HOW TO NAVIGATE THE RATE WARS!

General Peter Paley 30 May

HOW TO NAVIGATE THE MORTGAGE RATE WARS
You may have heard that rates are changing, and that is true. They don’t call it war for nothing and you need an expert by your side!

Think of mortgage brokers as your loyal soldiers. What we are seeing is exactly what we anticipated when prime rate goes up and discounts go down. Confused? Don’t be, variable rates are based on prime and both Bank of Canada Prime and Bank Prime are different.

What the new discount means is what it means – they anticipate prime to go up higher.

With current regulations, borrowers qualify for more mortgages on a variable rates! This is a shift from the previous policy where more Canadians were having to take fixed rates to qualify for the most.

These new discounts on new mortgages getting taken out there discount is lower off of the bank’s prime rate- this does not apply to an existing mortgage

Did you notice earlier I said the bank’s prime rate, you would think they are all the same… right?

This is not the case. In November of 2016 one Canadian lender broke the trend of their counterparts and raised their internal prime to immediately impact their existing customers by adding to their amortization. This discount below was for new clients they increased the discount so it looked bigger.

It’s important to note – each lender has unique criteria to be met to get these offers: some only for purchases, some only with switches, some only certain amortizations, and some only certain property types. The list goes on!

Remember your broker shops all these lenders without bias, while protecting your credit score to assist you in finding the best one. It’s important that we evaluate the following criteria with these lenders- here is an example of three lenders:

Lender one

Bank has a higher Prime than anyone else
No change to payment
Increases amortization which can put into effect a trigger clause- cash call in on mortgage or forced pre-payment and other costs such as appraisal at your expense
Not portable
Does have a 12 month penalty payback if getting a larger mortgage at new rates! Best one!
Have to go to branch to lock in and then be subject to their IRD (usually 3-5% of balance pending where you are in your term).
Based on history this lender is generally the first to raise their rates and last to decrease

Lender two

Prime rate consistent with all lenders
Change to payment so amortization doesn’t increase
NO trigger clause
Have to go to branch to lock in and face large IRD between 3-5%
Not portable but will refund you within 6 months if the mortgage is larger and will get rate available at that time

Lender three

Prime consistent with all lenders
Change to payment so amortization doesn’t increase
NO trigger clause
lender will pay back penalty within 3 months of getting a larger mortgage with them
your mortgage expert can assist you with lock in
If you lock in they have the lowest penalties in the country to break your mortgage in the future, generally 1-1.5% of the balance
With seven-in-10 mortgages breaking before the term is over, this should be weighted very carefully.

Let me demonstrate the following:

A mortgage that gets locked in with first or second lender above at $500,000, by the third year the cost to break a mortgage will be between $15,000 and $25,000. With the third lender the cost would be between $5,000 and $7,500.

What to do with this info?

These new wars apply to new mortgages. If you have a mortgage with a discount less than .50, a renewal upcoming, looking at accessing your equity for home renovations or to consolidate debt and you have a variable rate, it may be time to run the numbers to see if taking a new variable rate mortgage is beneficial for you. One of the significant benefits of having a VRM is to get out at any time with only three months interest penalty (unless a restrictive product was taken for a better rate or had a sale only clause).

As you can see we have only scratched the surface in terms of the differences. There are many other differences and mainly you have to consider as a consumer, do you want to be calling a bank branch and play Russian roulette with the education level and sales goals of the person who guides you through deciding what to do with your biggest asset? Or would you rather have a Dominion Lending Centres mortgage professional who is in the front lines proactively guiding you and assessing the economic factors to give you personalized advice based on their experience and knowledge of the mortgage industry.

Depends on what you value most!

Angela Calla
ANGELA CALLA
Dominion Lending Centres – Accredited Mortgage Professional

WHAT IS A COLLATERAL CHARGE?

General Peter Paley 18 May

WHAT IS A COLLATERAL MORTGAGE?
A collateral mortgage is a way of registering your mortgage on title. This type of registration is sometimes used by banks and credit unions. Monoline lenders, on the other hand, rarely register your mortgage as a collateral charge – which is an all-indebtedness charge that allows you to access the equity in the home over and above your mortgage, up to the total charge registered.

What this means is that you may be able to get a home equity line of credit and/or a readvanceable mortgage, or increase your mortgage without having to re-register a mortgage. This is a real benefit to you in some cases because re-registering your mortgage can cost up to a thousand dollars.

However, there are some negatives to having a collateral mortgage.

First and most glaring – because it is an “all indebtedness” mortgage – it brings into account all other debts held by that lender into an umbrella registered against your home. This means that your credit cards, car loans, or any related debt at your mortgage’s institution can be held against your home, even if you’re up to date with your mortgage payments.
Secondly, if you want to switch your mortgage over to a different lender, they may not accept the transfer of your specific collateral mortgage. This means you’ll need to pay additional fees to discharge the mortgage and register a new one.
And lastly, collateral mortgages make it more difficult to have flexibility to get a second mortgage, obtain a home equity line of credit from a different institution, or use a different financial instrument on your home. This is because your collateral mortgage is often registered for the whole amount of your property.
To recap, collateral mortgages give you the flexibility to combine multiple mortgage products under one umbrella mortgage product while tying you up with that one lender. While this type of mortgage can be a great tool when used correctly, it does have its drawbacks. If you have any questions, a Dominion Lending Centres mortgage professional can help.

Eitan Pinsky
EITAN PINSKY
Dominion Lending Centres – Accredited Mortgage Professional

5 WAYS YOU CAN KILL YOUR MORTGAGE APPROVAL

General Peter Paley 16 May

Getting your mortgage approval is a JOYOUS time! However, you are not out of the woods. From the time you get your final approval until possession date, you are on notice. You must keep everything the same. Read today’s blog for more info!

5 WAYS YOU CAN KILL YOUR MORTGAGE APPROVAL
So, you found your dream home, negotiated a fair price which was accepted. You supplied all the needed documentation to your mortgage broker and you are waiting for the day that you go to the lawyer’s to sign the final paperwork and pick up the keys.

All of a sudden your broker or the lawyer calls to say that there’s a problem. How could this be? Everything has been signed and conditions have been removed. What many home buyers do not realize is that your financing approval is based on the information the lender was provided at the time of the application. If there have been any changes to your financial situation, the lender is within their rights to cancel your mortgage approval. There are 5 things that can make home financing go sideways.

1 Employment – You were working for ABC company as a clerk for 5 years making $50,000 a year and just before home possession you change jobs. The lender will now ask for proof that probation for this new job is waived and new job letters and pay stubs at the very least. If you change industries they will want to see more proof that you are capable of keeping this job.
If your new job involves overtime or bonuses of any kind that vary over time, they will ask for a 2 year average which you will not be able to provide.
Another item that could ruin your chances of getting the mortgage is if you decide to change from an employee to a self-employed contractor just before possession day. Even though you are in the same industry, your employment status has changed . This is a big deal killer.

2. Debt – A week or two before your possession date, the lender will obtain a copy of your credit report and look for any changes to your debt load. Your approval was based on how much you owed on that particular date. Buying a new car or items for the new home need to be postponed until after possession of your new home.
Don’t be fooled by “Do not pay for 12 months” sales campaigns. You now owe this money regardless of when the payments start. Don’t buy a new car and don’t buy furniture for the new home. This will increase your debt ratio and can nullify your financing.

3. Down payment source – And yet again I reiterate that the approval is based on the initial information you have provided. You will be asked at the lawyer’s office to verify the source of the down payment and if it is different than what the lender has approved, then you may be in trouble. For example, you said that you were going to save the funds and then at the last minute Mom and Dad offer you the funds as a gift. There’s no problem accepting the gift if the lender knows about it in advance and has included this in their risk assessment, but it can end a deal.

4. Credit – Don’t forget to make your regular credit card payments. If your credit score falls due to late payments, this can kill your financing. If you have a high ratio mortgage in place which required CMHC insurance, a lower credit score could mean a withdrawal of their insurance once again , killing the deal.

5-Identity Documents – This can be a deal killer at the lawyer’s office. The lawyer is required to verify your identity documents and see that they match the mortgage documents. Many Canadians use their middle names if they have the same name as their parent. Lots of new Canadians adopt a more Canadian sounding name for their day-to-day lives but their passports and other documents show another name.

Be sure to use your legal name when you apply for a mortgage to avoid this catastrophe . Finally, keep in touch with your Dominion Lending Centres mortgage professional right up to possession day. Make this a happy experience rather than a heartbreaking one.

DAVID COOKE
Dominion Lending Centres – Accredited Mortgage Professional

Improving your credit score

General Peter Paley 11 May

Today’s blog come from London Ontario. As mortgage brokers one of our primary functions is to help people with not-so-good to bad credit repair it. We have many way to help! However, ever the best remedy is a reasonable and strict budget for your household. We can help you figure out where your excess money is going. Most families can reduce their monthly cashflow by almost $400 just my examining their finances more carefully.

Enjoy the blog!

IMPROVING YOUR CREDIT SCORE
Your credit score is a big factor when you apply for a mortgage. It can dictate how good your interest rate will be and the type of mortgage you qualify for.

Mortgage Professionals are experienced helping clients with a wide range of credit scores so we can find you a mortgage product even if your credit is far from perfect.

The good news about your credit score is that it can be improved:

Stop looking for more credit. If you’re frequently seeking credit that can affect your score as can the size of the balances you carry. Every time you apply for credit there is a hard credit check. It is particularly important that you not apply for a credit card in the six months leading up to your mortgage application. These credit checks may stay on your file for up to three years.
If your credit card is maxed out all the time, that’s going to hurt your credit score. Make some small monthly regular payments to reduce your balance and start using your debit card more. It’s important that you try to keep your balance under 30% or even 20% of your credit limit.
It’s also important to make your credit payments on time. People are often surprised that not paying their cell phone bill can hurt their credit score in the same way as not making their mortgage payment.

You should use your credit cards at least every few months. That’s so its use is reported to credit reporting agencies. As long as you pay the balance off quickly you won’t pay any interest.
You may wish to consider special credit cards used to rebuild credit. You simply make a deposit on the card and you get a credit limit for the value of that deposit. They are easy to get because the credit card company isn’t taking any risks.

Contact a Dominion Lending Centres Mortgage Professional if you have any questions.

TRACY VALKO
Dominion Lending Centres – Accredited Mortgage Professional

5 THINGS TO KNOW BEFORE BUYING A RURAL PROPERTY

General Peter Paley 10 May

Many Manitobans dream about that beautiful sprawling bungalow on 5-10 acres in a peaceful country setting. Our blog today discusses a few things you should consider before taking the plunge.

Enjoy…

5 THINGS TO KNOW BEFORE BUYING A RURAL PROPERTY
After several years as a home owner, my friend was set to buy the home of his dreams. He always wanted to own an acreage outside of town. He had visions of having a few animals, a small tractor and lots of space.
As a person with experience buying homes, he felt that he was ready and that he knew what he was getting into. Wrong. As soon as you consider buying a home outside of a municipality there are a number of things to consider, not the least being how different it is to get a mortgage.

Zoning – is the property zoned “residential”, “agricultural” or perhaps “country residential”?

Some lenders will not mortgage properties that are zoned agricultural. They may even dislike country residential properties. Why? If you default on your mortgage the process of foreclosing on an agricultural property is very different and difficult for lenders. Taking a farm away from a farmer means taking their livelihood away so there are many obstacles to this.
If you are buying a hobby farm, some lenders will object to you having more than two horses or even making money selling hay.

Water and Sewerage – if you are far from a city your water may come from a well and your sewerage may be in a septic tank. A good country realtor will recommend an inspection of the septic tank as a condition on the purchase offer. Be prepared for the inspection to cost more than it cost you in the city. Many lenders will also ask for a potability and flow test for the well. A house without water is very hard to sell.

Land – most lenders will mortgage a house, one outbuilding and up to 10 acres of land. Anything above this amount and it will not be considered in the mortgage. In other words, besides paying a minimum of 5% down payment you could end up having to pay out more cash to cover the second out building and the extra land being sold .

Appraisal – your appraisal will cost you more as the appraiser needs to travel farther to see the property. It may also come in low as rural properties do not turn over as quickly as city properties. Be prepared to have to come up with the difference between the selling price and the appraised value of the property.

Fire Insurance – living in the country can be nice but you are also far from fire hydrants and fire stations. Expect to pay more for home insurance.

Finally, if you are thinking about purchasing a home in a rural area, be sure to speak to a Dominion Lending Centres mortgage broker before you do anything. They can often recommend a realtor who specializes in rural properties and knows the areas better than the #1 top producer in your city or town.

David Cooke
DAVID COOKE
Dominion Lending Centres – Accredited Mortgage Professional

Why We Chose A Mortgage Broker

General Peter Paley 9 May

WHY WE CHOSE A MORTGAGE BROKER
For Arthur Dubreuil, the recent purchase of his new house will sound like a similar story for many homebuyers. Looking to upsize to meet the needs of his growing family, the Toronto area resident looked east outside the city for a more affordable option. What he found was a perfect affordable 2,000 square-foot home on an acre of land in the community of Cobourg, Ont.
“The price point and what you get for the value moving out of the city… we couldn’t have something like that in the city,” Dubreuil said. So when it was time to get financing, he turned to a trusted source, a Dominion Lending Centres mortgage professional he used in the past.

With the help of a mortgage broker, Dubreuil was able to move in to his new home at the beginning of the year. And with a three year-old son getting ready to start school soon, he figures his family will be in their new home for many years to come.

Q: Why did you chose a mortgage broker?
A: I got pre-approved at the bank before I did anything. The interest rates were higher with the bank then by choosing my mortgage broker. I used my broker prior with my last home when I got my first mortgage. It seems like things are a lot clearer using a broker rather than using a bank. They’re [the banks] not very forthcoming. When I went to the bank they were telling me all these different things, basically the mortgage and rate were not negotiable. My broker found me the cheapest rate he could find. He actually got me a better rate.

Q: How was your experience working with a mortgage broker?
A: It was good. I had no issues, everything was professional. He was very straightforward with me, especially when it came to details about buying a house. Especially with these new rules and regulations put in place. He talked me through what my options were, and it worked out well.

Q: What advice would you give someone I your situation?
A: I just gave my buddy some advice, he’s doing the exact same thing but buying his first home. I told him everything you need to do. Clear away any debts and speak to everybody before you actually make a choice of what you want to do and get a mortgage. Go through your options rather than not. A lot of people just stick with the banks because they’re big and they’re trusted.

JEREMY DEUTSCH

6 HOME PURCHASE CLOSING COSTS

General Peter Paley 7 May

Today’s BLOG is coming from BC! In Manitoba however, we have an extra closing costs for insured mortgages. If you have less tha 20% down. The Province of MB also charges PST on the CMHC/Genworth Insurance premium.

Enjoy our blog!

6 HOME PURCHASE CLOSING COSTS
When you purchase your home, there are 6 additional costs to account for. They include:

Home Fire and Flood Insurance
Title Insurance
Legal Fees
Adjustments
Land Transfer Tax
GST
Here’s an overview of what you can expect.

Home and Fire Insurance. Mortgage lenders will require a certificate of fire insurance to be in place by the time you take possession of your home. The amount required is generally at least the amount of the mortgage or the replacement cost of the home. This cost can vary on the property size and extras being insured, as well as the insurance company and the municipality. Home insurance can vary anywhere from $400 per year for condos to $2,000 for large homes.

Title Insurance. This is a one-time fee of about $150 and it protects you against any issues, defects or fraud on your title. Your lawyer or notary helps you purchase this.

Legal Fees. Thirdly, you are required to pay legal fees. Your lawyer or notary will charge you anywhere from $700 to $1,000 to help with your purchase. There are also fees to register your title with the municipalities. All told, you’re looking at around $1,000 to 1,300, after tax.

Adjustments. An adjustment is a cost to you to pay the seller back for prepaying any property tax or condo fees on your behalf. Simply put, if you take possession in the middle of a month, the seller has already paid for the whole month and you must pay the seller back for what they’re not using.

Land transfer tax. Land transfer tax, or property transfer tax (PTT) as it’s known as in British Columbia, is a fee that is charged to you by the province. First-time home buyers are exempt from this fee if they are purchasing a property under $500,000. All home buyers are exempt if they are purchasing a new property under $750,000.

In British Columbia, the PTT is 1% on the first $200,000 of purchase and 2% thereafter. However, if the property being purchased is over $2,000,000, then it is 3% on any value over $2,000,000.

GST. GST is only paid on new construction purchases. GST is 5% on the purchase price. However, there is a partial GST rebate on properties under $450,000.

Please don’t hesitate to contact a Dominion Lending Centres mortgage professional for your home financing and mortgage needs.

Eitan Pinsky
EITAN PINSKY
Dominion Lending Centres – Accredited Mortgage Professional

ALL ROADS LEAD TO JUNE -OUR HOUSE MAGAZINE

General Peter Paley 3 May

ALL ROADS LEAD TO JUNE -OUR HOUSE MAGAZINE
What do you do when you’re tired of the 9-5 daily grind and want to strike out on your own? For gal pals April Brown and Sarah Sklash, it was obvious – buy an aging motel in the country and renovate it. If it sounds like a business plan that could never work, these two Millennials would prove you wrong.

“We were looking for a creative outlet and thought about doing something entrepreneurial for five years, but the timing was never right,” Brown told Our House Magazine. Welcome to the June Motel.

Brown and Sklash, who worked in public and relations and the government of Ontario in Toronto respectively, had frequently visited Prince Edward County. A day’s drive from Toronto or Ottawa, the pair started noticing the area was quickly becoming a food and wine destination. They’d been looking for a creative outlet for years but the timing was never right.

But at the start of 2016, the friends decided it would be the year they make some changes and venture out on their own. They brainstormed a bunch of ideas until an old 16-room motel called the Sportsman Motel came up for sale.

“We should buy that motel, it’s one of those lightbulb moments,” Brown recalled.

However, the two 33 year-olds had no interest in running the same motel. They had much bigger plans.
Having spent time south of the border in places like Florida and Palm Springs, they fell in love with the retro-looking motels they came across in their travels. This would be their inspiration.

“Really our idea was we wanted to reinvent the motel experience. We travelled to so many places that had done this so well,” Brown said.

The pair went all-in on the concept.

After running the 50-year-old motel as the Sportsman for a season, they spent the winter getting their hands dirty on a total remodel. As Sklash explained, they started with a tropical palm wallpaper design they liked, and the rest of the renovation took off from there.

The women designed the guest rooms themselves, but worked with interior designer Keri MacLellan of Four Walls Interior on the lobby. After months of sweat equity, the motel was completely remade and had a new name to fit the retro vibe. The June Motel.

Sklash noted the idea was to design the motel for “photo moments,” from the pink doors greeting guests as they drive up to the neon signs in the lobby.

“We wanted the whole design to be a place that people would want to share with social media,” she said, adding 90 per cent of guests discovered the motel through Instagram.

And that bit of strategy paid off. As soon the June Motel opened its doors, guests were sharing their experiences with the world. The motel got a ton of buzz and attention from major publications like Vogue and the Toronto Star.

The first year as the June Motel was a smashing success. And as Brown and Sklash get ready for their second full season, the motel is already booked full for weekends.

With one success under their belts, the entrepreneurs now have their sights on expanding their brand. They’re looking for property and new opportunities. “There’s such and appetite for unique accommodations within that millennial market, we figure why stop at one?”

Motel inspired? Before taking the leap, be sure to talk to a professional
April Brown and Sarah Sklash struck gold when they decided to buy an old motel and convert it into the June Motel in Ontario.

But the pair didn’t jump into the idea without coming up with a solid business plan. Besides doing their market research, they had to consider financing.

Brown and Sklash explained along with a bit of their own capital, they decided to do a vendor takeback mortgage, in which the seller finances the remaining amount owed on the property. They turned to local economic development agencies to help with the costs of the renovation. While the pair note buying a motel in the country costs less than an average home in Toronto, they recommend doing the research and coming up with a strong business plan.

That’s where Dominion Lending Centres Commercial can help out. David Beckingham, the president of DLC Commercial Capital Inc., noted commercial mortgages aren’t easy and can be a long process. He pointed out commercial brokers can help the buyer through the process, including the appraisal, environmental issues, accounting and presenting a deal to the lender they understand.

He suggested in a situation like the June Motel, DLC Commercial would offer new financing at more favourable terms that would repay the vendor takeback mortgage and provide new money to repay the equity the new owners have already put in.

“You need a commercial guy to look at it in a business way that can isolate and stabilize the issues,” he said, adding it’s important to have a professional who understands the market place and the nuances of the lenders.

JEREMY DEUTSCH
Communications Advisor

FIXED RATES ARE ON THE RISE. ARE YOU READY?

General Peter Paley 2 May

Rates are increasing! One thing that I personally would like to stress, is that if you are in a variable rate right now and you are currently paying over 3%, then you need to make a change right now. I hope you enjoy today’s BLOG From Angela! 🙂

FIXED RATES ARE ON THE RISE. ARE YOU READY?
With the Bank of Canada holding rates steady this April, the same is not the case for the bond market, which impacts fixed rates.
In every interest-rate market there are many factors leading to and increase and we are hoping to provide a little bit of clarity on what is happening and what it means to you and your loved ones.
At this time, we see fixed rates increasing as the bond market increases, and our economists anticipate two more Bank of Canada increases of prime rate by the end of 2018.
Why do we note this information and how does it relate to you?

If you are in a variable rate, you will want to:
1. Review your lock-in options. Knowing it’s unlikely the prime rate will reduce and fixed rates are on the rise, there could be a sweet spot to review your options now.
2. If you decide not to lock in, it’s time to review your discount to see if a higher one can be obtained elsewhere.

Locking in won’t be for everyone, especially if you are making higher payments and your mortgage is below $300,000, which most people fit and will continue on that path. Locking in will be up to a 1% higher rate than you are likely presently paying.
If however rates raising another 50 basis points this year and knowing you can likely lock in below 4% now is most attractive to you, this may be your time. The next announcement from the BOC on Prime Rates is May 30th 2018

If you are in a fixed rate:
1. If you obtained your mortgage in the last year, stay put.
2. If you are looking to move up the property ladder or consolidate debt, get your application in to us ASAP so we can hold options for up to 120 days.
3. If you are up for renewal this year or know someone who is, secure your options now with us as we keep a watchful eye on the market.

Please reach out to a Dominion Lending Centres mortgage professional so we can help ensure you or a loved is on the right path in our ever changing market.

ANGELA CALLA
Dominion Lending Centres – Accredited Mortgage Professional