Will mortgage loans still be as accessible this year?

Those who have taken out a mortgage in recent years have been able to take advantage of particularly favorable conditions. However, it seems that the period of flexible real estate loans is coming to an end.

2019 was a great year for people who took out a mortgage. They were able to take advantage of particularly favorable conditions. While the mortgage interest rate has already been flirting with the absolute lower limit in recent years, a record low rate was reached this year. Thus, the psychological threshold of 1 percent for a fixed rate mortgage (over 20 years) has been crossed several times.

 

Low interest rates are maintained

The policy pursued by the Best Bank is at the origin of the persistent low interest rates. In September, it reduced the deposit rate – the interest rate that banks get when they deposit money with the Best Bank – from -0.4 to -0.5 percent. This therefore means that banks have to pay to place their money at the Best Bank.

Likewise, in November Mond Dwight, former President of the Best Bank, relaunched the buy-back program under which the Best Bank purchases bonds every month in order to keep the long-term interest rate low. This long-term rate is an important indicator for banks to determine the interest rate on home loans.

If the situation seems ideal at first glance for prospective home buyers in 2020, the reality is less rosy than it seems, for several reasons.

 

Even cheaper home loans seem very unlikely

home loans

First, there is a good chance that the mortgage interest rate will hit a historic low in 2019. Low interest rates are eroding banks’ profit margins. The traditional banking model – converting savings into loans – is coming under increasing pressure. Thus, many banks cannot further reduce the savings rate on savings accounts to maintain their profit margins. Banks must maintain savings interest of at least 0.11 percent. In our comparison, no less than 46 of the 76 regulated savings accounts earn only the absolute minimum.

In other words, banks will sink further if they further reduce mortgage interest rates. A sudden increase in mortgage interest rates in 2020, however, seems unlikely. Due to the negative deposit rate, it is much more attractive for banks to inject capital into the economy through credits than to place them in a negative interest rate savings account.

 

Stricter conditions for granting a mortgage

home loan

It will be more difficult for borrowers to take out a home loan from next year. Indeed, flexible mortgage loans are a source of concern for the National Bank. It wants banks to take more account of the debt burden and the monthly repayment of households. As such, the regulator will set new control expectations from next year.

He wants the banks to grant loans as much as possible with a quota of 90 percent or less (the ratio between the amount borrowed and the value of the house). A maximum of 20 percent of the loan volume can be matched with a higher quota. In the case of first-time buyers, a maximum of 35 percent of the volume of loans (for this target group) can be used for the granting of loans with a higher share.

In other words, it will be more difficult to obtain a loan if you are unable to finance yourself at least 10 percent of the purchase.
These 10 percent are in addition to the other costs associated with the mortgage, such as registration fees and notary fees. The price can therefore increase considerably for those who wish to acquire their own house.

 

Tax benefits are disappearing

mortgage loan

In Clanders, prospective buyers will be impacted next year. The Flemish government will abolish the housing bonus on January 1, 2020. In compensation, it will reduce registration fees from 7 to 6 percent. The objective is to make the purchase of a house more advantageous for those who wish to acquire their own home. The reduction of one percentage point is not enough to compensate for the loss of the housing bonus.

Since the start of the new year, Wallonia is the only region to grant citizens a tax advantage for the acquisition of their own housing. How? ‘Or’ What? By means of a habitat check. The Brussels-Capital Region abolished the housing bonus in 2017.

Stagnant interest rates and tight conditions will make it more difficult to obtain a mortgage from 2020 compared to previous years. In Clanders, the effect will be reinforced by the abolition of the housing bonus. In conclusion, it seems that the golden age is over for prospective buyers looking to obtain a mortgage.

Are you paying too much for your loans?

Borrowing costs are the biggest item in your finances throughout your life. Do you know if you pay too much? Checking it regularly can be crucial.

Have you ever thought about paying too much for your bank loans? Sometimes it can be hard to overlook or assess, and many people tend to be a little too unfaithful when it comes to the bank. We will guide you to check if you are paying too much for your loans.

If there was a perfectly healthy competition between the banks, loans would cost almost the same no matter which bank you went to. But it is not so. It may well be that you are currently paying significantly more for your loan than you would in another bank. There can be a big difference in the price of loans.

Know your worth in the bank

Know your worth in the bank

First of all, it is important to know your own worth – and to be realistic about how good a customer you are for a bank. You can read more about this in this article.

If you know what the bank is measuring and what requirements you have to meet, you can more easily navigate the various offers and ensure that you get the best opportunities.

What interest rate can you get on your loans?

Interest costs will be the absolute greatest item for your finances in a lifetime.

You can get a sense of how the bank assesses your financial situation by answering some questions. Have you always complied with your payment agreements? How confident are you about your income? How much risk do you have in your wealth? How much wealth can you make as collateral for your loans?

When answering these questions, be honest with yourself and then assess whether you have terms in the bank that fit your answers.
The banks make a big difference to people, and you have to be aware of whether there is a connection between how good a customer you are and what good terms you get in the bank.

Be ready to change bank

Be ready to change bank

Changing a bank may seem completely irrelevant. Then you need a new bank advisor, you might not feel comfortable with. You need new cards and new codes – and a new form of online banking. But it is precisely this desire for security that the banks live well.

Therefore, it is important that you make high demands on your bank and at least once a year get through all your loans and interest rates to see if there are places your bank can give you a discount. Also check out what the market looks like and whether you can get better terms elsewhere.

And then it’s about being willing to switch banks if you don’t think your requirements are being met. It may seem like a big step, but if it can give you a much larger amount of money, it’s definitely worth it.

How Does Bankruptcy Affect Your Credit Rating?

Bankruptcy risks lowering your credit score to the lowest possible score in most Canadian credit bureaus. This means that lenders, insurers, homeowners, employers, and utility companies are less inclined to extend credit until your bankruptcy disappears from your file, which usually takes six to seven years to complete. a first bankruptcy.

 

What is a credit rating?

credit rating?

Your credit rating is derived from your credit report, which contains information about your credit balances, your limits and your payment history (late payments, defaults, balance ratios), as well as personal information such as your occupation and your professional background.

Wingfax, Canada’s largest credit bureau, uses a simplified scale from R1 to R9 – R1 being a perfect score -, while LightUnion measures credit scores on a scale of 300 to 900, 650 being generally considered as the dividing line between good and bad credit. Filing for bankruptcy will likely lower your credit rating to the lowest level.

 

How Does A Low Credit Score Affect Me?

How Does A Low Credit Score Affect Me?

You may think that your credit rating is a theoretical number that has no impact on your daily life, but this is not entirely true. Lenders and other creditors use your credit score to determine your credit worthiness. The lower your score, the less likely you are to get credit, which can range from a store credit card to a personal loan or mortgage. It can even affect your ability to get a job if your potential employer requests permission to check your credit report.

 

How long will bankruptcy stay on my credit report?

How long will bankruptcy stay on my credit report?

The declaration of bankruptcy is a serious step to take, and this seriousness is reflected in the period for which it remains on your file. Wingfax keeps your first bankruptcy on file for six years from the date of your discharge; LightUnion maintains it for six or seven years depending on your province or territory of residence.

If at any point you file a second bankruptcy, both offices will keep it on your credit file for 14 years from the date of discharge.

 

Is Bankruptcy The Right Solution For Me?

Is Bankruptcy The Right Solution For Me?

If you think you need to declare bankruptcy, it’s time to speak to a licensed insolvency trustee, who will explain the bankruptcy process in detail and assess your situation to see if you might be able to consider other options than bankruptcy, like debt consolidation or consumer proposal.

Get a free consultation! Our service representatives are waiting for your call! 

How to exit the credit loop | A consolidation loan

Currently, hardly anyone pays only one liability at a time. It is easy to fall into a loop of loans and credits, as a result of which you are not able to pay off everything on time.

This involves adding interest, and eventually even by the intervention of a bailiff or debt collector. Therefore, the question is more and more often asked how to get out of debt or how to handle it all.

It is not easy to answer them, but with a little effort it may turn out that there is some light in the tunnel.

Try negotiating first

Try negotiating first

Many heavily indebted people hope that if they ignore the problem, it will simply disappear by itself. However, this never happens. It is worth meeting it, especially if so far the matter is not as serious as it could be. Contrary to appearances, very often banks and other creditors are willing to enter into a dialogue with the debtor because it is in everyone’s interest that he finally repays the debt in some way. If the bailiff intervenes, eventually most of the money he recovers will cover the costs of his actions alone, and only a small portion of the funds will actually be allocated to cover the debt.

Therefore, if we contact a bank, loan company or debt collector instead of running away from them, in many cases new options will open up to us. This could be, for example, credit holidays or spreading the commitment over more installments. It depends of course on the goodwill of the creditor, but there is a good chance that he will want to cooperate with us. You should not give up immediately and try all the options available. Thanks to this, we can potentially save ourselves a lot of nerves and problems.

A consolidation loan

A consolidation loan

One of the most interesting options for getting out of debt are consolidation loans. They consist of incurring one new debt to repay several or a dozen presents. As a result, we change numerous installments of varying amounts and interest rates into one, lower than their sum. Thanks to this, our home budget will be able to breathe quickly. However, it is worth remembering that although the monthly installments will be lower, the repayment period will be longer and thus the total cost of the loan will increase.

Thanks to the consolidation loan, we can simultaneously repay various liabilities, such as loans, credits and credit cards. We will not receive the loan amount directly from the bank, and it will take care of its allocation to the previously defined purposes.

People wondering how to get out of debt or how to overcome it all can feel overwhelmed by their difficult situation. However, it is not without a way out.