Most people know their weight. Their height. Their age. Their birth date. Their address. Their SIN. Even their income. Could you imagine if you always had to say to someone, “Can I get you that information when I get home? It’s written down in my planner… ”
Knowing your everyday numbers is important. It allows you to make quick and informed decisions.
Therefore I, as a Mortgage Broker, have made it my goal to know my numbers — to memorize certain things so that when called upon I can provide concise and detailed information in the simplest format. I am going to arm you with some quick mortgage number facts and mortgage industry calculations that I use daily.

1: Payments are $400/month/every $100,000 mortgage amount with 20% down or more. Example: $400,000 mortgage = $1,600 monthly mortgage payment.

2: Payments are $450/month/every $100,000 mortgage amount, 19.99% down or less. Example: $400,000 mortgage = $1,800 monthly mortgage payment.

3: For every $10,000 mortgage amount increase, payment increases by $40/month with 20% down or more. Example: $420,000 mortgage = $1,680 monthly mortgage payment.

4: For every $10,000 mortgage amount increase, payment increase $45 per month, 19.9% down or <. Example: $420,000 mortgage = $1,890 monthly mortgage payment.

5: If rate increases by 0.25%, monthly payment increases by $13 per month per $100,000.

6: If rate increases by 100% the monthly payment only increases by 33%.

7: A $13,000 credit-card debt cancels out $100,000 mortgage money.

8: A $400 per month vehicle payment cancels out $100,000 mortgage money.

9: A $20,000 gross income services a mortgage of $100,000. Example: Household income of $120,000, qualifies for a $600,000 mortgage.

10: A $400,000 mortgage balance (FIXED rate term) holds a penalty of approx $3,200 with a monoline lender. With a traditional bank, it’s closer to $16,000. This term paid out with 24 months remaining.

Knowing your numbers is likely going to change this fall. There are changes coming and they are not small ones. The federal government is going to make yet another amendment to the lending policy. Nothing specific or concrete yet. Coming this fall (2017) you are likely going to see your borrowing power reduced by as much as 25%. If today you qualify for a $500,000, that amount could drop to approximately $400,000 is as little as 3 – 4 months.
The bottom line is simple. Borrowers need to focus on what they can control:

• Coming up with larger down payments, saved and gifted.
• Earning more income. If you are self-employed, then you may want to re-structure your reported income to CRA. Verified income will be essential. This is LINE 150 of our tax documents.
• Good, strong, clean credit, both credit score and credit history.

Be sure that you know the power of your own numbers. Don’t be concerned with the past. Every day we move forward. Changes happen all the time; we need to adapt or be left behind. Asking WHY is sometimes not the best reaction but rather HOW. How do I adapt? How do I become current?
Overall, Canada has a very strong, dependable and stable financing and real estate market. The changes that are handed down by the federal government are mandatory, right or wrong… they need to be followed. And if you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

Courtesy of Michael Hallett, AMP – DLC Producers West Financial

In our business, we are constantly approached with questions about how reverse mortgages work and how they compare to Home Equity Lines of Credit (HELOCs). HELOCs are the most closely comparable products in Canada and many believe them to be superior to reverse mortgages. But many Canadians look at only two things and assume HELOCs are better in every situation: (1) lower interest rates; and (2) the flexible access to cash. Most are forgetting some of the other features and benefits that they should compare before deciding. Below is a chart that lets you see the bigger picture between these two rival products.

Generally, whether you choose a HELOC or a reverse mortgage, tapping into your home equity is a big decision that needs to be discussed with your family. However, having the extra money in one’s later years, when health issues and home retrofitting are needed the most, can make a big difference in our clients’ quality of life.

 
Courtesy of Zvonne Ziomecki, HomEquity Bank – Senior Vice-President, Marketing and Sales

For businesses large and small, a loan may be needed to overcome financial distress, purchase real estate, or acquire equipment to make their jobs easier. Business loans come in all sizes and for use in every aspect of business. Depending upon the size, age, and niche of your business, you can find available funding for every financial need that you can think of. The problem isn’t the availability of funding, it is the turndown rate of traditional banks that makes obtaining these loans so difficult. Businesses which have been turned down for a loan by a traditional bank often meet their ultimate end through failure. This is because business owners and representatives do not realize that alternative lending options exist and that they are easier to obtain than you may think.

What is Alternative Funding?

Dominion Lending Centres Leasing provides financing options for businesses who have been turned down for a traditional loan or for businesses that do not meet the requirements for a traditional loan. DLC Leasing matches businesses with lenders and investors within their network to provide funding outside of the traditional finance institutions. Brokers will assist business owners in finding the right loans to suit their needs and they will help with the application process as well.

Alternative funding is often grouped into specific niches. Lenders and investors will provide funding for certain needs rather than generalized financing. One lender may choose to provide funding for businesses which are in the construction field while another may choose to provide funding to businesses in retail or food service. This choice will often reflect the resources and network of the lender and will give the borrower a greater picture of where the money is coming from.

What Type of Loan Do You Need?

Every business is different and the needs of those businesses vary just as much. Where one company needs funding to pay for employee wages or utility bills, another may be looking for funding to purchase another location. The size of your business will be a determining factor for the amount of funding that you can receive. A larger business, with more income, will receive a larger loan where a small business will receive a lesser amount. Besides the size of your business, your loan broker will need to see detailed financial records, copies of your tax statements, and may even need to evaluate your accounts receivable.

When applying for a loan of any size, it is important to know what type of loan you need ahead of time. Here is an example of some of the most popular business loans available:

• Equipment loan – Funds are used to purchase equipment for business use. Either to replace old equipment or to upgrade to more modern equipment. This can be used for large machinery and production equipment as well as office and restaurant equipment.
• Real Estate loan – This type of loan is used to purchase real estate for business use. It cannot be used for personal real estate and will likely be calculated based on the business income.
• Hard Money loan – Typically secured by real property and are often a few months to only a few years in length. Hard money loans provide funding to assist in a temporary financial situation or while your business is waiting for long-term financing to be approved
• Accounts Receivable loan – The amount of this loan is based on your current accounts receivable and can usually be used for any financial needs of your business. This type of loan provides funding to help you get through financial distress because of money that you are waiting to receive.

Once you have decided the type of loan that your business needs, you will need to find a reliable, honest and knowledgeable commercial finance broker to work with. Research your broker to make sure that you are protected throughout the entire process.

Courtesy of Jennifer Okkerse, DLC Director of Operations, Leasing Division

What have they become? Well in one word complicated. I just ran some numbers for a client and it is based on a $400,000 purchase with 20% or $80,000 down payment. These three scenarios have been reproduced in our Filogix system and the numbers are as per their calculators.

Scenario one is get a better rate by paying the 2.4% CMHC fee on the mortgage and get a 2.89% 5 year fixed rate. Premium in this case becomes $7680.00 and the amount of interest paid over the 5 years based on just monthly payments would be $48,191. Balance on this scenario after 5 years is $279,488.

Scenario two would be just use a lender who doesn’t charge a CMHC fee (at least for now) but the rate is 3.39%. Over the 5 years they would have paid $50,286 in interest payments but the balance on the mortgage would be $275,537 at the end of the 5-year term.

Scenario three is use a hybrid product such as MCAP 79 where you pay a 1% government fee so you are financing 80%, but in reality, you had to come up with 21% of the mortgage amount or $4,000 extra which is capitalized back into your mortgage. In this scenario, you currently get a rate of 3.09%, pay interest of $45,622 and have an end of term balance of $273,270.

To say the least this has become a game of really knowing your products and your clients. If the end game is to avoid paying CMHC then you may end up paying too much unless your broker is as we are and has access to specialty products in the market. Check with your Dominion Lending Centres Mortgage Broker to see what’s available.

Courtesy of Len Lane, AMP – DLC Brokers For Life

After several years as a home owner, my friend was set to buy the home of his dreams. He always wanted to own an acreage outside of town. He had visions of having a few animals, a small tractor and lots of space.

As a person with experience buying homes he felt that he was ready and that he knew what he was getting into. Wrong. As soon as you consider buying a home outside of a municipality there are a number of things to consider, not the least being how different it is to get a mortgage.

Zoning – is the property zoned “residential”, “agricultural” or perhaps “country residential”?
Some lenders will not mortgage properties that are zoned agricultural. They may even dislike country residential properties. Why? If you default on your mortgage the process of foreclosing on an agricultural property is very different and difficult for lenders. Taking a farm away from a farmer means taking their livelihood away so there are many obstacles to this.
If you are buying a hobby farm, some lenders will object to you having more than two horses or even making money selling hay.

Water and Sewerage – if you are far from a city your water may come from a well and your sewerage may be in a septic tank. A good country realtor will recommend an inspection of the septic tank as a condition on the purchase offer. Be prepared for the inspection to cost more than it cost you in the city. Many lenders will also ask for a pot ability and flow test for the well. A house without water is very hard to sell.

Land – most lenders will mortgage a house, one outbuilding and up to 10 acres of land. Anything above this amount and it will not be considered in the mortgage. In other words, besides paying a minimum of 5% down payment you could end up having to pay out more cash to cover the second out building and the extra land being sold.

Appraisal – your appraisal will cost you more as the appraiser needs to travel farther to see the property. It may also come in low as rural properties do not turn over as quickly as city properties. Be prepared to have to come up with the difference between the selling price and the appraised value of the property.

Fire Insurance – living in the country can be nice but you are also far from fire hydrants and fire stations. Expect to pay more for home insurance.

Finally, if you are thinking about purchasing a home in a rural area, be sure to speak to a Dominion Lending Centres mortgage broker before you do anything. They can often recommend a realtor who specializes in rural properties and knows the areas better than the #1 top producer in your city or town.

Courtesy of David Coode, AMP – DLC Westcor

Sometimes in life, things don’t always go as planned. This could not be truer than in the world of Real Estate. For instance, let’s say that you have just sold your home and purchased a new home. The thought was to use the proceeds of the sale of your house as the down payment for the new purchase. However, your new purchase closes on June 30th and the sale of your existing house doesn’t close until July 15th—Uh-Oh! This is where Bridge Financing can be used to ‘bridge the gap’.

Bridge Financing is a short-term financing on the down payment that assists purchases to ‘bridge’ the gap between an old mortgage and a new mortgage. It helps to get you out of a sticky situation like the one above and has a few minimal fees associated with it.

The cost of a Bridge Loan is comprised of two parts. The first is the interest rate that you will be charged on the amount of funds that you are borrowing. This will be based on the Prime Rate and will vary from lender to lender. As a rule, you can expect to pay Prime plus 2.5%. The second cost to consider is an administration fee. Again, this will vary depending on the lender and can range from $200-$695.

The amount that you are able to borrow is easily calculated. The calculation looks like this:

Sale price
(less) estimated closing costs of 7%
(less) new mortgage of the purchase property

=Bridge Financing.

*Note: the closing costs included the expense of realtor commissions, property transfer tax, title insurance, legal fees and appraisal costs if applicable*

So that’s the cost side of things, now the next question is: how long? The length of time that you can have Bridge Financing is going to vary again from lender to lender as well as with what province you are in. For most, it is in the range of 30-90 days but there are some lenders that will go up to 120 days in certain cases.

Before applying for Bridge Financing, you must also have certain documents at the ready to present. These documents include the following:

1. A firm contract of purchase and sale with a copy of the signed and dated subject removal on the property that you are selling and the property that you are purchasing.
2. An MLS listing of the property being sold and purchased.
3. A copy of your current mortgage statement.
4. All other lender requested docs to satisfy the new mortgage of the upcoming purchase.

Once you have those documents, you can work with a qualified mortgage broker to apply for bridge financing. It is an important tool to understand and a great one to have in your back pocket for when life throws you one of those ‘curve balls’. You can have peace of mind knowing that if/when that situation arises, you are not without a strong option that can provide you with interim financing for minimal cost.

As always, if you have any questions about Bridge Financing, or any questions about your mortgage (be it new or old) contact a Dominion Lending Centres mortgage broker. We are well-versed in all things mortgage related and can help come up with creative, cost effective solutions for you.

Courtesy of Geoff Lee, AMP – DLC GLM Mortgage Group