10 Jan

It’s Time to Crush Your Credit Card Blues

General

Posted by: Jennifer Koop

It’s Time to Crush Your Credit Card Blues.

Although credit cards interest rates have not been affected by the recent surge in the prime lending rate, the fact remains that credit card debt is usually the most expensive debt you can have. The average is around 20% and even the so-called ‘low interest’ cards carry a rate in excess of 10%. Expediting the demise of your credit card balance should be the number one focus for anyone looking to improve their financial situation. Here are five actions to get you started.

  1. If you are carrying a balance, the first step is to put the card(s) away. Whether you put them in the food processor or just temporarily turn them off (our recommendation), you need to own up to your mistake and not add any more fuel to the fire. If it’s the case where you have no choice but to use the card (a prepayment for example) make sure to make a payment to cover that charge right away.
  2. Take a minute to fully understand the consequences of a credit card balance. Search out the details of your credit card statement until your find the section that tells you exactly how many years it will take to eliminate that balance with minimum payments. While you are at it, make sure to confirm the interest charge for that month and just how little of your payment is actually going toward reducing the balance. It can be a bit shocking, but also quite motivating! The government has a simple online calculator for you to easily analyze different repayment options.
  3. Plan your repayment attack. Making a few random spending sacrifices and hoping that you will have a little more left at the end of the month to pay towards your card is wishful thinking. You need to figure out ASAP the maximum amount you can throw at your credit card debt every month and chart out when you are going to be debt-free. Set up an automatic transfer from your bank account to your card every payday and make that money invisible – you can’t spend what you can’t see!
  4. Investigate balance-transfer credit card options… but only if you have a plan and are confident you can pay off the balance within the prescribed period! A balance transfer card shifts your debt to a new card (for little or no fee) which offers a limited time period (usually 6 -12 months) with a very low interest rate (often 0%) to pay off the balance. This cuts your interest expense to zero and ensures that 100% of your payment goes to reducing the balance. However, you have to be very disciplined and have the income to make regular payments. The card company is literally banking on you to fail and hopes you will miss the payment deadline, because that will trigger an avalanche of penalties, fees and interest charges that will put you worse off than ever!
  5. Pick up the phone and call your card company. It might be more possible and easier than you think to actually negotiate a lower interest rate on your credit card. If you have had a card for a while and have been carrying a balance and making the minimum payments, you are a valued customer! Your card issuer is very interested in keeping your business and may be willing to negotiate. You will have to get through to the right people and know what to say, but 15 or 20 minutes on the phone could save you a chunk of cash – even a few percentage points would help.

The above tips will help you get started on the road to eliminating your credit card balance. There are no shortcuts and it may require a lot of sacrifice depending on how much debt you have, but the mental burden that lifts when you see a big zero under “balance due” it will be worth it!

Published by DLC Marketing Team

For all your mortgage needs contact us today 705-349-0502

11 Dec

So, You Need a Tenant

General

Posted by: Jennifer Koop

So, You Need a Tenant.

If you have a basement suite or rental property and you are currently looking for a tenant, there are some things to know! Whether this is your first tenant or you have other rental properties, it is a good idea to familiarize yourself with the specifics to ensure a harmonious tenancy.

As always, your responsibility as the landlord is to keep your rental properties in good condition and ensure they meet health, safety, and housing standards. However, as a landlord, you also have additional responsibilities around the rental agreement and tenant regulations.

Tenancy Agreement

Landlords are required to prepare a written agreement for every tenancy. Bear in mind, if this agreement is not prepared the standard terms for your province will still apply, especially if a security deposit is paid. This agreement should clearly outline the following:

  • Who the agreement is between
  • The length of the tenancy
  • Rent amount and due date
  • Required deposits (if any)
  • Pet restrictions (if any)
  • Additional terms (smoking or non-smoking, etc)

The tenancy agreement should also outline if there is the ability to add a roommate, and whether or not utilities, parking, storage, laundry, etc. are included.

Deposits

Typically, a security or damage deposit is requested by the landlord to establish tenancy and cover any unexpected issues that may arise. The deposit can be no more than half of the first month’s rent.

If you are charging a pet deposit fee, note that guide or service pets are exempt from any damage deposits. In addition, you cannot charge fees beyond the pet damage deposit.

Move In

To ensure the move-in goes smoothly, tenants and landlords should schedule a move-in time that works for everyone. At the beginning of the tenancy, you may also consider an inspection before the new tenant has moved in to ensure everyone is on the same page and the condition of the unit is clear in regard to any potential damages or fixes needed.

As a landlord, you are also responsible for changing the locks (at your cost) should the new tenant request it.

Additional Considerations

As a landlord, you will want to assess the suitability of any new tenant before signing the agreement. There are a few things you can do to ensure a smooth process and the right choice of tenant:

  • Ask for proof of identity
  • Thoroughly check all references
  • Contact previous landlords to ask about rental and payment history
  • Conduct a credit check to confirm income and financial suitability
  • Get the names of all persons to be living in the rental unit

Once you have reviewed the above, you will be in a good position to determine if the potential tenant is a good fit for the rental space.

However, keep in mind that you cannot refuse to rent to a tenant based on any discriminatory aspects such as race, gender, sexual orientation, religion, etc. In addition, you cannot refuse to rent to individuals on income assistance.

While it can seem like a lot, with the proper preparation and understanding of tenant laws and regulations in your area, you can ensure a smooth and successful rental process!

Published by DLC Marketing Team

For all your mortgage needs contact us today 705-349-0502

14 Nov

RESP a No-Brainer when it Comes to Education Savings

General

Posted by: Jennifer Koop

RESP a No-Brainer when it Comes to Education Savings.

Another school year is well on its way, and we all know what that means…. your kids have inched another year closer to graduation and in many cases, heading off to another “school” to further their education and skills. Whether it’s university, career college or vocational school, it would be nice to be in a position to help them out with the cost, but it isn’t going to be cheap!

A quick look at this list shows that just the tuition fee for a Canadian university now runs $5000 to $10,000 per year. That could add up to $40K by graduation and you still haven’t bought books or other supplies or paid for food and a place to live if they are leaving the nest to pursue that education.

The good news is that there is a no-risk education savings account that pays a 20% dividend for the first year on new deposits, and you can get that same dividend offer every year for 14 years! Your scam-alert detector may be going off full blast, but it’s true, and it is called a Registered Education Savings Plan or RESP.

You may have noticed the word “registered” in the name and just like an RRSP or TFSA, it isn’t a regular savings account. There are government controls on how much you can deposit in the account and how and where the beneficiary (your kids) can spend the money. However, it is free and easy to open one and the rules and regulations are not that onerous given the benefits. Some of the need-to-know facts are:

  • Contributions up to $2500 annually receive a 20% Canada Education Savings Grant (CESG) from the federal government regardless of your income level (low-income earners may also qualify for additional grants). CESG grants are deposited annually into the RESP and can be invested along with the rest of the funds. Some provinces offer additional education savings programs that work in conjunction with an RESP.
  • Just like an RRSP or TFSA, the funds in the account can be invested — individual stocks, ETFs, mutual funds, GICs, cash, bonds, etc. This allows the fund to grow over time and you can adjust the risk to suit your preference and timeline to when your kids will need the money.
  • It isn’t just for university – colleges, technical training institutions, correspondence courses, even out of country programs often qualify.
  • The CESG is only for kids under 18 and there is a lifetime maximum of $7200. Best to start early if you want to max out the benefits, although there are some rules to catch-up if you get started late.
  • There are no tax deductions for contributions (unlike an RRSP), but there is no tax on your original contributions when withdrawn. Grant funds and any profits from investments are considered income and taxable when withdrawn, but students normally have a low tax rate so the effects can be minimal.
  • The funds can be used for a wide variety of education related expenses – food, transportation, tuition, books, computers… and a lot more!

There is a ton of information out there on the ins and outs of RESPs and it can get a little tricky if you have a couple of kids. A good place to start is the federal government RESP website.

Being knowledgeable about how the program works is the place to start, but it won’t help you find the $2500/year (per child) you need to max out the grant opportunities. As mentioned, you can catch up with contributions down the road (and get that free grant money) as your income grows, but you will shorten the timeframe for growing your investments in the account. One convenient option is to tap a portion of your monthly CCB payment — even $100 month would get you $250/year in CESG grants.

Investing in education/training is usually money well spent and delivers a solid return, and a RESP is a complete no-brainer when it comes to paying for that education. The earlier you get going with one the better it will work out, and the more relief you will feel with every passing school year.

Published by DLC Marketing Team

For all your mortgage needs contact Jennifer Koop today 705-349-0502

8 Nov

Choosing Your Ideal Payment Frequency

General

Posted by: Jennifer Koop

Choosing Your Ideal Payment Frequency.

Your payment schedule is the frequency that you make mortgage payments and ranges from monthly to bi-monthly, bi-weekly, accelerated bi-weekly or even weekly payments. Below is a quick overview of what each of these payment frequencies mean:

Monthly Payments: A monthly payment is simply a single large payment, paid once per month; this is the default that sets your amortization. A 25-year mortgage, paid monthly, will take 25 years to pay off but includes the added burden of one larger payment coming from one employment pay period. With this payment frequency, you make 12 payments per year.

Example: $750k mortgage, 3-year fixed rate, 5.34%, 30-year amortization you would have a monthly payment of $4,156.19. No term savings; no amortization savings.

Bi-Weekly Payments: A bi-weekly mortgage payment is a total of 26 payments per year, calculated by multiplying your monthly mortgage payment by 12 months and divided by the 26 pay periods.

Example: $750k mortgage, 3-year fixed rate, 5.34%, 30-year amortization you would have a bi-weekly payment of $1,915.98 with term savings of $177 and total amortization savings of $1,769.

Accelerated Bi-Weekly Payments: An accelerated bi-weekly mortgage payment is also 26 payments per year, but the payment amount is higher than a regular bi-weekly payment frequency. Opting for an accelerated bi-weekly payment will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage. This frequency also allows the mortgage payment to be split up into smaller payments vs a single, larger payment per month. This is especially ideal for households who get paid every two weeks as the reduction in cash flow is more on track with incoming income.

Example: $750k mortgage, 3-year fixed rate, 5.34%, 30-year amortization you would have accelerated bi-weekly payments of $2,078.10 with term savings of $1,217 and total amortization savings of $145,184. Plus, you would save 4 years, 12 months of payments by reducing scheduled amortization.

Weekly Payments: Similar to monthly payments, your weekly mortgage payment frequency is calculated by multiplying your monthly mortgage payment by 12 months and dividing by 52 weeks in a year. In this case, you would make 52 payments a year on your mortgage.

Example: $750k mortgage, 3-year fixed rate, 5.34%, 30-year amortization you would have weekly payments of $957.50 with term savings of $253 and total amortization savings of $2,526. You can move to accelerated weekly payments to save even more!

Prepayment Privileges: In addition to fine-tuning your payment schedule, most mortgage products include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This can help reduce your amortization period (the length of your mortgage).

By exercising your prepayment privileges, you can take time off your mortgage. For instance:

  • Extra $50 bi-weekly is $32,883 total savings and an additional 1 year, 2 months time saved
  • Extra $100 bi-weekly is $62,100 in total savings and an additional 2 years, 3 months time saved on your mortgage
  • Extra $200 bi-weekly is $111,850 in total savings and an additional 4 years, 1 month of time saved on your mortgage.

Understanding the different payment frequencies can be key in managing your monthly cash flow. If you’re struggling to meet a large payment, breaking it up can be effective; while the same can be true of the opposite. Individuals struggling to make a weekly or bi-weekly payment, may benefit from one monthly sum where they have time to collect the funds.

Contact Jennifer Koop your Dominion Lending Centres mortgage expert for more information or download our My Mortgage Toolbox app from Google Play or the Apple Store and check out the different payment calculators!

For all your mortgage needs contact us today 705-349-0502

Published by DLC Marketing Team

8 Nov

Market Beware: Subject Free Offers

General

Posted by: Jennifer Koop

Market Beware: Subject Free Offers.

When it comes to purchasing a home, most offers include conditions or subjects, which are requirements or criteria to be met before the sale can be finalized and the property is transferred. Some of the most common subjects include:

  • Financing approval
  • Home inspection
  • Fire/home insurance protection
  • Strata document review if applicable

The purpose of these subjects is to protect the buyer from making a poor investment and ensure that there are no hidden surprises when it comes to financing, insurance, or the state of the property.

These conditions are written up in the purchase offer with a date of removal. This is agreed to by the seller before the sale is finalized. Assuming the subjects are lifted by the date of removal, the sale can go through. If the subjects are not lifted (perhaps financing falls through or something is revealed during the home inspection), the buyer can waive the offer and the purchase becomes void.

However recently, especially in heightened housing markets, there has been an emergence of subject-free (or condition-free) offers. These are purchase offers that are submitted without any criteria required! Essentially, what you see is what you get.

Below we have outlined the impact of subject-free offers on both buyers and sellers to help you better understand the risks and outcomes:

Pros of Subject-Free Offers

  • Buyers: The main benefit of a subject-free offer for a buyer is the ability to “beat the competition” in a heated market. However, it is not without risks.
  • Sellers: Typically, a subject-free offer will include a competitive price, willingness to work with the dates the seller prefers, and evidence that the buyer has already done as much research as possible. If time is sensitive for the seller because they are trying to purchase another home or want to move as soon as possible, they may also choose your offer over subject offers to expedite the process.

Cons of Subject-Free Offers

  • Buyers: As a buyer submitting a subject-free offer, you are assuming a great deal of risk in several areas including financing, inspection, and insurance:
    • Financing: While buyers may feel that they have a pre-approval and so they don’t require a subject to financing, it is important to recognize that a pre-approval is not a guarantee of financing. If you are submitting a subject-free purchase based on a pre-approval, buyer beware. The financing is subject to the lender approving the property and the sale; from the price and location to type of property or other variables the lender deems important. By submitting a subject-free offer without a financing guarantee (or an inspection, title check, etc.), there is a risk that the deal can fall through. Even when you do not include subjects on the offer, you still are required to finance your purchase. In addition, as deals are submitted typically with a deposit, there is a risk that if the subject-free offer falls through the buyer will lose their deposit. This amount can range vary in the thousands and is typically a percentage of the purchase price or down payment.
    • Inspection & Insurance: If a buyer is also opting to skip the home inspection and home insurance protection subjects to have the offer accepted, then they assume huge risk as they do not know what they are getting and whether or not the property is up to code for insurance.
    • Due Diligence: With subject-free offers, there is no opportunity for due diligence after the offer has been made. This requires the buyer to do all their research before their initial bid. Because it is firm and binding, a buyer who decides to back out will likely be met with serious legal ramifications. Submitting an offer without subjects is not due diligence and it is at the buyer’s behest.
  • For Sellers: When it comes to the individual selling the property, there is less risk with subject-free offers but not zero. While the benefit is essentially there is no wait to accept the offer on the seller’s side, they do not know for sure if financing will come through.

Financing Around Subject-Free Offers

When submitting a subject-free offer, it is essentially up to the buyer to do as much due diligence as possible before submitting. They will need to identify what the lender is looking for to make sure they walk away with a mortgage. Though approval is never certain, prospective buyers placing a subject-free offer should do their very best to secure financing beforehand.

Contractual Obligations

Be mindful when it comes to purchasing offers versus purchase agreements. While your purchase offer is a written proposal to purchase, the purchase agreement is a full contract between the buyer and seller. The purchase offer acts as a letter of intent, setting the terms you propose to buy the home. If financing falls through, for example, then the contract is breached and this is where the buyer may lose the deposit.

It is also important to be aware of a breach of contract in the event that a seller chooses to take action. For example, if you submit a subject-free offer of $500,000 and cannot secure financing for that offer and the seller turns around and is only able to get a $400,000 deal with another buyer, they could potentially sue the initial buyer for the difference due to breach of contract.

Preparing a Subject-Free Offer

If you have decided to go ahead with a subject-free offer, regardless of the risks, there are some things you can do to mitigate potential issues, including:

  • Get Pre-Approved: Again, this is not a guarantee of financing when you do make an offer, but it can help you determine whether you would be approved or not.
  • Financing Review: Identify what the lender is looking for to make sure they walk away with a mortgage. Though approval is never certain, prospective buyers placing a subject-free offer should do their very best to secure financing beforehand.
  • Do Your Due Diligence: Look into the property and determine if there have been major renovations or a history of damage. This could come in the form of a Property Disclosure Statement. While this statement cannot substitute a proper inspection, it can help identify potential issues or areas of concern. If possible, conduct an inspection before submitting your bid/offer.
  • Get Legal Advice: This can help you determine your potential risk and ramifications of the offer should it be accepted, or otherwise.
  • Title Review: Be sure to review the title of the property.
  • Insurance: Confirm that you are able to purchase insurance for the home. Keep in mind, an inspection may be required for this but in some cases, you can substitute for a depreciation report if it is recent.
  • Strata Documents (if applicable): Thoroughly review strata meeting minutes and any related documents to determine areas of concern.

While there are things that can be done to help with subject-free offers, it is still risky. Ultimately submitting an offer with subjects gives you the time and ability to gather information on the above, as well as access to the property or home for inspections.

If you are intent on submitting a subject-free offer, be sure to discuss it with your real estate agent as they can determine if a subject-free offer is necessary, or if perhaps a short closing window would suffice to seal the deal. A good realtor will keep you informed of potential interest and other bids during the process as well. Their goal should be to maximize your opportunity and minimize your risk. In addition, before making any offers, be sure to check with Jennifer Koop, your DLC mortgage expert to discuss your mortgage and financing so you can make the best decision.

Contact us today for all your mortgage needs 705-349-0502

Published by DLC Marketing Team

10 Oct

What Insurance Protection Does Your New Home Need?

General

Posted by: Jennifer Koop

What insurance protection does your new home need?

With interest rate hikes on pause, more buyers are coming off the sidelines and looking to enter the market. Prices are high, so protecting your investment and your home is more important than ever.

What insurance will you need to protect your new home? A quick Google search will turn up entries for title insurance, as well as for home insurance. They each protect consumers, but from very different things.  Here’s a quick breakdown on each type of insurance and why properly protecting yourself takes both:

title insurance

WHAT IS TITLE INSURANCE?

Title insurance protects your right to own your property. It deals with hidden issues your home may have, as well as future risks like fraud. This is just some of what title insurance covers:

  • Title defects that can keep you from selling,
  • Title fraud and home title theft,
  • Encroachment and access issues,
  • Tax arrears and unpermitted work from previous owners.

Want to know more about title insurance coverage?

HOW MUCH IS TITLE INSURANCE?

You only pay once for title insurance, usually between $150—$800, depending on where your home is and how much you bought it for. There are no monthly or annual payments, and your coverage lasts for as long as you or your heirs have an interest in the property.

home insurance

WHAT DOES HOME INSURANCE COVER?

Home insurance covers four main things:

  • Damage to your home or other structures on the property,
  • Lost, damaged or stolen valuables, depending on your policy,
  • Liability for accidents or injuries that happen on your property,
  • Losing use of your home because of an event covered by your home insurance (usually to do with damage to the home).

HOW MUCH IS HOME INSURANCE?

It varies, but the average cost for home insurance in Canada is currently a little less than $1,000 per year.1 Your cost can change from year to year if you switch providers or update your coverage. Many home insurance policies also give you the option to purchase additional coverage, like flood protection, which increases your premiums.

which do you need, home insurance or title insurance?

They cover very different things, so you need both. It’s the only way to protect both your home itself and your ownership of it.

  • Title insurance doesn’t cover most property damage, lost or stolen items, or medical/injury liability.
  • Home insurance doesn’t cover fraud, back taxes, or the City forcing you to alter or remove structures on your property.

EXAMPLE OF A TITLE INSURANCE CLAIM

A north Ontario homeowner and her neighbour had discovered that her water and sewage lines didn’t connect to her street. Instead, they connected to the next street over via her neighbour’s property. They forced her to relocate her water and sewer lines at huge expense.

But fortunately, she had a title insurance policy in place with FCT. We stepped in to resolve the issue for her, and we were able to cover the full cost of moving her water and sewer lines.

Paid: $115,284.32

Without title insurance, where would the homeowner in that case have come up with $115,000? The risks title insurance protects you from are unpredictable and can be hugely expensive. If you don’t have title insurance and home insurance, the truth is that you’re at risk.

how can you get protected?

You can get title insurance coverage, even if you already own your home with an existing homeowner’s policy. But the best time to start protecting your new home is while you’re purchasing it. Talk to your lawyer or notary about title insurance from FCT, or learn more about residential title insurance here.

1 source: ratehub.ca

Insurance by FCT Insurance Company Ltd. Services by First Canadian Title Company Limited. The services company does not provide insurance products. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy. Copies are available upon request. Some products/services may vary by province. Prices and products/services offered are subject to change without notice.

®Registered Trademark of First American Financial Corporation.

Published by DLC Marketing Team

Contact Jennifer Koop, Recommended Dominion Lending Centres Mortgage Agent in Huntsville, Muskoka for all your mortgage needs.

705-349-0502

 

28 Sep

Converting Your Basement to an Income Suite

General

Posted by: Jennifer Koop

Converting Your Basement to an Income Suite.

With the current interest rates and economic scenarios, many Canadians may be looking for ways to bring in some extra cash. One option for this is to put your home equity to work and consider renovating your basement into a legal income suite! You can do this by using a secured credit line (home equity line of credit or HELOC) to help fund the upfront cash to make changes to your home.

A few things to consider before you invest in renovating to create an income suite include:

Zoning: Before looking into doing anything with an income suite, always double-check if you are zoned accordingly for a smooth renovation. If your zoning does not allow for secondary suites, see if you can rezone.

Local Regulations: Depending on your location, there may be particular regulations that you need to follow or be aware of regarding your suite. A few examples of how the regulations can differ between provinces or cities include:

  • In Coquitlam, you cannot have a suite that is more than 40% of the main house floor plan. You are also required to offer a parking spot for tenants.
  • In Kelowna, you can only have one secondary suite and the home must have an “S” designation.
  • In Calgary, updated zoning legislation has now made it easier to add income suites.
  • Toronto has also proposed reforms that will make it easier to add suites.
  • In Montréal, anyone carrying out a project involving the addition of at least 1 dwelling and a residential area of ​​more than 450 m² (equivalent to approximately 5 dwellings) must enter into an agreement with the City of Montréal in order to contribute to the supply of social, affordable and family housing. It can be a new building, an extension, or the conversion of a building.

Visit the official municipal websites or consult local building departments to obtain accurate and up-to-date information on the rules and requirements in your area BEFORE getting started.

Insurance & Legal Considerations: Before adding your secondary suite, ensure that you have proper insurance coverage or the ability to add additional coverage to protect both the primary residence and suite. In addition, you will want to consult a lawyer and draw up a tenant or rental agreement for any potential tenants. Ontario has a mandatory standard lease agreement that all landlords must use.

Unit Layout and Design: If the zoning and regulations in your area allow you to build an income suite, the next steps are to look at the suite layout and dimensions. Confirm any size restrictions or minimum ceiling height requirements as you are laying out the design for the unit. The unit should have, at minimum the following:

  • A separate parking space for the renter.
  • A separate entrance, kitchen, bathroom, and living/sleeping areas.
  • Ventilation and soundproofing measures to enhance livability.
  • Consideration of natural light.
  • Interlink smoke detectors for primary and secondary residences.
  • Separate, independently-controlled ventilation and heating system.
  • Proper drainage, sewage connections, and utility separations.
  • Outlets, circuits, and lighting that meet electrical code requirements.

Ensure that however your income suite is designed, you are hiring the appropriate building, plumbing, and electrical experts to ensure your suite is up to code and avoid any potential disasters.

Building & Trade Permits: Once you have confirmed that you are properly zoned and able to add an income suite and understand all the regulations for your area, you will want to draft your blueprints and submit a permit application, along with the fee, before you get started. For instance, in B.C. you are required to have a Building Permit for any suite to be considered legal.

IMPORTANT: Even if you are not required to have a building permit, it is important to get these permits for other aspects including insurance coverage should anything happen. Having a building permit will help protect your investment.

In addition to your building permits, you will need to get permits for any plumbing, electrical, and gas renovations prior to beginning your work.

Inspections & License: Once you have your permits and have begun construction, make sure you understand what inspections are required throughout the process and you schedule them accordingly with local authorities to ensure compliance with building codes, fire safety standards, and health regulations.

If the work meets all requirements, your suite will be approved. The last step is determining if you need a business license. This is not required if your family (parents, children, etc.) will be living in the suite. In Vancouver, for example, if you intend to rent out your suite long-term, you DO need a license. Be sure to check any rules on this in your area.

Incentives: Beyond the ability to earn extra income per month, there are a few additional government incentive programs when it comes to suites including:

  • First Nations: If you live on a First Nations reserve, you may be eligible for federal funding that will provide up to $60,000 to help you build an inexpensive secondary suite rental linked to your principal home. If you live in a northern or remote area, this amount is increased 25%. This is a 100% forgivable loan that is not required to be paid back assuming all guidelines are followed.
  • Residential Rehabilitation Assistance Program (RRAP) – Secondary and Garden Suites: This program is open to all First Nations or individual First Nation members, particularly those who own a family home that can be converted to include a self-contained suite for a senior or adult with disability.
  • Multigenerational Home Renovation Tax Credit: A credit for a renovation that creates a secondary unit within the dwelling to be occupied by the qualifying individual or a qualifying relation. The value of the credit is 15% of the lesser of qualifying expenditures and $50,000.
  • British Columbia: Beginning in early 2024, BC homeowners will be able to access a forgivable loan of 50% of the cost of renovations, up to a maximum of $40,000 over five years, for income suites.
  • Ontario: There are multiple secondary suite programs throughout Ontario, depending on your region. These loans provide $25,000 to $50,000 in funding and are forgivable assuming continuous ownership for 15 years.

While it is important to look online and do your research. Your best resource will be visiting local authorities at the “City of” to confirm that you completely understand the considerations before moving forward with implementing an income suite.

Published by DLC Marketing Team

For all your mortgage needs call us today 705-349-0502

21 Sep

Understanding Mortgage Rates

General

Posted by: Jennifer Koop

Understanding Mortgage Rates.

While not the only factor to look at when choosing a mortgage, interest rates continue to be one of the more prominent decision criteria with any mortgage product. Understanding how mortgage rates are determined and the differences between your typical fixed-rate and variable-rate options can help you make the best decision to suit your needs.

HOW RATES ARE DETERMINED

The  chartered  banks  set  the  prime-lending  rate  (the  rate  they  offer  their best customers). They base their decisions on the Bank of Canada’s overnight rate, because that’s the rate that influences their own borrowing. Approximately  eight  times  per  year,  the  Bank  of  Canada  makes  rate announcements that could affect your mortgage as variable  mortgage  rates  and  lines  of  credit  move  in  conjunction with the prime-lending rate. When it comes to fixed-rate mortgages, banks  use  Government  of  Canada  bonds. In the bond market, interest rates can fluctuate more often and can provide clues on where fixed mortgage rates will go next.

To put it simply: a variable-rate is based off of the current Prime Rate, and can fluctuate depending on the markets. A fixed-rate is typically tied to the world economy where the variable rate is linked to the Canadian economy. When the economy is stable, variable rates will remain low to stimulate buying.

FIXED-RATE VS. VARIABLE-RATE

Fixed-Rate Mortgage

First-time homebuyers and experienced homebuyers typically love the stability of a fixed rate when just entering the mortgage space.

The pros of this type of mortgage are that your payments don’t change throughout the life of the term. However, should the Prime Rate drop, you won’t be able to take advantage of potential interest savings.

Variable-Rate Mortgage

As mentioned, variable-rate mortgages are based on the Prime Rate in Canada. This means that the amount of interest you pay on your mortgage could go up or down, depending on the Prime. When considering a variable-rate mortgage, some individuals will set standard payments (based on the same mortgage at a fixed-rate). This means that, should Prime drop and interest rates lower, they would end up paying more to the principal as opposed to paying interest.

If the rates go up, they simply pay more interest instead of direct to the principal loan.

Other variable-rate mortgage holders will simply allow their payments to drop with Prime Rate decreases, or increase should the rate go up. Depending on your income and financial stability, this could be a great option to take advantage of market fluctuations.

Want to learn more about rates or need mortgage advice? Contact Jennifer Koop, your recommended Dominion Lending Centre mortgage expert today! 705-349-0502

Published by DLC Marketing Team

20 Sep

Alberta title fraud caught: why expertise matters

General

Posted by: Jennifer Koop

Alberta title fraud caught: why expertise matters.

Think title fraud is just a risk in places like Toronto and Vancouver? Think again. FCT just prevented $400,000 of fraud in a city of 20,000.

It seemed like a standard refinance deal from a community east of Calgary, just a homeowner leveraging some of their equity. But the owner had nothing to do with the deal.

The underwriter working on the transaction spotted an issue with one of the ID pieces she received. She escalated the issue to the Certified Fraud Examiner (CFE) on our underwriting team. Our CFE quickly noticed more issues with the “owner’s” ID, and with the deal in general.

A fraudster had impersonated the homeowner and was trying to walk away with almost half a million dollars, leaving them with the monthly mortgage payments. We quickly put a stop to the transaction and notified the lawyers involved in the deal.

what would have happened if the fraud succeeded?

Imagine being that homeowner if there hadn’t been experts looking at the deal and asking the right questions. Restoring an owner’s title can take tens of thousands of dollars—that expense would have fallen on the owner out of nowhere. How many homeowners have enough money ready to handle that kind of emergency?

Cases like this show just how important it is to work with experts in fraud prevention on every deal. The perception that fraud is an Ontario-only threat gives fraudsters more room to maneuver in other regions. Homebuyers and real estate professionals across Canada need to stay vigilant as the rate of fraud rises.

Remember, there’s at least one fraudulent deal every week. How will you know if your deal is that attempt?

how to protect yourself against title fraud

Whether you’re a homeowner, homebuyer or legal professional, you need protection against title fraud. The consequences can be disastrous: consumers can be out tens or hundreds of thousands of dollars, and without a way to compensate for that loss, the fraud poses a risk to the legal professional who conveyed the deal, as well.

WORK WITH THE EXPERTS

The best way to protect against the consequences of fraud is to stop it in its tracks. FCT’s underwriters identified $350 million in suspicious residential transactions in 2022 alone. We have the experience and the expertise to help keep consumers and professionals alike safe.

TITLE INSURE EVERY DEAL

If a fraudster succeeds, title insurance is often the only recourse to make victims whole. It can cover claims in the hundreds of thousands, and carries a duty to defend. That means FCT takes on the responsibility of resolving the situation—hiring investigators, retaining counsel and arguing the case in court if need be.

Learn more about residential title insurance.

With such a high rate of fraud, there really is no substitute for title insurance. As a legal professional, any deal that comes in could be a scam. As a homebuyer, any home listed for sale could have been listed by a fraudster.

Title fraud is rising—don’t leave yourself at risk. Rely on the experts and the protection of an existing homeowner’s policy from FCT.

Insurance by FCT Insurance Company Ltd. Services by First Canadian Title Company Limited. The services company does not provide insurance products. This material is intended to provide general information only. For specific coverage and exclusions, refer to the applicable policy. Copies are available upon request. Some products/services may vary by province. Prices and products/services offered are subject to change without notice.

®Registered Trademark of First American Financial Corporation.

Published by FCT

 

Contact Jennifer Koop, Recommended Mortgage Agent in Huntsville, Muskoka for all your mortgage needs 705-349-0502

12 Sep

How Job Loss Affects Your Mortgage Application

General

Posted by: Jennifer Koop

How Job Loss Affects Your Mortgage Application.

Whether you’ve made an offer on a home already or are still in the process of looking, you already understand that buying a home is likely the largest investment you’ll ever make.

When it comes to your mortgage application, there are a few things that you should avoid doing while you’re waiting for approval – such as making large purchases (i.e. a new car), applying for new credit, pulling additional credit reports, etc. Another issue that can come up is the loss of your job.

What you can afford to qualify for in relation to your mortgage depends on your income. As a result, the sudden loss of employment can be quite detrimental to your efforts. So, what do you do?

Should You Continue With Your Mortgage Application?

If you’ve already qualified for a mortgage, but your employment circumstances have changed, your first step is to disclose this to your lender. They will move to verify your income prior to closing and, if they have not been told in advance, it may be considered fraud as your application income and closing income would not match.

In some cases, the loss of your job may not affect your mortgage. Some examples include:

  • You secure a new job right away in the same field as previously. Keep in mind, you will still need to requalify. However, if your new job requires a 3-month probationary period then you may not be approved.
  • If you have a co-signer on the mortgage who earns enough income to qualify for the value on their own. However, be sure your co-signer is aware of your employment situation.
  • If you have additional sources of income such as income from retirement, investments, rentals or even child support they may be considered, depending on the lender.

Can You Use Unemployment Income to Apply for a Mortgage?

Typically this is not a suitable source of income to qualify for a mortgage. In rare cases, individuals with seasonal or cyclical jobs who rely on unemployment income for a portion of the year may be considered. However, you would be asked to provide a two-year cycle of employment followed by Employment Insurance benefits.

What Happens During Furlough?

If you did not lose your job entirely but have instead been furloughed or temporarily laid off, your lender may take a wait-and-see approach to your mortgage application. You would be required to provide a letter from your employer with a return-to-work date on it in this situation. However, if you don’t return to work before the closing date, your lender may be required to cancel the application for now with resubmitting as an option in the future.

Have You Talked to Your Mortgage Professional?

Regardless of the reason for the change in your employment situation, one of the most important things you can do is contact Jennifer Koop, your Dominion Lending Centres mortgage expert directly to discuss your situation. She can look at all the options for you and help with finding a solution that best suits you.

Contact us today for all your mortgage needs, 705-349-0502

Published by the DLC Marketing Team