22 Oct

Spousal Buyout Program

General

Posted by: Brent Adair

Spousal Buyout Program

 

“Until death do we part…”   doesn’t always happen. Divorce is never easy, especially if you own a matrimonial home together. If you or your spouse is looking to stay in the home after you have separated, there is a program available. The Spousal Buyout Program will allow a spouse to be bought off title in the event of a marital split, allowing you to take up to 95% of the equity out of the house.

 

Under the regular mortgage refinance rules, you are only allowed to refinance up to 80% of the property’s value. Unfortunately this leaves 20% of the equity still tied up in the house and normally the only way to access that equity would be to sell the property. However this can be time consuming, disruptive and stressful. Getting divorced or separating from a loved is difficult.

 

Is one spouse hoping to stay in the existing home?

 

The spousal buyout program falls under the mortgage purchase rule and allows you to finance up to 95% of your home’s value. With this you may be able to keep your home without moving, while paying your ex-spouse or partner their portion of the home’s equity and help with maintaining some stability with family life.

 

In order to qualify for the spousal buyout program, you must have good credit and you must be able to afford the mortgage on your sole income. You must also have a legal Separation Agreement and a Purchase Agreement that has been prepared by your lawyers. Lastly you and your ex-spouse or partner must currently be on the deed to the property.

 

Using this, you would be able to keep your home and avoid moving and have a little bit of stability in a somewhat turbulent time.

 

Lastly, if your spouse is buying out your equity in the matrimonial home, always make sure to get a confirmation from the lender in writing that you are no longer registered on the mortgage. Just know that simply being taken off the property’s title is not the same thing. Until you can provide written proof of this, you could still be on the hook for the outstanding mortgage balance for a house you no longer own.

 

Going through a divorce is often unpleasant, and at times can be quite expensive. Getting some good mortgage advice can help you save some money in the long run. That is why seeking the advice from a mortgage professional like myself can help you set the stage for a successful separation – so the two of you can have the best possible new start.

 

22 Oct

What is a Rate Hold?

General

Posted by: Brent Adair

You have most likely heard lenders and borrowers talking about rate holds and rate locks, so what exactly does this term mean?

What is a rate hold?

A rate hold protects the borrower from rate fluctuations for the duration of the hold period. This guarantees the lender will offer the borrower a specific interest rate. Once this rate has been locked in, the lender will guarantee that rate for a certain period of time. A typical rate lock period could be 60, 90 or 120 days. This also means that if the market rate rises after the rate is held and the borrower will still receive the lower rate.

What happens if the rates go down during the rate hold time?

Not a problem! If the rates go down during the rate hold period we will automatically have you pre-approved at the new lower rate. The interest on your mortgage rate will reflect the lowest rate reached within the duration of the rate hold period. This is why getting pre-approved for your mortgage well in advance of purchasing a property is a good idea.

When can a rate be held?

Buyers must typically wait until a seller has accepted their offer for the purchase for a specific property. Other information is also needed before the rate can be locked, as the rate offered to an individual borrower depends on a variety of things including: borrower’s credit score, the loan-to-value ratio, the property type and locality.

How much does a rate hold cost?

Rate holds are always free for clients! This is true, as the rate lock is not associated with any type of fee.

What happens if a rate lock expires before closing?

Lenders are not able to extend a rate lock after a period of 120 days. Therefore once the time has lapsed, they will then have to pay the current rates. One of the big things is to make sure you have firm knowledge of when you’ll be able to close.

22 Oct

The Unknown Benefits of Opting for a Home Refinance

General

Posted by: Brent Adair

Unknown Benefits of Opting for a Home Refinance

If you own a home, there’s a good chance you’ll do a mortgage refinance at some point. Few borrowers stay with their original home loan for a full 30 years; most either refinance or sell the property long before the full term runs its course.

When the borrower on a home loan has reached a stage where the terms of the first home loan are unsatisfactory, or costlier than they need to be, given the current economy and monetary condition, the borrower at times goes for a home refinance loan. When this happens the first loan is paid off and the same loan is supplanted with a refinance loan, though the terms can either be similar or different.

Smaller Repayments

When it comes to a refinance home loan, you may have the capacity to structure the loan in such a way that you may only have to pay a smaller amount of money at regular intervals. This could be extremely useful if your situation is a little tight due to monetary constraints.

Longer Time to Repay

Another advantage of home refinancing is that you can spread out a loan over more years by customizing the time to reimburse the loan. Spreading out a similar size loan over more years implies that the interest paid will be more, yet the repayment made will be more reasonable in size for the loan holder.

Fixed Amount of Payment

One of the other advantages when it comes to refinancing your home with a fixed rate is that the repayment sum will continue to be the same. Once the loan amount is set, the installment sum continues to be the same throughout the course of the mortgage.

Pay Off Old Debts

When you get cash as part of the home refinance deal, you can use some of that money to pay off old debt (especially those with high interest rates). A refinance can also help you pay off future costs as well. An example of this might be taking care of the cost of education for yourself or relatives. This money can also help with doing repairs towards the house.

22 Oct

Secondary Home Mortgages

General

Posted by: Brent Adair

Secondary Homes – Mortgages for Second Homes

 

Secondary Homes are normally used for Commuters, Students and retirees, or as a university residence for children who would otherwise rent. In cases like these lenders assume that the buyers of the property will either use it themselves, or allow it to be used by family members on a rent-free basis.

 

It is pretty easy to get a mortgage for a vacation property, so if you are planning on purchasing a vacation home, make sure you are looking into something that resembles a four-seasons house. Make sure this property is easy to get to, winterized and supported by an adequate infrastructure. Make sure to check out our Cottage Mortgages Blog, If you plan on buying a cottage as your second home.

 

Secondary homes loan amounts are between $600,000 and  $700,000 and require at least a 5 % down payment on them. However if you plan on putting a 20% down payment, lenders can finance your purchase as a conventional mortgage.

 

One thing to keep in mind when looking for a second home, is that second home financing is a little riskier overall. This is that if the borrower can’t pay their bills, they will put that money towards their first home and not second property. The lender will look at several factors including: a good credit rating, steady employment, and a good debt-to-income ratio. One thing to keep in mind is that you have to qualify on personal income alone, as you can not rent out these properties and therefore cannot use rental property income.

 

Home refinancing with a cash out option will allow you to replace your old mortgage with a brand new one for the same property. This option will give you additional funds when the mortgage closes and can be a great choice when you are looking to change several terms on your mortgage.

 

However if you are happy with your current mortgage, a home equity line of credit or home equity loan is always an option. Second mortgages can still give you the extra cash you need while allowing you to borrow against the equity in your home. You must have at least 20 percent equity in their current home in order to qualify and this can also be used as a down payment on the second home.

22 Oct

RRSP Home Buyer’s Plan

General

Posted by: Brent Adair

RRSP Home Buyer’s Plan

 

One of the best sources for funding your mortgage down payment is using a Registered Retirement Savings Plan (RRSP). The canadian government’s Home Buyer’s plan allows first time home buyers to borrow up to $25,000 from your RRSP for a down payment. This is tax free! If you are purchasing a home with someone else, you can both access $25,000 from your RRSP. This means that combined you can have access of up to $50,000 ($25,000 each) for a down payment. Since this is considered a loan, it must be repaid within 15 years.

 

Eligibility

 

In order to qualify for the first-time home buyer plan you must:

 

  • The RRSP funds you borrow must be in your account for at least 90 days prior to their  withdrawal
  • You cannot have owned a home within the previous four years
  • If you’re buying with a spouse (or common law partner) who is not a first time homebuyer, you cannot have lived in a house they owned for 4 years
  • You have entered into a written agreement to buy or build a qualifying home
  • You must intend to live in the home within one year of purchase as your primary residence
  • If you have used the Home Buyers’ Plan before, you cannot have any outstanding balance due
  • You must make the withdrawal from your RRSP within 30 days of taking title of the home
  • You must be a Canadian resident

 

If you make a withdrawal from your RRSP and do not meet the first-time home buyer eligibility, this will be taxed as income and should be included in your income tax as taxable income.

 

Buying with a partner

If both you and your spouse (or common-law partner) meet the first-time homebuyer eligibility requirements, each of you can withdraw up to $25,000 from your RRSPs for a total of $50,000.

If only you qualify as a first-time homebuyer, you will be able to withdraw the $25,000, provided you have not lived in, as your primary residence, a house owned by your spouse or common-law partner.

 

22 Oct

My Mortgage Application Was Denied. Now what?!

General

Posted by: Brent Adair

Interest Rates

My Mortgage Application was denied, now what?

Owning your home is not only a dream but a financial goal for many in Canada. However, factors like housing prices, interest rates, and new mortgage rules that came into effect have made it a little more difficult to get a home.

If you have recently had your mortgage application denied you may be wondering about some of the next steps you can take. Before you put your dream on hold, here are a few things to consider

Why was your application denied?

The first thing to consider after your mortgage application was denied, was why it was rejected in the first place. Your credit report or credit history may be one of the reasons. A low credit score can sometimes act as a warning sign to your lender. It would be a good idea to check your credit report to see whether it is accurate and then get to work on improving that credit score.

Proof of income might be another reason why you may not get that mortgage. For those that are self-employed or business owners, it may be a little more difficult to get approved for a mortgage, as lenders most often associate them with unpredictable income and are a higher risk.

The amount of debt you have can also affect your ability to get approved. Lenders will look at something called your debt service ratio when considering your mortgage application. Your Total Debt Service Ratio (TDS) is calculated by adding your family’s monthly mortgage payments, property taxes, and other debt payments, then dividing it by your family’s gross monthly income.

Is it really time to buy?

If your mortgage application was denied and you have considered the reasoning behind it, it is probably a good idea to double check to see if it is an appropriate time to buy a home. If right now you find that you have a lot of debt and are having difficulty paying some bills on time, it may be worth it to pay off some of that debt and set up a budget to put towards your home

purchase. If you have however gone through your finances and figured that right now is a good time to buy, you can consider other available options.

What other options are available?

It is a big misconception when it comes to big banks and mortgage loans. There are other lenders available. Not only are there other lenders out there, some of them include: mortgage companies, insurance companies, trust companies, loan companies and credit unions.

Mortgage Brokers can help

If your application was denied, an experienced mortgage broker can work with you to help determine if it is indeed a good time for you to buy a home. They can help investigate some of the alternative options available Mortgage brokers negotiate on your behalf and have relationships with various lenders. Meaning a mortgage broker can help get you approved, even if your first application was denied

23 Jan

The most common pitfalls of buying a home and how to avoid them

General

Posted by: Brent Adair

mortgage broker

To make sure you are prepared for buying a home, here are some common pitfalls you’ll want to avoid, and how to avoid them!

Closing issues

Is your money all in one place? If you don’t have the money ready for the closing date, you could face serious issues (i.e. legal issues). Make sure all your money is ready in one account for closing. Transferring money from one account to another, especially if it’s in investment accounts, can take much longer than you expect. This will make the home buying process much smoother, so make sure you get the money situation handled ahead of time.

Home inspections

Sometimes buyers forget to have a home inspection before they buy their new home. Things may look pretty on the outside, but there could be pluming issues, heating issues, etc. on the inside. Hire an engineer, and electrician, or whatever you need to do – just make sure to have professionals inspect the house before you buy. Sometimes if there are very serious issues lurking in the house, it might be better just to walk away from buying the house. Without that inspection, you might have gotten a very bad deal.

Make sure to hire a lawyer

If you hire a lawyer from the beginning of the home-buying process, you’ll be prepared for any legal or contract issue. Never act as your own attorney in real estate if you’re not a professional. For example, make sure you consult with a lawyer to ensure that everything that you expect to be in the home when you move in, stays there. There are cases of sellers removing toilets from their homes, appliances, chandeliers, light fixtures, and more without the buyer expecting this because it wasn’t noted in the contract. Make sure that before you sign any legal document, you have your lawyer look over it.

Get advice from professionals

To avoid any future problems, consult with all relevant professionals when buying your home. There will always be little things that you wouldn’t have considered without their help and have a huge impact. You’re already paying for a broker, lawyer, etc. so make sure you listen to their advice!

 

23 Jan

List of Things To Tell Your Realtor

General

Posted by: Brent Adair

b-lenders

Buying a home is a big deal! It is likely one of the biggest investments you’ll make in your life. Because of this, you’ll want to plan ahead and make sure that all of your needs are considered and expressed to your realtor, so you can find the home that is best for you.

Find a good realtor

First things first, make sure you find a realtor you ‘click’ with. Pick one that you feel best understands your needs, wants, and your overall vision for what you’re searching for in a home. If you have a realtor that you don’t have great chemistry with, you could waste a lot of valuable time.

Price range

What is your price range? Make sure your realtor knows this at the beginning of the home shopping process, so they don’t present you homes that are way out of your price range. You also want to make sure your realtor knows this, so they know the areas for homes to show you. Or if you’re looking for a home in a specific area or neighbourhood, they can make sure to show you only the homes in that area that meet your price range.

Needs and wants

Make a list of what you need to have, would like to have, and cannot have. This will make it much easier for your realtor to help you in your search of finding your ‘perfect’ home. For example, maybe a ‘cannot have’ would be to live on a busy main street since you want to live in quiet neighbourhood. Or, maybe a ‘need to have’ is living a reasonable distance from your work.

Timeline

When do you expect to move into your new home? Are you renting currently? When does your lease end? Are you selling your home currently and looking for a new one? These are all things to tell your realtor at the beginning of the home shopping process. If you don’t they could advise you on a house that will be gone by the time you hope to move in. Make sure you give your realtor as much information as possible such as the date you hope to move in.

23 Jan

First-Time Homeowner Concerns

General

Posted by: Brent Adair

Whether you’re newlyweds, first time home owners, parents looking for a home in a good school district, or planning on buying a new home, these are some concerns you may have when searching for your new home. With these concerns, we’ve also included tips on how to deal with them

The Right Home

Think about what you truly want in a home. Do you want a big, spacious house, or a cozy and quaint living space? What is your budget? What features do you want in your new home? Make sure you talk to your real estate agent and make a clear list of what you’re looking for in a new home. It’s always good to look at houses that may not fit you’re expected criteria, because you may just find a home that’s even better than you expected.

How Much Should I Offer?

Make sure you consult with professionals when giving an offer on homes. A good rule of thumb is to never immediately base your offer on the original asking price. Make sure whatever you offer, it is based on the actual value of the home. As mentioned, always consult with professionals because they are there to help you make sure you get the best bang for your buck. Buying a home is a big deal so you won’t want to skip this tip.

Finances and Other Expenses

Down payments, credit scores, employment, personal finances, and other unexpected expenses are all things first time home owners, and those just buying a new home need to consider. If you are a newlywed, make sure you have the ‘finance’ conversation before rushing into buying a new home. Do you know your partners credit situation? Are you both prepared to buy a new home based on your financial situation? Do you have savings to make a down payment? Is your current employment sustainable? You might also want to get preapproved for a mortgage if you can before checking out homes on the market. This will make it easier to understand what price of home you should be looking for.

Neighbourhood

What type of neighbourhood are you hoping to live in? Do you have children, or are you hoping to start a family? Do you want a home close to your work? These are all things new home owners often consider when buying a home. Make sure to talk to professionals about what areas would be best for what you’re looking for. If you’re thinking of starting a family or already have children, you probably want a neighbourhood with a good school district and is safe for children.

23 Jan

Benefits of Buying Vs. Renting

General

Posted by: Brent Adair

Here’s a general list of the benefits of buying vs. renting that will be sure to help you in making your big decision when it comes to looking for a new home.

Buying a home is an investment

Buying a home is a great investment. Over time, your home will very likely increase in value. Your equity will also build over time when you make your monthly mortgage payments and will grow more the longer you stay in your home. Simply, renting is not an investment – you’re paying someone else for money you could be using for an investment! Why not pay a mortgage instead that will benefit you in the long run?

Freedom

Have you ever had those landlords who never let you make the place you’re living in, your own? You had to keep the walls a pale white, or had to deal with an old bathroom or kitchen that barely does its job? As a homeowner, you can fix these things and make the home truly your own. You won’t have to worry about what colours you’re allowed to paint the walls or having to get permission to make changes to that old kitchen or bathroom.  

Generally over time, buying costs less than renting

Have you ever experienced a landlord increasing your rent each year? With paying a mortgage, you won’t have to deal with that if you opt for a fixed mortgage rate! This makes it easier to budget since it will stabilize your monthly finances. Also, your home will increase in value for your benefit, and each payment you make impacts your equity. With renting, there is no chance for money to be made. Also, when you’ve paid off your mortgage, guess what that means? No more mortgage payments – the house is all yours!

Family stability and being part of a community

Do you remember growing up in your family home and how special that home was to you and your family? If you’re planning on starting a family or thinking of moving to a new home to make life better for your family, buying a home will create a space that will be more important to you and your family than any investment. Without getting too cheesy, owning a family home is really something special: you can watch your kids grow up and make family memories that you’ll never forget.

Also, when you pick a great neighbourhood to live in, you’re sure to build a sense of community with your neighbours and foster a great environment for your children to grow up in.

Make sure to talk to your mortgage broker for more information on how buying is the right choice for you.