At some point in their lives, most Canadians have probably asked themselves whether it is better to buy or rent a home. Purchasing a home is one of the biggest decisions most people ever make so the impacts of the decision can be HUGE.

Ultimately, the decision is a personal choice, but it helps to look at the pros and cons of buying to determine whether home ownership is right for you.

Some advantages of buying a home

Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family.

Each month when you make your mortgage payment, you are building equity in your home.

Equity is the portion of the property that you actually build through your monthly payment versus the portion that you still owe the lender.

At the beginning of your mortgage, more of your payments go toward paying off the interest and less toward paying off the principal. But the longer you stay in your home and the more mortgage payments you make, the more principal you pay off and the more equity you accumulate.

Most mortgages also offer you the option of making additional monthly or annual payments to reduce your principal faster. Some prepayment privileges, for instance, enable you to pay up to 20% of the principal per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money.

There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate – or increase in value – as time passes, building more equity. As you build up equity, it’s usually easier to upgrade to a more expensive home in the future thanks to the profit you’ll make when selling your current home.

As an owner, you can also decorate and improve your home any way you like. Ownership tends to give you a sense of pride and can offer you and your family stronger ties to the community.

If you do decide that home ownership is right for you, it’s important to choose a home you can afford. If you can’t afford to buy your dream home, purchasing a more modest home can be a great place to start building equity that one day may allow you to buy the home of your dreams.

Since we’re currently in a buyer’s real estate market and interest rates have been dropping, now may be an ideal time to enter into home ownership for the first time.

Some disadvantages of buying a home

Since it’s easy to get caught up in the excitement of buying a home, it’s important to remember that home ownership has some additional responsibilities as well.

For one thing, a home can be expensive. Chances are, your monthly payments will be more than what you are currently paying in rent when you factor in such things as your mortgage, property taxes, repairs and general maintenance.

Owning a home ties up some of your cash flow and is likely to reduce your flexibility to move to a new location or change jobs.

While your home might increase in value as time goes by, don’t expect to get a big return quickly. There are no guarantees that your home will increase in value, particularly during the first few years. In the beginning, you could actually lose money if you sell because your home may not have appreciated enough to cover the real estate fees, moving, renovation and other selling costs.

Real estate is, however, usually considered a good investment over the long term.

When making the decision about whether to buy or rent, it’s important to carefully choose a home you can afford, and then weigh the pros and cons. Millions of people enjoy the rewards of home ownership but, ultimately, it’s a personal decision based on your own priorities.

If you’re thinking of buying your first home, Dominion Lending Centres mortgage professionals can answer all of your mortgage-related questions.

Courtesy of Alim Charania, AMP – DLC Regional Mortgage Group 

We all know that marriage isn’t always forever. When a separation occurs, a home is often involved. Since most couples have a joint mortgage – one where both names are on the mortgage and title of the home – when separation or divorce proceedings occur, many wonder what will happen with the home.

When the marriage comes to an end, there are two obvious options concerning the home: 1) sell the property and split the proceeds according to your agreement and go your separate ways; or 2) one person buys the other party out of the mortgage and the title of the property.

The first option is a straight-forward transaction where you put the house up for sale, sell and split the proceeds. The second option, however, is slightly more complicated.

The decision between the options is a personal one borne out of the specific circumstances of the parties involved. I have helped many borrowers through the home ownership woes of separation and divorce. If you find yourself in this situation and need professional mortgage advice, give Dominion Lending Centres a call.

Courtesy of Marie-France Lavigne, AMP – DLC The Mortgage Source 

Despite what you may see on TV, hear on the radio, or read online, there is strong evidence that although Canadian household debt is at an all-time record high, Canadians are doing just fine financially.

How can that be? Canadians are a whopping 1.8 TRILLION DOLLARS in debt – and that is exactly what the media focuses on. What they fail to disclose is that according to a recent report published by the Fraser Institute, Canadians also have $10 TRILLION DOLLARS in assets.

So for every $10.00 that Canadians have… they owe just $1.80. Now that doesn’t sound all that bad… It’s really a matter of perspective AND having all the facts.

So the next time you hear some doomsday report indicating that our economy is ready to implode in the next 38 minutes, remember that media outlets are more concerned about getting your attention than anything else. It’s not about the facts, it’s about the spin on the story. And seeing as though debt levels have hit new record highs every year since 1961, how can this still be news? Of course there is more debt… there are more people. Those people are buying houses!

Actually, right now, borrowing money in Canada has never been cheaper. We are experiencing all-time lows on some fixed rate mortgage terms and variable rate mortgages. So to answer the question, “Should you be concerned about Canadian household debt levels”… no, you should be concerned about your own personal debt level. Because that is what matters.

What is your financial situation like? Just as the economy changes, and life changes… your financial situation changes as well. It is good to periodically review your mortgage or financial situation to make sure that you are paying as little interest as possible.  That’s where Dominion Lending Centres comes in. If you currently have a mortgage and want to know if it is the best fit for you, or if you are working towards buying your first home, we would love to assist you.

Please contact us anytime!

Courtesy of Joe Tomkins, AMP – DLC Canadian Mortgage Experts 

Well, another month gone and spring is just around the corner. Bullying Ends Here has been up to so much over the last month and a half and has reached thousands more in many Provinces. I had the opportunity to see my Dominion Lending Centres friends in Ottawa and be a part of their Holiday Festivities. I was honoured to be able to say a few (well maybe more than a few) words to their amazing families and share some of my personal story with their children as well. From the moment I met this team in Whistler back in November, there was something very special about them. Kim and her team went so far as to raise over $2,500 for Bullying Ends Here that evening. I look forward to seeing them again in March and speaking at some of their children’s schools locally.

I was also in Toronto ON, Calgary AB, Cold Lake AB, Vancouver BC and Cambridge ON for presentations. It has been a whirlwind as always but so inspiring to speak to so many and also have hundreds share their own stories back. I can share with you after one particular presentation, that a youth and their Principal came up to me with tears in their eyes and the youth said ‘I think you just saved a life today…..that life is mine’. Both wanted to give me such a big hug as a token of their appreciation for letting youth know that they are not alone and that dreams can still come true, no matter how dark their current days may feel. Nothing more rewarding. This is precisely why I do what I do!

I was also in Woodbridge ON thanks to Vince Tarantino. He did a tremendous job arranging for me to present and reach hundreds more. Dominion Lending Centres is really stepping up to the plate to ensure that their communities have as many resources as possible available for their youth. Great job team and thanks for believing in me!

I am so fortunate to be sharing Pink Shirt Day on February 24th with our DLC Family in the Lower Mainland of BC and in Victoria. For years I have enjoyed this day for all that it does and how the media reports on it. I love the conversations it starts and how it also helps bring attention to a topic very dear to my heart. Although we all know that bullying takes place daily, 24 hours a day, it is vital that we bring as much attention to this epidemic as possible. To me, Pink Shirt Day represents change. It has all ages knowing what the pink shirt represents and how we all have a role to play when it comes to preventing bullying. To wear the pink shirt says that you stand up to it. That you are a safe person to talk to. That you are a friend.

For me, Pink Shirt Day is EVERYDAY. I know that you believe this as well. I believe this is one of the reasons why our partnership is so wonderful. Together, we ensure that bullying is spoken about daily and that we save lives together.

Lastly, I am so proud to tell you that my new book, ‘Bullying Ends Here – My Life’ is now available for purchase. This brand new book is already a ‘Best Seller’ and I can tell you that I wrote it all myself. This was something that took me a long time to do as I had to believe in my own abilities first. I then had to take myself back to some really difficult times in my life to be able to write about them. In a way the book was healing for me, while at other times it opened some wounds that had taken years to heal. The book wasn’t written for me though, I wrote it for you. I hope that by sharing my own story in such detail and honesty that it just might help those that need it most. It just might give them hope. If you go to www.bullyingendshere.ca, you can find out pricing and also I would be happy to autograph them as well. I can also tell you that every cent goes directly to the charity. These would make a great gift for the office, your clients or even just yourself. I hope you will enjoy it. Please email me at any time for more information. I’m always available at tad@bullyingendshere.ca.

Please join me in wearing Pink and making a #PinkShirtPromise, not just on February 24th, but any day that you want. Let’s show those around us that they have our support, our leadership and our love. Let’s work together to make this world a better place. Together, we will not only change lives, but SAVE them!

Courtesy of Tad Milmine, Founder – Bulling Ends Here 

When you are searching for a mortgage, you shouldn’t only base your decision on rate. It is important to search for the “best mortgage”. A mortgage that not only provides the best interest rate, but also the one with the best terms and conditions. By understanding mortgage terms and what they mean in dollars and sense, you can save the most money and choose the term that is best suited to your specific needs.

With a closed term mortgage, you can’t pay off your mortgage before the end of the term without having to pay a penalty.

The pre-payments without penalty clause is one of the conditions that can save you a considerable amount of money in the long run. This clause allows you to make payments on the principal of your loan, or increase the amount of your periodic payments (monthly, bi-monthly, etc.) without a penalty. Each lender has different programs for pre-payments, they usually vary from 10% to 20%, i.e., you can pay any amount within the approved percentage of the original value of your mortgage or increase your periodic payments once a year without paying a penalty.

Many people don’t take advantage of this clause because it is generally difficult to save the extra money to make additional payments.

Here is an easy way to take advantage of this benefit – “The Java Factor”. This is something that is very easy to follow and can save you thousands of dollars by paying down your mortgage.

Usually everyone buys a cup of jo (coffee) or two during their work day. When you see the cost of a cup of coffee at Starbucks or any other establishment, you realize that maintaining this habit can be very costly.

Suppose that you spend at least $5 per day, 5 days a week in “coffee, donuts, chocolates, snacks, etc.”, this would amount to approximately $108 per month; if you apply them to your monthly mortgage payments, the savings can be considerable.

For example:

In a $100,000 mortgage at a rate of 3.39% and 25 years amortization, you would reduce the total payment of your mortgage by 5 years and 4 months with savings of $13,185 in interest. For this calculation, we considered that the interest rate did not change during the life of the mortgage.

This calculation would vary case by case but depending whether you have a pre-payment clause with your mortgage or not, it is important to emphasize that by making a small sacrifice you can have significant long-term savings.

So remember “The Java Factor” next time you are thinking of stopping by for a coffee on your way to work and take a cup of coffee brewed at home.

Courtesy of Jorge Aragon, AMP – DLC Mountain View 

The Martian tells the story of Matt Damon (well, a character Matt Damon plays, but let’s be real: it’s Matt Damon), an astronaut stranded on Mars after a vicious storm separates him from the rest of his crew. With dwindling food and supplies, Astronaut Matt Damon has no choice but to attempt a daring escape back to Earth… Actually, he has at least one other choice: he could get comfortable and purchase some recreational property.

Financing Your Martian Recreational Property

For Matt Damon, financing a Martian cottage would just be a matter of writing a check; A-list Hollywood celebrities tend to be pretty stacked. But we’re dealing with Astronaut Matt Damon. Astronauts grind it out on a modest government salary, so financing gets more complex. Still, as you’ll see, it’s not rocket science.

Insurability

One of the keys to securing a mortgage on recreational property is insurability. The cost of insurance on a second property can drastically affect mortgage rates. So how insurable is Astronaut Matt Damon’s Martian property?

Accessibility

For cottages, access by private, unplowed roads or by water-only routes will increase insurance rates. Astronaut Matt Damon’s place is only accessible by spaceship and land-rover…so that’s a point against.

Winterization

Winterized cottages are a definite plus for mortgaging. Martian winters get brutal; picture Winnipeg, but not as severe. Since Astronaut Matt Damon’s an Astronaut, let’s assume he’s a pretty smart guy and went for a winterized place: score one for the Martian!

State of Repair

When buying a pre-existing property, its state of repair impacts the insurance. If it’s in rough shape, you can pay a higher rate or pay to fix it up—a losing proposition either way. There probably aren’t a lot of Martian cottages already available, so Astronaut Matt Damon’s place is a personal build; this won’t apply.

Payments

Is it worth it to buy your own second property? In some cases, it might not be: if you only use it a few times a year, the yearly mortgage payments of $15,000 on a $200,000 property (according to some estimates) might be a lot higher than the price of a biannual family vacation. However, that net cost drops if you consider the property’s annual rise in value and the potential to rent. But since Mars isn’t exactly hot property yet, and finding renters might be tricky, Astronaut Matt Damon has his work cut out for him to make payments.

The Verdict for Astronaut Matt Damon

All things considered, getting a mortgage approval on Martian property will hardly be a blast. But if you’re hoping to count down the days until you pay off the mortgage on your own recreational property, don’t space out. Lift off the couch and contact an experienced mortgage professional at Dominion Lending Centres today.

Courtesy of Gabriel Gallucci, AMP – DLC Denova Group 

If you work with me, a licensed mortgage agent, to obtain a pre-approval, you can be confident you have access to mortgage financing and you will know how much you can spend before you head out shopping for a property.

It’s important to note, however, that there is a significant difference between being pre-approved and pre-qualified. In order to obtain a pre-approval, the lender fully underwrites the deal, whereas with a pre-qualification, only the most basic details are considered. Remember that many banks will only issue a pre-qualification.

In order to get pre-approved for a mortgage, I require a short list of information that will help me determine your buying power. I will explain to you the benefits of shorter or longer mortgage terms, the latest programs available, which mortgage products I believe will most likely meet your needs the best, and I will review all of the other costs involved with purchasing a home.

Getting pre-approved for a mortgage is something every potential homebuyer should do before going shopping for a new home. A pre-approval will give you the confidence of knowing that financing is available, and it can put you in a very positive negotiation position against other homebuyers who aren’t pre-approved.

Data released earlier this week for January showed the stunning disparity in regional housing markets in Canada (see chart below). Vancouver remains the red-hot leader with year-over-year (y/y) price gains of 20.6% and home resales growth of an eye-popping 32.1%. In comparison, Toronto’s housing market seems almost tepid, with an annual price gain of 10.7% and resales growth of a mere 7.3%.

In direct contrast, regions of the country that have been hard hit by oil price declines continue to experience a marked slowdown in housing activity. For example, house prices in Calgary fell 3.1% y/y in January and existing home sales fell 13.8%. In recent months, the decline has been even bigger. Sales in Calgary are down more than 40% from their 2014 high. In this context, the price declines have been relatively modest. Additional price cuts are likely through 2016. Those who purchased homes before mid-2013, however, still have significant but dwindling equity gains.

The BC budget, released this week, shone the spotlight on the lack of affordable housing in the Vancouver region. Vancouver has an almost unheard of 91% sales-to-new listings ratio implying that almost every new listing is sold within the month. Concern about housing affordability prompted the BC government to introduce measures to address escalating housing market imbalances.

British Columbia has the strongest economy in the country, with growth expected to be roughly 2.4% this year. BC also has the strongest fiscal position, with a triple-A debt rating and surpluses expected to continue. The BC economy, though hit by falling commodity prices, is sufficiently diversified to have weathered the storm quite well–boosted by strength in manufacturing, retailing, technology, trade and film.

Population growth and a tourism boom is also contributing to the prosperity. More than 48,200 newcomers are expected to move to BC this year, including 13,000 from other provinces and 35,200 from other countries. Alberta’s woes have caused thousands of workers to move westward. In the third quarter of 2015, BC posted the highest quarterly level of net interprovincial migration since 1995. The weak Canadian dollar has boosted tourism and the film industry in Hollywood North.

Housing Measures in the BC Budget

In the first overhaul of the Property Transfer Tax since its inception in 1988, Finance Minister Mike de Jong raised the exemption threshold solely on new homes to $750,000 if they are owner occupied as a principal residence for at least one year. This new tax break is available only to Canadian citizens or permanent residents and could mean a savings of up to $13,000. This could bump up the price of new homes unless it triggers an increase in supply, as the government hopes.

To offset the anticipated $75 million cost of this initiative, the government is increasing the Property Transfer Tax rate on the portion of the home value that is in excess of $2 million to 3% (the current 1% on the first $200,000 and 2% on the value between $200,000 and $2 million will be maintained).

Budget 2016 confirmed an earlier announcement that the province is committing $355 million over a five-year period to construct or renovate affordable housing units throughout the province.

The government also proposes new measures to improve data collection around real estate transactions, specifically to monitor foreign investment. Homebuyers will have to identify as Canadian citizens or permanent residents when they register their property and individuals who are neither will be required to disclose their country of citizenship; corporations will be required to disclose their directors’ citizenship; homebuyers will have to disclose whether they are buying the property as a trustee.

Greater transparency into the currently opaque foreign investment component of housing activity is overdue and should help to provide a factual basis for future discussion. Hopefully, the province will continue to welcome foreign investors as the Minister suggests.

The effect of these measures will be modest at first. It will take time to assess their impact, but the majority of purchasers are buying existing homes, not new homes, so the relief will not be widespread.

We’ve all heard the terms Mortgage Broker and Mortgage Specialist flung around, but what on earth is the difference? Though they sound similar, there are major differences that all home buyers and owners should be aware of. Let’s start off with some simple definitions.

A Mortgage Specialist is a person employed by a lending institution to sell that lender’s mortgage products. A Mortgage Broker belongs to an independent firm that has access to multiple lenders’ mortgage rates and offers. So which one should you choose?

Mortgage Specialists can help if you already have services set-up at a lending institution, such as a bank, in order to consolidate all your finances. This can minimize paperwork as the bank is already familiar with your credit history. If you don’t have all your existing services set-up at one institution, you may choose a lending institution and Mortgage Specialist for the security of using a well-known bank. These are indeed valid reasons to enlist a Mortgage Specialist for your mortgage needs, but they also have some major disadvantages.

Mortgage Specialists only have access to their lender’s products. In a typical situation, homeowners end up with a higher interest rate than other institutions. This occurs because the homeowner must negotiate for themselves and Mortgage Specialists are usually paid according to the rate they sell you. This is where Mortgage Brokers come in handy. Mortgage Brokers have access to most lending institution’s products in the market place and can shop around to negotiate the best rate for you. They are also paid a flat rate for their services by the lender, so they don’t benefit from selling you a higher rate. Sounds great, but what else can a broker do?

Mortgage Brokers work for you rather than a single institution, which means they work in your best interest. A Mortgage Broker will handle all the paper work for you and only require a single credit check for all applications. Some people worry about using Mortgage Brokers because they usually belong to unknown, smaller companies, but this should really be viewed as an advantage. Mortgage Brokers are required to have formal training and must complete ongoing accreditation tests and courses to maintain their licences. Mortgage Specialists do not require any formal training and are simply educated by the institution they work for. These specialists are also limited to certain hours set forth by their employers, whereas Mortgage Brokers are typically available 24/7.

Both avenues of mortgage lending have valid functions. If you are willing to do research and feel comfortable negotiating for yourself then a Mortgage Specialist can be a sound investment option. If, however, you are stressed about the process and don’t feel comfortable taking on the responsibility of researching everything for yourself then a Mortgage Broker is a better option for you. It’s always best to take the time and discover which option fits your needs before jumping into one of the biggest purchases of your life.

So get out there and start researching!

Courtesy of Alim Charania, AMP – DLC Regional Mortgage Group 

Here are answers to some frequently asked questions on the government changes to down payment requirements that take effect today, February 15, 2016.

If you recall from my last video, the down payment requirement has increased from five per cent, to ten per cent for the portion of the purchase price above $500,000, but less than $1,000,000.

The application of the government down payment requirement during any transition can often be confusing. To clarify the application of this requirement, and the grandfathering of this new requirement, here’s a few snippets of what we learned from CMHC’s underwriting department.

Purchases

• The new minimum down payment requirement naturally only applies to purchase transactions, not refinancing your mortgage.

Unchanged Premiums

• We are advised mortgage insurance premiums will remain unchanged.

Important dates to remember

• If you received an insured mortgage approval between December 11, 2015 and February 14, 2016 (inclusively) with a planned closing date after July 1, 2016, the new down payment requirement will still apply.
• If you received an insured mortgage approval before December 11, 2015, and you entered into a purchase and sale agreement also before December 11, 2015, the “old” down payment requirement may still apply regardless of the closing date.
• If your planned closing date is postponed after July 1, 2016, “CMHC acknowledges industry realities and will accommodate delays that may occur that are beyond a lender or buyer’s control and will be looked at on a case-by-case basis.”

Switching Lenders

• If you wish to give your mortgage business to a different financial institution for a more competitive rate or product and you received an insured mortgage approval under the “old” down payment requirement before December 11, 2015 and the property and the buyers(s) remain unchanged, the new mortgage insurance application request made by this new lender would be reviewed in accordance with the “old” requirement, regardless of the date the alternative lender requests mortgage insurance approval from CMHC.
• Similarly, if the mortgage insurance approval from the existing lender was submitted between December 11, 2015 and February 14, 2016 inclusively with a planned closing date on or before July 1, 2016, this new mortgage insurance approval request will be reviewed in accordance with the “old” requirement.”

Again, these are just a few snippets of some frequently asked questions. You may likely have a few of your own so let me know yours. Be certain to speak to your own mortgage broker concerning your purchase if you’re under way as well.

Have a great rest of the week and remember, we are always here at Dominion Lending Centres to help you with your mortgage questions!

Courtesy of Mark Alltree, AMP – DLC Innovation Group