If you have ever sold your home in order to help with the purchase of your next home, chances are you have heard of bridge financing. Bridge financing is an option available to homeowners if they find themselves in a little bit of a pinch when it comes to two different completion dates.

A situation where a bridge loan or where bridge financing can be useful, is when you put an offer on a home you plan on buying with a completion date for the first of the month. However, in order to purchase this new home you need the money you’ll receive from the sale of your current home. What do you do if it closes at the end of the month, 30 days after you are supposed to pay someone for their home with these proceeds?

A lender can offer you bridge financing, where they will advance you your down payment as a separate loan for up to 30 days, some 90 days or more on exception. This allows you to close on the new property, pay the seller, and keep the contract to sell your place 30 days later where the proceeds from your sale will pay out the bridge loan instead of being used to pay the seller directly.

You will need to have accepted offers on both the property you plan on buying as well as the one you are selling with financing conditions removed as well as enough funds to cover the deposit. In some circumstances, you may be able to borrow the deposit from another source if that was also supposed to come from the proceeds of the sale of your current home. If you have any questions, contact a Dominion Lending Centres mortgage professional today.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

#trinamortgages #mortgages #ndlc #freedomofchoice

#bestmortgageforme #executive #firstimehomebuyer

If you found this information valuable, I only ask that you share with your friends and family.

Copyright DLC

The majority of my clients have stellar qualifications: established careers and businesses, excellent credit ratings, solid down payment funds, etc. They are truly awesome individuals who will almost certainly receive mortgage financing without a hitch.

Almost certainly.

With multiple offers, bidding wars, and over-asking-price bids now common as far afield from Vancouver proper as Port Coquitlam and beyond, clients find themselves, in the heat of the experience, contemplating a subject-free offer.

But there’s often an unanticipated hitch: the property itself.

A client would be hard pressed to find a Realtor to write an offer without a ‘subject to inspection‘clause, and for good reason. Similarly, a client should be hard pressed to find a Mortgage Broker advising an offer without a ‘subject to financing‘ clause.

This is because no banker or Broker can give a client 100% assurance of financing without factoring in the actual specific property details. Until an appraisal is reviewed and approved, the application is not complete. And there are some properties that some lenders simply will not lend against.

There are the obvious examples that lenders tend to exclude;

• Properties containing Asbestos, Aluminium wiring, Underground Oil tanks
• Re-mediated former grow-ops
• Re-mediated drug labs.

There are also less obvious ones;

• live-work units
• row-homes (attached non-strata properties)
• properties smaller than 450 sq ft
• properties on lease land, Government, First Nations, or Private.

Regarding the appraisal process, there is more than simply the valuation question to be answered. In fact, valuation is rarely the challenge in our market, as many properties ‘auto-approve’ when the value is below $750,000. (This is not true of ALL properties below $750,000 by a long shot; many lenders condition all strata properties for instance for a full appraisal no matter the purchase price.)

What is being looked at other than value in the appraisal report?

A key complication is a little thing called ‘Remaining Economic Life or REL’ (as opposed to the ‘physical life’) of the home. This refers to how long this specific house is likely to remain standing on this property under the current care it is receiving.

Perhaps we have an otherwise perfectly habitable home for decades to come ─ lots of remaining ‘physical life’. The problem is that lenders are looking for remaining ECONOMIC life rather than the remaining physical life. The question is not “How long can that house be standing there?” it is “How long does it make economic sense for that house to be standing there given current market conditions?”

There may be a problem if it is located in a neighbourhood where many of the older homes are being purchased to be demolished and replaced with multimillion dollar homes. That leaves the purchase looking like a speculative land play or potential knock-down. As such, the remaining economic life is perhaps 15 years or less stated in the appraisal report.

Or maybe the property is a ramshackle house in a state of disrepair. It looks like the bargain of the age on paper, and perhaps the purchaser is a contractor planning to bring the home back into a wonderful state of repair. However the appraisal must view the current remaining economic life of the home ‘as-it-sits’ not ‘as-is-planned’. We have seen homes like this with REL as short as five years.

What is this ‘Remaining Economic Life’ exactly?

Economic life is the total period of time which the improvements (house/buildings) contribute to the overall property value. The total economic life of a typical Lower Mainland home is generally accepted to be 65 years. Economic life and physical life can differ widely and physical life usually exceeds economic life. Renovations and updates can increase a property’s physical and economic life, and poor maintenance can shorten it. Increases in land value can also have a negative impact on remaining economic life. As older homes are torn down to make way for new ones, it makes less economic sense to keep the older one standing.

REL is the estimated time period which the improvements continue to contribute to property value. An appraiser estimates REL in part by interpreting the economic conditions, attitudes and reactions of buyers in the market.

The REL is calculated by subtracting the Effective Age from the Total Economic Life.

Economic Life – Effective Age = Remaining Economic Life

For example:

A 40-year-old home that has had substantial renovations may have an effective age of 30 years.

65 years – 30 years = 35 years Remaining Economic Life (REL)

How lenders view Remaining Economic Life (REL)

Few lenders will lend on a home with a remaining REL of less than 15 years. Also, the effective amortization will be set at the REL minus five years, which drives payments sky high, and often leaves client unable to qualify for such large mortgage payments should they even want to sign on for them.

Clients can run the risk at this point of their own awesomeness being part of the undoing of the mortgage approval. Clients with significant liquid assets and strong incomes buying a smaller, older home on the street of newly built monoliths will be viewed as most likely planning to knock the home down and build a new one.

The immediate thought: ‘But the land value alone… ’

Lenders are not in the business of writing conventional AAA-rate mortgages on properties that will be torn down. Instead this is viewed as ‘speculative’ or ‘investment/business’ lending with which come undeniably greater risks. Wherever one finds greater profits there are greater risks. Lenders price accordingly, which is why land/construction financing carries higher rates and additional fees.

A property with a habitable home standing on it is unquestionably easier to market and sell ─ and thus recover the loan balance from ─ should the lender have to step in and take over. And foreclosure is the last thing any Canadian lender wants to contemplate.

It will take on average 18 months of no payments before a lender has gained control of and sold a property through the foreclosure process. And at the end of it said lender must seek out the defaulting client and write them a cheque for the remaining equity that was in the property, all the while honouring the original interest rate in most cases.

It is nothing like the US system at all. (which is a wonderful thing for us)

So lenders avoid any whisp of risk, preferring security. Ideally in the form of a habitable home on a lot that is going to look decades from now much as it does today.

Clients would be wise to also minimize risk, by either writing offers that contain a ‘subject to inspection’ and a ‘subject to financing’ clause, or by having a detailed conversation with a skilled Broker well in advance of writing a subject-free offer.

If you have any questions, contact a Dominion Lending Centres mortgage professional near you today.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

#trinamortgages #mortgages #ndlc #freedomofchoice

#bestmortgageforme #executive #firstimehomebuyer

If you found this information valuable, I only ask that you share with your friends and family.

Copyright DLC

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.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

#trinamortgages #mortgages #ndlc #freedomofchoice

#bestmortgageforme #executive #firstimehomebuyer

If you found this information valuable, I only ask that you share with your friends and family.

Copyright DLC

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.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

#trinamortgages #mortgages #ndlc #freedomofchoice

#bestmortgageforme #executive #firstimehomebuyer

If you found this information valuable, I only ask that you share with your friends and family.

Copyright DLC

Client success stories are what make our job WORTH IT (We think most mortgage brokers would agree). So, with this in mind, we are sharing a recent client’s story that allowed them to not only purchase the home they wanted, but also pay down their own debt.

Mortgage Problem:

We had a young couple with two young children come to us looking to buy a detached home with a rental suite. They had several thousand dollars of consumer debt they had yet to pay off, and very little funding for the down payment. The husband was employed, and his wife ran a small business from their home. Their combined income was average, but with their significant amount of debt they weren’t sure they would be able to buy their dream home.

A close friend recommended that they visit a mortgage broker, and instantly we were able to see how we could help them not only find the down payment funding, but also help them pay down their debt.

Mortgage Solution:

Step 1: By the numbers.
First up, we looked at the numbers we would be working with to make this happen.

Purchase price of dream home: $600,000
Requested Mortgage Amount: $570,000
Loan to Value: 95%
Credit Score: 699 and 768

Step 2: Collect documentation.
For this particular mortgage we collected:
● Lease agreements for two suites (loft and basement)
● Notice of assessment and T1 generals from the last two years
● Standard income documentation for full-time employment
● Confirmation of self-employment for the last two years

Step 3: Calculate the total debt services ratio.
We took the above numbers and worked with them to present a debt service ratio that started out as 47.74% and brought it down to 42.5%

Step 4: Share the mortgage solution!
The down payment was provided by the parents and the rental income from the subject property was used. All their remaining debts were paid with $25,000 cash back from the lender who also provided an interest only payment Line of Credit to cover both the mortgage and consumer debt.

Our clients were thrilled to be able to purchase their dream home and to have their consumer debt under control. We are proud to be able to help couples like this to make their dreams become a reality, and really, all it took was 4 simple steps to get them into their home! If you have any questions, contact a Dominion Lending Centres Mortgage Professional near you.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

#trinamortgages #mortgages #ndlc #freedomofchoice

#bestmortgageforme #executive #firstimehomebuyer

If you found this information valuable, I only ask that you share with your friends and family.

Copyright DLC

Mortgage switches and transfers are becoming one of the more popular sources of revenue for certain lenders which means great incentives for borrowers as the banks and financial institutions fight for your business.

When your mortgage is up for renewal, your lender will typically send you a letter either 6-months or 120 days before your mortgage matures. When it is up for renewal and matures, you will need to commit to a new term and commit to a new interest rate. Most of the time, the bank’s offer is in the letter they send, and you circle your choice and mail it back; simple and quick.

But what happens when your lender isn’t offering you their lowest rate? Or is hoping you just circle one of the options and don’t look into the other options that are out there and available to you?

Most lenders will allow you to finance up to $3,000 back into your mortgage balance for legal fees, admin fees, and costs associate with moving from your current lender to them. With the move being cash free, you can take advantage of very low rates offered to new potential clients in order to win their business.

The mortgage amount (other than the $3,000 for costs) will need to remain the same though. When you change the mortgage amount, you are refinancing your mortgage, which moves you into a new category and changes the process as well as the different interest rates that are available to you.

For more information on mortgage switches and transfers please reach out to a Dominion Lending Centres mortgage professional. We will be able to tell you what kind of low interest rates and new mortgage privileges we are able to give you access to!

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

#trinamortgages #mortgages #ndlc #freedomofchoice

#bestmortgageforme #executive #firstimehomebuyer

If you found this information valuable, I only ask that you share with your friends and family.

Copyright DLC

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!

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

#trinamortgages #mortgages #ndlc #freedomofchoice

#bestmortgageforme #executive #firstimehomebuyer

If you found this information valuable, I only ask that you share with your friends and family.

Copyright DLC

For many people in Canada, they are first-time home buyers. Or if they are new to Canada, it’s their first home purchase in a new country. They may not be aware of the rules and guidelines. It’s the job of your mortgage broker to make you aware of what is expected from you to avoid disappointment.

Mortgage Documentation
90-day bank statements – It’s important to make your clients aware that they need 90 days of bank statements to show they have saved the funds needed for the down payment and closing costs. Closing costs vary by province, so it’s important to let out-of-province buyers know exactly what the costs are in their new home. I like to explain that the 90-day statements is meant to prevent money laundering. A few years before this law was enacted, gangs would find an elderly couple and offer them the down payment funds asking only to be allowed to grow a few plants in the basement.

Some people are very private and don’t want you to know how much they spend on lottery tickets. They will blank out everything on the statement except for the down payment funds entering the account. This will not be accepted by lenders and is a big red flag for them.
Another problem that can arise with statements is if the clients print them online. As a security precaution, many banks allow printouts but they remove the name and/or account number from the statements. The easiest thing to do is to have them go into a branch and ask for a printout and have it stamped by a teller.

Employment Letters- Many small employers will give a hand written employment letter. This is acceptable but a letter written on company letterhead is better. The letter should state the name of the employee, their job title when they started with the firm, if they are full or part time and what their gross annual income is. If there’s an overtime or bonus component to their pay, this should be clearly explained and how much of their gross is straight salary.

After the Mortgage is approved
It is important for home buyers to know that while the mortgage has been approved they need to avoid doing anything to change their financial situation before possession day. That means they should not quit their job, buy lots of new furniture or a car. Lenders will often check the credit bureau a few days before possession day to see if there’s been any changes. If the debt ratios are out, the mortgage could go sideways. Taking a few minutes to explain this is prudent but it also shows you care. Dominion Lending Centres mortgage brokers are not big banks, we are people who live in the community and we want to see our clients in homes and living happy lives. It matters to us.

Contact me for your best mortgage options 705.669.7798 or trina@ndlc.ca

#trinamortgages #mortgages #ndlc #freedomofchoice

#bestmortgageforme #executive #firstimehomebuyer

If you found this information valuable, I only ask that you share with your friends and family.

Copyright DLC