31 Mar

PINK SHIRT DAY 2017

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My goodness, where has the time gone?! It seems like just yesterday that I updated you on the recent accomplishments of Bullying Ends Here but it has been almost two months. I’m not going to bore you with every specific detail (so much has taken place as always), but will share some of the highlights.

On February 22nd, Dave Teixeira and I traveled to Vancouver to meet with the Premier Christy Clark of BC and Travis Price to celebrate Pink Shirt Day. As seems our normal practice for this day, we entertained media requests, spoke about the work we are doing and met some inspirational people. There are a lot of people out there making some real positive change! Everyone seemed to LOVE our pink shirt (that we wear all year round).

During those three days in BC, I presented to 5 schools (over 3,000 students) across the Lower Mainland. The responses have been terrific with emails sharing positive feedback along with the following note;

“You came and talked to my school and I didn’t expect much because it’s a school presentation but you changed my life that day. I wanted to say thank you because after your speech, I changed my mind. That day I was going to go home and end it but you made me think twice and I wanted to say thank you because your speech in my school saved my life that night and I’ll forever be appreciative!”

If this isn’t enough evidence to show just how much of an impact we are having on our youth, then I’m not sure what it would take. My goal was always to help just one person and this email now puts our program at 43 lives saved!!! Of course we will never know the true impact the program will have on thousands of others.

With February and March combined, I have presented more than 25 times and reached another 15,000 students. I have spoken to adults and youth alike. April and May will be the last real push for the 2016/17 school year with presentations in BC, Alberta and all over Southern Ontario. The Ontario tour is over two weeks and will be 23 presentations in many cities. We expect to reach close to 20,000 youth. One of the highlights will be when I speak at my old high school on April 20th. This will certainly be an emotional day for me.

I should also share that in February, our Prime Minister, Justin Trudeau, made a short message endorsing our program. You can find this on our website. We also released a three minute commercial sharing more of the program and what it consists of. As I said, so much is happening with so much more to come!

I hope everyone is doing well and getting ready for spring. We have been fortunate here in Calgary to have had spring arrive early. Now that I say that….

Be well and keep smiling. Together we will not only change lives, but SAVE them!

TAD MILMINE
Founder, Bullying Ends Here

29 Mar

DEBT-TO-INCOME; A MEANINGLESS METRIC

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The human brain struggles with distinguishing between a real or imagined threat.

Is it a snake? Or just a shoelace?

One may kill us quick, and so we react fast and think it through later… or maybe never.

Is the often cited, rarely critiqued, ‘debt-to-income’ ratio a snake or a shoelace?

A killer lying in wait or a meaningless footnote?

Federal regulators, and most mainstream media, would have us believe that at 167% it’s an Anaconda slithering through our sheets while we sleep, readying to swallow each household whole.

Two key points often absent from the debt-to-income conversation:

1. The average household debt figure is largely irrelevant to the financial success of our individual household(s)

2. What is my own debt-to-income ratio? And am I worrying about it at, say, 500%?

Perceived Reality

If one were to stop a citizen on the street and ask them if they believe today’s low interest rates have allowed Canadians to borrow more money than they should have most would say yes.

If one were to stop a citizen on the street and ask them if they believe today’s low interest rates have allowed housing prices to rise too high too fast, most would say yes.

If on the heels of these two questions you then asked one more question: Should government step in and tighten regulations?

Most at this point with this context would say yes.

And these citizens would be wrong.

Also by “yes” what these citizens mean to say is “regulate my reckless neighbours – not me, I’m cool.”

Framing matters

Let’s ask a few more questions.

Would it sound reasonable to take on a $2,000 mortgage payment with a household income of $100,000?

Is it fair to say that the same $100,000 per year household income could support a $2,600 monthly housing payment?

Likely we are going to get a “yes” response to both of these questions. As indeed these numbers are reasonable by any measure.

Numerical Reality

The $2,000 per month payment represents a monthly payment at today’s interest rates on a $500,000 mortgage balance.

Ah but what if rates double you ask? What if indeed…

The $2,600 per month payment represents a monthly payment at double today’s rates (when that $500,000 mortgage balance comes up for renewal).

Readers quick with numbers can see where this is headed, this household with their $500,000 mortgage balance and a $100,000 household income has a debt-to-income ratio of 500%.

Are they freaking out, suffering desperate times, readying a kidney for sale?

Not at all.

To be fair they do have concerns about debt levels – your debt levels!

The 500% debt-to-income household has things under control; they know that ~$1,000 of that ~$2,000 payment is principle reduction, a forced savings plan. They also know that the ~$1,000 interest component per month (fixed for the next five years) is way less than what they were paying in rent last year, and unlike rent this expense will not rise for five full years…and their mortgage debt balance will be dropping steadily. (by ~$60,000 over the first five years).

How many renters will see a ~$60,000 increase in net worth over the next five years? (this amount assumes 0% movement in home prices)

Nonetheless citizens remain concerned. Concerned that today’s low rates have allowed you to borrow more than you should have – and as you know, you are A-OK.

Guess what, your neighbours are OK too.

They are OK with a 500% debt-to-income.

Although few in Canada actually have a debt-to-income ratio this high; in fact Bank of Canada research shows that just 8% of Canadians have a debt-to-income ratio above 350%.

The example used in this piece is in fact a complete outlier, and not at all the norm; we are far more conservative than even these comfortable figures.

Tomorrow we discuss houses, in particular – glass houses and those who reside in them.

DUSTAN WOODHOUSE
Dominion Lending Centres – Accredited Mortgage Professional

28 Mar

WHISKEY, WINE, AND WEAKNESS IN OTTAWA

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In Ottawa Our Government has concerns about their role with CMHC — essentially a mortgage insurance company — a role in which taxpayers are technically liable for their clients’ actions and behavior (despite current CMHC premium reserves on hand to withstand up to a 40% market devaluation).

These concerns were apparently part of justification used regarding recent significant changes to not only the amount of debt Canadians can access (~20% less mortgage money) but also just which companies Canadians can access mortgage debt through. Limiting exposure to potentially bad behaviour seems a common refrain in Ottawa these days.

But what about bad behaviour with regard to unsecured debt?

‘Not our problem’ they state. Citing their lack of guaranteeing unsecured debt as they do mortgage debt.

Let’s view this through the lens of an analogy using cars, booze, and sales tactics.

Instead of mortgage insurance let’s call it car insurance, and consider the sales process of two different types of car dealers.

Company #1 strives to maximize profits by giving away a six pack of wine coolers (a new credit card) and a 40oz bottle of whisky (an unsecured line of credit) with every car (mortgage) sold. They place these ‘extras’ right there on the passenger seat at the time of delivery. Easy access.

Now hey, you don’t have to open these products up, and they cost you nothing if left unused. After all you only pay for what you consume. The sales agent is directly compensated for upselling you on the use of said wine & whisky; in fact their annual bonus depends upon it.

Company #2 has no Whisky (unsecured debt) to offer you. Their business model is simply to place you the right car (mortgage) for you and that is it. Often at a sharper price, with a few more bells and whistles, and a vastly superior trade in value (prepayment penalties). They send you on your way with a smile and a wave. No follow-up to cross-sell you on multiple other tempting products, like the wine & whisky for example.

Admittedly not everyone is going to crack that bottle open and consume the entire thing during their first drive home. But it seems reasonable, at least it should be to the insurance company (The Federal Government) witnessing this sales process, that there ought to be some greater concerns about the increased claims from company #1 and perhaps some stiffer regulations and legislation may be in order – especially when the government’s own research shows that twice as many clients of company #1 (0.28%) get into trouble and make a claim is do clients of company #2 (0.14%).

Table 1-A: Characteristics of median mortgage borrowers 2013Q1–2016Q3

Traditional lenders (*1) Mortgage Finance companies (*2)
Credit score 739 742
90-day arrears rate (%) 0.28 0.14
Household income (annual) $80,912 $84,404
Loan-to-income ratio (%) 304 357
Total debt-service ratio (%) 35.3 37.2
*1. Banks and credit unions

*2. Based on mortgages in pools of National Housing Act Mortgage-Backed Securities as of 2015Q4

Sources: Department of Finance Canada, Canada Mortgage and Housing Corporation and Bank of Canada calculations

Instead our government appears to see things differently.

When the government decided to enact stiffer regulations and restrictive legislation they called only on Company #1 for consultation, and interestingly the net result of said consultation and deliberation is a set of new regulations which threaten the very existence of Company #2.

Despite the research clearly indicating a more prudent approach to the business by Company #2 than that of their competition (Company #1).

Taking into account the relative youth of Company #2 (about a decade) vs the age of Company #1 (~150yrs) the variation of the equity (loan-to-income) held by each of its clients is more than reasonable and understandable. The narrow difference in total debt-to-service reflects the generally conservative nature of Canadians and further supports the prudent processes in place at Company #2.

Why is our government effectively trying to legislate Company #2 out of business?

Why is our government consulting only with Company #1 when the government’s own research demonstrates the people at Company #2 are doing twice as good a job when it comes to avoiding problem clients?

Food for thought.

DUSTAN WOODHOUSE
Dominion Lending Centres – Accredited Mortgage Professional

27 Mar

CONSUMER DEBT VS MORTGAGE DEBT

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Consumer debt vs mortgage debtDuring a recent trip to our nation’s Capital with folks from Dominion Lending Centres and other mortgage groups, an Ottawa insider made an interesting comment: “We don’t care about consumer debt, because we don’t guarantee it.”

This comment was made in an effort to justify recent increased restrictions placed on borrowers taking out insured mortgages (i.e. backed by CMHC, Genworth, or Canada Guaranty – effectively the federal government) due to increasing concerns in Ottawa around the optics of “taxpayer backed” mortgages.

This use of such hot button language would be laughable if taxpayers understood a few key things about CMHC in particular:

1. It is incredibly profitable and has generated tens of billions of general revenue for the Federal Government over the years. (This is arguably one of the most profitable Crown Corporations ever created).
2. The actual numbers as to just what CMHC (taxpayers) are “on the hook” for. (see chart below).
3. The incontrovertible fact that the government will, should the need arise, bail out the privately-owned banks should they ever truly misstep and get into trouble – meaning all debt in Canada is truly government guaranteed when you get right down to it.

Consumer debt vs mortgage debt
Source: CMHC

What hit me as most stunning about such a laissez faire attitude towards consumer debt, setting aside the question of protecting consumers from themselves (got a pulse? No job? No established credit? No problem, here is a 14% car loan and a $20,000 credit card) was that the very people managing these “taxpayer guaranteed” mortgages cannot see the problem with a system in which the major banks approve the mortgage itself under strict guidelines and then the moment it is approved offer the newly leveraged client an additional $5,000 – $80,000 in unsecured credit “just in case” the new homeowners “need” new furniture, a new car, a vacation, etc.

How is that not a significantly relevant factor in the stability and security of the guaranteed mortgage product?

The real irony in this?

The Fed backs these mortgages through two sorts of lenders, and has arguably been creating policy to heavily restrict the competitive ability of one of the two channels. More tomorrow on just how misdirected the regulations being imposed are in their targeting of one supplier channel over another.

DUSTAN WOODHOUSE
Dominion Lending Centres – Accredited Mortgage Professional

22 Mar

4 CRITICAL QUESTIONS YOU MUST ASK YOUR MORTGAGE BROKER

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4 Critical Questions You Must Ask Your Mortgage BrokerWe have often talked about understanding the personalities of your mortgage on our blog, but another part of that is working with your Dominion Lending Centres mortgage broker to ensure that you are getting the best product and sharpest rate possible. Asking critical questions will help you to not only understand your mortgage, but to also understand the benefit of working with a broker vs. the bank. It will also allow you to rest assured that you have flexibility and security in the mortgage that is selected for you. Here are our 4 critical questions to ask any mortgage broker you work with:

Question 1: What is the sharpest rate you can get me?

Keep in mind, that if you are shopping for your own mortgage, you do not have access to the same resources that a mortgage broker does. A broker can do mortgage comparison to show you what you qualify for. In addition, a good broker can help you compare apples to apples and shops your deal to more lenders.

Question 2: What payout options are available with each loan?

Different lenders offer different payout options varying between 0-20% lump sum payments each year. Some institutions allow you to double your payments monthly and/or once a year. Others will allow you to increase your payments by 20% once per year. There are many varieties of prepayment options, so you really need a broker to seek out the best prepayment options for you.

Question 3: What are the penalties for paying out a mortgage early?

Penalties are three months of interest, or the interest rate differential (whichever happens to be greater) and pending on the type of mortgage you are in (fixed or variable). In another case, a lender may calculate your penalty based on the Bank of Canada’s 5 year posted rate as the penalty payout and not the discounted rate you are in. Unfortunately, since no one can predict the future, you can enter into a 5 year term, and you don’t know what may happen in 2-3 years. If there is a reason you need to get out of a mortgage, you must know your payout penalties.

Question 4: What about amortization?

Your amortization period is the number of years it will take you to become mortgage free. The more that you pay on a payment, the lower your amortization will be. A typical mortgage amortization is 25 years although some opt for 15-20 but others may need an extended amortization up to 35 years. There needs to be flexibility in amortization.

Note: Different lenders, especially working with people with bruised credit don’t always allow the extended 35 years.

Asking these 4 questions will help you to make critical decisions about your mortgage, and can give you peace of mind regarding your mortgage broker’s ability to get you the sharpest rate. Don’t be afraid to ask questions, and if you don’t understand something always ask for a more in depth explanation. Your home may be the biggest purchase you make in your lifetime, understanding the terms and working with a skilled DLC mortgage broker is worth an investment of your time.

GEOFF LEE
Dominion Lending Centres – Accredited Mortgage Professional

21 Mar

RRSP CONTRIBUTIONS: TO PRESERVE OR NOT TO PRESERVE? THAT IS THE QUESTION…

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RRSP Contributions: To Preserve or Not To Preserve? That is the question…A recent BMO study shows that the number of Canadians withdrawing money from their RRSP increased to 38% from 34% last year, and on average these Canadians are taking out larger sums of money.

The government requires RRSPs to be converted to a RRIF when a Canadian turns 71. After 71, withdrawals begin and they are taxed as income. Annual minimum withdrawal begins at 7.48% for those aged 71 and rise annually to a maximum of 20% for Canadians 94 and older.

Retirees often resort to tapping into RRIFs to access large sums. For some, RRIFS are viewed as their savings and emergency fund. For others, a RRIF withdrawal is their preferred solution over borrowing money, so that they can avoid monthly loan payments.

A RRIF withdrawal is a common solution, and the financial implications can be severe for seniors.

Let’s look at an example

Background: A retired widow living in B.C. has a modest pension income and only a little over $100,000 in her RRIF.

Goal: Financially help a family member by withdrawing $40,000 out of her RRIF.

Reality: Client discovers at her bank that she has an immediate withholding tax that she must pay because she is withdrawing from a registered investment. Because of this, she must take out an additional $12,000 to cover the withholding tax, which is considerably more than planned. In April, income taxes are due and the full amount of her RRIF withdrawal is added to her income, which increases her income considerably and moves her up a tax bracket. As we know, more income = more taxes. And now she owes an additional $18,000 in income taxes. Where would she find the money to pay her income taxes?

In addition, the savings she intended to use to support herself through retirement decreased substantially and won’t go as far for her as planned. Also, because of her decision to draw the excess amount from her RRIF, she experiences government clawbacks on her income pensions such as, Old Age Security (OAS), Guaranteed Income Supplement (GIS) and other benefits and she now has an increase in her quarterly tax installments. To make matters worse, she is no longer eligible for her provincial health care assistance, and is responsible for the full monthly premium payments herself.

Alternate solution:

By using her home equity with a reverse mortgage, her retirement savings could have been fully preserved. Income could have remained the same because funds from a reverse mortgage are tax-free and do not get added to her income. Best of all, there would have been no tax implications and she could have prevented her pension and her provincial health care assistance from being affected.

This is a true story.

We met this client when her $18,000 income tax bill was due. She was able to use her home and a reverse mortgage to help her in this situation.

Dominion Lending Centres mortgage brokers and advisors see it all the time.

Life events happen. If you know a retiree looking for a financial solution to help a family member or to cover sudden life expenses, recommend they take the time to consider the tax implications that an extra RRIF withdrawal may have on their financial situation.

Then the question really becomes: Which asset should I use? My RRIF or my home?

A reverse mortgage provides a tax-efficient solution, helps clients keep their savings to support retirement and requires no monthly payments (including interest payments).

If this client had a conversation with her DLC mortgage broker to consider all options, she would have been left in a much better financial position for years to come.

SIMONE MCMILLAN
HomEquity Bank – Business Development Manager in Vancouver, BC

20 Mar

IS TODAY THE RIGHT DAY TO BUY YOURSELF A HOME OR NOT?

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Is Today The Right Day To Buy Yourself A Home Or Not?Q. Is today the right day to buy yourself a home or not?

A. Today is the right day assuming one has found a specific property that works for them on all levels.

This question arises on a near daily basis within our social circles and most of the chatter around the topic is largely noise. Noise that needs to be blocked out so that you can evaluate your own personal circumstances fairly.

If the conversation is about an owner occupied property which one plans to reside at for at least the next 7-10 years, then arguably yes the right time to buy is today.

Over a 7-10 year horizon the day to day, even the month to month gyrations of the market will tend to resemble those of a small yo-yo on a large escalator. Some ups and downs although with the lows often not dropping below the second last high. This is true of nearly any major urban 25 year chart of Real Estate Values.

There are some key considerations that will dictate not only the continued value, but perhaps more importantly your own ability to stay put for that magic 7-10 year time frame.

Location
Layout
Age
Size
Recreational amenities
Schools
Distance from workplace
Potential basement suite revenue
the list goes on…
Getting all of these variables aligned is something that takes dedication on the part of the both the buyer and their Realtor. The hunt itself can easily consume a few months or more, and for some may result in over 100 viewings. This is more than enough to juggle without also trying to ‘time the market’ on that perfect home.

Speaking of timing; consider allowing for a small overlap during which you have access to both the current residence as well as the new one. Being able to install new flooring throughout, complete interior painting, or upgrade kitchens and bathrooms, without having to live in the middle of the disruption is well worth an extra month of rent or the marginal costs of bridge financing. The costs involved are surprisingly lower than most clients expect.

Keep in mind during your search that the MLS #’s are an imperfect indicator of what is happening today in the market, as in literally ‘today’, MLS data reflects purchase contracts that were negotiated 30, 60, 90 or even 120 days prior to the completion date which was itself in the previous months report. In other words by the time the MLS data indicates a trend one way or another said trend has in fact been in motion for as long as 6 months and could be either reversing or ramping up further.

Where then to get the most accurate data?

Talk to front line folks, Realtors, Brokers, Appraisers, etc. for a better handle on up to the minute trends. Ask an Industry Expert – like your local Dominion Lending Centres mortgage professional.

Short term fluctuations in values and/or interest rates are themselves not the key factors in many peoples decision to buy, instead it is finding that perfect combination of all the factors that create a home within a community and the realization that homeowners win in the long run by owning, not by sitting on the sidelines.

It is all about finding a place you can call home for the duration. To be able to plant roots and become a part of a community. Home ownership will undeniably continue to be a part of living the Canadian dream.

Perhaps the (short term) timing will feel imperfect, as it did for presale buyers in 2007, whose completion dates were set for Spring 2009. However 7-10 years later most will be glad that they bought when they did. In fact many were smiling again as soon as the Spring of 2010.

Home ownership remains the one true forced savings plan, and one of the best investments we make socially as it provides an individual and/or a family with a certain sense of security, stability and community. Block out the noise and do what is right for you.

DUSTAN WOODHOUSE
Dominion Lending Centres – Accredited Mortgage Professional

6 Mar

INSIDE AND OUTSIDE THE BOX MORTGAGES IN TODAY’S MARKET

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Inside and Outside the Box Mortgages in Today’s MarketAs we truck along in 2017, Mortgage Brokers and Lenders are adjusting to the new risk based mortgage rate pricing that came into play after the Finance Minister changed Government backed mortgage default insurance regulations in late 2016.

Lenders often choose to pay for mortgage default insurance on mortgages where the borrower was not required to pay it themselves. This method protects a lenders book of business against credit loss, helps them package more secured mortgages together to sell to investors and reduces the amount of capital they are required to maintain. This method in the mortgage industry is called back-end insuring.

The changes have limited the mortgage profiles that lenders are allowed to insure using Government backed insurers. Essentially the Government is intentionally passing on the risk to Lenders by implementing stricter insurance qualifying guidelines and limiting mortgages that can be insured to what they consider lower risk “inside the box” mortgages.

The onus is now on the lender to absorb more costs if a borrower defaults. In the end costs are passed on to borrowers by lenders applying higher rates to less secured mortgages.

If you’re looking for a mortgage in today’s market your circumstances may not fit “inside the Box” and be an insurable mortgage profile and your mortgage rate may be higher. The following is a short list of what insurers have limited their guidelines to:

25 year maximum amortizations
Must qualify by using a rate stress test
Maximum Gross Debt Service Ratio (GDS) of 39% (shelter expenses)
Maximum Total Debt Service Ratio (TDS )of 44% (all liabilities)
No refinances
No single unit rentals
Purchase price must be less than $1 Million
As you can see the insurer’s list is limited making Dominion Lending Centre’s lender connections and mortgage solutions more important than ever! Our Mortgage Brokers have a vast amount of mortgage options available to cover “outside the box” uninsurable mortgage profiles. Whether your refinancing, you need an amortization over 25 years, want to buy a single-unit rental or more we have a mortgage for that!

Contact a DLC Mortgage Broker to get started on your mortgage approval today!

KATHLEEN DEDILUKE
Dominion Lending Centres – Accredited Mortgage Professional

3 Mar

STUCK IN A HIGH RATE 10 YEAR FIXED MORTGAGE?

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Stuck In a High Rate 10 Year Fixed Mortgage?With low rate offerings over the past several years and a struggling economy, some homeowners chose to lock into a longer term mortgage even if the interest rate was a bit higher. If you are one of those people who feel stuck in a high rate 10 year fixed mortgage you may be wondering if you have options. The answer is YES.

Let’s consider the case of Dan and Anita who own a home and refinanced their mortgage 8 years ago into a 10 year term. They wanted to consolidate their high interest credit cards and their mortgage into one lower monthly payment and be secure with that monthly payment for as long as possible.

The news was painting a picture of doom and they wanted to take advantage of the “record low” rate of 5.25% for 10 years. Over the past few years they have watched the shorter term rates for 5 year term mortgages continue to drop to under 3% and they feel they may have made a poor decision. But since they feel they are stuck in a high rate 10 year fixed mortgage with the potential of a high penalty to get out of the mortgage they have chosen to stick it out. The monthly payments are $1,644 which they can afford but the potential of payments at under 3% for the remaining 5 years would be $1,304 (based on the remaining amortization) which is hard to pass on.

A friend told them to talk to her mortgage broker to see what real options they had. After talking to the broker they learned the penalty for terminating a 10 year mortgage after 5 years is only 3 months interest or $1,200 in their case (and legal fee of about $600). Dan and Anita were stunned they had missed this in the fine print of their mortgage agreement. And to top if off this policy is determined by law and not by the lender. This was great news for the happy couple. The broker also ran numbers to show them how they could further take advantage of the lower interest rate and increase their monthly payments to pay off their mortgage faster.

By increasing the payment by 20% – which was still lower than what they were paying before and paying bi-weekly instead of monthly, they lowered their interest costs by $20,000 over the next 5 years and reduced their amortization from 25 years to 12 years!

The morale of this story is, if you are stuck in a high rate 10 year fixed mortgage and you are close to the 5 year mark, you should talk with your Dominion Lending Centres mortgage broker (I and see what options you have to save yourself some money on your mortgage. What would you do with a savings of over $20,000?

PAULINE TONKIN
Dominion Lending Centres – Accredited Mortgage Professional

2 Mar

PREPARE, PREPARE, PREPARE

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Prepare, Prepare, Prepare Every year since October 2008 it’s become more and more difficult to obtain a mortgage. The government claims to be casting a safety net over the Canadian housing industry via stiffer mortgage regulations. What do you need to know to help prepare yourself for a home purchase, refinance, debt consolidation, or even a simple renewal? Well the biggest item I cover on a daily basis is preparation.

It can take a client weeks or months to find the confidence to connect with a Mortgage Professional once they feel confident that they ready to obtain that next mortgage. Any Mortgage Professional worth their salt will be able to guide their clientele to prepare them properly for the mortgage.

Typically most people think they need to prepare themselves most for their first purchase, however preparing for each mortgage these days is more critical today than ever before. When Canadians finally make that call, they want a step by step process to solve their solutions in an easy manner, but are seldom prepared to proceed.

During my regular daily routine, I follow up with my clients with gentle reminders to send me the requested documentation list. Having done this for ten years, the process is quite similar for almost each individual even though the main list of documentation remains the same.

We all want to take short cuts to get to the finished product, but in the end, the banks and lenders have become governed so much so that the short cuts are almost non-existent therefore, preparing the proper document package is essential to an essential mortgage. As Arnold Schwarzenegger said recently in an interview I watched on Facebook, we need to stop taking and thinking about short cuts. There aren’t any to success.

What I’m getting at here is that when your Dominion Lending Centres Mortgage Professional provides you with a mortgage document checklist, please don’t take it for granted, please follow each and every step carefully.

In general, the most common documents required are dependent on what you do for work. So if you are an employee, then the most recent paystub, and an updated employment letter along with the most recent two years of T-Slips (whether they are T4’s from employer’s, T5’s and pension slips), T1 Generals -the entire document (the documents your accountant prepares to submit to Canada Revenue Agency), Notice of Assessments (the form you receive back from CRA after your file is completed). Then there will be the verification of down payment via 90 days of bank statements, any mortgage statements, property tax assessments and the list can go one. The most common mistake is providing a mix and match of the above documents to try and piece together your income story. Depending on how your income is structured, we may be able to provide you with a near pre-qualification but lenders are being more adamant of having the documentation upfront, so that they are using their time, along with the mortgage insurer’s time. As a rule of thumb, the cleaner the file, the easier it is to underwrite and make a proper decision.

Common mistakes include, missing pages from tax documents, poorly written, unsigned, undated, missing info on employment letters (handwritten ones draw huge red flags), cut off pages from documents, out dated items(paystubs and employment letters over 30-60 days is pretty much null and void these days).

You may not know how to prepare yourself, but that’s also what we are for. We are essentially mortgage guidance counsellors to help prepare you for mortgage success, but if we are trying to obtain a mortgage via shortcuts, you’ll be upset with how the process goes.

We all used to have more leeway with mortgage documentation, but it’s clear the government is having banks and lenders scrutinize every mortgage more carefully now than ever before. And the banks and lenders have to oblige as they will be audited, if they don’t pass audits, then they lose out. And if they lose out, we lose competition. Yes this is the new normal, yes it’s tiring, no we don’t like it either, but it’s our new reality. And realistically, is gathering a few extra documents really that bad? Mortgages are not a given right and earned more so than ever before in our recent history.

Our job is to help you prepare for the mortgage, sometimes it will take one meeting, sometimes it’ll take weeks or months, even years depending on your own personal financial situation. But we can provide the recipe to help you prepare, but it’s up to you to do the cooking.

JEAN-GUY TURCOTTE
Dominion Lending Centres – Accredited Mortgage Professional