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Monthly Newsletter April 2020

CoryVance • April 10, 2020

As I write this month’s newsletter I hope you and your families are healthy and making the best of the current environment. No blog or announcement would be complete without a sincere THANK YOU and appreciation for all health professionals and first responders who are tasked with one of the most important jobs in keeping those around us healthy. I also wanted to thank those who are now considered Essential Service providers for everything they are doing each day to support us. As we have learned things can change quickly and what we once thought was important may have changed as we all focus on our health and families during this time.

I think we can all try to play a part in some small way as we help each other to make it through. Whether it is helping someone that may find it difficult to get out or even making that call to check-in. Small deeds pay massive dividends. On that note I wanted to let you know, as past clients, that if you have any questions on anything finance or mortgage-related to please reach out. I am always happy to provide any education, advice or insight on financial matters.

For the past two weeks, the top question I am getting is Mortgage Payment Deferrals. Judging by the mass outcry of payment deferral requests, approaching 500,000, I will try to cover here in a few key points:

A payment deferral is NOT a waiving of payment or a free gift from your lender.
Payments deferrals should only be requested if you have been impacted or will be impacted by COVID-19.
There will be additional interest costs in deferring your payments (interest on interest). Your mortgage payment WILL increase at some point to pay back these deferred payments. This payment increase will occur at one of three times: 1) The end of the payment deferral period 2) The end of the mortgage maturity or 3) The end of your mortgage amortization. The longer you wait the bigger the increase in your payment and the more the interest this will cost you. However, NONE of this matters if you do not have the income or funds to make your payment so please take advantage of this option before your payment goes past due.
This WILL NOT impact your credit score as long as you contact your lender and have received the approval to defer your payments. DO NOT just stop making payments for 6 months.
Requests to defer payments will vary from lender to lender but remember they may want to know if you have been impacted by COVID-19.
Some lenders have set up online forms to get further info or make the request to defer payments. This will be better than calling your lender directly. Contact me if you want your specific lender’s info.

Once again, every one situation is different so I would encourage you to reach out to discuss your situation and develop a strategy to get through this period and understand the impact of the deferrals on your mortgage payment.

The next top question is to review the Government of Canada announcements and significant resources to help Canadians which now total more than $100 billion dollars.

Click here for the link with further details:
https://www.canada.ca/en/department-finance/economic-response-plan.html
Within this page, you will find details on the Canada Emergency Response Benefit (CERB). This one will be the one that most should focus on especially Self Employed. The start date to apply for this benefit is currently set on April 6 and will be phased. You should apply to access it through your online CRA account. If you do not have this set up please start NOW because it may take 5-10 business to get a code to get access to the online account.

As always if you have any questions Mortgage Payment Deferrals, Mortgage Rates or anything mortgage please reach out.

Stay Well,
Cory

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Buying a Vacation Home? Here’s What You Need to Know

By Cory Vance • July 16, 2025
The idea of owning a vacation home—your own cozy escape from everyday life—is a dream many Canadians share. Whether it’s a lakeside cabin, a ski chalet, or a beachside bungalow, a second property can add lifestyle value, rental income, and long-term wealth. But before you jump into vacation home ownership, it’s important to think through the details—both financial and practical. Start With Your 5- and 10-Year Plan Before you get swept away by the perfect view or your dream destination, take a step back and ask yourself: Will you use it enough to justify the cost? Are there other financial goals that take priority right now? What’s the opportunity cost of tying up your money in a second home? Owning a vacation home can be incredibly rewarding, but it should fit comfortably within your long-term financial goals—not compete with them. Financing a Vacation Property: What to Consider If you don’t plan to pay cash, then financing your vacation home will be your next major step. Mortgage rules for second properties are more complex than those for your primary residence, so here’s what to think about: 1. Do You Have Enough for a Down Payment? Depending on the type of property and how you plan to use it, down payment requirements typically range from 5% to 20%+ . Factors like whether the property is winterized, the purchase price, and its location all come into play. 2. Can You Afford the Additional Debt? Lenders will calculate your Gross Debt Service (GDS) and Total Debt Service (TDS) ratios to assess whether you can take on a second mortgage. GDS: Should not exceed 39% of your income TDS: Should not exceed 44% If you’re not sure how to calculate these, that’s where I can help! 3. Is the Property Mortgage-Eligible? Remote or non-winterized properties, or those located outside of Canada, may not qualify for traditional mortgage financing. In these cases, we may need to look at creative lending solutions . 4. Owner-Occupied or Investment Property? Whether you’ll live in the home occasionally, rent it out, or use it strictly as an investment affects what type of financing you’ll need and what your tax implications might be. Location, Location… Logistics Choosing the right vacation property is more than just finding a beautiful setting. Consider: Current and future development in the area Available municipal services (sewer, water, road maintenance) Transportation access – how easy is it to get to your vacation home in all seasons? Resale value and long-term potential Seasonal access or weather challenges What Happens When You’re Not There? Unless you plan to live there full-time, you'll need to consider: Will you rent it out for extra income? Will you hire a property manager or rely on family/friends? What’s required to maintain valid home insurance while it’s vacant? Planning ahead will protect your investment and give you peace of mind while you’re away. Not Sure Where to Start? I’ve Got You Covered. Buying a vacation home is exciting—but it can also be complicated. As a mortgage broker, I can help you: Understand your financial readiness Calculate your GDS/TDS ratios Review down payment and lending requirements Explore creative solutions like second mortgages , reverse mortgages , or alternative lenders Whether you’re just starting to dream or ready to take action, let’s build a plan that gets you one step closer to your ideal getaway. Reach out today—it would be a pleasure to work with you.

Fixed-Rate or Variable-Rate Mortgage?

By Cory Vance • July 15, 2025
If you're looking to buy a new property, refinance, or renew an existing mortgage, chances are, you're considering either a fixed or variable rate mortgage. Figuring out which one is the best is entirely up to you! So here's some information to help you along the way. Firstly, let's talk about the fixed-rate mortgage as this is most common and most heavily endorsed by the banks. With a fixed-rate mortgage, your interest rate is "fixed" for a certain term, anywhere from 6 months to 10 years, with the typical term being five years. If market rates fluctuate anytime after you sign on the dotted line, your mortgage rate won't change. You're a rock; your rate is set in stone. Typically a fixed-rate mortgage has a higher rate than a variable. Alternatively, a variable rate is not set in stone; instead, it fluctuates with the market. The variable rate is a component (either plus or minus) to the prime rate. So if the prime rate (set by the government and banks) is 2.45% and the current variable rate is Prime minus .45%, your effective rate would be 2%. If three months after you sign your mortgage documents, the prime rate goes up by .25%, your rate would then move to 2.25%. Typically, variable rates come with a five-year term, although some lenders allow you to go with a shorter term. At first glance, the fixed-rate mortgage seems to be the safe bet, while the variable-rate mortgage appears to be the wild card. However, this might not be the case. Here's the problem, what this doesn't account for is the fact that a fixed-rate mortgage and a variable-rate mortgage have two very different ways of calculating the penalty should you need to break your mortgage. If you decide to break your variable rate mortgage, regardless of how much you have left on your term, you will end up owing three months interest, which works out to roughly two to two and a half payments. Easy to calculate and not that bad. With a fixed-rate mortgage, you will pay the greater of either three months interest or what is called an interest rate differential (IRD) penalty. As every lender calculates their IRD penalty differently, and that calculation is based on market fluctuations, the contract rate at the time you signed your mortgage, the discount they provided you at that time, and the remaining time left on your term, there is no way to guess what that penalty will be. However, with that said, if you end up paying an IRD, it won't be pleasant. If you've ever heard horror stories of banks charging outrageous penalties to break a mortgage, this is an interest rate differential. It's not uncommon to see penalties of 10x the amount for a fixed-rate mortgage compared to a variable-rate mortgage or up to 4.5% of the outstanding mortgage balance. So here's a simple comparison. A fixed-rate mortgage has a higher initial payment than a variable-rate mortgage but remains stable throughout your term. The penalty for breaking a fixed-rate mortgage is unpredictable and can be upwards of 4.5% of the outstanding mortgage balance. A variable-rate mortgage has a lower initial payment than a fixed-rate mortgage but fluctuates with prime throughout your term. The penalty for breaking a variable-rate mortgage is predictable at 3 months interest which equals roughly two and a half payments. The goal of any mortgage should be to pay the least amount of money back to the lender. This is called lowering your overall cost of borrowing. While a fixed-rate mortgage provides you with a more stable payment, the variable rate does a better job of accommodating when "life happens." If you’ve got questions, connect anytime. It would be a pleasure to work through the options together.

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