29 Aug

3 Things You May Not Know About Cash-Back Mortgages


Posted by: Clarissa Yap

It can get pretty exciting to see campaigns around “cash-back mortgages” but, before you get too far along, here are three things you might not know about these types of mortgages:

  1. Occasionally you will see campaigns on cash-back mortgages, so don’t jump at the first one you see! These types of mortgages are available through a few major lenders so it can be helpful to shop around to see what different terms and conditions are available, as this will affect the overall loan.
  2. When it comes to cash-back mortgages, you’re really getting a loan on top of your mortgage. The interest rates are calculated to ensure that, by the end of your term, you will have paid the lender back the money they gave you (and perhaps a bit extra!). Be mindful that these loans can come with higher interest rates and, in some cases, the extra is more than you got in cash-back.
  3. The average cash-back mortgage operates on a 5-year term. While you may not be planning to move before your term is up, sometimes things happen and it is important to be aware that if you break a cash-back mortgage, you have to pay the standard penalty but you will also have to pay back a portion of the loan you were given. For example, if you are 3 years into a 5-year term, you would have to pay back 2 years or 40% worth of the cash-back. Combined with the standard mortgage penalties for breaking your term, this can add up if you’re not careful!

Contact me for the free assessment on your needs and advise regarding all cash-back mortgage availability, lines of credit, purchase plus improvement loans or also flex down mortgages that may be better for your situation.

Written by DLC Marketing Team
22 Aug

Tips to Create a Monthly Budget


Posted by: Clarissa Yap

One of the quickest ways to take back control of your finances and understand where your money is going is to create a monthly budget. This will help you get a snapshot of your income compared to your spending, and provides an avenue to review outgoing costs and determine areas for improvement to help you increase your monthly cashflow or just feel less stressed!

Step 1: Calculate Your Income

The very first step to creating any budget is determining your income – knowing exactly how much money do you bring in, per month, is important to understanding what you have available to spend. Remember to focus on NET INCOME versus gross salary as thinking you take home more than you do can lead to overspending and failed budgets.

Step 2: Track Your Spending

Once you have determined your income, you will want to take a look at your spending. Reviewing and categorizing all your monthly bills can help you breakdown exactly where your money goes and your priorities to see where changes can be made.

To start, first list out your fixed expenses – these are things like car payments, loans, rent or mortgage costs that do not change on a monthly basis.

Next, you will want to take a look at your variable expenses – things like groceries, gas, entertainment, etc. and determine your average spend. This is typically the area where people are able to cut back.

Step 3: Set Realistic Goals

Realistic goals are vital for long-lasting financial health. It is important to determine what you cannot live without and where you can cut costs or scale back on spending.

Ideally, when it comes to your monthly budget, you want to consider the 50/30/20 rule, which applies the following:

  • 50% of your spending is for NEEDS such as rent or mortgage payments, car payments, utilities and groceries
  • 30% of your income goes to WANTS such as shopping, vacations, streaming services, etc.
  • 20% of your income goes to SAVINGS OR DEBT such as emergency funds, retirement, child’s education and/or credit card payments

Step 4: Make a Plan

Once you have your goals set, you can now make a plan to tackle your financial position and ensure a healthy cashflow each month.

There are a few different ways you can plan to handle your monthly budget. For some, setting realistic spending limits for each category works well. For others, taking a look at the importance of the items on their expenses list and re-prioritizing can free up funds.

Step 5: Adjust Your Spending

Now that you have determined how much money you bring in per month and what you spend it on, you can take a look at adjusting your spending to ensure you remain on budget. Taking a look at any wants is a great place to cut out frivolous spending beyond a reasonable amount.

This is also a great time to review your fixed expenses. Perhaps you can save money by getting a better interest rate on your mortgage or changing your payment schedule for your loan.

Be sure to connect with a Dominion Lending Centres mortgage expert before making any changes!

Step 6: Stay on Track

Lastly, once you’ve tracked all your spending and income and determined your monthly budget, you will want to stay on track. Tracking your budget on a monthly basis is important to catch any changes in your spending habits. As well, it is a good idea to conduct an annual review and take into account any increase in expenses or wages that may require shifts in your overall plan.

Remember! A healthy, well thought-out budget is key to financial freedom and comfort.

Written by DLC Marketing Team
15 Aug

Why are Modern Day Finances So Hard?


Posted by: Clarissa Yap

Do you feel like you need to be a banker, accountant, economist and stock market analyst just to keep the family finances in check?

Should it really be so hard to cover the household bills, make the payments on the car and mortgage, put away a little for the kid’s education, and make some solid investments that will hopefully leave you with enough left over for a reasonably comfortable retirement?

Managing your finances might have seemed a lot simpler in the past. Then again, the early 1980’s had interest rates of 15% with inflation over 10%, so that claim is a little dubious! What has changed is the number of alternatives available to “help us”— it can get overwhelming very quickly.

For example, if you are looking for options to invest your hard-earned TFSA contributions, there are around 5000 mutual funds and 1000 ETFs in Canada to choose from! But that’s only if you are already up to speed on the differences between mutual funds and ETFs, MERs and investment fees, asset allocation, RRSP & TFSA rules and regs, DIY online investment platforms… and the list goes on!

The reality is that personal finance is likely to get more difficult and more complicated in the future. If you are lucky, your employer may offer financial literacy programs as part of their employee wellness program. In some provinces, high schools are now offering financial literacy programs for kids to learn the basics before they graduate. This is great news for your kids and their financial future, but it isn’t going to do much for you… unless you want to put your kids in charge of the household finances?

The reality is that most of us are on our own when it comes managing our money. There are some great tools and information resources that can help immensely, but the easiest, most cost effective, and most reliable option for the majority of us is building our own financial knowledge.

The good news is that mastering the basics is a lot simpler than most of us realize. You don’t need a complicated app to track your expenses, a pen and paper will get you started.  If you want to know more about DIY investing or whether an RRSP or TFSA is best for you, there is tons of information available to help you.

The problem for most of us is we focus way too much on making money and spend far too little time looking at where our money goes, or how to manage it better and make that money work for us. Earning more money won’t solve many problems if you continue to spend too much, make poor decisions, fail to invest, and have no goals to help guide you and measure your financial progress.

Written by DLC Marketing Team
8 Aug

Could an Investment Property Be Your Pension?


Posted by: Clarissa Yap

An investment (or rental) property, can be a great option for generating additional monthly income and growing your wealth over time, if done properly.

This strategy has multiple options and outcomes that can benefit Canadians such as:

  • Supplementing income now and boosting pension in the future creating more financial freedom
  • Allowing you to buy your dream retirement home now and rent it out until you’re ready to use it
  • Increase monthly cash flow for potential expenses beyond retirement savings
  • Utilize a multi-unit home (such as a duplex) by renting out one of the units

However, before you buy an investment property, there are a few things to know. Firstly, buying a property for the purpose of renting it out to someone else comes with different qualifying criteria and mortgage product options than traditional home purchases.

Before you look at purchasing a rental property, be aware that:

  1. The minimum down payment required is 20% of the purchase price, and the funds must come from your own savings; you cannot use a gift from someone else. Another option is to utilize existing equity in your primary residence and refinance for the cash to purchase your rental or investment property. Be sure to factor in funds for closing costs, potential repairs and maintenance in your amount.
  2. Only a portion of the rental income can be used to qualify and determine how much you can afford to borrow. Some lenders will only allow you to use 50% of the income added to yours, while other lenders may allow up to 80% of the rental income and subtract your expenses.
  3. Interest rates usually have a premium when the mortgage is for a rental property versus a mortgage for a home someone intends on living in. The premium can be anywhere from 0.10% to 0.20% on a regular 5-year fixed rate.

With the right purchase price and rental costs per month, this can be a great way to supplement income and make the most out of your retirement. Not only does it offer monthly cashflow, but you also will have the ability to sell the property down the line if you so choose. However, bear in mind, the sale will be subject to capital gains tax. Your accountant will be able to help you with that aspect if you do decide to sell in the future.

Before getting started, it is important to calculate the cost of your investment (purchase price and closing costs), as well as consider maintenance amounts (approximately 1% of the property value for the year) and compare to current rental prices to be sure it is a profitable investment before purchasing.

If you’re looking to purchase an investment property, be sure to reach out to a Dominion Lending Centres mortgage expert to discuss your options and understand what is required.

Written by DLC Marketing Team
1 Aug

What to Look for During a Home Tour


Posted by: Clarissa Yap

So! You think you’ve found your dream home, and you can’t wait to check it out in person.

Before you go, here are a few things that are important to look out for during a home tour:

  1. Odor: Unusual smells can indicate problems, especially mold or mildew issues.
  2. Plumbing and Electrical: Check water pressure as well as electrical systems to ensure no eroded or exposed wires, properly functioning HVAC, sealed water heater, etc.
  1. Noise: This is one that homebuyers can often overlook, but it is important to consider the noise within the house as well as how loud the street and neighbourhood are before committing to ensure they are suitable for you.
  2. Home Layout: Whether or not the layout and function of the home suits your needs.
  3. Number of Rooms: How many bathrooms and bedrooms does the house have? Is that amount suitable for your needs?
  1. Wall and Flooring Condition: What is the condition of the walls and floors? Defects such as warping, cracks, watermarks, etc., can be indicative of larger issues.
  2. Unpermitted Additions or Updates: On occasion, you might go to view a home that was listed as having 2 bedrooms and 1 bathroom, only to find that it actually has an extra bathroom! As great as this might be for your needs, you’ll want to double-check that the addition was permitted. Unpermitted construction can create major issues when it comes to insurance coverage and potential structural headaches if not done properly.

Remember, things like furniture, decor, wall or floor treatments, and hardware or other fixtures are easily updated and not important when viewing a home as they can be changed if the rest of the home suits your needs!

In addition to these items to keep an eye out for, there are also a few specific questions you should be asking your realtor, including: deadline for offers, number of offers that have been made, why the sellers are moving, any concerns they may have, whether or not there is a homeowner association with fees, and how old the home is.

To ensure the smoothest homebuying journey, it is vital to have right professionals at your side. A Dominion Lending Centres mortgage expert can help walk you through the process and even recommend a realtor in your area to assist with the purchase itself!

Written by DLC Marketing Team