29 Jul



Posted by: Mike Hattim

The level of documentation required for the average mortgage these days can be very frustrating. It can seem endless, very nitpicky and annoying because we are able to purchase a vehicle with just a paystub. There are a few reasons for the increased documentation requirements.

The first is that the banks are mandated by the Anti-terrorism Act to make sure all funds are legally sourced. Criminal organizations do exist even  in say, Central Alberta, and they are clever and will launder their funds however they can.

I had the opportunity to attend an anti-fraud session led by the Edmonton police and he told a story of how a routine bylaw infraction led to the discovery of a criminal enterprise which involved more than 32 million dollars in mortgage fraud. Police resources, insurance proceeds, court time and on and on mean there was a genuine cost to the greater community. Increased due diligence prior to funding can help catch such things ahead of time.

The second is that your banks and mortgage lenders are accountable to the mortgage default insurers and their company’s investors and shareholders and to OSFI which oversees them all. If you default on your mortgage they have to be able to prove that they took every step possible to ensure you were in fact a solid borrower qualified for the mortgage.

Honestly it boils down to this. If you were lending someone $350,000 wouldn’t you want to make sure they could afford to repay you?

So back to down payment sources. When you are providing documentation for your mortgage it is going to have to be pretty clear. It will have to show your name, financial institution holding said asset, account number and all transactions into the account for the past 90 days. Any deposits over $500 will have to be properly accounted for as per the above rationale. A quick reminder that you will have to have at least 5% to put down and an additional 1.5% for the closing costs so 6.5% all together though these days the banks and the mortgage insurers really like to see additional savings just in case you experience a job loss or illness.

Here are the most common and acceptable down payment sources and how each is to be verified. Keep in mind that you can use a combination of them but you will have to provide verification of each.

1. Savings – All accounts will need to be verified via a 90 day history

2. TFSA – Must be verified via a 90 day history

3. RSP- Will require a 90 day history and in most cases verification that the funds have been redeemed via the forms to the RSP provider and have been deposited into your account

4. Gift – from an immediate family member. Need to see a signed gift letter stating it is in fact a gift which is not expected to be repaid and proof it has been deposited to your account. In some cases they will want to see the source of the gift which means a statement from the person giving you the funds.

5. Loan – You can use borrowed funds for your down payment through certain lenders. They will need to verify the terms of the loan if it is new to make sure you can afford both it and your mortgage.

6. Credit Card/Line of Credit – This is similar to the loan as above but in this case you usually only have to prove you can afford the payments for both.

7. Sale of Asset – You can sell anything you own but make sure you document it properly. Bill of sale, copy of the cheque and proof it has been deposited to your account.

8. Gifted Equity – If you are purchasing the home of a family member and they wish to, they can gift you the equity in the home and this can be used as the down payment.

9. Inheritance – This is usually verified via the documents form the lawyer with corresponding deposit to your account

Sometimes I (and my colleagues at Dominion Lending Centres) get questions about rare occurrences such as a lotto win. Even in this case, which I have actually seen, there is a paper trail.

So called mattress money is no longer acceptable unless you can show you have held it in a traditional account for the 90 days.

Banks and mortgage lenders are stuck abiding by the rules which mean that so are we all.

28 Jul



Posted by: Mike Hattim

1. Cash back at closing, while not illegal they lender will usually reduce the mortgage by that amount.

2. Furniture included in the contract, lenders consider this to have a value and if it is zero then it needs to state that in writing. Better yet have the seller and buyer write it in a separate agreement.

3. Changes after the inspection will need to be addressed after the fact and any rebate will adjust the mortgage down usually.

4. Handy Man Special, this one sets off all kinds of alarms and usually means a full appraisal to see what shape the house is actually in at that time.

5. Anything that sounds like illegal activity has taken place on the property, grow op, meth den and lately we had one that had been the scene of a murder. All of these are considered to have an effect on the potential value.

6. Size of a property can affect the sale, houses under 700 sq ft have only a few lenders who will consider them.

7. The appraisal itself can set off a lot of red flags, signs of water damage or the house in disarray can lead lenders to back away. Especially in times when there are down turns in the market.

8. Change in employment during the process is never a good thing to have happen. This can actually cause the deal to stop.

9. Change in debt, better to not have any new debt show up as lender can check your credit again right up until the day of possession.

10. And last but not least the down payment needs to be in place at least ten days before possession and proven to the lender by ways of proof of savings.

At Dominion Lending Centres, we give you the advice you need to secure the right mortgage for your unique needs.

27 Jul



Posted by: Mike Hattim

Chances are, you’ve seen real estate listings that end with terms like, “as-is, where-is” or “court ordered sale” or even “offers subject to court approval” and wondered if the listing prices were real. Or even wondered if you should be looking at foreclosed properties in order to make or save a buck.

My advice to you is to run the other direction as fast as you can.

Let’s begin with the foreclosed property sales process to see why:

In B.C., the process of taking possession of a property in default and then reselling it takes about a year, then another six months for the sale. During this time, the Mortgagor (the owners) can live in the property subject to only to allowing reasonable access to the realtor. They can live in the property without paying a penny against the mortgage, potentially to the final closing date.

Some, like the Smith family, who have fallen on hard times, treat this as an opportunity to get back on their feet and continue to take pride in their home and ensure that it stays in good shape.

Others, like the Jones family, have rented the property out since they bought it, haven’t maintained it, and now that they are in default, abandon any pretence of caring for the property.

After a year’s worth of legal action, the mortgagee (the bank or whatever financial institution the mortgage is with) meets with a judge and agrees on a price to list the property at. The Judge, who acts for the benefit of the mortgagee (the Smiths or the Joneses), insists that it be at the fair market value.

The property is then listed. It sits on the market for three to six months, the listing price drops regularly.

At some point, someone approaches the listing realtor with an offer. Because the place is listed “As-is, where-is”, all of the normal subjects and conditions have to be removed before the offer is represented. There is no allowance for financing, inspection and remedying existing problems. Even the normal disclosure statement will not be provided.

It’s entirely up to you to have all your ducks in a row (and theirs as well) prior to submitting an offer.

Once the offer is agreed upon by the bank, the listing realtor takes the offer to court for approval. If your realtor is smart and experienced, you tag along. Once in court, the offer is presented to the master for review. If anyone else has been interested in the property, they now take the opportunity to come in with a competing, sealed bid on the property. You will be given an opportunity to counter, but its basically guesswork as to how much to bid.

The successful bidder is now instructed to close within a very short period of time.

Because the bank are selling the property under a legal order rather than as an owner and because you are buying “as-is, where-is”, they cannot be held accountable for any damage incurred between your last inspection and the possession date. They will make every effort to prevent it, but what if the Jones family, angry at what’s happened, entered the property and trash the place, or remove all the appliances and fixtures for their next rental property?

Remember there are no subjects on your offer – you can’t cancel it no matter what. Then there are the clean up and fix up costs which you and you alone are on the hook for.

In the end, buying a foreclosed property may end up costing you more than buying the property for sale next door to it that’s move in ready.

Still not convinced? Still want to give it a try?

Here’s some advice on going ahead:

-Find the most experienced realtor you can and stick to him or her like glue. This is not a task for your Uncle Manny, no matter what a great guy he is. There are about a dozen or so realtors (B.C. again) who specialize in selling foreclosed properties. Someone like that who has handled dozens or even hundreds of foreclosure sales can provide valuable service in ensuring the transactions flow smoothly.

-Find your financing before you start looking. In terms of financing, the best (and possibly only) terms you will get will be subject to less than 65% loan to value. Make sure you have easy access to the 35% cash commitment ready.

-Have lots of experience in the building trades or have experienced family or a friend who can come with you on the walk through. Nothing says buyer’s remorse quite like the crack in the foundation you failed to notice on first look or underestimating the clean up costs by $100,000.

-Find a qualified inspector with a good reputation and when you’ve found a property, pay him well to tell you what’s good and bad.

-If you’re looking at a condo with a special assessment due and the bank says they’ll pay the special assessment, remember they’ll only pay that one. I guarantee you there will be a second one, which you will need to factor into your costs.

-If you are wanting to buy a foreclosed grow op, make sure the damage has been remediated and a clearance certificate has been issued. No one will finance an unremediated one! Note, there are only about three lenders who will finance one with a clearance certificate.

-Don’t think you can shortcut the process by contacting lenders directly. Remember, the decision maker is the Court’s Master, not the bank or credit union.

Still Interested? Really? Call or email a mortgage professional at Dominion Lending Centres!

26 Jul



Posted by: Mike Hattim

Aside from paying a regular monthly mortgage payment there are other choices you’ll be presented with when approved for a mortgage. This article will explain the differences and benefits of changing your payment schedule.

The goal is to pay down your mortgage as quickly as possible and save on interest. The longer it takes to pay down the more interest you’ll end up paying in the end. You’ll soon discover how choosing an accelerated payment is the best way to go.

Typical mortgage re-payment options:

Monthly: Your typical payment. With this option your payment will be the least amount and the mortgage will be re-paid the slowest. This may be more comfortable for some people as its only one payment a month to think about and plan for.

Bi-Weekly: Your 12 Monthly payments divided by 26. You would pay a payment every 2 weeks for a total of 26 payments per year.

Accelerated Bi-weekly: Your monthly payment divided by 2. This way you end up paying 2 extra payments a year the same as paying 13 monthly payments per annum.

Semi-Monthly: Making payments twice a month for a total of 24 payments a year. This will not help to pay your mortgage off any sooner than regular monthly payments.

Weekly: Taking your monthly payments for the year and dividing by 52 weeks. This will not pay down your mortgage any sooner.

Accelerated Weekly: Taking your monthly payment and dividing it by 4. You’ll end up paying the equivalent of 13 monthly payments in one year.

Here are some examples using a $250,000 mortgage at 2.44% over 5 year term, compounding semi-annually with a 25 year amortization.

You can see how choosing the accelerated option pays your balance down a lot faster than regular payments.

Payment Matters

If you would like more information on how you can save on your mortgage payments, contact a mortgage professional at Dominion Lending Centres.

25 Jul



Posted by: Mike Hattim

There are great advantages to having business for self. There are many extremely successful business owners that live great lifestyles but don’t have to pay for medical, all because they have great tax write-offs that bring their income down to a low tax bracket. The other side of this is that these great benefits actually make these same business owners work hard to qualify for a mortgage, all because their income is significantly reduced on paper. These business owners know that there is advanced planning involved in being able to qualify for conventional financing.

According to Statistics Canada, in 2015 there were about 2.7 million people self-employed in Canada which is about 14% of the total population of the country. These statistics reflect people that are continuing on in maintaining a significant lifestyle financed by self-employment and being able to be counted as such. In other words, being self-employed is a viable way of making income. It just doesn’t fit very well in the conventional lending “box”.

In order to fit in the conventional lending “box”, there is a measure that lenders require that each mortgagee(s) (the person(s) applying for the mortgage) must meet. Some of the documents that self-employed have to provide for the lender are two most recent years of tax returns that don’t always accurately reflect the actual take-home that a self-employed person has. Tax deductions related to business often reflect meals to rental space to credit card interest, etc. The result is that the income the self-employed business owner shows on their tax return is a significantly lower figure than what they actually take home. However, the “box” requires that tax returns show the required income to justify the mortgage.

So, how does one show enough income when they are self-employed? The following points are suggestions on strategies on how to plan ahead and be prepared when you, as someone who is self-employed, are ready to move forward in arranging a mortgage for property purchase.

  • The easiest way to plan is to write off fewer expenses in the two years leading up to the property purchase. Yes, this means you will pay more personal taxes. However, your income will be higher which will easily qualify you for the mortgage amount that you are looking for.
  • Set your finances up through a certified accountant. Many lenders want to see self-employed income submitted through a professional rather than doing it yourself. The truth is that the time that you spend doing your own taxes will not be as efficient both financially and time wise as a professional. A certified accountant knows what to look for and has enough experience to understand the tax implications. Make sure you discuss with them what your goals are so that they can set up your taxes appropriately.
  • Choose your timing carefully. If you are leaving on an extended holiday or sabbatical within the two years previous to purchasing, your two-year average income is not going to be great. Take all the time off that you want AFTER your purchase. Plan your timeline with INCOME in mind.
  • Ask your Mortgage Broker about STATED INCOME. There are options with some lenders to State your income. This is based on you being in the same profession for at least two years previous to being self-employed. The lender looks at the industry and researches the mean income of someone in that same profession within a reasonable amount of time. STATED INCOME is a complicated approach to showing income. However, your Dominion Lending Centres Mortgage Professional will know what questions to ask and how to negotiate this kind of proof of income. Documents such as bank statements, showing consistent deposits, will be requested by the lender.
  • BANKRUPTCY. Although some business people see bankruptcy as a viable option to get out of a bad deal and regroup, lenders generally do not like bankruptcy. Having said that, some lenders will overlook this if there has been consistent and excellent credit since the time of bankruptcy and you have been fully discharged from the bankruptcy for a specific time period. Make sure you keep ALL Bankruptcy papers easily available along with your discharge papers.
  • Be prepared for higher interest rates. Lenders offer discounted rates to those that fit in the “box”. Those that are not conventional are seen as a risk and, therefore, are applied to a higher interest rate. There also could be lender fees attached to the mortgage.
  • Offer a larger down payment. Lenders are somewhat handcuffed to the insurer when there is less than 20% down payment on a property purchase. But if you offer more than 20% down payment, depending on the lender, their flexibility increases and it is up to the lender or even the branch if they want to take you on as a client.
  • As a last resort, you can do private financing. Even though it is an expensive option, it could result in the mortgage you are looking for. Rates are higher and there will be lender/brokerage fees. However, you could be in a private mortgage for 12 months or even less, whereby giving yourself time to improve your credit (if need be) or topping off a two year self-employed period to set yourself up to show STATED INCOME to the lender. The whole point of private financing is to use it as a short term solution for a long term plan.

Being self-employed does not mean that you have to show enough income on your T1 General in order to qualify for a mortgage. There are many factors involved in showing income when you are self-employed. And every lender has different guidelines as to how they view self-employment. If you are self-employed, plan accordingly and make sure you are well set up to show that the lender that you are a desirable candidate for a mortgage.

22 Jul



Posted by: Mike Hattim

With plenty of activity in the real estate market and more new building slated over the next few years, here is my list of “Things to Consider When Buying in a New Development”.


Some buyers attend the display suite and consider a purchase directly with the developer sales person or the developers Realtor. Regardless of which kind of property you choose to purchase – new or existing – I always suggest you have a Realtor represent you. I have seen contracts where the buyer has not reviewed the details properly and they are not fully informed before they sign. The developer’s agent or Realtor is acting on behalf of their client – the seller. You should also have your own representation.

Interest Rates

If you are buying a home more than a year or more before completion, you may not know your actual fixed costs for the mortgage until well after you have signed your purchase agreement and paid your deposits. Depending on the lender and timeline, your costs may be unclear for several months. Even if you have a rate hold – things can change along the way with financing rules or the market. I always keep in touch with my clients and within a few months of completion we revisit the overall plan and make some decisions. Your down payment may need to change, the property value may shift or you may have experienced a life changing event (please don’t quit your job). Remember: Keep your mortgage broker in the loop.

Goods and Services Tax (GST)

When you buy a newly built home pay special attention to the contract price. In Canada Goods and Services Tax (GST) of 5% is payable on the purchase of a new home. In many cases the purchase price is set excluding GST so you need to add that tax amount to determine the total purchase price. If the home price is under $450,000 and will be your primary residence, you are eligible to receive a rebate equivalent to 36% of the GST. The rebate will be deducted and the new purchase price will be set Net of GST. There are many online calculators to determine this number and it should also be clear on the purchase agreement. Your mortgage broker will also calculate to confirm. For example a $400,000 purchase price excluding GST will result in an actual purchase price of $416,850. ($20,000 in GST minus the rebate of $3150). A purchase price of $500,000 excluding GST will result in an actual purchase price of $525,000 ($25,000 GST and no rebate).

Allowances and Discounts

In some cases you will have the option to upgrade the home with higher quality items such as flooring or a basement. These items can be included in the purchase price with no additional cost. The agreement will clearly outline the details and no cost will be associated for these items. However, if the contract states there was an allowance as a credit with a cost associated this will be considered a buyer credit and the amount on the contract will be deducted from the purchase price by the financial institution. There will be no financing on these items and the buyer will be responsible for the additional cost. This is common when buyers want to include furnishings such as in a display home. This can be a surprise to buyers as they are not fully clear on the purchase price and what is really included. It is important to review the contract closely with your own buying agent (Realtor) and if any financing questions arise – with your mortgage broker – to ensure you know your options.

Property Taxes

When a developer applies to the local city for a building permit the city will set the municipal taxes for the entire development. Once the developer is near completion and applies to the city for occupancy permits or submits the strata plan (for condo developments) it can still take some time for the city to determine the property tax for each home or condo unit. More and more lenders are using a percentage of the purchase price to determine the property taxes at the time of application unless confirmation of taxes can be provided by the city. In some cases this can be .5%-1.75% of the purchase price which can make a difference to qualify for financing. Your Dominion Lending Centres mortgage broker can review options with you to select the best overall financing solution for your purchase and avoid delays in securing an approval.

Strata fees – start low and grow

Since the strata plan on a new condo development isn’t in place when you make an offer to purchase a new home the strata fees on the purchase agreement will be set low. I recently had a client purchase a condo for $750K and the strata fees were under $170 per month. My clients understood this strata fee will increase to a higher level once the operating budget is set by the strata council and they should set their personal budget accordingly to expect an increase. For more details on the process and to understand the responsibilities of the developer, the strata corporation and the new buyer, click here.


When a developer sells their houses or condo units well in advance of completion some original buyers may decide not to complete on the purchase and choose to assign the property to a new buyer. In this case there may be a lower or higher new purchase price. If there is a lower price the GST on the original price will apply. If the price is higher the GST on the original purchase price will apply. The property purchase transfer tax will apply to the new purchase price. The final property purchase transfer tax will be determined depending on the details of the transfer and the value of the property within limits for exemption is typically set by provincial government. For financing purposes, not all lenders will consider an assignment as the new purchase contract is between the original buyer and the new buyer and not with the developer. Some lenders will only consider the original price and the new buyer will have to pay the difference between the two amounts as the down payment to complete the purchase. Lenders who consider the new price will require a full appraisal to confirm the current value of the property. They will also need the original contract in addition to the new purchase contract and want to know details on the relationship between the seller and the buyer. There are many things to consider when you purchase a new home. Always consult your professional advisers, including your Realtor, Mortgage Broker, Financial Planner, Accountant and Lawyer to ensure the purchase helps to meet your lifestyle and financial goals.


20 Jul



Posted by: Mike Hattim

As a business owner, you understand the power of financial leverage. It is especially important for companies that require significant investment in equipment, raw materials and inventory before they can begin generating revenue. A key to success is to spend as little out of pocket as possible on these necessities in order to preserve cash flow for operations. When used properly, financial leverage helps companies grow faster.

Two particular kinds of leverage can be especially beneficial: Leasing and Factoring. When used together, leasing and factoring provide a powerful one-two commercial financing punch.

All businesses are built on cash flow and leverage. It does not make sense to use all your cash to pay upfront for something that’s going to generate income at a future date. Also, if you spend all your cash on equipment, there’s nothing left for materials, inventory, payroll, overhead, etc. Leasing helps preserve cash and manage it more effectively.

Like leasing, factoring can be an important cash flow management tool. In the same way that it’s usually not smart to lay out cash to buy equipment, it often doesn’t make sense to carry accounts receivable, especially for slow-paying customers that may not pay for 60 to 90 days or more. By factoring your AR, you can accelerate cash flow in order to take on even more business.

The bottom line is it can be much easier to manage your business financially by using leasing and factoring together. As a business owner, you can now focus on sales and margin. The cost to lease and operate equipment is fixed each month as is the cost to factor, so it’s easier to set prices that ensure the level of profitability desired. Meanwhile, you’ve created a scenario where you can keep growing as fast as you can sell products. Need a new machine? No problem, Lease it. Need to accelerate cash flow? No problem, factor.

In today’s fast-paced business environment, where conditions change on a dime and opportunities often arise with little or no warning, companies must be nimble and flexible. Using factoring and leasing together can provide a powerful one-two commercial punch needed to succeed. By using leasing and factoring together, you can turn a profitable opportunity into reality.

For information on how you can grow your business through leasing and factoring, please contact your locate Dominion Lending Centres office.

19 Jul



Posted by: Mike Hattim

This is the great debate around many household dinner tables nowadays: improve or move? With all the attention the real estate market is getting these days in the local and national media, I’m surprised everybody isn’t cashing in, selling and moving. Everybody who owns real estate is holding their very own lottery ticket, each with a slightly different purse.

Sell your home for lots of cash and buy new…what could be easier! There is definitely something to be said about buying new and ‘shiny’ with a warranty. It’s glamorous, it’s easy and it makes for great Facebook posts.

Heck, on the flipside, posting before-and-after pictures of a renovation could be more impactful. You could even use the platform as a confirmation tool with picking wall colors, countertop material or even layout.

You don’t have to sell to win the lottery. The equity in your home could also be viewed as the lottery proceeds. In my opinion is there isn’t enough thought put into staying in the current home and improving the living space. Bear in mind, there are valid reasons why you have lived there so long: an established network of friends, close to school, convenience for day-to-day amenities, access to work, beautiful big back yard (new homes have small yards nowadays), family activities, kids’ sporting programs…the reasons are endless to stay…Bu-u-u-ut one could say there are many reasons for moving too.

My only intention for this blog post is to create questions and have you think, is improving or moving the best option? Don’t always jump at the dangling carrot; there could be other options.

One could argue that deciding to sell and move is the easier of the two. All that you need to do is to call your trusted Realtor and suddenly within 4 to 9 days your home is sold. But is that the more financially sound choice?

Here are the costs to consider when selling your home.

* Approx Realtor fees: 3.50% on the 1st $100K, 1.15% on the balance
* Potential mortgage penalty: Based on the balance, or it can be ported
* Lawyer fees: $2,000 (sell and buy)
* Property repairs: TBD; major repairs or just minor touch ups?
* Movers: Professional movers $2,500 or friends/family
* Inspection: $400-500 buying new property
* Appraisal: $300 buying new property with 20% down or more
* Property Transfer Tax: 1% on the first $200K & 2% on the remaining bal. (purchase)
* Mortgage payment: Difference between mortgage payments (old and new) is a cost
* GST: Are you buying a brand new home?

The other side to the equation is staying in your current home and making it better; more livable, shiny, new, fresh…Facebook worthy!

Here are the costs to consider when improving or renovating your home. This scenario makes the assumption that you will be accessing your equity to improve your home.

* Appraisal: $300; to determine market value for equity leveraging
* Mortgage payment: What is the overall increase per month with the additional funds?
* Permits/Plans: Are renos structure or surface? New floors, new paint etc…
* Product to be used: Cost to purchase new flooring, paint etc…
* Demolition: Cost of disposing of the materials correctly.
* Installation: Can you do it or do you need to hire a contractor?

Both scenarios create disruptions in life. Which one makes more sense for you and your family? Moving can have long-term effects, whereas improving is a short-term impact with living in a construction zone.

Either of the options is a great journey. Don’t focus on the destination. Make sure you consult with your Dominion Lending Centres Mortgage Broker first to consider all the costs and qualifying ramifications. The lending landscape is constantly changing; don’t assume you will qualify for a mortgage today because you qualified for one 5, 10, 15, 20…years ago.

18 Jul



Posted by: Mike Hattim

One cost that can be overlooked by home buyers is mortgage default insurance.

So, what exactly is mortgage default insurance and why do you need it?

If you’re buying an owner-occupied home with less than 20% down payment, you are required to purchase mortgage default insurance in order to arrange your financing.  When buying a rental property, some lenders require you to purchase this insurance if you put down less than 35% towards your purchase.

As real estate values in Metro Vancouver continue to soar, many home buyers, especially first time home buyers, often have less than 20% of the purchase price available as a down payment.  The average price of a new home is now well above $500,000 meaning a 20% down payment can easily exceed $100,000.  This is a lot of money for most people and it’s understandable why many fall short of this 20% down payment.

Conventional vs. High-Ratio Mortgage

Borrowers who have a payment of 20% qualify for conventional mortgage financing.  For your lender this means the property has sufficient equity to protect the lender from any shortfall should you, the borrower, default on your mortgage.  Having a higher down payment also means you have more “skin in the game”, making it less likely you’d default and walk away.

A high-ratio mortgage means the borrower has anywhere from 5% – 19.99% towards their down payment.  Financing can still be obtained but in this case you will be required to purchase mortgage default insurance.  The higher loan-to-value (LTV) percentage of a high-ratio mortgage means you have less equity at stake and thus a higher potential of default.

The lender wants to protect their investment and they do this through mortgage default insurance.  This is an additional cost to the borrower but it also makes it possible for those with limited savings, particularly first time homebuyers, to get into the market sooner.

Mortgage Default Insurance Providers

There are three major insurers in Canada.  The Canadian Mortgage & Housing Corporation (CMHC) is a Crown Corporation and the largest provider of mortgage default insurance in Canada. Genworth Canada and Canada Guaranty also provide this type of insurance to the lenders.

Your lender or financial institution will arrange and pay for your insurance, but this cost is typically passed on to the borrower and is incorporated directly into your mortgage payments.   Insurance premiums are tiered and based on the amount borrowed and the size of your down payment.

To see a detailed list of premiums visit CMHC’s site to see how much it costs.

Thanks for reading and feel free to contact Dominion Lending Centres with any questions.

15 Jul



Posted by: Mike Hattim

1. Make a double mortgage payment whenever you can. Doing this once a year can shave over 4 years off the mortgage! Sometimes you can skip a payment later on too…if you really, really need to. Try not to. If your payment is $2,000 a month, four years of no payments is $96,000!!

2. Increase frequency of payment. For Example going from monthly to bi-weekly accelerated can shave over three years off your mortgage! $2,000, three years of no payments is $72,000!!

3. Increase your payment. For example a one-time 10% increase can shave 4 years off the mortgage. That’s $96,000! Imagine if you bumped the payment 10% every year from the get go!!! You would be mortgage free in 13 years! Start to finish! Can’t do it? How about 5% every year….you would be mortgage free in 18 years! How about increasing the payment by the amount of your annual raise?

4. Lump sum payments…same idea…mortgage is gone way faster! Even just one payment a year equivalent to 1 monthly payment will give you similar results as #2 above! How about using your annual work bonus?

5. Renegotiate whenever rates drop to save interest and pay mortgage faster! Generally a good idea however *Caution* get independent professional advice (a cost benefit analysis) to make sure it makes sense for you at that time. I can help. A 1% reduction on a $300,000 mortgage will save $250 a month…times 5 years…that’s $15,000!!

6. Keep your credit rating high for best rate. Always pay on time. Never let payments slip past their due date. Always keep balances low in relation to credit limits on credit cards, lines of credit, etc. 50% or less is best even if you pay the balances in full every month. What generally reports to the credit bureau is the statement balance each month. So if your credit limit is $3000 and you are running $3000 a month through the card each month (to collect all those points you never spend or can’t use in blackout periods) and paying in full, it will look like you are maxing out your credit limit and your credit score will drop accordingly.

7. Increase your mortgage! Yeah I know sounds backwards! Do it to roll in your credit cards, line of credit, car loan etc for a better rate and a set payment plan. Oh you say you don’t want to extend the repayment period of that stuff by rolling it into your mortgage or you have a low or promo rate credit card (those never end well) I agree! Then keep the total payment amount the same but pay it in one neat monthly payment to the increased mortgage.

8. Make an RRSP contribution and use the refund to pay down your mortgage.

9. Go variable rate with your mortgage but keep payments as if fixed rate. Variable rates usually win out over fixed rates. By paying a higher payment you will pay off the mortgage faster. It’s also a buffer in case the rate rises above the fixed rate for short periods of time. *Caution* variable rates are not for everyone. Get independent professional advice to find out what is best for you. I can help!

10. Take your mortgage with you when you change properties to avoid penalty or higher rate on a new mortgage. This is called “porting”. Make sure that your mortgage has this feature. It is not widely known and could save you a ton of dough.

11. Set up auto savings every paycheque, even $10, when it reaches the amount of one mortgage payment, apply it to the mortgage. This concept goes nicely with #4 above.

12. Unhook from the money drip…stop paying with your fancy points credit or debit card. Way too easy to overspend! Go old school, go off the grid…PAY CASH, it works!

13. Don’t ever buy on layaway, you know, six months don’t pay schemes. You think…No problem I’ll just pay it in six months, it will be okay. Yeah right!

14. Downsize your house. Two good friends and clients of mine, having followed many of the tips here, are in great shape except they have a six bedroom house! Two people, six bed house – go figure! They are nearly debt free so no biggy, but can you say the same? Circumstances change, make the adjustments along the way!

15. Don’t want to move? Convert the basement/rooms to rental and use the income to pay down debt.

16. Convert your mortgage to tax deductible. If you are self-employed, own rental property or have investments, this is likely possible. I won’t go into details here, just ask me how.

17. Have a payment priority.

18. Pay off the highest interest rate first.

19. If you have tax deductible loans, pay them off last, slowest. Pay the non-tax deductible loans first and fastest.

20. Pay off ugly debt first. Stuff like credit card purchases.

21. Payoff bad debt next. Stuff like car loans, boat loans. Things that depreciate in value.

22. Pay off good debt (or shall I say “not so bad debt”) last. Stuff like mortgages, investment loans. Things that hopefully appreciate in value.

23. Buying a car? Finance it if you have to, don’t lease! *Exception* If you are self-employed it might make sense.

24. You have $20,000 in a secret bank account for a rainy day fund and $20,000 owing on a line of credit. Seriously? The bank account is paying you next to nothing (which is taxable income to boot) and the line of credit rate is way higher (and not tax deductible). You know what to do. You can keep the line of credit open and on standby for rainy day funds. Make it the secret line of credit that you have but never use.

25. Give your Banker more money. No really. Keep enough in your chequing account to meet the minimum requirement to waive your service charges. My bank charges $10 a month for 25 transactions and nothing, zero, zilch, zip if I keep $2,500 in the account. Let’s see $10 x 12 is $120 a year to pay off debt. I’d have to earn 5% with the $2,500 in my savings account to come out ahead. No brainer here. Oh yeah, if you need more than 25 transactions a month…see #12 above.

26. #26? BONUS TIP and MOST IMPORTANT. Let’s face it, you’re not the Government and you’re not a Bank, you can’t run deficits forever and you won’t get a bailout….stop procrastinating already! See 1 through 24 above and take action now!

Sidenote: *Caution* beware of some too good to be true ultra-low rate mortgages. These “no frills” mortgages are often loaded with restrictions like pre-payment limitations, fully-closed terms, stripped-out features, or unusual penalties. You really need to compare product to product. If you’re not looking at what you’re giving up, you may regret it in the future. This alone could prevent you from taking advantage of tips #1, 2, 3, 4, 5, 7, 8, 9, 10, 14, 16 and 22!