As a mortgage professional with Dominion Lending Centres, I do everything I can to maintain a high credit score. For example, I pay off my credit card in full, or at least the monthly minimum, on time every month. I don’t overuse credit and I stay under 75% of my credit limit.

However. . .

I recently switched from fee to no fee banking. Then I applied for a new credit card and – horror of horrors – I was told there was a problem. What?! Me?!

I immediately ordered a copy of my TransUnion credit file, (that was the credit company they used) and there it was. Apparently, I was using my old married name while living at a different address – horror of horrors once again (actually not that horrible, and I’ve so moved on). The thing is, I haven’t changed my address in 14 years and I’ve been using my maiden name even longer.

So, I checked all the trade-lines thoroughly and everything was in order. It could have been much worse.

I’m contacting TransUnion to get this cleared up, and I’ll probably put an alert on my file now.

Good save!

The moral of this story is simple: check your credit file at least once a year at either Equifax.ca or Transunion.ca. You can get a free report, but you’ll have to dig a little deeper.

Happy credit checking.

Courtesy of Sandra Tisiot, AMP – DLC Smart Debt  

Looking to increase your homes property value? Here are five of the best renovations you can do to your home to increase property value. These five renovations can sometimes have a return on investment 5-6x what they cost.

# 5 Flooring

Flooring is one of the most important aspects of your house. You will see an immediate rise in property valuation with the installation of hardwood floors. Existing hardwood floors that you can refinish are ideal as they are less costly to restore and in higher demand than new flooring materials. For the bathroom, tile will always be in demand and retain value exceptionally well.

# 4 Fixtures

Kitchens often look tired and dated, in large part due to old fixtures. Replacing or updating cabinet hardware, light fixtures, countertops and faucets will result in an immediate increase in your home’s value. This small, but effective upgrade will also revitalize the entire home. Pot lights are in high demand in open concept style homes.

# 3 Bathroom

The bathroom is the second most important room in the home in terms of valuation. If you can add a three-piece bathroom to a home with only one full bathroom, you will see a dramatic rise in the market value of your home. While you should never compromise bedroom space for a bathroom, try sneaking one in dead space in the home. Scott managed to fit in a 3-piece bathroom under a staircase – the width of the room measured just 44 inches. As an added tip, use glass for the shower to make the bathroom feel more spacious.

#2 Kitchen

Kitchens are the single most important room in the home relating to valuation. The kitchen can make a significant difference in the value of your home. As such, it is crucial that you invest in having a modern, fresh and desirable kitchen. Modern cabinetry, under cabinet lighting and new appliances will all significantly increase the value of your home on the market. To save on cost without compromising construction and desirability, look at options like Ikea cabinets as opposed to custom cabinetry.

#1 An Income Suite

No surprise, but the single biggest way to increase the value of your home is to build an income suite within the property. Whether this is converting your basement into a rental, or another floor in the home, an income property will increase your home’s worth. The main reason for this is that it covers a portion, or sometimes all of your mortgage payments, and results in your home being cash flow positive – which creates real wealth that can supplement your income.

Speak with any Dominion Lending Centres mortgage professional about how Genworth Canada can help qualified home buyers make their new home just right for them, with tailored improvements, immediately after taking possession of the purchased property.

Courtesy of Marc Shendale, Genworth Canada – Vice President Business Development

The Canadian Mortgage and Housing Corporation (CMHC) issued its quarterly housing market assessment and outlook yesterday, suggesting that, for the first time ever, there are “problematic conditions” in housing markets at the national level in Canada (see table below for details). As well, CMHC expects national housing starts and MLS sales to decline slightly in 2017 before stabilizing in 2018, which is pretty much the consensus view. What I find strange about the hype surrounding this report is that there is nothing new here. Moreover, the details seem encompass lagged data, before the sales decline and price slowdown in Vancouver–a slowdown that began before the August implementation of a 15% tax on non-resident buyers in Vancouver.

The tightening measures announced by the Department of Finance on October 3 are the most recent in a long list of initiatives over the past eight years designed to cool  housing markets, particularly in Vancouver and Toronto and surrounding regions. Today’s report is apparently justification for the most recent policy moves, rather than anything new. In other words, the report is looking in the rear view mirror.

At least in part, the government has itself to blame for the boom in housing. I am struck by a recent report by Derek Holt at Scotiabank that reminds us of all the measures the government took to spur housing prior to the financial crisis. Most notably–allowing RRSP withdrawals for home purchases in 1992, introducing 40-year amortization periods and 0% downpayments in 2006, the zero downpayment insured investor mortgage (for non-owner-occupied housing purchases) with a high amortized premium in 2007, and offering first-time home buyers tax credits in 2008 and 2009. Clearly, the surge in household debt relative to income was at least in part generated by these politically popular actions, which fueled the already strong demand generated by the decline in interest rates to ever-lower levels.

Since October 2008, the government has been scrambling to overturn these measures and more. In a series of steps, maximum amortization periods have been reduced from 40 to 25 years, minimum downpayments increased from 0% to 5%, and stress tests to qualify for a mortgage have been tightened. Refinancing ceilings have also been reduced over time from 95% to 80% loan-to-value and, for buyers of non-owner occupied housing, a 20% minimum downpayment has been imposed. All this happened before the most recent initiatives which tighten mortgage conditions significantly further as well as impose disincentives for foreign purchases.

The growth in the demand for housing will no doubt slow in response. What has yet to be tackled is a reduction in government impediments to an increase in the supply of affordable housing that is particularly lacking in Greater Vancouver and Toronto.

Courtesy of Dr. Sherry Cooper, Chief Economist, Dominion Lending Centres

With the recent changes to the mortgage rules in Canada, we take a moment to look back at the evolution of the mortgage, and to highlight these new changes and what they mean.

LOOKING BACK

BEFORE 2008

During this time, lending and mortgages were much more laid back! There was 100% financing available, 40 year amortizations, cash back mortgages 95% refinancing, 5% down payment required for rental properties, and qualifications for FIXED terms under 5 years and VARIABLE mortgages at discounted contract rate. There was also NO LIMIT for your GROSS DEBT SERVICING (GDS) if your credit was strong enough. Relaxed lending guidelines when debt servicing secured and unsecured lines of credits and heating costs for non subject and subject properties.

JULY 2008

We saw the elimination of 100% financing, the decrease of amortizations from 40-35 years and the introduction of minimum required credit scores all took place during this time period. It was also the time in which the Total Debt Servicing (TDS) could only be maxed to 45%

APRIL 2010

This time period saw Variable Rate Mortgages having to be qualified at the 5-year Bank of Canada’s posted rate along with 1-4 year Fixed Term Mortgages qualified at the same. There was also the introduction of a minimum of 20% down vs. 5% on investment properties and an introduction of new guidelines on looking at rental income, property taxes and heat.

MARCH 2011

The 35-year Amortization dropped to 30 years for conventional mortgages, refinancing dropped to 85% from 90% and the elimination of mortgage insurance on secured lines of credit

JULY 2012

30 year amortizations dropped again to 25 years for High Ratio Mortgages (less than 20% down). Refinancing also dropped down this time to 80% from 85%. Tougher guidelines within stated income mortgage products making financing for the Business for Self more challenging and the disappearance of true equity lending. Perhaps the three biggest changes of this time were:

* Ban mortgage insurance on any million dollar homes

* 20% min requirement for down payment

* Elimination of cash back mortgages

* Federal guidelines Min; requirement of 5% down

* Introduction to FLEX DOWN mortgage products

FEBRUARY 2014

Increase in default insurance premiums.

FEBRUARY 2016

Minimum down payment rules changed to:

• Up to $500K – 5%
• Up to $1MM – 5% for the first $500K and 10% up to $1MM
• $1MM and greater requires 20% down (no mortgage insurance available)

Exemption for BC Property Transfer Tax on NEW BUILDS regardless if one was a 1st time home buyer with a purchase price of $750K or less.

JULY 2016

Still fresh in our minds, the introduction of the foreign tax stating that an ADDITIONAL 15% Property Transfer Tax is applied for all non residents or corporations that are not incorporated in Canada purchasing property in British Columbia.

WHAT IS TO COME?

OCTOBER 17, 2016: STRESS TESTING

INSURED mortgages with less than 20% down Have to qualify at Bank of Canada 5 year posted rate.

NOVEMBER 30, 2016: MONOLINE LENDERS

In addition, Portfolio Insured mortgages (monoline lenders) greater than 20% have new conditions with regulations requiring qualification at the Bank of Canada 5 year posted rate, maximum amortization of 25 years, max purchase price of $1 Million and must be owner occupied.

BOTTOM LINE:

Homeowners will experience the following:

1. QUALIFY FOR LESS-25% less

• Options for mortgages will decrease as certain lender’s guidelines will no longer meet the federal criteria

• No more rental or investment properties to be insured

2. CAPITAL GAINS

• Can only be claimed 1x per year.

• Measure taken against the recent flipping of assignments to avoid property transfer tax from investors in the last 2 years

Stay up-to-date on all the changes in the mortgage rules by visiting the Dominion Lending Centres “new rules” page by clicking HERE. As always, we’re here to help with all your mortgage questions and needs.

Geoff Lee, AMP – DLC GLM Mortgage Group 

I sit atop a local bike trail overlooking the spectacular valley vista. The air is crisp, the soil is tacky and the sun is out in full force. The only thing on my mind is what lies ahead. I push away from the trailhead, anticipating my navigating down the steep, rocky and rooty trail. The natural adrenaline rush I get from charging down through the forest never gets old, as there is always something new to experience.

Riding my mountain bike is a passion. It has provided a platform for me to explore amazing geographic regions in BC as well as down the coast into the USA. My bike also recently provided me the opportunity to travel to Iceland to see and experience a fascinating culture and landscape.

I look with extreme jealousy at the professionally sponsored riders and racers who travel the world. They get to live in a world of adventure, one that they created from a young age. I want to help create the same thing for other kids.

It starts with getting your very first bike.

I have had many bikes over the past 40 years. They have ranged from second- or third-hand bikes costing just a few bucks right through to brand-new bikes worth thousands of dollars. The price doesn’t matter. Getting a new bike, regardless of my age—or the bike’s—has always put a smile on my face. But the thing I crave more is planning where that bike will take me on my next adventure and imagining the stories and memories it will create.

Bikes For Kids gives underprivileged kids that same feeling of owning their first bike. Every kid remembers that first bike, and the adventures that came with it!

The initiative was created by the Dominion Lending Centres head office and since 2014, we have donated 2,500+ bikes to needy kids across Canada. At our recent Dominion Lending Centres University I was asked, “What’s your number?” My reply was five. This means I plan to donate five bikes at this year’s Bikes For Kids.

I would love to give other kids the same opportunity to experience what I experience when I’m riding my bike in the forest or anywhere else it might take me. If you would like to DLC donate more than just my five bikes please visit www.BikesForKids.com before November 14th. It will put a smile on your face for donating, and even a bigger smile on the recipient’s face when they receive it.

Courtesy of Michael Hallett, AMP – DLC Producers West FInancial 

Most of us know that changing your mortgage payment from monthly, or semi monthly, to an accelerated bi-weekly payment instantly reduces your standard 25 year amortization by 2.58 years with today’s rates. (If you didn’t know that, you’re likely not working with the mortgage professionals at Dominion Lending Centres).

Sometimes, however, an accelerated bi-weekly payment option might not be available to you. Either the lender does not offer it as an option with that particular product, or they may not allow you to set it up if the accelerated payment knocks your qualifying ratios out of line. Although these situations are rare, they do come up from time to time. Here’s a workaround for those that might find themselves in this situation.

Open up a separate chequing account from which ONLY your mortgage payment will be withdrawn.

Then, from the account where your paychecks are deposited, set up an automatic transfer from this account, to your new chequing account. The automatic transer will be every two weeks and for half of the amount of your monthly mortgage payment. This is the amount that your accelerated bi-weekly payment would equal out to.

Throughout the year you will continue to automatically transfer exactly half of your monthly payment into your new chequing account, every two weeks. Then, those two months each year where you receive your paycheck three times in one month, you will also transfer half of your mortgage payment into the new account three times this month. When your monthly payment is withdrawn by your lender, there will be a half monthly payment remaining in your new account. This will happen twice throughout the year, leaving you with one full monthly payment remaining in your new chequing account. This is the accelerated effect.

Once per year, take this remaining balance in your account and apply it as a lump sum towards your mortgage, which most mortgages allow you to do. This lump sum goes directly towards your principal balance, interest free, thus reducing your amortization the same as anaccelerated bi-weekly payment would have.

It may not seem like much, but imagine no mortgage payments for the next two and a half years. Feels good, doesn’t it?!

Courtesy of Jeff Ingram, AMP – DLC Canadian Mortgage Experts 

That’s right!

Sure the new mortgage rules from our Federal Government on October 17th can be a bit confusing, here are five tips to help you with your mortgage while at the same time, reducing your stress.

1. Review your Credit File:

Good credit is your ticket to informed borrowing and purchasing, great rates and, most important, approval.

Don’t be vulnerable. Understand how a good credit score happens, and how best to manage credit so that you can use it to your advantage.

Make sure all your information is true, complete and up-to-date. If there are discrepancies deal with them before you start the buying process.

2. Review your Debts:

Understand the difference between secured and unsecured debt:

Secured debt is money owed for the purchase of an asset, such as a car, boat, motorcycle or property. The asset is collateral, and if you don’t repay the loan as specified by the terms, your creditors can confiscate it.

Unsecured debt is largely due to credit cards. These typically have a higher interest rate, so you should always try to pay them off first.

Anyone can have credit difficulties if they don’t understand how and when to use it. On the other hand, credit can be a great advantage if you know how it works.

Make payments on time, and in the case of a credit cards clear the balance every month.

Establish and implement a debt repayment strategy.

3. Down Payment:

You may also need a down payment saving strategy. This will help you avoid extra fees, such as mortgage insurance premiums, and ensure that you stay within the guidelines of the percentage of debt allowed against your income.

So, save, save, SAVE!

4. Help from Mom, Dad or other Fans:

Though you may not be so sure, they actually do love you.

Suppose you have great credit, a down payment and a good job. You want to start your family, but are a little short of being approved for a loan. That could be the time to reach out to Mom, Dad or others. I usually suggest taking on debt singlehandedly, but there’s nothing wrong with asking for a little help now and then.

5. Patience:

Patience is key. To paraphrase an old adage: Patience and practice makes for a perfect outcome. So, practice patience, and make your purchase a perfect performance.

BONUS #6 – Contact your local mortgage professional at Dominion Lending Centres so we can help you navigate these new mortgage rules!

Courtesy of Sandra Tisiot, AMP – DLC Smart Debt 

Practice your mortgage…

What exactly do I mean by that? Well, if you’re a first-time buyer and just beginning to explore the housing market, chances are you’re currently renting or living with family, and very likely paying less than you will be going into your new home. For this reason, I strongly suggest you start getting used to your new mortgage payments sooner than later.

Let’s suppose you’re paying $1,600.00 monthly rent and planning on buying a home for $500,000.00 with a 10% down payment plus typical maintenance fees and taxes your new monthly payment would be approx. $2,600.00. I’d encourage you to start paying yourself the difference between your current rent and your new monthly payment, then deposit that $1,000.00 into an on-line savings account.

Why? For starters you’ll get used to the amount that will eventually be your real housing payment. If that isn’t compelling enough in itself, consider that you’re also be putting away extra money to help with your new purchase down payment, pay your closing costs or treat yourself to something special.

The Sooner you start “practicing your mortgage”, the better…

Already a home owner and looking to buy up? The same principle applies. Once you’ve determined the monthly mortgage payment on your new home, increase your existing mortgage payment by that amount. You’ll be better prepared for the realty of your new payment and paying down your mortgage faster in the meantime.

Any of the 2,500 Dominion Lending Centres mortgage professionals across Canada are happy to help you work through these and other mortgage related scenarios and tips, so please get in touch.

Courtesy of Shaun Zipursky, AMP – DLC City Wide Mortgage Services 

Lately we’ve seen projections that rates will begin to increase through the next 15 months. Some banks have projections that show the 5 year bond will increase from the current .65% to 1.7% that 1.05% increase will equate to these numbers.

The 5 year mortgage rate on average is set by most lenders at the bond rate and adding what some call their comfort margin of 1.8%. So by today’s standards that rate would be 2.45% which pretty close to what we see on average somewhere between 2.39% and 2.49%. Take the projected increase in the bond to 1.7% and add the 1.8% then we are now at 3.5% so almost a full percent higher. Doesn’t sound like much does it, let’s look at the numbers to see what difference per month it makes in your payment.

With a household purchase price of $500,000 at today’s rate of 2.45% on a 25 year amortization with a $350 a month car payment and no other debt you would need to be making $85,000 a year. Your monthly payment would be $2,195 per month plus taxes. Take the same scenario projected to happen a year from now and rates at 3.45% your payment now is $2,450 plus taxes and your income now needs to be $95,000 a year. I don’t know many people in today’s economy getting a $10,000 raise. (NOTE: these numbers do include CMHC fees and have been calculated using the Filogix program, they also take into consideration average credit scores).

If you’re waiting another year to buy you may be surprised that the rates have increased to the point that you no longer qualify for the house of your dreams. Talk to a Dominion Lending Centres mortgage professional today about your different down payment options you may be able to get into that new home before the rates increase and lock in for a five year term at today’s excellent rates.

Courtesy of Len Lane, AMP DLC Brokers for Life