16 Jan

Fixed or Variable Rate Mortgage

Posted by: Jim Graszat

One of the biggest decisions you need to make when you get a new mortgage is whether you want the interest rate to be fixed or variable. The answer depends a bit upon your financial situation and your disposition.

Fixed rate mortgages give some people more peace of mind. You lock in your rate for the whole term of your mortgage, and you know your principal repayment and interest paid monthly will never vary. If you have a very strict budget and you also stay awake at night worrying about this stuff, then a fixed rate may very well be for you. Your rate will not fluctuate with “prime”, which means you have certainty, and if rates increase, your rate will not change during the term. If rates go down, however, you also will not benefit from that change.

Variable rate mortgages are based upon the lender’s prime rate (the base rate upon which they base all of their lending), and that is in turn usually tied to the Bank of Canada’s policy interest rate. As your lender’s prime rate moves up and down, your interest rate on your mortgage will too. While it’s not always the case that your payment will change, it can. If your payment is not adjusted, then what happens is the amount of interest and principal that you are paying will change. If prime goes down, you benefit from the reduction, and more of your payment will go towards principal. If prime goes up, more of your payment will go towards interest.

Often, the initial rate offered on a fixed rate is higher than on a variable rate. An initial lower payment might allow a borrower to qualify for a larger loan. The other issue to be considered is that, if you wanted to pay your mortgage out early, the penalties to discharge it will usually be higher on a fixed rate mortgage, although those decrease the longer into your term you are. It also be noted that most mortgages allow you to switch from variable rate to fixed rate anytime.

Historically, choosing a variable rate has saved home owners money, however, past performance certainly does not guarantee the future, and there are lots of considerations when making the final decision.

Written by me, Dr. Jim Graszat

11 Jan

What is Land Transfer Tax

General

Posted by: Jim Graszat

Land Transfer Tax (LTT) is a provincial tax charged in Ontario when someone buys a home or condo. In Toronto, there is also a municipal tax, but outside that area, there is one LTT charged by the province. Buyers of houses and condos in Ontario pay land transfer tax when they purchase a property, at the time of the registration of their Deed on the closing day.

Tax is calculated on the the purchase price as follows: amounts up to and including $55,000: 0.5%, amounts exceeding $55,000 up to and including $250,000: 1.0%, and amounts exceeding $250,000: 1.5%

First time home buyers can receive a LTT rebate of up to $4,000.00 if they qualify.

You can read all about the ins and outs of LTT here: https://www.fin.gov.on.ca/en/tax/ltt/

Written by me, Dr. Jim Graszat, DDS

11 Jan

The Journey from Dentist to Mortgage Broker

General

Posted by: Jim Graszat

It may not seem like an obvious career change, but during the pandemic I started to do some soul searching. With my office shut down for 3 months, I looked for learning opportunities that might interest me. I completed both the real estate and mortgage agents courses, in order to get a feel for what I liked better. I had been working in dentistry since 1993, when I graduated from U of T. My first 4 years were spent in the military, and after that, in private practice. I bought a dental office in Barrie and grew it into a very successful and thriving family practice. I had built up a large patient base and was proud of what I had accomplished. But the back started to get sore, and things just seemed routine after doing the same thing for so many years. I did not want to become one of “those guys” who continued in the profession maybe a few years too many. I loved my team and my patients and so I knew I had to find an alternative that would still allow me to work with people and help them in some way.

When I took the mortgage agent course, I just really loved it. I have always loved math, and numbers and finances light me up. I felt that I had enough real world experience to offer good judgment, intelligent advice and personable client service. I felt I could be successful in this industry, if I wanted to make the jump. I also have a great friend in Adam Bazuk, a very successful mortgage broker who has been in the industry for decades. I have followed his career with interest, and when I approached him with the idea of joining his industry, well if you know Adam, you know he was enthusiastic and encouraging. So, when the opportunity arose to sell my practice, I took it. It was a big, scary jump, but what the heck, we only live once and it may as well be fun and exciting. So here I am, a brand new mortgage agent, just completing my first deal as I write this (January 10, 2022) and I feel great! I am learning a ton and feel fully supported by the Dominion Lending team. Adam has been fantastic as my mentor, and I feel like this second career could be just what the doctor ordered.

Written by Dr. Jim Graszat, DDS

Update – August 2023. Well, the education continues, and I have now completed the education required to be a Mortgage Broker.