Everyone knows that Mortgages come with a rate attached to them. But few know that each Mortgage Product has a PERSONALITY too!

The Personality of a mortgage product is a key component in selecting the right mortgage for you and your unique needs. So sit back, take some notes, and take your mortgage on a little coffee date—lets get to know it a bit better shall we?

8 Questions You Should Ask:

1. What is the penalty to break my mortgage, if I want to upgrade, refinance or sell?

Just how flexible is your mortgage? A no frills approach would be along the lines of a 12-month principle and interest penalty to break the mortgage —which means you may be stuck with the Lender and the terms that they give!

2. What are my prepayment privileges?

You will want to know how much extra you can put toward your mortgage principle-be it monthly or annually. This could mean a basic 0-20% monthly payment with or without an anniversary or lump sum payments. But this begs the question: How much do you REALLY need? Statistics show that 17% make lump sum payments, and 23% of us make additional monthly payments. Statistics show us that most BUT not all of us do not need more than 10% when looking for prepayment privileges but it’s always important to have the additional room when needed.

3. Is my mortgage portable?

This may seem like an odd question, but you will want to be able to bring your mortgage with you with NO penalty and keep your interest rate intact if you sell your current residence and buy another (portable). Often the case may be with a “no frills” mortgage, that you either can’t or you have restrictions placed on it. Also, it’s important to know that if you are in a Variable Rate Mortgage (AVRM) most lenders will not allow you to have a portable mortgage at all.

4. Can I Blend & Extend or Assume my mortgage?

You will want to ask your broker/lender if your rate can be blended or if the additional monies that you want to borrow for purchase can be extended. In addition, finding out if you sell your home, and someone can take over the remaining terms is a key question to ask—with a “no frills” you are out of luck with that one!

5. How long can my Amortization be?

We all want to know: how long will it take to pay off my mortgage (amortization) at the contract rate?? This question is an important one to ask as this impacts debt servicing and monthly payment. With your no frills you have a max of 25 years!

6. Does the mortgage that I am looking for apply to an investment property?

Looking to get into the real estate investment biz? Make sure you get a good broker/lender on your side! A no-frills mortgage won’t let the mortgage you are looking at apply to investment property’s (rental) – leaving you with a higher rate and unlikable terms.

7. What will my rate be if I go from a Variable Rate Mortgage (AVRM) to a Fixed Rate?

Asking this simple question at the start of your mortgage product search, can save you a lot of heartache. With a no frills mortgage you get the Standard Rate, not the best rate—which means you may be paying a lot more than necessary!

8. How is my mortgage going to be registered? Standard or Collateral charge?

A mortgage that is being registered as a standard charge can be transferred/switched at no costs at the time of renewal. A mortgage that is being registered as a Collateral Charge will typically incur a cost in renewing your mortgage that you must pay for.

These 8 questions are the ones you should always ask before signing on the dotted line of a mortgage. They make up the mortgage personality, and help to establish your future! All Dominion Lending Centres mortgage brokers are committed to finding you the best product to meet your unique circumstances. So remember, before you sign make a date with your mortgage and get to know each other a bit better.

Courtesy of Geoff Lee, AMP – DLC GLM Mortgage Group

Last week we touched on TD’s 0.15% move with existing variable rate mortgage clients. There is nothing new to add as TD remains the only lender to make such a move with variable rate clients. Perhaps TD back downs down soon, perhaps other banks join them – time will tell.

The fresh news on rates is that most lenders, not all, hiked the venerable 5-year fixed rate for new applicants by as much as 0.25%.

WHAT DOES IT ALL MEAN?

• A 0.25% hike equates to a ~$12.50 per month payment increase per $100,000 borrowed. Hardly a show stopper for many buyers.

• These moves are not surprising considering the timing is just a few weeks after the bank’s fiscal year end, and reflective of similar moves in November’s past. The increase is usually followed by a decrease during the heat of the following Spring market.

• Long term fixed rates are driven by the bond market, not the Bank of Canada – There is little chance of the BoC increasing Prime anytime soon (NOTE: the next BoC rate announcement is scheduled for December 7, 2016 – watch the Dominion Lending Centres website for more information from our Chief Economist, Dr. Sherry Cooper).

• This is a mosquito bite, not a shark bite.

• Everybody be cool.

And in other news…

THE VACANCY TAX

Vancouverites voted favourably on a motion put forth by the Ministry of Plenty to have telescreensinstalled in their homes to be monitored by a another division of city hall. Said division, The Ministry of Truth will be run by one Winston Smith. The purported purpose of the telescreen monitoring program will be to confirm that you are in fact residing in your residence, and thus the telescreen monitoring program ensures your avoiding tens of thousands in potential fines for waste. Said waste being owning something you are not using regularly.

Expect similar legislation to soon extend to automobiles, why should we build more cars when yours can be put to use by all night delivery drivers while you sleep? After all what is yours is really all of ours.

Proposals are also said to be in the offing to levy fines for unused exercise equipment, with the said fines being redirected to healthcare costs inevitably incurred from lack of use (exercise). So pluck that laundry off your Nordic track, elliptical machine, and treadmill and get hustling. Big Brother is watching…on your newly installed telescreen.

In case you skipped middle school English class and believe I am being serious… click here

Of course all such taxes are for our own good, the greater good, and there will be no negative consequences whatsoever…

Courtesy of Dustan Woodhouse, AMP – DLC Canadian Mortgage Experts 

I want to share with you a story. Below is the story of John, and if you ever want to own a home, you need to read his story.

John was a 25 years old. He was good with money. He went to school and he worked his butt off to support himself. John had been saving $250 every pay cheque for the past 2 years allowing him to accumulate $12,500. This was hard for John as he was barely making $15 an hour and was not left with much spending money after each payday. Six months ago, John started a new job working full time getting paid more than $25 an hour. With the increase in income, he bought a new car with monthly payments he could easily make. Financially, John was feeling confident.

John called his mortgage broker to tell him the good news. He had his 5% down payment, had his new full time job getting more than $25 an hour and was ready to put in an offer on a $250,000 condo. John was excited- he’d been saving for 2 years, he could finally move out and have his own home. Unfortunately, John’s mortgage broker informed him that even though he had the 5% down payment and full time job, he wouldn’t be able to buy a home for at least another two years!

What the heck happened?

Well, a couple things.

First, John’s credit report wasn’t strong enough and his score was too low because of unpaid parking tickets and short credit history. Second, John didn’t know about closing costs so his savings were short thousands of dollars. Third, John didn’t know about the ratios lenders look at when qualifying a potential borrower. His $450 a month car payment took away his ability to qualify for an additional $100,000. To top it all off, John wasn’t even guaranteed 40 hours a week at this new job. Due to this, John’s broker informed him that a lender will require a 2-year average income. Of course, 6 months ago John was only earning $15 an hour, giving him a 2-year average income significantly lower than what he had now.

How to avoid being like John:

Do an application with a Dominion Lending Centres mortgage broker, these are FREE. They’ll be able to tell you exactly what you can afford, exactly how much you need to have saved, and where your credit score needs to be and how to get it there. Many of you reading this are a year or two away from wanting to purchase your own home but even if you are 5 years away: call a mortgage broker, take 20 minutes, do an application, and get qualified!

Purchasing a home is one of life’s biggest and most stressful moments and you need to be prepared for it so you don’t waste time and money like John. This is my entire reason for being a mortgage broker; someone who can be an expert for others to rely on for help. Use a Dominion Lending Centres broker, find an expert, get qualified.

Courtesy of Ryan Oake, AMP – DLC Poducers West Financial

I had a client, who at 84 years old sold his home in order to purchase a home closer to his daughter and her teenage son. Although most people prefer to age in their own homes, this client lived far away from his family, and at this stage in his life, he preferred to be closer to them; family was very important to him and he missed them very much. However, he was concerned: at this age and stage of life, would he be approved for a mortgage?

Here are the numbers:

• Client 84 years old
• Sold his existing property for $380,000 with a small mortgage of $80,000
• The purchase price of his new home was $420,000, but the bank was unable to qualify him for a conventional mortgage.
• Client was referred to me and we were able to qualify him for a CHIP Reverse Mortgage in the amount of $167,495.
• Client only needed $120,000 for the purchase but he took $130,000.

This client was very happy after his loan was approved. In fact, he went to the branch a couple of days after to make sure that the extra $10,000 that he had taken had been deposited into his account. As soon as it was confirmed, he withdrew $5,000, placed it in a Christmas card, sealed it and put it in his safety deposit box. He later told the banker that he was going to give the $5,000 to his grandson as a Christmas gift.

You see, my client’s grandson plays hockey and he had the opportunity to play in a tournament in Europe over the March Break, and it would cost $5,000 to get him there. At 84, my client wanted to make sure that the money was safely set aside should anything happen to him between May and Christmas, to ensure that his grandson would have the money to participate in this hockey tournament.

It was very important to him to be able to provide this gift to his grandson so that he could make a difference in his life. I am proud to have had the opportunity to help my client make this wish come true.

To learn more about how a CHIP Reverse Mortgage can help you or a loved one, contact the mortgage professionals at Dominion Lending Centres.

Courtesy of Liz Prendergast – HomEquity Bank, Business Development Manager 

Did Prime go up?

No.

Did my Variable rate mortgage rate change?

No, not unless your variable rate mortgage is with TD.

So the Bank of Canada did not raise rates?

No, in fact they are more likely to lower rates than increase them.

But TD raised rates?

Yes, but only by 0.15% and only for variable rate mortgage holders.

If you are a TDCT client in a variable rate mortgage at TD then read on…

Update RE TD Variable Rate mortgage rate changes

On Nov 1st, 2016 TD announced their own private rate increase affecting just one exclusive group of TD clients. Specifically those in a TD variable rate mortgage.

While the rate adjustment may be minor, at only 0.15%, it is still a change, and nobody likes change.

Does this mean immediate action should be taken?

No.

Does this mean that going variable was a mistake?

No.

Is this change going to stick?

At this point (Nov 11, 2016) no other lenders have followed suit, and TD is effectively all alone on this move. As such TD may back down and reverse the increase.

For those of you with a discount of Prime -0.60% or better, you are still laughing. Such a discount leaves you with a net rate of 2.25% which can only be matched by a two year fixed rate product. And if you have such a discount the odds are you have been enjoying it for some time now as well. Racking up the savings!

For those whose net rate has risen above the 2.25%, keep in mind some of the key features of the TD variable rate product in particular that may make it worth the extra few dollars: You did not wind up in this product with this institution by accident.

• The TD variable is a Fixed Payment product, which means your effective payments will remain the same. This is meaningful if the subject property is an investment property as well – no change to your monthly cash-flow.

• The TD variable is nearly the only product that can be converted into a 3-year fixed from day one. (Currently ~ 2.29% – but this is just an example, not a suggestion for action) There are greater options with TD than with other lenders.

• The pre-payment penalty to break this mortgage is only ~0.50% of the balance, about nine times less than the penalty to break out of their 5-year fixed product (which 60% of clients wind up doing). Keep this in mind before locking in, I am not locking my TD variable in anytime soon.

• TD is the only lender that gives you 12 months to find a new home to move the mortgage over to and grants a full penalty refund…even if they give you a deeper discount on the new mortgage! That’s right, a full penalty refund up to a year later, and possibly and even deeper discount!

What is this increase costing me?

A 0.15% increase results in an interest-expense cost increase of $12.50 per $100,000 outstanding.

Got a $300,000.00 mortgage? Then your payment just went up by zero, but the interest component within your payment did go up by $37.50 per month.

Is the Bank of Canada going to raise Prime too?

Highly unlikely by all current estimates.  Said estimates being made by people far smarter than myself.

Will TD raise their own Prime rate further?

This also seems unlikely.

Will TD lower their Prime back to 2.70% to get in line with ALL of the other financial institutions?

Perhaps if TD gets enough pressure from clients they will – and this is where I suggest a call to your TD branch to express your displeasure with them being the only bank to do this to their clients. And only to their mortgage clients.

Do you have an unsecured credit line? Car loan, TD credit card? All good they left the interest rates the same on those. What’s that, you carry no high interest debt? Yep, TD is sparing the folks with consumer debt and only coming after those with mortgage debt. A touch ironic for sure.

If you wish to call TD directly. Look up the local branch here, press ext ‘250’ and this will connect you to the branch manager directly.

This is a phone call that may result in some action – or you can always call your local Dominion Lending Centres mortgage professional for more information.

Courtesy of Dustan Woodhouse, AMP – DLC Canadian Mortgage Experts 

It is forever in discussion in the Lower Mainland – is a former grow-op home a good investment? Prices are often much lower than similar properties so at first glance it seems so. But the stigma will follow the property in perpetuity, unless it’s razed to the studs and rebuilt. If it’s been remediated that means it’s perfectly fine now, right? Not to the banks.

This is an era where lenders are being very conservative with the Office of the Superintendent of Financial Institutions (OSFI) clamping down on policies. Prior to the sweeping mortgage rule changes that came into effect in July 2012 there were at least a dozen lenders with products for remediated grow-ops. That list has now been whittled down to about 5 credit unions in BC and a handful of private lenders.

What you can expect from these offerings is that no matter how much you can put down or equity you have the credit unions are requiring mortgage insurance (CMHC or Genworth) so you will have the premium added to your mortgage and you can expect a 0.50-1.00% bonus added to the interest rate – not to mention an additional lender fee on top of all that in some cases.

While the price of that home may be much lower than comparable properties without the stigma it can cost you in other ways.

Lenders are being conservative with a view to the re-sale marketability factor. If the stigma will stay with that home forever, will there be many people willing to buy it if you decide to sell – or if that bank needs to foreclose and sell the house itself. Not to mention, with so few and costly financing options how many potential buyers will brave that process.

Buyers that acquired remediated grow-ops prior to July 2012 who are now coming up for renewal are finding themselves with very few options. A recent client was hoping to secure a better rate, consolidate some credit debt and lower their payments was forced to simply renew with their existing lender at a higher rate than the rest of the market and it was just too expensive to tap into his equity.

If you make the decision to buy a beautiful home with a dubious past remember to always ask one of the qualified mortgage professionals at Dominion Lending Centres to help you find the best financing for.

Courtesy of Kristin Woolard, AMP – DLC National 

When purchasing a property, it can be an overwhelming experience. Especially with the current real estate market when you need to make fast decisions and you need to get your questions answered quickly. Many think that their only option is talking to their bank where they do their daily banking to get their mortgage. The question is you’re your ever considered working with a Mortgage Expert? A Mortgage Broker?

There are many reasons why you can benefit from using a Mortgage Expert. A mortgage consumer survey conducted in 2015 by CMHC (http://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/sure/fihosu/upload/2015-First-Time-Homebuyers-Survey.pdf) found in that 55% of first-time buyers reported arranging their mortgage through a mortgage broker.

The survey also reported that overall, recent buyers were satisfied with their experience using a broker (79%) and almost half (47%) “totally agreed” they were satisfied and 32% “somewhat agreed” they were satisfied.

The following are some reasons why you should consider working with a Mortgage Expert:

• Mortgages are our area of expertise

When you need a mortgage or are refinancing your existing one you will have questions such as. Where do I start? Which lender is the best fit for my needs? Which lender can offer me the best value? What are the real differences between mortgages? Which terms and features are the best for my unique needs?

Mortgage Experts have the answers. They work and have experience working with up to 200 plus lenders including big banks, credit unions and other lenders that only work with brokers. They understand the benefits of the various rate options, are familiar with the different types of mortgages and find the best mortgage for your unique needs. In comparison, if you approach your bank for a mortgage, they can only offer you a limited choice of their own products.

• Mortgage Experts find solutions that fit your unique needs

They will help you navigate the confusing and overwhelming road of the different rate types, mortgage options and terms while helping you find the best solution for your current circumstance and your long term plans. Mortgage Experts take the time to understand your financial needs and situation. In addition, to all of this, they help you avoid unnecessary risks and can save you money.

• Help you save time and money

Buying a house is time, energy and emotionally consuming. Finding the right home and finding the best mortgage that is right for you can take hours, days and even weeks if you were to do it yourself. Mortgage Experts do most of the leg work for you. They will research mortgage options, process your application, obtain the required documentation requirements and negotiate on your behalf. This means less disruption to your daily life and more time to focus on your home research and enjoy the process of homeownership.

• Multiple options for every client

Since each bank and lender have their unique guideline and programs. Mortgage Experts are able to assist clients with different situations. They are able to help if you don’t have sufficient funds for the down payment or/and closing costs. If you are self-employed or own your own business making it difficult to verify their income or if you have credit blemishes.

• The services of a Mortgage Expert are free

Yes, Mortgage Experts are paid their fees by the lender, not by the person who is using the mortgage broker’s services. There is no cost for the client.

Before you start shopping for your home, contact a Dominion Lending Centres Mortgage Expert to assist you in your road to homeownership.

Courtesy of Alisa Aragon, AMP – DLC Canadian Mountain View 

When bad things happen to good people sometimes the reality is they just can’t keep up with their mortgage payments. While Canadian mortgage defaults are amongst the lowest in the world at just 0.31%, foreclosure still happens.

In BC, if a lender forecloses on a homeowner they are required to give the borrower a 6-month Redemption Period – time granted to bring their mortgage up to date or find another lender. If at the end of this period the borrower is unsuccessful the foreclosing lender can ask for a Court-Ordered Sale. Once granted the property will be appraised and then listed by a realtor for sale at a price that will get the bank their money back in a reasonable amount of time. This usually translates into a lower asking price than if the seller that could hold out for the best the market has to offer.

If you have found a property in foreclosure listed at a great price there are a few things to consider before submitting an offer.

First, as soon as an offer is made and accepted a court date is set for about two weeks after. At court other parties can attend and make their offers and it can turn into a bidding war with the Court approving what they feel is the best offer.

Another point to consider is that you have to come to court with basically a condition-free offer. This means if you need financing to buy it you can only have one condition left on the mortgage approval – the Court accepting the offer. If you have less than 20% down and need mortgage insurance (CMHC) some lenders won’t take it to the insurer before your offer is accepted so your options may be limited somewhat. You have a much stronger bid if you have more than 20% to put down.

The rest of the financing conditions are pretty much exactly what to expect but again, all conditions need to be satisfied before presenting an offer. This means the cost of an appraisal and house inspection are upfront costs that may be a waste of money if you don’t get the property in the end.

Once the Court approves your offer the completion date is set usually for two weeks after that so you had also better be prepared for a hasty move if that proves necessary.

The last thing to note is that once the sale completes at lower than true market value you have now effectively established a new value for your place. Over the next 6-months or more likely a year an appraisal on this property will have its own sale price factored into its appraised value so if flipping is your game you could have a longer than normal investment period before seeing it’s true market value reflected.

Buying a foreclosure is a step up in the complexity of buying real estate so always seek the professional advice of a Dominion Lending Centres agent before jumping in.

Courtesy of Kristin Woolard, AMP – DLC National 

Before we start, something needs to be made clear: B.C.’s First-Time Home Buyers’ Program is not the same thing as First-Time Home Buyers’ Tax Credit and it is also not the same as the Home Buyers Plan. The First-Time Home Buyers’ Program in British Columbia gives individuals the opportunity to reduce or eliminate the property transfer tax they pay when purchasing their first home.

Property transfer tax is exactly as it sounds: a tax you pay to transfer your purchased home into your name. It is a one time tax everyone pays when they buy a home and it is not the same thing as yearly property tax payments. Property transfer tax is equal to 1% of the first $200,000 of a property’s value plus 2% on any amount over $200,000 up to $2,000,000. So, if you buy a house or condo worth $350,000 you will pay $5,000 in property transfer tax (1% of $200,000 plus 2% of $150,000).

In order to qualify for this First-Time Home Buyers’ Program and be exempt from paying your property transfer tax, you must be:

* Canadian citizen or permanent resident

* Lived in B.C. for 12 consecutive months up until you register the property OR filed at least 2 income tax returns as a B.C. resident in the past 6 years.

* Have never owned any portion, of any home or residence, anywhere in the world at any time.

* Have never received a first-time home buyers’ exemption or refund.

If you qualify for the above, then you must make sure the property qualifies for the following:

* Located in B.C.

* Your principal residence (you must live there and not rent it out)

* Have a value of $475,000 or less if register on or after February 19, 2014

* be smaller than 0.5 hectares (53,819.60 sq. ft.)

Any amount over $475,000 just means you will not receive a 100% exemption or refund, and you will still need to pay a portion of the tax. To find out what that portion would be, you can visit: http://www2.gov.bc.ca/gov/content/taxes/property-taxes/property-transfer-tax/understand/first-time-home-buyers/current-amount#current-exempt or call the mortgage professionals at Dominion Lending Centre – we’re here to help!

Courtesy of Ryan Oake, AMP – DLC Producers West Financial 

If you have have overextended yourself with credit card debt, or have consolidated all of your consumer debt into your mortgage, or are at the point where you just want to cancel your credit cards, we have the 3 steps for you to follow to get your credit back in check.

1. DO NOT CANCEL ALL YOUR CARDS

It may seem tempting, but money lenders want to see that you can handle your credit responsibly. Instead keep your 2 oldest credit cards (trade lines). The longer you have had your trade line, the better it is for your credit.

2. FOLLOW THE 2/2/2 RULE

The 2/2/2 rule means that money lenders what to see 2 trade lines, for 2 years with a minimum of a $2,000 limit. These cards need to be paid on time each month, and they also need to stay within that $2,000 limit!

3. USE WITH CARE-REGULARLY

The 2 trade lines you keep need to be actively in use. If you are concerned about consumer debt, then have a monthly bill such as your cell phone, cable, or even Netflix charge billed to your credit card. Then have that credit card paid automatically each month from your bank account.

Follow these steps to keep your credit in check and growing.  When it is time to renew or revamp your mortgage, or purchase a new home, your credit won’t hold you back—And you can bet Dominion Lending Centres is here to help you get the sharpest rate and the best product.

Courtesy of Geoff Lee, AMP – DLC GLM Mortgage Group