3 Dec

Pride in ownership can pay off

General

Posted by: Mike Hattim

Any prospective homebuyer knows this situation well. You’re set up for a viewing but when you get there the condition is less than ideal. Maybe the toilets are dirty, or the cluttered kitchen is hiding its full potential. Immediately, you’re turned off and you’ve moved on to another property.

For the owner, that’s sale opportunity lost.

In a lot cases, buyers can’t really see beyond what’s in front of them. A messy place not only makes your home harder to see, it can cost you money.

Depending on who you talk to in the real estate industry, a messy home compared to a clean house could fetch up to a $20,000 swing.

That’s a lot of money for a weekend of washing walls, decluttering, taking the trash out, running the vacuum and putting some elbow grease.

There are few simple things during this time of year that can help make your home stand out above the rest.

1) While winter can be lovely, it can also get a little messy. Especially around the yard with all those snowy and muddy days. If you want to boost the curb appeal before prospective buyers step foot in your home, you’ll want to make sure you clean your walkways. Don’t be afraid to take advantage of a dry day to keep your garden looking presentable. A little maintenance goes a long way!

2) Winter is all about colour. It’s time to put away all those bright colours for the more earthy tones of

the season. If you’re not sure, those are browns, greys, orange and greens. Change your bed spreads, pillows and rugs to match the season. It doesn’t hurt to throw up a fresh coat of paint or an accent wall in an olive or burnt orange hue.

3) Winter also seems to have a smell. And you can recreate that in your home. The fresh scent of cinnamon or ginger are perfect for the season. You don’t want to go overboard, but nothing feels more welcoming then a home that smells of love and food. You can also decorate your home with the fruit of the season in a decorative bowl. It doesn’t even have to be in the kitchen. It can be right at the front entrance.

4) The change of season is a great time to make sure your maintenance is up to date. For the exterior, that means cleaning your gutters, windows and deck. If you have a pool, making sure it’s properly covered and tucked away for the winter. Inside, make sure the furnace and all your electrical components are working including your appliances. Nothing turns off a buyer more than looking at a home in disrepair.

5) The days are short and the weather tends to be a little unpredictable, so you’ll want to ensure your home is bright. If you’ve got some burned out lights both inside and out, replace them. And before a buyer comes in for showing, turn on all your lights. Keep your blinds and curtains open to let in as much light.

If you’re about to put your prized possession on the market, treat it like one and take pride in ownership.

3 Dec

The great debate: Gen-x Vs. Millennial

General

Posted by: Mike Hattim

If you’ve ever been around a Gen-Xer and Millennial together, you’ve probably heard this debate before: Who had it easier trying to get into the housing market?

Undoubtedly, the millennial will claim there is no struggle greater than the one they currently face, while the Gen-Xer will tell their younger cohort that they are spoiled and don’t understand how hard it was to adult in the 90s.

So, are millennials better or worse off than Gen-Xers at the same age?

A report earlier this year from Stats Canada set out to settle the debate with some interesting findings.

For starters, the study found on average young millennials earned more than young Gen-Xers. Specifically, Gen-Xers between the age of 25 and 34 in 1999 earned on average $51,000 annually compared to millennials who earned $66,500 in 2016.

The study found that millennials in 2016 also had higher assets and net worth then their grunge-era counterparts in 1999 at $154,000 to just $76,700 respectively.

However, millennials were found to be more indebted, with a debt-to-after-tax-ratio at 216 per cent compared to 125 per cent for Gen-Xers.

The study also found millennials are taking on larger mortgages then previous generations. The median mortgage debt on the principal

residences of a millennial between the ages of 30 and 34 in 2016 was $218,000 compared to $117,500 for Gen-Xers in 1999.

Interestingly, though their median net worth is higher, there are greater differences in economic well-being among millennials, specifically, millennials in the top 10 per cent held 55 per cent of all total net worth accumulated by their generation.

The study also found that millennials are entering the housing market at similar rates as previous young generations.

So, who can claim the biggest hardship to getting into market? That would depend on how you want to spin the facts. Instead, maybe the key is in the finding that millennials are getting into the market at the same level as their parents and grandparents did before them.

Of course, there have been a number of market factors and challenges each generation has had to face. Consider late boomers trying to get into the housing market with interest rates at nearly 20 per cent in the early 80s, or the recession and economic malaise of the 1990s.

At the end of the day, and this study proves it, young people in every generation have found a way to look past the challenges in their face, and fulfill the dream of homeownership. And if you’re a young person ready to buy or soon to be, a mortgage broker is your best bet to help get you there.

11 Nov

Homeowner Tips – Let the heat reach you.

General

Posted by: Mike Hattim

Dust or vacuum radiators, baseboard heaters and furnace duct openings often and keep them free from obstructions such as furniture, carpets and drapes.

Replace/Clean Furnace Filters:
Check and clean or replace furnace air filters each month during the heating season. Ventilation system filters, such as those for heat recovery ventilators, should be checked every two months.

8 Nov

Using the interest on a second mortgage as a tax write-off

General

Posted by: Mike Hattim

We all know owning a second rental property is a great way to invest and build your wealth portfolio. Unfortunately, a lot of homeowners sitting on plenty of equity are afraid to use that money for a downpayment to purchase a rental or investment property. The idea of a second or third mortgage tends to spook people away. While there are always financial risks in any investment, there’s a little-known incentive that might make you take the leap from homeowner to real estate mogul.

You can expense the interest on a mortgage as long as the INTENT for the funds are used on an investment property.

Thus, when you’re refinancing or taking equity, you can pull money from your existing owner-occupied home and use the funds on a rental property. Now the interest on the money you pulled out (and only that money, not any existing money) can be written off or expensed against your rental income.

You could expense your rental income down to a negative which in turn lowers your overall taxable income. Putting even more money back into your pocket.

It might only lead to a savings of a few hundred dollars a month, but not many people know it’s an option and is an extra incentive to consider.

You’ll definitely want to talk to your accountant and your mortgage broker to get more details.

There are also a few things to consider if you’re going down this route for an investment property.

You must claim your rental income on your tax return. It’s tax evasion if you don’t.

Mortgage rates are also typically cheaper for owner-occupied homes compared to rental or investment homes. Don’t be tempted to tell your broker or lender the house use will be owner occupied when it will actually be a rental because you want the lower rate. That is mortgage fraud. You could get charged and or the lender could call the balance.

While taking on a second or third mortgage might seem a little daunting at, there are some options available to save you money and your mortgage broker can help.

7 Nov

Should you go fixed or go variable?

General

Posted by: Mike Hattim

It’s the first and only thing anyone usually asks when you talk about your mortgage: What’s your rate? While everyone can recall their rate off the top of their head, it’s the only detail of the mortgage they remember or care to know. Though the rate is obviously important, your mortgage is so much more than a rate, and if you’re not paying close attention, it can cost you money.

Before we dive deeper, let’s talk fixed rate vs. a variable rate and which one is better. Well, that all depends. First-time homebuyers and older homebuyers typically love the stability of a fixed rate. Keep in mind, seven-in-ten fixed mortgages are broken before the term ends. A fixed rate for five years is fine as long as you stick with a lender that’s going to calculate the penalty if you break your mortgage on the contract rate versus the Benchmark rate. That’s because the Benchmark rate, or as it’s sometimes called the Bank of Canada rate, is higher than your contract rate. Typically a credit union or monoline is the right choice for this mortgage.

Variable rates are great with any lender as it just comes down to who offers the best discounted variable rate. There’s a pretty simple way to decide whether a variable or fixed makes sense, based on rate alone. It’s called the 50-basis point rule.

Basically, take the best fixed rate out there and the best variable rate out there and subtract the two. If the number is less than 50 basis points, there is strong argument to go for a fixed rate. However, if the difference is more than 50 basis points, there’s a solid case to go with a variable.

Pretty simple right? What’s not as simple is the personality of your mortgage. It may not seem like it, but yes, your mortgage has a personality. Think of it like a shiny sports car. It may look amazing when it rolls off the lot, but as the years go on, does it meet your daily needs? Besides your mortgage rate, you need to consider portability, and whether it can be blended and extended and how penalties for breaking the mortgage are calculated. When people start looking for a mortgage, they’re usually getting advice from friends or their parents, and the only question they’re asking is, what’s the rate? But if they don’t know the details of the mortgage like the ones listed above, you can tell them to stick their head in the sand, because they’re giving you bad advice. And if a mortgage broker is only fixated on the rate, you’re working with the wrong one.

Life happens and our circumstances change. You really want to make sure the mortgage will work for you in the future before you sign on the dotted line.

29 Oct

NEED AN APPRAISAL – 7½ TIPS FOR SUCCESS

General

Posted by: Mike Hattim

Do you need to get a current value of your property? Then you are going to need an appraisal.

Banks and other lending institutions want to know the “current” market value of your home before they consider loaning money on the property. An appraiser checks the general condition of your home and compares your home to other similar homes which have recently sold in order to define a comparable market value for your home.

Here are 7½ tips that can help you get top current market value.

Short version – Prepare your home as if it was going to be sold!!

Long version… If a picture is worth a thousand words, think what kind of story the pictures from your home are telling?

In the world of mortgages, lenders seldom set foot on the property before making a loan decision.

Instead, they rely on their trusted list of approved appraisers. All a lender usually gets is the appraiser’s pictures of your property and their comments about how your home was appraised.

Tip #1 – Clean up. The appraiser is basing the value of your property on how good it looks. Before the appraisal, prepare your home as if you’re selling it. Clean and declutter every room, vacuum, and scrub. Do whatever you can to make your home as presentable as possible.
Tip #2 – Pay attention to curb appeal. An appraisal is all about first impressions. And the very first one the appraiser gets is when they walk up to your property. Spend an hour or two making sure the outside of your house, townhouse or condo is warm and welcoming.

Tip #3 – The appraiser must be able to see every room of the home, no exceptions. Refusal to allow an appraiser to see any room will be noted in the appraisal can be a game stopper. There are times when it is not appropriate for the appraiser to take pictures of certain things and appraisers and lenders understand this, but refusal to grant access could kill your deal.

Tip #4 – Make a list of upgrades and features. It’s important that the appraiser is made aware of any updates you’ve made, especially those which are hidden, like new plumbing and electrical. If possible, give the appraiser this list. That way they have a reference as to what has been updated and how recent or professional that work was done.

Tip #5 – If you need to spend to update, be prudent. Many people think “bathrooms and kitchens” are the answer for getting high prices on home value. They aren’t. First, consider that kitchen and bathroom remodels can be some of the priciest reno costs. For that reason, it may be more prudent to spend a bit of money, for just a bit of updating. Paint, new flooring, new light or plumbing fixtures don’t break the bank, but can provide a dramatic impact and improve your home’s value.

Tip #6 – You know your neighbourhood better than your appraiser does. Find out what similar homes in your neighbourhood have sold for. Your property might look like one down the street, but if you believe the value of your property is worth more, let them know why.

Tip #7 – Lock up your pets. I’m sure most appraisers like pets, but some may be put off by your cat rubbing against their leg or the dog barking or following them around.

Tip #7½ – One last tip – don’t annoy the appraiser with questions and comments and follow them around. Instead, simply be prepared to answer any of their questions and, if you do have concerns or queries, wait until they’ve completed their viewing of the property, then ask.

Mortgages are complicated, but they don’t have to be… Engage a Dominion Lending Centres mortgage expert!

By Kelly Hudson

24 Oct

WHAT THE ELECTION RESULTS MEAN FOR YOUR MORTGAGE

General

Posted by: Mike Hattim

With all the news we have seen on the election, I thought I would sum it up from a mortgage industry perspective.

What the liberal win means for your mortgage:

1. We will see the continuation of the First Time Home Buyers’ Incentive. Check out the link for more information at https://www.placetocallhome.ca/fthbi/first-time-homebuyer-incentive

2. Property Transfer Tax modifications were on the platform, so we will await the date that change is applicable.

3. Consumers will still be able to withdraw up to $35,000 from their RRSPs as part of the government’s Home Buyers’ plan.

4. Bank of Canada Rates may not decrease as expected this year – unless there is a significant downtown in the market suddenly- based on the snapshot of recent activity that doesn’t appear as likely. It certainly makes it easier for the lenders not to pass the decrease down the line to the consumer.

5. We will likely see a national housing tax implemented in addition to the provincial ones already in place.

For items 1, 2 & 5, here is a link. https://globalnews.ca/news/5893892/trudeau-liberals-first-time-homebuyers-program-expansion-campaign-promise/

It doesn’t appear we will see any of the changes to the stress test or amortization hoped for by many.

Stay tuned for more updates and what the BOC decides to do Oct. 30 and Dec. 4.

While the constant in our market will always be change, Dominion Lending Centres mortgage professionals are here at the frontlines to help you navigate the market to your advantage and save you money. Please reach out to us with any mortgage questions on how we can help you or those you care most about.

By Angela Calla

22 Oct

6 THINGS ALL CO-SIGNORS SHOULD CONSIDER

General

Posted by: Mike Hattim

Co-signing on a loan may seem like an easy way to help a loved one (child, family member, friend, etc. ) live out their dream of owning a home. In today’s market conditions, a co-signor can offer a solution to overcome the high market prices and stress testing measure. For example, if you have a damaged credit score, not enough income, or another reason that a lender will not approve the mortgage loan, a co-signor addition on the loan can satisfy the lenders needs and lessen the risk associated with the loan. However, as a co-signor there are considerations.

1. If you act as a co-signor or guarantor, you are entrusting your entire credit history to the borrowers. What this mean is that late payments on the loan will not only hurt them, but it will also impact you.

2. Understand your current situations—taxes, legal, and estate. Co-signing is a large obligation that could harm you financially if the primary borrowers cannot pay.

3. Try to understand, upfront, how many years the co-borrower agreement will be in place and know if you can make changes to things mid-term if the borrower becomes able to assume the original mortgage on their own.

4. Consider the implications this will have regarding your personal income taxes. You may have an obligation to pay capital gains taxes and we would highly recommend talking to an accountant prior to signing off.

5. Co-signors should seek independent legal advice to ensure they fully understand their rights, obligations and the implications. A lawyer can lay it out clearly for you as well as help to point out any things you should take note of.

6. Carefully think about the character and stability of the people that you are being asked to co-sign for. Do you trust them? Are you aware of their financial situation to some degree? Are you willing to put yourself at risk potentially to take on this responsibility? Another consideration is to think about your finances down the road and determine how much flexibility will be needed for yourself and your family too! If you have plans of your own that will require a loan, refinancing your home, etc. being a co-signor can have an impact.

Co-signing for a loan is a large responsibility but when it is set-up correctly and all options are considered, it can be an excellent way to help a family member, child, or friend reach their dream of homeownership. If you are considering being a co-signor or wondering if you will require a co-signor on your mortgage, reach out to a Dominion Lending Centres mortgage professional. We are always happy to answer any questions and guide you through processes like this.

By Geoff Lee

17 Oct

MORTGAGE RENEWALS WITH THE SAME LENDER ARE ON THE RISE, BUT SHOULD YOU JUST SIGN ON THE DOTTED LINE?

General

Posted by: Mike Hattim

If you’re in a mortgage that’s coming up for renewal in the coming months and you’re considering just staying with your current lender, you wouldn’t be alone.
According to the Canadian Mortgage and Housing Corporation’s (CMHC) Residential Mortgage Industry Report released in the summer, in 2018, the number of mortgage renewals with the same lender increased by 16 per cent over the previous year.

The report suggested one of the factors that may have contributed to large increases in loan renewals with the same institution are the tighter approval criteria. In other words, people are worried they may not qualify for a new mortgage if they switch lenders, so they’re staying put.
You’ll remember in the fall of 2017, OSFI, (the Office of Superintendent of Financial Institutions) the agency that regulates the financial industry, announced tighter rules on mortgages. The biggest change related to uninsured mortgages, or homebuyers with 20 per cent or more for a down payment. These people are now required to go through a “stress test” or qualify using a minimum qualifying rate.

The changes came a year after a similar stress test was introduced for insured mortgages.

If the tighter mortgage rules still have you stressed as you face a mortgage renewal, the CMHC report noted the approval rate for same lender renewals remained stable at 99 per cent. Renewals are not specifically subject to the new stress test and are more likely to meet current lender criteria, the reported noted.
So, does that mean you should just automatically renew your mortgage with the same lender when your term is up? Not necessarily. You need to reach out to a mortgage professional to get the best advice.

For starters, most lenders, especially the big banks, will send you a renewal letter when there’s about three months left on the term. Sometimes that letter could come with six months left. Typically, the lender will offer you a rate at that time and all you’ll have to do is sign at the bottom line to roll over your mortgage.

But beware, lenders often offer a higher rate than a new client because they’re hoping the ease of renewal will keep you from seeking out a new lender and lower rate.

In some cases, it may be best to just sign and roll over your mortgage. There are a few things to consider. If you decide to change lenders, you’ll basically have to go through an approval process again. That entails getting all your documents, lawyer’s fees and appraisals.

You’ll have to ask yourself, is it worth the effort to save a few basis points off your rate, or a few hundred dollars over a term to make the switch?
For some it won’t be. But, if a switch can lead to saving thousands of dollars, it would certainly be something to consider. While everyone’s situation is different, the larger the mortgage, the bigger the savings will be if you can find a lower rate.

Often, homeowners will just use a bank their parents recommend for their first mortgage. But they might find themselves not happy with the service or terms of the mortgage and may just want to switch to a different lender as the mortgage comes up for renewal.

If that’s a situation you find yourself in, you have options, and a Dominion Lending Centres mortgage broker can help you make the best decision.

By Jeremy Deutsch

15 Oct

BUILDING A REAL ESTATE PORTFOLIO

General

Posted by: Mike Hattim

More and more Canadians do not have a defined benefits pension plan. Companies are moving away from this model due to the expense of maintaining enough in the fund to pay out until the employee and survivors die. Those who are self employed also do not have pensions beside the Canadian Pension Plan.
What can you do if you fall into this category? How do you save enough to have a comfortable retirement? The answer is, build up your own investments through a real estate portfolio.

In order to purchase a revenue property you need 20% down payment . This can be a huge sum to save and you could get discouraged as you see property prices rising. There is a legal work around that is an open secret that realtors and other property investors have used for years.

Purchase a starter home with a 5% down payment. While you are living in the property, it is considered as your primary residence and any increase in value is tax free. Start from Day 1 to save for your next home. You may purchase a condo as the prices are usually less than most detached homes in Canadian cities. When you have saved 5% or if your present home has increased enough in value that you have more than 20% in equity you can remove that extra equity with a line of credit or by refinancing your home you can now purchase a larger home. Now you move to House #2 and rent out House #1.

You are now on your way to building a real estate portfolio. If you repeat this every 3 to 5 years in 20 years you’ll have a portfolio of 4 or more rental properties Is this for everyone? No, if you aren’t handy and if you don’t want the expense of hiring a property management company you cold end up spending your free time on maintenance of several homes.

Talk to your financial advisor or accountant first and then meet with your local Dominion Lending Centre mortgage professional. We can provide answers to your real estate financial needs.

By David Cooke