30 Sep

ONCE UPON A MORTGAGE

General

Posted by: Mike Hattim

Do you remember the ‘choose your own adventure’ books? You would read through the story and watch as the hero or heroine battled through their struggles until you got to the page where your involvement was required. You could choose path A and turn to page X or you could choose path B and turn to page Z. The choice was yours and they were kind of fun to read as I recall.

Anyway, what if we changed our thinking about mortgages a little so that you, the intrepid mortgage borrower, could look at the whole process where you are actually the one in control. That based on your plans and your budget you could determine the best mortgage option for your situation.

So here we go, once upon a mortgage…

Story 1 – Louis and Lulu, are a young couple who have saved their down payment and carefully built their credit. They and the clever Realtor have found the perfect home and navigated the negotiations painlessly and now it is time to make all the choices in their mortgage adventure.

But wait! Now that their search engine knows they are looking for a mortgage, they are being bombarded by rate sites and are feeling a bit overwhelmed. How do they choose? What is the difference between the offers? Here are the questions they really should ask before they difference between the offers? Here are the questions they really should ask before they sign:

“IF A NEW ADVENTURE BEACONS AND I HAVE TO BREAK THIS MORTGAGE, HOW WILL THE PENALTY BE CALCULATED? HOW DOES THAT COMPARE TO OTHER LENDERS? CAN I TAKE THIS MORTGAGE WITH ME TO A NEW HOME IF I WANT? DO YOU LEND ALL OVER THIS VAST COUNTRY? ARE THERE TIME CONSTRAINTS IF I DO MOVE MY MORTGAGE? WHAT IF I COME ACROSS A PILE OF GOLD AND I WANT TO PAY DOWN THIS MORTGAGE? HOW MUCH EXTRA AND HOW OFTEN CAN I DO SO?”

And then, Louis and Lulu see a really low rate offer that seems eerily like the idol that Indiana Jones grabbed just before running for his life and so they feel reluctant to accept this seemingly too good to be true mortgage. Louis and Lulu know they can feel confident that they are choosing the best mortgage as long as they have asked all of the questions above.

Moral – If you think about how much time it took them to save the money and establish the credit and find the home then it really seems like taking a few hours to research and ensure they are making the best mortgage decision is a very good idea before they turn the page

Story 2 – Meet Al – A young brave entrepreneur who has successfully built a thriving business. Being wise for his age, Al has listened to his accountant who has counselled him to claim a low income to avoid paying any unnecessary taxes. Al works hard and saves his pennies and meets a lovely maiden with whom he wishes to make a home. He sets off to his favourite Dominion Lending Centres mortgage broker and is told that he has an important choice ahead of him. He can choose the lowest rate available on the market but he must pay a very high mortgage default insurance premium because he has not claimed much income OR he can choose a higher interest rate with a lower fee and in the end save himself a lot of money although he will not be able to brag of having captured the lowest mortgage rate ever.

Moral of this story is that there is a LOT more to a mortgage than the rate he was offered.

So this was an unusual article about mortgages to say the least but if it has caused you to realize that you are the one in charge of getting the best mortgage for yourself, which will not only save you money but avoid pitfalls down the road, then it was certainly worth the time it took to peruse. As always, if you need some mortgage advice, we here at Dominion Lending Centres are here to help!

 

29 Sep

FIVE TIPS FOR FIRST-TIME HOMEBUYERS

General

Posted by: Mike Hattim

Did you know that the majority of first-time homebuyers are Millennials? That’s right; Canadians born between 1980 and 1995 now represent a full 77 per cent of first-time homebuyers. If you fit the mold, then get a leg up on the competition as we enter the year’s hottest real estate month. Here are our five top tips for first-time homebuyers.

First-Time Homebuyers’ Tip #1: Prioritize your house (or condo) hunt April is the busiest month for real estate transactions. The MLS is on fire; your real estate agent will be texting you non-stop, and other prospective buyers will be out in full force. If you’re looking to buy this spring, now’s the time to take a few personal leave days to house hunt. Sit down with your partner to hammer out priorities so you’re on the same page when it comes to your house hunt. Then, once you see a strong candidate, be ready to act fast.

First-Time Homebuyers’ Tip #2: Get pre-approved It’s important to launch your house hunt having already obtained pre-approval for a mortgage. This marks you as a serious buyer, and lets you jump on a property you are interested in without losing time applying after the fact. Mortgage pre-approval also helps narrow your search as you have your price range established.

Use our handy Financial Planning Calculators to get an idea of how much of a mortgage (and home) you can afford.

First-Time Homebuyers’ Tip #3: Search the hot new neighbourhoods

Millennials are more committed to car-free lifestyles than the average Canadian. Accordingly, many condo developers have planned communities geared at diehard urbanites, with proximity to

public transit, supermarkets, well-lit bike and running paths, dog-friendly green spaces and amenities such as bike lockers. Be sure to check out high-density condo communities to see what they have to offer for you.

First-Time Homebuyers’ Tip #4: Consider moving out of town

Many first-time homebuyers are trading big metropolises for smaller cities that are in the early waves of urban renewal. These emerging markets offer great deals, particularly on detached houses. For born-and-raised urbanites, these emerging cities can mean less culture shock versus heading to the ’burbs. Often these locations offer extensive public transit, a thriving cultural and retail scene, and easy access to the larger urban hub (which can be handy if you still work there).

First-Time Homebuyers’ Tip #5: Use social media to help find a home

Finally, don’t limit your house hunt to the MLS or real estate agent websites. The real estate market is a fascinating subject – as any HGTV junkie will attest! – and a number of bloggers are probably busy covering the very neighbourhoods in which you are house hunting. Googling “real estate blog” and your city, or specifically your dream neighbourhood, will yield a variety of options. They’re a great way to get sneak peek of exclusive listings and private sales, and to survey comparables and get a feel for your desired community.

Got your own tips for first-time homebuyers? Visit Genworth Canada’s Facebook page (https://www.facebook.com/genworthcanada) to share them with your customers!

27 Sep

A TAKE CHARGE WOMANS GUIDE TO SURVIVING FINANCIAL RUIN AND OTHER ODDS AND SODS DURING A DIVORCE

General

Posted by: Mike Hattim

If you find yourself in the unfortunate position of getting divorced, have no fear, because help is here!

Divorce, while often times feels like a death, it is also the beginning of your new life.  And while it can be scary it can also be exhilarating and life changing.

As women, we often make the mistake of being too trusting or giving the proverbial “benefit of the doubt”.  But in a divorce that cannot happen.  In my career as a mortgage broker I have seen too many women have their credit ruined because they trusted that the ex spouse would pay the bills as agreed to.  BIG BOWL OF WRONG!!

If you have not done it before, then divorce is the time to take charge of your finances.  It’s vitally important to keep your credit intact and in good standing because, bad credit haunts you and follows you for 7 years.

Here are a few tips to keep you on track and ensure your credit does not take a beating like your poor little heart has.

  1. Ensure that if you have joint debt (credit cards, lines of credit etc.) that you know who is paying what.  DO NOT trust your ex to pay the bills, because as soon as some other woman (or man) comes along and he wants to wine and dine her, those debts take a back seat.  Often the debts don’t get paid or are paid late, and because you are jointly responsible, your credit takes a hard hit as well.  So if you have agreed as to who is paying what debt, ensure that you have yourself removed from that joint debt as soon as you can.
  2. If you have a mortgage and you are both equally responsible for the payments until you either reach a settlement or sell the house, make sure that you continue to make the payments from an account you can monitor.  That is have your ex pay his share of the mortgage to you and then you pay the full amount from an account that is in your name.  Recovering from a mortgage that shows late payments, NSF payments and missed payments, is a long hard process. Do not fall for the “I’m paying my share, don’t worry”
  3. Treat the divorce like a business.  Get everything that you can in writing.  The sooner that you hammer out an agreement the easier and quicker and most cost effective it will be. Even if you do not negotiate a separation agreement right away, ensure that you agree, who is responsible for what. It is crucial to keep your credit in good standing.  Divorce is already hard enough and emotionally draining without having to deal with creditor phone calls, and juggling missed payments.  And try getting your own credit card with a bad credit rating, you’d likely have more success getting a sitting with the Pope than a credit card!

Look, I am not trying to scare you, I am just reminding you to embrace your independence and take care of your financial well being.  Take charge of your finances.  It is such an empowering feeling to be in control of your bills and your money!

If there are children involved, remember this, they are children!  Do not make them a pawn in your divorce.  Do not pit your children against one parent.  It causes anxiety and confusion as they feel that they have to choose a parent and that they can’t love them both.  Your children only have one childhood.  Do not take that away from them.  Lastly do not talk badly about the ex in front of the children.  Talk about what a “loser” or “cheat” he is over wine with your friends when the children are not around.  It is an unfair and stressful position to put the children in.  Remember they did not choose you as parents and they are a casualty of the divorce, so make sure you children know, that they are loved, that they do not have to choose between the parents, and that lastly, none of it is their fault.

Finally know this.  It does get better and in time, you will likely acknowledge that getting divorced was one of the best decisions that you made.  When you feel yourself faltering and feeling nostalgic and missing your ex, simply remind yourself what brought you to the position of getting divorced in the first place. Give your head a shake and snap out of it!!!

Trust me; I know what I am talking about.  I have lived through divorce, bankruptcy as a result of divorce, cheating, bad credit etc.  You name it and I experienced it.  My climb back out of financial ruin was a situation that I would not wish on my worst enemy….OK maybe one or two!!!  The climb out was hard.  It made me who I am today (a pretty awesome ladyboss).

I hope that sharing this information will save you some grief in your own struggle.  There is life after divorce, there is love after divorce, there is money after divorce and there is mortgage help in just such a situation from Dominion Lending Centres.

 By Maria Kyle
26 Sep

10 QUESTIONS FOR FIRST TIME BUYERS

General

Posted by: Mike Hattim

As a first time home buyer, the process of purchasing a home can seem very daunting.  From a financing standpoint, here are 10 common questions I hear from first time home buyers.

1. What’s your best rate?

This is by far the most common question.  Rate is a small part of your mortgage contract but its often the most talked about.  People become “rate sensitive” when they hear their neighbour or co-worker got 2.49% and they want the same rate.

Some lenders will dangle these low rates to entice you but don’t be fooled.  The lowest rates almost always come with conditions such as high pre-payment penalties or quick 30 day closings.

Is saving $15/month on your mortgage payment worth paying a penalty up to 9 times higher when you sell or need to refinance in 3 years?  No broker or website can secure a rate without a full application and credit bureau.

2. What’s the maximum mortgage amount for which I can qualify?

My suggestion is set a budget your comfortable with and let your Dominion Lending Centres mortgage professional tell you how much mortgage your budget allows.

The two ratios used to determine how much mortgage you qualify for are the Gross Debt Service Ratio (GDS) & the Total Debt Service Ratio (TDS).  Your GDS is composed of your new housing cost such as your mortgage payment (principal & interest), property taxes, heating costs and any strata fees.  Your TDS includes your GDS as well as any other monthly liabilities such as car loans, credit card debts, lines of credit etc.

Depending on your credit score, the maximum GDS/TDS ratio is 39/44.  This means your GDS shouldn’t be more than 39% of your gross income.  Your TDS shouldn’t be more than 44% of your gross income.  If your gross income is $100,000/yr you could allocate $39,000/yr to GDS & $44,000/yr to TDS.

3. How much money do I need for a down payment?

For owner-occupied homes, the minimum down payment required is 5% of the purchase price for homes under $500,000. For homes over $500,000 10% down payment is required on the amount over $500,000 up to $1M.  Anything over $1M requires 20% down as a minimum.  If you want to avoid CMHC mortgage insurance then 20% down payment or greater is needed.

Any rental properties require a minimum of 20% down.

4. What happens if I don’t have the full down payment amount?

As a first time home buyer you are eligible to use your RRSP as a form of down payment to a maximum of $25,000. Your RRSPs can be used without being taxed if you pay back within 15 years.

Another popular option is a gifted down payment.  A gift can come from an immediate family member to form part or all of your down payment.

Some lenders will also allow a flex down program.  This means you borrow the money from a line of credit and this loan is factored into your debt service ratios.

5. What will a lender look at when approving me for a mortgage?

Generally speaking, the lender will want to look at your source of income, employment history, debt levels and repayment history and the actual property itself.

Lenders want stability.  By vetting and checking the above, the lenders feel confident you are able to make your mortgage payments and in the unlikely event you default, they know the property is marketable.

6. What’s better, fixed or variable rate?

Not everyone qualifies for a variable rate because the qualification rate is currently 4.74% vs the 5 year fixed of 2.54%.  That’s a big difference!

Assuming you qualify for a variable, it boils down to risk tolerance and your plan for the property.  Fixed rates give you stability over the term of your mortgage where a variable rate is tied to the prime rate, currently 2.70%.  This means your mortgage payment could decrease or increase depending on what the Bank of Canada decides.

Variable rates can save you thousands if you sell or refinance during your term.  The standard penalty on a variable rate is 3 months interest.  The penalty on a fixed rate is calculated using the interest rate differential and depending on your lender can sometimes be in the tens of thousands of dollars.

Your Dominion Lending Centres mortgage professional can discuss all the differences and benefits for you.

7. What credit score do I need to qualify?

Anything over 680 is considered AAA with most lenders.  A score above 680 gives you access to all the discounted rates.  If your score is below 680 there are options but often at higher interest rates.

8. What happens if my credit score isn’t great?

Take action immediately to increase your credit score.  If possible pay off all your debts on credit cards and lines of credit as this will increase your score substantially.  Its a good idea to always pay your balance in full each month as this creates a pattern of positive repayment.

Don’t take on anymore new debt such as car loans or new credit cards.  Make sure everything is up to date meaning no overdue collections or old Telus or Rogers bills outstanding.

9. How much are closing costs?

Closing costs vary but lenders typically want to see that you have 1.5% of the purchase price on hand for closing costs.  If you bought a condo for $500,000 you’d need $7,500 for closing costs.  This is only a guideline and costs vary.

Closing costs will cover things like, inspections, lawyer fees, property transfer tax, appraisals, and title insurance.

10. How much will my mortgage payments be?

Obviously this depends on your mortgage size, rate, amortization, repayment schedule, any CMHC insurance and if your lender is collecting your property taxes for you or not.  My suggestion is stick to your budget!

If you have any other questions, please feel free to contact Dominion Lending Centres – we are always happy to answer all your questions.

23 Sep

DOES 0.50% LESS REALLY SAVE ME MONEY?

General

Posted by: Mike Hattim

It doesn’t sound like a big number, but when you realize how interest is calculated you may be surprised. Interest on a mortgage is compounded semi-annually, this means the interested is adding back into the principal every six months. It is no wonder it takes 25 years to pay off a mortgage, it is mostly interest, especially in the early stages.

Below is a comparison of a $300,000.00 mortgage amortized over 25 years based on 5 year fixed rates of 2.99, 2.74 and 2.49%:

Does 0.50% Less Really Save Me Money?
The first calculation to look at is the savings at the end of term:

Mortgage 2 paid off $1,282.41 more principal than Mortgage1

Mortgage 3 paid off $2,587.83 more principal than Mortgage1

You may think that that’s a modest savings because it is based on a 5-year term, but wait there is more!

Take a look at the difference in monthly mortgage payments:

Mortgage 2 payments are $38.18 less per month, or $2,290.80 less than Mortgage 1 for the term.

Mortgage 3 payments are $75.79 less per month, or $4,547.40 less than Mortgage 1 for the term.

In essence you are paying more per month on Mortgage 1 to pay off less principal. Does 0.50% save you money? Absolutely, $7,135.23 to be exact!

It doesn’t stop here; we can show you how to make these savings work by accelerated/increasing your payment thus decreasing the amount of interested being compounded and lower the amount of years to becoming mortgage free.

Contact a Dominion Lending Centres Mortgage Professional today to learn more!

22 Sep

5 REASONS WHY YOUR BANK RATE ISNT BETTER

General

Posted by: Mike Hattim

I recently had a client ask me what difference I could provide given that his bank’s website was offering the same interest rate I had quoted him the day before. Before responding to him, I went on his bank’s website to check it out for myself.

There are times when a client needs the best rate and lowest possible monthly payments, and this was definitely the case for this client. He was lucky enough to be able to afford a 20% down payment if he needed to, making it a conventional mortgage. Seeing as the bank was offering the same rate, he asked why bother if he could get away with putting only 15% down?

After checking out the bank’s website, I called him back and gave him these reasons why the bank rate was in fact NOT the same as the one that I had quoted for him.

Although there were MANY reasons that I provided, I want to touch on the top 5 that were the most important given his individual circumstances. Scenario is based on a purchase price of $430,000.

1) The bank rate was for an insured mortgage (meaning less than 20% down) which would require he pay mortgage default insurance of $6,579.00. This would increase his mortgage amount and be to the benefit of the lender. Of course, he would also be paying more interest as his mortgage balance would be higher. The rate I quoted him was for a conventional mortgage, so no mortgage insurance and no mortgage insurance rules! Also as a Dominion Lending Centres mortgage broker, I could most likely offer him a lower interest rate for an insured mortgage if he chose to go that way providing him more savings.

2) Just as important for him, an insured mortgage can only be amortized up to 25 years, while a conventional mortgage can be amortized up to 30 years (and in some cases 35 years). So when calculating his monthly cost, he would in fact be paying over $300 more per month if he was to put only 15% down.

3) At the end of the 5 year term, he will have paid $2,467.48 more in interest and $18,562.28 more in monthly payments with the bank rate on his insured mortgage, even though the mortgage amount is less. For this particular client, keeping more money in his pocket each month is crucial. To further reduce his interest payments and amortization period, I would encourage a bi-weekly accelerated payment.

4) As is all too common, if he chose to break his mortgage, say after 3 years, his banks penalty would be somewhere around the $6,400 price tag, while with my chosen lender for him, he would only pay approximately $1,200.

5) Should the need arise, my client would have a likelier chance of being able to refinance his mortgage if he required the extra funds because you can only refinance up to 80% Loan To Value of the home.

Finally, and perhaps one of the most important benefits, is the expertise, advice and ongoing service to him that a broker such as myself can offer, potnetially saving him thousands over the life of his mortgage. His bank rate will not give him that!

So, for any client, I would suggest looking beyond rate and speaking to a DLC mortgage professional to get a clearer understanding of how your banks rate may not in fact be the same before jumping to any conclusions!

 
21 Sep

A COOL CAR, OR A HOME OF YOUR OWN?

General

Posted by: Mike Hattim

Thinking of purchasing or leasing a new car?

Some quick math for you.

A $400.00 payment will reduce your total mortgage qualification by $100,000.00

Ouch.

I will confess that I think about new cars for at least a moment or two daily, fast cars and I go back a few decades and as I hit ‘mid-life’ temptations abound. Apparently there are 265 new car models to choose from, so many cars so little time.

I do not feel that old, but I do recall when most manufactures had three models to choose from, no mini vans, and few SUV’s.  Never mind the wide variety of niches being filled with Hybrid-this and crossover-that.

Once upon a time BMW offered 3, 5 & 7 series.  Today they offer 1, 2, 3, 4, 5, 6, 7, 8, i, X, Z etc…

Honda as recently as the early 90’s was three models, whatever happened to the prelude anyways?

But what does this have to do with mortgage financing?

The simple math is this;

$13,000.00 of consumer debt (credit card, line of credit)

OR

A student loan payment of $400.00 per month

OR

A Monthly car payment of $400.00 (Lease or Finance)

Will eliminate $100,000.00 of mortgage money from what one would otherwise qualify for.

Nice car, nice digs…tough to finance both, tougher still to finance the car before the home.

The moral of the story is this;

1. Eliminate debt from your life (and take on no new debt).

2. If you are Incorporated, be sure to have the actual payments flowing directly from your Corporate bank accounts.  This will reduce the impact in most cases.

3. If you must personally Lease or Finance a new car, do so after settling into your new home and making certain that your budget can handle it.

Keep in mind that qualifying for a mortgage involves a rigorous review of your debt servicing abilities, and you are largely ‘protected from yourself’.  However qualifying for a vehicle requires little more than a pulse.

You are the master of your own demise when it comes to consumer debt.

There is little to no oversight.  Personally I have yet to see clients in foreclosure over a mortgage payment alone.  Often is the vehicle, boat, RV, credit cards, unsecured line of credit that all came after the mortgage which are the root of the problem.

Debt is the enemy, but at least mortgage debt is attached to an appreciating asset in which you live at 50 year record low interest rates.

Although this one might sleep a family four, no?

A Cool Car, Or A Home Of Your Own?

 
19 Sep

8 THINGS TO AVOID BEFORE BUYING A HOME

General

Posted by: Mike Hattim

The following is a list of things you’ll want to avoid if you plan on purchasing a new home in the near future.

1. Don’t apply for new credit: It may seem natural to apply for a credit card at a home improvement store or a furniture store when you are about to become a homeowner, but applying for credit can lower your credit score. Not only will you lose a few points because of a credit inquiry, and if you are approved for new credit, a lender may worry that you will spend up to your new credit limit and then default on your loan.

2. Don’t close any credit accounts: You may be feeling that this is a good time to get your financial house in order by closing unused credit accounts or transferring your debt to a new credit card with a zero-interest balance transfer offer. While that’s a smart move financially, it’s a bad one for your credit score because you lose points when you have a higher usage of debt compared to your limit on one credit card and to your overall credit availability. Wait until your closing is complete before you make these changes.

3. Don’t move your money around without a paper trail: Your lender will need the most recent bank statements before you go to settlement, so if you have any unusual deposits you will need to provide complete documentation of where the money came from. If possible, it’s best to move the cash you will need for your home purchase into one account before you apply for a mortgage. If not, make sure you have complete and accurate records readily available.

4. Don’t increase your debts: In addition to your credit score, your debt-to-income ratio is extremely important to your mortgage approval. If you take on more debt you could be in danger of going above the maximum acceptable debt-to-income ratio.

5. Don’t skip a payment or make a late payment: One of the most important elements of your credit score is your history of on-time, in-full payments; so don’t get so caught up in your move that you forget to keep up with paying basic bills.

6. Don’t buy a car: You may be feeling that a new car would be a nice addition to the driveway of your new home. Resist that feeling. Even if you can easily afford a new car, the depletion of your savings or the addition of a new car loan could derail your mortgage application. Wait until after you have moved to switch to a new car.

7. Don’t change jobs if you can help it: While a job change could mean a raise or a path to a better future, it could also delay your settlement.Your lender needs to verify employment and will need pay stubs to prove your new income before your mortgage conditions are fully satisfied. 

8. Don’t spend your savings: You’ll need cash on hand at the acceptance for your down payment and closing costs and your lender may even verify your cash reserves one more time, so make sure the funds stay in place.

In other words, no matter how hard it is at this exciting time, it’s better to do nothing than to do anything.

If you have any other questions regarding this please call a mortgage professional at Dominion Lending Centres.

16 Sep

BACK TO SCHOOL WITH BULLYING ENDS HERE

General

Posted by: Mike Hattim

This summer has flown by, and what a summer it has been for Bullying Ends Here! Just last week, I traveled to Amsterdam Netherlands to present the program to 400 law enforcement delegates from around the world. This also signaled the first time that the program had been presented outside of Canada’s borders. What a humbling experience to say the least. Given there were delegates from 25 different Countries, there were four translators available to translate all that I said into four languages. I have no idea how they kept up to me!

The feedback was tremendous and there are unofficial invitations now for Australia, France, New Zealand, the UK and US. Now I just have to find a way to make all of this work while still recognizing we have much work to do right here in Canada of course!

With that said, and with the new school year just a few weeks old, I thought it the best time to offer some tips to prepare your child for the upcoming school year.

Back to school can be a very difficult time for youth. The uncertainty of the new year, the high expectations set by parents, the challenges of knowing where they will fit in and of course, bullying.

This is the ideal time to sit down with your child and have real discussions about kindness, compassion and explaining how everyone is unique in their own way. Turn the TV off, set your phones aside and create a safe environment to speak in. Speak openly and honestly. Let them know the importance of reaching out and speaking up if they see something negative or if something happens to them. Reassure them that they can come to you anytime to talk. Educate your child on how our words can have serious consequences if they aren’t used appropriately.

Lastly, speak about how to use the internet responsibly, in particular social media. For the younger students, I always recommend that an adult do periodic checks to ensure everything is appropriate. I realize that some think that this might ‘infringe on privacy’, but the reality is that times are different now. Our kids are using the internet to attack and be attacked. There is very little social media safety taught in schools and what is said on the internet is there forever. This is the time to ensure the internet is being used properly. We teach kids to drive a car. We restrict the movies they can see or games they can play, yet we give them the key to the cyber world without any direction at all. We all play a role in keeping our kids safe.

As always, I am always here to email if you have any questions. The website also has dozens of resources available to help with any social media questions you might have.
I trust your summer has gone well and I look forward to coming/returning, to a community near you this school year.

 
14 Sep

LIVE YOUR LIFE

General

Posted by: Mike Hattim

Recently I was fortunate enough to travel to the small island country of Iceland in the middle of the North Atlantic. It had not been a destination on my radar until I started to plan a mountain biking trip for my milestone 40th birthday.

I knew I was going to utilize the locally owned (Whistler based) Big Mountain Bike Adventures, an award-winning global mountain bike adventure company. So I started following their Instagram feed @bigmtnglobal. I had shortlisted four of their trips, but one particular image from their Iceland trip clinched my decision, so I booked my spot and there was no turning back!

As an avid and passionate mountain biker, I was extremely excited about placing my bike tires on foreign ground.

As my departure drew closer, I became increasingly anxious about traveling on my own. I had traveled internationally many times, but never solo. It was something that I had always done with my wife, and I usually just followed. I figured out how to harness the anxiousness and bottle it,; put a label on it called EXCITEMENT… the fine 2016 vintage! I tried to focus on the journey and not the destination. I embraced the adventure!

What I came to realize was how much I still love to explore. I grew up roaming the forest around our home, which later developed into a love outdoor excursions and guiding. In my late twenties and early thirties I was fortunate enough to experience the guiding lifestyle.

As soon as I landed in Iceland to start the bike adventure I realized then and there that I want to continue exploring. This would be the first of many trips with friends and family.

You’re probably asking yourself, what does this all mean? Why is this Dominion Lending Centres Mortgage Broker talking about adventure travel within a mortgage and financing platform? It’s very simple. As the title says, LIVE YOUR LIFE.

Buying your first or second (or even third) home isn’t all about buying the biggest or the best. One’s lifestyle and long-term goals, plus needs and wants, should be the only things to consider, never mind how that new home will look on Facebook. My office is located in an area with an average household gross income of $95,000. Here is an example of that household’s maximum real estate purchase price.

Purchase Price: $600,000

Down Payment: $35,000

Mortgage Amount: $565,000

Mortgage Insurance: $20,340

Total Loan: $585,340

Monthly Mtg Payment: $2,620

Est. Monthly Strata: $300

Est. Monthly Property Tax: $209 ($2,500/year)

TOTAL Monthly Payment: $3,129

Property Transfer Tax: $10,000

Home Inspection: $400 (estimate)

Title Insurance: $250 (estimate)

Approx lawyer fees: $1,500 (estimate)

Can your household really afford this? Yes, this is what the federal lending guidelines allow you to extend yourself to, but do you want to live at the limit? Bear in mind that this doesn’t consider any travel, entertainment, social nights out, re-occurring monthly expenses or adding to one’s savings.

Buy within your means and don’t try to keep up with the Joneses. I have made a conscious decision to live within my means and save for the big trip as well as purchases.

What are your big goals, besides owning a home? Build them in to your purchase decision. Do an internal audit. Does the $3,129 home payment match your personal budget? Does it fit into your ultimately LIFE plan?