Published by DLC Marketing team.

With interest rate hikes on pause, more buyers are coming off the sidelines and looking to enter the market. Prices are high, so protecting your investment and your home is more important than ever.

What insurance will you need to protect your new home? A quick Google search will turn up entries for title insurance, as well as for home insurance. They each protect consumers, but from very different things.  Here’s a quick breakdown on each type of insurance and why properly protecting yourself takes both:

title insurance

WHAT IS TITLE INSURANCE?

Title insurance protects your right to own your property. It deals with hidden issues your home may have, as well as future risks like fraud. This is just some of what title insurance covers:

• Title defects that can keep you from selling,
• Title fraud and home title theft,
• Encroachment and access issues,
• Tax arrears and unpermitted work from previous owners.

Want to know more about title insurance coverage?

HOW MUCH IS TITLE INSURANCE?

You only pay once for title insurance, usually between $150—$800, depending on where your home is and how much you bought it for. There are no monthly or annual payments, and your coverage lasts for as long as you or your heirs have an interest in the property.

home insurance

WHAT DOES HOME INSURANCE COVER?

Home insurance covers four main things:

• Damage to your home or other structures on the property,
• Lost, damaged or stolen valuables, depending on your policy,
• Liability for accidents or injuries that happen on your property,
• Losing use of your home because of an event covered by your home insurance (usually to do with damage to the home).

HOW MUCH IS HOME INSURANCE?

It varies, but the average cost for home insurance in Canada is currently a little less than $1,000 per year.¹ Your cost can change from year to year if you switch providers or update your coverage. Many home insurance policies also give you the option to purchase additional coverage, like flood protection, which increases your premiums.

which do you need, home insurance or title insurance?

They cover very different things, so you need both. It’s the only way to protect both your home itself and your ownership of it.

• Title insurance doesn’t cover most property damage, lost or stolen items, or medical/injury liability.
• Home insurance doesn’t cover fraud, back taxes, or the City forcing you to alter or remove structures on your property.

EXAMPLE OF A TITLE INSURANCE CLAIM

A north Ontario homeowner and her neighbour had discovered that her water and sewage lines didn’t connect to her street. Instead, they connected to the next street over via her neighbour’s property. They forced her to relocate her water and sewer lines at huge expense.

But fortunately, she had a title insurance policy in place with FCT. We stepped in to resolve the issue for her, and we were able to cover the full cost of moving her water and sewer lines.

Paid: $115,284.32

Without title insurance, where would the homeowner in that case have come up with $115,000? The risks title insurance protects you from are unpredictable and can be hugely expensive. If you don’t have title insurance and home insurance, the truth is that you’re at risk.

how can you get protected?

You can get title insurance coverage, even if you already own your home with an existing homeowner’s policy. But the best time to start protecting your new home is while you’re purchasing it. Talk to your lawyer or notary about title insurance from FCT, or learn more about residential title insurance here.

Welcome to my blog! As a mortgage agent, we understand the significance of interest rates when it comes to your mortgage payments. In this article, we will explore how interest rates can impact your monthly payments and offer valuable insights to help you navigate through this aspect of homeownership. So, let’s dive in!

Interest rates play a crucial role in determining the cost of borrowing for your mortgage. They directly affect your monthly mortgage payments, the total amount you’ll pay over the life of the loan, and even your ability to qualify for a mortgage in the first place. Understanding the impact of interest rates is vital for making informed decisions and maximizing your financial well-being.

One of the primary factors that influence interest rates is the overall state of the economy. When the economy is strong and healthy, interest rates tend to rise. Conversely, during economic downturns, rates often decline. This is because lenders adjust rates to reflect the level of risk associated with lending money. Keeping an eye on economic indicators can help you gauge the direction of interest rates.

Timing is crucial when it comes to applying for a mortgage. Interest rates can fluctuate frequently, sometimes even daily. It’s essential to monitor interest rate trends and aim to lock in a rate when it’s favorable. By working closely with a knowledgeable mortgage agent, you can gain access to the latest rate information and make an informed decision about the ideal time to secure your mortgage.

Taking advantage of a low-interest rate environment can have a significant impact on your mortgage payments. Even a slight decrease in interest rates can lead to substantial savings over the life of your loan. For example, on a $300,000 mortgage, a 0.5% decrease in interest rate could save you thousands of dollars in interest payments over a 30-year term. Exploring refinancing options when rates drop can be a smart financial move.

To ensure that you get the best possible interest rate on your mortgage, there are steps you can take. Firstly, maintain a good credit score as it has a direct impact on the interest rate you’ll be offered. Secondly, provide a larger down payment if you can, as this reduces the lender’s risk and may result in a lower interest rate. Lastly, working with an experienced mortgage agent can help you navigate the complexities of the mortgage process and find the most competitive rates.

In conclusion interest rates are a vital aspect of the mortgage process, and understanding their impact on your monthly payments is essential for financial planning. By staying informed about economic indicators, timing your mortgage application strategically, and leveraging a low-interest rate environment, you can save significant amounts of money over the life of your loan. Remember to consult with a trusted mortgage agent who can guide you through the process and help you secure the best possible interest rate for your mortgage.

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Published by the DLC Marketing team.

While not the only factor to look at when choosing a mortgage, interest rates continue to be one of the more prominent decision criteria with any mortgage product. Understanding how mortgage rates are determined and the differences between your typical fixed-rate and variable-rate options can help you make the best decision to suit your needs.

HOW RATES ARE DETERMINED

The  chartered  banks  set  the  prime-lending  rate  (the  rate  they  offer  their best customers). They base their decisions on the Bank of Canada’s overnight rate, because that’s the rate that influences their own borrowing. Approximately  eight  times  per  year,  the  Bank  of  Canada  makes  rate announcements that could affect your mortgage as variable  mortgage  rates  and  lines  of  credit  move  in  conjunction with the prime-lending rate. When it comes to fixed-rate mortgages, banks  use  Government  of  Canada  bonds. In the bond market, interest rates can fluctuate more often and can provide clues on where fixed mortgage rates will go next.

To put it simply: a variable-rate is based off of the current Prime Rate, and can fluctuate depending on the markets. A fixed-rate is typically tied to the world economy where the variable rate is linked to the Canadian economy. When the economy is stable, variable rates will remain low to stimulate buying.

FIXED-RATE VS. VARIABLE-RATE

Fixed-Rate Mortgage

First-time homebuyers and experienced homebuyers typically love the stability of a fixed rate when just entering the mortgage space.

The pros of this type of mortgage are that your payments don’t change throughout the life of the term. However, should the Prime Rate drop, you won’t be able to take advantage of potential interest savings.

Variable-Rate Mortgage

As mentioned, variable-rate mortgages are based on the Prime Rate in Canada. This means that the amount of interest you pay on your mortgage could go up or down, depending on the Prime. When considering a variable-rate mortgage, some individuals will set standard payments (based on the same mortgage at a fixed-rate). This means that, should Prime drop and interest rates lower, they would end up paying more to the principal as opposed to paying interest.

If the rates go up, they simply pay more interest instead of direct to the principal loan.

Other variable-rate mortgage holders will simply allow their payments to drop with Prime Rate decreases, or increase should the rate go up. Depending on your income and financial stability, this could be a great option to take advantage of market fluctuations.

Want to learn more about rates or need mortgage advice? Contact a DLC mortgage expert today!