It is not difficult for mortgage brokers to compete with the banks.

I am often asked if it’s hard to compete with the banks. While they may offer competitive rates at times, right now we have much better rates than the banks. However, we have certain advantages which allow us to blow them out of the water most of the time.

1. More Choice – banks are limited to around 5 products that they can offer you. They will try to fit you into one of their products even if the financial institution next door has a better one for you. Brokers have access to banks, credit unions, trust and mortgage companies as well as private lenders.
2. Better Representation – Brokers are your champions bankers are employees. They put their employer first . They won’t offer you the best rates unless you are a good negotiator. Brokers are licensed by provincial organizations and have to follow a code of ethics which requires that we put the consumer first. We also negotiate the best rate, terms and conditions for you. If you need to break the mortgage before the end of the term, we can assist you with that and perhaps help you to avoid paying a penalty.
3. More Benefits – If you are moving into a home that is more than one year old, you probably do not have a home warranty. Brokers have 3 lenders who offer home warranties, which can cover repairs to the plumbing, heating and electrical systems with a small deductible. Two of the lenders even offer this as a complimentary service for the first year while the third lender offers it for the length of the mortgage. As Dominion Lending Centre brokers, we also have discounted rates for moving services and boxes from a large national moving company .
4. Better Protection – I saved the best for last. We offer portable mortgage life and disability insurance.

It may not sound like much but we have the same coverage as the banks offer with one important difference – portability. While we take care to place you with a good lender, circumstances change and lenders may not offer favourable terms on renewal. If you try to leave a bank after developing a condition like high blood pressure or having a heart attack, you will have to re-apply for insurance coverage and may be denied. There are hundreds if not thousands of unhappy bank clients who are stuck paying high interest rates because they are forced to stay with a lender. Broker insurance gives you the independence to move from lender to lender depending on who is willing to offer you the best rates and terms. This may not sound like much to you now but it’s a real game changer for anyone who knows someone who have had this happen to them.

Is it difficult to compete with the banks? No – we have them beat hands down.

David Cooke

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

Be sure to include a “subject to financing” in your purchase agreement!

There is a myth out there that once you’re pre-approved for a mortgage, you’re good to go out and buy a home… with a no subject offer… DON’T do it!

A pre-approval means that based on being able to PROVE (through documentation) your CURRENT income, expenses, down payment and credit bureau you SHOULD be able to get fully approved once you find the right property (this is the first half of the equation).

Remember that there cannot be any major changes to the your mortgage application details prior to the completion of their purchase as it may affect the your qualifications and change the conditions of the approval.

I always recommend my clients put in a “subject to financing” clause with their realtor when they are putting in an offer to protect themselves.

Here’s why:

The lender can like you and your financial picture, BUT the lender doesn’t know which property you want to purchase (this is the other half of the equation). Here are 3 examples:

• A bidding war has bid up the price and the best offer (yours) has been accepted. YIPPEE!!! The lender sends in their appraiser to determine the value of the property. The appraisal comes in at a lower price than your accepted offer DRATS!! You now have to come up with the difference between the appraised value and your offer, since lenders will only offer a mortgage based on the appraised value of the home.
• You are buying a condo/townhouse and the strata minutes indicate that there are: leaks, electrical issues, roofing problems, etc. that the strata needs to act upon. If the Strata doesn’t have a big enough contingency fund, the lender can decline due to potential special assessments down the road.
• Property zoning – if the zoning is anything other than residential then your options will be limited. Some condos are zoned commercial if there is a large commercial component to the complex. Industrial, Agricultural Land Reserve (ALR) in B.C., or leasehold (government or otherwise) limit a buyer’s options.

As you can tell “you may be pre-approved” but most certainly the subject property is not!!

There are several properties that most lenders will not touch these days. Here’s a (partial) list of property details that can affect most lender’s decisions on approving your mortgage:

• A remediated grow-op or drug lab
• Leased land or co-op
• Age-restricted property
• Special assessment (pending or otherwise)
• Any reference to water or leaks in the minutes
• A “fixer upper”
• Contains asbestos, vermiculite insulations or has (even partial) knob-and-tube or aluminum wiring
• Is on land with a commercial zoning component
• Livestock is present, etc.
• Self-managed strata’s (no strata management company)
• Size of the property – below 500 sq. feet,
• Doesn’t use municipal sewage or waste
• Over 1 Acre and/or multiple buildings
• Ongoing or upcoming assessments or legal proceedings
• Strata with small contingency fund

The lender reviews the details of each property in detail once you have an accepted offer in place.

It’s important that the real estate agent discloses the information to their buyer ASAP so that it can be brought to the lender’s attention. The agent should be proactive in getting all documentation pertaining to the building/property, so that the buyer can make an educated buying decision. Many of the issues stated above can affect the long-term value and marketability of a property.

If you have a “subject to financing” clause in your purchase agreement, and you can’t find a lender (for whatever reason), then you can back out of the deal with no financial repercussions.

In my opinion you need to always put in a “subject to financing clause” as that’s the best protection you have. With subject free offers you could forfeit your deposit (and facing potential legal action from the seller) should you want to cancel your contract after the agreement has been made, even though you were technically “pre-approved”.

As you can tell there is lots to discuss about buying homes including pre-approvals! If you have any questions, contact a Dominion Lending Centres mortgage broker near you.

Kelly Hudson

Needing a co-signer or looking to be a co-signer for a mortgage? Read on!

If you keep up on the news you know that qualifying for a mortgage is getting tougher and tougher. Someone who would have sailed through the application process 10 years ago could find themselves declined for a mortgage today.

Often I find applicants can afford the monthly payments but they can’t prove that their income is stable. If they waited another 6 months to a year, they could but they would miss out on a great opportunity to buy a home now. Buyers who have recently switched jobs, receive overtime or get a portion of their income from tips are the people who need co-signers to make the deal work. A strong co-signer can be more persuasive to a lender than offering to put more money down.

I also have found that people with “thin” credit are being asked for co-signers. These are applicants who have one credit card but no car loans or other credit facilities showing on their credit bureau report. Often they are recent university graduates who recently started work.

Rick Bossom, an accredited mortgage professional with Bayfield Mortgage Professionals in Courtenay, British Columbia, says that it’s an alternative to lenders just turning the deal down in cases where the borrowers are just on the edge of qualifying. “They’re close but they just need a little bit more and that’s why the co-signing thing would come up. It’s not like they’re really, really bad, they’re just not quite there.”

What does a co-signer do? Their job is to continue payments in the event that the main applicant(s) default on the mortgage. In essence, they are saying that if you skip out on the payments, they will take up the slack.

As a result, lenders want to have co-signers on the application just as if they would be living in the home and making the mortgage payments. If they have mortgage payments of their own, they have to show that they can financially afford to pay both mortgages and any other monthly obligations that they may have like car payments.

One thing that surprises primary applicants as well as their co-signers is the amount of information required from the co-signers. They will have to provide an employment letter, recent pay stub, a credit bureau report at a minimum. If they are self-employed company income documents will also be required.

It’s always best for the primary applicant to have a conversation with the co-signer or co-signers to inform them of this in advance. The co-signers should also be aware that this will tie up their credit for the term of the mortgage. If they are planning on buying a vacation home or making a large purchase, they may be declined based on their financial obligation to your mortgage.

However, there is one feature that banks don’t tell you about but your Dominion Lending Centres mortgage professional will tell you. There’s the ability to remove the co-signer from the mortgage after 12 months of successful on time mortgage payments. Co-signers don’t have to stay on the mortgage for the whole term.

Make sure that you mention that you are interested in taking your co-signer off the mortgage in a year and your mortgage broker can pick a lender who will allow this. It’s really nice to be able to remove your co-signer and thank them for their help without tying up their credit capacity for 5 years.

David Cooke

To downsize, or not to downsize, that is the question?

With almost 50% of homeowners ready to retire and wishing to stay in their home and 30% of those people with most of their money tied up in home equity, the downsizing dilemma is real. Can they afford to stay in their home or is downsizing the better option?

In the past, retired couples or a widow would keep their clear title home and use pension and investment income to live. They would only sell the family home and move into a retirement home when health issues forced the move or upon death of both people. Times have changed.

People are living longer and want to stay in their home. The cost of living has risen and, due to higher home values, the amount of equity in that home is greater than ever. Many home owners are being stretched with their budget and their retirement income is insufficient to maintain their lifestyle.

We have found that many retired people are unable to meet their budget each month and are using a line of credit and/or credit cards. This becomes a vicious cycle and the cost of interest pushes them to the wall and they reach their maximum limits. Then they are forced to sell their home or reduce their lifestyle to manage. Often family members are unaware till it becomes a serious matter. Planning ahead is essential to avoid this situation and lower stress levels for all family members including the aging parent.

In a recent Globe and Mail article, Scott Hannah of the Credit Counselling Society talks about the risks.

Some homeowners now recognize the need to look to their home as a source of income from home equity financing.

There are a growing number of programs designed specifically for homeowners over the age of 55. Each comes with different requirements, advantages and benefits. It is important for retiring or retired people to talk with their family and then in a group with their independent Dominion Lending Centres mortgage broker and financial planner.

For some family members, the next step is for the aging parent to downsize to a new home. For some, it is to stay in the family home and set up an equity plan to maintain a safe place and comfortable lifestyle. Consideration must be made for current income, current budget and future needs.

Pauline Tonkin

A mortgage broker works with various lender to get you the best option for you!

Mortgages are like vehicles. A bank is similar to the brand, Ford or Toyota for example. How long you have a mortgage before it’s time to renew is like the model, a Fusion or Camry. The rate is similar to the car’s paint color, and the mortgage benefits such as prepayment privileges and portability are like the car’s benefits; 4-wheel drive, hatchback, four doors instead of two, etc.

A bank is like a sales person at a Ford or Toyota dealership. He or she is an expert, they know everything about every car on their lot; engine size, warranty, all available colours, and their fuel ratings. He or she can match any car to your needs and lifestyle, as long as it’s sold at their lot.

But what if they don’t have the most fuel efficient car? What if you don’t like the design or you need four doors and a trunk and all they have is two doors and a hatchback? Are you still going to buy from that dealership just because you went there first? No, you’re going down the street to check out the Chevrolet, maybe even BMW, Mazda, or the new Chrysler dealership. That sales person doesn’t want you to go buy from another lot down the street, but you are buying to satisfy your needs, not the dealership’s needs of selling their own cars.

Now imagine a dealership that sold every single make and model of vehicle. Imagine you could choose one of their sales people, and have them work only for you. They know just as much or even more about every make and model, they do all the research for you and tell you what you need to look for, they ask you the important questions; they have your best interest. That is a mortgage broker, your own personal expert.

Now, you may not need a personal expert to buy a car. But what about mortgages? Is a 0.10% lower interest rate a lot? Or will a 20% prepayment privilege instead of 10% be more advantageous? Can you switch lenders and move your mortgage? $15,000 or $5,000 penalty? How is it calculated? Fixed or variable? Is a collateral charge good or bad? 2-year term or 5-year? Big bank or monoline lender? How about credit unions? The list goes on.

So, a bank or mortgage broker? Put it this way; would you buy from the first dealership you visit or hire an expert? If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

Ryan Oake

Be prepared when thinking of buying your first home!

As a licensed Mortgage Broker, I am often asked “what do I need to know when buying my first home?”

Everyone has their own aims and objects when buying their first home. As a Mortgage Broker, I specialize in making sure your financing is in order to facilitate your dreams of owning a home.

Buying your first home is very exciting, but it can easily be overwhelming. Being prepared is the first step. The decision to purchase your first home can be a huge, life-changing event and you need to know exactly what you are getting into.

To get you prepared with the knowledge you need, here are my 7 tips to consider when you buy your first home: (Some of these may only relate to B.C.)

1. Strengthen your credit rating.

It’s pretty simple: the higher your credit score, the lower your mortgage rate will be.

Spend the time now to improve your credit. Check your credit report. Many credit reports have errors, so you need to ensure that your credit bureau is current and correct.

ALWAYS pay every single one of your bills on time. Set up automatic payments if you have had any late payments over the last couple of years.

Stop applying for any new credit a year before you are considering buying and continue until you sign the closing papers on your home. Spend only 30% of credit limits on credit cards.

2. Find a Mortgage Broker and figure out how much you can afford to spend.

The home buyer’s mantra: Get a home that’s financially comfortable.

Contact a Dominion Lending Centres Mortgage Professional. We work with you up to a year in advance to analyze your situation, and tell you how much mortgage and monthly payments you can afford.

Lenders like to see that you spend a maximum:

1. 32-39% of your Gross income on mortgage payments, maintenance fees (if applicable), heat & property taxes
2. 38-44% of your Gross Income on all debts
   Including #1 above PLUS loans, credit cards, additional financing etc.

1 year+ prior to going home shopping, calculate the mortgage payment for the home in your intended price range, along with the increased expenses (such as taxes, insurance and utilities). Then bank the difference between the home payments and what you’re paying now. Not only will that simulate ownership, it also helps you save for your down payment!

When you are ready to start shopping for your home, as your Mortgage Broker, I gather all your financial documentation that the lender requires, in order to figure out much you can afford to spend. Then I work with you to get a pre-approval and lock in a low interest rate to protect you in case rates rise between now and the time you by your new home.

3. How long will you live in your new home?

The transaction costs of buying and selling a house are substantial including: real estate fees, legal fees, Property Transfer Tax, selling in a down market, moving, etc.

If you don’t plan to live in your new home for at least 3-5 years, you may not gain enough equity to make selling worthwhile.

Short-term home ownership can be a pretty expensive proposition. If that is the case, holding off on purchasing could be your best option.

4. How much house you need?

Buying a cheaper, smaller home might sound like a good place to start, but could end up costing you more if you need to move due to changes in your lifestyle, including a growing family. Then again, buying more house than you currently need will cost you more with higher mortgage payments, higher maintenance, energy and tax costs.

Prioritize your housing wish list. They say that the 3 most important things to think about when buying are home are location, location, location. In Greater Vancouver your first choice for location i.e. Kitsilano or Yaletown may not be within your means. You also need to think about how the new home space will be used and whether it will fit your lifestyle now and in the future.

5. Build a savings account.

Start now to build a healthy savings account. To avoid paying CMHC Mortgage Default Insurance you need to prove you have a 20% down payment.

Building your savings account, over and above the money you will require for the down payment and closing costs. Lenders want to see that you’re not living paycheck to paycheck. If you have three to five months’ worth of mortgage payments in your savings, that makes you a much better loan candidate.

6. Remember closing costs.

While you’re saving your down payment, you need to save for closing costs too. They’re typically 1% to 3% of the purchase price and due on the completion date.

In B.C. you need to also pay Property Transfer Tax (PPT). The amount of tax you pay is based on the fair market value of the land and improvements (e.g. buildings) on the date of registration unless you purchase a pre-sold strata unit. The tax is charged at a rate of 1% for the first $200,000 and 2% for the portion of the fair market value that is greater than $200,000. 3% on the portion over $2,000,000 and if the property is residential, a further 2% on the portion greater than $3,000,000

7. Shop for a Realtor that has your best interests in mind.

Interview at least three Realtors. Get referrals from people you trust who have recently bought or sold, including me, your mortgage broker. I work with a lot of realtors, some of whom are outstanding in their field. Once you’ve decided which Realtor is the best fit for you, they can help you focus your search to find your perfect home. There is no cost for the Realtor for the home buyer since the home seller pays the commission.

Besides the 7 tips I’ve listed above, there are many other things you should need to be aware of prior to buying your first home.

Mortgages are complicated… BUT they don’t have to be! Engage an expert!

Kelly Hudson