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Tino Brelak is an experienced and knowledgeable mortgage broker servicing and helping clients in the Greater Toronto Area (GTA) for over 15 years. His banking background (including branch manager, credit auditor and financial advisor) allows him to navigate the mortgage process and ensure you get both the best mortgage rate and the right product. Whether your credit is perfect or poor, Tino can help you purchase a home, refinance, finance your investment property or get you the best mortgage rate at renewal.
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Purchase or refinance now before rules change in January

[Posted on: November 22, 2017]

If you're looking to buy and will have more than 20 percent down, or if you are considering refinancing, then you might want to do so before January 1, 2018.

Why? On October 17, the Office of the Superintendent of Financial Institutions (OSFI) released new guidelines for residential mortgage underwriting at all federally regulated financial institutions. Beginning January 1, 2018, a new "stress test" will be applied to all new conventional mortgages - and not just those mortgages that require mortgage insurance (downpayment or equity of less than 20%).

The so-called "stress test" is designed to protect homeowners should interest rates rise. Lenders will be obligated to qualify all new conventional mortgages at the greater of the Bank of Canada's five-year benchmark rate (currently 4.89%) or the contracted rate plus 2%. So if your contract rate is 3.29%, you will be qualified at 5.29%.

Here's what that might mean for you:

You want to buy a home with more than 20% down. Your payments will always be based on your contract rate so this new rule isn't costing you more. However, the new rule might change how much mortgage you qualify for. If that's the case, you may need to look at a less expensive home, save up for a larger downpayment, or reduce any other debt. Or we can take a look at a variable rate mortgage that lowers your qualifying rate (if the rate plus 2% is less than the benchmark 4.89%) and has the option to convert to a fixed mortgage.

You want to refinance to pay off debt or buy an investment property. Here too, yo ...Read Moreur actual mortgage payment will not be affected. But the new rule could slow you down by making it more difficult to qualify for your refinance. You may need to wait and accumulate more equity, or look at a lower-rate variable mortgage. If that refinance is important to securing your own financial health, get in touch ASAP.

Your mortgage comes up for renewal next year. This more stringent qualifying requirement will not apply to mortgage renewals. If you go shopping for a better deal with a new lender, however, that will require that you re-qualify... and the new rule will kick in for you too. It still is very important that we review your options together.

Get in touch now - you have the rest of 2017 to get in under the old rules. Going forward, I'm here to work with you early in the process to make sure you are fully prepared for your purchase or refinance. I also have access to non-federally regulated lenders that do not fall under this new guideline. I'm always here to answer your questions, so feel free to call or email at any time!

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   LATEST NEWS & UPDATES

How are higher rates affecting your mortgage payments?

The July and September rate hikes by the Bank of Canada have increased variable mortgage rates by a total of 0.5%. If your variable rate was 1.95%, it is now 2.45%.

While there are institutions whose mortgage payments will stay the same, regardless of the change to the Prime, most lenders` payments will change as rate increases.

A $100,00 mortgage, with an amortization of 25 years, would have seen an increase of around $25 monthly, or $300 annually.

If your mortgage has a balance of $350,000, a net increase of 0.5% would hit your wallet by $85 monthly, or $1,020 annually (rough estimate).

The next scheduled dates for announcing the change to the Prime rate are October 25h and December 6th.
If you have a variable rate and would like to discuss your options, please call me!

Purchase or refinance now before rules change in January!!

If you`re looking to buy and will have more than 20 percent down, or if you are considering refinancing, then you might want to do so before January 1, 2018. Why?

On October 17, the Office of the Superintendent of Financial Institutions (OSFI) released new guidelines for residential mortgage underwriting at all federally regulated financial institutions. Beginning January 1, 2018, a new "stress test" will be applied to all new conventional mortgages - and not just those mortgages that require mortgage insurance (downpayment or equity of less than 20%).

The so-called "stress test" is designed to protect homeowners should interest rates rise. Lenders will be obligated to qualify all new conventional mortgages at the greater of the Bank of Canada`s five-year benchmark rate (currently 4.89%) or the contracted rate plus 2%. So if your contract rate is 3.29%, you will be qualified at 5.29%.

Why You Should Refinance Now

If you are considering a refinance for any reason - to consolidate your debt, pay for your kids` education, renovate your home or buy an investment property - you should consider doing it now.

New mortgage rules include stress testing for conventional mortgages which, when implemented on January 1, 2018, will make refinance more difficult for many Canadians.

The present day reality is as follows... If you wanted to refinance your mortgage, your broker or bank could approve you for the maximum amount that your income can carry, based on on the contract rate of your mortgage (let`s call it 3.29%) and 30 years amortization.

This will roughly approve you for a mortgage that is 5 times your salary. In other words, your income of $100K will approve you for a mortgage of $500K.

The new mortgage rules will lower your "qualifying power" by at least 20%, since the "stress-test" will be using the higher of posted Bank of Canada rate (currently 4.89%) and 25 years amortization or contract rate + 2%.

Practically speaking, that $100K income could lower your maximum approved mortgage below $400K.


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We regularly receive short-term rate promotions that are not posted online, which means our rates change frequently. Please contact me for these unpublished rate specials, and for your own personalized rate and mortgage plan.

Terms Posted Rates Our Best Rates
6 Months 3.14% 3.10%
1 Year 3.04% 2.64%
2 Years 3.24% 2.54%
3 Years 3.44% 2.69%
4 Years 3.89% 2.94%
5 Years 4.99% 2.99%
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10 Years 6.10% 3.74%
 
5 Year Variable 2.35% 2.35%


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