If you have been asked to be a guarantor on a mortgage, read this important information!

A Guarantor, when it comes to mortgages, is exactly what it sounds like—they “Guarantee” the mortgage for another person if they are unable to pay back the loan.

Guarantor’s or co-signers are often used if someone has:

• Damaged or poor credit
• Insufficient income

In most cases, someone with poor credit and/or insufficient income has a more challenging time securing a mortgage. Adding a guarantor can help get the file approved as the lender is assured that he or she will be paid, should the mortgage holder default.

Many people will assume that a co-signer and a guarantor are the same thing. This is not the case though…there are key differences that you should know before becoming a guarantor on a mortgage.

1. Whose name is on the loan?
This may seem like a small detail, but when it comes to loans, whose name is on it matters!
With a guarantor, their name will not be on the title of the property, but it will be on the mortgage. With a co-signor, this changes in that their name will be on the mortgage and on the title of the property. In addition to this, for a guarantor mortgage the guarantor must be a spouse. With a co-signer this is not the case, and you can utilize whomever agrees and meets the qualifications.

2. What’s the Risk?
For the people seeking a guarantor, a portion of risk is alleviated because they have the guarantee of the guarantor. However, for the guarantor, there is a heightened risk. They are responsible for the entire amount of the loan if the borrower defaults at any time. With this in mind, lenders require the guarantor(s), in addition to the borrower(s), to qualify for the loan they are looking to borrow. They must meet the following lending requirements which include:
. Credit Check
. Disclosure of income
. Disclosure of Liabilities
. Disclosure of Assets

It is also highly advisable that a potential guarantor seek legal advice before signing for the loan—and this should be a separate attorney from the one that is involved in the mortgage transaction. Seeking out proper legal advice can allow the potential guarantor to ensure they fully understand the contract, the loan, and any other details.

One final note that should be evaluated by any potential guarantors, is the relationship with the person you will be signing for. You are taking a risk and taking on a lot of responsibility for this person and it is advisable that you know the person well and trust them.

3. What other Variables are there to Consider for Guarantors?
There are a few other things that a guarantor will want to consider before finalizing anything. One of these is the fact that if you are a guarantor, you may not be able to qualify for a large loan or mortgage on your own. Look at your goals and future (or current) expenses before taking on this additional responsibility. As a final note to guarantors, they may want to consider creditor insurance (amount varies based on the loan) to protect themselves and their assets.

4. Can your relationship with your bank dictate if I need a Guarantor?
In some cases, yes! If you have a long-standing relationship with your current bank and they have seen your ability to responsibly handle debt-repayment, they may consider not requiring you to have a guarantor. This is not always the case, but it is an option that your mortgage broker may review with you.

These 4 facts along with your mortgage broker’s advice, can help you decide if you want to be a guarantor, or if you truly require a guarantor mortgage after all! If you have any other questions about guarantors or co-signers, we encourage you to reach out to your Dominion Lending Centres Mortgage Broker—we know they will be happy to help!

Geoff Lee

There are many things to consider if you would like to port your mortgage.

Policies are always changing, and when you port a mortgage, a FULL application must be approved and completely underwritten with full, credit, income, property and policy review.

It’s a mistake to believe that just because you already had a mortgage, you will easily get a new one. Policies and rates are changing rapidly and you need a strategy to stay informed. SO BEFORE you consider a move, understand the worst case scenario of what you qualify for without porting your mortgage so you avoid disappointment of falling into the 70% of people that don’t end up porting. Mortgages can be made simple, when you are empowered with relevant information relating to the current market and your life stage. Depending on those factors, you might be happy to get rid of your old mortgage and get in with the new! We have a mortgage for that, and can help. On average less than 3% of mortgages are portable.

Let me list a few of the reasons why:
1. Dates– most lenders have a different policy on the dates that will allow to port the mortgage; it can be weeks or months. Your closing date will determine that.
2. Amortization– porting a mortgage means you port the same amortization, so if you are moving up the property ladder, that may mean your payments are significantly increased making it less affordable or meaning you can’t qualify with your income.
3. Amounts– some have a 10% variance limit up or down, where the penalty will trigger or it’s no longer a fit within the policy.
4. Change in credit– depending on the credit score and outside debts you have will determine if you still fit the credit profile your previous mortgage had.
5. Income– if there has been a change in your income type or amount this will also impact the options.
6. Property type– some lenders only lend on single-family homes, or a particular zoning, or don’t do private sales- even if they did when you originally got your mortgage with them.
7. Rate– maybe the change in rates either way of the product type you took doesn’t allow for a port due to one or a few of the combined factors. For example, going from insured to uninsured comes with different policies.
8. Product– maybe the product you had no longer exists for your particular profile.
9. Inspections – maybe the lender approved it initially but after your inspection just as you wanted a reduction in price, they decide they are no longer going to lend on it or decide it doesn’t fit the profile or they wont do it under that program ( instead you need a purchase plus improvements or a hold back they may or may not participate in and maybe want a different fix that you or a strata council agree on.)
10. Bridge – if you want to buy before you sell, all the above factors come into play. Maybe the original lender doesn’t allow the length of time you need, there cost to bridge is much higher, or maybe they don’t approve that portion of the loan, which puts you back at square one.

Purchasing a home is complex, with many moving parts and needs to be understood as such. When you have an experienced Dominion Lending Centres mortgage broker by your side while lots of things can come up, we can guide you through what is best for your family, which is why we encourage you to be educated, and empowered so you are ready for your next part of your ownership journey.

Angela Calla

Read on to help pay off your mortgage quicker!

So now that you’re a home owner, what are your next steps? Well first, you will have to figure out exactly how you are going to get RID of that mortgage. Yes, that’s right. Now that you got it, here are four ways you can pay it off and be done with it!

1. ACCELERATE YOUR PAYMENT FREQUENCY

Making the change from monthly payments to accelerated bi-weekly payments is one of the easiest ways you can make a huge difference to the bottom line of your mortgage. A traditional mortgage splits the amount owing into 12 equal monthly payments however, an accelerated biweekly payment is simply taking a regular monthly payment and dividing it in two. Instead of making 24 payments, you will make 26. The extra two payments really accelerate the repayment of your mortgage!

Here is an example of what I’m talking about.
Bob currently has a $300,000 mortgage at a 4% fixed rate with a 25 year amortization period. He will save $32,000 just by moving to biweekly accelerated payments from biweekly. Go Bob!

2. INCREASE YOUR MORTGAGE PAYMENT AMOUNT

Unless you opted for a “no-frills” mortgage, chances are you have the capability of increasing your regular mortgage payment by 10-25%. This is a great option if you have some extra cash to spend within your budget. This money will go directly towards paying down the principal amount owing on your mortgage. The more money you can pay down when you first get your mortgage, the better. At the end of the day, you will pay less interest over the lifespan of your mortgage. By voluntarily increasing your mortgage payment, it is metaphorically like you are signing up for a long term forced savings plan where equity builds in your house rather than your bank account.

3. MAKE A LUMP SUM PAYMENT

Again, unless you have a “no-frills” mortgage, you should be able to make bulk payments towards your mortgage. Depending on your lender and your mortgage product, you should be able to put down anywhere from 10-25% of the original mortgage balance. Some lenders may be particular about WHEN you can make these payments, however if you haven’t taken advantage of a lump sum payment yet this year, you will be eligible.

4. REVIEW YOUR OPTIONS REGULARLY

As your mortgage payments are withdrawn from your account, it is easy to put your mortgage payments on auto-pilot especially if you have opted for a 5-year fixed term. Despite the term of your mortgage, it is highly encouraged to give your mortgage an annual review. This review gives you a conscious look at the overall stance of your mortgage which could rise to opportunities of refinancing or lowering your interest rate!

If you have any questions about your mortgage, how to get a mortgage, or how to get rid of the mortgage you have, please don’t hesitate to contact a Dominion Lending Centres mortgage professional today!

Chris Cabel