31 May

PURCHASE PLUS IMPROVEMENTS – YOU JUST FOUND YOUR DREAM HOME… SORT OF.

General

Posted by: MANJIT SINGH BHONDHI

PURCHASE PLUS IMPROVEMENTS – YOU JUST FOUND YOUR DREAM HOME… SORT OF.

In a competitive real estate market or a market that is suffering from a lack of available listings, the Purchase Plus Improvements mortgage could be your saving grace. Regardless of whether you’ve just started your search for a new home or if you’ve been hunting for months, this is something that you should be thinking about each time you walk into a potential house.

Of all the homes that you’ve looked at so far, you have likely walked into at least one home by this point and said to yourself: “Well this house looks great, but if it wasn’t for that incredibly dated _______”. You fill in the blank here… Kitchen, bathroom, flooring, basement, etc. If you have passed up the opportunity to purchase that potentially perfect property because of the costs of required improvements, it’s important that you know there is a solution to your problem. Enter, the Purchase Plus Improvement Mortgage.

In a nutshell, a purchase plus improvements mortgage allows you (the home buyer) to roll the costs of improvements into your mortgage. The new mortgage allows you the ability to finance those much-needed repairs and get you into that home of your dreams! The mortgage comes with a great interest rate and one simple mortgage payment. Had you chosen to purchase the home and not include the renovation costs into the mortgage, then you might end up financing the improvements on a higher interest rate unsecured debt which also give you a second payment to make each month.

The first step to take is a conversation with your Dominion Lending Centres mortgage broker about specifically how that Purchase Plus Improvements Mortgage would apply to your application and specific situation. Understanding the types of improvements that can be included in the financing will help you better understand which potential houses might work great for you.

Working with your Realtor, the mortgage broker will help guide you through the final approval process. The main difference between a Mortgage vs. a Purchase Plus Improvements Mortgage is the need for quotes. As part of the verification process, your mortgage broker and the lender will need to see a quote for the work that is planned for the improvements. The quotes will provide us with the cost and plan details required to secure the final approval. Getting you into a house of your dreams!
If you have questions about how a Purchase Plus Improvements Mortgage could work for you, take the time to connect with our team anytime!!

NATHAN LAWRENCE

Dominion Lending Centres – Accredited Mortgage Professional

30 May

WHAT IS REFINANCING AND HOW IT WILL CHANGE YOUR CREDIT?

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Posted by: MANJIT SINGH BHONDHI

WHAT IS REFINANCING AND HOW IT WILL CHANGE YOUR CREDIT?

The need to refinance your mortgage can be for many reasons. Whichever the reason you are refinancing, there are a few things to consider. One of the top questions we are asked as a Mortgage Broker is “will refinancing hurt my credit?” The answer to this question brings cause for a closer look at the refinancing process in itself.

First, you need to know that when you refinance there will be consequences outside of affecting your credit. To refinance you are essentially restructuring terms of a contract and therefore a penalty will apply.

Every lender is different in how they calculate penalties, but in general:

• Breaking a fixed mortgage will result in you paying the interest associated determined by the current interest rate for the remainder of your term or three months’ interest. Whichever of the two are greater.
• Breaking a variable mortgage will result in you paying out three months’ interest.

There are also limitations on the amount you can borrow with refinancing against your mortgage or tapping into your home equity line of credit.

• For borrowing or securing a line of credit against your property you will borrow up to 80% of the appraised value of your home, less the mortgage you have.

• For a Home Equity Line of Credit, you can take out a line of credit up to 65 per cent of the value your home, with the total Home Equity Line of Credit and mortgage totaling 80 per cent.

Now that we have covered the penalty and borrowing limitations, we can tackle the true question—will refinancing change my credit?

The answer to that is yes. No matter how you look at it, debt is still debt. Whether you are looking to refinance to gain access to your home’s equity, gain a better rate, or utilize your home’s equity for investment purposes you are still borrowing money thus your credit is going to change.

Let’s take a look at 3 examples to put this into better perspective.

 

 

 

 

 

No matter what your reason for refinancing, remember that debt is still debt and you credit may be impacted.

We advise that before you refinance consider the reasons you are doing so. Ensure they are justified. For example, if you are refinancing to do a much needed home renovation, purchase an investment property or pay for your child’s university tuition then those are all wonderful reasons for refinancing. On the flip side, refinancing to take a family vacation—maybe not a good reason. Look at what your reasons are and then decide if this option is the right one for you.
As always, Dominion Lending Centres is here to help! Give us a call and we can help you navigate your refinancing

Geoff Lee

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional

26 May

HOW MORTGAGE RATES WORK

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Posted by: MANJIT SINGH BHONDHI

HOW MORTGAGE RATES WORK

how mortgages workEver wonder how your mortgage rate is determined? What factors make it jump from percentage to percentage? We are getting down to the nitty gritty today and giving you the facts on what impacts mortgage rates.

What affects a Mortgage Rate?

There are 10 factors that affect a mortgage rate:

1. Location
Depending on which province your home is located in, this will have an overall effect on your mortgage rate. Generally speaking, provinces with more competitive markets will have lower rates.

2. Rate Hold
A rate hold is a guarantee on a rate for 90-120 days. If your closing dates do not fall within this timeframe, then your hold will be re-assessed. If your rate hold is re-assessed and the lender’s rates at that time of re-assessment are higher than your initial rate, then your rates will go up accordingly. We always follow up with all of our clients on a regular basis to avoid this situation whenever possible!

3. Refinancing
Movement on your mortgage of any form can affect your rate typically when you are working with your existing lender. New buyers will have lower rates than refinances, but refinances will have lower rates than mortgage transfers. Mortgage Brokers can access multiple lenders to find the most suitable product for their client’s unique needs.

4. Home Type
Lender’s assess the risk associated with your home type. Some properties are viewed as higher risk than others. If the subject property is considered higher risk, the lender may require higher rates.

5. Income Property/ Vacation Home
As previously mentioned, lenders assess the risk on your property. If you are buying an income property or a vacation home than the lender can assess at a higher risk and a higher rate may apply. This is one of the major benefits to having a mortgage broker on your team! They have access to a variety of lenders that can offer you a rate lower than others as they can compare a large variety.

6. Credit Score
We have talked a lot about credit on our blog, and there is a reason for that. Your credit score is a large determining factor for your rate. Lenders want to see that you have a history of managing your credit well and that you will be able to pay back the lender overtime. For more information on fixing your credit, check out our free e-book, Credit Medic.

7. Insured or uninsured
With the changes that the federal government made back in October 2016 this has had a significant impact on mortgage rates if your mortgage is insured or not. Read our Change of Space guide to find out the full impact of these changes.

8. Fixed/Variable Rate
The type of rate you are wanting to get will also affect your rate. Fixed rates are based on the bond market and variable rates are based on the Bank of Canada (economy).

9. Loan to Value (LVT)
The higher the Loan to Value the higher the risk. You can have someone who has a $1 million mortgage but has $2 million in equity in that property and they would be viewed as a lower risk than someone who has a $200,000 mortgage and their property is only worth $220,000. To boot with the federal changes, the person with the higher risk mortgage (insured) is likely to get a more competitive interest rate than the client with $2 million in equity.

10. Income level
The final part in this rather large equation is your income level. Although this does not necessarily impact the rate itself, it does impact your purchasing power and the amount you are able to put down on a home. Essentially indirectly impacting the rate.

Each of these factors plays a factor in the rate you will be able to get through a lender. The easiest way to get the lowest rate is to work with a dedicated mortgage professional. They will put together a fail-proof plan to get you the sharpest rate. They also have access to a variety of lenders which saves you the time and trouble of shopping for your mortgage on your own. As a final point, mortgage brokers can also assess your unique situation and find the right mortgage for you. Their goal is to see you successfully find and afford the home of your dreams and set you up for future success.

Geoff Lee

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional

25 May

THIS VS THAT 8: RENEW OR SWITCH LENDERS

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Posted by: MANJIT SINGH BHONDHI

THIS VS THAT 8: RENEW OR SWITCH LENDERS

THIS VS THAT 8: RENEW OR SWITCH LENDERS

Renew (the mortgage industry meaning): to remain with the current lender by simply signing the renewal letter that comes in the (e)mail.

Switch (again, the mortgage industry meaning): to move from the existing lender to a different lender without leveraging any additional funds/equity; the outstanding balance remains the same.

Is renewing your mortgage with the current lender the best option, or should you consider switching to a new lender? The answer is provided with some simple math. As mortgage consumers, we want to save as much money as possible, plain and simple.

Seventy percent of borrowers that currently hold a mortgage simply sign the renewal letter they get. Most of the time they are leaving 20 – 40 basis points or 0.20% – 0.40% on the table. This puts millions of dollars back into the pockets of the lenders and their shareholders.

There are times when the current lender does not offer the best market rate or product for your situation. How will you know you are getting the best rate for your scenario? By contacting Dominion Lending Centres Mortgage Professional who works for you… not the lender.

So first things first: contact your DLC Mortgage Broker four months before the term matures to discuss the next term’s strategy. What do the next two, three or even five years look like? This will then lead to an interest-rate discussion. Can there be some money saved?

I have been working with a client over the past couple of weeks as her current mortgage is coming to maturity. Had she just signed at the bottom of the renewal letter she would have been overpaying by 30 basis points.

Current lender offered 2.84% for a 5-year Fixed term (Renew)

New lender offered 2.54% for a 5-year Fixed term (Switch)

Here’s what that looks like. Note the mortgage balance used was $330,000 (25-year amortization). This just happens to be the average mortgage amount in British Columbia.

Monthly Payment Annual Payment Payments Over 5 Yrs O/S Balance After 5 Yrs Interest Paid
2.84% $1,534.74 $18,416.88 $92,084.40 $281,194.12 $43,278.52
2.54% $1,484.87 $17,818.44 $89,092.20 $279,529.82 $38,622.02
Total Savings $49.87 $598.44 $2,992.20 $1,664.30 $4,656.50

The biggest saving is in the total interest saved over 5 years. At the end of the day this borrower saved $4,656.50. Guess what she decided to do? Yes, SWITCH lenders.

In this scenario, it will cost the borrower $0 to make a switch. Would you put four 1000-dollar bills, six 100-hundred-dollar bills, one 50-dollar bill, one five-dollar bill, one loonie and two quarters in the fire? No, you would not.

Bottom line, make sure you have a discussion with your independent Mortgage Broker before (potentially) burning thousands of dollars.

Michael Hallett

MICHAEL HALLETT

Dominion Lending Centres – Accredited Mortgage Professional

24 May

SELF EMPLOYED? 8 TIPS TO HELP YOU QUALIFY FOR A MORTGAGE

Mortgage Tips

Posted by: MANJIT SINGH BHONDHI

SELF EMPLOYED? 8 TIPS TO HELP YOU QUALIFY FOR A MORTGAGE

Self Employed? 8 Tips to help you qualify for a mortgageSince 2012, it’s become the wild west of mortgage options out there for those folks who are living the Canadian dream of being Self Employed (also known as BFS, Business for Self). 

In 2012, the Office of the Superintendent of Financial Institutions introduced Guideline B-20, which required federally regulated banks to tighten the rules for approving mortgages. Without boring you with what that mortgage jargon translates to you, the bottom line means you “generally” have to qualify now from your Line 150 of your tax return. That’s NET income, not GROSS income.

Don’t freak out yet! There is good new below…

As BFS folks, one of the perks of being self-employed is we don’t pay as much in taxes as we have business write offs we can use to lower our GROSS income. We are now being penalized with many lenders with higher rates and fees with these new rules.

I wish there was a simple book with straight up rules for the BFS mortgages, but there really isn’t.
Why?
• It depends on your credit
• It depends on where your income is coming from and how long. Is it commissioned, contract, invoiced, under the table or under your mattress?
• It depends on your down payment.
• It depends on so many factors…hence you really need a mortgage consultant who really understands BFS mortgage programs.
There are a few programs you may fit under: Stated Income, BFS Conventional, or Alternative or Private lender. All of them are slightly different, but you will fit somewhere with someone.

Not to pick favourites, but here are a few lenders and their programs (through your Dominion Lending Centres mortgage professional):
B2B Bank has a fantastic BFS Expanded Program (actually nine in total) that allows 12 months of bank statements showing income vs those Notice of Assessments. They also don’t charge any mortgage premiums or fees!
Street Capital has an insured Stated Income to 90% (i.e. 10% down payment) program. You have to be two years in business filed, 5% of your down payment has to come from your own savings, and no “commissioned sales” folks here.

Common Questions I get:

Q: I was working with a company as a computer systems analyst for the past three years. Now I am self employed as a computer systems analyst. Can I still qualify for a mortgage with less than two years as filed self employed?
A: Yes, as long as you are in the same job role, you should have no issues.

Q: I heard you need 20% down to qualify for Self Employed Mortgage.
A: There are a few lenders that allow for 10% down now.

Q: I am a waitress and make most of my money in tips. How can I use this to qualify for a mortgage.
A: If you’re not declaring your tips on your taxes, then some lenders will look at 6 months deposits into your account.

Q: Can I refinance to pay off my Canada Revenue debt I owe:
A: Yes, very common practice.

Kiki’s Korner of Self Employed mortgage tips:
1. Keep your business money deposited in one account. Separate your expenses and your income accounts.
2. Leases or Loans on vehicles for business should come out of your BUSINESS account.
3. If your company is paying you a “stipend” or “allowance” for you vehicle, make sure it’s taxable income. You will need two years to use this as income.
4. Make sure your invoices match your deposits.
5. When depositing “other monies” i.e.: tips, tag it on your deposit slip so it shows up online with your deposit.
6. Keep important documents such as articles of incorporation, GST/HST registration or business licence in one folder with all your tax returns. Keep records for three years from the date you filed your original return or two years from the date you paid the tax, whichever is later, if you file a claim for credit or refund after you file your return. Keep records for seven years if you file a claim for a loss from worthless securities or bad debt deduction. Be organized.
7. If you’re not filing business financials, file T2’s if you are incorporated. Filing business financials may be more expensive, but worth it for mortgage qualifying with more lenders.
8. If you pay yourself dividend income, you will need two years of this form of income.

If you’re in business for yourself, congratulations! Keep up the good work. There are many moving parts to planning and qualifying for a self-employed mortgage, so if you’re just starting to look at the idea of a mortgage – plan NOW!

I too am self-employed and work with many professionals such as lawyers, doctors, pharmacists, management consultants and self-employed folks such as truck drivers and waitresses. You’re all important and have different incomes we can use to make your dream come true.

KIKI BERG

Dominion Lending Centres – Accredited Mortgage Professional

23 May

MORTGAGE FACTS TO KNOW BEFORE YOU BUY THIS SPRING

Mortgage Tips

Posted by: MANJIT SINGH BHONDHI

MORTGAGE FACTS TO KNOW BEFORE YOU BUY THIS SPRING

Mortgage facts to know before you buyBuying a home can be a really exciting time, so the last thing we want is for you to be hit by any surprises. Let’s take a look at five things to keep in mind before you write an offer.

Get your mortgage in place before you write an offer. Meeting or speaking to an actual person who will take your application and pull your credit is the best strategy. You will get a firm amount of how much of a mortgage you may qualify for. This is also a great time to make some decisions like if you want a fixed rate or variable rate, if you want a monthly or biweekly payment. You are far removed from stress of meeting any condition of financing dates at this time so you have the luxury of time to ask your questions.
Be ready to provide the necessary paperwork. If I was lending someone $300,000 I would want to know that they could pay me back and so would you I’m sure. You are going to be required to provide a lot of paperwork. Getting a complete list ahead of time and starting to gather it really makes it less stressful for you once the offer is accepted.
There are extra costs. It is not just a matter of having the down payment. You will also have to pay for legal fees, title insurance, property tax adjustment if necessary, mortgage default premiums and on and on. That is why you have to have at least five per cent down and an additional 1.5 per cent of the purchase price in your account to cover these costs. The banks also really like to see that you have a fallback position of extra cash in case you get sick or downsized.
You can get extra funds for improvements to the new home added to your mortgage. Most lenders allow up to $40,000 for upgrades. These have to be things such as flooring, windows, exterior, kitchen, bathroom or any other manner of upgrade which will stay with the property. The funds are held at the lawyer’s office until an appraiser verifies the work is complete so you will have to be able to cover any costs in the short term.
Here is how the process goes.
• You get the mortgage pre-approval
• Find a home and place an offer with a condition of financing date and likely a home inspection one as well
• The application is sent off for approval based on both you and the property and you provide all the necessary paperwork
• The bank says they are 100% happy with you and you say you are 100% happy with the offer of financing and you remove the financing condition. Do not make any changes to your financial picture after you remove the condition. It can be cancelled if you leave your job, take on more debt or rack up the credit cards.
• You meet with the lawyer to provide the balance of the down payment, cover the other costs
• Day of possession you are given the keys once it is confirmed that the funds have transferred to the seller
• Congrats! You own an home

This has been a crash course in buying a home, but there are so many resources online or available to you for free over the phone that it shouldn’t be too awful. Happy house hunting and we look forward to helping you at Dominion Lending Centres!

PAM PIKKERT
Dominion Lending Centres – Accredited Mortgage Professional

15 May

NEW LISTINGS IN TORONTO SURGE 36% AS SALES DECLINE

Latest News

Posted by: MANJIT SINGH BHONDHI

NEW LISTINGS IN TORONTO SURGE 36% AS SALES DECLINE

New Listings in Toronto Surge 36% As Sales DeclineSince last month’s release of CREA housing data, the Ontario government has introduced a similar 15% tax on foreign purchases in the Greater Golden Horseshoe (GGH), which is Canada’s largest urbanized area centred on the City of Toronto, where house prices have risen very sharply over the past decade and spiked in 2016 (see map below). This has caused great concern at all levels of government. The Bank of Canada has repeatedly warned that the housing boom is unsustainable and household debt levels relative to income at record highs is a threat to financial stability.

Not seasonally adjusted sales were down 7.5% year-over-year, with widespread declines led by the Lower Mainland of British Columbia, where activity continues to run well below last year’s record levels. Sales in Calgary and Edmonton are up from last year’s lows and are trending higher in Ottawa and Montreal.

New Listings in Toronto Surge 36% As Sales Decline

According to Gregory Klump, CREA’s Chief Economist, “Homebuyers and sellers both reacted to the recent Ontario government policy announcement aimed at cooling housing markets in and around Toronto. The number of new listings in April spiked to record levels in the GTA, Oakville-Milton, Hamilton-Burlington and Kitchener-Waterloo, where there had been a severe supply shortage. And with only ten days to go between the announcement and the end of the month, sales in each of these markets were down from the previous month. It suggests these housing markets have started to cool. Policy makers will no doubt continue to keep a close eye on the combined effect of federal and provincial measures aimed at cooling housing markets…, while avoiding further regulatory changes that risk producing collateral damage in communities where the housing market is well balanced or already favours buyers.”

New Listings Shot Up in April

The number of newly listed homes jumped 10% in April, led by a 36% surge in the GTA. Housing markets in the GGH also saw similar percentage increases. Supply shortages have been a major issue depressing sales activity and raising prices, especially in and around Toronto and parts of B.C.

The jump in new listings and the decline in sales eased the national sales-to-new listings ratio to 60.1% in April compared to 67.3% in March. The ratio in the range of 40%-to-60% is considered generally consistent with balanced housing market conditions. Above 60% is considered a sellers’ market and below 40%, a buyers’ market.

The sales-to-new-listings ratio was above the sellers’ market threshold in about half of all local housing markets, the majority of which continued to be in British Columbia, in and around the Greater Toronto Area and across Southwestern Ontario.

Number of Months of Inventory

The number of months of inventory is another important measure of the balance between housing supply and demand. It represents the number of months it would take to completely liquidate current inventories at the current rate of sales activity.

There were 4.2 months of inventory on a national basis at the end of April–up slightly from 4.1 months in March when it fell to its lowest level in almost a decade.

Although new listings surged in the Greater Golden Horseshoe, inventories remain very tight across the region. Ontario’s recent changes to housing policy were announced late in the month, so their full effect on the balance between supply and demand is yet to be seen.

Prices Continue to Rise

The Aggregate Composite MLS House Price Index (HPI) rose 19.8% year-over-year last month. Once again, price gains accelerated for all benchmark housing categories tracked by the index.

This price index, unlike those provided by local real estate boards and other data sources, provides the best gauge of price trends because it corrects for changes in the mix of sales activity (between types and sizes of housing) from one month to the next.

Prices for two-storey single family homes posted the strongest ever year-over-year gains (+21.8%), followed by townhouse/row units (+17.2%), apartment units (18.8%) and one-storey single family homes (17.2%). In many of these regions, the supply of new single-family homes is so limited, you practically need to knock one down to build a new one.

After having dipped in the second half of last year, home prices in the Lower Mainland of British Columbia have been recovering and are up from levels one year ago. They are now achieving new heights or trending toward them (Greater Vancouver: +11.4% y-o-y; Fraser Valley: +18% y-o-y).

Meanwhile, benchmark home price gains remained in the 20% range in Victoria and elsewhere on Vancouver Island. Price gains were in the 30% range in Greater Toronto and Oakville-Milton, and ranged in the mid-20% in Guelph.

By comparison, home prices eased in Calgary (-0.9% y-o-y) and Saskatoon (-2.6% y-o-y) and are now about 5.5% below their peaks reached in 2015.

Home prices were up modestly from year-ago levels in Regina (+0.4% overall, led by a 2% increase in apartment prices), Ottawa (+4% overall, led by a 4.9% increase in two-storey single family home prices), Greater Montreal (+3.7% overall, led by a 5.5% increase in prices for townhouse/row units) and Greater Moncton (+4.8% overall, led by a 12.7% increase in prices for townhouse/row units). (Table 1).

The actual (not seasonally adjusted) national average price for homes sold in April 2017 was $559,317, up 10.4% from where it stood one year earlier.

The national average price continues to be pulled upward by sales activity in Greater Vancouver and Greater Toronto, which are two of Canada’s most active and expensive housing markets. Excluding these two markets from calculations trims more than $150,000 from the average price.

New Listings in Toronto Surge 36% As Sales Decline

DR. SHERRY COOPER

Chief Economist, Dominion Lending Centres
Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians.

5 May

EMOTIONAL HOME-BUYERS CAN LOSE OUT ON THE BEST DEALS

General

Posted by: MANJIT SINGH BHONDHI

EMOTIONAL HOME-BUYERS CAN LOSE OUT ON THE BEST DEALS

Emotional Homebuyers Can Lose Out On the Best DealsBuying a home is financial decision, but also an emotional experience.

Before we’ve explored every room, we often start imagining our new lives there. Where our furniture will go. The parties we’ll host in the open-concept living-dining space. The mornings we’ll spend at the breakfast bar overlooking the garden or skyline… When a home speaks to us emotionally, the fear of missing out on it can set in fast.

That’s especially true in a real estate market where multiple offers and bidding wars are common, where a financing condition can put you at a disadvantage, and where prices are at all-time highs.

According to the 2017 Genworth Canada Homeownership Study, 60% of first-time buyers were worried they might miss out on the “perfect” house. That can lead emotional homebuyers to act against their own best interests by, for example, forgoing important conditions, or paying more than they had budgeted.

There’s no need to lose the dream — you will host those parties — but you’ve got to take emotion out of the deal, and these strategies will help.

Assemble your entire team before looking at any property.

That means: interview experienced real estate agents with expertise on your desired neighbourhoods; consult a financial advisor to help determine how homeownership fits into your other goals (a wedding, saving for a child’s education, retirement planning, etc.) and establish a budget including “what-if” scenarios, such as a layoff or maternity leave; find a DLC mortgage broker to help you secure a pre-approval, explain your options, and answer your questions here. You may be able to achieve homeownership sooner than you think. Find out how

Get the names of 3 home inspectors. Call and introduce yourself now.

Many emotional homebuyers forego the inspection process in an effort to make their bid more competitive. That’s a risk. With 3 recommended inspectors on speed dial, you should be able to get a qualified professional to visit a property the day you want to make an offer. Your real estate agent is one source of referrals, or check with the Canadian Association of Home and Property Inspectors.

Don’t visit properties outside your price range.

Best-case scenario, you’ll walk away deflated. Worst-case scenario? You’ll bid on something you can’t comfortably afford. Stick to your homeowner budget (likely to be higher than renting, since it includes property taxes/maintenance fees, utilities, etc.) and practice living on it for a few months before you decide to make a purchase.

Focus on the things you can’t see.

The efficiency of the heating and cooling systems, the age of the roof, the state of the electrical… these matter most when it comes to deciding if a home is a good financial deal. Hardwood floors, quartz counter tops, and stainless steel appliances can be seductive, but they shouldn’t be a priority.

Surprise repairs and upgrades to fundamentals — like a furnace on its last legs, plumbing that isn’t to code, or uninsurable knob-and-tube wiring — could sink your budget. And if problems have been covered up, you might just have to rip out those magazine-worthy finishes and details.

There is no disputing that buying a home is a massive financial decision as well as an emotional experience. But minimizing emotions throughout your homebuying experience is a heads-up move that will ultimately benefit you.

For more tips on what you should know before you purchase a home visit www.homeownership.ca.

Marc Shendale

MARC SHENDALE

Genworth Canada – Vice President Business Development

4 May

HEY LANDLORDS! YOU NEED TO READ THIS!

Latest News

Posted by: MANJIT SINGH BHONDHI

HEY LANDLORDS! YOU NEED TO READ THIS!

Hey Landlords! You Need To Read This!If you have not yet found yourself skimming the news online today, you may not have heard yet about the Provincial Government’s announcement regarding the Ontario Housing and Rental Markets.

The Provincial Liberal Government, laid out for the Province their plan to address issues in key aspects of the Real Estate and Rental Property Markets in the Province. There were 16 steps in total, however for this post, we are going to focus solely on the announced changes that deal directly with Rental Properties and Landlords. These changes may directly impact our clients whom have or plan to acquire rental property. (Keep in mind that these were just announcements and many of them will have to be passed in the legislature before officially becoming law, although passing is highly likely).

1. Standardized Lease Agreements – The new plan stipulates that rental agreements/leases in Ontario for rental properties will be standardized. This helps the government ensure that lease agreements meet legislation requirements pertaining to landlord/tenant relationships and their respective rights.

2. Expansion of Rent Controls – Currently, any privately owned rental properties that are newer than 1991 are not impacted by Ontario’s rent control legislation. Meaning that a landlord has complete control on rent setting.

To gain control of skyrocketing rents (typically being experienced in Toronto and the Golden Horseshoe markets) the Province is expanding the Rent controls to all privately held rental properties regardless of the year they are/were build. The change would mean that rental rate increases would be capped at annual amount stipulated by the Landlord and Tenants Board. Those increases are typically in line with or around the rate of inflation. Even though this increase needs to come through approved legislation, the change will take effect today, April 20th.

3. Vacancy Taxes – Although a specific tax is not being created by the Province, they are creating new powers for Toronto and other municipalities to introduce a tax on vacant homes in their respective communities. The tax is designed to encourage owners of vacant properties to make these available to tenants or be forced to pay a tax to the municipality.

4. Creating a rebate program designed help with Development Cost Charges to incentivize the building or more rental housing.

5. Ensuring that Property Tax for new multi-residential apartment buildings is charged at a similar rate as other residential properties. Designed to encourage developers to build more new rental housing.

As we have become accustom to in the industry, change is always inevitable and many of the changes laid out today are not a surprise. Some of these have been rumored or discussed for some time. The most substantial of those changes impacting owners of rental properties is likely the changes proposed to the rent control rules, although this truly only impacts those owners who have properties that are newer than 1991.

Should you have any questions about any mortgages on properties that you own, please feel free to contact your local Dominion Lending Centres mortgage professional. We would be more than happy to complete a full review of your property portfolio and discuss what options might exists for either saving money on interest or accessing equity for another investment.

Nathan Lawrence

NATHAN LAWRENCE

Dominion Lending Centres – Accredited Mortgage Professional

3 May

REVERSE MORTGAGES – NO, WE DON’T WANT YOUR HOME!

General

Posted by: MANJIT SINGH BHONDHI

REVERSE MORTGAGES – NO, WE DON’T WANT YOUR HOME!

Your Parents Owe $500,000 to CRA…Can a Reverse Mortgage Help?Reverse Mortgages have had their share of misconceptions. In fact, we are often approached with false assumptions and unfounded facts about the product that steer the public to think of the product in a negative light. This article will cover one of the most common myths and the real facts behind this myth that has long been misinterpreted.

Myth: One of most common misconceptions that we hear time and time again is that you will lose ownership of your home to us.

Fact: This statement is false. HomEquity Bank, the provider of the CHIP Reverse Mortgage has taken several measures that ensure the protection of your equity.

1) Retain ownership of your home: Just like with any other mortgage, your home is used to secure the loan, which means that HomEquity Bank is registered as a standard charge on title. You, as a customer DO NOT transfer ownership of your home to us. In fact, once it’s time to pay back the mortgage you or your heirs have the choice to settle the loan however you or they want. Selling the home is the most common option, but it is not mandatory.

2) Our conservative lending practices: In our ads and on our website, we remind the customers that they can get up to 55% of the value of their home in a reverse mortgage loan. Of course, this amount does depend on the borrower(s) age, their property type as well as the location of their home. But as a rule of thumb, the younger the borrower is, the less they will qualify for and the older the borrower is, the more they will qualify for. This is because we want to make sure that the borrowers reverse mortgage loan doesn’t exceed the value of their home.

3) The potential value appreciation of your home: Many people don’t realize that their home may appreciate in value, however the interest that accrues only accumulates on the small borrowed amount of the home. That is why we say in our marketing pieces that “99% of homeowners have money left over” when their loan is settled.

This graph illustrates how the interest is affected when a home appreciates in value. For illustration purposes, we have used 3%, a modest level of home appreciation, which allows for equity preservation after a borrower takes out a CHIP Reverse Mortgage for 15 years. This example illustrates the following:

  • Home appraised at $500,000.
  • Homeowner(s) qualify for $200,000 (40%) of the value of their home in a CHIP Reverse Mortgage.
  • The homeowner(s) take the CHIP loan for 15 years before they move, sell or pass away.
  • The home appreciates at 3% and the new home value after 15 years is $778,984.
  • The principal plus interest total $457,288 and the estate still has $321,696 in equity (41% of the home value at time of sale).

Home Equity Preservation Graph – CHIP Reverse Mortgage
The following graph is for Illustration purposes only *

Home Equity Preservation Graph – CHIP Reverse Mortgage The following graph is for Illustration purposes only

4) Negative equity guarantee – Many people ask, “what happens if the house doesn’t appreciate in value, and in fact depreciates?” Our negative equity guarantee ensures that if your home depreciates in value at the time the home is being sold, and the loan amount due is more than the sale amount of the property, the homeowner or the heirs will not be financially penalized for being on title of the home. In fact, HomEquity Bank, will pay the difference between the sale amount and the loan amount when the loan amount due is more than the sale amount of the property. However, just like all other home equity loans, the homeowner(s) must keep their property taxes up to date, and maintain the condition of their home. If these conditions are met, the borrowers will never owe more than the fair market value of their home, when the home is sold.

The above measures are all the reasons why a CHIP Reverse Mortgage customer will not lose their home to the lender. A CHIP Reverse Mortgage provides a great solution for a growing number of Canadian retirees. For more information on this solution for homeowners 55+, contact your local Dominion Lending Centres mortgage professional.

* The illustration uses conservative values:

  • Example based on the national price of Canadian homes of $500,000 (Average home price in Canada is $519,521 according to the CREA, February 2017)
  • Example based on CHIP Reverse Mortgage advance of 40%
  • Home appreciation of 3.00%. Average home appreciation is 7.16% annually. (Source: CREA, Canadian Real Estate Association 15-year national house appreciation average, February 2017). HomEquity Bank makes no representations on future housing market performance.
  • CHIP interest rate of 5.59%. The Annual Percentage Rate (APR) is 5.79%, which is the estimated cost of borrowing for 5 years expressed as an annual percentage. The APR includes interest and closing costs.
Yvonne Ziomecki

YVONNE ZIOMECKI

HomEquity Bank – Senior Vice President, Marketing and Sales