30 Sep

A Smart Approach to Down Payments

Mortgage Tips

Posted by: Brent Adair

A down payment is the amount you pay upfront to obtain a mortgage. The minimum down payment in Canada is 5%. Using a list price of $250,000, the minimum amount of money you would have to put down is $12,500. Not everyone has this much money laying around in a bank account, however just because you don’t have this much in your bank account doesn’t mean that it is impossible. So here are some smart ways to help save money for your down payment:

 

If You Don’t Need It, Don’t Buy It

There is a difference between needing something and wanting something. Here are some questions to ask yourself the next time you are ready to check out with your purchase.  1. Do I need this or want this? Because there is a difference 2. Can I live without this? 3. Can I wait and get this later? 4. Can I get this cheaper somewhere else? Maybe second hand? 5. Can this item be borrowed from someone else? When it comes down to it, stick to the necessities.

 

“Google It”

When it comes to saving money, Google can help! Using Google, you can research money saving ideas, there are plenty of money saving ideas on the internet, so have a look through them and choose the ones that work best for you.

 

Eliminate the Small Costs

All the small things add up. Cutting down all the small things will help to make a huge difference in your bank account. Think about the $2 coffee that you buy on your way to work each workday. This adds up to $10/week and $520/year. When you start to look at the big picture, it helps to put things into perspective.

 

Write Your Spending Down

By writing your spending down, you’ll be able to monitor your spending and track where your money is going. This helps you with your planning and help with possibly changing your spending habits.

 

Try Fixing It Yourself

With all the information that is available, you can use this to your advantage. If there are some minor projects that you need help to fix, you can use YouTube or Pinterest to help you fix or replace items rather than hiring a repair person.

30 Sep

Four Ways You Can Still Be a First Time Home Owner

Mortgage Tips

Posted by: Brent Adair

When it comes to purchasing a home, there are still ways to figure it out, without it damaging your finances. It’s unfortunate that salaries are not keeping up with inflation, and many more people today are working as freelancers or contractors; something traditional lenders are not fond of. So when it comes to looking to purchase your home, here are four helpful tips!

Clean Up Your Debt

What this means is to choose to use our credit cards a little more wisely, as our credit cards do have high interest rates and if you let it accumulate it may take a while to finally clear your debt. Be smart when it comes to using your credit card, word to the wise try to pay off as much as you can each month. There’s nothing wrong with purchasing fancy stuff you like if you can afford them; but it won’t help you saving up for the home you wish. You should also understand the effect of the financial decisions we make, whether they are a mistake or clever purchases.

Move away from big cities

Buying a home or property in a country could be beneficial to you, while you aren’t as close as you would be to a lot of things like in the big city, the homes are cheaper. If you do plan on looking into smaller communities, also investigate their public transportation and see how easy it is to access, so you are not constantly relying on your car to get around.

Help from Parents

We can always tap into our RRSPs to help with a down payment, but we must pay it back. But if you don’t have that option, you can always rely on your parents. They can lend you the money from their own RRSPs. It’s safe, can securely earn them interest, and will help you out in the process. This is a non-conventional way about getting money, this is not a family member “gifting” ‘you the cash to help with your down payment. The loan is truly a gift, and not repaid with interest.

Rent Out Part of the Property

If you are looking at homes that may be just a little out of your price range, you can also rent out a room, while keeping some privacy. The money you receive in rent can help pay off your mortgage by going straight into your mortgage payments! It is important that you make sure all your activities are legal in your municipalities.

31 Jul

How to Refinance your Mortgage with a Bad Credit Score

Mortgage Tips

Posted by: Brent Adair

Refinancing is when you replace your current mortgage with a new one, majority of the time the new one will have a lower interest rate. There are plenty of reasons why anyone would investigate refinancing their mortgage. For those that have a good credit score, this is a straightforward process. However, when it comes to refinancing when you have a poor credit score, it can be a little more difficult.

 

How Does Credit Score Affect Refinancing?

Before you get you can refinance your loan, lenders will look at your credit history. They will look at your payment history, money that is currently owing, the amount of time you have had credit history and what you are applying for.

 

Typical Refinancing Process

When you are looking to refinance, the first step is all about choosing a lending institution. You should shop around for deals during this process. Once you do find a suitable lender you’ll need to provide them with bank statements, credit history, past tax returns and other documents. The lender will then assess if you are able to repay the loan or not.

 

Tips for Refinancing with Bad Credit

Here are some steps you can take:

  1. Have some significant assets on hand. By having some substantial holdings on hand, the bank will a little more forgiving of a low credit score.
  2. Find a co-signer. By having a co-signer with a high credit score, this will reduce the amount of risk on the bank’s end and will more than likely to approve your loan. It should be noted that if you are unable to pay your loan, the bank will get the money from the co-signer.
  3. Boost your credit. By clearing as much of your credit card debt as possible and paying your bills on time, you have the potential to raise your credit score by about 50 points within a couple of months.

Whatever the reason for refinancing, don’t let bad credit stand in your way. With the information in this blog, you too can help to improve your credit and be on your way to refinancing your mortgage.

 

31 Jul

How Private Lenders Can Help Get You a Mortgage

Mortgage Tips

Posted by: Brent Adair

Can’t Get a Bank Mortgage?

Not everyone can qualify for a mortgage these days. Government regulations have been clamping down on the ability to qualify for a mortgage. Self employed individuals and those with past credit issues have in the past struggled with mortgages and getting approved through banks. More and more Canadians are now turning to private lenders for their financing needs. Although many borrowers often see private mortgages as a last resort, they are a viable option for many people.

 

Private Mortgage Lenders Operate Differently Than Banks

A private mortgage is simply a home loan offered by an individual or company other than a bank or traditional finance provider.

Since private lenders operate differently compared to traditional banks, this is one of the benefits of working with them. Since they get their money from individual or private investors, they have the freedom to set their own criteria for lending. This means that during the application process they are more flexible and aren’t dealing with the stringent guidelines set out by major institutions.

Private mortgages are suitable for:

  • Self employed
  • Want to purchase raw land or a unique property
  • Have less than ideal credit
  • Want to invest in real estate
  • Need to consolidate high interest rate debt
  • Looking to renovate an existing property
  • Looking for a short-term loan

 

How Private Mortgages Work

If you are looking to explore a private mortgage, the first step is looking for a broker that provides alternative lending solutions. The broker will assess your situation and determine if you are eligible for a loan. They will also determine if you are able to make your loan payments on time.

The broker will then search for the best mortgage solution that meets your needs. They will then structure and create a deal that also creates an exit strategy, so that you know how long the deal will last.

Private lenders will usually lend on location, as private mortgages are uninsured. This means the lender falls back on the property if a default were to occur. That is why the location of the property is extremely important when it comes to a private mortgage and the rate you will be given.

Broker fees and legal fees generally apply when securing a private mortgage.

Private mortgages are growing in Canada as more borrowers are falling outside of the traditional lending guidelines put in place by major banks. There are plenty of options available when it comes to looking for alternative lending solutions.

10 Mar

4 Strategies to Help You Get Approved for a Mortgage

Mortgage Tips

Posted by: Brent Adair

So, you have finally decided to take one of the biggest steps of your life and take out one of the biggest loans of your life; a mortgage. Applying for a mortgage can be a bit nerve racking, especially if you might have a not so perfect financial history. Don’t let your denials get you down! There are some things you can do to help and get a handle on your finances and improve your chances for approval. Before applying for a mortgage consider the following 4 things:

Have a Good Amount in Your Savings Account

Having a good amount in your savings account is an absolute must before you walk into any lenders office and asking for a mortgage. Most lenders will require some sort of down payment, meaning some sort of large payment up front. Lenders will more likely give you the loan if they see you have the means to pay them back in the foreseeable future. If you come into a lenders office with little cash to your name, you may be too much of a risk.

Try to Bring Down Your Debt

Before asking for a loan it is best you are bringing down your total debt, while of course having some money in your savings. You do not have to pay off eerie single credit card you have, but you shouldn’t have creditors chasing you for overdue payments. Any mortgage lender will want to know how much debt you have currently and how you are dealing with the payments, so try to have this under control before you apply for a mortgage.

Set Your Sights on a More Affordable Property

If your mortgage application is constantly denied despite the fact you have a decent savings amount and very little debt, then it might be the property you are looking at and maybe choose one that is more affordable. If you need to ask for a smaller loan, then you’ll most likely have an easier time getting approved.

Find a Financially Stable Co-Signer

If none of the above strategies work for you and you are keen on becoming a homeowner, then you could also consider getting a co-signer on your loan. You will need to find someone who is financially stable and has a great deal of trust in you and your ability to make monthly mortgage payments. Having a co-signer will help you appear as less of a risk to lenders.

10 Mar

How To Buy a Home Using the Home Buyers’ Plan

Mortgage Tips

Posted by: Brent Adair

Do you plan on buying a home, but don’t have enough for a down payment? The Home Buyers’ Plan could help give you a boost in accumulating and making a sufficient down payment.

What is the Home Buyers’ Plan?

The Home Buyers’ Plan is federal government program that allows you to withdraw up to $25,000, tax free from your Registered Retirement Savings Plan (RRSP) to buy your first home. If you are looking to buy a home with your spouse, both spouses can each withdraw $25,000 and therefore can put $50,000 towards the down payment.

Requirements

While this is greatly beneficial for anyone looking to buy a home, and have help with their down payment, there are some requirements to participate in this program. The eligibility criteria are as follows: you must be considered a first-time home buyer, you must have a written agreement to buy or build an eligible home, this home can be for yourself or for a person with a disability that is related to you.  

Withdrawing from your RRSP

To be able to withdraw from your RRSP, you must first be a Canadian resident at the time of your withdrawal. You must also be able to receive all the withdrawals in the first calendar year. If you have multiple RRSPs, you can withdraw from them as well, you must however be the owner of the RRSPs that you are withdrawing from. As part of the Home Buyers’ Plan you must repay the amount back. However, do not worry about repaying the amount back immediately, as you normally have 15 years to repay the amount back and it must be at least 1/15th of the loan every year. Of course, you can also choose to repay back faster if you so choose.

 

To learn more about the Home Buyers’ Plan, visit the Government of Canada website.

 

2 Feb

Mortgage Brokers Vs Banks

Mortgage Tips

Posted by: Brent Adair

Buying your first home and getting your first mortgage can be an overwhelming experience. So when it comes to getting your first mortgage where do you start?

 

Right now there are plenty of options available when it comes to mortgages, as 40% of consumers are turning to mortgage brokers for their mortgage needs instead of banks.

 

Mortgage Brokers are provincially licensed and regulated by the CMBA. Mortgage brokers like myself are able to help you with all aspects of a mortgage, from figuring out how much you can afford, to determining the best mortgage product for you and even helping you find ways to save money and pay off your mortgage faster.

 

Many lenders’ rates and mortgages can only be accessed through a mortgage broker. By not having a selection of lenders to choose from and going with a bank to get a mortgage, this can mean harsher penalties for breaking your mortgage early, as well as a higher interest rate; which can end up costing thousands of dollars over the entire life of a mortgage.

 

A mortgage broker is not only able to tailor a mortgage product to your specific needs. Mortgage brokers have access to more lenders, they’re better able to connect you to a lender and a mortgage based on your specific needs and your financial situation to get you the lowest rates possible.

 

Mortgage brokers offer convenience, which lets you meet around your schedule and not during regular bank hours. Mortgage brokers also operate on commission and are paid by the lenders who ultimately grant you your mortgage, so there is no cost to the consumer.   

 

So feel free to contact me at 519-854-8668 or email me at brentadair@dominionlending.ca

if you have any questions.

 

1 Feb

What is a B-Lender?

Mortgage Tips

Posted by: Brent Adair

There are three types of major mortgage lenders in Canada, which include traditional, subprime and private lenders.

 

The traditional mortgage focuses on clients who possess good credit and jobs, they are focused on buying real estate under the traditional guidelines. However not everybody is able to get approved by banks, so if you are looking for help for financing your mortgage, I am here to help!

 

B-lenders are large Canadian institutions offering a variety of mortgage products. Clients that fall into the B category would be missing one of the major components that the banks and other major financial lenders require,  something like income or good credit. B Lending is a popular and proven source of lending in Canada. It should be noted that interest rates on B lenders are higher than traditional, but not by that much as they are normally only between 1 and 2 percent. Normally this type of lending is a short term, and is helpful for the client, as it helps get their credit back in line and are able to qualify with a traditional mortgage lender.

 

One of the main things you should be asking yourself is if this loan makes sense for your current situation. This is where I’ll be able to help with your current situation and I’ll be able to thoroughly study all of your options and assist in helping you make the right choice for your unique needs and situation. Unfortunately, homebuyers with bad credit will typically pay a higher interest rate than somebody with excellent credit because they’re seen as a greater risk. However, I’ll aim to find the best options for your loan.

 

More and more clients are getting turned away from big banks when it comes to mortgage financing. If you have been turned away from the big banks because you don’t fit into one of their cookie cutter molds, I can help! Feel free to contact me for some advice about your mortgage.

1 Feb

What Happens When Interest Rates Increase During the Home Buying Process

Mortgage Tips

Posted by: Brent Adair

As exciting as it can be while looking for a home, the next big thing to look out for is ensuring that you are getting the best mortgage rate possible without worrying about the rate increasing. However what can happen if the mortgage rate increases while looking for a home?

 

If the rates decrease, consider yourself lucky! However if the rates increase and your mortgage agent has previously advised you that you just barely qualify, it might be difficult to get the home you originally wanted.

 

Let’s have a quick look at two different cases below.

 

Case # 1: Purchasing a mortgage without pre-approval

Let’s say, you buy a home for $625,000 and your down payment is (20%) $125,000 your 5 year fixed-rate is 2.84% amortized at 25 years which works out to around $2,325/month. Now if you were to hold off on purchasing the home and rates do rise to let’s say to 3.34%, your monthly payment will then be $ 2,454.

Although it is very difficult to conclude that rates will change, some predict that interest rates will rise in the future. You really don’t have anything to lose by locking in your rate because it’s only a pre-approval and you will not be stuck with it.

Case # 2: Pre-approval on a variable mortgage rate

After being pre-approved on a variable rate mortgage remember the rate is not guaranteed, if there’s an increase in the prime rate. The only guarantee is the discount to the prime rate,if your lender reduces the discount to all their clients.

Let’s have a look at this example in more detail. How much more you will have to pay if prime rate goes up in the middle of you buying a home. Let’s say today’s prime rate is 3.2%. If the discount is prime rate – 0.45%, your rate will be 2.75% (3.2% – 0.45%) We have used the same purchase and DP as in case #1 giving you a monthly mortgage payment of $2,303.

If you are thinking about buying a home and the rates do rise, ensure that you get pre approved. This will protect you from the increase if the fixed rate is what you are looking for. For a variable rate, it may not protect you from the rates, it will allow you keep the discount to prime if your lender reduces the discount.

 

 

1 Feb

Subsidy Programs for Renovating

Mortgage Tips

Posted by: Brent Adair

Have you recently been looking around your house and started to think maybe you should make a few changes to the place? There are plenty of grants available for Ontario residents that will help you save money, if you are looking to make your home more energy efficient and reduce your carbon footprint

 

Senior’s Homeowner Grants

 

Ontario Senior Homeowners Property Tax Grant

This grant gives seniors a rebate of up to $500, however if your income is more than $50,000 you are unable to get this grant.

Provincial Land Tax Deferral Program for Low Income Seniors and Low Income Persons with Disabilities

If your property was used as your principal residence for at least one year. You could qualify to have your entire provincial land tax deferred.

Disabled Homeowner Grants

Home and Vehicle Modification

If you are making modifications to your home or vehicle to accommodate a disability, you can receive up to $15,000.

 

Easter Seals Financial Assistance

Children up to the age of 19 with mobility issues

Easter seals will provide up to $3,000 to help with home renovations or equipment, that is not covered by the Ministry of Health Assistive Devices Program

 

Low Income Homeowner Grants

Ontario Energy and Property Tax Credit

Seniors and Students can qualify for this. Seniors can receive up to $1,165 and students can receive a credit of $25 if any of their costs were related to energy.

 

Ontario Electricity Support Program

This is an application program for a reduction in the energy bills.

Each rebate is based upon the household. As an example a household making less than $39,000 a year could get a $34 credit on their energy bill.

 

First Time Homeowner Grants

 

First Time Home buyer Tax Credit

This tax credit can give you up to $5,000 of tax relief from the federal government

This tax credit applies to first time homebuyers and anyone with a disability from buying a home, that has special conditions.

 

RRSP Home Buyers’ Plan

This programs allows you up to $25,000 from your RRSP to buy or build a new home

This can also be used to buy or build a home for yourself or someone you know with a disability

 

Low-Income Energy Assistance Program

You can apply for this rebate when you pay the land transfer tax if you are a first time home buyer

Starting January 1, 2017 the most you can receive is $4,000

This is only available to anyone that has never owned a home before

 

GST/HST Rebate

New housing rebates may also be available for some of the GST/HST paid if you did any of the following:

  • purchased new housing or constructed or substantially renovated housing, which could include housing on leased land (if the lease is for at least 20 years or gives you the option to buy the land), for use as your (or your relation’s) primary place of residence
  • purchased shares in a co-operative housing (co-op) complex for the purpose of using a unit in the co-op for use as your (or your relation’s) primary place of residence
  • constructed or substantially renovated your own home, or hired someone else to construct or substantially renovate your home for use as your (or your relation’s) primary place of residence and the fair market value of the house when the construction is substantially completed is less than $450,000