Mortgages on Fire

Tracy Head • June 15, 2023

I sat down to write my column and there were two themes from the last few weeks that jumped out at

me. Mortgages on fire is a bit tongue in cheek. The two things that have been a theme in my conversations lately are how the fires throughout the province are affecting both the housing market and the purchase process, and how pre-build purchase files are feeling a bit like we need a whole team of firefighters to bring them across the finish line.


Purchasing a pre-build unit can be both lucrative and very stressful. When I say pre-build, I refer to

buying a home from a developer that has not yet been built. You choose your floor plan and color scheme, make a deposit to the developer, and wait for the project to be built.


I have seen pre-builds with completion dates ranging as far out as three years down the road. The

lucrative part I referred to is that (as a general rule) real estate increases in value over time. If you buy a unit now, it may be worth considerably more by the time the project is finished and you take

possession.


In the olden days (say two or three years ago) the time to completion wasn’t a big issue. Interest rates

were lower and people qualified for more borrowing power than they do today. Some people invest in a pre-build intending to sell it closer to the time the project is complete. What they are doing is selling their contract to a new purchaser. This is called assigning the contract, or if you are the purchaser you are buying an assignment of the original contract for a higher price than the original purchase paid based on current market value of the home.


Over the last few months I’ve seen clients in tough spots as their home is nearing completion and they

no longer qualify for financing with traditional lenders. After years of dreaming about their new home clients are suddenly facing much higher payments than they planned for when they initially signed their purchase agreement. In some cases they have had to come up with additional down payment in order to complete their purchase.


On the other end of the spectrum I’ve worked with several clients who have faced delay after delay of

the completion of their new build. During the height of the pandemic this was attributed to supply chain issues and challenges finding trades to actually do the build. Over the last few months I’ve seen stories on the news and seen a few cases of developers who are facing financial challenges, which then drags out the completion date even further.


If you are considering purchasing a pre-build, I cannot stress enough the importance of doing your due diligence. Research the developer. Does the developer have a strong reputation for building quality homes and completing them on time?


More importantly, do your homework with respect to your financing. Don’t purchase something at the

top of what you qualify for anticipating that everything will be status quo two or three years from now.

Shop at a lower purchase price and save as much for your down payment as possible between now and closing.


If you are buying a pre-build, please make sure you have your ducks in a row and have a backup plan for your financing … just in case.


Back to the other part of mortgages on fire. With such an early start to the fire season this year, I expect we are in for a challenging summer.


If you are purchasing a home, one of the conditions you have to satisfy for your lender is that your home is insurable and that you have adequate insurance in place.


If a fire flares up close to the home you are purchasing, you may have a difficult if not impossible time

trying to coordinate home insurance. As a rule, insurers require that the home you are buying is a

certain radius or distance from an active fire in order to provide an insurance policy.


In order to protect home buyers that are not able to finalize their home purchase due to an active fire,

realtors ensure that there is a force majeure clause in the purchase contract.


According to google, force majeure is a contractual clause intended to protect the parties from events

outside normal business risk. The clause may be used to manage the risk of unforeseeable future events that could impact a party's ability to complete its contractual obligations.


I’m dealing with this right now with clients that are buying in Chetwynd (not far from Tumbler Ridge).

The first thing I checked was that their contract included the force majeure clause.


Regardless of the time of year you are purchasing this clause is one you should look for in your purchase agreement.


As a reminder, if you haven’t already claimed your Home Owner’s Grant, take a moment to do that. It

takes less than five minutes to complete the online form.

Tracy Head

Mortgage Broker

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By Tracy Head August 27, 2025
Does an early renewal make sense? 2020 was a very busy year for home buying and mortgages. This means that 2025 is and has been a busy year for mortgage renewals as the majority of clients seemed to choose five year terms in 2020. I’ve had lots of conversations with my own and new clients about whether it makes sense to renew early. Each conversation is slightly different based on client needs and their individual circumstances. Most of the time I suggest that clients stay with their current lenders until their renewal dates because their current interest rates are anywhere between 1.6 per cent and 2.79 per cent. If you don’t need to make any immediate changes it makes the most financial sense to stay put until your term runs out. We can start the process of either switching or refinancing mortgages four months ahead of your renewal date and lock in a rate for you. As a generalization, when people ask about doing a straight switch (not adding any money to their mortgage) I will do a survey of what interest rates are available so they can go back to their lender to try to negotiate a great rate. Time and time again I’ve worked with clients on switches for them to cancel at the last minute as their current lender finally sharpens the pencil rather than lose the client. This is why I always try to help people negotiate with their current lender rather than put everyone through the work of having a new mortgage approved. If clients are wanting to add money to their mortgage to pay out consumer debt or pay for home renovations that changes things a bit. Some lenders are more aggressive with their refinance rates so it makes sense to make a move. Another situation has popped up this week that has had me crunching numbers for multiple clients. One of my favorite lenders came out with a quick-close rate special that is pretty hard to pass up. The fine print is that the new mortgage has to finalize within thirty days. I have been working on a refinance at renewal for clients that is set to close at the beginning of November. I took a look at how their current lender calculates the payout penalty when they are this close to renewal. It turns out they charge daily interest instead of a three-month interest penalty or interest rate differential. So I did the math. If we pay out early to take advantage of this great interest rate their payout penalty is around the $1000 mark. Over the term of the new mortgage they will save approximately $5500 in interest cost and their monthly payment will be about $85 per month less. Even after they pay out the penalty to move a bit early they will still be $4500 ahead over the term of their mortgage. This is one of the few times I’ve recommended that it makes sense to move forward ahead of the renewal date.  If you have a renewal coming up over the next few months I’d say it’s a good idea to connect with your mortgage person to look at what rates are available now and figure out whether it makes sense to consider making a move sooner rather than later. Lenders will pop up with rate specials from time to time so it is worth having your mortgage professional keep an eye open for you as your renewal date comes closer. It may just save you a significant amount of money.
By Tracy Head August 11, 2025
Last week was a vivid reminder of the importance of finalizing your home insurance as soon as you are within thirty days of your closing date on a home purchase. I had three clients with purchases closing on the Friday after the fire broke out in Peachland. All three had to push their closing dates back because they couldn’t get their insurance in place due to an active fire. Thinking about this led me to consider a few of the key steps involved when purchasing a home. I’ve written about this in prior columns but I feel a reminder is never a bad idea. There are a few areas of crossover between the guidance your realtor gives you and the advice you receive from your mortgage person. When your realtor writes your purchase contract there are some standard conditions that are added to the agreement. You will generally see the following: Subject to the purchaser obtaining satisfactory mortgage financing Subject to the purchaser having a home inspection conducted Subject to the purchaser arranging home insurance Subject to review of strata documents if applicable Subject to the sale of the purchasers’ current home if applicable The financing end is obviously our responsibility. I do double-check with my clients that they have taken care of the other conditions. Most realtors are great at offering support to their clients with respect to addressing the relevant conditions. In some cases I feel like realtors tell clients the steps they need to take but my guess is that the whole process can feel or become overwhelming. Before I give my clients the ok to remove their financing subject I confirm that they have taken care of the home insurance as this is one piece they sometimes miss.  If you are going through the process of purchasing a home my suggestion is keep a notebook (aging myself by suggesting a paper version) or a list on your phone to keep track of your must-do tasks as you go through the process. I have a checklist that I’m happy to share if you would like a copy.