60% is a pretty high likelihood and even the most well-organized, meticulous planners have seen life happen.

Should your circumstances change, knowing the next steps can help you navigate the process.

Calculating Penalties on Closed Mortgages:

Typically, the penalty for breaking a closed mortgage is calculated in two different ways. Lenders generally use an Interest Rate Differential calculation or the sum of three months interest to determine the penalty charged. Borrowers are typically be assessed the greater of the two penalties, unless your contract states otherwise.

Interest Rate Differential (IRD) aka the Nasty One! (Typically specific to fixed-rate mortgages).

In Canada, there is no one-size-fits-all rule for how an IRD penalty is calculated and it can vary greatly from lender to lender. This is due to the various comparison rates that are used. Typically, the IRD is based on the amount remaining on the loan and the difference between the original mortgage interest rate you signed (posted rate) at and the current interest rate a lender can charge today.

Ideally, you will want to be aware of what your IRD penalty would be before you decide to break your mortgage as it is not always the most viable option and this penalty can be substantial.

In this case, these penalties vary greatly as they are based on the borrower’s specific mortgage and the specific rates on the agreement, and those available in the market today. That means that it is a very complicated calculation. I have seen this penalty in the tens of thousands and it’s not too rare to see that. I have blogged previously on the true cost of a mortgage contract.

Chartered bank fixed-rate mortgages sound like the safest bet for your mortgage right?? Think again. These ones tend to have some of the highest penalties of all. This is why, when choosing a mortgage, that you trust an expert that can look at multiple lender options for your specific case.

Three Months Interest:

In some cases, the penalty for breaking your mortgage is simply equivalent to three months of interest. Using a simple example – $200,000 mortgage balance at interest rate of 3% – three months interest would be  $1,500 penalty.

($200,000 x 3% / 12 months X 3 months).

A variable / adjustable rate mortgage is typically accompanied by only the three-month interest penalty and this almost always is the lowest possible penalty that you can pay on a closed term mortgage. This is a major consideration and why an adjustable / variable mortgage provides the best possible flexibility from “life happens” moments.

Paying The Penalty

When it comes to paying a penalty, some lenders may allow the penalty to be added to your new mortgage. You can also pay your penalty by having the cost added to the mortgage upon early payout. If you can wait out your current term before making a change to your mortgage, it is the best way to avoid being stuck in the penalty box. If you cannot wait, do note that, while calculators can be ok tools for estimates, it is best to contact me directly to discuss your mortgage specifics and potential penalty calculations / steps. You want to have an accurate number in mind so the potential penalty doesn’t come as a surprise and leave you short or scrambling for cash at the lawyer office.

“Risky” Variable rate mortgages? Not so Fast…

Mortgage Tips Shaun Serafini 25 Sep

“A Variable rate mortgage? Too risky for me!!”

This is probably one of the most frequent, and most costly misconceptions I see in mortgages. 

The true risk of a mortgage is in erosion of a family’s net worth. I’m not talking erosion caused by a $25-50 change in a person’s payment when Bank Prime rate changes. I’m talking erosion caused by a payout penalty that can be 4 to 10 times higher (or more) than another available option. Check the two pics showing the identical mortgage, the only difference, one is a FIXED rate, one is ADJUSTABLE / VARIABLE rate:

Fixed rate example

Adjustable / Variable rate example


The fixed mortgage penalty (top) is 7 times that of the adjustable mortgage and over 4% of the total mortgage amount. That’s on a $172,000 mortgage. Imagine what that penalty looks like on a $650,000 mortgage!

In 14 years of doing mortgages, I am here to tell you that LIFE HAPPENS! The best laid plans, strategies and goals can be undone by a single change of course along the journey. 

The smartest, most prepared, most informed people get transferred, get promoted, get sick, get divorced, start businesses, have children etc. Often this requires or results in a recalibration of their current mortgage financing. 

In most cases, the chartered banks have the MOST punitive / harmful penalty calculations. If you knew how much money banks put on their “other fees & charges” revenue line due to early payout fees annually you would be shocked. It’s honestly crazy that such high penalties are even allowable. Statistics show that over 70% of 5 year mortgages are broken prior to their maturity. The average lifespan of a mortgage is 3.7 years before being broken or changed. And banks know this as well. The five year fixed mortgage is indeed the safest mortgage available – to the bank shareholders!  The true risk in mortgages lies in rolling the dice with less than 30% odds that you will see a 5 year term through to its maturity.

I use the saying (borrowed from an esteemed colleague) – “Life is variable, your mortgage should be too!” It has served many of my clients (myself included) very well over the years. 

Bottom line

Of course, the entire picture has to be known before a professional can properly determine which mortgage option fits one person / family’s circumstances. In some cases, the peace of mind that goes along with a Fixed rate is, in fact, a preferred option. In our role, we do our best to ensure that if the mortgage is to be set up with a fixed rate, that we align with a fair-penalty lender. That is the value and advantage of working with dozens of lending institutions. We can sidestep lenders that are known to have much more consequential penalties than others.

As a Mortgage Professional, my goal is to help manage the overall risk of your mortgage. We don’t want you to take on more risk than you are comfortable with by any means. Just want to make sure you don’t drive into the ditch trying to avoid a pothole!

Separation / Divorce doesn’t have to mean splitting from your home too

General Shaun Serafini 20 Mar

When we tie the knot with a soulmate, we assume it’s going to be forever. It’s pretty much written in the vows. Unfortunately not all marriages have fairytale endings. In fact, a significant amount of marriages in Canada end in divorce. The most recent data suggests 38 per cent of all marriages in Canada don’t last until death. Over 70,000 per year. The average marriage lasts 14 years, with 42 per cent of divorces occurring in marriages lasting between 10 and 24 years.

The reasons for the divorce rate are many and complicated and not really necessary to discuss here.

What we do know is, divorces can get ugly and costly for both individuals involved. And if the marriage is years old, there’s likely a home or property that gets caught in the middle.

A typical divorce scenario sees that when the couple breaks up, the matrimonial home is sold and what’s left over is split. In almost all cases, even when one party wants to keep the home, the lawyers, banks and other professionals recommend selling the home. It makes sense, since most couples get a mortgage they can afford together, not on their own. That or due to refinance regulations that came in to play a few years ago, the home is not seen to have enough equity to fully pay out one of the parties unless sold. If the home is full of memories, or children are involved, it can be an extremely painful situation. You not only have to start a new family dynamic, but also do so in totally new homes as well.

There is a unique alternative very few professionals even know exists. All three of Canada’s mortgage insurance providers, Canada Mortgage and Housing Corporation, Genworth Financial and Canada Guaranty, offer what’s called a spousal/partner buyout program.

This program allows one party to refinance the matrimonial home up to 95 per cent of its appraised value, and pay out any debts related to the marriage.

Traditionally, you can only refinance on an existing mortgage up to 80 per cent of the appraised value.

The program is considered a purchase, so all the requirements and qualifications needed in a traditional purchase mortgage apply. In this case, you’ll also need a purchase agreement and a separation agreement with all the debts and payments spelled out up front.

The buyout program is a one-time opportunity. It can be used to pay off other debts outside the separation agreement, but this depends on which one of the three insurers used.

Even with a helpful loan-to-value ratio, some people still can’t afford to take on the home on their own. The program can also allow people to bring on a cosigner in this scenario, often a new partner or family member.

At the end of the day, divorce is unfortunate and very difficult. The program strives to allow you to keep your home and kids can remain where they’ve grown up and feel comfortable. And that makes the situation at least somewhat more bearable.

If you find yourself in a relationship / matrimonial breakdown and you’re not sure what to do about your home, a mortgage professional who has experience with this program should be consulted before making any important decisions. We can work with the lawyers to ensure proper steps are taken initially to ensure this program is considered and to determine if it can be used to keep the matrimonial home if desired. Even if you’ve already been told “No” by your bank / existing lending institution.

Click HERE to get in touch for information / advice on this program. All conversations are in strict confidence!

For Rental Properties, Cash (Flow) is King

Mortgage Tips Shaun Serafini 25 Jan

Ask pretty much anybody about mortgages and the first, sometimes only thing they want to talk about is the interest rate. In my business as a Mortgage Professional, my job is to educate clients that while interest rate is definitely a cornerstone of your mortgage decision, it is not the only factor to consider when agreeing to sign a mortgage commitment. In many cases, the lowest interest rate does not represent an ideal fit, especially when the actual mortgage isn’t aligned with customer’s stage of life, priorities, or long-term outlook. Rental properties are a prime example of mortgage situations where basing a decision solely on the rate is often short-sighted and in some cases detrimental to the long term viability of one’s investment.

Rental properties can be a lucrative way to diversify investments, build passive income and long term net worth. They can also be costly, rigid and very problematic if you don’t choose the right property, area, tenants and MORTGAGE PRODUCT. Like any investment you are going to do your research before buying – RIGHT? And you are going to take your time and screen potential tenants vs taking the first Kijiji reply from offering a cash deposit higher than you have specified – RIGHT? I’ll leave that part up to you. Where I come in is ensuring that the mortgage product you are using allows you the most  flexibility on your payments and  overall investment. The best way to ensure that your rental investment does not become a sucking vampire on your personal bank account is to minimize the cash outlays you are obligated to make.

Enter the Home Equity Line of Credit (HELOC).

In my 10+ years of doing mortgages and owning investment property, the HELOC is far and away my favourite product for investment properties.

First & foremost – CASH-FLOW. HELOC’s allow you the option of making interest-only payments monthly.  The monthly payments on a standard $200K mortgage using current 5 yr fixed rate of 3.39% for example are $987. Interest only payments would be about $650. That’s a cash flow difference of $340. Think of a vacancy – they happen. That’s $340 of your own money that you don’t have to pull out of personal savings to cover while your investment income is stalled.

Having the ability to scale back or minimize your cash outlays can be the difference between good and bad when it comes to an extended vacancy, renovation or unforeseen expense such as a repair or insurance claim. This very feature has allowed me to take the time needed to properly screen potential tenants when I have a vacancy and not rush into leasing to the very first interested reply. I can tell you that one of the worst mistakes that can be made with a rental is to scramble to get tenants in so they can start paying rent only to find out you picked the wrong people.

HELOC’s also offer a number of additional features:

  • Fully open – imagine somebody comes along offering you top dollar for your investment property. A HELOC is fully open meaning it can be paid off immediately without restriction or early payout charges. You can accept the offer and cash out immediately without seeing profits eroded by penalty charges and fees. With a standard mortgage you may have a payout penalty ranging from 3 months interest into the tens of thousands depending on mortgage type & institution (cringe if you have a fixed mortgage with one of the Big 5 Canadian banks).
  • Revolving – so you’re an investment property wizard and the cash you are making has allowed you to pay down the HELOC we set-up dramatically. You can use the available space on your current HELOC towards the purchase of another property. Keep your personal savings and investments in tact and don’t have to ask permission to access the equity. That’s the beauty of revolving credit.

The main (only) drawback to a HELOC over a standard, amortizing mortgage is that the interest rate tends to be slightly higher (about .50%). To me this argument rings hollow. Since your rental property is essentially a business, the interest that you pay on a mortgage is eligible to be written off for tax purposes. Given the strict criteria involved in qualifying for mortgages these days, I’m willing to bet most people with rental properties are already showing income that has them in an elevated tax bracket. That means that every extra dollar of profit reported on tax returns gets annihilated by CRA. Sometimes increasing an individual’s interest expense actually helps them bring their reported profits on rentals close to breaking even and honestly that’s why we have accountants (SIDE NOTE: please use an accountant if you are going to play in the investment game).

Finding lenders who offer HELOCs on rentals isn’t easy, especially if you are wanting only 20% downpayment (80% LTV). Most lenders these days want more meat on the bone (equity) for rental properties. There are definitely good lenders out there doing rental HELOCs at 80%LTV. That’s where a call to your trusted Mortgage Advisor and the proper strategy can payoff in spades.

HELOCs are not just a great product for rental properties. Click HERE to visit an earlier blog I wrote discussing the full range of benefits a HELOC can offer as a mortgage strategy.

Mortgage Rate Increases Upcoming? What Do I Do?

Latest News Shaun Serafini 7 Jul

You may have heard rumblings of mortgage rate increases recently. As a mortgage broker, I can always tell when media have published their frequent “Lock in your Rate or Doom” headlines. We have received quite a few calls and emails over the past week or so from clients concerned that their mortgage rate / payment could be on the rise. It’s actually no wonder there’s so much concern. One flip to Financial Post this evening and I was ready to liquidate all of my personal belongings and head for my panic room. Luckily I know how media sells papers (there are still things called newspapers for sale right?) / clicks and it’s not by publishing “Nothing to Worry About Today” headlines.

I did feel however that there’s been enough concern raised by our variable rate clients that I wanted to get in touch and ease some concerns. Before doing something rash such as switching your current (likely awesome) variable rate mortgage into a more stable (boring /more expensive) fixed option, it’s important to remember why we opted for variable on your mortgage in the first place. It wasn’t just a short term solution to capture rates lower than fixed at the time. It was to set-up the mortgage that should improve your net worth position over the LONG TERM. There was much more strategy that just grabbing variable because it was half a point or more lower than fixed when we set up your mortgage.

Most of the rumblings that you are hearing right now about rates going up are due to increased bond rates which affect fixed mortgages not variable, which are attached to prime. In fact, we’ve already seen most fixed mortgage rates increase in the past week anywhere from .10-.25%. Prime rate hasn’t moved. That means your variable mortgage looks even better in comparison to fixed right now. I’ll say that again — the rate increases that we’re seeing right now are increases to FIXED mortgages. Since fixed rates don’t change over the life of the mortgage, the only folks directly exposed to these changes are those who are currently in need of a mortgage right away and who haven’t been told or convinced of the virtues of variable over fixed anyways (IE they need a better mortgage person in their lives).

Now I will say this — there has been some speculation that we could see the Bank of Canada increase the prime rate for the first time in over four years in the next few months. This is much earlier than most economists predicted at the start of the year but the rumblings certainly appear to becoming more pronounced. So realistically, I don’t want to rule out an increase to Prime & subsequently variable mortgages & Home Equity & personal Lines of Credit by the end of the year. This is much more likely to happen than we were led to believe 3-4 months ago. Remember though, even if Prime was to increase, your variable mortgage would still be substantially lower than the current rates of fixed and it’s extremely unlikely that an increase will be more than .25% at any one time.

Let’s consider these #’s:

An increase to the prime rate (if/when this happens) would probably change your payment $20-$35 a month (a .25% increase to prime will raise your payment approx $12 per $100,000 of mortgage). Locking into a new fixed-rate at the current market prices would increase $50 plus (you’d be taking a rate of 2.94 or higher by locking in in most cases. So it’s not as though a change in the prime rate is going to affect your budget considerably and certainly not more than flipping into fixed.


A few more points if what you have read so far isn’t enough and you still have thoughts of locking into fixed:

1) You have to choose a mortgage term equal to the time you have left or longer.

2) You would be locking into current fixed rates not the one that was available when you agreed to on your existing mortgage. That means you effectively pay a higher interest rate presently as a stable payment insurance policy where the added premiums go into your lender’s pockets. Why wouldn’t you just take that extra money that you’d be paying and pay down extra principle on your mortgage to rapidly decrease the overall mortgage balance. Then when/if rates do go up, your mortgage balance is reduced so the increase isn’t as noticeable. That’s effectively what you are doing with the variable mortgage. Heck we could even increase your payments to exactly what they’d be if you were to flip into a fixed and pay down even more principle in the mean time.

3) Fixed mortgages can carry far more substantial early payout penalties due to the dreaded Interest Rate Differential calculation that only comes into play with fixed mortgages. (See my additional link below for more info on this)

Long story short I struggle to see many situations that would see our variable clients benefit by flipping into a fixed mortgage in anticipation of dreaded mortgage doom that we’ve been hearing about for seemingly the past decade. I now have a saying that I borrowed from a colleague — “life is variable — your mortgage should be too”.

In conclusion: I’m not worried about a slight shuffle of variable rates whenever they do come and I’m on variable with my personal mortgage as well. We knew there could be adjustments to the rate when we set up the mortgage in the first place. It wasn’t meant to abandon ship at the very first rate change ripple. The ONLY clients I ever recommend being on a fixed mortgage are those with very narrow budgets where any payment change could cause distress or when they simply do not qualify under variable underwriting.

PS — Now’s probably a good time to highlight a blog that I published a while back in regards to why I side with Variable mortgages more often than not these days in the first place.

As always, please reach out if you have questions / concerns or want us to review your specific scenario to ensure it’s still a good fit. Click here to get in touch

4 Signs You’re Ready For Homeownership

Mortgage Tips Shaun Serafini 22 Jun

While most people know the main things they need to buy a home, such stable employment and enough money for a down payment, there are a few other factors that may help you realize you’re ready, perhaps even earlier than you thought!

As a Lethbridge mortgage broker serving the city and the surrounding areas, it is my job to ensure that each one of my clients is getting the best service I can provide. Part of this means educating as much as possible when it comes to buying a home, which is why I’ve put together a list of 4 signs that may tell you that you are ready to become a homeowner.

  1. You should have more funds available than the minimum of a down payment

This one may seem obvious, but it’s something that people may not realize until they actually think about it. It’s very difficult to afford a home if you only have enough money for a down payment and then find yourself scrambling for day-to-day living after that.

If you have enough money saved up (more than the minimum needed for a down payment), you may be ready to start house-hunting.

  1. Your credit score is good

This might seem obvious at first glance, however, if you don’t have a good credit score, chances increase that you could be declined altogether or stuck with a higher interest rate and thus end up paying higher mortgage payments. If you have a less-than-optimal credit score, working with a mortgage professional can help you get on the right track in the shortest time possible. Sometimes a few subtle changes can bump a credit score from “meh” to “yahoo” in a few short months.

  1. Breaking the bank isn’t in your future plans

Do you plan on buying two new vehicles in the next two years? Are you thinking of starting a family? Are you considering going back to school?

Although you may think you can afford to purchase a home right now, it’s extremely important to think about one, two, and five years down the road. If you know that you aren’t planning on incurring big expenses that you need to factor into your budget anytime soon, then that’s something that may help you decide to buy a home.

  1. You are disciplined

It’s easy to say, “it’s a home, I’m going to have it for a long time so I may as well go all-in!”. While that would be nice, that’s rarely the case!

You must have a limit that you’re willing to spend. Sitting down with a mortgage broker or real estate agent and analyzing your finances is crucial. It’s important that you know costs associated with buying a home and what the maximum amount is that you can afford without experiencing financial struggles. IMPORTANT: This is not the amount that you are told is your max!

This is the amount that you calculate as your max based on your current monthly budget and savings plan. It’s quite frequent where I have clients tell me that their max budget is, say, $1200  and then when I run the numbers they could actually be approved for much more. Low and behold suddenly these guys are looking at homes that are hundreds of dollars a month higher than their initial perceived budget. It is up to you (with my help or pleading, when necessary) to reel things back in and make sure that you aren’t getting into something that affects the long-term livelihood of a well thought out budget or savings plan.


These are just four signs that you may be ready to purchase a home. If you’re seriously considering buying or selling, talking with a Lethbridge mortgage broker, such as myself, can help put you on the right path to a successful real estate transaction.

To learn more about your mortgage, contact me today!



Should You Refinance Your Mortgage?

Mortgage Tips Shaun Serafini 20 May

As a trusted Lethbridge mortgage professional serving Lethbridge and the surrounding areas, I am frequently asked by clients whether they should refinance their current mortgage. People typically ask this question because they have heard that they can lower their monthly payments or that mortgage rates have fallen and they’d like to take advantage of the lower rates available.

While these are valid reasons for wanting to refinance, there is a bit more to this decision than just paying less money per month.

First, let’s take a quick look at what refinancing is. When someone refinances, they are essentially paying off their current loan and swapping it for a brand new one. While it can be extremely beneficial to refinance your mortgage, there are usually some costs involved and doing so can also work against you. This is why it is important to talk to a mortgage professional who will help you determine if it makes sense to refinance.

Here are three of the main reasons that you SHOULD refinance your mortgage.

Locking in a lower interest rate

This is the most obvious reason, and it’s also the most common reason people refinance a mortgage. The general rule is that if you can save just 1% by refinancing, then it’s a no-brainer to do it. Doing so can help save you money and boost the rate that you build equity in your home. I have seen examples where as little as .5% of a difference still equals better long-term standing through a refinance.

You can pay a lower monthly amount by switching your mortgage when there is a lower interest rate available, or you can keep your mortgage payment the same as you are currently paying and rapidly advance the timeline of which your mortgage is paid off.

Consolidating Higher Interest Debt

Another common reason that people choose to refinance is to pay off current high-interest debt by using money built up through equity in their home. Although this may seem like a great idea in the beginning, this reason for refinancing should be carefully planned out with your mortgage broker & financial planner (if necessary).

For example, a good time to refinance to consolidate debt would be when you are certain that once your debts are paid off, you’ll be able to keep them that way. It can hurt you in the long run if you pay off debts via a refinance only to have the debts reappear. It’s quite tempting to start spending again once you see you are clear of debt, so be aware! Deflecting the additional cash streams that you were once paying towards debt into your mortgage or better still, into a diversified investment (TFSA or RRSP) could compound your savings / net worth position dramatically! That’s where your financial planner comes in. I work with a great Lethbridge Financial

Deflecting the additional cash streams that you were once paying towards debt into your mortgage or better still, into a diversified investment (TFSA or RRSP) could compound your savings / net worth position dramatically! That’s where your financial planner comes in. I work with a great Lethbridge Financial planner team that I’m always confident in referring if clients don’t already have someone managing their savings.

Changing from Adjustable-Rate to Fixed-Rate and Vice Versa

If you first set-up your mortgage under a fixed-rate, you may now be open to switching to an adjustable (variable) rate mortgage as it could save you considerable money over time.

Each option has its own benefits and drawbacks. It depends on what type of person you are and the financial situation you see yourself in both presently and over the term of your mortgage. I actually run into many people who are quick to dismiss adjustable mortgages because they don’t fully understand how powerful they actually are and how much money can be saved long term. (These mortgages aren’t nearly as risky as most people think).* This is where advice and planning from your mortgage broker can help you determine what is best suited to your specific situation.


By carefully considering why you want to refinance and talking it over with your mortgage broker, the opportunity is there to drastically save money / improve a family’s financial position down the line.

If refinancing is something that you think you may be interested in, contact a Lethbridge mortgage professional like myself and learn everything there is to know about refinancing!

*Here’s a link to a blog that I published in regards to the Variable vs Fixed mortgage debate –



No Doesn’t Always Mean No in Lending

General Shaun Serafini 10 May

No Doesn’t Always Mean No in Lending

– Lethbridge Mortgage Blog


Last week, new clients of mine took possession of an awesome new home for their family. Despite being sound in all aspects financially, these guys had been told “No” on a mortgage by several banks and brokers alike. The main factor was that one of them became self-employed just over a year ago. Most bank policy these days specifies that unless you have 2 full years history of self-employment, they can’t consider the self-employed income.


My clients were told by a friend to give it one more shot. “Call Shaun just to be 100% sure before you give up!”.


When they called initially, they were reluctant – confused and almost exhausted. How, despite doing so many things to prepare for this next step (including selling their previous home and moving in with family to save a strong downpayment), was it that they weren’t considered worthy of a mortgage? Becoming self-employed improved their financial situation immensely. They now earned more and had less overhead expenses because of the income tax benefits afforded to self-employed!


This story isn’t meant to pump my tires. It’s meant to demonstrate how mortgages and all lending really is entirely subjective. Some deals might not meet the black and white wording of lender policy manuals. That doesn’t make them bad deals – it means the broker/lender might have to position the file differently or request different info that helps to support the area of concern. As a Lethbridge mortgage broker, I work on mortgages EVERY SINGLE DAY. For that reason I know how best to look & position at all types of mortgage files, not just the black & white salaried employment deals.*


This is exactly what I did with this particular file. I positioned the strengths, explained the merit of the clients. I also chose a lender partner that I knew would work to welcome the clients as strong future customers on both the mortgage as well as the personal & business banking side.


Unfortunately hearing “No” on a loan application can be a huge deterrent and cause many people to give up entirely. I’ve seen people go out and spend the downpayment money they had saved because “banks clearly don’t think we are worth lending to!”.


Lethbridge Mortgage


Sometimes in lending, a no does actually mean no – for the time being at least. When you work with an experienced Lethbridge mortgage professional, however, the “No” doesn’t have to mean permanently. It’s an opportunity to realign some priorities and try again (sometimes in a very short period) with the added expertise of years of making deals work.


My clients took possession of their new home yesterday despite hearing “No” over and over. All these “No’s” eventually led them to me. I’m very grateful for the opportunity to be the one to give them the “Yes” they worked so hard for.


*Self-employed files are particularly ones that banks and inexperienced mortgage specialists can stumble over. Here’s a link to one of my colleague’s articles about qualifying for a mortgage while self-employed:


Please contact me anytime for unbiased mortgage advice. We are located in Lethbridge but can provide Canada-wide mortgage service!


Mortgage Decision Making: Embrace, Don’t Fear the Variable

Mortgage Tips Shaun Serafini 31 Mar

Ah yes, the age-old ‘Fixed vs Variable’ debate when it comes to mortgages…

Analysis from one of our top lenders:

“There is the notion that the big, trend-setting lenders will be looking to move (fixed) rates up to bolster profits. As well, Bank of Canada Governor Stephen Poloz has hinted he might be willing to let inflation run in order to avoid hiking the policy rate. That would put upward pressure on government bond yields (Also affecting fixed rates). As for variable-rate mortgages, the betting is there will not be a Bank of Canada increase, holding variable rates in place for the foreseeable future.”

You read what the above quote is essentially saying right? Fixed rates are where banks etc. can turn to and manipulate to boost profits. Profits are good if you are a shareholder of a bank. Profits aren’t as cool if you happen to hold a borrowing instrument from one of those same banks. There’s a big reason that most banks aren’t rushing to market and push variable rate mortgages even though almost every one of them definitely has this in their arsenal. The reason is because variable mortgages typically favor the customer, or at least aren’t AS profitable as the fixed rate option.

Here’s an informative blog that a colleague of mine wrote:

In particular, the point that I find most relevant is the penalty calculation, usually a point that isn’t even brought up in the original mortgage application process. On a variable rate, the maximum penalty that can be charged is 3 months interest, in your guys case likely less than $2000 and a pretty basic calculation. A fixed penalty is a different beast altogether. The penalty on a fixed is the GREATER OF 3 months interest or a dreaded Interest Rate Differential (IRD) calculation. The IRD can be very punitive (I’ve seen over $20,000) and very difficult to calculate as it is based on bank posted or bond rates which change daily.

Here’s another colleague blog post that I like as it’s short, sweet and to the point:

My summary – Don’t believe media fear mongering suggesting to “lock in now or else!” whenever these headlines pop up. A variable rate strategy can be a very strong move to hammer down principal on your mortgage over the next 12-18 months.

Consider the strategy where we set your payment to what you’d pay on the higher fixed rate — all that extra money goes direct to principal. Net result, when / if rates rise, your balance is significantly lower and your budget already fits the rate increase. Despite what some publications would have you believe, rate increases are gradual and should not drastically affect most people’s cash flow situation. Sure your rate could be higher than present day fixed rates years down the road. This is no different than saying putting your money in GICs could produce a better result than investing in Apple stock. I’m willing to bet (and I have with my own personal mortgages) however, that the savings / net worth improvement that can result in the next 12-18 months plus added flexibility in reduced costs/penalties related to variable mortgages wins out over fixed in almost all circumstances. Decades of financial data on mortgage rates in Canada support variable mortgages consistently beating fixed, often by a large margin: (NOTE: Blue=fixed / Red=Variable)

Mortgage product selection is one small aspect of the value that an independent mortgage professional can offer clients. A licensed mortgage professional should bring more to the table than simply an approval and a low rate. By reviewing our client’s entire financial picture and outlook, we help build a plan that best aligns with the individual borrower’s goals & saves the most money overall on your mortgage, now and in the future.

Using a HELOC to Enhance your Financial Position

Mortgage Products Shaun Serafini 13 Mar

Do you have a large amount of equity built up in your home? Are you looking to further enhance your financial position? A HELOC may be just the type of financing that you are looking for.

HELOC is an abbreviation for Home Equity Line of Credit. Basically, a HELOC is a credit account that is secured by property that a person owns. This account can be drawn against for any number of reasons, such as paying bills, consolidating debt, making a large purchase such as vehicle, additional property, financing a new business venture, investing for retirement etc.

The HELOC option when used properly, can be a very powerful tool when looking to enhance one’s financial position. In most cases the interest rate offered on a HELOC is much lower than an unsecured credit line and funds available can be much higher because the line of credit is secured by valuable property. The interest rate on HELOCs typically sits at/around Prime rate, whereas unsecured lines usually are offered at Prime plus anywhere from 2 to 5%. Considering that retail credit cards often pack interest rates of up to 29.9%, you can see why it makes a lot of sense to have the option of a HELOC, especially for large purchases.

Aside from interest rate, there are several other attractive options that a HELOC can provide:

Interest Only payments –most Home Equity Lines allow for interest only payments, meaning your monthly obligation would be less than on a mortgage of the same amount. There is no amortization schedule or commitment to pay back principal required. This feature can prove very useful for cash flow management and is a major component of my investment property strategy for clients.
Fully-open – unlike a mortgage, there are no early payout fees if you decide to pay-off the line of credit. This option is very attractive to investors who are in the “Fix & Flip” or short term investment business.
Revolving Credit – The amount that you have registered for your line of credit is at your disposal for as long as you own the property. If you have a $200,000 line, you can use up to that amount at any time. That means no more having to wait for approval from a bank or lender in the future on large purchases.

A Home Equity Line also can work to enhance investments other than real estate such as RRSP purchases. If a person has $45,000 in RRSP room on their income tax available, wouldn’t they like to know that they have the option of making this max contribution if they feel it’s in their best interest? By setting up a home equity line and consulting a financial planner, one may be able to set up a plan that satisfies both short term and long term tax and investment strategies.

Think of these scenarios and imagine the benefits of a HELOC in each case:
• We’re renovating our house (improving our living and our asset)
• I’m consolidating my debt so I can get it paid off sooner
• I’m financing my own business
• We’re buying a revenue property and are concerned about cash-flow from rent / vacancy
• I’m clearing my credit cards to lower my borrowing costs
• We’re finishing our basement as a rental suite (to earn more income)
• I’m sending my daughter to university
• I’m reinvesting my mortgage to reduce my taxes
• We’re planning and paying for a wedding
• We would like to put a HELOC on our rental property so we can pay off the mortgage on our personal home.


As mentioned, a HELOC can provide many strong options to investors who have equity built up in a home. Homeowners can typically borrow or set-up a HELOC up to 80% of the value of a home.

Despite the advantages of flexibility and convenience, HELOC’s are not for everybody and require a higher level of financial management than a typical mortgage loan. For this reason, the requirements for obtaining a Home Equity Line of Credit are much tighter than on a traditional loan. In most cases, HELOCs are reserved for customers who display very high credit ratings and strong credit history. The interest rate on this type of account is tied to prime meaning that as interest rates go up, so too will monthly obligations.

As with any financial decision, it is always recommended that you consult with a professional. A mortgage professional specializes in consultation with clients in regards to mortgage and loan options and knowledge of all products available. It is our job to align you with the mortgage product that best fits your financial scenario / situation.

Please feel free to contact me for questions on HELOC’s or any home financing related questions.

If you’d like to apply for a new mortgage, click HERE to start with our secure online application. 10 mins is all it should take to get us working on your behalf.