What is the difference between a Mortgage Broker and a Mortgage Specialist

General DAZADA DIAMOND 28 Sep

What is the difference between a Mortgage Broker and a Mortgage Specialist

With the importance of real estate in Canada, it is vital to understand how the various professionals in the sector operate when buying a home.

Sooooooo… what is the difference between a Mortgage Specialist & a Mortgage Broker? At the surface they sound the same
• They both arrange mortgages
• They both can offer advice and help you select a mortgage, right?

WRONG!!! There are many differences… Let’s check some of them out!

• A Mortgage Broker works for you! Their role is to act as a link between you and the lenders so that you do not have to spend your valuable time learning about mortgages and shopping around for the perfect mortgage. Mortgage brokers do the legwork and negotiate on your behalf for lenders. They are your point of contact for everything related to your financing your home.
o Bank specialists are employed and paid by the bank and work on the bank’s behalf.

• A Mortgage Broker can work with many different lenders across Canada, rather than working for one financial institution. Therefore, Mortgage Brokers can offer you more choices with competitive rates and terms including: Big banks, Credit Unions, Trust Companies, Monoline Lenders (broker only banks) and private lenders.
o Usually Mortgage Specialists only have access to their lender’s products. In a typical situation, homeowners could end up with a higher interest rate than other institutions. This occurs because the homeowner must negotiate for themselves and Mortgage Specialists are usually paid according to the rate they sell you.

• A Broker must successfully complete a Provincially regulated Mortgage Broker course and exam. (In BC, Mortgage Brokers must be licensed by FICOM) They continue to maintain their good status to keep that license by taking professional development education courses.
o Bank specialists are not licensed and require no formal training. There are no standards for educational requirements (although most Lenders do provide some in-house training).

• Because Mortgage Brokers don’t work for a specific lender, you get impartial advice about a variety of lenders
o A bank specialist can only offer their own institutions products, good or bad.
o Specialists don’t have access to other lenders, so they won’t recommend another lender’s product offerings.

• Mortgage Brokers use their knowledge and experience to negotiate the best possible terms and rates for you from a variety of lenders, based on the best fit for your situation.
o When you see a bank specialist, the mortgage negotiating is typically left up to you.
o Will the bank specialist negotiate on your behalf or the banks?

• For conventional financing, the services of a mortgage broker are generally FREE to you. If there is a cost, you will be advised of those costs up front. Brokers get a finder’s fee from the lender once they place your mortgage. Therefore, brokers are motivated to get the best terms and rates for their clients.
o Bank specialists are paid by the bank
o Some banks offer bonuses if specialist gets their client to pay higher interest rates or sign up for other bank services.

• Mortgage Brokers work on a referral basis and are self employed. Most of their business is done through word of mouth referrals, therefore a Dominion Lending Centres Mortgage Broker is motivated to ensure their clients are extremely happy and satisfied to keep their business growing.
o A bank specialist is generally an employee of the bank, generating business through the bank’s existing customers.

• Most Mortgage Brokers are available for appointments outside banking hours (nights, weekends) at their client’s convenience.
o Bank specialists are generally only available during regular banking hours.

• Mortgage Brokers are focused on your mortgage
o Specialists are trained and rewarded on cross selling. Some will push you to consolidate all your banking services with them when getting a mortgage (credit cards, insurance, RRSP, lines of credit, etc.)

Would you ask Tim Hortons who makes the best coffee and expect them to say Starbucks? Not likely…  So why would you ask a Mortgage Specialist who works for a bank, to tell you which Lender has the best mortgage product for your situation.

  • https://dominionlending.ca/news/what-is-the-difference-between-a-mortgage-broker-and-a-mortgage-specialist/

All About Pre-Approvals

Mortgage Tips DAZADA DIAMOND 27 Sep

All About Pre-Approvals

Are you in the market for a new home? That’s great – but if you’re not already pre-approved from your mortgage broker, be sure to read on.

Pre-approvals are very important for two reasons.

They give you confidence in knowing that a specific amount of financing is available for you.
A pre-approval can put you in a positive negotiating position against other home buyers who aren’t pre-approved.
Not all pre-approvals are the same, though. There are essentially three different kinds.

  • The first occurs when you meet with a mortgage professional and tell them how much you make. They’ll say something along the lines of “Great, you’re pre-approved.” The mortgage professional has only looked at your income. There is no real pre-approval.
  • The second kind is when a mortgage professional asks you how much you make and then pulls your credit bureau. This allows a mortgage professional to lock in your mortgage rate for up to four months. This pre-approval still isn’t a sure thing.
  • The third kind of pre-approval – and the one that we do – is a lot more encompassing. We get all of your papers prepared right off the bat, which allows us to eliminate any unforeseen issues with your approval. Sure, it’s more work up front – but we do this because it’s the right thing to do.

If you’d like to get a pre-approval, contact a Dominion Lending Centres mortgage professional! We’re here to help.

  • https://dominionlending.ca/news/all-about-pre-approvals/

Mortgage Protection Plan

General DAZADA DIAMOND 26 Sep

Mortgage Protection Plan

Insurance coverage is something that everyone is “pitched” at some point or another in their life. Unfortunately, a lot of us have a negative attitude towards insurance or warranty as it is perceived as being a cash grab. Yes, if you are purchasing a flat screen T.V., that extra 2-year warranty for $100 might be a little excessive. However, when it comes to covering monthly mortgage payments or the outstanding balance of your mortgage upon death or injury, yes, it is important to have.

Every single person is offered life and disability insurance when applying for a new mortgage. As a mortgage broker, it is our obligation to offer you Manulife’s Mortgage Protection Plan. Even if it is something you do not want or do not have a need for- we still require a signature confirming it was offered. Reason being, is when John Smith breaks his foot two years down the road and can’t work to cover his mortgage payments, Manulife needs to confirm that the client passed on the opportunity to have their payments covered.

Now, is Manulife’s mortgage Protection Plan, or, MPP as it is known, the most comprehensive coverage out there? No.

Is MPP better than any coverage you are ever going to receive from a bank directly? Yes.

Manulife’s MPP is a 60-day money back guarantee, with coverage that follows you lender to lender. It will cover disability injuries preventing you from work, and is underwritten before your coverage begins, not when a claim is made.

Most banks do not allow you to take their mortgage insurance to another lender. So, if after 10-years of paying your premiums you decide to leave your bank and go to a credit union, your coverage is no longer in affect and all that money you spent on your monthly premiums is now worth nothing. Scariest part about bank coverage, is the health evaluation is done when a claim is made, not when you sign up. Can you imagine not making a claim for 20-years and then being declined on coverage because you have developed health issues not relevant when you signed up in your 20’s?

If Manulife Mortgage Protection Plan is not for you, there are insurance brokers out there we have access to who can offer alternative solutions. The biggest thing though is to make sure you have SOME coverage, because you won’t know you need it until you do. If you have any questions, contact a Dominion Lending Centres mortgage professional for help.

  • https://dominionlending.ca/news/mortgage-protection-plan/

Is your Line of Credit Killing your Mortgage Application?

Mortgage Tips DAZADA DIAMOND 25 Sep

Is your Line of Credit Killing your Mortgage Application?

Some of the last round of changes from the government regarding qualifying for a mortgage were that if you have a balance on your unsecured line of credit, then to qualify for mortgage the lenders require that we use a 3% payment of the balance of the line of credit.

Simple math is,  if you owe $10,000 we have to use $300 as your monthly payment regardless of what the bank requires as a minimum. Given that the banks hand out lines of credit on a regular basis it is not uncommon for us to see $50,000 lines of credit with balances in the $40,000 range. That amount then means we have to use $1,200 a month as a payment even though the bank may require considerably less.

So what if it is a secured line of credit? Again we have clients telling us that they don’t have a mortgage only to realize they do have a Home Equity Line of Credit (HELOC). A home equity line of credit by all definition is a loan secured by property, the actual definition of a mortgage.

Again, it’s something the bank will require little more than interest payment on because it is secured. The calculation here can also upset the calculation for your next mortgage, as what is required by many lenders is to take the balance of the HELOC. Let’s say the balance is $200,000 and you convert it to a mortgage at the bench mark rate, which today is 5.34% with a 25-year amortization. That without any fees today is equal to $1202.22 per month, so what in the client’s mind may be a $400 or $500 dollar interest payment for the purpose of qualifying will be almost three times higher.

This one change to supposedly safe guard the Canadian consumer has lately been the thing we have seen stop more mortgages than just about anything else. If you have any question, contact a Dominion Lending Centres mortgage professional for answers.

  • https://dominionlending.ca/uncategorized/is-your-line-of-credit-killing-your-mortgage-application/

5 Tips on how to get out of debt and into your own home

Mortgage Tips DAZADA DIAMOND 24 Sep

5 Tips on how to get out of debt and into your own home

To get out of debt, you need a plan and you need to execute that plan. That’s why I’ve created this simple, five-step, get-out-of-debt checklist that can help you leave that financial burden behind you.

As you work on your plan, you’ll need to make all necessary adjustments to your budget along the way so you don’t overspend and slide back into debt. Plus, if you don’t have an emergency fund, consider setting some money aside in savings beforehand.

Keep this checklist someplace where you’ll see it often (like your refrigerator door ), and make it your goal to check a task off the list each day (or each week), depending on how quickly you want to become debt-free.

1- Make a list
Take all your bills and put them in a chart that includes: the name of creditor, interest rate, balance, minimum monthly payment. Figure out how long it will take you to pay the balance down to zero. Many credit card statements now feature this.

2. Lower your rates
This is easier than you think. Call up each of your credit card companies starting with the ones with the highest interest rates and ASK them to lower your interest rate. You can tell them that other credit cards are offering lower rates and you wanted to let them keep your business. They won’t give you an answer on the phone but you should receive a letter with a new lower rate within a couple of weeks. Another possible solution is a balance transfer. Often a credit card company will allow you to transfer your balance from another card to theirs and they charge you 0% for 6 months. They assume that you will see zero being added and will spend more. Show them that you are disciplined and keep paying the balance down as if it was still at 19%. Consider getting a debt consolidation loan. If you have a home with equity you can often get a very good rate and clear up all your debts. Often you can get these loans at considerably less than your credit cards. Once again, keep your monthly payments up as if you were still paying a credit card of 19% interest and your balance will go down quickly.
Next contact your car loan company. If you have been paying your loan on time they may lower your rates. Now you are ready to tackle the utility companies. In Alberta the gas/electric companies really want your business. You can often get a better rate just by threatening to switch. This also works with cellphone companies. They often have better plans than the one you are on but will only offer it when you say you are going to leave.

3. Get your Number
What is the amount you need to pay off all your debts? Now that you have a number in mind you can set a goal. Can you pay this off in six months? 12 months? two years?
Get your credit score number. How much does it have to improve before you can qualify to buy a house? Check with your Dominion Lending Centres mortgage broker for help getting this.

4. Make a plan
What will be your target debt? Is it the credit card balance with the highest interest rate? The lowest balance? Set a short term goal to pay one card off in a manageable amount of time. One down and three to go sounds better than tackling all the debt at once. Pay each debt off one by one. Does your community library offer debt counselling financing planning courses? Consider signing up for one.

5 – Monitor your progress
How quickly are the debts coming down? Is your credit score going up? It should if the debts are coming down.
Do you have to adjust your plan to make your deadlines? Don’t be discouraged. Large companies make plans and set budgets and then adjust them quarterly based on how the previous three months performance was.
Stick with your plan and if you show some self-discipline you can achieve your goals in time. Finally, tell your local Dominion Lending Centres mortgage broker what your goal is and what your timeline is. They will be happy to help you along the way. Nothing makes them happier than to tell people like you that they are approved for home financing.

  • https://dominionlending.ca/news/5-tips-on-how-to-get-out-of-debt-and-into-your-own-home-sooner-rather-than-later/

Rent, Own, or Do Both?

General DAZADA DIAMOND 21 Sep

Rent, Own, or Do Both?

There are generally three different situations you can find yourself in when it comes to living situations; living with parents, renting, or owning.

A lot of the times the first decision someone will need to make is whether they buy a home to live in, buy a home to rent to someone else, or buy a home to live in while also renting out a portion of it. There are lots of pro’s and con’s to both. Below are some of the numbers and things to consider when looking at each of them.

Buying with The Intention to Rent
Buying a property for the purposes of renting it out to someone else comes with different qualifying criteria and different mortgage product options. The following are some of the important points to consider:

  • The minimum down payment required is 20% of the property price and this down payment must be from your own savings. It cannot be gifted from someone else.
  • Only a portion of the rental income can be used for the qualifying of how much of a mortgage you can afford to borrow. Some lenders only use 50% of the income and add it to yours. Others may look at taking 80% of the rental income and subtracting your expenses which can have a much higher impact on how much you can afford.
  • Interest rates usually have a premium on them when the mortgage is for a rental property compared to a mortgage being requested for a property someone plans on living in. This premium can be anywhere from 0.10% to 0.20% on a regular 5-year fixed rate.

The following is a typical scenario you can expect to qualify for in a rental situation:

$450,000 purchase price
$90,000 down payment (20%)
$360,000 mortgage
$1,665 monthly mortgage payment

$1,400 in monthly rental income
$66,500 a year in income
$0 month in consumer debt payments

Buying with The Intention to Own
Buying with the intention of living in the property as your primary residence is the most common and the guidelines are well known:

  • 5% minimum down payment from own resources or from gifted funds coming from an immediate family member.
  • Insurance premium for having less than 20% as a down payment
  • Lowest interest rates available for high ration purchases of home becoming owner occupied (Loan-to-value of more than 80%)
  • If first time home buyers, you may be able to utilize grants and avoid property transfer taxes which you will not receive on the purchase of a rental.

The following is a typical scenario you can expect to qualify for in an owner-occupied situation:

$450,000 purchase price
$22,500 down payment (5%)
$444,600 mortgage
$2,039.63 monthly mortgage payment

$97,000 a year in income
$300 in monthly debt payments

Buying with The Intention of Both

Owner-occupied properties with a rental are really the best of both worlds. Only issue is, it needs to be a self-contained suite. Therefore, second bedrooms in town-homes or condos do not qualify. It is typically only detached homes with rental suites that are allowed but the rate premiums and minimum down payments fall under the owner-occupied side. Below is a typical scenario you could expect with this kind of purchase:

$1,000,000 purchase price
$100,000 down payment (10%)
$927,900 mortgage
$4,256 monthly mortgage payment

$1,200 in monthly rental income
$175,000 a year in income
$750 month in consumer debt payments

Please reach out to a Dominion Lending Centres mortgage professional today if you would like to discuss the different options that are available to you and whether or not any one of these scenarios could potentially work for you.

  • https://dominionlending.ca/news/rent-own-or-do-both/

First Time Mortgages: Expectations Vs. Reality

Mortgage Tips DAZADA DIAMOND 19 Sep

First Time Mortgages: Expectations Vs. Reality

First-time homebuyers are one of our favourite clients! It’s great to work alongside them and teach them the in’s and out’s about real estate, owning a home, and helping them cross “homeownership” off their bucket list. One thing that we find though, their expectations are often not aligned with reality. We are always honest with our clients about the reality of the situation, but we thought it would be helpful to clear up a few of those “expectations”.

1. Expectation: They have enough saved for their down payment

Reality: This seems to be the first “shocking” point to many first-timers. It’s also one of the most heartbreaking ones to explain to them too. Many times, they have saved for several years and come in with what they think is a sizable down payment…but, in reality, it’s less than what is needed. They will often have their sights set on a home that is well out of their price range. They have also potentially failed to account for stress-testing measures. As a general rule of thumb, 5% is the minimum on a property with a purchase price of less than $500,000. However, 20% or more is the ideal in order to avoid your mortgage being classified as a high-ratio mortgage and require mortgage insurance.

2. Expectation: Once you have the down payment you are all set!

Reality: There are many different costs associated with moving, buying a home, and other fees that many first-time buyers may not be aware of. A few fees to consider include:

• Legal Fees
• Property Transfer Fees
• Moving Costs (moving van, moving crew)
• Appraisal fee
• Searches and Title Insurance
These will total approximately 1.5-2% of purchase price.

3. Expectation: Costs will stay the same when going from renting to owning a home.

Reality: This is not true in most cases. Many people forget to account for the day-to-day and general upkeep associated with home ownership. These can include repairs on the home, insurance, property taxes, extra utility costs, etc. This is why we always encourage first-time buyers to sit down and look at their budget and “practice” the strains and additional costs. This allows you to see if you are truly ready financially for home ownership and also alleviates stress down the road.

4.Expectation: We qualified for (blank) amount of dollars—let’s use all of it.

Reality: This is rarely a recommended or smart decision. Pick a price range that you are comfortable house shopping for that would allow you to accommodate things like home renovations, upgrades, and updates. Looking at homes that still fit your needs but may just need a little more work can significantly decrease the amount you are borrowing. If you are open to different options when house-hunting, you can save money in the long run.

These are just four examples of how a first-time mortgage holders’ expectation are rarely the reality. However, there are other areas that we find they may have questions in or not be aware of. The mortgage industry is one that is forever changing, and it can be difficult to stay on top of all of the changes! If you have a question, concern, or just want to know about what to really expect when you are going through the mortgage process, consider meeting with a Dominion Lending Centres mortgage broker.

  • https://dominionlending.ca/news/first-time-mortgages-expectations-vs-reality/

HGTV’s original boss babe – Sandra Rinomato

General DAZADA DIAMOND 18 Sep

HGTV’s original boss babe – Sandra Rinomato

After taking a turn as the host of Property Virgins and Buy Herself, Sandra Rinomato has come full circle putting her efforts back into Toronto area real estate.

Sandra Rinomato fell into a career in real estate almost by accident. It was the mid-90s, and the future TV star was considering opening up a coffee shop in the Toronto area. She reached out to a friend and commercial realtor for help to find a space, and he obliged. But he asked her an important question: Why did she want to work so hard?
“I said I don’t, I said I want to work smart not hard,” Rinomato recalled of the conversation 22 years later.
The friend suggested instead of selling java, she get her real estate license. And just like that, she did. She began her real estate career in a prestigious area of Etobicoke, noting she got lucky getting into the industry at a time when the market was good.
In a sink or swim industry, Rinomato quickly established herself, relying on her people skills, especially during open houses.
“It was really a great learning experience to do open houses and get face-to-face with people because let’s face it, everybody loves to talk about real estate,” she said, adding those open houses taught her the publics perception of real estate and what the masses considered a good home.
By 2006, Rinomato’s success and personality eventually led her to being cast in the popular HGTV show Property Virgins.
For seven seasons, Rinomato crisscrossed the continent coaching first-time homebuyers through the process of buying a home.
When she left the show in 2011, she starred in another HGTV show Buy Herself for one season.
The series focused on single women who were buy their first home.
Rinomato was blindsided by the success of Property Virgins, admitting when she was originally asked to take part, she wondered why anyone would want to watch a show about her day-to-day job.
“The show was watched by five-year olds and 80-year olds. That was a real trip,” she said.
While Rinomato considers her turn on TV a blessing, it was also a lot of work. By 2016, she was feeling burned out and ready to take a
step away from media. Nowadays, she’s focused on her first love:
Real estate. She’s still busy running her successful real estate brokerage Sandra Rinomato Realty Inc., But time away from the tube has allowed Toronto resident to get her life back.
“I’m just really enjoying being a realtor, and being a person,” she said, noting she even has time to meet with girl friends for a weeknight dinner, something she could never fit in around her TV schedule.
Rinomato recently took some time to chat with Our House Magazine about some of her favourite topics including real estate, the current market and women’s empowerment.

Our House:

What is it about real estate that you love?

Sandra. I love that every day is different, every client is different, every property is different, every negotiation is different, I love the people contact and I feed off their energy. And I do love being able to share my knowledge and expertise with people. Because when I go to a professional, I know I really benefit when they are knowledgeable.
What are some of the key pieces of advice you give to a client, especially a first-time homebuyer when you meet them for the first time?
The most important thing is to communicate and be honest. That includes being honest with yourself and create a little bit of a plan. Understand your plan might go off the rails at some point, but if you have a plan you can proceed toward your goal. It’s not easy buying a place, it almost doesn’t matter what your budget is, it’s not easy to find everything you want or everything you’re dreaming about. Recognize that this is a big deal. This is serious and this affects your life. If you’re not prepared for it, chances are you’re going to just give up and rent.

Q: What are the common mistakes you see from people buying a home?

A: First time buyers don’t understand the financing. They go online and do a preapproval online and think, ‘Oh, I can get this much money because I make this much money.’ That’s not a preapproval. And if you do get a preapproval from a lender, it may have conditions, so you have to pay off your credit card or your student loans… and a lot of people make the mistake of not taking that seriously and then shopping and finding out too late they have to have that stuff before they can get the mortgage. The other mistake with first-time buyers especially, they expect to get their forever home right of the gate, but you have to take one step at a time. You may not want to, but in Toronto or Vancouver, the first step is a condo. People really may want a house, and you know what, you can get there. Get the condo, get used to the culture around budgeting and being a homeowner and build equity in the condo… and then you can move up. Another mistake people make, many people, don’t know that mortgages are products and there are many products, there are many things to consider other than the interest rate. For example, don’t assume you’re going to get a 25 year amortization. Talk to your mortgage professional to see what your options are.

Q: What do you make of the real estate market right now in Canada and where do you think its heading?

A: I can tell you what’s going on in Toronto, and Toronto is a mixed bag. It has every market. Condos are outperforming every other type of real estate. They are busy, the prices have gone up significantly just in the last six months because it is the last frontier, the last affordable product people can buy. Toronto grew up and I know in Vancouver people are raising families in condos and that’s what’s happening in Toronto. There’s no negative stigma that should be attached to that. The Toronto core, we really didn’t see any hesitation at all. For some reason, the peripheral or outlying areas were hard hit, and I don’t know why. I can’t make sense of it. Many properties are not selling in multiple offers, they’re lingering on the market. I’m going on statistics, I ran the statistics for my area around the office and we’re only four per cent up from last year, but we’re not 40 per cent don like people seem to want to believe. In the last three months it’s gone up eight percent. That little blip is over and I think we’ve come through the other side unscathed. The problem here with Toronto is infrastructure, there’s land that could be developed but there isn’t any money to build the water treatment plants, so the land can’t be developed yet. Even with what’s happening in the peripheral of Toronto with the downturn in the market, that is temporary because people need a place to live and we’re growing rapidly. If you think Toronto is expensive now, just wait.

Q: Have you kept an eye on the mortgage rules that came into effect in January?

A: Yes, people qualify for less. I feel bad for people who waited to have their 20 per cent down because as I said it’s a lot of work, it’s a lot of time to save those after tax dollars and you wanted to avoid the CMHC fees for being a high ratio mortgage. Now you’re in a conventional mortgage and they slap these rules on you and it’s like ‘Wow, I can afford $150,000 less’ which puts you right out of the market. I don’t disagree they should have a stress test to make sure people can afford houses, I think Canadian banks and lenders have been typically conservative and it’s worked well for our country. I do think there should be a little bit of leeway, for people who have to renew in a couple years who may not qualify under the stress test when they have to renew their mortgage. I’m not sure what that’s going to look like. I have clients who are worried and I’m worried for them.

Q: How important is financing and budgeting when it comes to buying a home?

A: It’s crucial. It’s not just a matter of the bank saying I can have this much money. I say calculate what you spend by tracking every penny you spend for a month. Whatever your fixed expenses are, and then anything you buy, either put it on debit or credit so you get a transaction report at the end of the month. If you just look at that and say, this is what I spent, these are my fixed costs, on top of that I have to put on vacation, gifts, entertainment not incorporated in that month… and then savings. Add in 10 per cent of your income or whatever you designate as your savings, and that’s how much money you need every month to survive. When you look at that, you freak out. That’s the real number. Of course you need to know what the bank will give you, but you also need to know what your spending habits are. Don’t lie to yourself, and say you’re going to stop spending money on such and such. If that’s what makes you happy and motivates you to get out of bed, you’re not going to stop. Accept it and embrace it. And so it means I can afford this amount of mortgage. That’s what it means.

Q: How do you see the role of a mortgage broker in the transaction of a home?

A: They’re critical. I don’t have any bearing on where people go, I make my recommendations, only because I know we may need to contact someone on a Saturday night if we’re in multiple offer. We need correct information, and sometimes if you just walk into a (bank) branch you don’t necessarily get a mortgage professional, so I insist they get a mortgage professional.

  • https://dominionlending.ca/news/hgtvs-original-boss-babe-sandra-rinomato/

7 Questions to Help You Decide if You Should Pursue a HELOC, Refinance or Second Mortgage

Mortgage Tips DAZADA DIAMOND 17 Sep

7 Questions to Help You Decide if You Should Pursue a HELOC, Refinance or Second Mortgage

HELOC, Refinance or Second/Third Mortgages? Which one should you choose to go with? If you have decided to tap into the equity in your home, the three can seem to be interchangeable at times and for many consumers can be a difficult decision on which one to select. We have laid out seven questions to guide you through the decision, for your unique situation. We’ve also broken this down into three categories, Equity, Payment and Availability.

PAYMENT

1. HOW WILL I RECEIVE THE MONEY?
• HELOC: Home Equity Line of Credit-withdraw as needed
• Refinance: Lump Sum
• Private Second/Third Mortgages: Lump Sum

2. WHAT IS THE INTEREST RATE?
• HELOC: Prime Rate + premium 0.5%-1.5%
• Refinance: Best fixed or variable rate (dependent on what you and your broker decide)
• Private Second/Third Mortgages: 6.95%-19.95% typically with lender/broker fees

HOW IS THE INTEREST CALCULATED?
• HELOC: interest accrues on what you withdraw from your home’s equity.
• Refinance: interest accrues on the full loan amount that was taken out.
• Private Second/Third Mortgages: interest accrues on the full loan amount that was taken out.

3. WHAT IS MY PAYMENT?
• HELOC: You pay back the interest only, however, most banks will have a minimum rule so even if your HELOC value is $0 you will still have to pay a nominal fee each month.
• Refinance: You will pay the interest, plus the principle principal loan amount.
• Private Second/Third Mortgages: You can pay interest only payment or pay the interest plus the principle principal loan amount.

EQUITY

4. HOW MUCH EQUITY DO I NEED TO HAVE IN MY HOME IN ORDER TO ACCESS IT?
• HELOC: 20% minimum
• Refinance: 20% minimum
• Private Second/Third Mortgages: 5-10% minimum

5. HOW MUCH EQUITY CAN ACCESS?
• HELOC: You can access up to 80%
• Refinance: 80% of your home’s equity is accessible
o HELOC portion can be up to 65% of your home’s equity
o Mortgage portion must be 15% – as per Bank of Canada guidelines
• Private Second/Third Mortgages: 1st mortgage + 2nd/3rd mortgages up to 95% of home value

AVAILABILITY

6. ARE THERE FEES ASSOCIATED WITH IT?
• HELOC: No fees associated with it
o At times
 Appraisal fees
 Legal fees
• Refinance: Prepayment penalty of Interest Rate Differential or 3 months interest* depends on your current mortgage terms.
o At times
 Appraisal fees
 Legal fees
• Second/Third Mortgage: There are several fees associated with a second mortgage including:
• Appraisal fees
• Legal fees
• Lenders fees
• Broker Fees

***One final note on refinancing: With the new stress-testing you will have to qualify at a higher rate and you will also have to consider that lenders can no longer insure the product… meaning there are many different rates with different lenders.

Once you answer each of these questions and review your options, you can decide which one is best suited for your needs. You can also always call a Dominion Lending Centres Mortgage Broker and discuss it. DLC brokers are well versed in each of these options and can direct you towards the best option for your situation. We’ve seen a variety of situations with our clients and have helped each of them reach their goals.

  • https://dominionlending.ca/news/7-questions-to-help-you-decide-if-you-should-pursue-a-heloc-refinance-or-second-mortgage/

Keeping Your Credit Score Healthy

General DAZADA DIAMOND 12 Sep

Keeping Your Credit Score Healthy

There is a lot of misinformation floating around about credit bureaus, credit reports and credit scores – not only that, but a large amount of the clients I work with have never even seen their credit report or score before!

I’d like to shed a bit of light, as they say, on the importance of your credit score and what does (and does not) affect this ever-changing number.

Keeping Your Credit Score Healthy
There are a few ways that you can actively ensure that your credit score is kept at a nice high number:

  • Pay your credit cards and other debts on time – this includes bills like your cell phone!
  • Pay your parking tickets on time – many people don’t realize that unpaid tickets will affect your credit score.
  • When meeting with your mortgage broker, go over your credit report line by line (a service I offer to every one of my clients). They will be able to help you catch any unsubstantiated credit checks, fraudulent activity, and any mistakes by your lenders – and have them removed from your report.
  • Have a couple of credit cards or a line of credit on your report…but! Ensure they have reasonable credit limits for each card, and that are not using your limits to their max. *The unofficial rule is only use about 30% of your available credit.
  • Don’t apply for credit too often.

My Score Falls Every Time It’s Checked
Not necessarily true. You can personally check your credit report as many times as you like, and your score will not change. What DOES affect your score is a lender or creditor looking into your credit report. The more times lenders check (especially in a short period of time), the greater chance your score is going to decrease. Research has shown that people who are actively seeking credit tend to be people who are at a greater risk of possibly not repaying their credit, or seeking credit beyond their repayment capabilities. Lenders who see a lot of credit report checks also view this as a potential risk of fraudulent behaviour, and will move (by not extending credit) to protect themselves against it.

Decreasing your credit score also functions as a protective mechanism for YOU if someone is trying to fraudulently use your identity to gain credit (for themselves) on your behalf.

The gist here is that you can apply to have your credit checked a few times a year by lenders, and expect to have little to no affect on your score.

Buying a Home? Use a Broker!
Of course, when you are in the process of applying for a mortgage, some people go to more than one bank; all of which will look into your credit report, all within a short amount of time.

One of the great benefits of using a Dominion Lending Centres mortgage broker is that your mortgage broker will only check your credit once. One check will negate many lenders checking your bureau because your broker knows which lenders will be the best for your personal situation and we can discuss your different mortgage options without needing to have multiple lenders look into your credit!

  • https://dominionlending.ca/news/keeping-your-credit-score-healthy-2/
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