Are you dreaming of buying a vacation rental property, have just bought one, or are strongly considering it? If so, your mind is probably abuzz with design ideas and thoughtful touches you could add to the home.

In order to make a rental property into a viable business, you need to set a reasonable budget and stick to it. And everything in the home should be geared towards rental guests. Some elements may not align with how you would design and furnish your own home, but what matters is that it appeals to guests. Keep in mind that as a rental, it has to be able withstand wear and tear, and items should be reparable or replaceable.

How I approached the design of my vacation rental property was to learn about who stays in the area, what they value, and how I could tie that in with the character of the home to create a great experience. In my case, the main guests are groups of women between the ages of 25-40, who come to tour wineries and enjoy Instagram-worthy decor. My house is about 100 years old, so I decided to work with its charm and quirks to create an airy and open design with accents of ecru and foliage.

To furnish your vacation rental without sacrificing comfort or experience, there are many different tactics you can employ.

First and foremost, ensure that everything you bring into the home can reasonably be maintained. That means, don’t plant rose bushes if you can’t trim them, don’t bring in a white shag carpet if you won’t be there to vacuum it every day. As a guest, you want to arrive at a home that’s clean and well taken care of. If your ideas are so ambitious that you can’t manage the upkeep, it will take away from the guest experience and potentially their overall impression of the place. Put it this way: how would you feel if you pulled up to a house with overgrown shrubs and stained carpets?

Re-use, re-purpose, and be thrifty. Everything you bring into the space doesn’t have to be shiny and new. Thrift stores, grandparents’ basements and garage sales can be full of treasures like antique books, frames, artwork, lamps or other accents. Clean them up and paint them, if needed. Placing out a few selectively chosen antiques can add uniqueness and visual interest to the room. For simple items like frames that can easily be painted, it can save you a bundle on decor.

Remove any personal items from the home, such as family photos, paperwork, storage bins, clothing, etc. Leaving these items around will make guests feel like they are intruding on someone else’s personal space; it doesn’t feel like a getaway. That’s not to say that you can’t add personal touches. For example, I have an old chest that belonged to my grandparents in my vacation rental. But keep in mind that personal touches tell a story and are different than personal items.

You can also add homey touches before guests arrive, like a bottle of wine (is there a brand or product that your area is known for?), a hand-written card, a bag of coffee, some toiletries, etc. These thoughtful extra-somethings make the guests feel welcome and valued.

Consider guests’ comfort as they use the house. Ensure the linens are plentiful. That includes towels, hand towels, sheets, blankets, pillows, etc. They don’t have to be pricey linens, IKEA or Costco works just fine. Everyone has their own way of getting comfy on the couch or in bed. Some guests may only want one pillow, while others may want three. Have extras available in a linen closet or shelving area so that they can freely use what they need.

Spills and messes happen, kids may wet the bed, or someone might want to take a nap on the couch, so a few extra blankets, towels, sheets, and pillows will be greatly appreciated. I once stayed in a rental apartment that only had two thin pillows available, and I felt like I was asking a lot for the host to drop off another pillow to me that evening. Aim to make the experience as smooth and comfortable as possible.

In addition to comfort, make it as easy as possible too. Provide a house manual detailing everything they need to know about check-in, check-out, info about the home and the area, if certain things are not allowed, how to contact the host, etc. Put helpful labels or markers on closets or storage areas that house extra bedding, kitchen supplies, recycling bins, etc. The goal should be to provide your guests with all the handrails they need to have a fantastic and streamlined experience, without having to call you to ask anything.

Finally, create a statement somewhere in your home that stands out and is memorable. It could be artwork, a wall decal, or mural that your guests want to take pictures of. It could be a really fabulous gallery wall (showcasing all those thrift store frames) that displays your interests and tells a story. Or maybe it’s a stylish and comfy room with plush couches, lots of pillows, blankets, and interesting books.

If you were staying at a vacation rental, imagine what details you would appreciate or want to take a picture of. What type of spaces would you be drawn to relax and unwind in? In my home, I created a room for ultimate relaxation and comfort; it has large, plush couches, tons of pillows, movable coffee tables, and a curtain that runs along the length of the doorway so that you can block out the action happening in the rest of the house. Guests are always drawn to this area because it’s a cozy place to read, hang out or watch a movie.

No matter what your budget is, you can turn your vacation rental into a welcoming oasis that will make guests feel comfortable and valued, and give them a fabulous experience.

Written by DLC Marketing Team

People don’t always want to talk about home insurance, but when it comes to your house there is no better investment than insurance. But, with the number of insurance products available, it can be hard to know where to start! While it can seem overwhelming, it’s a good idea to get familiar with the basics of some of the required and optional insurance coverage when it comes to your home.

default insurance

The first and perhaps most common form of insurance when discussing the mortgage space is known as “default insurance”. The purpose of mortgage default insurance is to protect the lenders, allowing them to lend money more aggressively.

This type of insurance is mandatory for any homes where the buyer puts less than 20 percent down on the purchase. In fact, default insurance is the reason that lenders accept lower down payments, such as 5 percent minimum, and actually helps these buyers access comparable interest rates typically offered with larger down payments.

In Canada, there are only three companies that offer default insurance: Canada Mortgage and Housing Corporation (CMHC), which is run by the federal government and two private companies: Genworth Financial and Canada Guaranty.

Default insurance typically requires a premium, which is based on the loan-to-value ratio (mortgage loan amount divided by the purchase price). This premium can be paid in a single lump sum or it can be added to your mortgage and included in your monthly payments.

According to CMHC, the minimum down payment required for mortgage loan insurance depends on the purchase price of the home:

• For a purchase price of $500,000 or less, the minimum down payment is 5 percent.
• When the purchase price is above $500,000, the minimum down payment is 5 percent for the first $500,000 and 10 percent for the remaining portion.

It is also important to note that default insurance (or mortgage loan insurance) is available only for properties with a purchase price or an improved/renovated value below $1 million.

title insurance

Another insurance policy that potential homeowners may encounter is known as “title insurance”. This is an insurance policy that protects residential or commercial property owners and their lenders against losses relating to the property’s title or ownership. In fact, it is so important to lenders that every single lender in Canada requires you to purchase title insurance on their behalf. It is not a requirement to have coverage for yourself, but that doesn’t mean you should dismiss it outright.

Title insurance can protect you from existing liens on the property’s title, but the most common benefit is protection against title fraud. Title fraud typically involves someone using stolen personal information, or forged documents to transfer your home’s title to him or herself – without your knowledge. The fraudster then gets a mortgage on your home and disappears with the money. As the old adage goes: “It’s better to be safe than sorry” and the same goes for insurance.

Similar to default insurance, title insurance is charged as a one-time fee or a premium with the cost based on the value of your property. Title insurance for the lender is typically $250 to $300, while title insurance for yourself runs around $125 to $150. You can purchase title insurance through your lawyer or title insurance company, such as First Canadian Title (FCT).

mortgage protection insurance

Before you sign off on your mortgage, there is one more type of insurance your mortgage broker should tell you about – Mortgage Protection Insurance. Despite being optional, it should still be considered. Almost every mortgage broker in the business has a story of someone who passed on the extra coverage and tragedy hit.

Unfortunately, life happens but it doesn’t have to happen to your home. While you may not want to spend the money now, or maybe you already have some type of life insurance policy through work, don’t discount this option as it is often a blessing in disguise – especially when it comes to homeowners with a spouse and children. Can they carry on with the mortgage payment? If not, they would be forced to sell on top of everything else. For a few extra dollars a month, mortgage protection insurance provides that safety net in the event it is ever needed.

When it comes to choosing a mortgage protection plan, there are a number of different policies available depending on your budget. Manulife’s Mortgage Protection Plan offers immediate insurance and can be canceled at any given time. If you think you may be covered through your work, it can’t hurt to take a closer look at the policy.

Mortgage insurance is what we consider “debt replacement” and life insurance is more fitting as an “income replacement”. This is an important distinction and you should understand the difference. You also need to see just how much you’re going to get through your life insurance policy; you may be surprised just how little it amounts to.

property + fire insurance

Lastly, after you’ve signed off on your mortgage you need to close on the home. Before you do this, your lender is going to require home insurance. When it comes to home insurance, there are many different types of coverage however it generally protects you from damage to the home that is accidental or unexpected, such as a fire.

Home insurance can also cover the contents of your home, depending on your insurance package. For individuals looking at purchasing condos or townhouses, this is especially important! The insurance from strata typically protects the building itself and common areas, as well as your suit “as is”, but it will not account for your personal belongings or any upgrades you made. Be sure to cross-check your strata insurance policy and take out an individual one on your unit to cover the difference.

One final thing to consider with regards to home insurance is that, just because you have home insurance you’re not necessarily covered in the event of a flood or earthquake. Depending on where you live, you may need to purchase additional coverage to be protected from a natural disaster. It’s best to talk to your insurance provider to confirm that you are covered.

At the end of the day, purchasing a home is a huge investment. Why risk it when there are so many great insurance products to ensure your investment – and family – remain protected? Reach out to a Dominion Lending Centres Mortgage Professional today to find out what coverage is needed and how to go about getting it!

Written by DLC Marketing Team

In life, things rarely go as planned. This is especially true when it comes to real estate! When it comes to buying a new home, in a perfect world, most of us would like to take possession of their new residence before having to move out of the old one. This makes moving a lot easier and allows you time for painting or renovations prior to moving into your new digs. Unfortunately, this is where things get complicated.

Most people need the money from the sale of their existing property to come up with the down payment for the new house. This is where bridge financing comes in. Essentially, bridge financing allows you to ‘bridge’ the financial gap between the firm sale of your current home and the firm commitment to purchasing your new home.

WHAT ARE BRIDGE LOANS?

Bridge loans are short-term solutions that range from 90 days to 12 months, with an average of six months in length. This type of financing allows you to access some of the equity in your existing property, to put towards the down payment of your new home. However, to be eligible for a bridge loan, a firm sale agreement MUST be in place on your existing home, meaning all subjects have been removed. You will also require a purchase agreement for the new home to verify the amount required.

If you have not yet sold your home, you will not be eligible for bridge financing as the lender needs that to accurately calculate how much equity you have available and if you can afford your new home.

If you are currently looking to sell, or are in the midst of selling your home and considering bridge financing, it is important to understand that unless you can qualify and pay for two mortgages, you should always sell your existing home before purchasing a new one. There are a couple reasons for this:

• Property values are constantly changing. You won’t know how much money you have until you sell your home as a home is only worth what someone is willing to pay for it NOW. Past sales and future guesses don’t count!
• You need the proceeds from your existing home to help pay for the down payment on your new home, as well as renovations, moving costs and (if required) the size of mortgage you qualify for.

However, if you have firm sale and purchase agreements in place and are adamant about bridge financing, there are some things you should know.

getting bridge financing

If you have sold your existing home but the closing date comes after the closing date of the new property you just purchased, then bridge financing will likely be your best option.

Remember – in order to qualify you must have a firm sale agreement for your current home and a purchase agreement for the new home. If you don’t have a firm selling date you may need to consider a private lender for the bridge loan.

If you do have firm sale and purchase agreements and want to move forward with bridge financing, you also need to consider the lender. Your new lender may not allow for bridge financing as not all lenders do. It is important to consider whether or not you think you need bridge financing so you can ensure you sign with the appropriate lender. Utilizing a Dominion Lending Centres mortgage broker can help you find a lender that provides the options you need.

COSTS OF BRIDGE FINANCING

It is important to mention that bridge financing typically costs MORE than your traditional mortgage. It is best to expect the Prime Rate plus 2, 3 or 4 percent, as well as an administration fee.

Also, in some cases, if you require a loan over $200,000 or a loan for more than 120 days, your lender may register a lien on the property until the loan is repaid. In order to remove this lien, you will need to consider the added costs of paying for a real estate lawyer.

PRIVATE FINANCING

If you have purchased your new home and are closing the deal, but your existing home has not yet sold, you would not qualify for bridge financing and would therefore need to consider a private loan.

Private financing is expensive, but it is generally a more affordable option versus lowering the asking price of your existing home and losing out on tens of thousands just to sell quickly. Seeking out a specialized mortgage broker who has access to individuals that lend money out privately to get the best rate and terms available to you.

COSTS OF PRIVATE FINANCING

Private loans are dependent on having enough equity in your current property to qualify and are more expensive than traditional mortgages. Private loans have a much higher interest rate than traditional mortgages, which averages anywhere from 7-15 percent. The costs associated with a higher interest rate is in addition to an up-front lender fee and potential broker fee. These amounts will vary based on your specific situation with consideration to: time required for the loan, the loan amount, loan-to-value ratio, credit bureau, property location, etc.

When it comes to bridge financing and selling and buying of your home, don’t waste your time trying to figure it out on your own. Give a Dominion Lending Centres mortgage broker a call and we can help you determine your best option!

Written by DLC Marketing Team

A few simple steps to healthy credit…

Just like you should have a physical every year to make sure you’re healthy, you should do the same for your credit report and score.

Don’t wait until you go to buy something and you are turned down. And don’t worry… chequing your own credit does not affect it. So, what should you be looking for?

MISTAKES

Make sure your personal information is correct and upto- date. Also check that your date of birth and any other identifying information is correct as well.

ERRORS

Even creditors make mistakes sometimes so carefully look over any negative information appearing on your credit that isn’t true. Creditors are required to change any errors that you find on your report.

HINT: Send a letter to the credit bureaus, as well, to let them know there was an error and send a copy to the credit agency who incorrectly reported to motivate them to take care of it in a timely manner.

OUTDATED INFORMATION

Credit agencies are required to remove certain information from your credit after a certain number of years. For example, if you got behind on your payments but then went back to your normal payment schedule, that late history is to be removed after 6-7 years. Don’t assume it will be. Be proactive and follow up to make sure it was done.

FRAUD

We all know someone who has had their identity stolen and nothing wrecks a credit score and report more than someone hijacking it. It doesn’t necessarily have to be a stranger either. Family and friends have been known to “borrow” someone’s credit. Be smart and make sure to protect your credit from the known and the unknown.

WHY DO ERRORS MATTER?

Even minor errors like a misspelled name or a wrong address can keep you from getting a loan or even lower your credit score. Keep your credit as healthy as possible by checking it every year. Choose a day that will be easy to remember like your birthday or the day you file your taxes.

Written by DLC Marketing Team