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Wednesday, March 28, 2018

What are Credit Unions ?

What are Credit Unions?

We’ve all seen credit unions or advertisements for them, but do you know what a credit union is? What’s the difference between banks and credit unions?  How did we end up with credit unions in Canada?
 What is a Credit Union? -  it is a  non for profit money cooperative. Members pool their money to lend to other members for car loans, consumer loans and mortgages. The profits are not paid out to stock holders but they are returned as dividends to the members.
 How did this cooperative system enter the Canadian financial system?
 In 1900 Alphonse Desjardins read about a man in Toronto who borrowed $150 and ended up having to pay $5000 in interest to pay is loan off.  At the time, banks were for well off people and your average working class individual had to borrow from loan sharks .  Desjardins studied the cooperative banks in Europe and opened his first branch in the Quebec City suburb of Levis that year. At the time of his death in 1920 there were 163 branches in Quebec and 18 in Ontario.
    The first credit union branch opened Alberta in Edmonton in 1938. Credit unions can now be found in all provinces and territories.
    Why do mortgage brokers use credit unions?  They do not fall under the rules of the Canada Bank Act and sometimes we can get better terms for a client that is not available from a bank or other lending institution.  Credit unions often  tend to follow the guidelines set out for banks but sometimes they can be more understanding as the lending decisions are made locally and not in an office in Toronto.
 Next time you need a mortgage or a line of credit speak to your favourite mortgage broker. A credit union might have the right product for your particular needs.
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Sunday, February 25, 2018

Be creative when saving to buy a home

Homeownership is a goal for most of us and millennials appear to be the most optimistic group. According to an RBC poll, two in five millennials said they intend to buy a home in the next two years. But the cost of homeownership and things such as regulatory changes can make saving for a downpayment more difficult and for many put the dream of homeownership out of reach.
However, first-time buyers may not be looking at all their options. A little flexibility and compromise can help make ownership more accessible when considering the following:
Begin with a starter home: Think about your lifestyle for the next five to 10 years and make a decision based on that. Your dream home in your dream neighbourhood may still be yours, just a bit later in your life.
Get a renter: Could you afford the home you want if you rented out part of it? Many people create a basement suite or rent out a second bedroom as a way to offset their mortgage payments.
Consider co-ownership: Buying a property with family or friends is a great way to get your foot in the door. Discuss options with your mortgage specialist and be sure to establish a solid contractual agreement that will help avoid or mediate any future disagreements when selling the property, renegotiating terms or buying each other out.
Be patient: Style your home slowly. Get creative with chic but less expensive, gently used furniture or pieces that may not last a lifetime but will save you money today. Calgary Sun Feb 24, 2018
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Tuesday, February 20, 2018

6 Reasons To Get A Home Inspection Before You Buy

In an active housing market sometimes buyers are urged by their realtors to make an offer with no conditions. As a mortgage broker this always makes my heart skip a beat.  I know from experience that financing can go sideways and you need to be sure it’s in place before removing conditions.
  Another item that should not be forgotten is a house inspection. You may have a good eye for décor but house inspections are not for amateurs. We have all heard, “Never judge a book by its cover” so why would you make the most important purchase in your life without checking it out? This may be the best $300-$500 you ever spent. Here’s why.
#1 – It provides an out for the home buyer.
    Sometimes hidden structural issues like a cracked foundation or saggy beams can mean expensive repairs. If the price can’t be re-negotiated then you have a way to walk away from an expensive mistake.
   A few years ago I had a client who I preapproved for a mortgage. He found the perfect house in south east Calgary and made an offer which was accepted. He then ordered a house inspection while I arranged the mortgage. The inspector came back and told my client that there were 10 things he could see in the house that indicated that it had been used as a grow op. My client used this to break the contract and went on to buy another home without any problems.
#2 – Revealing illegal additions or improper renovations
    If the DIY seller wired the house improperly or used sub-standard materials your home insurance could be null and void if you had something happen in the future.  The home inspector for my first home noticed that the indoor outdoor carpet in the master bedroom had been glued to the hardwood, something that resulted in a multi-day project we were not counting on.
#3 Safety and Structural issues
Inspectors go up into the attic , and down into the farthest reaches of the basement and can spot things like mold, holes in the chimney, improper wiring or improperly vented fans.
#4 – Aiding in the planning for future maintenance expenses
   Unless the home is brand new you will need to replace a number of things; water heaters last 6-10 years, roofs about 20 years ,  furnaces about 25 years. . The report will include an estimate on the remaining life for each of these expensive items which will give you time to save for their eventual replacement.
#5 Bargaining power
  If you find something that will cost a considerable amount to replace or repair you can go back to the seller’s agent and ask for a reduction in the price. A leaky roof may cost $3000 to replace. Perhaps the seller would split the cost with you?  It’s worth asking.
#6 Peace of Mind
 Finally, for your own peace of mind. When you have spent all your hard earned cash on a home and will be paying it off for 20+ years, it’s easier to sleep at night knowing that the house won’t come tumbling down on you or that you paid too much .
While an inspection cuts into your budget at a time when you need all the cash you can get,  you will find it is money well spent. NOTE: If you live in an area where housing prices are rising quickly your appraisal may come in low as the property is appraised based on sales in the previous 90 days. Ask your mortgage broker and your realtor if this is the case for your area.
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Friday, December 8, 2017

What is a Cash Back Mortgage?

What is a cash back mortgage?    
 Every once in a while a bank will advertise a cash back mortgage. It sounds great but there are a few things to consider.
When you purchase a home, you may find that you need some extra cash. You may  want to renovate, purchase some furniture, or start on building a fence or landscaping.. Fortunately, some Canadian lenders offer mortgages that give you a cash back rebate when you take out your mortgage.
With a cash back mortgage, your lender advances you a cash lump sum when your mortgage closes. The most common sum you receive is 5% of your mortgage amount but it’s possible to get between 1% and 5% depending on the lender you choose. Note that you receive these funds when the mortgage closes. The funds cannot be used for your down payment, however if you borrowed your down payment you could use the funds to pay back the loan.
    This sounds like a great idea but there are some down sides to this type of mortgage. First- you will pay about 1.5% higher interest rate for the duration of the mortgage term. Usually this is a 5 year term and if you take a look at how much extra interest you are paying you will find that it takes you 5 years to pay this sum back to the lender.
   Another point to consider is that Canadians move on average every 3 years. What if you have to break the mortgage?  In that case, you owe the lender the usual 3 months interest or Interest Rate Differential (IRD) as well as the balance of the cash back balance. This could be a very pricey move. If your lender allows it , it’s best to port your mortgage to your new home to avoid the double hit of the penalty and paying the cash back.
    A cash back mortgage is a great option but it’s not for everyone.  Be sure to tell your mortgage broker if it’s at all possible that you will have to move before your mortgage term is over so that he or she can advise you on what your penalties would be.
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Friday, August 18, 2017

Homeowners are going on ‘spending binges’ – study


Homeowners in Canada’s hottest housing markets are taking advantage of rising property values to go on spending binges, according to National Bank of Canada, the nation’s sixth largest bank.
“The sharp appreciation in home prices in Ontario and British Columbia, fueled by extremely accommodative monetary policy, have undoubtedly encouraged some homeowners to tap into their home equity in order to support a spending binge,” said Stéfane Marion, chief economist and strategist at National Bank of Canada.
In Canada, there are currently about three million active home equity lines of credit (HELOCs), according to National Bank, citing data from the Financial Consumer Agency of Canada.
On average, the outstanding balance on Canadian HELOCs is $70,000, and these types of loans account for about 45% of consumer credit.
Rather worryingly, there has been an increase in this type of consumer debt. “We estimate that HELOCs at Canadian chartered banks have surged by close to $20 billion in the past year, accounting for close to 60 per cent of the growth in total consumer credit,” Marion said.
Households taking advantage of HELOCs are fueling a broader borrowing frenzy, said National Bank. During the last quarter, consumer credit grew at its fastest rate since 2010.
While National Bank doesn’t examine what Canadians are spending their HELOCs on, earlier this year, one Toronto-based mortgage agent told BuzzBuzzNews that homeowners are increasingly using their HELOCs to help their children finance their own home purchases.
Overall, the racking up of consumer debt is extremely risky, National Bank warned. While it supports near-term GDP growth, increased debt, including HELOC debt, poses risks to the financial system’s stability and undermines the financial well-being of individuals.
“So, the resurgence in consumer credit may ring some alarm bells at the Bank of Canada which, as you may recall, continues to see household indebtedness and housing market imbalances as ‘the most important vulnerabilities for the Canadian financial system,’” Marion said.  

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate
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The Role of a Mortgage Broker

here's a great article written by my associate Mandy Reinhardt. 

The Role of a Mortgage Broker

The Role of a Mortgage BrokerBuying a home is a big step – a big, very exciting, potentially stressful step! How can you take the hassle out of the equation and keep your buying experience super positive? Easy… Surround yourself with a team of experienced professionals!
Many experienced realtors insist on starting your financing first, that’s where your Mortgage Broker comes in.
What is a Mortgage Broker? A Mortgage Broker is an expert in real estate loans that acts as a match-maker between home buyers looking for money and lenders with funds available to borrow. A broker will collect information from you about your employment, income, assets, loans and other financial obligations as well discuss your current budget, spending patterns and goals in order to get a thorough understanding of where you’re at and where you’d like to be. From here they assess the strengths and any weaknesses in your application and can advise on potential suitable financing options and any next steps you might need to take in preparing yourself for loan approval.
Talking with a Mortgage Broker before you start shopping is helpful for a number of reasons:
  • You’ll develop a well-founded expectation of the price range and payments that you can afford.
  • You’ll have a chance to address any potential gaps in your application for financing BEFORE you’re in a time crunch to meet deadlines for closing.
  • Sellers may take your offer more seriously when you tell them you’ve been pre-approved for your financing putting you in a better position to negotiate (price, possession date, inclusions, other terms, etc).
  • You and your Mortgage Broker will begin to compile your documentation so that your application is ready to go when you find the perfect home, leaving your mind free to start arranging furniture in your new place.
So why use a Mortgage Broker rather than your bank?
A Mortgage Broker has access to loans from a wide range of lenders. That means that you have more potential places to get approved, AND can take advantage of best products, top programs and lowest pricing!
A Mortgage Broker must complete a series of courses and pass the corresponding exams prior to obtaining a license to sell mortgages. In order to maintain that license a Broker must uphold the highest standards of moral, ethical, and professional conduct – including ongoing education and training.
A Mortgage Broker working with multiple lender options means that they truly SHOP for the best programs and rates for you based on comparisons and choices and don’t simply sell you the limited products they have to offer through a single bank source.
Mortgage Brokers work EXCLUSIVELY in mortgages so they are mortgage product specialists rather than banking generalists. Brokers deal with real estate transactions involving deadlines and conditions everyday as part of their job. They understand the urgency of meeting these commitments to ensure a successful transaction for everyone involved.
Learn more by contacting your Dominion Lending Centres mortgage professional today!
for more information contact me at or  on Facebook
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Thursday, July 20, 2017

Mortgage brokers are super heroes

Mortgage brokers have a reputation as superheroes. Although we cannot leap tall buildings in a single bound we can do extraordinary things.
Is the down payment money coming from outside of Canada? I had a client who had a joint account with her father in Japan. She showed me bank statements with the money in the account and leaving Japan. I had another bank statement showing the funds coming into her Canadian account. Finally I showed the foreign exchange rate for that day from Yen to CAD. The bank accepted this as a suitable paper trail.
An unusual down payment source? I had a client who sold his vintage Cadillac for his his down payment. A copy of the registration, the bill of sale and a bank statement showing the funds going into his account was deemed fine by the bank.
Is your down payment coming from multiple sources? I recently had two brothers purchasing a home together. They both had their money in RRSP’s and TFSAs. It took some explaining but we were able to show all the down payment and closing costs coming from four different sources.
Several years ago I had a client defaulting on two mortgages. Foreclosure was just days away.
I was able to consolidate the two mortgages, pay them out and get a reasonable payment schedule for one year. After the year , I moved him to a regular lender and arranged for a line of credit so that he could pay for some home renovations with a low interest rate secured against his home.
I had a couple who wanted to buy a home. The husband had had a business failure and it had affected his credit. I could only use the wife’s credit and her income for this purchase. She was a foster mother with six children. Her income was good but not high enough. I was able to get the lender to gross up her income by 25%, as her income was tax free. This was enough for them to buy a large home for the couple and their foster children.
Small towns can also pose unique problems. I had a client who wanted to refinance his home. I checked his credit report and found a credit card that he did not have. He told me that there were five people with his name in this small town. He also revealed that he had an account at Home Hardware that was not reporting on the credit bureau. The manager was a friend and thought that the loan would hurt his credit so they made an informal arrangement to pay it off.
Did I mention that he had three jobs? He worked as a tire installer, and invoiced the company from his firm. I was able to get a lender to accept this client his varied income and got the mortgage . Come to think of it , perhaps mortgage brokers are superheroes. If you have a difficult situation the best person to speak to is a Dominion Lending Centres mortgage professional, if it can be done legally, a broker can do it.  for further information visit my Facebook page or my website