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 

In October 2015, I wrote 136 words on this topic, hoping that the image alone would get some traction. It was a pretty insane image to a numbers geek like me – linked here.

Perhaps these additional 381 words worth will garner more attention.

This month’s Visa images are tamer, as a business card the monthly total can be significant during busy months. Yes I pay the balance to zero each month, in fact I appear to actually over pay it some months (so deep is my fear of credit card interest).

No I will not be taking 108 years and 7 months to pay off the balance…

108 YEARS AND 7 MONTHS!

Here is a question for a government so intent on protecting us from ourselves:

Why clamp down even further against lending on a secured asset in which we live, a debt we must pay off in a maximum of 30 years, (25 if less than 20% down) with a record of repayment that is the envy of the free world, yet allow us to take 108 years and 7  months to pay off the:

• Particle board furniture we fill the home with?
• The vacation we could not afford to take?
• A night of bottle service hitting up the clubs (yo!)?

How does this make sense?

99.63% of Canadians never miss a mortgage payment. There is no mortgage crisis to repair.

Can the same be said about this form of debt though?

To qualify for this 108 year 7 month amortization… Does one need:

• A down payment?
• Clean Credit history?
• A job?

Nope. Not at all.

In fact in some cases one can qualify for this kind of debt without even being alive, or even being an actual  human being. Trust me, to apply for a mortgage through Dominion Lending Centres, is easy, but not THAT easy!

So I ask again: Where is the real debt problem in our country?

Why is our government not asking this question?

Why is our government intent on trying to fix a problem that does not exist?

Canada is not the USA, and policy should not be set based on Netflix analysis.

The recent changes made to mortgage lending will in fact do the most damage to lower middle class households, the ones already most susceptible to 108 year 7 month loans.

Enjoy your day, mine will be spent applying for credit cards on behalf of our dog and two cats.

GET IN FRONT OF A BAD SITUATION

Financial difficulty can happen. Marital breakdown, economic downturn / job loss, health issues are all realty.

If I can give one piece of advice it’s this – in the face of financial difficulty the worst thing that a person can do is to go dark on their creditors.

In my experience, being 100% upfront and honest with creditors is by far the best 1st step in face of a cash crunch. CALL YOUR CREDITORS. EXPLAIN YOUR SITUATION. ASK FOR A TEMPORARY REPRIEVE. BE PROACTIVE WITH LOOKING AT A SOLUTION EARLY.

Trust me – most creditors DO NOT want to foreclose on homes, send you to collections or push you over the brink of financial ruin. Many will actually work to help you get back on your feet if you let them know early on that you are in a crunch. I have seen some of our lenders make amazing concessions for customers who hit a stumbling block financially when they have gotten in touch BEFORE they fall behind.

It’s when a person stops making minimum payments, avoids calls from creditors and just gives up on their situation / assumes they are up the creek or are too embarrassed to admit that they may not be able to meet obligations.

This looks to creditors that the person has abandoned the debt and is now looking to stick it to them.

Unfortunately, many times people call us at Dominion Lending Centres when they are already months behind and been served with collections / seizure notices and credit is ruined. At that time, they are too far gone and lenders/creditors are normally not able to help.

Any time a person calls to advise that they are looking for a solution to help with a cash crunch, the first question I ask is “Have you spoken to your creditors?”

Don’t be embarrassed, be proactive!! Save your credit standing, your assets and your future. Short term pain is much better than long term ruin any day.

We have seen it all at DLC and are here to help.

IN THE MIDST OF CHAOS, A FOCUSED APPROACH IS KEY

By now you will have likely heard that the Federal Finance Minister has made drastic changes to mortgage lending rules making it tougher to qualify for a mortgage. For Canadians with less than a 20% down payment, their purchasing power has been dramatically reduced. So what can you do if you want to purchase a home in the next few years? Below are five main points you will want to consider if home ownership is one of your financial goals.

First, however, let’s clarify the role of debt servicing in the mortgage approval process. There are two types of debt servicing ratios that lenders look at. The first is Gross Debt Servicing (GDS) and it accounts for the costs associated with housing – mortgage principal and interest payment, property taxes and heat. The second ratio is Total Debt Servicing (TDS) which includes all costs in the GDS plus all other outstanding debt. These ratios need to be below 39% for GDS and 44% for TDS. So let’s look at what you can do to qualify within these ratios.

1. Pay down unsecured debt. Balances on unsecured debt such as credit cards and unsecured lines of credit affect your TDS ratio. Even if the GDS is in line, if your TDS is high, your maximum mortgage amount will be limited. All unsecured debt must be calculated at a 3% payment per month regardless of the actual payment required. For example, a $10,000 credit card balance equates to a $300 per month payment for debt servicing. High balances combined with other types of debt (i.e. car payments) will affect the maximum mortgage amount so pay them down.

2. Hold Off On That New Car. We all love that new car smell and dealerships make it very easy to purchase a new car. However, that car payment may make the difference between qualifying for a mortgage or not. If home ownership is a goal for you, then you need to understand how that car payment will affect your debt servicing ratios. Like unsecured debt, that car payment is calculated in your TDS.

3. Manage Your Credit As If It Is Your Most Valuable Possession. Now more than ever, good credit will be a key to home ownership. As the landscape of the mortgage world continues to change, credit will become a main focus of lenders when considering mortgage applications. Always make your payments on time, keep balances below 70% of your limit and maintain at least two types of credit with a two year history.

4. Save, Save, Save. Start saving now for that down payment. As mortgage guidelines tighten, the larger down payment you have saved, the more options available to you. Gifted down payments from immediate family can also be considered as part of your down payment.

5. Start Claiming Income On Your Tax Returns. This sounds contrary to what most people would think as we all strive to pay less taxes. However, over the last several years lenders have required proof of income based on your tax returns. The higher the income on the tax returns, the more income that can be used to qualify you for a mortgage. Income such as self-employed income, tips, overtime, etc. require a two year average in order to be used. If you want to purchase a home in the next few years, you may want to start claiming all income earned to maximize the mortgage amount you qualify for. Guidelines around self-employed income have been tightening up for a few years so there is no guarantee the programs available now will be available in the future.

As the government continues to tighten mortgage lending rules, it is more important than ever to ensure you work with a mortgage professional you trust who can help guide you towards home ownership. Contact your Dominion Lending Centres mortgage broker and start reviewing your situation now to work towards your homeownership goal.

THINKING OF SELLING? COSTS YOU SHOULD KNOW ABOUT!

Often times it’s the simple math that will betray you when selling a property. In your head you do quick calculations, you take what you think your property will sell for and then subtract what you owe on your mortgage, and the rest is your profit! Well… not so fast, there are several costs that have to be taken into consideration when selling a home. It’s especially important to get these costs right when you are selling one property, and using the proceeds from that sale as a downpayment for another property.

So here is a fairly comprehensive list of costs you may incur when selling your home.

REAL ESTATE TRANSACTION COSTS

Although it may seem odd that you have to pay money to sell your home, that’s the reality, and selling a property isn’t cheap. If you use the services of a professional REALTOR®, the total commission cost is going to be anywhere between 4-6% of the purchase price, divided between the listing agent (the REALTOR® who represents you) and the buyer’s agent (the REALTOR® representing the buyer). It’s also good to note that GST is added to real estate commissions.

If you are looking for a way to get around paying real estate commissions, you might consider selling your house privately. To list your property with a FSBO company (for sale by owner), you are going to be anywhere between $400-$1,500 just for setup and a bit of marketing. From there, you may still have to negotiate a commission if potential buyers are working with a buyer’s agent.

MORTGAGE DISCHARGE FEES

If you have a mortgage on your property, there will be a cost to discharge it, the question is how much?

If you are breaking your mortgage in the middle of your term, you will be responsible to pay a penalty. On a closed mortgage, that penalty will be either 3 months interest or an Interest Rate Differential penalty, known as an IRD. Each mortgage contract is written up differently lender by lender, so it’s impossible to simply explain the math here and have you calculate your penalty on your own. In order to figure out your IRD ahead of time, you can either contact your lender directly, or you can contact me and I can help you through the process.

The IRD penalty is the wildcard in the whole process, because depending on how the lender calculates the penalty, penalties can range from $3,000 to $30,000. It is very important to know what you are dealing with here.

If you are currently in a variable rate mortgage, your penalty will be equal to 3 months interest. Even if you are in an open mortgage, or have a home equity line of credit secured to your property, there might not be a penalty to discharge, but there will most certainly be some kind of lender fee, usually between $250-$500.

LAWYER’S FEES

In order to discharge the title of your property, and to verify that the buyer is going to receive a clear title of your property, you are going to incur legal fees to sell your property. In a straightforward discharge, expect to pay between $500-$1000, less than when you purchased the property, but an expense none the less.

UTILITIES AND PROPERTY TAX

Although this might not come as a surprise, when you are selling your property, you are responsible for paying all the property taxes and utilities up to the day you no longer have possession. If you close in the middle of the month, you will be responsible for half the months taxes and utilities. If you are on equalized payments, and you have run a deficit with the utility company, expect to bring that bill current before your lawyer can discharge the mortgage!

CAPITAL GAINS TAX

If you’re selling your primary residence, you are in the clear. In Canada we don’t pay tax on the appreciation of our primary residences, however, if you are selling an income property, you will be responsible to pay taxes on half the gains at your marginal income tax rate.

PROPERTY REPAIR

If you are looking to sell your house quickly, you will want to make sure that it is in tip top shape, don’t underestimate the growing costs of fixing your property up before trying to sell it. It has been said that sellers should consider spending up to .5%-1% of the asking price on getting the property ready, making sure the small things are looked after will give people the feeling like the property was looked after . Low-cost, minor improvements like

• Patch drywall and nail holes, repaint.
• Fix or replace damaged flooring.
• Repair plumbing leaks.
• Replace burnt out light bulbs.
• Replace outdated light fixtures.
• Clean out and reseal gutters.
• Keep up with the yard and garden.

MOVING

Don’t forget that once you do sell your house, it’s gonna cost you money (and time) to move. Depending on how much stuff you have, you are looking at some gas money and pizza for friends, or a few hundred to a few thousand for movers.

There you have it, by understanding these costs hopefully you will have a better idea of how much money you will actually have in your jeans after selling your house! Of course if you’re looking for a new mortgage for a new house – give the mortgage professionals at Dominion Lending Centres a call!

5 REASONS A MORTGAGE BROKER IS YOUR BEST CHOICE

So it seems that there are still Canadian consumers who have reservations or misunderstandings about why a mortgage broker is their best choice. Time to take a quick look at 5 reasons you should use a broker.

1. Almost always free to use. 41% of consumers polled for the June 2016 Mortgage Professionals Canada “The Next Generation of Homebuyers” report seem to have the misconception that they are the ones paying somehow for the mortgage broker’s services. Here are a few things you should know:

· Bank branch reps and mobile specialists are paid bonuses for being able to get you to sign at a higher rate. It’s true. Ask them.

· The banks and broker lenders avoid the costs of having another in house employee with benefits and all that when they go through a mortgage broker who pay all those cost themselves.

· A mortgage broker will only charge a fee on an alternative deal where the client has blemished credit or on a commercial deal and in both cases the amounts are very upfront and are agreed to ahead of time.

2. Professional and carefully watched. Mortgage brokers only do mortgages. That means we know what we are talking about and can advise you properly. You can also rest assured that your privacy is well protected given that we are watched carefully by governmental agencies. As we should be really.

3. Choices! A mortgage broker is exactly like an insurance broker. We have access to a large number of lenders so if your application does not quite fit with one bank we have many others we can try it through. It is our job to know that you are getting the best mortgage and rate for your situation. Often we can even get better rates for you at your own bank given the very high volume we do with them.

4. Avoiding nasty pitfalls. Do you know how your bank calculates the penalty on the mortgage? Do they use posted to discounted rates? Are you getting put into a collateral mortgage? That’s OK if you have no idea what any of that means. We know. It’s our job and that can save you a ton of money down the road.

5. Convenient. Mortgage brokers pride themselves on their exemplary service. We can work with you remotely or face to face. We use the latest technology to make things as easy as possible for our clients.

So there you have it. We are free to use, full of professional advice, offer wide variety of choices, help you avoid pitfalls and we are convenient too! Oh, and did we mention that just over 50% of first time home buyers use mortgage brokers these days? Come find out why Dominion Lending Centres is where you should go for your next mortgage. You’ll be so glad you did.