31 May

PURCHASE PLUS IMPROVEMENTS � YOU JUST FOUND YOUR DREAM HOME� SORT OF.

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PURCHASE PLUS IMPROVEMENTS – YOU JUST FOUND YOUR DREAM HOME… SORT OF.

In a competitive real estate market or a market that is suffering from a lack of available listings, the Purchase Plus Improvements mortgage could be your saving grace. Regardless of whether you’ve just started your search for a new home or if you’ve been hunting for months, this is something that you should be thinking about each time you walk into a potential house.

Of all the homes that you’ve looked at so far, you have likely walked into at least one home by this point and said to yourself: “Well this house looks great, but if it wasn’t for that incredibly dated _______”. You fill in the blank here… Kitchen, bathroom, flooring, basement, etc. If you have passed up the opportunity to purchase that potentially perfect property because of the costs of required improvements, it’s important that you know there is a solution to your problem. Enter, the Purchase Plus Improvement Mortgage.

In a nutshell, a purchase plus improvements mortgage allows you (the home buyer) to roll the costs of improvements into your mortgage. The new mortgage allows you the ability to finance those much-needed repairs and get you into that home of your dreams! The mortgage comes with a great interest rate and one simple mortgage payment. Had you chosen to purchase the home and not include the renovation costs into the mortgage, then you might end up financing the improvements on a higher interest rate unsecured debt which also give you a second payment to make each month.

The first step to take is a conversation with your Dominion Lending Centres mortgage broker about specifically how that Purchase Plus Improvements Mortgage would apply to your application and specific situation. Understanding the types of improvements that can be included in the financing will help you better understand which potential houses might work great for you.

Working with your Realtor, the mortgage broker will help guide you through the final approval process. The main difference between a Mortgage vs. a Purchase Plus Improvements Mortgage is the need for quotes. As part of the verification process, your mortgage broker and the lender will need to see a quote for the work that is planned for the improvements. The quotes will provide us with the cost and plan details required to secure the final approval. Getting you into a house of your dreams!
If you have questions about how a Purchase Plus Improvements Mortgage could work for you, take the time to connect with our team anytime!!

NATHAN LAWRENCE
Dominion Lending Centres – Accredited Mortgage Professional

26 May

HOW MORTGAGE RATES WORK

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HOW MORTGAGE RATES WORK

how mortgages workEver wonder how your mortgage rate is determined? What factors make it jump from percentage to percentage? We are getting down to the nitty gritty today and giving you the facts on what impacts mortgage rates.

What affects a Mortgage Rate?

There are 10 factors that affect a mortgage rate:

1. Location
Depending on which province your home is located in, this will have an overall effect on your mortgage rate. Generally speaking, provinces with more competitive markets will have lower rates.

2. Rate Hold
A rate hold is a guarantee on a rate for 90-120 days. If your closing dates do not fall within this timeframe, then your hold will be re-assessed. If your rate hold is re-assessed and the lender’s rates at that time of re-assessment are higher than your initial rate, then your rates will go up accordingly. We always follow up with all of our clients on a regular basis to avoid this situation whenever possible!

3. Refinancing
Movement on your mortgage of any form can affect your rate typically when you are working with your existing lender. New buyers will have lower rates than refinances, but refinances will have lower rates than mortgage transfers. Mortgage Brokers can access multiple lenders to find the most suitable product for their client’s unique needs.

4. Home Type
Lender’s assess the risk associated with your home type. Some properties are viewed as higher risk than others. If the subject property is considered higher risk, the lender may require higher rates.

5. Income Property/ Vacation Home
As previously mentioned, lenders assess the risk on your property. If you are buying an income property or a vacation home than the lender can assess at a higher risk and a higher rate may apply. This is one of the major benefits to having a mortgage broker on your team! They have access to a variety of lenders that can offer you a rate lower than others as they can compare a large variety.

6. Credit Score
We have talked a lot about credit on our blog, and there is a reason for that. Your credit score is a large determining factor for your rate. Lenders want to see that you have a history of managing your credit well and that you will be able to pay back the lender overtime. For more information on fixing your credit, check out our free e-book, Credit Medic.

7. Insured or uninsured
With the changes that the federal government made back in October 2016 this has had a significant impact on mortgage rates if your mortgage is insured or not. Read our Change of Space guide to find out the full impact of these changes.

8. Fixed/Variable Rate
The type of rate you are wanting to get will also affect your rate. Fixed rates are based on the bond market and variable rates are based on the Bank of Canada (economy).

9. Loan to Value (LVT)
The higher the Loan to Value the higher the risk. You can have someone who has a $1 million mortgage but has $2 million in equity in that property and they would be viewed as a lower risk than someone who has a $200,000 mortgage and their property is only worth $220,000. To boot with the federal changes, the person with the higher risk mortgage (insured) is likely to get a more competitive interest rate than the client with $2 million in equity.

10. Income level
The final part in this rather large equation is your income level. Although this does not necessarily impact the rate itself, it does impact your purchasing power and the amount you are able to put down on a home. Essentially indirectly impacting the rate.

Each of these factors plays a factor in the rate you will be able to get through a lender. The easiest way to get the lowest rate is to work with a dedicated mortgage professional. They will put together a fail-proof plan to get you the sharpest rate. They also have access to a variety of lenders which saves you the time and trouble of shopping for your mortgage on your own. As a final point, mortgage brokers can also assess your unique situation and find the right mortgage for you. Their goal is to see you successfully find and afford the home of your dreams and set you up for future success.

GEOFF LEE
Dominion Lending Centres – Accredited Mortgage Professiona

23 May

MORTGAGE FACTS TO KNOW BEFORE YOU BUY THIS SPRING

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MORTGAGE FACTS TO KNOW BEFORE YOU BUY THIS SPRING

Mortgage facts to know before you buyBuying a home can be a really exciting time, so the last thing we want is for you to be hit by any surprises. Let’s take a look at five things to keep in mind before you write an offer.

Get your mortgage in place before you write an offer. Meeting or speaking to an actual person who will take your application and pull your credit is the best strategy. You will get a firm amount of how much of a mortgage you may qualify for. This is also a great time to make some decisions like if you want a fixed rate or variable rate, if you want a monthly or biweekly payment. You are far removed from stress of meeting any condition of financing dates at this time so you have the luxury of time to ask your questions.
Be ready to provide the necessary paperwork. If I was lending someone $300,000 I would want to know that they could pay me back and so would you I’m sure. You are going to be required to provide a lot of paperwork. Getting a complete list ahead of time and starting to gather it really makes it less stressful for you once the offer is accepted.
There are extra costs. It is not just a matter of having the down payment. You will also have to pay for legal fees, title insurance, property tax adjustment if necessary, mortgage default premiums and on and on. That is why you have to have at least five per cent down and an additional 1.5 per cent of the purchase price in your account to cover these costs. The banks also really like to see that you have a fallback position of extra cash in case you get sick or downsized.
You can get extra funds for improvements to the new home added to your mortgage. Most lenders allow up to $40,000 for upgrades. These have to be things such as flooring, windows, exterior, kitchen, bathroom or any other manner of upgrade which will stay with the property. The funds are held at the lawyer’s office until an appraiser verifies the work is complete so you will have to be able to cover any costs in the short term.
Here is how the process goes.
• You get the mortgage pre-approval
• Find a home and place an offer with a condition of financing date and likely a home inspection one as well
• The application is sent off for approval based on both you and the property and you provide all the necessary paperwork
• The bank says they are 100% happy with you and you say you are 100% happy with the offer of financing and you remove the financing condition. Do not make any changes to your financial picture after you remove the condition. It can be cancelled if you leave your job, take on more debt or rack up the credit cards.
• You meet with the lawyer to provide the balance of the down payment, cover the other costs
• Day of possession you are given the keys once it is confirmed that the funds have transferred to the seller
• Congrats! You own an home

This has been a crash course in buying a home, but there are so many resources online or available to you for free over the phone that it shouldn’t be too awful. Happy house hunting and we look forward to helping you at Dominion Lending Centres!

PAM PIKKERT
Dominion Lending Centres – Accredited Mortgage Professional

4 May

HEY LANDLORDS! YOU NEED TO READ THIS!

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HEY LANDLORDS! YOU NEED TO READ THIS!

Hey Landlords! You Need To Read This!If you have not yet found yourself skimming the news online today, you may not have heard yet about the Provincial Government’s announcement regarding the Ontario Housing and Rental Markets.

The Provincial Liberal Government, laid out for the Province their plan to address issues in key aspects of the Real Estate and Rental Property Markets in the Province. There were 16 steps in total, however for this post, we are going to focus solely on the announced changes that deal directly with Rental Properties and Landlords. These changes may directly impact our clients whom have or plan to acquire rental property. (Keep in mind that these were just announcements and many of them will have to be passed in the legislature before officially becoming law, although passing is highly likely).

1. Standardized Lease Agreements – The new plan stipulates that rental agreements/leases in Ontario for rental properties will be standardized. This helps the government ensure that lease agreements meet legislation requirements pertaining to landlord/tenant relationships and their respective rights.

2. Expansion of Rent Controls – Currently, any privately owned rental properties that are newer than 1991 are not impacted by Ontario’s rent control legislation. Meaning that a landlord has complete control on rent setting.

To gain control of skyrocketing rents (typically being experienced in Toronto and the Golden Horseshoe markets) the Province is expanding the Rent controls to all privately held rental properties regardless of the year they are/were build. The change would mean that rental rate increases would be capped at annual amount stipulated by the Landlord and Tenants Board. Those increases are typically in line with or around the rate of inflation. Even though this increase needs to come through approved legislation, the change will take effect today, April 20th.

3. Vacancy Taxes – Although a specific tax is not being created by the Province, they are creating new powers for Toronto and other municipalities to introduce a tax on vacant homes in their respective communities. The tax is designed to encourage owners of vacant properties to make these available to tenants or be forced to pay a tax to the municipality.

4. Creating a rebate program designed help with Development Cost Charges to incentivize the building or more rental housing.

5. Ensuring that Property Tax for new multi-residential apartment buildings is charged at a similar rate as other residential properties. Designed to encourage developers to build more new rental housing.

As we have become accustom to in the industry, change is always inevitable and many of the changes laid out today are not a surprise. Some of these have been rumored or discussed for some time. The most substantial of those changes impacting owners of rental properties is likely the changes proposed to the rent control rules, although this truly only impacts those owners who have properties that are newer than 1991.

Should you have any questions about any mortgages on properties that you own, please feel free to contact your local Dominion Lending Centres mortgage professional. We would be more than happy to complete a full review of your property portfolio and discuss what options might exists for either saving money on interest or accessing equity for another investment.

NATHAN LAWRENCE

Dominion Lending Centres – Accredited Mortgage Professional

3 May

REVERSE MORTGAGES – NO, WE DON’T WANT YOUR HOME!

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REVERSE MORTGAGES – NO, WE DON’T WANT YOUR HOME!

Your Parents Owe $500,000 to CRA…Can a Reverse Mortgage Help?Reverse Mortgages have had their share of misconceptions. In fact, we are often approached with false assumptions and unfounded facts about the product that steer the public to think of the product in a negative light. This article will cover one of the most common myths and the real facts behind this myth that has long been misinterpreted.

Myth: One of most common misconceptions that we hear time and time again is that you will lose ownership of your home to us.

Fact: This statement is false. HomEquity Bank, the provider of the CHIP Reverse Mortgage has taken several measures that ensure the protection of your equity.

1) Retain ownership of your home: Just like with any other mortgage, your home is used to secure the loan, which means that HomEquity Bank is registered as a standard charge on title. You, as a customer DO NOT transfer ownership of your home to us. In fact, once it’s time to pay back the mortgage you or your heirs have the choice to settle the loan however you or they want. Selling the home is the most common option, but it is not mandatory.

2) Our conservative lending practices: In our ads and on our website, we remind the customers that they can get up to 55% of the value of their home in a reverse mortgage loan. Of course, this amount does depend on the borrower(s) age, their property type as well as the location of their home. But as a rule of thumb, the younger the borrower is, the less they will qualify for and the older the borrower is, the more they will qualify for. This is because we want to make sure that the borrowers reverse mortgage loan doesn’t exceed the value of their home.

3) The potential value appreciation of your home: Many people don’t realize that their home may appreciate in value, however the interest that accrues only accumulates on the small borrowed amount of the home. That is why we say in our marketing pieces that “99% of homeowners have money left over” when their loan is settled.

This graph illustrates how the interest is affected when a home appreciates in value. For illustration purposes, we have used 3%, a modest level of home appreciation, which allows for equity preservation after a borrower takes out a CHIP Reverse Mortgage for 15 years. This example illustrates the following:

Home appraised at $500,000.
Homeowner(s) qualify for $200,000 (40%) of the value of their home in a CHIP Reverse Mortgage.
The homeowner(s) take the CHIP loan for 15 years before they move, sell or pass away.
The home appreciates at 3% and the new home value after 15 years is $778,984.
The principal plus interest total $457,288 and the estate still has $321,696 in equity (41% of the home value at time of sale).
Home Equity Preservation Graph – CHIP Reverse Mortgage
The following graph is for Illustration purposes only *

Home Equity Preservation Graph – CHIP Reverse Mortgage The following graph is for Illustration purposes only
4) Negative equity guarantee – Many people ask, “what happens if the house doesn’t appreciate in value, and in fact depreciates?” Our negative equity guarantee ensures that if your home depreciates in value at the time the home is being sold, and the loan amount due is more than the sale amount of the property, the homeowner or the heirs will not be financially penalized for being on title of the home. In fact, HomEquity Bank, will pay the difference between the sale amount and the loan amount when the loan amount due is more than the sale amount of the property. However, just like all other home equity loans, the homeowner(s) must keep their property taxes up to date, and maintain the condition of their home. If these conditions are met, the borrowers will never owe more than the fair market value of their home, when the home is sold.

The above measures are all the reasons why a CHIP Reverse Mortgage customer will not lose their home to the lender. A CHIP Reverse Mortgage provides a great solution for a growing number of Canadian retirees. For more information on this solution for homeowners 55+, contact your local Dominion Lending Centres mortgage professional.

* The illustration uses conservative values:

Example based on the national price of Canadian homes of $500,000 (Average home price in Canada is $519,521 according to the CREA, February 2017)
Example based on CHIP Reverse Mortgage advance of 40%
Home appreciation of 3.00%. Average home appreciation is 7.16% annually. (Source: CREA, Canadian Real Estate Association 15-year national house appreciation average, February 2017). HomEquity Bank makes no representations on future housing market performance.
CHIP interest rate of 5.59%. The Annual Percentage Rate (APR) is 5.79%, which is the estimated cost of borrowing for 5 years expressed as an annual percentage. The APR includes interest and closing costs.

YVONNE ZIOMECKI
HomEquity Bank – Senior Vice President, Marketing and Sales

2 May

SPOUSAL BUYOUT MORTGAGE?

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Spousal Buyout Mortgage?
If you happen to be going through, or considering a divorce or separation, you might not be aware that there are mortgage products designed to allow you to refinance your property in order to buyout your ex-spouse.

For most couples, their property is their largest asset and where the majority of their equity has been saved. In the case of a separation, it is possible to structure a new mortgage that allows you to purchase the property from your ex-spouse for up to 95% of the property’s value. Alternatively, if your ex-spouse wants to keep the property, they can buy you out using the same program.

Here are some common questions about the spousal buyout program:

Is a finalized separation agreement required?
Yes. In order to qualify, you will be required to provide the lender with a copy of the signed separation agreement. The details of asset allocation must be clearly outlined.

Can the net proceeds be used for home renovations or to pay out loans?
No. The net proceeds can only be used to buy out the other owner’s share of equity and/or to pay off joint debt as explicitly agreed upon in the finalized separation agreement.

What is the maximum amount that can be withdrawn?
The maximum equity that can be withdrawn is the amount agreed upon in the separation agreement to buy out the other owner’s share of property and/or to retire joint debts (if any), not to exceed 95% loan to value (LTV).

What is the maximum permitted LTV?
Max. LTV is the lesser of 95% or Remaining Mortgage + Equity required to buy out other owner and/or pay off joint debt (which, in some cases, can total < 95% LTV). The property must be the primary owner occupied residence. Do all parties have to be on title? Yes. All parties to the transaction have to be current registered owners on title. Solicitor is required to do a search of title to confirm. Do the parties have to be a married or common law couple? No. The current owners can be friends or siblings. This is considered on exception with insurer approval. In this case, as there won’t be a separation agreement, there is a standard clause that can be included in the purchase contract that outlines the buyout. Is a full appraisal required? Yes. When considering this type of a mortgage, it is similar to a private sale and a physical appraisal of the property is necessary. If you have any questions about how a spousal buyout mortgage works, please contact your local Dominion Lending Centres mortgage professional. Be assured that our communication will be held in the strictest of confidence. MICHAEL HALLETT Dominion Lending Centres - Accredited Mortgage Professional