Wednesday, December 30, 2015

Annual reality check for your mortgage

Most of us tend to think of our mortgage as the ultimate “buy and hold” purchase. After all, who wants to spend any more time in the “borrower” chair than is absolutely necessary? You get a 5-year term, and then go on automatic pilot until it comes due again. You might wring your hands over your other finances, but your mortgage is set in stone, right?

Well, not exactly. In fact, it’s a great idea to have an annual mortgage review to see if it’s really working for you – especially in the context of the rest of your financial picture.  After all, a lot can happen in a year – especially during our “mortgage years”, when we tend to be juggling many commitments in our busy lives! Think of all the financial commitments we carry during these years: care of our children, tuition or school expenses, one or more cars, vacations, home renovations, travel… the list seems to go on and on.

Chances are that something in your financial life has changed since you took out your mortgage. Life doesn’t stand still, after all. The mortgage planners at Dominion Lending Centres  – an elite firm of Canadian mortgage brokers – have identified a list of the most common reasons why a mortgage may need some adjustment:

• You’re considering a move to a new home in the next year or two;
• You wonder if you can tap into some of your equity for a special renovation project to upgrade your home;
• You’re wondering if you can afford a vacation property;
• You’re considering the benefits of investment property ownership;
• You’re a bit concerned about a large expense looming in your future:  like university tuition, a wedding, a leave from work, a new career or business, a big vacation or a new vehicle, for example;
• You’re making more money – or less money – than you were when you began your mortgage;
• You’re carrying some credit card or other high-interest debt that is eating away at your monthly cash flow;
• You’re worried that you’re not saving enough for your retirement years, and you’ve heard there’s a way to convert your non-deductible mortgage debt into deductible investment loans using a re-advanceable mortgage.  You’re interested in collecting annual tax refunds, paying off your mortgage faster, and having an investment portfolio for the future.

If any of these sound familiar to you – and if you have held your mortgage for a year or more – then it’s worthwhile to contact a qualified mortgage planner to give your mortgage a reality check.

At Dominion Lending Centres , the company’s mortgage planners provide this service free of charge and with no obligation.  They tailor each mortgage to their client’s current needs and long-term goals, with an overall focus on mortgage planning, Mortgage Planners believe that a mortgage is not just a single transaction done in isolation of your goals and overall financial situation, but that a mortgage can accomplish so much more when property structured and integrated into your overall financial plan.

Mortgage Planners look at the mortgage as a financial keystone - the right mortgage can build your wealth, protect you from a financial downturn, and save you thousands of dollars. That’s why an annual mortgage review is part of their overall service offering.  It’s also a smart financial move for Canadian homeowners. Don't wait for your mortgage renewal date to contact your mortgage planner. You can reach me at or by phoning 403-836-1201.
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Wednesday, December 16, 2015

The U.S. Fed Finally Did It - Hiked Rates

Dr. Sherry Cooper, chief economist at Dominion Lending Centres published this article today.


For the first time in nine years, the U.S. Federal Reserve hiked their key policy rate--the overnight federal funds rate--by one-quarter percentage point (25 basis points) to a range of 1/4 to 1/2 percent. The policy-making Federal Open Market Committee (FOMC) said that the stance of monetary policy remains accommodative, thereby supporting further improvement in the labor market and a return to 2 percent inflation.

The U.S. labor market has improved considerably this year taking the unemployment rate down to 5%, while inflation has been depressed by falling commodity prices and the strength in the U.S. dollar.

Importantly, the Fed suggests that they expect economic conditions to warrant only gradual increases in the federal funds rate and that the funds rate will remain below levels that are expected to prevail in the longer run for some time. Having said this, the Committee's interest rate forecasts signaled four quarter-point increases in 2016, a stance that has been interpreted by the markets as relatively hawkish. This, of course, will be data dependent, and many economists expect fewer than four rate hikes next year.

The Canadian dollar, which has weakened sharply in recent weeks on further declines in oil prices, edged downward with the release of the Fed decision, but bounced back shortly thereafter. U.S. Treasuries tumbled on the news pushing market rates higher. U.S. stocks, on the other hand, extended today's gains and the yield on two-year Treasury notes topped 1 percent for the first time in five years after the Fed ended seven years of near-zero interest rates and reaffirmed gradual tightening over the next year. The yield on the ten-year Treasury bond edged up slightly to 2.29 percent.

Bank of Canada Will Remain On the Sidelines

The Canadian economy has been hard hit by the continuing decline in oil prices and other commodity prices. Not only has West Texas Intermediate crude oil, the price received in the U.S., fallen to roughly $36 a barrel, but the price received in Canada for heavy oil is substantially lower.

Economists expect that Governor Poloz will keep his benchmark overnight rate at 0.5 percent unchanged until at least 2017. Nevertheless, mortgage rates in Canada have likely bottomed as five-year market rates, to which mortgage rates are linked, are edging higher and lenders are pressured by very narrow interest rate spreads.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

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Friday, December 11, 2015

Changes to down payment requirements coming February 15, 2016

Changes to down payment requirements coming February 15, 2016Today Finance Minister Bill Morneau announced changes to down payment requirements. Effective February 15, 2016, the minimum down payment for new insured mortgages will increase from five per cent to 10 per cent for the portion of the house price above $500,000. The five per cent minimum down payment for properties up to $500,000 remains unchanged.

Homes priced at more than $1 million by law require a minimum down payment of 20 per cent. Today's announcement therefore focuses on homes priced between $500,000 and $1 million.

In the Mortgage Professionals Canada (MPC) Fall Report, Chief Economist, Will Dunning discusses why raising the down payment could cause problems for the housing market, including this cautionary observation: “Rising prices have made it increasingly difficult for first-time home buyers to accumulate down payments. Increasing down payment requirements would, most likely, severely dampen housing demands from people who are financially well-qualified to make their monthly mortgage payments.”

MPC notes that the 10% requirement does represent a graduated approach while the Ministry of Finance commented that they believe this will only impact 1% of home purchasers.

Click here for the government’s official news release.

Handy chart below - click to enlarge.
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Monday, November 16, 2015

How our new Liberal government will affect realtors and housing in Canada

One month ago today Canadians gave Justin Trudeau and the Liberal Party of Canada a majority. Some people were unsure as to how this would affect Canada's economy and the housing market. I am optimistic that this will be a good thing for realtors, mortgage brokers and the general home buying public.
While most Canadians still struggle with paying too much in taxes, trying to maximize savings while making sound financial decisions, the new Liberal majority government will have real impact on the nation’s real estate market.
First-time buyers might get incentives
One way the Liberals propose to deal with housing affordability is to analyze all factors that help or hinder housing affordability in Toronto and Vancouver and in other parts of Canada.
The Liberals have also made vague promises about helping the first-time homebuyer, explained Robert McLister, independent mortgage broker and founder of “This might mean looser policies, such as longer amortization limits for first-time buyers, but so far few details have been released.” First time home buyers might qualify for a 30 year mortgage term, which would lower their monthly payments

Changes to the Home Buyers’ Plan
Homeowners may, yet, come out ahead with the Liberals, explained McLister. “They’ve promised to open up access to the Home Buyers’Plan (HBP), which will give more people access to money for a down payment on a house.”  The HBP has a limit of $25,000 and the Liberals don’t plan to increase that but they will loosen the existing qualification rules for the HBP to allow more Canadians affected by sudden and significant life changes—such as divorce, death of a spouse or an employment move—to access their RRSP savings for a down payment.
   This will be a great help to many Canadians. I don't know how many times I have had couples who are splitting up  call me saying that they want to refinance their house to allow one  spouse to  buy out the other one. Unfortunately, many times there isn't enough equity in the home for this to happen and dad ended up moving to the basement. Think of the stress on the children and the family as a whole. 
   Now , if there's a shortfall, we can access RRSP money to make up for any shortages. Now Dad can get his condo and Mom and the kids avoid the conflicts that arise by being stuck under one roof. 

      This plan can also be used in the case of the death of a spouse. Let's say, Dad dies. Mom is alone in her home and trying to sell it. You want her to move in with your family but due to her age and infirmities she needs to live in a house with lift to access the bath tub and you need to to widen the doorways and build a wheelchair ramp. Accessing RRSP money to pay for these renovations will now be possible. 
  Finally, if you lose your job and find one in Ontario. The only problem is that by the time you pay realtor and legal fees to sell your home you have nothing left to pay for the move. Now  you can pay for your moving expenses to move to the new job using the Home Buyers Plan.  
   In conclusion, the changes we can expect will help to keep home sales up during this  very challenging time in Western Canada. We look forward to seeing these changes enacted as soon as possible. 
David Cooke is a Calgary mortgage broker. Find out more at his website at 
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Tuesday, July 14, 2015

Renovation Financing

 My colleaguem Pam Pikkart published this great blog on renovating. Here it is in its entirety. 

Renovation Financing

Renovation FinancingSo you have found a great house.  The neighborhood is wonderful.  Mature trees, lower property taxes, schools within walking distance and easy access to a variety of amenities.  But the house is, how do I put it, retro at best.  You wonder how you will tolerate the bright pink carpets and the vast array of energy inefficient items has you wondering if you will be able to pay the astronomical heating bills.
What now?  Should you look for something newer? No way my friend, there is a mortgage product made just for this situation and today we are going to take a look.
Purchase Plus Improvements is the name of this product and this is how it works. You head out with your Realtor to choose the best house for your needs.  You write up an offer and bargain your way to the best price.   In the meantime, you contact a qualified contractor or other service providers, to get quotes for the work you would like to do.  These quotes are provided to the lender as a part of the financing process.  The lender reviews and provides the thumbs up.
But you before to rush out to do just this, you really need to know a few things.
  1. The day of possession, the funds are transferred for the purchase of the home so you are able to move in and start the renovations. The balance of the funds are held in trust with the lawyer and will not be released until the work is 100% complete. An appraiser will be sent to your home to verify the work is done. You may want to arrange access to a line of credit so you will be able pay for any deposits or other costs in the interim as you will only get the funds upon completion.
  2. There is a maximum amount you are allowed. Most lenders will allow you $40,000 or 10% of the home’s value as your renovation budget.
  3. You will have to have at least 5% of the improved value to put down. For example, if your new home costs $300,000 and you are going to do $30,000 of improvements, you will need to have $16,500 down ($300,000+ $30,000 = $330,000 x 5% = $16,500) instead of $15,000.
  4. Not all improvements you propose will be acceptable to the lender. The Travertine tile imported from Italy may be gorgeous but it does not necessarily add a dollar-for-dollar value.   Lenders like new kitchens, flooring, bathrooms, siding, windows, furnaces, garages, roofing or other substantial upgrades. They will sometimes allow appliances or landscaping but this is a case by case decision.
  5. You must do the upgrades you said you would do to get the funds. It has happened that once a homeowner took possession of their home they opted to make different improvements, however the lender is not likely to release the funds for work they did not agree to in the first place.
  6. There is a time restriction. Most lenders allow only 90 days for the work to be completed.  If some of the work is seasonal you should make sure your lender will allow a relaxation on the restriction.
This product can also be great for people purchasing a brand new home.  This is an easy way to get the funds you need to finish the basement or the fencing.
There is also a similar program for homeowners looking to upgrade their existing home.  In this case, the value of the home is determined via an appraisal “as is” and a complete system.   The current mortgage is paid out and the balance of the funds are held in trust with the lawyer until the work is complete.  The same restrictions as the Purchase plus Improvements apply.
The really nice part of this program is that you are able to borrow the funds to complete your renovations at today’s very low rates and your mortgage payment will be only slightly higher.
So there you have it.  A simple way to get the funds you need to turn your house into your dream home. Your mortgage professional at Dominion Lending Centres can answer any questions you may have about this program.
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