Understanding Accelerated Payments

One of my brokers gave me this piece. I thought it was worth sharing.

Non-accelerated payments are calculated using 12 months worth of payments in a 12 month period.


Accelerated payments are calculated by incorporating 13 months worth of payments in a 12 month period. The additional month is divided equally among your payment to increase them.



Impact of Accelerated Payments

Contractual Amortization Impact on Amortization

40 years 8 years, 1 month

35 years 6 years, 3 months

30 years 4 years, 10 months

25 years 3 years, 7 months

20 years 2 years, 6 months

15 years 1 year, 8 months

10 years 1 year

5 years 5 months

Home Capital likely to double assets in four years

Here is an article out of this month's CMP Magazine...

Home Capital likely to double assets in four years
| Monday, 7 June 2010



Home Capital Group Inc., the mortgage lender whose stock outperformed Canada's eight banks last year, will likely double its assets in the next four years, reported Bloomberg Businessweek.

"We think we can be a C$20-billion ($18.9 billion)-plus company within three to four years because of the momentum we have," CEO Gerald Soloway said. The Toronto-based company had about C$12 billion in assets at the end of the first quarter, and reported a record profit of C$41.7 million.

Home Capital primarily offers uninsured mortgages to clients who can't get loans from Canadian banks. Since the financial crisis began, Home Capital president Martin Reid said half of 25 "decent competitors," including General Electric Co.'s GE Money and Accredited Home Lenders, have exited the C$200 billion market. Home Capital only does business within Canada, and deals mostly with lending, credit cards and deposit products.

Home capital fell C$1.02 to close at C$41.60 on June 4 on the TSX. The shares have fallen less than 1 per cent this year after more than doubling in 2009.

CAAMP Atlantic Wrap Up, Plus a Few More Things

CAAMP Atlantic has wrapped for another year. For me, it started on Saturday with a small social gathering involving a couple of brokers from NL. Sunday was the annual Invis/Mortgage Intelligence Boat Cruise around Halifax Harbour, followed by the Verico Cocktail Mixer, supper with the Home Trust team, capped off by a visit to a packed Lower Deck. Monday was the trade show and symposium. Lots of great presentations, but best of all was the time to see our brokers at the trade show. Monday night was the TMG mixer followed by another team supper and another trip to the Lower Deck. Tuesday was the windy golf day at Glen Arbour. Get time in the sun.

One of the big messages coming out of CAAMP was marketing and networking...how to grow your business. If you are not on to social networking today(Facebook, Twitter, Linkedin, etc.) then you will miss the boat tomorrow. CMHC estimates that only 3% of all business today comes from social networking. However, that is based on all age ranges. I would guess that if you broke that down to buyers between ages 25 and 35, that number would jump a lot. The "new buyers" are using social networking so much that they are not using traditional methods of communications (mail flyers and landlines are becoming a thing of the past). Think of a YouTube video that goes "viral" and gets 100,000+ hits within hours. How do you think word gets out about it...that's right, social networking.

The book I just finished is called The Purple Cow, and it has opened my eyes. The premise is if you drive by a field of brown cows, none of them stand out. But put a purple cow in that field and you will notice it. The same goes for marketing your business. If you jump on the social networking bandwagon too late, then you will be a purple cow among thousands and never get noticed. Social networking is going to catch on even more within months. So don't delay, have a go at it today.

Last thing is rates. We have seemed to have stabilized on the rate front. With the BoC rate hike really turning into a "non-event" and bond yields being fairly stable after the EU/Greek economic crisis, we hope to see rates stay this way through the summer. So let's get those clients off the fence and into their dream house today.

Chicken Little, the sky is not falling!

My kids are a little old for that story now, but it is a good reminder that even though Prime went up 0.25% this week and fixed rates are no longer at that "all time low", rates are still FANTASTIC! And while it is great for those inside the industry to debate this all day long, we need to get this message out to the buying public so that they have more than just the media's fatalistic view of things. The average consumer needs to know that sub 5% rates are worth getting into the game on - the home buying game that is. If the message is not being delivered, the home buyers will continue to stay on the sidelines, and when rates do go up over 5% (or even higher) that potential buyer will have missed their opportunity and will be out of the game all together.

But what can you do? Do you have a sign outside your office, a newsletter, an email list of potential clients, or even the ability to speak? Then start talking, telling people that now is the time to buy. It is fairly easy, after all, as mortgage professionals you are the ones clients turn to for advice.

Have a great weekend.