7 Sure- Fire Ways to Grow Your Credit

General Jordan Thomson 22 Aug

Have you ever wished for a simplified guide on how to actually GROW your credit score? Well today is your lucky day! We have had years of experience working with individuals who come to us with poor or damaged credit and we have found 7 steps that prove to be tried and true in fixing it.

First off though—why are we so focused in on credit scores? Simply put, your credit score details your history of borrowing money. It shows how timely you are on payments; how responsible you are with it and how you manage it.

In a Nutshell: Your credit score represents to the lender that you have proven yourself capable of paying your bills on time and are responsible when managing credit. You credit score will also impact the interest rate that you receive. So, when we are talking about mortgages, your credit score=very important.

Now that we have that covered, here are our 7 sure-fire ways to grow your credit and make the mortgage application process, a breeze:

1. Have at least 2 credit lines at all times
This means that you should always have 2 “tradelines” going. Whether this be 2 credit cards, a credit card and a line of credit and a car loan etc. You want to show that you can manage credit, and this is one easy way to do it. As an added note, the limit on the credit lines will need to be set at a minimum $2,000.

2. Make your payments on time each and every month
No skipped payments! You should ALWAYS make the minimum payment required on all your lines of credit each month.

3. Do not let your credit be pulled too often.
This one is something people often forget about. Having your credit pulled for new credit cards, car loans, and other things frequently raises a red flag for lenders and can significantly lower your credit score

4. Do not exceed 50% of the available credit limit on your credit card or credit line.
We know this one can be hard to do. One easy way to monitor this is to only use a credit card for certain fixed bills such as a cable/internet bill, cell-phone bill, etc. This way you can easily keep track of what credit you have used and what is available still.

5. If you have missed a payment, get back on track right away.
If you did, by chance, miss a payment, do not fret. Instead, get back on track with your month by month payments. Lenders would look at the one missed payment as an abnormality versus a normal occurrence if you are back on track by the following month.

6. Make sure each partner has their own credit.
We cannot tell you how frustrating it can be for couples when they realize that all their credit cards and lines of credit are only under one name…leaving the other person with no proven track record of managing credit! We advise clients to both grow their credit by making sure all joint accounts report for you both.

7. Do not exceed the Credit limit.
It is important to not go over or exceed the credit limit you have been given. Having overdrawn credit, shows the lender that you are not able to responsibly manage credit.

If you follow these 7 steps and are responsible with your credit, you will have no problem when it comes time to purchase a home! In need of more advice? Contact a Dominion Lending Centres Broker-they will be more than happy to help you.

Thank you Geoff Lee for this list!

What is a Collateral Mortgage?

General Jordan Thomson 26 Feb

WHAT IS A COLLATERAL MORTGAGE?

A collateral mortgage is a way of registering your mortgage on title. This type of registration is sometimes used by banks and credit unions. Monoline lenders, on the other hand, rarely register your mortgage as a collateral charge – which is an all-indebtedness charge that allows you to access the equity in the home over and above your mortgage, up to the total charge registered.

What this means is that you may be able to get a home equity line of credit and/or a readvanceable mortgage, or increase your mortgage without having to re-register a mortgage. This is a real benefit to you in some cases because re-registering your mortgage can cost up to a thousand dollars.

However, there are some negatives to having a collateral mortgage.

First and most glaring – because it is an “all indebtedness” mortgage – it brings into account all other debts held by that lender into an umbrella registered against your home. This means that your credit cards, car loans, or any related debt at your mortgage’s institution can be held against your home, even if you’re up to date with your mortgage payments.
Secondly, if you want to switch your mortgage over to a different lender, they may not accept the transfer of your specific collateral mortgage. This means you’ll need to pay additional fees to discharge the mortgage and register a new one.
And lastly, collateral mortgages make it more difficult to have flexibility to get a second mortgage, obtain a home equity line of credit from a different institution, or use a different financial instrument on your home. This is because your collateral mortgage is often registered for the whole amount of your property.
To recap, collateral mortgages give you the flexibility to combine multiple mortgage products under one umbrella mortgage product while tying you up with that one lender. While this type of mortgage can be a great tool when used correctly, it does have its drawbacks. If you have any questions, a Dominion Lending Centres mortgage professional can help.

Thank you to DLC’s Eitan Pinksy for this article.

Don’t Let Procrastination Get In Your Way of Homeownership

General Jordan Thomson 12 Jan

Every week I do a LIVE “Mortgage Minute” to keep you up to date on the current news and topics of the week relating to mortgages, real estate, homes and more!

Mortgage Minute Week of January 12th, 2018

Check it out LIVE here!

Don’t let procrastination, or the fear of rejection, failure and mistakes get in the way of taking the first step towards homeownership in 2018.
1) Commit
2) Make a plan- with me!!
3) Prepare

These things don’t happen overnight. It’s not as if you wake up one day and say, hey, I’m going to buy a home. At least not for the majority of us. So just taking the first step to find out what you can afford and what you may need to prepare for will get you on track and I promise, it’s not as scary as you think!!

Let’s do this!

Call me at 604.725.1607 or email me at jordan@citywidemortgage.ca for a free and confidential consultation.

Mortgage Changes are Coming…Are you prepared?

General Jordan Thomson 22 Sep

MORTGAGE CHANGES ARE COMING—ARE YOU PREPARED?

We know – more changes?! How can that be! With this ever-changing landscape, mortgages continue to get more complicated. This next round of changes is predicted to take affect this coming October 2017 (date not yet available). These new rules contain three possible changes, the most prominent being the implementation of a stress test for all uninsured mortgages (those with a down payment of more than 20%). Under current banking rules, only insured mortgages, variable rates and fixed mortgages less than five years must be qualified at a higher rate. That rate, of course, is the Bank of Canada’s posted rate (currently 4.84%, higher than typical contract rates). Going forward, it will be replaced by a 200-basis-point buffer above the borrower’s contract rate. (source)

The other proposed changes include:
• Requiring that loan-to-value measurements remain dynamic and adjust for local conditions when used to qualify borrowers; and
• Prohibiting bundled mortgages that are meant to circumvent regulatory requirements. The practice of bundling a second mortgage with a regulated lender’s first mortgage is often used to get around the 80%+ loan-to-value limit on uninsured mortgages.
These two proposed changes are minor, and would only affect less than 1% of all mortgages in Canada. The main one, the stress testing, will have a far greater impact.

Why is this happening?

You may recall that the stress test requirements were announced by OSFI in October of 2016. This rule followed a long string of new rules that occurred in 2016. At the time, they primarily affected First Time Home Buyers and those who had less than 20% down to put towards a home. Now, those who are coming up to their renewal date or wishing to refinance may find that this will have an impact on them. They may not qualify to borrow as much as they once would have due to the stress testing implication. For example:

A dual-income family with a combined annual income of $85,000.00. The current value of their home is $610,000.00.

Take off the existing mortgage amount owing and you are left with $145,000.00 that is available in the equity of the home provided you qualify to borrow it.

Current Lending Requirements

Qualifying at a rate of 2.94% with a 25-year amortization and with a combined annual income of 85K you would be able to borrow $490,000.00. Reduce your existing mortgage amount of 343K and this means that you could qualify to access the full 145K available in the equity in your home.

Proposed Lending Requirements

Qualify at a rate of 4.94% with a 25-year amortization and with a combined annual income of 85K you would be able to borrow $400,000.00. Reduce your existing mortgage amount of 343K and this means that of the 145K available in the equity in your home you would only qualify to access 57K of it. This is a reduced borrowing amount of 88K.

They have a mortgage balance of $343,000.00. Lenders will refinance to a maximum of 80% LTV (loan to value). The maximum amount available here is $488,000.00

As you can see, the amount this couple would qualify for is significantly impacted by these new changes. Their borrowing power was reduced by $88,000-a large sum of money!

With the dates of these changes coming into effect not yet known, we are advising that clients who are considering a renewal this fall do so sooner rather than later. Qualifying under the current requirements can potentially increase the amount you qualify for—and who wouldn’t want that?

For more information on how these changes affect you specifically, or to refinance your mortgage, get in touch with your local Dominion Lending Centres Mortgage Professional-they are well-versed in these changes and are ready to help you navigate through the complexities!

 

Thanks to DLC’s Geoff Lee for writing this!

A Brief History of Mortgage Tightening

General Jordan Thomson 10 Jul

You may have noticed that it’s definitely harder to get mortgage financing these days and you are right! Over the past 9 or so years, many changes have been brought in by the government and regulators in an effort to “protect” borrowers, mortgage insurers, slow the housing market etc. The affect has been tougher guidelines for lenders and consumers alike making it a much more complicated and onerous process to obtain financing.

  • January 1, 2017: OSFI imposed onerous capital requirements on default insurers, thus disadvantaging many bank competitors (and consumers) by jacking up rates substantially on low-ratio insured mortgages.
  • November 30, 2016: New stress test regulations were extended to include insured mortgages with 20% equity or more. It also banned certain mortgage types from being insured, including refinances, extended amortizations and single-unit rentals.
  • October 17, 2016: The federal government introduced a stress test to be used in approving all high-ratio insured mortgages with terms of five years or more. It required such borrowers to prove they can handle payments at the Bank of Canada’s posted 5-year rate (currently 4.64%).
  • February, 2016: The Department of Finance announced it was increasing the minimum down payment from 5% to 10% on the portion of a home’s price that’s above $500,000.
  • November, 2014: OSFI releases its B-21 guidelines, which set out insurer restrictions on everything from debt-ratio calculations and self-employment evaluation to borrowed down payments and cash-back mortgages.
  • July 9, 2012: The government reduced the maximum amortization period to 25 years for high-ratio insured mortgages, limited the gross debt service and total debt service ratios permitted to 39% and 44%, respectively, banned mortgage insurance on properties over $1 million and implemented a maximum 80% LTV for refinances.
  • March 18, 2011: Regulators introduced a 30-year maximum amortization on insured mortgages over 80% LTV, an 85% loan-to-value limit on insured refinances and eliminated government insurance on secured lines of credit (e.g., HELOCs).
  • April 19, 2010: The government introduced stress testing for insured mortgages using the Bank of Canada’s 5-year posted rate. Other key changes included a 90% LTV max. on refinances (down from 95%), and an 80% LTV maximum for rental financing.
  • October 15, 2008: The first mortgage rule changes announced by the government eliminated 40-year amortizations (dropping them to 35), raised the minimum insured credit score, added a new maximum total debt service ratio of 45% and additional loan documentation standards.

 

 

Noisy Neighbours: The Law Behind Condo Noise Complaints

General Jordan Thomson 10 Apr

Noisy Neighbours: The Law Behind Condo Noise Complaints

Do you have noisy neighbours disturbing your peace? Or perhaps you want to play music but are getting complaints? Strata law expert Neil Mangan has advice from all the angles

Neil Mangan Velocity Legal

October 27, 2014
Noisy neighbours

Of all the compromises that come with condo ownership, living with noise might be the biggest. Whether you have a neighbour with creaky hardwood floors or a penchant for practicing freestyle clarinet solos or late-night acrobatics, you know all too well how noise can affect your life.

Although most strata corporations have bylaws restricting noise and other forms of nuisance, it can be difficult for owners and strata councils to figure out when the noises of everyday life cross the line and become legitimate complaints.

Most noise complaints come down to a conflict between how owners wish to use their properties and how different noises travel in buildings. For example, one owner may want to use their spare bedroom as a 24-hour home gym while the person living below can hear every footstep above their bedroom. When both owners have a right to live and use their property, who is responsible to change their behavior or expectations?

From a legal perspective, making a noise that impacts another person’s quiet enjoyment of their property can be considered nuisance. The challenging comes down to figuring out what level or noise or interference is reasonable. We all experience life subjectively and what bothers one person may be entirely acceptable to another.

In British Columbia, the courts will normally try to establish whether the level of noise is objectively reasonable to the average person. The courts will look at the nature and frequency of the noise as well as the nature of the neighbourhood and the property. When a neighbourhood changes over time, this too must be taken into account.

If you believe that a neighbour’s noise is affecting your ability to enjoy your home, look for ways to create evidence in support of your noise complaint. Take recordings of the noise if you can. Keep a journal of the timing, frequency and nature of the disturbances. You may also want to hire an acoustic engineer to measure the level of the noise and compare it to normal levels, verify the source and propose modifications in behavior or building construction.

At the other end of the scale, if you receive noise complaints, ask for specific details about the type of noise and the timing of the incident. Your strata corporation has a statutory obligation to provide you with specific details about the alleged offence. If you want to challenge a noise complaint, remember that you will need to show the strata council, and potentially the courts, that you were not engaging in any unusually noisy activities given the time of the complaint. If the issue persists, consider working with your neighbour and strata corporation to come to an agreeable solution.

If you are a member of a strata council dealing with noise complaints, avoid jumping to conclusions and take the time to investigate the complaint. Your strata corporation has a statutory duty to enforce the bylaws, make reasonable decisions and provide owners with a fair adjudication process.

While a late-night party or barking dog are obvious problems, many persistent noise issues are structural in nature. Your strata corporation is responsible for the repair and maintenance of common property between strata lots, and if the common property is a contributing factor in the transmission of noise between strata lots, the strata corporation may have a duty to repair or minimize the transmission of sound.

The simplest and most cost-effective way to resolve noise disputes is to work with neighbours and strata council to determine whether the noise is normal and to look for ways to minimize the disturbance.

If extending an olive branch doesn’t work, you may have legal remedies. Most of the time, owners have a right to the quiet enjoyment of their property. If you believe that your neighbour or your strata corporation are failing to respect your rights, or are unfairly targeting you, speak with a strata lawyer to review your matter and provide you with qualified legal advice.

For additional information on this and other strata property topics, visit my free online strata law guide at www.stratalaw.ca. Finally, always remember that this article provides general reference information, not legal advice. If you have a legal problem, always speak with a lawyer.

Getting the Most from your Renovation Dollars

General Jordan Thomson 23 Mar

GETTING THE MOST FROM YOUR RENOVATION DOLLARS

For most of us, the family home is likely to be the largest single investment we will make. While the purchase of a home is driven primarily by the need to provide shelter for your family, all homeowners anticipate that the value of their home will increase over time.

The extent of this increase depends very much on market factors such as location and overall economic conditions. In recent years we’ve seen tremendous volatility in some parts of the country and this has led to a price distortion in these markets, but over the course of twenty or more years of ownership, the expectation is that a home’s value will continue to appreciate.

As the last wave of the Baby Boomer generation prepares for retirement, many plan to downsize and use the proceeds of the sale of their principal residence to purchase a smaller home. Remaining funds can then be added to retirement portfolios or used to pay off other debts.

For those planning to make this transition within a few years, it can be highly tempting to complete expensive renovations in the hopes of boosting the home’s selling price. While this can be an effective strategy, it is critical to proceed with caution! When it comes to makeover projects, some renovations are definitely better than others; here are just a few things to keep in mind to help ensure you get the best return for your renovation investment.

Bathrooms and Kitchens

Bathrooms and kitchens are frequent upgrade targets and it is generally accepted that money spent updating these rooms gives you the best opportunity to maximize your investment. In many cases, you can make a significant impact with relatively inexpensive upgrades to fixtures and lighting but anything beyond that will require a greater investment.

When upgrading a bathroom, for instance, costs will quickly escalate if installing upgraded amenities such as soaker tubs and whirlpool baths. The same holds true for kitchen renovations and once you start replacing appliances and upgrading counters and cabinets, costs will mount at an alarming rate.

Basements

Basements are also very common renovation projects and a basement that adds more living space to the home is a strong selling feature. Converting an unfinished basement into a comfortable space is an expensive proposition but a well-designed, modern basement will give your home a tremendous advantage once it hits the market.

Families with growing children will definitely appreciate the extra space, and basements that can be easily converted into a legal apartment with a separate entrance provide the potential for the new owner to earn extra rental income. Not all buyers are interested in renting out their basement, of course, but as the number of intergenerational families continues to rise, the ability to provide a self-contained apartment for aging parents makes this a very attractive feature for many buyers.

Renovations to Avoid

Just as some renovation projects can help boost the value of your home, others may actually have a negative impact on the future selling price. At the top of this list is the installation of a pool, and while lounging on the deck of your own pool is something you may enjoy, not everyone shares this feeling.

Families with small children, for example, often shun homes with pools over safety concerns. For others, the work and expense of maintaining a pool is not something they wish to take on further limiting demand for your home.

It is also common to see smaller homes that have had attached garages converted to an expanded living room or extra bedroom. Again, converting the garage may have served the owners well at the time, but the loss of garage space may be seen as undesirable by many potential buyers.

Align Your Priorities

Finally, while these things may not add to your home’s “curb appeal”, it’s important that major items are in good repair. Things like the condition of the roof, as well as the age of your cooling and heating systems, are all areas that new buyers will closely examine. If after conducting an inspection it is discovered that these critical systems costing thousands of dollars to replace are in poor repair, prospective buyers may insist on a lower purchase price, or may even pull their offer altogether.

Pino Decina

EVP Residential Mortgage Lending
Home Trust Company

Buying Your Home in 2017-7 Steps to Maximize Your RRSP Down Payment

General Jordan Thomson 28 Feb

BUYING YOUR FIRST HOME IN 2017? – 7 STEPS TO MAXIMIZE YOUR RRSP DOWN PAYMENT

RRSP’s For Your Down Payment??Are you thinking of buying your first home in 2017? If yes, contributing to your RRSP before the March 1 contribution deadline can help you increase your funds available for your purchase. Follow the 7 steps below so you can maximize your available funds to purchase your first home.

Step 1: Check to see if you fit all the Home Buyers’ Plan (HBP) requirements at www.cra-arc.gc.ca/hbp/. If you do continue to the next step.

Step 2: Consult with your Dominion Lending Centres Mortgage Broker to review your credit and plan ahead so you are mortgage ready. Your broker will help you figure out what you qualify for as well as help you navigate all the first-time home buyer programs such as the new BC Home Owners Mortgage and Equity Program.

Step 3: Contribute to your RRSP to top it up to $25,000 (check your contribution room to confirm the maximum you can contribute) for each buyer. Contribute to the highest income earners RRSP first to maximize your tax refund. If you don’t have the cash to contribute, then it may be beneficial to borrow funds to contribute to your RRSP but talk to your mortgage broker first to ensure your credit is in line to do so.

Step 4: Do your taxes as soon as possible so you can get your tax refund in your bank account.

Step 5: If you didn’t maximize your RRSP to $25,000 put your tax refund into your RRSP (highest income earner first) to help reduce your taxes next year.

Step 6: Now that your funds are in your accounts review your options with your mortgage broker and let your RRSP contributions stay in your account for 90 days for the withdrawal to qualify under the HBP.

Step 7: Begin searching for your first home. Be sure to plan the closing date to be after the minimum 90 days required for the funds to be in your RRSP and allow time for funds to transfer out of your account.

Important 2017 Dates:

March 1 – the 2016 RRSP Contribution Deadline

February 20 – the first day you can file your 2016 income taxes

May 1 – the deadline to file your taxes if you are not self-employed

April 30 – all income taxes must be paid to CRA by all tax payers

June 15 – the deadline to file if you are self-employed

Good to Knows about the Home Buyers’ Plan:

Funds withdrawn from your RRSP before they have been in your account for 90 days are not eligible under the HBP and income tax will be withheld from the withdrawal
You can use your RRSP withdrawal for anything from you down payment, paying off debts, moving costs and more as long as you’re in a contract to purchase your first home
You must repay the withdrawal amount over 15 years starting the year following your withdrawal or pay tax on 1/15th of the amount withdrawn in tax years you do not pay it back.
Your Dominion Lending Centres Mortgage Professional will help you plan to buy your first home. It’s never too early to start your mortgage application. Contact us today to get started!

Thank you to DLC’s Kathleen Dediluke for this great info!

When My Mortgage Broker Can Help

General Jordan Thomson 16 Feb

BC real estate is an ever changing landscape, and so too is the world of mortgages! More and more, consumers are using mortgage brokers over their local bank or credit union to receive unbiased mortgage advice, first or second mortgages, refinances and more. It’s becoming more difficult to get financing these days since the government introduced tougher rules and regulations, so it makes sense to be informed of all the options available to you.

There are many times when you can call on your mortgage broker that you may not think of and it is during these life changes that we want to help.

When My Mortgage Broker Can Help:

Getting Married– Building a life and home together
Need Space– Your current home is too cramped
Losing Money– If your rate is too high, you are kissing your money goodbye
Bad Neighbours-You’re living beside Mr and Mrs Crazy
Divorce– You want to keep your home, we can help
Too Many Bills– Your home may hold the key to paying off debt

Here at Dominion Lending Centres, our brokers have the knowledge and expertise to provide you with the advice and solutions that you need, helping you manage the ups and downs of your life.

Jordan Thomson, MBI
jordan@citywidemortgage.ca | 604.725.1607