8 Nov

4 COMMON FINANCIAL MISTAKES EVERY SMALL BUSINESS OWNER SHOULD AVOID

General

Posted by: MANJIT SINGH BHONDHI

Every entrepreneur and business owner will make a few financial mistakes during their journey. Those who aren’t savvy in accounting often overlook the need to brush up on their financial IQ. Truth is, these little financial errors can lead to some serious cash flow problems if you aren’t careful. Here are four financial mistakes you can easily avoid so you can protect your bottom line.

Late payments
Nobody is fond of paying bills. We tend to put them off until the last minute for short-lived peace of mind. This applies to all business owners when it comes to both your account payables and receivables.
When billing your clients, it’s common to give them an extended window of time to make payments so you can foster more sales. While your clients may appreciate the flexibility this can seriously cripple your cash flow. I generally suggest giving your clients no longer than 14 days to pay an invoice. If you’re providing quality goods and services they should have no problem paying you within this time window.
When it comes to paying your own bills, it’s important to follow the same principles above. This is especially the case if you’re operating off borrowed money. Paying an invoice late may result in a few unhappy emails, but when it comes to paying off your debts you need to always be on time. Even one missed payment can severely harm your credit score.
The best way to stay on top of these is to use an online payments solution that offers online invoicing and accounting features. This way all of your bills are organized and can be accessed anywhere at anytime.

Forgetting to have an emergency fund
Every successful entrepreneur will probably tell you that hindsight is 20/20 and foresight is … well you just never know what’s going to happen. Every business will have to pivot and there will always be unexpected hurdles. That being said, it’s absolutely imperative that you have your contingency plan, especially when it comes to finances. I recommend that every business owner has a three-month emergency fund at least.
You should start putting money away into your emergency fund as soon as the cash comes in. No matter the size of your business you should learn the art of bootstrapping and staying lean. The more money you put away, the more you’ll force yourself to get by with what you have. The majority of startups fail due to the lack of or misuse of capital. Having an emergency fund gives you a bit more runway when disaster strikes.

Failing to separate business funds from personal funds
This is one of the most common and dangerous pitfalls in small businesses. Small business owners often put their lives on the line for their business, literally. This is a big no-no. When starting a business it’s important to immediately separate your personal finances from your business finances. If you’re like any other entrepreneur it’s going to take more than one go to be successful. That being said, you definitely don’t want a failed business to tarnish your financial reputation.
Start by opening up a business bank account and apply for a business credit card to keep track of expenses. Make sure you’re only using your business credit card for business expenses and vice a versa. Failing to separate the two can also lead to complications around balancing accounts, filing taxes, measuring profits and even setting clear financial goals. Do yourself a favor and avoid mixing these expenses.

Spending too much time on non-cash-generating activities
It’s a given that you most likely won’t see an ROI on every activity you do when running a business. That being said, it’s important to distinguish which ones have the highest chance of eventually generating some cash flow. When it comes to time tracking and time management, it’s important to pay close attention to your productivity levels.
Everyone has 24 hours in a day, some decide to work smarter than others and that’s why they become successful. Know that time is your most valuable asset and treat it as such. Remember, it’s okay to say no or to turn down meetings that you know provide little to no value for your business. There’s no need to take or be present on every phone call either. Being able to identify what brings true and tangible value to your business is a key to success.
Try your best to follow the 80/20 rule. There are likely three to four activities in your business that generate the most cash. Once you identify these activities, create a habit of spending 80 percent of your time doing these tasks and save the rest of your time for other miscellaneous jobs. If you’re able to get really disciplined around this strategy, it will surely pay off.
It takes years of practice to improve your financial literacy. Although most lessons in finance are learned the hard way, it’s important to learn them nonetheless. Take note of these four common financial mistakes and do your best to avoid them. Contact Dominion Lending Centres Leasing if you have any questions.

JENNIFER OKKERSE

Dominion Lending Centres – Director of Operations, Leasing Division

7 Nov

FACT AND FICTION-OUR HOUSE MAGAZINE

General

Posted by: MANJIT SINGH BHONDHI

This story appeared in the Fall issue of Our House Magazine

The restored Green Gables property in Prince Edward Island is a blend of Lucy Maud Montgomery’s real childhood home and the one of her fertile imagination. 

Stepping into the house at 8521 Cavendish Road in Cavendish, P.E.I., is like walking back a couple of centuries and into the imagination of Lucy Maud Montgomery. While the famed Canadian author wrote Anne of Green Gables more than 100 years ago at the turn of the 20th Century, her beloved masterpiece lives on in real life at a heritage site in the rural Maritime town.

The folks who look after the Green Gables, officially known as the L.M. Montgomery’s Cavendish National Historic Site, want visitors to feel like they’re a part of the novel.

“When they arrive and they step into the barnyard or the house, or when they look at Anne’s room on the second floor, they really feel like they’ve stepped into that story,” says Ocel Dauphinais-Matheson, the visitor experience manager for Parks Canada National Historic Sites for Prince Edward Island. The idea was to recreate the location described by Montgomery in her novel, he explains, even though the actual site was originally a little different back in 1908.

While the Green Gables house and property were the inspiration for Anne of Green Gables, the author added elements that weren’t literally in front of her. For example, the original farmhouse, built back in 1831, actually never had a green roof. It does now. And Montgomery in fact grew up on a property next to the home with her grandmother. The Green Gables property belonged to David Jr. and Margaret Macneill, who were cousins of Montgomery’s grandfather. She came to know her cousins’ farm through her explorations of the surrounding woodlands and places she discovered and named, such as Lover’s Lane and the Haunted Wood.

“That’s why when she [Montgomery] wrote Anne of Green Gables, she used it really as the inspiration for the main setting in her book,” Dauphinais-Matheson told Our House magazine. “That’s the uniqueness of the site: it’s a real place and it really served as an inspiration. The way we present it is really true to the description she makes of the site in her novel.”

And people from all over the world have been coming to the province and site ever since the book was published. Last year, Green Gables welcomed 180,000 visitors between May and the end of October. At its peak in the summer, the property can expect up to 3,000 daily.

Dauphinais-Matheson suggested there are generally two types of people who visit the site: ones who don’t know much about the book but know its historical importance, and those for whom the site is a real pilgrimage. And to understand just how far reaching Montgomery’s novel has traveled, hundreds of thousands of people from abroad have come to the site, including from Japan, France, Australia and the U.S.

However, to keep a home approaching 200 years old in tip-top shape takes a lot of work and hands. There are two people responsible for cleaning the home and the 3,000 or so artifacts therein from top to bottom every day. There is an entire maintenance team responsible for the physical upkeep of the property, which includes any repairs that are authentic to the time period.

“It’s a big job. There are thousands of artifacts in the house. Lots of people come through, so we have a team of people who look after the upkeep and longer-term maintenance of the artifacts and the house itself,” Dauphinais-Matheson says.

But the effort is necessary to maintain such an important Canadian historical site, according to people with Parks Canada. Dauphinais-Matheson suggests Green Gables is important to protect because the site represents the inspiration and imagination the author had in creating one of the most well-read novels of all time.

JEREMY DEUTSCH

Lead Writer

3 Nov

THE CAPITAL STACK. WHAT YOU NEED TO KNOW

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Posted by: MANJIT SINGH BHONDHI

Financing is key to successful real estate investing. You’ve aligned your financing with your real estate investment strategy, and are comfortable that you can execute your plan. As a result, you may have a conventional mortgage, and secondary debt as well. The term Capital Stack is used to describe the various levels or layers of financing that go into purchasing or improving a real estate project.

Why is this an important concept to understand? A successful real estate program on a specific development will result in all participants getting paid. Not all financing sources however, have the same priority. Understanding the Capital Stack insures that you understand the relative risk associated with each level of financing participation. And ultimately, whether the proposed real estate investment plan will yield the intended rate of return.

What you Need to Know

There are typically 4 levels of capital, however there is really no limit, in theory, to how many layers or classes of financing a capital stack may contain. 

The important concepts to keep in mind are that:

Risk increases as you move higher in the capital stack

Each source of capital has seniority over the capital source above it, in the capital stack

Each source of capital is subordinate to the capital source below it, in the capital stack

Since risk increases as you move higher in the capital stack, it follows that returns generally do as well, with the Junior, or Mezzanine lender typically earning a higher rate of return than the Senior debt holder.

What are the Implications?

The important concept here is that in the event of the sale or refinancing of the property, the capital stack participants at the bottom get compensated first, and once fully paid, and to the extent that there are excess funds, subsequent participants (i.e. up the capital stack) will be compensated as well.

If a real estate development plan is strategically implemented, and the business plan is properly executed, all participants will be paid. The relative position in the capital stack will however reflect risk, and the potential for compensation will be commensurate. If there are losses upon a property sale or refinancing, losses are incurred from the top down.

There is no right and wrong position in the capital stack. Savvy real estate investors may either participate as financiers, or receive the benefit of various levels of capital in their own projects. Understanding the concept of the Capital Stack allows for a better understanding of risk, and the ability to generate higher real estate investment returns. If you have any questions contact a Dominion Lending Centres mortgage specialist near you.

ALLAN JENSEN

Dominion Lending Centres – Accredited Mortgage Professional

1 Nov

THE 30-SECOND COMMUTE-OUR HOUSE MAGAZINE

General

Posted by: MANJIT SINGH BHONDHI

This story appeared in the Fall issue of Our House Magazine

How a B.C. woman transformed her home into a skin-care spa.

From an early age, Leah LaVanway struggled to get her acne under control. As a gymnast and horseback rider, her athletic pursuits made it difficult to keep her skin healthy and clean. It was those personal struggles that also led her into the medical skin-care industry.
“It was always my mission to learn more about skin and try to figure out why my skin was breaking out,” she tells Our House magazine.
LaVanway graduated as a Certified Medical Esthetician and sought to start her own business in B.C.’s Lower Mainland. But life got in the way, at least for a few years. Just as she was getting her spa business up and running, her boyfriend, William, a trainer of racehorses, was injured in a car accident and couldn’t work for a couple of years. She put her business on hold to help with the equestrian work that her boyfriend—now her husband—couldn’t do.
But once he got back to work, LaVanway wanted to get back to helping people.
She set up her spa business in a few retail locations around the Lower Mainland, but none seemed to be the right fit. The storefronts didn’t offer the privacy that she felt her clients wanted. They were also telling her if she ever set up at home, they’d come to her there.
She did just that, moving her spa into her home. Since 2012, LaVanway, 32, has been operating Essence of L Medi Spa & Laser Clinic out of her White Rock, B.C., home, and hasn’t looked back. “People love it. They come in and they feel comfortable. Especially since a lot of my treatments are for acne… a key reason to keep it here was the privacy,” she said.
LaVanway also noted some pretty big advantages to having a home-based business, including offering a flexibility in her schedule.
But the spa isn’t some little office space. She’s transformed nearly her entire home to give it a true spa feel. Walking through the front door, you wouldn’t know it was a residence too.
A grand entrance leads into the studio space on the house’s main floor. The studio is completely separate from the living space. And since there are no children in the home, there are no toys or other items strewn about.
Over the years LaVanway has changed the entire front entrance, adding parking, a waiting area and an outdoor fire table. The first piece of advice she would give anyone looking to start a home business is to make sure it’s as separate from the living area as possible. If you have clients coming to the house, she recommends spending a little extra money. “Just so when they come in [to your home], you’re proud to show your home and to welcome them,” she says.
There isn’t a better time to start a home-based business, LaVanway believes, and the statistics back her up. According to the Business Development Bank of Canada (BDC), there are 1.1 million small businesses in the country. Another 2.7 million people are self-employed.
“In my opinion, this is one of the best times to have a business at home because it’s so flexible, interest rates are great, and our lives are getting busier… It can change and build how you planned to have your dream life to supplement your income by having something else at home. It’s definitely the time to do it,” LaVanway says.
Before committing to starting a business in your home, check with your municipality regarding rules and bylaws governing such businesses. While very few cities and towns ban home businesses outright any more, they may not permit signage or customer visits, for example. Condominium and townhouse dwellers will need to confirm what their building’s regulations will allow too.

Financing a Home with a Business
Starting a home-based business like Leah LaVanway’s can be an appealing way to make a living, but there are a few things you need to consider if you’re about to take out a mortgage on the property.
Nancy Ingram, a DLC mortgage specialist in Guelph, Ont., notes that lenders will be looking at the sustainability of the business and whether the borrower can repay the mortgage. Lenders will also be looking at the history of the business for things like regular deposits. If it’s brand new, lenders will be considering whether the business venture is viable.
“They would really look at the whole scenario to make sure they’re protecting themselves and their investors’ money to ensure they [borrower] can pay it back,” Ingram says. Contact a Dominion Lending Centres mortgage specialist near you if you have any further questions.

JEREMY DEUTSCH

Lead Writer

13 Oct

WHAT YOU NEED TO KNOW BEFORE YOU BORROW MONEY FOR YOUR SMALL BUSINESS STARTUP

General

Posted by: MANJIT SINGH BHONDHI

Deciding to borrow money to launch your small business startup is a big decision. It’s the second biggest decision after deciding to start the business. Since it is a big decision, it requires much thought and research before taking the leap. There are multiple ways to fund a small business startup, and it’s important to know and understand all of them before making a final decision.
Not only can you borrow money to launch your small business startup, you can also invest your own personal savings or give up a percentage of ownership in the company to investors in return for funding. Before making the final decision to borrow money for your small business startup, here are a few things you should know:

Types of Financing

There are a number of different ways you can finance your small business startup. Depending on the amount of revenue the business is generating, how many years the company has been in business, and the business industry, you may or may not qualify for certain types of financing.

Pay Back & Defaulting

When you borrow money to launch your small business startup, you will be required to make monthly payments. You will also have a set “term” to pay back the financing. The term is the period of time you will have to make monthly payments toward the total financing amount you borrowed. This is important because you need to be comfortable making the monthly payments. It has to be something you can afford. I suggest developing a business plan with at least three years of financial projections to estimate what your expenses will be and the amount of revenue the business will generate. This will help you determine if there will be enough money to go around (to cover business expenses and paying back a business financing).
If you default on a financing for any reason it can ruin your personal and business credit. Having a good understanding of how much it will cost you to borrow money to build the business will enable you to plan better and avoid defaulting. It’s good practice to ask a lender what their average interest rates and terms are before you apply so you can estimate what your monthly payments will be. The bottom line is that paying back financing has to be something you are ready for and capable of handling.

Maximum Amount of Debt

Your debt to income ratio and the amount of outstanding debt you have on the business is important in the lender’s decision to give you a small business loan. If your company is a small business startup with no revenue, lenders will pay close attention to your debt to income ratio. As a rule of thumb, your outstanding debts should equal no more than 28% of your total income. (Depending on who you talk to, some people will say it should be no more than 32% to 36% of your total income however, 28% is playing it safe). If you have a high debt to income ratio, you may not be able to borrow money to launch your small business startup.
If your small business startup has some revenue, and you’ve already borrowed money for the business, if you apply for additional financing, the lender may also look at outstanding business debt. As a rule of thumb, you usually can’t borrow more than 15% of your total annual revenue. This all depends on the lender, but keep that in mind if you decide to take out multiple business loans from different lending sources for the business.

How You Will Spend the Money

Some types of financing are restricted to certain business expenses. For example, equipment financing must be spent only on equipment purchases. This includes computers, office furniture, etc. However, financing such as unsecured business lines of credit can be spent on any business expense. This is why it is important to develop a business plan and at least three years of financial projections. Financial projections outline what the money will be spent on. Knowing what the money will be spent on will help you determine what type of business financing will work best for you.

Need Expert Help? Let Us Assist You

If you still need helping figuring out if borrowing money will be right for your small business startup, Dominion Lending Centres Leasing can help. Our team can advise you and will help you analyze your situation to determine whether or not borrowing money to launch your small business startup makes sense. They will also help you figure out what type of financing will work best for you.

JENNIFER OKKERSE

Dominion Lending Centres – Director of Operations, Leasing Division

6 Oct

TIME TO LOCK IN YOUR RATE? MAKE SURE YOU HAVE AN EXIT STRATEGY

General

Posted by: MANJIT SINGH BHONDHI

Like many of you, I received a call last week, from my mortgage provider, asking whether I wanted to “lock in” a new five-year fixed rate. The rate was a special offer and would only last for the week, so I would need to make a decision quickly, with little time to think about the consequences to my own mortgage strategy.

While it may appear that your financial institution is acting entirely in your best interests, this is only partially the case. While it is true that locking in or switching to a new fixed rate can help you control your costs, they are doing it to manage their own costs, not yours. It’s important to remember that each time a financial institution lends you money, it’s not their own money. Their strategy is to borrow the money from investors, depositors and other corporations in order to lend you the money. The five year fixed rate renewal they sign with you is backed up with a five year investment contract with someone else. Always.

When I started as a broker, the best piece of advice I got was from a former boss who said; “Before you sign up with someone, its always important to have an exit strategy, because things will change, often for the better, and you may need to get out of the agreement. Make sure you make it easy to do so. “

Having an exit strategy is just as important when signing a renewal or early renewal contract. The strategy is not so much about exiting the mortgage entirely, but ensuring you know and can use the existing features to your advantage. There are three specific features (termed ‘privileges’ and ‘penalties’ in the offer) that you should know and understand before signing that new contract;

A) Pre-Payment Privilege
For most of us, there is some time in our lives where a sum of money lands in our laps, perhaps a large bonus, severance, cash settlement or even a small inheritance. Knowing how much you can pay down, should you choose to, is vital. Depending on the lender, you may be limited to a 10 percent prepayment or as much as 20 percent. Some lenders specify the exact day you can make the prepayment, some merely say ‘anytime’.

B) Increased Payment Privilege
Again, at some time in our lives, most of us will leave one job for another that pays significantly more. In those situations we can certainly afford to increase our mortgage payments and should do. Do you know how much you can increase your payment and when? Again, it varies widely from lender to lender, for 10% on a specific day, yearly, to 20% anytime.

C) Early Payout Penalty
This is perhaps the most ignored potential cost in mortgage financing. As with the privileges, no two lenders calculate the penalty the same way. Its important to understand the differences. It can save you thousands.

Most people’s reaction, when we talk about penalties is ‘well I’m never going to pay out early, so it doesn’t matter. ‘ I don’t blame you for thinking that way, because that’s always my reaction too! But let’s walk through a “what if” and I’ll show you why its important to consider.

So… You have an existing mortgage in the amount of $480,000. Your lender’s representative calls you to say that because rates are going up, he’s calling all his clients to let them know that if you wish to early renew, they’re offering a fixed rate that’s actually a minuscule amount lower than you are paying now. Rates are going up and the offer is only guaranteed until the end of the week!

Because it’s actually well before the renewal date, there is a penalty, but they’ll add that on to the mortgage balance, no need to worry. After a couple of moments hesitation, you agree and you go in to sign at the branch. Overall, your experience with the lender has been very good.

Spool forward three years and your life is changing. You’ve become an expert in your field, people are noticing and suddenly, you are offered a dream job in another part of the country.

It’s sad and exciting to have to sell up and move but you’re startled when you realize the payout penalty is $21,000. That’s a LOT of your hard earned equity to lose but you realize that you’ve already actually paid another $37,00 in penalties when you renewed early. Now its $25,000! GULP!

I know you realize that this is a worst case scenario but it can potentially happen to any one of us. The key is not avoiding these costs, but by making informed choices, avoid paying any more than you have to. By being aware and making one simple change, your penalties in our previous scenario could be about $7,500 – a savings of $17,500.

You can read more about how some lenders (not all ) calculate their penalties here.
As always, contact a Dominion Lending Centres mortgage specialist if you have any questions.

JONATHAN BARLOW

Dominion Lending Centres – Accredited Mortgage Professional

5 Oct

GO GREEN & SAVE!

General

Posted by: MANJIT SINGH BHONDHI

We all do different things to go green in our day to day life: using reusable shopping bags, biking instead of driving, re-using water bottles… you name it. All of the various steps we take to minimize our environmental foot-print give us the satisfaction of knowing we are working towards a greener tomorrow-but how often do you get rewarded for going green? If your experience is anything like ours, not very often. But we have some exciting news right from CMHC-they want to reward YOU for going Green! Here’s how.

The CMHC Green Home Program is a relatively new program that allows lenders to offer borrowers more affordable financing choices when purchasing an energy efficient home or when purchasing an existing home and making energy-efficient improvements. This program gives you a refund of up to 25% of the CMHC Mortgage Loan Insurance Premium as long as the home is located in Canada. In addition, the process to apply is simple, all a borrower must do is fill out this application form and submit it to CMHC.

Sounds fairly straight forward doesn’t it? Let’s dig into a few more details though with a straightforward FAQ.

1. When Does the Program Apply?
The program is applicable when a new home is purchased (with a traditional or non-traditional source of down payment). The program also applies to new construction and to CMHC improvements related to energy efficiency.

2. What is the Loan-to-Value Ration?
The Loan to Value Ratio of this program will vary by CMHC product and the number of units. Contact CMHC or a Dominion Lending Centres mortgage specialist to find out more.

3. What are the Benefits of the Program?
The Program can offer a 15% or 25% refund of the total premium paid provided to borrowers. This is how you are “Paid to go Green”

4. What are the Energy Efficiency Requirements?
The requirements that must be met in order to qualify for a premium refund include:
Purchase of energy efficient homes or units located in low-risresidential building:
• Most new homes built under a CMHC eligible energy-efficient building standard automatically qualify for a premium refund.
• For all other homes, eligibility will be assessed using the NRCan EnerGuide Rating System (ERS) either the 0-100 scale or the gigajoule scale.
Purchase of condominium units located in high-rise residential buildings:
• For homes built under the LEED Canada New Construction Standard (certified, silver, gold and platinum)-Level 1 only.
• The building is designed to be either 20% or 40% more energy efficient than compliance with the applicable building cod.
Energy Efficient retrofit (renovations) of an existing home (purchase)
• To qualify the home must be assessed by a qualified energy advisor before and after the energy-efficient renovations.
• The refund is based on the improvement in the energy rating assessed using the NRCan EnerGuide Rating System (ERS) either the 0-100 scale or the gigajoule scale.

5. How does the Refund Application Process Work?
Borrowers should look at filling out the application located on the CMHC’s website. The application must be submitted within 2 years of the closing date of the mortgage and the energy efficiency documentation must be no more than 5 years old. Finally, the partial premium refund will be provided by CMHC directly to eligible borrowers that have incurred the costs of their lender’s CMHC mortgage loan insurance premium.

For those who qualify for this refund, it presents a unique opportunity to gain back some of their hard-earned money. If you are wondering if this program is right for you, contact a DLC mortgage specialist and we would be happy to walk you through the entire process.

*Sources: CMHC Green Home Program https://www.cmhc-schl.gc.ca/en/hoficlincl/moloin/hopr/upload/cmhc-green-home.pdf

GEOFF LEE

Dominion Lending Centres – Accredited Mortgage Professional

4 Oct

YES, YOU CAN

General

Posted by: MANJIT SINGH BHONDHI

This story is from the Fall edition of Our House Magazine

Moving on up from condo to house, these young homeowners prove age is just a number

For Jordan Rothwell and Karissa Roed, the timing to find their forever home couldn’t be more perfect. The couple, who recently moved to Mission, B.C., are expecting their second child and are ready for the family to grow.

It’s quite the responsibility for Jordan and Karissa, aged 23 and 24, respectively. But it’s a challenge the young couple has been preparing for since they first resolved to get into the housing market a couple of years back. And the pair see their story as motivation for what other young people can achieve if they set their minds to it.

“If younger people would just set goals for themselves, especially when it comes to buying property, it’s such a blessing when you do it. You’re instantly further ahead as an adult when you do it,” Jordan says.

Their property story began when Jordan’s grandfather offered to match the couple’s savings for a down payment on a condominium. So Jordan and Karissa went about saving money wherever they could. That meant a lot of sacrifice—especially missing out on trips and events they might have attended.

“It basically became an addiction for a while, just saving up every penny to try and get to the point where we could go in and buy a condo,” Jordan notes.

It paid off. By 2014, they saved up $5,000 and, with matching funds, moved into a two-bedroom condo in Port Coquitlam, B.C.

Fast forward a couple of years, and Jordan and Karissa were looking to upsize. By then, they had some equity, in part because they bought their condo at the right time, taking advantage of the hot Metro Vancouver real estate market, and were ready to move into their forever home.

Once again they looked to family, partnering with Karissa’s mother and stepfather to purchase a 3,000-square-foot, six-bedroom house in Mission for $605,000. Jordan, Karissa and their young family will live upstairs, while her parents will take the ground floor.

The couple couldn’t be happier in their new home. “It’s definitely nice moving from a condo to a house,” Karissa says, adding they have nearly double the square footage as their old condo, along with a backyard for her children to play.

Dominion Lending Centres mortgage specialist Pauline Tonkin says she couldn’t be more impressed by the couple’s smart financial habits. Tonkin helped them secure a mortgage for their first condo and wasn’t surprised to see them make a jump to a house.

“I wasn’t concerned for them because they really do the right things. They really get it,” Tonkin says. “Age is not indicative of how people handle finances.”

She describes the couple, especially Karissa, as very diligent at considering all the costs involved in the purchase. The pair wanted all the details, something Tonkin says isn’t often the case with young buyers.

Besides securing the proper financing, Tonkin helped Jordan and Karissa through the process, giving them a “road map” to where they wanted to be. It was help the couple appreciated. “When you’re buying a condo or a house, it’s such a blur,” Karissa says, adding that their mortgage broker was someone they could trust and call at all hours if they needed to.

Jaclyn LaRose has enjoyed similar success as a homeowner. This spring, she sold her first condo to upsize to a bigger one in Surrey, B.C., close to her work as a schoolteacher.

LaRose was 26 when she and her sister decided to buy their first place with a little help from their parents. Her parents didn’t like seeing them throw away money on rent, she explains, so they helped out with a five per cent down payment for an apartment in nearby Coquitlam, B.C.

“I definitely considered at the time that I was young because I hadn’t been thinking about it for a few more years at least,” she says.

Not having even hit the age of 30, Larose is now on her second home. She said she has friends who believe it’s impossible to get into the market, especially in B.C.’s Lower Mainland. But she also points out those friends are looking in prime spots where the prices are highest. LaRose chose to look a little further afield to get into the market. She’s gone from a 500-square-foot, one-bedroom apartment to a two-bedroom with more than 800 square feet.

While Larose points out there is a sacrifice related to home ownership, she now feels lucky to be in her position. “It’s just about getting in when you can,” she said. There are places out there where you can get in.” And now that she has home ownership all sewed up, she’s able to focus on her career and personal goals.

“For the short term I feel settled,” LaRose says.

Back in Mission, Karissa and Jordan have settled into their new home. They are also way ahead of their peers and looking forward to the future. A lot of people his age look at owning a home as something they’re not supposed to do, or able to do at their age, Jordan says. But he doesn’t see it that way at all: “If you just stick to your guns and build a goal of what you want to accomplish… you’ll get there.”

JEREMY DEUTSCH

Lead Writer

 

2 Oct

BOOMING GROWTH IN CANADA TAKES A BREATHER

General

Posted by: MANJIT SINGH BHONDHI

Canada’s second-quarter gross domestic product (GDP) growth of 4.5 per cent triggered two back-to-back rate hikes by the Bank of Canada. But today, Statistics Canada released data showing a slowdown in the monthly industry data for July. Canadian GDP held steady in July ending an eight-month streak of cosmic expansion. This slowing is consistent with the Bank of Canada’s recently expressed view that the outsized pace of growth over the last year is not sustainable going forward.

Slumping oil and automobile production and a slowing housing market were among the biggest drags on growth in July. The figures seem to show the downturn in housing has become a drag. Credit intermediation was down one per cent, residential construction dropped 0.9 per cent, and activity at real estate agents declined 1.5 per cent. The finance and insurance sector’s decline of 0.6 per cent was the largest since April 2015.

A slowdown from the year-over-year pace of 3.7 per cent is not a bad thing, and there is plenty of room for the economy to continue to grow at an above-potential rate. It is still likely that the economy will grow at a solid 2.5 per cent pace in the third quarter, data for which will be released on Friday, Dec. 1 when we will also see the November employment report.

Monetary policymakers will remain cautious owing to ongoing concerns about the strength of the Canadian dollar, risks associated with the NAFTA renegotiations, and the still below-target inflation readings. Moreover, U.S. trade policy is becoming ever more belligerent as evidenced by the heavy duty imposed on Bombardier, which has caused shock waves throughout Canadian industry. With the stunner of a 219 per cent tariff on Bombardier’s CSeries jets, The U.S. Commerce Secretary Wilbur Ross touted a 48 per cent increase from 2016 in anti-dumping and countervailing cases initiated by the U.S. Department of Commerce. That’s on the heels of a study that found a 26 per cent spike in U.S. trade actions against G20 partners in the first half of this year from the same period in 2016, according to the Center for Economic Policy Research’s Global Trade Alert. The Canadian softwood lumber industry has been tasting this punitive medicine for months. These U.S. trade policies create uncertainty across the manufacturing sector, including those supplying raw materials. The aggressive move threatens to disrupt the well-integrated manufacturing processes between Canada and the U.S., with industries such as steel and aluminum smelting possibly hit by collateral damage from the trade talks.

Today’s report is the last set of GDP data before the Bank of Canada’s next rate decision on October 25. Governor Stephen Poloz said earlier this week policymakers would proceed “cautiously” as they gauge the impact of the two interest rate increases.

DR. SHERRY COOPER

Chief Economist, Dominion Lending Centres

28 Sep

GETTING PRE-APPROVED FOR A MORTGAGE

General

Posted by: MANJIT SINGH BHONDHI

You’ve been squirreling away your bonus cheques, savings and reducing the amount of times you visit Starbucks so you can finally get into your own home to build solid equity for your future. Now that you know what you want and what you can afford, it’s time to visit your local Dominion Lending Centres mortgage specialist to get yourself pre-approved for a mortgage.

Note, we did not say go to your bank to get pre-approved!

A mortgage broker works with banks (including yours), credit unions and other lending institutions to help find you the best rate on your mortgage. Since they work with so many different lending institutions across the country, they are in the best position to approach banks and ask for the best rates – sometimes better than what the same bank would have been able to offer you had you gone in on your own. Best of all, you do not pay a dime for their services – the lending institution does!

To work with a broker for your pre-approved mortgage, you will need the same documentation you would have to provide your bank so be sure to have your documents in order. You will need the following documents:

For a Salaried Employee

  • an employment letter/verification of employment
  • current/most recent pay stub

For an Hourly Employee

  • current/most recent pay stub
  • an employment letter/verification of employment
  • Two (2) years of your T4 tax slips

For Someone Who is Self Employed

  • last two (2) income tax returns
  • proof of self-employment

Once you have submitted these details, you are on your way to getting pre-approved for your mortgage and providing yourself with a clear budget on the home you would like to buy!

MAX OMAR

Dominion Lending Centres – Accredited Mortgage Professional