6 Aug

WHAT ARE ACCELERATED PAYMENTS?

General

Posted by: Trina Tallon

An accelerated payment is a mortgage payment that is increased slightly so that you can pay off your mortgage faster. There are two common types of accelerated payments: bi-weekly and weekly. Of the two, bi-weekly is the much more common choice because it matches with pay dates more often.

An accelerated payment works by increasing your weekly or bi-weekly payment by an amount that would have you pay one full month’s payment extra per year.

Accelerated payments are a great way to start paying off your mortgage, but they actually do not have much of an impact on the interest you will pay. Banks and mortgage professionals use this term to make borrowers think they are paying off their mortgage faster, but the amount of interest saved over the course of your term is minescule.

There’s nothing wrong with accelerated payments, but they are only part of the puzzle. Please contact a Dominion Lending Centres mortgage professional to learn more.

Illustration:
If your payment is $1,000 per month, you pay 12 months per year, which will equal $12,000 of payments that year.

Now, if you pay semi-monthly, or every half month, you pay $500 per payment, for a total of $12,000 per year at 24 payments.

Bi-weekly payments are 26 payments per year with $461.50 per payment.

However, accelerated bi-weekly payments use the semi-monthly payments of $500, 26 times. This means that you end up paying $13,000 over the course of the year, or one extra monthly payment.

The Bare Bones

If all you do is an accelerated payment, your mortgage payoff is stunted compared to what is available. Across Canada, due to the fact that mortgage sizes are now very high, paying off a mortgage should be more of a priority.

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.

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1 Aug

4 KEY THINGS YOU NEED TO KNOW ABOUT A SECOND MORTGAGE

General

Posted by: Trina Tallon

Many homeowners are vaguely aware of the fact that you can take out a second loan on your home. You hear your friends mention it or perhaps a family member close to you has gone through the process—but do you truly know what it means to take out a second mortgage? We have taken all the questions we get asked about second mortgages and compiled it into four key points.

A SECOND MORTGAGE IS BASED ON THE EQUITY IN YOUR HOME
The total loan amount that the second mortgage lender will offer you will depend on the equity that has been built up in your home. Second mortgages allow you to access up to 95% of the equity you have in your property. For instance:

House Value $850,000
95% LTV (maximum mortgage amount) $807,500.00
First Mortgage $550,000.00
Amount Available Through Second $257,500.00

INTEREST RATES WILL VARY AND BE HIGHER THAN YOUR FIRST MORTGAGE
This is because when a lender agrees to a second mortgage, they are taking a higher risk as he gets second priority in case of default. With that being said, we have options and solutions such as working with private lenders that can help you obtain a reduced rate and the right product for your mortgage situation. Typically, you can expect an interest rate of 6.95%-19.95% with lender and broker fees included.

YOUR PAYMENT CAN BE AS LOW AS INTEREST ONLY PAYMENTS
One of the advantages of selecting to use a second mortgage is the fact that the payments are attractive. You can pay interest only payments or you can also select to pay the interest plus the principle loan amount. You can work with your mortgage broker to discuss options and what would work best with your situation.

THERE ARE ADDITIONAL FEES TO CONSIDER
Since we want to have you understand ALL the fees associated, it is important to know that setting up a second mortgage will require you to pay: *note dollar amounts are approximations

An appraisal fee to assess the value of your home: $300
Legal fees to set it up: $2,000
Lenders & Broker fees: 1-5%

Second mortgages are a great option for many and may be a better solution than a refinance or a Home Equity Loan (HELOC). If you are interested in learning more or want to find out if a second mortgage is right for you, talk to your Dominion Lending Centres mortgage broker. We can guarantee they can guide you the process from start to finish!

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.

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31 Jul

THE RIGHT KIND OF DEBT

General

Posted by: Trina Tallon

Put yourself in a bank or lender’s shoes. Someone comes into your branch and asks you to politely loan them $300,000. You are a big bank, but $300,000 is still a lot of money. How do you ensure this person is going to pay back the money you loan them, on time, and in the right amount? Look at their record for borrowing other people’s money.

This is why taking on different kinds of debt when you are young is a good thing, but it must be within reason.

Credit Cards
Lenders want to see a minimum credit limit of $2,000 as well as the fact that you use your credit and pay it back on time. Don’t go overboard, even just purchasing your car’s monthly gasoline on your credit card and paying it off when your statement comes out should be enough, and the longer you do this, the better.

Car Loan
Banks love giving loans through car dealerships to first time borrowers. Why? Because if they treat you right, guess who you are going to go to when you are ready to ask for a mortgage loan. Getting an auto loan for a reasonable amount will truly help showcase your ability to a lender. Just try and make sure any car loans are completely paid off before applying for a mortgage!

Lines of Credit
Almost like leveling up from a credit card. You will get a much bigger credit limit, and have a much lower interest rate. Plus, the minimum payments are usually interest only, making it easier to manage. Using this to make a bigger purchase and making monthly payments can show your ability to manage debt.

I bet you’d feel a lot more comfortable loaning someone $300,000 if they have successfully managed debt on all three of these levels, rather than someone who came to you with only a chequing account to their name. If you have any questions, 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.

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26 Jul

CMHC CHANGES TO ASSIST SELF-EMPLOYED BORROWERS

General

Posted by: Trina Tallon

As a self-employed person myself, I was happy to hear that CMHC is willing to make some changes that will make it easier for us to qualify for a mortgage.
In an announcement on July 19, 2018, the CMHC has said “Self-employed Canadians represent a significant part of the Canadian workforce. These policy changes respond to that reality by making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance and benefit from competitive interest rates.” — Romy Bowers, Chief Commercial Officer, Canada Mortgage and Housing Corporation. These policy changes are to take effect Oct. 1, 2018.

Traditionally self-employed borrowers will write as many expenses as they can to minimize the income tax they pay each year. While this is a good tax-saving technique it means that often a realistic annual income can not be established high enough to meet mortgage qualification guidelines.
Plain speak, we don’t look good on paper.

Normally CMHC wants to see two years established business history to be able to determine an average income. But the agency said it will now make allowances for people who acquire existing businesses, can demonstrate sufficient cash reserves, who will be expecting predictable earnings and have previous training and education.
Take for example a borrower that has been an interior designer with a firm for the past eight years and in the same industry for the past 30 years, but just struck out on his own last year. His main work contract is with the firm he used to work for, but now he has the ability to pick up additional contracts from the industry in which he has vast connections.
Where previously he would have had to entertain a mortgage with an interest rate at least 1% higher than the best on the market and have to pay a fee, now he would be able to meet insurance requirements and get preferred rates.

The other change that CMHC has made is to allow for more flexible documentation of income and the ability to look at Statements of Business Professional Activity from a sole-proprietor’s income tax submission to support Add Backs of certain write-offs to support a grossing-up of income. Basically, recognizing that many write-offs are simply for tax-saving purposes and are not a reduction of actual income. This could mean a significant increase in income and buying power.

It is refreshing after years of government claw-backs and conservative policy changes to finally see the swing back in the other direction. Self-employed Canadians have taken on the burden of an often fluctuating income and responsible income tax management all for the ability to work for themselves. These measures will help them with the reward of being able to own their own home as well.

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.

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25 Jul

REFINANCES, RENEWALS & TRANSFERS

General

Posted by: Trina Tallon

After you have purchased your new home, closed on your new mortgage, and are all moved in, what comes next?

Well, when it comes to your mortgage, the next step is to either refinance, renew, or transfer your mortgage. This decision can be made one month into your new mortgage or one month before your new mortgage is set to mature. Below is a break-down on what a refinance, renewal, and transfer mean.

Refinance
Refinances are when you decide to access the equity in your home. When your home rises in value, say $400,000 in 2016 to $500,000 in 2021, you can request your current lender, or a new lender, to pay you a portion of that increase in cash and they will in turn add that same portion to your mortgage for you to pay back- with interest.

There are many reasons to refinance; for home repairs, purchasing second properties, financial assistance with other outstanding loans or to have access to cash for larger purchases. It is only a refinance when you change the amount of your mortgage and borrow against the equity you have in your home.

Renewal
Renewals are quite straight forward. At the end of your mortgage term, your lender will offer you a renewal letter stating the remaining balance on your mortgage, what the remaining amortization is, and what interest rate options they can offer you.

The term can be 5-years for example, but most mortgages are on what’s called a 25-year amortization- the length of time it takes to pay off the entire mortgage. The 5-year term is just a length of time you are guaranteed a certain rate before you need to renew it. Renewals generally do not require any re-approval, documents, or applications as no new money is being added, the property is the same, and so is the lender. It is straight forward and allows you to continue paying your mortgage, just on a different interest rate.

Transfers
Transfers are a lot like renewals, the one difference is you are switching lenders. You are not adding more money, selling or buying a new home, everything is remaining the same except who you are paying interest to. One reason someone may want to transfer their mortgage from one lender to another is bad customer experience. Another could be to take advantage of a lower interest rate. Another reason could also be to take advantage of a lender’s product like a Home Equity Line of Credit or high pre-payment privileges.

Transfers are becoming more and more common as lenders are constantly looking to add clients and customers to their brand, being able to take advantage of interest payments as well as offer other products.

If your mortgage is up for renewal or you have been thinking about what kind of options may be available to you with your current mortgage, please reach out to a Dominion Lending Centres mortgage professional to discuss the different choices you have.

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

23 Jul

5 REASONS WHY EVERY REALTOR NEEDS A MORTGAGE BROKER AT THEIR OPEN HOUSES

General

Posted by: Trina Tallon

Realtor Safety – While we do not have the safety issues that realtors experience south of the border, there have been incidents involving female realtors being assaulted or feeling uncomfortable being alone with strangers walking around the house.

Property Safety – Did you know that when a realtor is holding an open house they are liable for any losses or damage to the property? It’s pretty easy to have one person distract the agent upstairs while their partner runs off with the flat screen TV or the silverware. Another person in the property discourages theft and can make the realtor feel safer.

Snagging new clients – sometimes people show up at open houses without any preparation. They may like a home but they have no idea whether they could afford it. Enter the mortgage broker- by being on the premises you can quickly pre-approve these prospective buyers giving the realtor an opportunity for a quick sale and to double end the deal.

Third Party Feedback – sometimes visitors are reluctant to say anything negative about a property to a realtor but are more open with their financial partner. The realtor can benefit from both the mortgage broker’s opinion and anything that they hear from visitors.

Programs that can help sell a home – some municipalities offer subsidized down payments for first time home buyers, others offer tax incentives . If a prospective buyer comments on the worn carpeting or the lack of a garage, it’s a good time for the mortgage broker to mention Purchase Plus Improvements programs available. The realtor may be aware of the programs but unaware of the program rules. The realtor will be really happy to have a mortgage broker find a solution to one sales objection and help them sell the house.

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

19 Jul

PORTING A MORTGAGE?

General

Posted by: Trina Tallon

Porting a mortgage is something similar to transferring a mortgage. Transfers are when you move your current mortgage to a different lender in order to take advantage of different interest rates or mortgage products.

Porting a mortgage is when you keep your lender, but move your mortgage to a different property. Now, not every lender allows you to port a mortgage, and not every property can qualify for a port.

One of the other things to keep in mind with porting a mortgage, you are generally only porting the balance remaining on your mortgage. If you need more money, you will need to re-qualify to blend your mortgage. If you do not want to blend and extend your mortgage term, you will need to come up with the additional funds on your own.

The ability to port a mortgage is really important, especially if you are in a fixed mortgage with a big bank, as it can be used to avoid paying a pre-payment penalty to break your mortgage early.

If you are curious to hear more about portability options and whether or not you could qualify, please reach out to 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

18 Jul

REMODELING YOUR HOME THIS SUMMER

General

Posted by: Trina Tallon

With most of the summer still ahead, it seems like the best time for rest and relaxation. Or… it could mean the perfect opportunity to make those changes around the house that they have been waiting to do since the Spring!

A renovation or remodel on your home could mean excellent returns on your investment. We’ve all seen the TV shows, like Fixer Upper or Love It or List It on HGTV, that demonstrate just how far a fresh coat of paint and decluttering can go to help raise the value of your home when trying to sell it. Sometimes a renovation budget can be as easy as a can of paint but there are other times that you need to add an extra bathroom or bedroom which cost substantially more.

Whatever the reason for your renovation, the question remains: how do everyday people get the money for these fixer-upper projects?

CASH OR CREDIT

For renovations under $5,000, you could probably pay cash or with your credit card. Saving up for these smaller renovation projects can prove very lucrative over the long term, especially if you want to make your everyday living experience a little more comfortable and/or are trying to increase your property value. As we’ve seen on the home renovation shows, the money that is invested in the renovations is likely going to see returns when selling a home.

For projects over $5,000, the projects are more elaborate and may or may not see the types of returns the smaller upgrades can. (Here’s an article with examples of renos that add value, and those that don’t.) However, they mean a lot for your living conditions. When considering these larger projects, there are a number of ways you could find the means to pay for them.

PERSONAL LOANS

The banks will likely suggest a Personal Line of Credit for these types of projects, however, you could also apply for a personal loan from the bank. The personal loan usually has a lower interest and can be paid off through regular payments in a few years. The line of credit may be better suited for ongoing or long-term projects, where you can access funds as you need them, and pay interest only on the amount used.

SECURED LINE OF CREDIT & HOME EQUITY LOANS

A secured line of credit is another option for bigger renovation projects. To secure one, you will likely need a credit score at or above 700 and have a good history of repaying debts in a timely fashion. They offer the advantages of regular lines of credit and loans, plus they often come with preferred interest rates. Since they will likely be secured by your home’s equity, they will require some set-up costs, such as legal fees.

For seniors looking to make adjustments to their home, they can apply for SHARP, the Seniors Home Adaptation and Repair Program. It provides low-interest home equity loans to help seniors with the necessary repairs, adaptations and renovations to their homes, up to a maximum loan of $40,000. In order to qualify, seniors need to have an annual total income of $75,000 (or less) and a minimum of 25% home equity in their primary residence.

MORTGAGE REFINANCING

Refinancing your mortgage may offer some advantages when looking to complete larger-scale renovations to your home. With mortgage interest rates still relatively low, much lower than those on a credit card or loan, refinancing may be an advantageous option. When refinancing, you will likely receive a lower mortgage rate that reduces the overall cost of the loan, ultimately resulting in savings. Refinancing at a lower rate could allow a homeowner to “cash out” with enough funds for the planned home repairs – without an increase in mortgage payments. The additional funds for the renovation are added to the total mortgage and spread out over a longer period of time.

RENOVATING A NEW HOME PURCHASE

If your planned renovations are for a new home you’re thinking about buying, you can also add that cost to your mortgage. If the price of the home (or condo) is $250,000, you can add the $10,000 (for example) renovation budget and secure the mortgage for $260,000, with the same amortization rate. This results in a lower interest rate, compared to a credit card or loan, and allows you to spread repayment over a longer period of time.

GRANTS & REBATES

In good Canadian fashion, the federal, provincial and municipal governments along with local utilities offer grants and rebates for energy-saving renovations. For example, CMHC Green Home offers a premium refund of up to 25%. You may be eligible if you buy, build or renovate for energy efficiency using CMHC-insured financing. Below is a list of other available financial options to help with your environmentally friendly home improvements.

CMHC Green Home premium refund
Environmental incentives (Alberta)
ENERGY STAR® rebates and incentives
Energy Efficiency Alberta (Home Improvement Rebates)

REMEMBER!

Whenever you decide to embark on a renovation project, remember to set money aside for any unexpected costs that may come up. By having this buffer, you are able to adjust your plans without renegotiating your finances or having to reapply for new funds.

Also, every homeowner’s financial needs are unique, so it’s best to meet a qualified professional to explore your options. For help with finding some financial options for your next renovation project, 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

17 Jul

RISING INTEREST RATES AND THE IMPACT ON REAL ESTATE VALUES

General

Posted by: Trina Tallon

Rising Interest Rates and the Impact on Real Estate Values. Is there a direct connection? In a post entitled Interest Rates and Property Values. What’s the Connection?, I suggested that there was. An example was given which suggested that mortgage lenders would be directly impacted by a rise in rates, as their underwriting parameters, most notably debt service coverage requirements, are directly impacted. An inability for a buyer to secure the required financing amount, in an environment of increasing interest rates will, I argue, impact their willingness to offer as high a purchase price. Arguably a lower debt level will necessitate a greater amount of equity. This directly diminishes an investors cash-on-cash return. The inevitable result will be a softening of values, since buyers will want to offer less.

Are there Other Factors?
The above noted rationale, for establishing the link between interest rates and values, does however ignore other factors which may impact market sentiment.

A recent study by Manulife Asset Management raises some interesting observations. In their March 2018 report entitled Canadian Commercial Real Estate Outlook, Manulife’s study observed that in fact there was no consistent relationship between real estate values and interest rates. One of their important findings was that although interest rates have been rising since November 2016, largely as a result of economic growth and higher inflationary pressure, capitalization rates actually declined. Why? Well apart from the sentiments of an individual buyer and lender, which is what I referenced in my earlier post, Canadian investors enjoyed improving real estate fundamentals. Yields were seen to be attractive in comparison to other investments, and there was a rise in foreign investment. All contributed to a support for commercial real estate fundamentals and stable or enhanced values.

Capitalization Rate Refresher
You may recall that capitalization rates are comprised of a nominal “risk-free” rate (often associated with a Government of Canada benchmark bond yield), plus a risk premium attributed to a specific property type or asset. If, as it appears, overall capitalization rates have declined, could it be that the “risk-free” rate is falling as well? I will encourage you to take a look at the Manulife report and come to your own conclusions. From a lender’s perspective, I do not doubt that rising rates have a bearing on what a buyer will pay for a property. I suspect real estate appraisers will be like-minded. The Manulife study does however caution us that there are macro-factors at play as well, and a strong economy is supportive of longer term stability, and indeed growth, in the Canadian Commercial real estate market.

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

16 Jul

RATE HOLDS EXPLAINED

General

Posted by: Trina Tallon

Have you ever heard of the term rate hold? If you have ever worked with a mortgage broker, chances are, you have!

Rate holds are something that the majority of lenders offer to potential clients purchasing a new home who need a mortgage. Rate holds are generally not given out for people refinancing their mortgage or looking to transfer it from one lender to another.

120 days is the longest rate hold available with lenders. Once you have created an application with a mortgage broker, they can submit it to an available lender offering rate holds on an interest rate you want to take advantage of- all without a property attached.

This rate hold does not commit you to working with a lender, does not commit you to working with the mortgage broker who submitted it, and does not hurt your chances of receiving an approval down the road (assuming you and your mortgage broker have not submitted multiple rate holds and plan to use a third or fourth lender).

For example, day one you submit your application to a lender for a fixed interest rate of 3.24% for 5-years, and on day 60 that interest rate moves to 3.54%, as long as your mortgage closes in the next 60 days, you are protected and can keep your 3.24% rate. If rates go down, not up, you can also take advantage of the lower interest rate.

Once the 120 days expires, there is nothing stopping you from submitting another rate hold, it will just be subject to current interest rates the day of submission. If you have any questions, contact a Dominion Lending Centres Mortgage Professional who can help.

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