4 Jun

Introducing the First Responder Mortgage Program

General

Posted by: James Wynters

12 May

25 Secrets Your Banker Doesn’t Want You to Know

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Posted by: James Wynters

3 May

Making the Grade: Common Myths About Credit Scores

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Posted by: James Wynters

26 Apr

How to Afford a Second Property in Retirement

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Posted by: James Wynters

More and more Canadians are choosing to buy a second property in retirement. Reasons for doing this vary. Some want to reap the rewards of a lifetime of saving and treat themselves to a vacation home. Others, on the other hand, view their second property as an investment, intending to rent it out and use the rent to bolster their income.

Whatever your reasons for wanting to buy a second property, there are various ways you might choose to pay for it – let’s have a look at what those are.

PAYING THE DOWN PAYMENT

Just like your first property, you’ll need a down payment for your second property. This can be as little as 5% but ideally should be higher – try aiming for 20%.

CASHING IN INVESTMENTS

One way that you may choose to make the down payment is by cashing in on investments. When considering this, however, caution should be exercised. Cashing in on investments in a taxable account can trigger taxes and OAS clawback, as well as potentially pushing you into a higher tax bracket. Taking large sums from your investments will also reduce the size of your portfolio, which can have a knock-on affect on your retirement income. Outliving savings is something all retirees should be conscious of, so think carefully before making large withdrawals that may deplete your pension pot too quickly.

TAKING OUT A HELOC

A Home Equity Line of Credit (HELOC) is a revolving line of credit secured against your primary residence which allows you to access up to 65% of your home’s value. Taking out a HELOC to pay for the down payment can be a good option to avoid cashing in on investments, but they’re not without their limitations. It’s recently become more difficult to get approval for a HELOC, and many retired Canadians without a fixed monthly income have seen their applications denied. If you manage to get approved for the loan, be aware that you need to service it each month, which will have an affect on your monthly cashflow.

USING THE CHIP REVERSE MORTGAGE

Another way to afford the down payment on your second property is with the CHIP Reverse Mortgage. The CHIP Reverse Mortgage allows you to access up to 55% of your home’s value in tax-free cash, meaning it won’t trigger taxes or OAS clawback, or push you into a higher tax bracket. Unlike a HELOC, with a reverse mortgage you don’t repay what you owe until you move out of your home or pass away, so there are no monthly repayments eating into your cashflow. What’s more, depending on how much equity you have built up in your home and how much your home is worth, you may be able to pay off a significant amount of your second property – perhaps even paying for it outright!

PAYING OFF THE MORTGAGE

Unless you were able to pay for your second property outright, chances are you’ll have a monthly mortgage to pay.

If your second home is an investment property, you likely intend to rent it out. In this case, the rent you charge should be enough to cover your mortgage payments (and hopefully a little extra for you each month).

On the other hand, if your second property is a vacation home, you’ll need to factor mortgage repayments into your monthly budget. One way to get the best of both worlds is by renting your vacation property out for short-term holiday lets. This will help you cover some, if not all, of the mortgage payments, while also giving you the flexibility to enjoy your vacation home whenever you want. Want to know more about how the CHIP Reverse Mortgage could help you afford a second property? Contact your DLC Mortgage Professional to learn more!

Written By: Agostino Tuzi

19 Apr

Mortgage Broker vs Mortgage Specialist

General

Posted by: James Wynters

To most consumers outside of the mortgage space, the terms “mortgage broker” and “mortgage specialist” would seem interchangeable – but they aren’t. As a potential homeowner, the differences are more important than you might think.

First and foremost, it is important to understand the definition of these groups before looking at the major differences. Mortgage brokers belong to an independent firm. This allows them unique access to rates and offers from various lenders’ (banks, credit unions, private lenders and alternative options). Conversely, a mortgage specialist is employed by a single lender and works to sell that particular institution’s products.

BENEFITS OF WORKING WITH A MORTGAGE BROKER:
1. MORTGAGE BROKERS WORK FOR YOU!
Mortgage Broker vs Specialist

Unlike a mortgage specialist, who is paid by the bank to sell their products, a broker works for YOU! A broker works as a link between you and the lender; they filter through the offerings to find you the best rate and product. The best part? A mortgage broker’s services are FREE! Brokers are paid by the lender of choice once the ideal mortgage product has been found. This means you get to utilize their expert advice and lender access at no cost!

2. MORTGAGE BROKERS CARE FOR THEIR CLIENTS

Similarly to the above, Mortgage Brokers care for their clients. Not only because they work for YOU but also because most brokers are self-employed and rely on referrals. As a majority of their business is done through word-of-mouth, this results in the best experience for clients. Every DLC Mortgage Broker is motivated to help you achieve your dream of home ownership!

3. MORTGAGE BROKERS ARE LICENSED PROFESSIONALS!

It might surprise you to know that mortgage and bank specialists are not required to have any formal training. While some lenders do provide in-house training, this varies from the provincially regulated course that mortgage brokers are required to pass. Mortgage brokers also continue to maintain their education through license renewals and educational courses. As a result, a mortgage broker provides expert advice you can trust!

4. MORTGAGE BROKERS HAVE GREATER ACCESS TO RATES

A mortgage broker is employed by an independent firm and has access to 90+ lenders, while a mortgage specialist can only access their particular lenders’ products. This can mean a big difference in rates and mortgage terms for homeowners! If you are looking at getting a mortgage with your bank (say Bank X), then your mortgage specialist can tell you exactly what Bank X offers. But, by seeking the advice of a mortgage broker, they can tell you what Bank X offers… as well as your options with Bank Y, Bank Z, Bank A, etc. When you are looking for the best mortgage product to fit your unique needs, more options to choose from just makes sense!

5. MORTGAGE BROKERS FOCUS ON MORTGAGES

When it comes to mortgage brokers, all they do is mortgages; they live and breath home ownership! Mortgage specialists and bank staff are often trained with a focus on cross-selling. While you may have booked an appointment to discuss a mortgage, many times they will focus on other bank products. This might include offering credit cards, insurance, RRSP, lines of credit, etc. This can sometimes be helpful, but many potential homeowners may find it overwhelming or pushy; especially when they are specifically looking for a single product – a mortgage.

6. MORTGAGE BROKERS OFFER FLEXIBLE HOURS

Most banks don’t offer great business hours, which can make it hard to book an appointment with a specialist. As many mortgage brokers are self-employed, they are motivated to assist clients. This means they are often available for appointments outside of business hours such as evenings or weekends. This can be especially comforting to individuals who are new to the mortgage process and may have questions or concerns that they would prefer to have answered right away.

 

Written by my Marketing Dept

 

10 Apr

Relocate or Renovate

General

Posted by: James Wynters

Like Lighting in a Bottle. That’s how Todd Talbot describes the chemistry between him and Jillian Harris, his co-host of the reality TV series Love It or List It Vancouver. There’s an undeniable electricity that flows between the pair who have battled against each other through 104 hour-long episodes of the home-design series. Sparks fly, but ultimately, both have the same goal: to find a solution for homeowners whose spaces simply don’t suit their needs.

In the “love it” corner is Harris, an interior designer (she wore her heart on her sleeve on The Bachelor and The Bachelorette) whose strategy is to help homeowners kiss and make up with their space, thanks to her design-savvy renovation. Talbot, a realtor (he’s been acting on stage and screen since he was a kid), is firmly in the “list it” corner, coaching quarrelsome couples to sell and start fresh.

The sparring is real, but there’s no bad blood between Harris and Talbot. “Jill and I really agree with each other 99 per cent of the time,” says Talbot. “We’re like brother and sister with each other, on camera and off.”

EMBRACING CHANGE

Buy or renovate? Talbot says the answer isn’t absolute. “Generally speaking [buying a house]; it’s a really fun journey. And it can be really fun on the reno side,” he says. “Life is lived in the grey areas, the nuances in between.” Those shades of grey involve negotiation and prioritization, among other practical and philosophical considerations that happen behind the scenes.

Off set, Talbot is a dedicated DIYer. “My happy place is building and renovating. I manage all my rental properties and do almost all the maintenance,” he says. He even renovated the house he shares with his wife and two children, located in Lions Bay, a sleepy seaside town in B.C. But that doesn’t mean they’ll live there forever. Like the homeowners featured on the show, Talbot and his wife wrestle with opposing forces. “Are we going to sell? Stay? Move?” Relocation to a condo in the city is a real consideration.

That struggle is what makes the show’s appeal universal. Our lives are constantly shifting. Babies are born and kids move out. Jobs change and communities evolve. Still, many homeowners are reluctant to step outside of their comfort zones, says Talbot, noting that the people who come on the show are fixated on location. “I’m the opposite: I’m a change guy. I love the idea of a different home in a different area. Nothing excites me more.”

As the TV series closes in on its fifth year of filming in June, Harris, a new mom, reflects on how her design sensibilities have shifted. “Now that I’m a parent, especially, I’m leaning towards more colour, less clutter and softer finishes, whereas before I was all about everything being white,” she says.

No two families are alike, but all are in desperate need of change, says Harris. She eases the transition, giving growing families more functional space within the existing square footage or cozying up a family home that feels empty after the kids have moved out. Each has their own wants, needs and personal style, which Harris tries to tease out of the homeowners so she can design workable spaces they love. “It’s our job to show them their best options and help guide them towards the right choice for them,” says Harris.

The obstacles families face, however, go beyond bad design and unpredictable real estate markets. A recent episode of Love It or List It Vancouver, where the homeowner uses a wheelchair, presented a new type of design challenge for Harris. “I wanted to think about every part of her home she would experience, from the front entrance to the kitchen cabinetry to being in the living room with her family. Even though they ultimately chose to list [the house], that episode really stuck with me and reminds me not to take things for granted.”

FINANCING FIRST

Whether overhauling an aging home with a sinking foundation, or buying bigger in a hot real estate market, those decisions are guided by budget. “People don’t want to talk about money. It’s not sexy,” says Talbot. His true passion for real estate is connected with the financial side. “What I really love doing is empowering people and coaching them to be able to make the decision to fulfil their vision.”

Talbot believes that gathering information and building knowledge is essential, rather than solely relying on an expert’s perspective. When you start making decisions based on instinct, it takes lots of the worry out of homeownership. He also believes everyone should view real estate as an investment and determine the end game of the property before they buy it: when they’re going to sell it and who they’re going to sell it to.

“At the end of the day, for anyone making decisions about renos or buying and selling, that’s a very personal choice and a choice that ultimately the homeowner takes responsibility for,” says Talbot.

Harris also advises thinking long-term. “It’s so important to look at both your five and 10-year plan as a family. If your house does not have any additional square footage to work with, then maybe a lipstick reno and a quick sell is your best option,” she says. “If your home does have extra space [and] it’s just not being utilized well, but you love the neighbourhood, then I would suggest renovating it to support your family for years to come.”

HOMEOWNERSHIP FOR ALL

For his part, Talbot is rethinking the entire ethos of homeownership. “In today’s day and age, we don’t live the same way as our grandparents did, [who] lived in their houses for 50 years. [Now] houses are more designed to facilitate lifestyle than be the lifestyle themselves,” he says.

“I’m really interested in the idea of redefining the Canadian dream of what makes a great house.” I think we’ve gotten off target as a society: 5,000 square feet is indulgent!” Instead, Talbot says it’s about those shades of grey and finding the sweet spot where financial responsibility, sustainability and quality of life intersect.

That’s a tough sell for some. Especially when our social media feeds are awash with idyllic images of families frolicking in sprawling backyards and cooking in couture kitchens. Dream home envy indeed. Harris sees beyond the soft filters and careful cropping and suggests homeowners look inward.

“I think the best thing is to identify what’s important to you and then build a plan around how to achieve that,” she says. “Or, be on Love It or List It Vancouver and have Todd and I figure it all out for you!”

TODD’S FIRST MORTGAGE

“Real estate kind of snuck up on me. I didn’t get into it for the money,” says Talbot who was working as successful actor when he started renovating.

“I’ve always struggled with this: being an artist and this financial fixation.” Talbot describes his first foray into the real estate market. “I bought a two-bedroom, two bathroom condo in [the Kitsilano neighbourhood in Vancouver], which happened to be the display suite. I had no furniture so I tried to negotiate in all the staging furniture.

They didn’t go for it. The only way I could swing buying my first place was to convince my buddy to rent the other room from me and that ended up subsidizing half my monthly costs. I drew up what I would later learn was a rental contract, literally on the back of a napkin. We lived together for three years before that property turned into a rental property. I refinanced it many times and funded multiple other properties with it.

I learned huge lessons owning that first property, which I sold a few years ago.”

JILLIAN’S DESIGN SECRETS

Harris is expanding her airy aesthetic of white-on-white and introducing saturated splashes of colour. Here, she shares five tips on finding your own style. Mix it up “I like to mix vintage with all sorts of eclectic styles. I like a tad of whimsy in a space and I love to see a person’s personality and life experiences shine through in the décor.” Harris also likes blending textures: “I love mixing muslins with thick rugs and knits and sequins and sparkles.”

Build Layers: Start with a blank canvas and build layers within the room. Anchor a room with an area rug, then add larger investment pieces such as sofas and loveseats. Then add in smaller pieces such as side chairs, ottomans and table lamps.

Get Colorful: “I have had a lot of fun over the years experimenting with coloured kitchens, using finishes like olive green and royal blue.”

Add Artwork: Harris suggests finding something inexpensive yet valuable in a sentimental way to inject polish and personality into your home. Or making a piece from meaningful items. “Frame flies from your great grandpa’s fly-fishing collection.”

Accessorize: Achieve a luxe look for less with a high-low mix of accessories, such as “steals” from stores such as Home- Sense and Target and “splurges” from boutiques, which act as “the icing” on the cake. “It gives your house that look of timelessness and richness.”

 

Written by my Marketing Dept


3 Apr

How to put an offer on a property with multiple offers.

General

Posted by: James Wynters

In many areas across Canada, local real estate markets continue to experience a trend toward a relative lack of home listings and an influx of active buyers. As a result, those ready to sell are in a favourable position to generate multiple offers on their home – often leading to buyers paying over market value for a property.

If you’re in the market to purchase a new property in an area that is experiencing this robust sellers’ market, then the reality is that you may ultimately get into a bidding war with other buyers. There are certain strategies that can help position yourself and your offer above others.

1. Get pre-approved. Don’t rely on what the internet tells you or a simple pre-qualification from a lender. Take the extra step and get mortgage pre-approval. By doing this and discussing your personal financial situation in depth with your lender, you’ll have more confidence in your buying power. This is paramount if you plan to not include a finance condition in your offer.

2. Understand the sellers’ needs. Buyers often make the mistake of wanting to “win” in negotiations. However, in a hot sellers’ market it is the seller that has the upper hand, not the buyer. Aim for a “win-win” situation. You can partly accomplish this by understanding what contractual components are important for the seller. For instance, if the seller is looking for a specific closing date, try to give them their preferred date – or something close to it.

3. Have fewer conditions. If you’re putting an offer on a home that has generated a lot of interest, you may need to consider not including some standard conditions.  Although this is not a recommended approach, it is a reality. All things being equal, a firm offer in a bidding war will typically win over a conditional offer.

4. Include a large deposit. Your ability to put a large sum of money down on a home will provide the seller with confidence in your purchasing power. This can ultimately give you an advantage over other buyers in a bidding war.

5. Make a strong offer. Every local market differs in terms of what a strong offer may look like, but each market will typically have a trend that can be analyzed. For example, a trend may dictate that for every additional offer, your offer should be increased by $5,000 to $7,000 above asking price.

Be sure to discuss these trends in your area with your realtor. Keep in mind these are only rules of thumb, so you’ll need to use your discretion based on the particular situation.

Written by Dustin Graham for Candian Real Estate Magazine

28 Mar

The 7 Misconceptions about Reverse Mortgages

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Posted by: James Wynters

21 Mar

6 Important Questions to Ask Before a Big Home Renovation

General

Posted by: James Wynters

So you want to make a major home renovation. Congratulations! Now, you’ve got to find the right contractor for the job. While doing a thorough online search or asking family and friends is an important first step, once you find a potential contractor, it’s time to start treating the process like a job interview. Being prepared with the right questions protects you from future headaches, but also ensures that you’re happy with the end result.

Hiring a contractor for your big home reno? Ask these important questions to make sure you’re picking the right contractor.

What is your experience in home renovation?
This question can help you determine how long the contractor has been in the business, whether they’ve worked with similar challenges as those in your home and how they ensure that projects are completed on time. With this question, you get full insight into their methodology.

You can also find contractors in your area that might have positive Yelp reviews or other social media to see if others are happy with their work.

Do you have a contracting license?
Depending on where you live, there are different requirements for what type of license a contractor has to hold. Check the laws in your region to see what might apply, and ask potential contractors directly whether they hold those licenses.

Do you carry the appropriate insurance?
According to the Canadian Homeowner’s Association, hiring people without the proper insurance could put you at legal and financial risk should something happen in your home. Protect yourself (and the workers improving your home) by checking off this box in the beginning, and ensure they have both liability insurance and worker’s compensation.

Will we get a written contract?
This should be a given if you’re working with a contractor because if the answer is no, don’t even bother moving forward with the interview. The CHBA says contracts should cover the description of the work, the materials used and the price of the job. You should also take this as an opportunity to figure out your payment schedule, as the Better Business Bureau in the U.S. says that you should never pay the full price of the job upfront, and the specific timeline for completing your project.

Contractors should also always offer a warranty in writing that informs you of what is covered and for how long.

Can we get in touch with your past clients?
A contractor should be proud of their past work. Take this as an opportunity to figure out how contractors approach their work, whether they have effectively handled disputes and fact-check what contractors tell you about their working style.

Will you be responsible for building permits?
If there is a chance that your building requires permits, you want to make sure that your contractor is prepared in this area. Square One Insurance says you should try to be present for a contractor’s home inspection to ensure that you fully understand their feedback, and anticipate if any changes in your home need to happen.

Written by my Marketing Dept

13 Mar

It’s All About the Property

General

Posted by: James Wynters

When your mortgage application goes through the approval process, they are not only looking at you, but also the property in question. In fact, sometimes when an application is denied it has nothing to do with you, and everything to do with the property.

To improve your chances of success when it comes to financing, there are three main things to consider:

The type of property
The location of the property
The usage of the property
Let’s take a look at some of the specifics for each of these considerations.

type of property
There are various types of properties when it comes to home ownership – detached houses, semi-detached, condos, townhouse, duplex, carriage or heritage home. Depending on the type of property you have chosen, there may be specific considerations.

CONDOMINIUMS
When it comes to condo properties, the lender (and potentially the insurer) will consider the age of the building. In addition, they will look at maintenance history (or lack thereof), as well as the location for marketability. Some lenders may have stipulations that limit themselves to buildings with a certain number of units, or past a certain age.

If the condo you wish to buy is lacking a depreciation report, has a low contingency fund or large special levies pending, these will be red flags for the lender. Any of these situations will require a more thorough review. These items should also serve as strong considerations for you as it indicates the management (or lack of) for that condo building.

ADDITIONAL UNITS
If you are looking at a property with additional units, it is important to consider that buildings with over four units, are considered a ‘commercial’ property and would be evaluated on that basis.

HERITAGE HOMES
Whether registered or designated, heritage homes require a more detailed review and often come with special considerations for financing.

LEASEHOLD OR CO-OP PROPERTIES
These properties also have specific requirements, particularly when it comes to the maximum loan-to-value which means they will require a larger down payment. These types of properties also typically call for additional documentation, and may have varying interest rates.

If you shift from a standard condo to a lease-hold property, your down payment amount will likely change. If you want to move to a small rural town or a small island, there will be fewer options. In addition, you may have to pay a higher rate as well as provide more documentation on the property.

All About The Property
location considerations
You’ve heard it before – location, location, location! Location matters just as much to the potential homeowner as it does the lender. Some things to keep in mind when it comes to location include:

POTENTIAL RESALE VALUE
If the location limits the potential resale value for the building, lenders may not provide financial approval on that property. This is due to the increased risk if the borrower defaults. In that case, the lender may not be able to foreclose the property and get enough funds back due to the low resale. That said, some lenders may allow these properties but they might reduce the loan amount if the building is located outside of a major market area, or they may add a premium to the interest rate.

RURAL CONSIDERATIONS
For properties with water access only, or with no access to municipal utilities (heat, water, electricity, sewage), there will be additional requirements to assess lender risk. These requirements might include: Insurance coverage, water testing, septic tank inspection, seasonal access and condition of the property.

TRANSFER TO ANOTHER PROVINCE
It is also important to note that if you purchase a home in one Province and are transferred or move to a different province, some lenders won’t be able to port the mortgage due to being provincially based.

usage considerations
The use of the property can include things such as personal, investment, recreational, agricultural and also consider previous activities. A few things to keep in mind are:

CONDOMINIUMS
If you are looking at purchasing a condo on a property that has either a commercial component in the building (such as shops on the first floor), or allowable space in the unit for businesses (live/work designation), you may have limited lender options. In some cases, lenders will avoid these types of properties at all costs, while others may require approval from the insurer (i.e. CMHC).

RENOVATION REQUIRED
If the property requires renovations, the extent of the upgrades, as well as the property value will be taken into consideration.

PREVIOUS GROW-OPS
Homes that previously existed as grow-ops, have special lending options. These typically come with higher interest rates and costs due to decreased value.

RENTAL SUITES
For owner-occupied homes that contain rental suites, it is important to consider potential rental income. If the house is purchased for investment, rental income is automatically considered. This can result in a different interest rate than simply an owner-occupied dwelling. In these cases, the rental income can also increase the resale value of the property. However, an appraisal of the property must be conducted and reviewed to ensure the condition. This will also uncover whether any renovations were completed to add value.

SECOND PROPERTIES
Purchasing a second home for recreational use will require a review to determine if it is seasonal or year-round access.

Before you begin your home search, it is best to discuss your future plans with a Dominion Lending Centres Mortgage Professional. This will ensure you receive accurate information to understand the specific requirements your potential property might require. Seeking expert advice early on will also give you ample time to find the right fit! This will also ensure you can submit a full financing review before subject removal on a purchase.

Written by my DLC Marketing Team