Mortgage Renewal

When renewing your mortgage, the banks often only offer the posted rates. You have to push a little harder for them to give you a break. They know that most homeowners don't want to have to shop around, so, they offer you a higher rate and hope that you will take it.

Armada Mortgage Services is there to help you. When you be come an Armada Mortgage Services client, we take care of you. We will contact you before your renewal date and discuss any changes to your situation, and then we will shop the best rate for you. No worries.

Mortgage Refinancing

Rates seem to be dropping. Is it better to refinance now?

That depends. Breaking your mortgage contract to renew at a new rate and a new term, may include a prepayment charge to reimburse your financial institution for the lost interest income. As a rule, the prepayment charge is based on three months interest or the interest rate differential (the difference between your current mortgage rate for the balance of your term and the new rate you want to refinance at), whichever is greater.

This amount will tell you if you should refinance the mortgage. The shorter the remaining term - less than a year is best - the smaller the penalty. The longer the term left on your mortgage, the greater the prepayment penalties. We are able to calculate your information to determine if you should break your mortgage and take advantage of current lower rates.

Mortgages insured by the Canadian Mortgage and Housing Corporation, has a maximum penalty of three months interest after the third anniversary date of the interest adjustment period, or after the third anniversary date from your most recent renewal.

Bridge Financing

Bridge financing is the use of temporary funds to cover the cost of a new home if the sale of the current home isn't complete by the time the new purchase is finalized.
At most financial institutions, the set up or administrative fee is about $250.00 plus the interest payable. With prime near historic lows, bridge financing is definitely a manageable cost.

Bridge financing has certain terms and conditions. For example, Financial institutions may insist you present them with two firm offers, one for the current house, and one for the new property. Conditional offers may not be acceptable, making it difficult to get bridge financing if you've bought a new house, without having sold your current house. You must be prepared to secure bridge financing with a mortgage registered against both properties, if a hitch or glitch causes the sale to abort.

Normally, bridge financing is set up as an unsecured loan. Nothing is registered against the title of either property to ensure the borrowed funds are repaid. How does the lender ensure the loan is paid off once both deals are finalized? By signing a letter of direction addressed to your lawyer. That instructs him or her to retire the bridge financing, plus interest and costs, immediately after the sale closes. Your lawyer will acknowledge receipt of the letter of direction, and agree in writing to repay the total amount owing to the lender right after the sale is complete, before you receive any money. Your lawyer becomes the security for repayment of the loan.

Never assume the Letter of Direction and lawyer acknowledgment will suffice. Before funds are released, it may be necessary for mortgages to be prepared against both your old and your new homes; they will only be registered if a problem arises with the sale. Occasionally, mortgages registered against both properties is a condition to any money being advanced.

As this extra work will be performed at your expense, clarify at the outset both what security the lender will require for the bridge financing loan, and the costs.

Some people actually prefer having their purchase close days before their sale, and deliberately opt for bridge financing. They do this to stagger the closings and complete the purchase first then they take possession of their new home without the worry and aggravation of moving in the same day. That gives them the opportunity to clean the house, and make needed improvements and repairs, while it's still empty. Bridge financing then allows a more relaxed move, at a manageable cost.

For more information on these services contact us today.