RightMortgage Hits $2 Billion Milestone

December 18, 2009

RightMortgage Hits $2 billion Milestone

Mortgage Alliance, one of Canada’s biggest brokerage firms, launched its private-labelled RightMortgage two years ago.

Since then, the RightMortgage has racked up $2 billion in sales—a solid number given that it’s available only through Mortgage Alliance agents.

The RightMortgage’s popularity is based on customization. It lets borrowers choose and pay for only the features they want or need. For example, if you choose minimal pre-payments, a short-term rate hold, and a 5-year fixed term, the rate would be roughly 3.88% as of today (normal terms and qualifications apply). According to Mortgage Alliance, the features that people customize the most are the rate hold period and the annual prepayment amount.

President, Michael Beckette, says that, “Unlike a typical ‘white label’, RightMortgage is a branded, customer-focused product..not a lender’s product with a broker’s name attached to it.”
“We didn’t see any great value in simply white labelling something and calling it a Mortgage Alliance mortgage,” he said. “In fact, we believed it would diminish our value proposition as a mortgage broker.”

“When we created RightMortgage,” Michael adds, “we focused on process, product differentiation and the ability to build the RightMortgage brand with consumers.”

A key to the product’s success, he says, is that “it’s a process that educates and empowers the customer and the mortgage professional…and they seem to like that.”

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About Mortgage Alliance: Mortgage Alliance is a national mortgage brokerage, with over 1,700 mortgage professionals throughout Canada. Its RightMortgage product is funded by Macquarie Financial.

REFI Plus Improvements May Solve your Limited Equity Problem

There has been a noticeable trend that has appeared over the last couple of months, with some of my clients looking to refinance their homes. Not enough equity to roll all of their debts, and/or to pay for some renovations to take advantage of the “Renovation Tax Credit”, and or rebates through the “Energy Audits”.

Time and time again, we take a deal to approval stage, to only have it undone by a low appraisal.

Everyone some how knows what their neighbor sold his house for, back 4 months ago, and thinks their home is in much better condition, and should therefore be worth $20 - $30K more. Or on the other side of the fence, when a house recently sells for a low price, there is always a story about the previous owners being in financial distress, marital breakdown or an estate sale, so they had to let it go at below market value. Which is further reason to believe that their house is worth $20 -$30K more. The reality is that the appraisers are getting more and more sales to support the fact that the homes have either not gone up, since their last evaluation, or in fact have gone down.

What does this mean for the clients looking to refinance their homes.. Hurry up and get your home evaluated to maximize its borrowing power today.

If you own a home and answer yes to any of the following, you should be looking to “REFI-NOW.”

1. If you owe more the $10,000 in credit cards or on your line of credit.

2. If you have not filed a tax return for the last couple of years, or know you will have a sizable bill for 2009 tax year.

3. There are renovations that are moving up from the “wish list” to the “must be repaired list”. Roofs, Windows, doors, kitchens and Baths… There has never been a better time with the tax credits and rebates to complete these renovations. At these low rates every $1000.00 in renovations carries for as low as $3.40 per month. So that $20,000 kitchen renovation could end up costing you $68.00 per month.

4. You know that your living paycheque to paycheque and do not have the means to save for RESP or RRSP’s.

But some of these clients are the same clients that are running into the challenge of limited equity. So how are we getting some of these deals approved?

REFINANCE PLUS IMPROVEMENTS.

This is actually one of the most powerful tools if a renovation is being planned for the near future on an existing home. Some clients may have heard of “Purchase Plus Improvements.”, a program that will enable immediate renovations to be added to the purchase price of a home. Great if you happen to be buying that house. But what about the other approx 95% of current homebuyers who are not buying or selling?

“Refinance Plus Improvements” is somewhat of an unwritten program, that piggy back’s on the underwriting criteria of the Purchase Plus Program.

In some cases I can increase the value of your home by the cost of the renovation, usually up to 10% of the current value without any problems, anything higher then the 10% is subject to the possibility that the lender may not give you a dollar for dollar increase in value.

This program is excellent for those who want take advantage of the renovation tax credits, and beat the implementation of the HST.

This program can also work for those who are in the position of wanting to sell their home but there is something that is keeping clients from buying. Outdated tiles, roof needs replacing, original furnace, outdated wiring. The “Refinance Plus Improvements” can be used to fix up a home and get it ready for selling.

By creating additional equity in the home, it will allow the existing equity to be allocated strictly for a debt consolidation and then the increased portion will complete that wish list and/or must be repaired list.

Now, you maybe able to renovate and consolidate at the same time.

Best 5 year fixed is still at 3.99% and variable rate is still at PRIME -.10% and holding.

Please keep in mind that rates are subject to change. The 3.99% rate is a quick close rate.

One more quick update, is that TD Bank just announced that they are no longer using the 32% GDS restriction on their applications. Is this a sign that the lenders are loosening up credit, yes and no…. There are already many lenders who have in essence abandoned the GDS ratio limitation. All they care about is the TDS or Total Debt Service ratio. This works well for those clients with no outside debt, it significantly reduces the minimum income to qualify for a mortgage.

But keep in mind TD Bank is still heavily reliant on the client’s beacon score, so if a client has no credit facilities what so ever they still may not qualify for the mortgage.

If you are looking to REFI NOW then do not hesitate to give me a call.

Thanks,

David Kendall

BOO! HST is coming! If you’re thinking of buying a new home in Ontario or BC, now is the time to do it.

As of July 1, 2010, the BC and Ontario governments will implement a Harmonized Sales Tax (HST). The HST combines the existing GST (5%) with the PST (7% in BC and 8% in Ontario) to create a single tax that applies to more products than the PST alone. While there may be certain advantages to an HST, its effect on real estate will be dramatic and negative.

Currently, new home purchases are subject to GST. But starting July 1st, new homes will be subject to the entire HST. This means that buying a new house will cost 8% more in Ontario and 7% more in BC. For example, if you’re buying a $500,000 house (not unusual in either of these markets), you’ll pay $40,000 extra in Ontario and $32,000 extra (less a $20,000 flat rebate) in BC. Kind of puts new urgency into your shopping plans, doesn’t it?

But it gets worse. Realtor commissions, legal fees and the price of appraisals, land surveys, home inspections, landscaping, renovations and more will all rise. Sure you could try to stay under $400,000, since new properties under that level are exempt. But try to find a new house or condo in Toronto or Vancouver under $400,000. Good luck!

Another option is buying a resale home since, as is currently the case, no tax is payable. However, as mentioned above, all associated home buying expenses will still be higher.

The only foolproof way to avoid the HST is to buy BEFORE next summer. And as it turns out, that’s a great idea anyway. Prices still haven’t reached their previous highs in most areas and interest rates are near historic lows. If you’re interested in avoiding the HST, talk to me today. I can pre-approve you for mortgage financing at a highly competitive rate, so you’re ready to buy the moment the right house comes along!

Lisette Amalfi
(905) 529-1199