In the mortgage world, a “guarantor” is someone who guarantees the mortgage on behalf of the mortgage holder in the case that the mortgage holder cannot pay back the loan.

Typically, a guarantor is used in a situation where the buyer has damaged or poor credit history or they lack sufficient income to qualify for the value of the loan. Adding a guarantor can help get these types of files approved as this allows the lender to know they will be paid back should the mortgage holder default.

*It is important to  note that a guarantor is not the same as a co-signer.

Below are some key facts about guarantors and what makes them different from a co-signer:

1. The guarantor must be a spouse or immediate family member. This is not necessary for a co-signer who could be a friend or distant family member.
2. A guarantor typically does not have their name on the title of the property but it will be on a mortgage. In the case of a co-signer, the name is typically on both the title of the property AND the loan.
3. Guarantors cannot qualify for their own mortgage or large loans if they are responsible for guaranteeing a different loan.
4. There is heightened risk on the side of the guarantor as they are responsible for the entire amount of the loan should the borrower default. In order to qualify, they must meet the requirements for credit check, income, liabilities and assets. Any potential guarantor should seek legal advice before signing for the loan to ensure they understand the contract.

Whether you want to be a guarantor for someone else’s mortgage, or you need one for your own, be sure to reach out to me to review your options and explore the terms of the agreement or simply answer any questions you may have.

Written by DLC Marketing Team

When it comes to getting a mortgage, there is a common misperception that a low rate is the most important factor. However, while your rate does matter for your mortgage, it is not the only component to consider.

If you’re looking to get a mortgage, these are some other important factors that you should look at beyond simply the interest rate:

Term: The length of time that the options and interest rate you choose are in effect. A shorter term (5 years) allows you to make changes to your mortgage sooner, without penalties.

Amortization: The length of time you agree to take to pay off your mortgage (usually 25 years). This determines how the interest is amortized over time.

Payment Schedule: How often you make your mortgage payments. It can be weekly, every two weeks or once a month and will affect your monthly cashflow differently depending on your choice.

Portability: An option that lets you transfer or switch your mortgage to another home with little or no penalty when you sell your existing home. Mortgage loan insurance can also be transferred to the new home.

Pre-Payment Options: The ability to make extra payments, increase your payments or pay off your mortgage early without incurring a penalty.

Penalty Calculations: Where variable rates typically charge three-months interest, a fixed rate mortgage uses an Interest Rate Differential (IRD) calculation. This can add up quite quickly! In fact, in some cases, penalties for breaking a fixed mortgage can sometimes be two or three times higher than that of a variable-rate.

Variable versus Fixed: For fixed-rate mortgages, the interest rate does not fluctuate over time. For variable-rate mortgages the interest rate fluctuates with market rates, which can be great when rates drop but not so great when rates are rising.

Open versus Closed: An open mortgage is similar to pre-payment options, allowing you to pay off your mortgage at any time with no penalties. A closed mortgage, on the other hand, offers limited to no options to pay off your interest in full despite often having lower interest rates.

When considering your mortgage, the above components all have a part to play in your overall mortgage as well as your homeownership experience.

It is easy to think that a low-interest rate is good enough, sign on the dotted line… but you may be overlooking important options such as portability, which allows you to switch your mortgage to another property should you choose to move. Or pre-payment options, which give you the choice to make additional payments to your mortgage. Without looking deeper at your mortgage, you may find yourself being forced to pay penalties in the future because you wanted to make a payment or a change to your mortgage structure. In some cases, agreeing to a higher rate to have more options and flexibility is better in the long run than the savings received from a lower rate.

Before agreeing to any mortgage, reach out to me at Clarissa.Yap@dominionlending.ca to review the contract, as well as your future goals and any potential concerns you have to ensure that you get the best mortgage product for YOU.

Written by DLC Marketing Team

Are you dreaming about owning a rental property and making some extra income each month? Before diving into becoming a landlord, there are some things you should know from the advantages and disadvantages to some tips when it comes to buying a rental property.

Advantages of Owning a Rental Property

If you’re looking to purchase a property for rental and become a landlord, you are likely already aware of some of these advantages, but just in case, some benefits to this include:

• Earning additional regularly monthly income
• Allows you to continue to build home equity in the property(s) that you rent
• Ability to deduct certain items from your gross rental income such as mortgage interest, property taxes, insurance, maintenance costs, property management fees and utilities.

Disadvantages of Owning a Rental Property

As with any investment, there are also some disadvantages to owning a rental property, which are important to consider before you make the leap. These can include:

• Responsibility of maintaining the rental property and managing your tenant(s)
• Rental income is taxable and must be included on your income tax. Depending on the value of the extra income, it may push you into a higher tax bracket.
• Unexpected expenses and issues may crop up over time. It is ideal to budget 2% of the purchase price of your property for potential repairs. You’ll also want to keep some money aside should your tenant leave and you need to cover a few months to find a new tenant.
• If you choose to sell the rental property in the future, it will be subject to capital gains tax.

What to Know BEFORE You Buy

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. In addition, note the following:

• 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.
• 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.
• 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.

Final Tips on Becoming a Landlord

If you’ve decided to move forward with getting a rental property and becoming a landlord, here are some tips to consider:

• Don’t forget about insurance! Ensure you have proper coverage for a rental situation and to cover any unforeseen events.
• Educate yourself on what it means to be a landlord in your province from tenant laws to rental responsibilities.
• Do your research on rental rates and locations before you choose to buy so that you are aware of where the market is at when it comes to potential earning power.
• Choose the right mortgage for your rental property. Your mortgage broker can help you with this!
• If you’re looking to run multiple rental properties, consider hiring a property manager who can be a go-between with you and the tenants.

With the right purchase price and rental costs per month, a rental property can be a great way to supplement income. If you’re looking to purchase an investment property, be sure to reach out to me at Clarissa.Yap@dominionlending.ca to discuss your options and understand what is required.

Written by DLC Marketing Team

When it comes to the winter season, it can be easy to go overboard when it comes to heating – but there is a better way! With a little awareness – and the right preparation – heating your home this winter won’t have to cost you a fortune. To help you save, we have put together a few helpful tips to reduce heating costs:

1. Inspect Your Heat Sources – Regardless of whether you rely on a fireplace, gas or baseboard heating, it is always a good idea to have all heat sources inspected for efficiency.

2. Check Your Fireplace – It is recommended to keep your fireplace damper closed, unless there is a fire burning. Otherwise, it is the same as having your window wide-open during the winter! For those of you with a fireplace you never use, now might be a good time to plug and seal the chimney to keep warm air from escaping.

3. Manage Your Thermostat – As tempting as it is to turn your heat all the way up in the winter, proper thermostat management will help you save costs in the long run. A thermostat with a timer is a great option to help you save this winter. Turn it on earlier so the room heats up in time for use, instead of cranking the heat when you need to get warm quickly and have it turn off 30 minutes before bed or before leaving the home. If you find you are chilly at night, a safely positioned space heater and closed door is a far more inexpensive choice.

4. Close The Door – To keep your heating system from working too hard, close doors when rooms are not in use. This prevents heat transfer in and out of vacant rooms, and will ensure the space you’re currently using remains warm and cozy.

5. Be Mindful of Drafts – Checking for drafts is another important way to reduce heating costs. If you notice any issues, using a weatherstrip or caulking to seal doors and windows is a relatively inexpensive fix that can have a huge savings impact on your heating bill.

Written by DLC Marketing Team

When it comes to getting a mortgage, one of the more overlooked elements is the option to be able to port the loan down the line.

Porting your mortgage is an option within your mortgage agreement, which enables you to move to another property without having to lose your existing interest rate, mortgage balance and term. Thereby allowing you to move or ‘port’ your mortgage over to the new home. Plus, the ability to port also saves you money by avoiding early discharge penalties should you move partway through your term.

Typically, portability options are offered on fixed-rate mortgages. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current interest rate. When it comes to variable-rate mortgages, you may not have the same option. However, when breaking a variable-rate mortgage, you would only be faced with a three-month interest penalty charge. While this can range up to $4,000, it is much lower than the average penalty to break a fixed mortgage. In addition, there are cases where you can be reimbursed the fee with your new mortgage.

If you already have the existing option to port your mortgage, or are considering it for your next mortgage cycle, there are a few considerations to keep in mind:

1. Timeframe: Some portability options require the sale and purchase to occur on the same day. Other lenders offer a week to do this, some a month, and others up to three months.
2. Terms: Keep in mind, some lenders don’t allow a changed term or might force you into a longer term as part of agreeing to port you mortgage.
3. Penalty Reimbursements: Some lenders may reimburse your entire penalty, whether you are a fixed or variable borrower, if you simply get a new mortgage with the same lender – replacing the one being discharged. Additionally, some lenders will even allow you to move into a brand-new term of your choice and start fresh. Keep in mind, there can be cases where it’s better to pay a penalty at the time of selling and get into a new term at a brand-new rate that could save back your penalty over the course of the new term.

To get all the details about mortgage portability and find out if you have this option (or the potential penalties if you don’t), contact me today for expert advice and a helping hand throughout your mortgage journey!

Written by DLC Marketing Team

If you have had to declare bankruptcy, you may be wondering what is next.

Bankruptcy is not a financial death sentence. In fact, there are a few things you can do after declaring bankruptcy to help reset your financial status and get a mortgage in the future.

While there is no wait requirement to apply for a mortgage after bankruptcy, it is important to allow your credit time to heal in order to ensure approval.

The first step to rebuilding your credit is getting a secured credit card. If you are able to show that you are responsible with this credit card by paying your balance in full each month and not overspending, it will help to improve your credit score.

Once you’ve re-established your credit, you can apply for a mortgage. What type of mortgage you can apply for, and whether or not you qualify, will depend on a few factors, such as: how long ago you declared bankruptcy, the size of your down payment, your total debt-to-service ratio (how much debt you are taking on compared to your total income) and your loan-to-value ratio (loan value versus the property value).

Depending on this, you will have three options for your future mortgage loan:

Traditional or Prime-Insured Mortgage

This is a traditional mortgage, which will typically offer the best interest rates. To apply for this type of mortgage after bankruptcy the following requirements apply:

• Your bankruptcy was 2 years, 1 day previous
• You have one-year of re-established credit on two credit items (credit card, car lease, loan).
• You have a minimum down payment of 5% for the first $500,000 and 10% for any additional amount over that
  • You have mortgage insurance – required for all down payments under 20%
• You have a total debt-to-service ratio of 44% maximum
• Your loan-to-value ratio is 95% minimum

Subprime Mortgage

This type of mortgage falls between a traditional and private mortgage, meaning you qualify for more than private but not enough for a traditional loan. To apply for this type of mortgage:

• Your bankruptcy was 3 – 12 months prior
• You have a total debt-to-service ratio of 50% maximum
• Your loan-to-value ratio is 85% minimum

Private Mortgage

If you don’t qualify for a traditional or subprime mortgage, you have the option of looking into a private mortgage. Typically, your interest rate will be higher on a private mortgage but there is no waiting period after bankruptcy and the requirements are as follows:

• You have a down payment of 15% of the purchase price
• You have obtained a full appraisal
• You have paid a lender commitment fee – typically 1% of the mortgage value
• Your loan-to-value ratio is 80% minimum

If you have previously declared bankruptcy and are now looking to start over and apply for a mortgage, don’t hesitate to reach out to me for expert advice and to review your options today!

Written by DLC Marketing Team

If you have had to declare bankruptcy, you may be wondering what is next.

Bankruptcy is not a financial death sentence. In fact, there are a few things you can do after declaring bankruptcy to help reset your financial status and get a mortgage in the future.

While there is no wait requirement to apply for a mortgage after bankruptcy, it is important to allow your credit time to heal in order to ensure approval.

The first step to rebuilding your credit is getting a secured credit card. If you are able to show that you are responsible with this credit card by paying your balance in full each month and not overspending, it will help to improve your credit score.

Once you’ve re-established your credit, you can apply for a mortgage. What type of mortgage you can apply for, and whether or not you qualify, will depend on a few factors, such as: how long ago you declared bankruptcy, the size of your down payment, your total debt-to-service ratio (how much debt you are taking on compared to your total income) and your loan-to-value ratio (loan value versus the property value).

Depending on this, you will have three options for your future mortgage loan:

Traditional or Prime-Insured Mortgage

This is a traditional mortgage, which will typically offer the best interest rates. To apply for this type of mortgage after bankruptcy the following requirements apply:

• Your bankruptcy was 2 years, 1 day previous
• You have one-year of re-established credit on two credit items (credit card, car lease, loan).
• You have a minimum down payment of 5% for the first $500,000 and 10% for any additional amount over that
  • You have mortgage insurance – required for all down payments under 20%
• You have a total debt-to-service ratio of 44% maximum
• Your loan-to-value ratio is 95% minimum

Subprime Mortgage

This type of mortgage falls between a traditional and private mortgage, meaning you qualify for more than private but not enough for a traditional loan. To apply for this type of mortgage:

• Your bankruptcy was 3 – 12 months prior
• You have a total debt-to-service ratio of 50% maximum
• Your loan-to-value ratio is 85% minimum

Private Mortgage

If you don’t qualify for a traditional or subprime mortgage, you have the option of looking into a private mortgage. Typically, your interest rate will be higher on a private mortgage but there is no waiting period after bankruptcy and the requirements are as follows:

• You have a down payment of 15% of the purchase price
• You have obtained a full appraisal
• You have paid a lender commitment fee – typically 1% of the mortgage value
• Your loan-to-value ratio is 80% minimum

If you have previously declared bankruptcy and are now looking to start over and apply for a mortgage, don’t hesitate to reach out to me for expert advice and to review your options today!

Written by DLC Marketing Team

It can sometimes be hard to keep track of your finances. Fortunately, we have some tips to help you review your financial situation and plug unwanted money leaks!

1. Be Wary of Impulse Spending: While it can be easy to think that picking up a few extra items here and there won’t affect your overall budget, it does. When you make a purchase of $10 here or $8 dollars there, it all starts to add up! This is why it is so important to track your spending at grocery and convenience stores or gas stations. Make a list or be aware of what you intend to purchase – and stick to it.
2. Carry Cash: It can be way too easy to spend money unintentionally or over budget when you’re simply swiping your credit card. For some, taking spending money out as cash is a much easier way to manage your budget and know when you have used up your weekly funds!
3. Examine Your Bills: As money leaks go, the best way to avoid spending extra funds or paying too much for a service is by examining your bills. Perhaps there are some that you can get rid of entirely or some you can reduce (by changing your phone plan, for example).
4. Ask The Question: If you’re making a new purchase (whether a new internet bundle or car), it is a good idea to always ask “is this the best you can do”? In some cases, you may get a further discount. In addition, be sure to always do your research before any large purchases.
5. Manage High-Interest: One of the biggest places you will find financial leaks are with high-interest rates. If debt is getting in the way of your cash flow (and you still have equity in your home), you may be able to refinance your mortgage and consolidate your debt for one easy monthly payment and a better rate.
6. Renew With Confidence: When you receive the letter from your lender about your mortgage renewal, consider shopping the market or reaching out directly to your mortgage expert before signing the renewal. You may be able to get a lower interest rate or better mortgage terms.
7. Renovate vs Relocate: If you’re finding yourself falling out of love with your home, consider a renovation! It is much more cost-effective than moving and can be a great way to breathe new life into your spaces.
8. Don’t Leave Money on the Table: Be sure to take advantage of rebates and incentives at your disposal! From first-time homebuyer tax credits to energy rebates, there are plenty of opportunities.
9. Change Your Mortgage Payments: Depending on your monthly cash flow situation, you might also want to consider switching up your mortgage payments. Moving from weekly to biweekly can help you reduce your overall monthly bills. If you have extra income, moving to a weekly or accelerated biweekly payment schedule can help you pay off your mortgage faster.
10. Know Your Pre-Payment Penalties: Avoid spending unnecessary money on your mortgage by knowing your pre-payment terms and penalties! If you ever find yourself needing to get out of your mortgage early, you’ll want the option of pre-payment.

If you’re looking to plug money leaks in your finances, reach out to me at Clarissa.Yap@dominionlending.ca to discuss your mortgage payments, debt consolidation and more.

Written by DLC Marketing Team

It can sometimes be hard to keep track of your finances. Fortunately, we have some tips to help you review your financial situation and plug unwanted money leaks!

1. Be Wary of Impulse Spending: While it can be easy to think that picking up a few extra items here and there won’t affect your overall budget, it does. When you make a purchase of $10 here or $8 dollars there, it all starts to add up! This is why it is so important to track your spending at grocery and convenience stores or gas stations. Make a list or be aware of what you intend to purchase – and stick to it.
2. Carry Cash: It can be way too easy to spend money unintentionally or over budget when you’re simply swiping your credit card. For some, taking spending money out as cash is a much easier way to manage your budget and know when you have used up your weekly funds!
3. Examine Your Bills: As money leaks go, the best way to avoid spending extra funds or paying too much for a service is by examining your bills. Perhaps there are some that you can get rid of entirely or some you can reduce (by changing your phone plan, for example).
4. Ask The Question: If you’re making a new purchase (whether a new internet bundle or car), it is a good idea to always ask “is this the best you can do”? In some cases, you may get a further discount. In addition, be sure to always do your research before any large purchases.
5. Manage High-Interest: One of the biggest places you will find financial leaks are with high-interest rates. If debt is getting in the way of your cash flow (and you still have equity in your home), you may be able to refinance your mortgage and consolidate your debt for one easy monthly payment and a better rate.
6. Renew With Confidence: When you receive the letter from your lender about your mortgage renewal, consider shopping the market or reaching out directly to your mortgage expert before signing the renewal. You may be able to get a lower interest rate or better mortgage terms.
7. Renovate vs Relocate: If you’re finding yourself falling out of love with your home, consider a renovation! It is much more cost-effective than moving and can be a great way to breathe new life into your spaces.
8. Don’t Leave Money on the Table: Be sure to take advantage of rebates and incentives at your disposal! From first-time homebuyer tax credits to energy rebates, there are plenty of opportunities.
9. Change Your Mortgage Payments: Depending on your monthly cash flow situation, you might also want to consider switching up your mortgage payments. Moving from weekly to biweekly can help you reduce your overall monthly bills. If you have extra income, moving to a weekly or accelerated biweekly payment schedule can help you pay off your mortgage faster.
10. Know Your Pre-Payment Penalties: Avoid spending unnecessary money on your mortgage by knowing your pre-payment terms and penalties! If you ever find yourself needing to get out of your mortgage early, you’ll want the option of pre-payment.

If you’re looking to plug money leaks in your finances, reach out to me to discuss your mortgage payments, debt consolidation and more.

Written by DLC Marketing Team

While you might think selling your home in winter is harder, with the right considerations it doesn’t have to be! When selling your home during warmer months, the focus is typically on curb appeal and gardening, as well as having bright colors and patterns to draw out different rooms.

While curb appeal should not be forgotten in winter months, the focus should be centered on creating a warm, comfortable and welcoming space. You can do this through the following:

1. Curb Appeal – If you live in an area that receives high amounts of snow, be diligent about keeping your sidewalk and driveways clear for visitors, and to keep your home looking clean for viewing. Always make sure to sweep any fallen leaves or debris.
2. Keep it Cozy – Ensuring your home is sufficiently heated during showings will also go a long way to making it feel more comfortable; a steady 20 to 22 degrees Celsius during showings is ideal.
3. Light and Inviting – With days being shorter and darker during winter, ensuring your home is light and inviting can make a big difference. In some cases, you may consider repainting the walls before listing your property.
4. Declutter – When selling, it is important to declutter your home so that it looks its best and gives room for people to imagine their own belongings in your space.
5. Define Property Boundaries – If you are showing your home in the middle of snow season, be sure to mark the four corners of your property so that potential buyers can see exactly what they are getting.

While there is some extra work with selling your home in the winter due to the weather conditions, it can pay off! Buyers tend to be highly motivated and often there is less competition for sales during this time giving more focus to your home.

Written by DLC Marketing Team