Affordable Housing in Calgary

As anyone in Calgary knows, rental housing is becoming more and more difficult to find. The vacancy rate is in the 1% range and dropping. Housing prices are rising in response. How can anyone pay rent and save a down payment for a home while paying their bills? It can be tough. Affordable Housing Calgary has come up with a solution. They will provide 2/3's of the down payment for a condo unit. You only need $2000 for your portion of the down payment. If you are interested in this program , contact Calgary Affordable Homes

If you want to purchase a home and need help, feel free to contact me at 403- 836-1201 or via my website at http://davidcooke.ca .

New to Canada issues

I recently came across a problem with a couple which I had not encountered before. My clients wanted to buy a home after renting for the year and a half since they arrived in Canada. They saved diligently and were able to put down a 10% down payment. When I asked them if the money was in the bank they replied "yes".
I told them that I would need an employment letter and recent pay stub and 3 months of bank statements. They quickly responded with the required items.
When I reviewed the bank statements I found that they had just put the bulk of the downpayment money into their account a week before. The reason CMHC and the lenders ask for the 3 months of bank statements is to show that the people have saved the money over time.
This is a requirement of the Anti- Money Laundering laws passed a few years ago.
I asked them where the money came from and they said they had saved it. When I asked where, they told me that in their country people do not trust banks so they put the money under their mattress. In this case, they rented a safe deposit box and saved it there.
When I spoke to the lender they said this was not acceptable. The funds could easily be the results of crime..
In the end, the bank they had their account in was the only lender who could help them.
Personnel at the bank had seen them withdraw hundreds of dollars and then go to their safe deposit box. Whey they never said anything to this couple I'll never know.
Be sure to put your funds for downpayment all in one account. Make sure your funds are there for at least 90 days. If you are using RRSP's you must have held them for at least 90 days.
If you follow this simple rule, you can avoid disappointment and get into the house of your dreams faster.If you have any questions about down payments and the New to Canada program , contact me via my website.

Understanding yoru Credit Report

Understanding Your Credit Report

As credit has become more and more abundant in our society, your credit report, and thus your credit rating, has become more important in your daily life. Your credit rating affects all aspects of your financial activities when it comes to borrowing money. Your credit rating also has the ability to affect the job you get, the apartment you rent, and even the ability to open a bank account.
Your credit report itself is simply a listing of all of your mortgage and consumer debt. Here in Canada, the two main credit reporting agencies are Trans Union and Equifax. Both agencies have a credit history file on anyone who has ever borrowed money. Every time you borrow money, or make a payment on a loan or credit card, the lender then reports the information about the transaction to these two agencies. In addition to credit information, you will also find liens and judgments on your credit report as well as your address and possibly your work history. The accumulation of all of this information is called your credit report.
The information on your credit report varies based on your creditors and what they have reported about you. Potential lenders and others, such as employers, view your credit history as a reflection of your character. Whether we like it or not, our financial habits have a lot to say about the way in which we choose to live our lives.
The credit score, or beacon score, is a number which gives mortgage lenders an idea of your lending risk.
Credit scores range from 300 to 900, the higher your credit score the better. The mortgage products and interest rate that you will qualify for are often determined by your credit score.
One thing that many people do not know is that you have the legal right to obtain a copy of your credit report. A mortgage professional can help you obtain a copy of this report and go through it with you to verify that all of the information is true and correct.
The good news is that your credit report is a working document. This means that you have the ability over time, to repair any damaged credit and increase your credit score.

Did you know that a mortgage broker can help you improve your credit rating and get you the financing you need for a home?  

Contact me for more information. 

Get your RRSP deduction & use it for down payment !! A legal loophole.

If you know you are buying your first home in the next 90 days, you can make a $25,000 RRSP contribution or $50,000 for two people. That means a big refund in April. You then withdraw the $25,000 or $50,000 to pay for that initial home’s down payment.

• Most people have the RRSP room to make a contribution. If you are buying a house by June and you have the down payment in cash, you can make the contribution to get the tax return.
• The “catch” is the contribution normally has to be in the plan for 90 days before you can take it out. Your possession date would have to be 91+ days after you make the RRSP contribution. If you would like more information on this call me at 403-836-1201 or visit my website .

Tips for Paying Off Your Mortgage Faster

Mortgages in Canada are generally amortized between 25 and 35 year terms. While this seems a long time, it does not have to take anyone that long to pay off their mortgage if they choose to do so in a shorter period of time.

With a little bit of thinking ahead, and a small bit of sacrifice, most people can manage to pay off their mortgage in a much shorter period of time by taking positive steps such as:

• Making mortgage payments each week, or even every other week. Both options lower your interest paid over the term of your mortgage and can result in the equivalent of an extra month’s mortgage payment each year. Paying your mortgage in this way can take your mortgage from 25 years down to 21.
• When your income increases, increase the amount of your mortgage payments. Let’s say you get a 5% raise each year at work. If you put that extra 5% of your income into your mortgage, your mortgage balance will drop much faster without feeling like you are changing your spending habits.
• Mortgage lenders will also allow you to make extra payments on your mortgage balance each year. Just about everyone finds themselves with money they were not expecting at some point or another. Maybe you inherited some money from a distant relative or you received a nice holiday bonus at work. Apply this money to your mortgage lender as a lump-sum payment towards your mortgage and watch the results.

By applying these strategies consistently over time, you will save money, pay less interest and pay off your mortgage years earlier! If you require more information, visit my website or contact me.

Bank of Canada Rate Announcement

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  Good morning
  
  As you know, your variable rate mortgage, line of credit and/or student loans are all based on the Prime Rate and here is your personal update from me on the recent Bank of Canada announcement on changes to their Overnight Rate which in most cases impacts your Prime Rate.
  
  At 10:00 am EST, Wednesday January 22nd, 2014 the Bank of Canada again did what we expected them to do … they continued to maintain their overnight rate. What this means to you is that once again the prime rate on your mortgage, line of credit or student loan will not change and remains at 3.00%. This is fabulous news but don’t forget to make the most of the low payments you still have, as the rate will increase in the future. If you haven’t done so already, give me a call and we can chat about helping you get set up with a great GIC, Tax Free Savings Account, or Retirement Savings Plan as your payments continue to remain low. So did you, or someone you know, blow their budget over the holiday season and have started to get those dreaded credit card bills in and the reality is starting to sink in... let me help you get back on track with a review of your financial situation which might be a savings plan, credit counseling or debt consolidation to pay off high interest loans or credit cards. If you would like to chat about some budgeting and saving strategies – let me know as I would be happy to assist.
  
  Here is an excerpt of the announcement from the Bank of Canada and what they had to say about their decision today:
  
  “Inflation in Canada has moved further below the 2% target, owing largely to significant excess supply in the economy and heightened competition in the retail sector. Global growth is expected to strengthen over the next two years with the US leading this acceleration, aided by diminishing fiscal drag, accommodative monetary policy and stronger household balance sheets. The improving U.S. outlook is affecting global bond, equity, and currency markets. Growth in other regions is evolving largely as projected. In Canada, growth improved in the second half of 2013. However, there have been few signs of the anticipated re-balancing towards exports and business investment. Stronger U.S. demand, as well as the recent depreciation of the Canadian dollar, should help to boost exports and, in turn, business confidence and investment”.
  
  Based on this news, the Bank still does not expect to increase their rate in the foreseeable future with any change most likely to occur late 2014 or even not until 2015! Remember, that any increase to the prime rate since 1992 has only been by 0.25% at any ONE time, so you won’t see a large significant increase all at once.
  
  Fixed rates dropped just slightly since the last announcement to around 3.39% to 3.59% for a five year fixed term.
  
  Based on this recent announcement, and the anticipation that the prime rate will still remain low for a while now, unless you feel otherwise, I’d recommend that you remain with your current variable rate product as the interest is lower than a fixed term rate right now. However, if having a fixed payment is important to you, call me so I can calculate what your new payment would look like and also if it is suitable for you. The next announcement on any change to the prime rate is March 5th, 2014 at which time
  I wonder if I can ask a favour – this is a great time for first time home buyers who are thinking of purchasing in the Spring to start with a pre-approval plan now to get them on track and save unnecessary interest. Also if you hear a friend or family member talk about going thru a financially tough time – maybe I can help with some budgeting and debt consolidation options for them. In either of these cases, would you mind passing my contact information on to them – this is very much appreciated.
• David Cooke - your Calgary mortgage broker 

Hybrid Mortgages - What are they?

Back in the 80's when interest rates were going up , a popular investing strategy was to go long and short. That's to say, you would take half your investments and lock  them in bonds at the 5 year rate and half in the one or two year rate. The idea is that you can never time exactly when rates will be at their peak or bottom so it's best to have half your investment in short term and half in long term. 

    Hybrid mortgages – also known as 50/50 mortgage products – include an equal mix of fixed-rate and variable-rate components within your single mortgage. This means you get the best of both worlds – the security of fixed repayments with the flexibility of a variable rate.

Although there was a time in recent years when mortgage experts considered a variable-rate mortgage as the obvious choice to save mortgage consumers money over the long term, with fixed rates remaining near historic lows, a 50/50 mortgage may be a great alternative for you.

In essence, since it’s extremely difficult to accurately predict rates over the long term, a 50/50 mortgage offers interest rate diversification, which can help reduce your level of risk.

If you opt for a 50/50 product, half of your mortgage is locked into a five-year fixed rate and half is at a five-year variable rate. You can lock in your variable-rate portion at any time without paying a penalty. As well, each portion of the 50/50 mortgage operates independently – like two separate mortgages – yet the product is registered as only one collateral charge.

The 50/50 mortgage product is well-suited to a variety of borrowers, including those who:

·         Would normally go fully variable but are afraid prime rate is at its bottom

·         Aren’t comfortable being locked into a fully fixed rate

·         Can’t decide between a fixed or variable mortgage

·         Savvy first-time home buyers

Some features of the 50/50 mortgage include:

·         20% annual lump-sum pre-payment privileges

·         20% annual payment increase ability

·         Portability (the option to transfer your existing loan amount to a new property without penalty)

As the 50/50 option is a fairly new offering, according to a recent study by the Canadian Association of Accredited Mortgage Professionals (CAAMP), 5% of Canadian mortgage holders have 50/50 mortgages compared to 28% with variable-rate mortgages and 68% with fixed-rate mortgages. But many experts believe the 50/50 mortgage is quickly gaining momentum. David Cooke is a senior mortgage broker at Dominion Lending Centres Westcor in Calgary. For more information contact him here.