DAZADA DIAMOND

Mortgage Associate

Month: August 2017

Avocado Toast & Budgeting

Mortgage Tips DAZADA DIAMOND 22 Aug

Avocado Toast & Budgeting

There was an article reprinted in the National Post recently about an Australian millionaire’s opinion on millennials not being able to afford a home because they’re wasting money on avocado toast, at $22 per plate. The article was quickly mocked but it was an interesting article on two fronts: 1) the irresistible urge for avocado toast and 2) the importance of budgeting.

In no way is this a critique on millennials themselves, but a reminder for all to understand how spending money today, may prevent us from saving for tomorrow.

The comments arose from a TIME interview with the millionaire about how he did not spend his money on avocado toast and $4 coffee, multiple times a day, when he was young. Surely times have changed since said Australian millionaire was young and he had other priorities at the time – which may not have included avocado toast. However, what he is trying to drive home, is the importance of budgeting.

For those that are trying to save money for a down payment on their first home, it is important to think about living within your means. Perhaps those trips to the coffee shop and Sunday brunches could be fewer per month to help save a few hundred dollars a month.

If you are spending an average of $4 per coffee at your local café on your lunch hour or coffee break at work, that could add up to approximately $80 per month. For many, those coffees are added to their credit cards where only the minimum payment is made at the end of the month. As such, those $80 per month have increased to more than 99$ at a 24% interest rate (and continues to compound over the months you carry your balance). For those few who pay off their credit card before the end of the month, even saving an extra $80 per month can add up to a pretty solid down payment on a home over months and years.

Today, we are more prone to instant gratification and those coffees and avocado toasts may seem like harmless frivolities that don’t amount to much. However, every little bit counts when planning for your future. I often tell people that today’s non-essential purchase is a hindrance to their future home which helps puts things into perspective for them – and serves as a catalyst to saving.

Budgeting is essential when looking to buy your first home. This includes looking for a home and mortgage solution that work best within your monthly budget. For example, if you are earning $4,000 per month, it would be ill-advised to have mortgage payments that nears $2,000. Perhaps a starter home is all you need which will allow you to invest in your home, grow your equity and then use that for your next home in a few more years. Do you need that 2,500sq foot home right away, or can you live in a 800sq foot home for a few years before moving into a bigger place?

Making the right financial decisions can be difficult for many families. As a mortgage broker I have seen many people struggle trying to buy their first home and invest for their future. Luckily, though, I have also been able to work with them to find mortgage solutions that make sense for their very personal financial situations.

Should you need help securing a mortgage for your first home, please contact your local Dominion Lending Centres mortgage specialist.. In the meantime, ease up on the avocado toasts and $4 coffees.

  • https://dominionlending.ca/news/avocado-toast-budgeting/

Everything you Need to know about Reverse Mortgages

Latest News & Economy DAZADA DIAMOND 21 Aug

Everything you Need to know about Reverse Mortgages

Wouldn’t it be wonderful to be able to have money to do more of the things you love? To be able to have the freedom to pursue things you truly enjoy, especially in your Golden Years? Enter in a CHIP Reverse Mortgage! A Reverse mortgage is a simple and sensible way to unlock the value in your home. This mortgage product can tap into your home’s equity and turn it into cash to allow you to enjoy life on your terms.

A CHIP Reverse Mortgage is a loan secured against the value of the home. With this type of mortgage product, you are not required to make regular mortgage payments. Instead the loan is repaid only when the homeowners no longer live in the home. Keep in mind that there are conditions with this. The homeowner is required to keep the property in good condition and keep up to date on property taxes and insurance.

There are also other qualifications an applicant must meet in order to qualify for this type of mortgage.

  1. Homeowners must be age 55 or older
  2. You must reside in your home/residence for 6 months out of the year
  3. If the title of the property is registered to more than one person, you must be registered as joint tenants, not just as tenants in common. The difference between these two types of shared ownership is what would happen to the property when one of the owners passes on. If the property is joint tenants, the interest of a deceased owner automatically gets transferred to the remaining surviving owner. If it is tenant in common the deceased tenant’s property interest belongs to his or her estate.
  4. Although you do not need to have an income to qualify for the borrowed amount as there are no payments required, you will have to stay up to date on paying the property taxes, fire insurance and strata fees (if applicable). The income you have coming in will have to be enough to adequately cover those associated fees.

Now for the big question you are all asking: How much can I borrow?

Well, to answer this there are factors that contribute to the total value. First, your age is a determining factor for this mortgage product. Essentially, the older you are the more you will qualify to borrow. The second factor is in direct relation to the details of your property. For instance, a detached home will qualify to borrow a higher amount than say a condo or townhome. The final factor to consider in this is the maximum amount that can be accessed through a CHIP Reverse Mortgage. The max amount is set at 55%. So, if your property is worth $1,000,000 and you are looking to qualify for the maximum amount, that would give you a mortgage of $550,000. If accessing 55% Loan To Value is not high enough there are private lending options that will consider increasing the Loan To Value up to 65%.

An easy way to take all three of those factors into consideration is to visit www.chipadvisor.ca and enter in your details. This can give you a rough idea of what the maximum amount is that you will be able to receive through a CHIP Reverse Mortgage.

One final note is to consider the costs associated with a CHIP Reverse Mortgage. Yes, there are no required payments due while you are living in your home. However, you should expect the following costs to be associated with this product:

1. An appraisal of your property will be required with an approximate cost of $300.
2. There will be legal costs associated which will be around $1495.00 This amount can be included in the mortgage funds and does not need to be paid out of pocket.
3. Independent legal advice is required on all CHIP Reverse Mortgages. The approximate cost will be $600. However, this again can be included in the mortgage funds and does not need to come out of your pocket.
4. Mortgage Penalties may incur if you are breaking the term of your mortgage.

  • In the 1st year it is 5% balance of the funds owing
  • In the 2nd year it is 4% balance of the funds owing
  • In the 3rd year it is 3% balance of the funds owing
  • In the 4th year and beyond it is 3 months interest penalty
  • If you are deceased, no penalty

If you are selling to move to a nursing home the penalty fees will be reduced by 50%.

In closing, a CHIP Reverse Mortgage product is a unique product that can be very powerful and useful for a certain demographic. It can allow you tap into the funds that you need while allowing you to remain in your family home. We have seen clients use their home’s equity for a variety of things from supplementing their pension income, to paying off debts and helping out family without depleting their current savings. It offers unique benefits that may just be right for you.

If you are interested or want to learn more, contact your certified Dominion Lending Centres Mortgage Broker today and they can give you the details that will relate to your unique situation.

  • https://dominionlending.ca/news/everything-need-know-reverse-mortgages/

Top 5 costly financial mistakes homeowners make with their mortgage

Mortgage Tips DAZADA DIAMOND 18 Aug

Top 5 costly financial mistakes homeowners make with their mortgage

1. Not consolidating high interest debt into low interest mortgage.
2. Paying “fees” to get the lower rate
3. Not looking at their long term forecast
4. Taking a 5 year rate when 3-4 years can be cheaper
5. Having their mortgage with a lender that has high penalties and restrictive clauses.

Not consolidating high interest credit or vehicle loans in their mortgage. I hear this often “I don’t want to use the equity in my home” or “I can pay it off”. Many times when people end up with debts is due to inefficient budgeting and understanding what your income is and your debt payments are. There are many folks where monthly payment is the driving factor in their monthly budget. Making minimum payments can take you YEARS to pay off. Soon after people get mortgages, they are buying that new car at 0% interest and $600 month payments, then the roof or hot water tank goes and they put another $15,000 on credit, then someone gets laid off and boom…can’t make all the payments on all those debts that it took a 2 income family to make. It’s a true reality. Let’s look at an example:

Paying Fees to get the lower rate.
Dear rate chasers…they catch up with you somewhere. Nothing comes for free. Let’s face it, you go to the bank and their goal is to make money! A lender that offers you a 4.49% with a $2500 vs a 4.64% with no fee and you think “yes, score what a great rate!” Hold your coins… as you could be walking away poorer as the banker didn’t run the bottom line numbers for you. Chasing rates can cost you more money in the long run.

Your $500,000 mortgage was offered with two rates for the business for self guy who needed a mortgage where they didn’t look at the income so much: 4.49% and $2500 fee and $4.64% no fee. Lets see what it really looks like for a 2 year mortgage.

$502,500 (built in th $2500 feel) 4.49% – payments $2778 per month – $479563 owing in 2 years
Total payments: $66672
$500,000 (no fee) 4.64% – payments $2806 per month – $477634 owing in 2 years
Total payments: $67344.

Wait? So by taking the lower rate with the fee means I owe $1929 MORE in 2 years and only saved $672 in overall payments?

The long term financial planning side.
I counsel many of my clients to take 2-3 year year terms for a variety of reasons. Better rates, lower payments, capitalizing on the equity in your home to pay off a car loan or upcoming wedding. Did you know the average homeowner refinances every 3 years of a 5 year term and pays a penalty?

Taking a 5 year when 3 and 4 year rates might be a better option. Many times the 2-4 year rates can be significantly lower than the 5 year rates. Remember, the bank wants money and the longer you take the term, the more they make. True, many folks prefer or fit the 5 year terms, but many don’t. Worrying about where rates will be in 3-5 years from now should be a question, but not always the guiding factor in you “today” budget.
Here is an example of a $450,000 mortgage and what the difference in what you will owe on a 3 year term.

2.34% – payments are $990 every two weeks = $402,578 owing in 3 years
2.59% – payments are $1018 ever two weeks = $403,604 owing in 3 years.
Your paying $28 MORE every two weeks ($2184 total) and owe $1026 MORE in 3 years. Total LOSS $3210! Planning is key. Stop giving away your hard earned money!

Mortgage monster is in the penalties you pay when you fail to plan.
Since many families today are getting in with 5-10% as their downpayment.
If you got your mortgage with many of the traditional banks you know and your current mortgage is $403,750 and you need to break your mortgage (ie refinance to pay off debts) 3 years into the contract you potential penalty could be $12,672! Ouch. vs going with a mortgage broker who can put you with a lender that has similar rate you penalty would be significantly different – almost $10,000 dollars different!

Get a plan today! If you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

  • https://dominionlending.ca/news/top-5-costly-financial-mistakes-homeowners-makes-mortgage/

What does the future hold for mortgages?

Latest News & Economy DAZADA DIAMOND 17 Aug

What does the future hold for mortgages?

There have been a dizzying number of changes to the mortgage rules over the last six or seven years. The red hot markets in Toronto and Vancouver coupled with increased household debt and concerns over the risk to the Canadian tax payer through CMHC have caused the federal government to step in repeatedly. Here are a few of the changes we have seen.

  • Maximum amortization from 40 years to 25 years.
  • Mortgages must qualify on the stress test rate which is currently 4.84%.
  • Homes over $500,000 need 10% down on any amount over that threshold.
  • Homes over $1,000,000 are not eligible for mortgage insurance.
  • Refinances can no longer be guaranteed by mortgage default insurance.
  • Foreign buyers faced additional restrictions.
  • Home Equity Lines of Credit are maxed at 65% of the property’s value.
  • Refinances are maxed at 80%.
  • All outstanding credit cards and lines of credit have to be included at a 3% repayment.
  • Increased mortgage default insurance premiums.

This list could go on but these are some of the major ones. Recently the powers that be have announced another round of proposed changes which, if history holds true, we would anticipate to come into existence in October of this year.

The overall indebtedness of Canadian households through Home Equity Lines of Credit is a concern which may signal a further set of limitations to this type of mortgage.
There is consideration being given to a risk sharing model between the mortgage insurers and the banks. At the present time if you were to default on your mortgage the lender has the assurance that the default insurance will make them whole. Going forward this may not be the case.
How could you be affected? There will likely be an increased level of scrutiny applied to mortgage applications. If your credit is blemished or less than perfect you could face higher rates or be shut out of buying a home. They will likely also want to see savings beyond just the down payment and closing costs.

The fact of the matter is that if a bank has an increased risk overall they are going to certainly be more selective in who they lend their money to. The days of the best 5 year rate for everyone may be a thing of the past.

Currently there are lenders in Canada who charge slightly higher rates and make allowances for damaged credit, short self-employment tenure or other issues a borrower may be facing. Though these companies have nowhere near the loose lending guidelines in the U.S. which led to the melt down, the government would like all lenders in Canada to abide by the same guidelines and looking at ways to bring this into reality.
We will have to wait and see if these or other changes are actually implemented. It is fair to say that until the government is satisfied the housing sector no longer poses a threat to the economy, it will remain at risk of further changes. Long story short, if you are considering purchasing then you may want to proceed sooner rather than later. Rates have risen recently and there is uncertainty over the future of mortgages. Call a well-qualified Dominion Lending Centres mortgage professional today for assistance.

  • https://dominionlending.ca/news/future-hold-mortgages/

10 things NOT to do when applying for a mortgage – buying a home or refinancing

Mortgage Tips DAZADA DIAMOND 16 Aug

10 things NOT to do when applying for a mortgage – buying a home or refinancing

Have you been approved for a mortgage and waiting for the completion date to come? Well, it is not smooth sailing until AFTER the solicitor has registered the new mortgage. Be sure to avoid these 10 things below or your approval status can risk being reversed!

1. Don’t change employers or job positions
Any career changes can affect qualifying for a mortgage. Banks like to see a long tenure with your employer as it shows stability. When applying for a mortgage, it is not the time to become self employed!

2. Don’t apply for any other loans
This will drastically affect how much you qualify for and also jeopardize your credit rating. Save the new car shopping until after your mortgage funds.

3. Don’t decide to furnish your new home or renovations on credit before the completion date of your mortgage
This, as well, will affect how much you qualify for. Even if you are already approved for a mortgage, a bank or mortgage insurance company can, and in many cases do, run a new credit report before completion to confirm your financial status and debts have not changed.

4. Do not go over limit or miss any re-payments on your credit cards or line of credits
This will affect your credit score, and the bank will be concerned with the ability to be responsible with credit. Showing the ability to be responsible with credit and re-payment is critical for a mortgage approval

5. Don’t deposit “mattress” money into your bank account
Banks require a three-month history of all down payment being used when purchasing a property. Any deposits outside of your employment or pension income, will need to be verified with a paper trail. If you sell a vehicle, keep a bill of sale, if you receive an income tax credit, you will be expected to provide the proof. Any unexplained deposits into your banking will be questioned.

6. Don’t co-sign for someone else’s loan
Although you may want to do someone else a favour, this debt will be 100% your responsibility when you go to apply for a mortgage. Even as a co-signor you are just as a responsible for the loan, and since it shows up on your credit report, it is a liability on your application, and therefore lowering your qualifying amount.

7. Don’t try to beef up your application, tell it how it is!
Be honest on your mortgage application, your mortgage broker is trying to assist you so it is critical the information is accurate. Income details, properties owned, debts, assets and your financial past. IF you have been through a foreclosure, bankruptcy, consumer proposal, please disclose this info right away.

8. Don’t close out existing credit cards
Although this sounds like something a bank would favour, an application with less debt available to use, however credit scores actually increase the longer a card is open and in good standing. If you lower the level of your available credit, your debt to credit ratio could increase and lowering the credit score. Having the unused available credit, and cards open for a long duration with good re-payment is GOOD!

9. Don’t Marry someone with poor credit (or at lease be prepared for the consequences that may come from it)

So you’re getting married, have you had the financial talk yet? Your partner’s credit can affect your ability to get approved for a mortgage. If there are unexpected financial history issues with your partner’s credit, make sure to have a discussion with your mortgage broker before you start shopping for a new home.

10. Don’t forget to get a pre-approval!
With all the changes in mortgage qualifying, assuming you would be approved is a HUGE mistake. There could also be unknown changes to your credit report, mortgage product or rate changes, all which influence how much you qualify for. Thinking a pre-approval from several months ago or longer is valid now, would also be a mistake. Most banks allow a pre-approval to be valid for 4 months, be sure to communicate with your mortgage broker if you need an extension on a pre-approval.

 

Secrets for building your credit

Mortgage Tips DAZADA DIAMOND 15 Aug

Secrets for building your credit

Over the years, I have come across all sorts of people who have had no idea what their credit score is. Some of them have declared to me that they have great credit only to find that they had poor credit scores or a number of late payments. I have also had people tell me that they had lousy credit only to find that they had a very respectable credit score. People do not know anything about credit and need an expert to help them to build their credit.
When you ask the two major credit reporting agencies, Equifax and Trans Union how they score credit, they give you a vague idea but no idea on how to quickly up your score.

Perhaps you have seen this pie chart that shows how they score different activities I have found out recently that people have higher scores that they had previously and this is due to more emphasis on what you owe now as opposed to your payment history.
Here are some things I have observed over my 12 years of being a mortgage broker.

1- Credit card balance. If you have a credit limit of $1,500 and your balance is at $1,450 you are losing 25-30 points. Having a balance of $0 or using less than 50% of the limit adds points. If you pay the minimum balance you may go over your limit. If you are over your credit limit by $1 you will lose 35 points !
How do you quickly get your score up in this situation? Call your credit card company and tell them that you have a large purchase coming up. Ask them to increase your limit to $2,500. They won’t give you a decision over the phone but often within a week you will receive notification that your balance has been increased. You now have an extra 25 points with one phone call. You can also ask them to lower your interest rate so that you can pay your balance down quicker. Most people don’t realize that credit card companies will do this. You can also move your credit card balance over from a high interest department store card at 26% to a lower interest bank card at 9.95%.

2- Types of credit used – credit agencies want to see proper usage of revolving credit ( i.e.: credit cards) and installment credit (i.e. car loans) . They also want to see that you have over $2,500 in available credit. You probably have a credit card but you may not have an installment loan showing on your credit report. You don’t have to buy a car to get this showing on your report. Consider getting a $1,000 RRSP loan from your bank. Why? Well, $1,000 is a substantial loan. Your bank or credit union will be more willing to lend you money for an RRSP that you may buy from them than they would lending you the money for a gambling junket to Vegas.
The RRSP loan is a win/win for you. Besides increasing your credit score and thickening your credit file you will get a tax refund at the end of the year which can be used towards your down payment. 90 days after you open your RRSP you can use the money towards your down payment under the Home Buyers Program up to a maximum of $25,000.

Credit history – don’t close the old credit card you got in university just because you aren’t using it.
Chances are that this card is still reporting month after month that you have credit with them and that the balance for that month is $0. Finally this brings me to my best tip for building credit.

Payment History – Recently I had a young client who wanted to renew his mortgage. When I obtained his credit report I was surprised to see that he had a 900 credit score. This is the highest score possible and usually it is reserved for older people with 20+ years of credit history. When I asked him how he managed this he told me that the only thing he does differently is that he checks his credit card balance every week and pays it off to $0. I knew that people who paid bi-weekly often had higher scores from having more payments showing in their history but this was the first time I had ever heard of someone paying weekly. I am not certain if it’s the number of payments, the fact that the balance is $0 so many more times or a combination of the two factors.
Recently, using these techniques I was able to raise a client’s credit score by 60 points in one month.

If you want to buy a home and you suspect your credit is weak, your first call should be to a Dominion Lending Centres mortgage broker. They can check and make suggestions to get your credit score up and to get you into a home a lot sooner than you could do this on your own.

  • https://dominionlending.ca/news/secrets-building-credit/

The Role of a Mortgage Broker

General DAZADA DIAMOND 14 Aug

The Role of a Mortgage Broker

The Role of a Mortgage BrokerBuying a home is a big step – a big, very exciting, potentially stressful step! How can you take the hassle out of the equation and keep your buying experience super positive? Easy… Surround yourself with a team of experienced professionals!

Many experienced realtors insist on starting your financing first, that’s where your Mortgage Broker comes in.

What is a Mortgage Broker? A Mortgage Broker is an expert in real estate loans that acts as a match-maker between home buyers looking for money and lenders with funds available to borrow. A broker will collect information from you about your employment, income, assets, loans and other financial obligations as well discuss your current budget, spending patterns and goals in order to get a thorough understanding of where you’re at and where you’d like to be. From here they assess the strengths and any weaknesses in your application and can advise on potential suitable financing options and any next steps you might need to take in preparing yourself for loan approval.

Talking with a Mortgage Broker before you start shopping is helpful for a number of reasons:

  • You’ll develop a well-founded expectation of the price range and payments that you can afford.
  • You’ll have a chance to address any potential gaps in your application for financing BEFORE you’re in a time crunch to meet deadlines for closing.
  • Sellers may take your offer more seriously when you tell them you’ve been pre-approved for your financing putting you in a better position to negotiate (price, possession date, inclusions, other terms, etc).
  • You and your Mortgage Broker will begin to compile your documentation so that your application is ready to go when you find the perfect home, leaving your mind free to start arranging furniture in your new place.

So why use a Mortgage Broker rather than your bank?

A Mortgage Broker has access to loans from a wide range of lenders. That means that you have more potential places to get approved, AND can take advantage of best products, top programs and lowest pricing!

A Mortgage Broker must complete a series of courses and pass the corresponding exams prior to obtaining a license to sell mortgages. In order to maintain that license a Broker must uphold the highest standards of moral, ethical, and professional conduct – including ongoing education and training.

A Mortgage Broker working with multiple lender options means that they truly SHOP for the best programs and rates for you based on comparisons and choices and don’t simply sell you the limited products they have to offer through a single bank source.

Mortgage Brokers work EXCLUSIVELY in mortgages so they are mortgage product specialists rather than banking generalists. Brokers deal with real estate transactions involving deadlines and conditions everyday as part of their job. They understand the urgency of meeting these commitments to ensure a successful transaction for everyone involved.

Learn more by contacting your Dominion Lending Centres mortgage professional today!

  • https://dominionlending.ca/news/role-mortgage-broker/

Is it Really All About Rate?

Mortgage Tips DAZADA DIAMOND 11 Aug

Is it Really All About Rate?

Is It Really All About Rate? You might conclude that it is. You may think that securing the lowest rate is key to your real estate investment success. However, rate is but one of the four main components of any commercial mortgage offer. Amount, term and amortization period are also critical factors. It’s all related to your overall investment strategy, and your property specific goals.

1. Amount
Loan Amount is often the critical component of your financing. This is particular true in the case of a property purchase. The loan amount will drive your other considerations. You may have secured a great low rate, but if you lender is only prepared to provide you a loan equal to 60% of purchase price or appraised value, are you prepared to inject additional equity? Have you considered what this will do to your real estate return? Will you need to source secondary financing, and if so, at what cost? Will you need to seek partners or co-investors to complete your property purchase?

2. Term
Important, but often overlooked, is the term of your financing. In our post entitled Mortgage Term Preferences, we outlined borrower preferences for length of mortgage terms selected. The importance of developing a real estate strategy cannot be overstated.
Are you a buy and flip investor, or are you interested in a long term hold? How long are your primary Lease terms? Perhaps you acquired the property at an advantageous price. You may have created value by releasing to stronger tenants at higher rents. Perhaps you’ve updated the property. Are you now locked into an inappropriate mortgage term, unable to “release equity” to leverage this added value?
What is your portfolio strategy? If you have several assets, conventional wisdom would suggest that you stagger your mortgage maturities.
What is your property specific exit strategy? If you’ve maximized value, and little future value upside is available in the short term, do you want to position yourself so that you can entertain an Offer to Purchase without having to consider potentially costly mortgage prepayment penalties?
Conversely you may have acquired the property with the expectation that it will represent a major part of your future retirement strategy. Is a longer mortgage term more appropriate, with certainty of mortgage payments? All of these considerations will inform your decision regarding length of Term.

3. Amortization
From personal experience, often little attention is paid by Borrowers to amortization periods. Your preference will be guided by your investment strategy. Your need to manage cash flow, and the specific income generating characteristics of your property will be key.
Is it important to you to be debt debt free by a particular point in time? Do you want to grow your property specific or portfolio equity so that you can leverage the asset(s) for future acquisitions? Conversely, are you in a joint venture ownership situation, where investors are looking for the maximum cash flow? All of these considerations will inform your amortization period decision.

4. Rate
Rate is the component which garners the most interest (pun unintended). But is it less critical to your financing plans than you’ve previously thought? A keen rate offered by a lender who can only provide you a 5 year term, on a 20 year amortization, with no prepayment privileges, may not be the right loan for you.
If you are conventionally financing a well leased commercial asset in a major centre, chances are that a number of lenders will be interested in your investment opportunity. Lenders will be competing for business like yours. They will have a budget for annual loan approvals. As such, available market rates from major “A” lenders will likely not differ greatly. Rates are at a historically low point. Though rate upside is a concern, few are expecting rapid, nor exorbitant increases.

Your Investment Strategy will be Key

So Is It Really All About Rate? No, it is not. By all means consider rate, but ensure that all the loan terms align with your property specific, and overall portfolio strategy. Choose your lender wisely!
Understand which of these 4 factors or combination of factors is most important to you. All are negotiable to a greater or lesser extent.
Perhaps you need a full loan for an acquisition, so loan amount will be the critical piece. Paying a slightly higher rate, in exchange for the “right” loan amount, so that you can make effective use of debt, may be a wise decision.
Possibly debt service coverage and sufficiency of cash flow is key to your strategy. You may anticipate a softening of rental rates, or possible anticipate a vacancy increase. Focus on securing a comfortable (i.e. lengthy) amortization period.
Perhaps a number of your Leases are structured to mature in 36 months. Arrange the term of your loan to coincide. Taking a a 5 year term may lock you into waiting an additional 24 months before you can secure an increased loan (without going the secondary financing route).
Understand what is important to you. Implement your commercial real estate investment strategy accordingly.

If you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

  • https://dominionlending.ca/news/is-it-really-all-about-rate/

Know Your Numbers

General DAZADA DIAMOND 10 Aug

Know Your Numbers

Most people know their weight. Their height. Their age. Their birth date. Their address. Their SIN. Even their income. Could you imagine if you always had to say to someone, “Can I get you that information when I get home? It’s written down in my planner… ”
Knowing your everyday numbers is important. It allows you to make quick and informed decisions.
Therefore I, as a Mortgage Broker, have made it my goal to know my numbers — to memorize certain things so that when called upon I can provide concise and detailed information in the simplest format. I am going to arm you with some quick mortgage number facts and mortgage industry calculations that I use daily.

1: Payments are $400/month/every $100,000 mortgage amount with 20% down or more. Example: $400,000 mortgage = $1,600 monthly mortgage payment.

2: Payments are $450/month/every $100,000 mortgage amount, 19.99% down or less. Example: $400,000 mortgage = $1,800 monthly mortgage payment.

3: For every $10,000 mortgage amount increase, payment increases by $40/month with 20% down or more. Example: $420,000 mortgage = $1,680 monthly mortgage payment.

4: For every $10,000 mortgage amount increase, payment increase $45 per month, 19.9% down or <. Example: $420,000 mortgage = $1,890 monthly mortgage payment.

5: If rate increases by 0.25%, monthly payment increases by $13 per month per $100,000.

6: If rate increases by 100% the monthly payment only increases by 33%.

7: A $13,000 credit-card debt cancels out $100,000 mortgage money.

8: A $400 per month vehicle payment cancels out $100,000 mortgage money.

9: A $20,000 gross income services a mortgage of $100,000. Example: Household income of $120,000, qualifies for a $600,000 mortgage.

10: A $400,000 mortgage balance (FIXED rate term) holds a penalty of approx $3,200 with a monoline lender. With a traditional bank, it’s closer to $16,000. This term paid out with 24 months remaining.

Knowing your numbers is likely going to change this fall. There are changes coming and they are not small ones. The federal government is going to make yet another amendment to the lending policy. Nothing specific or concrete yet. Coming this fall (2017) you are likely going to see your borrowing power reduced by as much as 25%. If today you qualify for a $500,000, that amount could drop to approximately $400,000 is as little as 3 – 4 months.
The bottom line is simple. Borrowers need to focus on what they can control:

  • Coming up with larger down payments, saved and gifted.
  • Earning more income. If you are self-employed, then you may want to re-structure your reported income to CRA. Verified income will be essential. This is LINE 150 of our tax documents.
  • Good, strong, clean credit, both credit score and credit history.

Be sure that you know the power of your own numbers. Don’t be concerned with the past. Every day we move forward. Changes happen all the time; we need to adapt or be left behind. Asking WHY is sometimes not the best reaction but rather HOW. How do I adapt? How do I become current?
Overall, Canada has a very strong, dependable and stable financing and real estate market. The changes that are handed down by the federal government are mandatory, right or wrong… they need to be followed. And if you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

  • https://dominionlending.ca/news/know-your-numbers/

Home Equity Line of Credit in Canada vs. Reverse Mortgages

Mortgage Tips DAZADA DIAMOND 9 Aug

Home Equity Line of Credit in Canada vs. Reverse Mortgages

In our business, we are constantly approached with questions about how reverse mortgages work and how they compare to Home Equity Lines of Credit (HELOCs). HELOCs are the most closely comparable products in Canada and many believe them to be superior to reverse mortgages. But many Canadians look at only two things and assume HELOCs are better in every situation: (1) lower interest rates; and (2) the flexible access to cash. Most are forgetting some of the other features and benefits that they should compare before deciding. Below is a chart that lets you see the bigger picture between these two rival products.

Generally, whether you choose a HELOC or a reverse mortgage, tapping into your home equity is a big decision that needs to be discussed with your family. However, having the extra money in one’s later years, when health issues and home retrofitting are needed the most, can make a big difference in our clients’ quality of life.

If you have any questions, please contact your local Dominion Lending Centres mortgage specialist.

  • https://dominionlending.ca/news/home-equity-line-credit-canada-vs-reverse-mortgages/
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