This post applies if you are taking a new mortgage, whether it’s for a purchase, refinance, or renewal. The variable remains the main contender.

But what about all the economists saying if you are currently in a variable rate mortgage then you should rush to ‘lock in’?

You mean the economists that are employed by profit driven shareholder owned institutions that directly benefit from your locking-in (banks) via instantly increased profit margins and massively higher (up to 900% higher) prepayment penalties that 2/3 mortgage holders will trigger?

A bit biased, that crowd.
Also they are generalists, they’re not specialists.

But what about independent real estate experts?

While these experts may have their finger on the pulse of many facets of the real estate market, many remain totally unaware of how exactly mortgage prepayment penalties are calculated, and just how likely you are to trigger them.

Also generalists, are unaware of many nuances of mortgage products.

So what’s my game?

I’ve never really had game, so to speak. And I don’t stand to profit from your locking in, or from your staying variable. In fact as I type this on a stunning day I’m wondering just what I’m doing in my office at all.

I’m just a Mortgage Broker offering an opinion. An opinion that reflects my personal policy, an opinion shaped through 25 years of experience with my own mortgages, an opinion based on 11 years of experience with 1,673 client’s mortgages.

I’ve seen a few things, mortgage specific things.

I’ve watched 2/3 of my clients break their mortgages and trigger penalties. Almost every single one of them a small and relatively painless penalty thanks to staying variable.

But what about these rising rates?

If you are currently in a Prime -.65% to Prime -1.00% variable then to lock-in would be to inflict an immediate rate hike on yourself that might take the government another 12-18 months to pull off… if they pull it off.

Stay variable.

If you are in a Prime -.35 or shallower mortgage, we should discuss restructuring that into a Prime -1.00% mortgage and reducing your rate by .65% or more.

Staying variable.

My crystal ball says yes, perhaps another two or three 0.25% hikes through 2019, but at that point the odds favour (heavily) an economic contraction that will in turn trigger a corresponding reduction in interest rates.

It is my theory, and that of others smarter than I, that the fed is pushing rates up aggressively to beat said economic contraction, because they want to have the tool of ‘reducing interest rates’ back in their toolbox when the rainy days come. And we are overdue for stormy economic times. And when those times arrive it will not be prudent to be locked-in.

In short, life is variable – your mortgage should be as well. If you have any questions, contact your local Dominion Lending Centres mortgage professional today.

Written by Dustan Woodhouse

Over the last month, as the big banks and many of our monolines mortgage lenders wind down their fiscal year, we are starting to see some very obvious changes in what your credit score can get you.

I heard a few months ago that 720 beacons were going to become the new 650. The 650 beacon credit score for many years was the mid-range norm for most mortgage lenders. Today on many of the sites we use, we are seeing that the primary borrower must have a credit score of 720 and the secondary beacon can’t be below 650. It’s a big change from what we have seen in the past.

There are more changes coming as the banks will need to set aside more balance sheet if your mortgage is conventional. The one report I read said that if your credit score is lower, then the banks will now need to set aside 1.5% or possibly more if the score is low enough. That of course will then mean that an investor will need to be compensated more for having that in their portfolio, aka higher rates for you on a conventional mortgage.

If you are in the market for a house and you don’t know where to start, at least contact Dominion Lending Centres mortgage broker who can guide you through the process and let you know where you start.  If you use a DLC broker, they can set you up with a CleverCredit account and you can work together to make sure your credit is strong enough to apply for a mortgage when the time comes.

Written by Len Lane

It’s not just because of finances.

As a mortgage broker I receive calls from people who want to know how to qualify for a mortgage. Most of the time it comes down to finances but there are other reasons as well.
Here are the 5 most common reasons why your home mortgage loan application could be denied:

1. Too Much Debt

When home buyers seek a mortgage, the words “debt-to-income ratio” quickly enters into the vocabulary, and it’s not without reason. Too much debt is a red flag to lenders, signifying you may not be able to handle credit responsibly.
Lenders will analyze how much debt you carry and what percentage of your income it takes to pay your debt. Debt ration is just as important as your credit score and payment history.
Two affordability ratios you need to be aware of:
• Rule #1 – GROSS DEBT SERVICE (GDS) Your monthly housing costs are generally not supposed to exceed 32% of your gross monthly income.
• Rule #2 – TOTAL DEBT SERVICE (TDS) Your entire monthly debt payments should not exceed 42% of your gross monthly income.

If you don’t have a good debt to income ratio, don’t give up hope. You have options available including lowering your current debt levels and working with your Dominion Lending Centres Mortgage Broker.

2. Poor Credit History

Some people don’t realize if they are late on their credit card/loan/mortgage payments the lender sends that information to the credit bureaus.
• Late/non payments on your credit report will make your score drop like a rock
• Exceeding your credit card limit, applying for more credit cards/loans will lower your score.
• Bankruptcy or Consumer Proposal will significantly impact your score, and stay on your credit report for up to 7 years.
Your credit history is a great way for a lender to tell whether you’re a risky investment or not. Lenders look not only at your minimum credit score, but also at whether you have a significant amount of late payments on your credit report.
Your Mortgage Broker will run your credit bureau to see if there are any challenges you need to be aware of.

3. Insufficient Income and Assets

With the high price of homes in the Vancouver & Toronto area, sometimes people simply don’t earn enough money to afford: mortgage payments, property taxes and strata fees along with their existing debt (credit cards, loans, lines of credit etc.).
You need to prove your previous 2 years’ income on your taxes with your Notice of Assessments (NOA). This is the summary form that the Federal Government sends back to you after you file your taxes, showing how much you filed for income and if you either owe money or received a refund.
If you can’t provide documentation to prove your income, then you will likely get denied for a home mortgage loan.
Some home buyers will need to provide more money for a down payment (perhaps a gift from their family) or try to purchase a home with suite income. In some cases, home buyers will need to add someone else on title of the home, in order to add their income to the mortgage application.

4. Down Payment is Too Small

A lender looks at the down payment as how much of an investment a buyer will be putting in their future home. Therefore, bigger is always better when it comes a down payment to satisfy your home mortgage loan application. Start saving now.
To qualify for a mortgage in Canada the minimum down payment is 5% for the purchase of an owner-occupied home and 20% for a rental property.
In Canada if you have less than 20% down payment, the federal government dictates that the home buyer must purchase CMHC Mortgage Default Insurance which is calculated as a percentage of the loan and is based on the size of your down payment. The more you borrow the higher percentage you will pay in insurance premiums.
For those with less than 20% down payment, the maximum amortization is 25 years, with more than 20% down payment 30-35 years (depending on the lender).

5. Inadequate Employment History

Most lenders will want to see a consistent employment history of 2 years when applying for a mortgage, because they want to know you’re able to hold down a job long enough to pay back the money they’ve loaned you.
To prove your employment, you will need to prove a Job Letter with salary details.

If you’ve been denied a mortgage, chances are it was because of one of the above five reasons. Don’t be deterred, with a little patience and some work on your end, you can put yourself in a position to get approved the next time you apply.

Written by Kelly Hudson

Are you looking for that new dream home, or anything that will get you out of your current rental property so you can officially become a homeowner?

If so, what is the minimum amount you are required to put down?

Below are three different purchase price categories. Each one has their own minimum down payment requirements and we have included some important notes to also consider at those prices.

| $1-$500,000 | Minimum 5% Down Payment |

• The lowest amount you need as a cash down payment for a purchase up to $500,000 is only 5% of the purchase price.
• For a $300,000 home, this would be $15,000.

| $500,001 – $999,999 | Blended Down Payment |

• The minimum down payment if your purchase price falls in this category is 5% on the first $500,000 and 10% on the remainder up to a million dollars.
• For a $650,000 purchase price, you would be required to put down $25,000 (5% on amount up to $500,000) and $15,000 (10% of the amount above $500,000 [$150,000 in this case]) for a total minimum down payment of $40,000. This would be a 6.15% down payment.

| $1,000,000 + | Sliding Scale |

• 20% requirement on entire amount up to $1,250,000 and 50% down payment on amount over $1,250,000 subject to a 75% loan to value.
• A $1,100,000 purchase price would be a minimum down payment of $220,000 (20%).
• $1,350,000 purchase price would require $250,000 (20% on $1,250,000) plus an additional $50,000 (50% of amount above $1,250,000 [$100,000 in this case]).
• Some lenders may make different exceptions depending on the strength of an application but, for the most part, the sliding scale information above is quite accurate.

There you have it! The three most common sized purchase prices and their required minimum down payment. Please keep in mind that almost all lenders will require you to have an additional 1.5% of the property value available in cash to cover all closing costs which may include, for example, lawyer fees, property transfer tax, and insurance. If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

Written by Ryan Oake

It’s getting to be that time of year when we are collecting our tax receipts to file taxes and hopefully get a nice cheque back from CRA.

1st time homebuyer’s Tax Credit
If you purchases a home in 2018 don’t forget to apply for the $5,000 tax credit. This could result in up to $750 in cash back in your pocket. In order to qualify you must have purchased a home in 2018. It must be registered in your name or your spouse’s. You and your spouse can not have owned a home in the previous four years. What that means is if you owned a home 5 or 6 years ago you would qualify as a first time homebuyer because of the amount of time you had been renting and not a homeowner. Homes include mobile homes, modular and floating homes.

GST/HST New Housing Rebate
This rebate is for people who built a home during 2018 and they can apply for a tax rebate. However, they can also qualify if they owned a home and did major renovations such as adding an addition to a home.
Granny Suites – you may also qualify for this rebate if you converted a non-residential building into a residential property. That means that if you turned your garage or barn into a granny suite for you or a family member you can claim the rebate.
Co-op Shares – if you purchased shares in a housing co-op for you or a relation to live in as your primary residence , the rebate can also be claimed.

Land Transfer Tax Rebate
If you live in Ontario, B.C. or PEI you also may qualify for a fist time homebuyers rebate on the land transfer tax and for the city of Toronto you can apply for a $3,725 municipal land transfer tax rebate. Put it all together and there’s a lot of money available for first time homebuyers if they know they qualify. Be sure to check with your Dominion Lending Centres mortgage professional to see if you do qualify.

Written by David Cooke

As many of you already know, Canada just became the second country in the world to legalize marijuana for medical and recreational purposes. Of course, this historic moment in Canadian history has cannabis activists jumping for joy while others are not s-toked on the idea.

With legalization comes the realities of growing your own pot at home which already has Global News giving Canadians a step-by-step guide on how to do so properly and legally — sorry Manitoba and Quebec!

We always have clients contacting us for restructuring advice on their current mortgages. However, through our initial discussions, we have found out that some have started growing pot plants within their homes. Since this legislation is new to everyone, including the mortgage community, we had to do some research.

Prior to September 17, growing cannabis at home was a legal grey area. Mortgage wise, it was a red flag. Any home that has previously or is currently being used in the growing of cannabis was treated as a “grow-op” and as a result is NOT financeable.

grow-op: a concealed facility used for marijuana plantation.

Since legalization day on October 17, the federal government officially set a limit of four pot plants per household — NOT by person. This information DOES NOT have to be disclosed on a property disclosure UNLESS damage has occurred within the household because of cannabis cultivation.

Just as a FYI — ALL property owners should consult their realtor or lawyer about how to properly disclose when selling their household.
After talking to our local Canada Mortgage and Housing Corporation representative (CMHC), she notified us that mortgage insurers are currently leaving lenders to create their own policies on how to deal with marijuana plants and their effect on existing mortgages. We contacted lenders about this ‘budding’ home-grown industry but were met with no answers.

This situation is certainly a waiting game and we’re all holding our breath waiting for the first move!

Let us share our advice.
If you are looking to sell your property or refinance your mortgage — get rid of those pot plants now!
Any home appraisal company can disclose in their report that cannabis is present within your home which could place your home on a list that DOES NOT foresee future sales or refinances.
It is your safest bet to keep your cannabis plant growth up to the licensed growers located across the country.
If you have any questions, contact your local Dominion Lending Centres mortgage professional.

Written by Chris Cabel

Your realtor will be happy to list your property and sell it for you. However, if you have a garage, they will be much happier. Why?

Here’s the reasons why realtors prefer to sell homes with garages:

1 – Homes with a garage, attached or detached sell faster and for more money, usually $20-30,000 more.

2 – Curb appeal – a house with a garage looks cleaner and neater than a house with a driveway or parking pad. Once again, it’s easier to sell.

3 – Clutter storage – If you’ve lived in your house for 20-plus years you probably have a little too much stuff. Putting one piece of furniture in the garage from each of the main rooms makes the house look more spacious and – it’s easier to sell.
If there are several homes like yours for sale and none of them have a garage, here’s an idea. Instead of lowering the asking price on the house by $20,000, ask your realtor if building a new garage would help sell the property. Depending on city permits and your local renovation market, you could build a garage in two weeks and sell your house quickly.
Speak to your favourite Dominion Lending Centres mortgage professional about a Refinance plus Improvements mortgage to get that garage built.

Written by David Cooke

There are two different types of mortgages when it comes to their balance in relation to the value of your home- high ratio or conventional.

When you applying for a mortgage, lenders use a ratio called loan to value. Your loan to value is exactly what it sounds like, the size of your mortgage in relation to the value, written as a percentage.

For example, if you have a $500,000 home and your mortgage is $300,000 and your down payment/equity is $200,000, your loan to value is 60%. This means that the bank owns 60% of your home and you technically own 40%, because if your house sold for $500,000, you would only get $200,000 as the remaining amount goes to the lender to pay out your mortgage.

When some one says high ratio and conventional mortgages, that is referring to your loan to value. If your loan to value is more than 80%, you have what is called a high-ratio mortgage. A high-ratio mortgage is when you own less than 20% of your home. You will also be required by law to pay what is called mortgage default insurance to help protect the lender if you were unable to maintain your mortgage payments.

A conventional mortgage is when you own 20% or more of your home and your mortgage amount is less than 80% of the value of your home. You do not need to pay mortgage insurance premiums if you purchase a home with 20% or more as well. When refinancing your home and borrowing against your equity, lenders are not allowed to increase your mortgage to an amount above 80% of your homes value. This means, if you own less than 20% of your home, you cannot refinance or take equity out.

You are also not allowed to purchase a rental property and receive a high ratio mortgage as you are required to put 20% down. Conventional and high ratio mortgages will also affect your interest rates as most lenders incentives high ratio buyers to work with them by offering lower interest rates.

There are several other categories when looking at loan to value and what each one can give you in terms of borrowing power, however, when it comes to high ratio and conventional, these are the biggest differences.

If you have any questions relating to high ratio or conventional mortgages, contact your local Dominion Lending Centres mortgage professional.

Written by Ryan Oake

Here are 7 signs that you’re ready to buy your first home…

1. You have saved enough for the down payment
Most people think the biggest hurdle to overcome when buying a house is saving up a down payment. You normally need to save at least 5% of the purchase price as a down payment. This down payment shows that you have some of your own money invested in the house which gives the lender some comfort that you will protect your investment. Having the ability to save money is a great first sign you might be a future homeowner.
2. You have good credit
Having perfect credit isn’t a requirement to get approved for a mortgage in Canada. However, if your credit score is at least 650, your odds of getting approved are much higher. If your score is at least 620, you may qualify for a mortgage with as low as a 5% down payment. Lenders look at more than just your credit score. If you have not missed a single missed payment in the past 12 months this is a great sign that you’re more likely to qualify.
3. You can afford the mortgage payment
The amount of home you qualify for is tied to your debt to income ratio. It’s typically recommended to keep you spend no higher than 35% of your monthly income on housing related expense (Mortgage, property tax and heating). If you’re renting a home, chances are that your mortgage payment will be close to what you’re paying in rent. Use our calculator to find out what your mortgage payment will be and how much you can afford. How much house can you afford calculator
4. You have steady employment
If you have been in the same job with the same employer for at least 1 year, you’re financially stable enough to have a mortgage. Having steady employment history is a good indicator that you’re ready to buy a house.
5. You don’t plan on moving to a new city anytime soon
We all dream of living somewhere different. Buying a house is better financially than renting, but only if you plan on staying put for 3 years. If you don’t have any immediate plans on changing cities, then buying is a great option for you. There’s a chance that home you buy today will increase in value in a few years. Buying a home is a great investment.
6. You have kids, or kids on the way
If you already have children, you most likely want to settle down into a nice neighborhood. Kids don’t like moving away from their school and friends, so buying a home makes the most logical sense. If you don’t have kids this doesn’t mean you’re not ready to buy a home, not at all.
7. You’re tired of renting
Renting is financially exhausting. You are basically paying someone else mortgage payment. You’re hurting your bank account and helping theirs. You might want to spruce your place up but as a renter, what’s the point. If you feel the need/want to upgrade your home, now is the time to buy. You will feel proud and a sense of accomplishment taking care of and improving your home. So, get your DIY skills ready.

If you think a few of these describe where you are at in life, contact a Dominion Lending Centres mortgage broker who can put you on a path to home ownership.

Written by Chris Cabel