Closing costs are a necessity when it comes to purchasing a home. They are not included in the down payment, the monthly mortgage payments, nor are they included in the purchase price of a home yet you are still responsible for paying them in full. Knowing they exist is half the battle. Nobody wants to find out a week before possession date that they suddenly owe thousands of dollars before they can get the key to their new home. Correctly budgeting for closing costs will take that huge weight off your shoulders.

In order to approve your mortgage, lenders will require you to have 1.5% of a property’s purchase price available in cash to be able to cover closing costs. This amount is in addition to the 5% minimum required for a down payment. Actual closing costs could be closer to 3% of the purchase price and even higher in some cases. What are closing costs specifically? The following is a list of what you might be able to expect for closing costs depending on your province:

1. Appraisal – sometimes required by the lender to determine the value of a home.
2. Interest Adjustment – the amount of interest due between your mortgage start date and the date from which the first mortgage payment is calculated.
3. Property Transfer Tax – a tax paid to the provincial government when a property changes hands.
4. Legal Fees – costs associated with finalizing the sale or purchase of a property.
5. Prepaid Property Tax & Utility Adjustments – amount you will owe if the person selling the home has prepaid any property taxes or utility bills.
6. Property Survey – legal description of the property you are purchasing including its location and dimension.
7. Sales Taxes – some properties are sales tax exempt (GST and/or PST), and some are not. Always ask before signing an offer.

As you can see, many factors go into determining the size of these costs. That is why it is also important to speak with a mortgage broker prior to making an offer on a home. Also, some costs may be exempt, such as the property transfer tax for first-time home buyers in BC. Contact a Dominion Lending Centres mortgage professional to find out if you would qualify to have these costs covered.

To find the perfect realtor for you, you’ll need to do a bit of legwork. It can seem like an overwhelming decision akin to deciding on which ice cream you want to try! You go to the ice cream store and they have over 50 flavours and after you have contemplated, you opt for vanilla – just because it was easy.

When it comes to a slightly larger transaction such as purchasing a home, you probably won’t want to make a decision on which realtor to go with just because it was the easy choice.

Here are five questions that you should always ask your next potential real estate agent:

1. How does your experience benefit my specific real estate transaction? If the agent just completed a course on negotiation skills or sold a home in your neighbourhood, they should be able to bring a unique edge to the table.

2. If you were buying or selling your home, what would you look for in an agent?
This question is a great way of getting the inside scoop on the industry. What do industry professionals see as an essential asset? How does each agent vary in those priorities?

3. Could you tell me about a recent success that you’ve had as a realtor? Give the agent a chance to discuss their latest win, and you’ll learn what they’re passionate about as well as how they’ll turn your transaction into their newest achievement.

4. What are your most effective approaches to marketing a home? Rather than the standard ‘how will you market my home?’, ask which methods are delivering results. If your agent is particularly successful with new school social media or tired and true networking, you’ll have expectations on how they’ll tackle selling your home.

5. Ask for the rundown of the conditions, commission fees and agreements. These basics will play a major role in how you choose your real estate agent. Ask for the specifics at each interview, and you can see how each partnership measures up.

If you have any questions, contact your local Dominion Lending Centres mortgage professional.  We work with many realtors and will happily provide quality referrals for your next interrogation/interview.

The first time you heard the term “Monoline Lender” you might have felt a bit of suspicion or at least a feeling of needing more information before proceeding. It’s understandable, I mean why is this “bank” you’ve never heard of willing to loan you money when you’ve never even heard of them?

In an effort to help you see the benefits of working with a Monoline Lender, here is some basic information that will help you understand why you’ve never heard of them, why you want to, and the reason they are referred to as lenders instead of banks.

Monoline Lenders only operate in the mortgage space. They do not offer chequing or savings accounts, nor do they offer investments through RRSPs, GICs, or Tax-Free Savings Accounts. They are called Monoline because they have one line of business – mortgages.

This also plays into the reasons you never see their name or locations anywhere. There is no need for them to market on bus stop benches or billboards as they are only accessible through mortgage brokers, making their need to market to you unnecessary. The branch locations are also unnecessary because you do not have day-to-day banking, savings accounts, investment accounts, or credit cards through them. All your banking stays the exact same, with the only difference of a pre-authorized payment coming from your account for the monthly mortgage payment. Any questions or concerns, they have a phone number and communicate documents through e-mail.

Monoline Lenders also have some of the lowest interest rates on the market, the most attractive pre-payment privileges, and the lowest pre-payment penalties, especially when compared to a bigger bank like CIBC or RBC. If you don’t think these points are important, ask someone who’s had a mortgage with one of these bigger banks and sold their property before their term was up and paid upwards of $12,000 in penalty fees. An equivalent amount with a Monoline Lender would be anywhere from $2,000-$4,000 in fees.

Monoline Lenders are not to be feared, they should be welcomed, as they are some of the most accommodating and client service-oriented lenders around! If you have any questions, don’t hesitate to call your local Dominion Lending Centres mortgage professional.

Prepayment, Portability and Assumability

Prepayments

One of the most common questions we get is about mortgage prepayments. The conditions vary from lender to lender but the nice thing about prepayments is that you can pay a little more every year if you want to pay off your mortgage faster. A great way to do this is through prepayments.

There is always something to ask your broker about because each lender is very different. You can always do an increase in your payments which means that you pay a little bit more on top of each mortgage payment. You can also make a lump sum payment. Perhaps you get a bonus every year or you get a lot of Christmas money. You can just throw that on your mortgage. It goes right on the principle so you’re not paying interest on those extra funds. Paying a big chunk at once also means that a higher percentage of future payments will also go towards the principle.

Portability

Portability means that if you sell your house and you want to take your current mortgage and move it to your new house you can. The one thing about portability that we always have to keep in mind is that we can’t decrease the mortgage amount but we can do a little bit of an increase often through a second mortgage or an increase we call a blend and extend. It just gives you the flexibility of moving the mortgage from one property to the next property. It also gives you the flexibility of being in control of where your mortgage is going and not having to break your mortgage every time you decide to move.

Moving a mortgage to a new property avoids things like discharge fees, the legal cost of registering a new mortgage and the possibility of a higher interest rate. It’s great to be able to keep that rate for the full term rather than having to break and pay those penalties halfway through.  Not every mortgage is portable.

Assumability

Assumability comes into play more often where there are family ties. Say your parents have a mortgage and you move into that house. Rather than you going out and getting a new mortgage and your parents having to pay those discharge fees, you might have the ability to assume their existing mortgage at that current rate. All you have to do is apply and make sure you can actually afford the mortgage at what they’re paying. You have to be able to be approved on the remaining balance on the mortgage just like you would on any other mortgage. Just because your parents have an eight hundred thousand dollar mortgage doesn’t mean you’ll be able to take that over.

If you have any questions, contact a Dominion Lending Centres mortgage specialist for help.

Doing a little bit of research before you renew your mortgage could save you thousands of dollars. Just under half of all Canadian mortgages are up for renewal this year. Do you have a mortgage coming up for renewal?

Typically you will receive your mortgage renewal notice from your current lender 3-4 months in advance of the renewal date. Sometimes you may receive an offer for early renewal. Either way, always reach out to your Dominion Lending Centres mortgage professional to find out your options and what you need to know before you renew your mortgage.

With the new mortgage rules in effect in October/November 2016 and subsequent changes January 1st, 2018 it is more important than ever to know your options before you sign a renewal agreement.

Did you know…?

• Any fees for transferring the mortgage may be covered
• Over 65% of borrowers simply sign the first renewal agreement that comes their way without doing any research
• Lenders are aware of the above statistic and are taking advantage by offering high rates on the initial renewal agreement
• Most lenders will only offer lower rates after a client declines their first offer. Doesn’t seem fair does it?

Mortgage professionals have access to many great renewal programs from banks, mortgage companies and credit unions.

Be informed before you renew. Consult with a Dominion Lending Centres mortgage professional to review your financing needs for all of your properties and to come up with a plan ahead of time. If you are looking to make any large purchases such as investments, real estate, an automobile, etc. — we can help you understand your options and the impact of these purchases on your financial situation.

Do you have bad credit? What about no credit?

If you haven’t seen your credit score, you’re not alone.

Many of us don’t know about our credit score or even know what it is. Luckily, during our initial consultation, we go over your complete credit report with you.

So, how can you make sure you have a great credit score? Here are a few tips to get you started.

1. You need to have credit. It may be surprising – but your credit score goes up as more credit is available to you. We recommend at least two sources: a line of credit and a credit card (or 2 credit cards), for example.
2. Make sure to keep your balances low. It may help to have more credit available but not if you’re using it all up.  One of the least known ways to hurt your credit is to have high utilization.
3. You also have to pay your bills when they are due. That goes for your internet, cell phone and even parking tickets.
4. It also helps to start as soon as possible. The longer you have a clean record of paying your credit card, loans or other credit facilities, the better your credit becomes.

Don’t ever hesitate to contact a Dominion Lending Centres mortgage professional about your mortgage related needs when you’re buying a property anywhere in Canada.

This great article with tips on how to handle your mortgage renewal will help you save thousands on your next mortgage term!

Is your mortgage coming up for renewal this year?

There is a good chance that you or someone know has a mortgage due for renewal very soon. Almost one out of every two households in Canada that currently have a mortgage in place will mature this year with a major lender in Canada.

Here are a couple simple rules to follow if you, a friend, a family member or colleague are renewing your mortgage this year.

• DO NOT just simply sign the renewal letter that comes in the mail.
• INVESTIGATE your options.

70% of all mortgagors simply sign the renewal letter that comes in the mail. You would think that because you have been with the current lender for so long that you would receive the BEST rate out there. NEWS FLASH, that is 100% false. Remember, lenders are in the business of making money for their shareholders. Your current lender has done their homework, you should do yours. They know that most of the borrowers will sign and send back the form for ease and convenience. We are lazy by nature and we possess too much trust. I’ve seen scenarios where borrowers are paying an extra 0.20% to 0.40% on their rate because they didn’t investigate their options.

I recently read an article online that indicated the average mortgage amount in Canada was just under $200,000 for 2017. An increase of 0.25% in rate will increase the monthly mortgage payment by approx. $13 per $100,000 of the mortgage balance. If your current lender offered you a rate 0.25% higher than another lender then this scenario it would yield an annual increase of $312. Are you able to invest 3-4 hours of your time to save that kind of money? Heck yes, you are! That is equivalent to making $78 – $104 per hour… after taxes!

Renewing with your existing lender may or may not be your only option. When 47% of you out there receive the renewal letter in the mail this year, I have 312 reasons why I would strongly advise you to reach out to a Dominion Lending Centres mortgage specialist to discuss ALL your options – switching lenders to save money and/or leveraging equity for financial planning purposes.
Here is an example of how I just refinanced my home to access my equity. We were able to obtain a HELOC (Home Equity Line of Credit) mortgage product from a major Canadian chartered bank.

• Current residence appraised at $1.15MM.
• Current mortgage balance, $445,000.
• Maximum loan limit, $920,000 (80% of market value: 1,150,000 x 80%).
• Opted to secure the current balance into a variable rate mortgage.
• The equity of $475,000 was set up to be accessible from a line of credit.
• These clients now have access to funds for any future needs: renovations, emergency, investment opportunities, post-secondary education for their children.

But while a HELOC allows for product diversification and long-term planning, it is not for everyone. It can be a bad idea if it’s just used as access to easy cash. One needs to possess high self-discipline, as the funds are extremely accessible. A HELOC is also not available to all homeowners as there must be greater than 20% equity in the home before a lender will consider it.

With 13 modifications to lending policies since 2006, the time to plan is now. If I were to attempt the same refinancing manoeuvre today to leverage equity I would qualify for 20% less ($95,000) or $380,000. This would be one less rental property added to the portfolio. Before any more changes happen, you should consider accessing your money today.