When it comes to mortgages, it can be easy to get overwhelmed by the sheer number of options! Fortunately, we are here to help! Below are some of the mortgage details that you should understand to ensure that you are getting the best mortgage for YOU:

Interest Rate Type

Interest rate is one of the major components to your mortgage and it is important to decide whether you want a fixed-rate, variable-rate or protected (capped) variable-rate mortgage.

A fixed-rate mortgage is ideal for new home owners or those on a fixed income who are more comfortable with a stable monthly payment.

A variable-rate mortgage is ideal for individuals who have room in their budget and want to take advantage of potential interest rate drops – keep in mind, with this mortgage you pay more if the rates go up!

Lastly, the protected (capped) variable-rate mortgage operates similarly to variable-rate, except with a maximum (or capped) rate allowing you to take advantage of interest rate decreases while never paying above a set amount should the rates rise.

Amortization

This is the life of your mortgage and is typically a 25-years period whereby you would pay off the entirety of the loan. You can choose a shorter term, which would result in higher payments but allow you to pay less interest over the lifetime of your mortgage and be mortgage-free faster! Or, you can opt for a longer amortization period, which allows for smaller monthly payments.

Payment Schedule

This is the frequency that you make mortgage payments and ranges from monthly to bi-monthly, bi-weekly, accelerated bi-weekly or even weekly payments. There are many great calculators on My Mortgage Toolbox app (available through Google Play and the iStore) that can help you calculate and compare these payment schedules to see what works best for you.

Mortgage Term

The standard mortgage term is 5-years and refers to the length of time for which options are chosen and agreed upon, such as the interest rate. When the term is up, you have the ability to renegotiate your mortgage at the interest rate of that time and choose the same or different options.

Open vs. Closed

Open mortgages give you the option to increase mortgage payments or make lump sum deposits on your loan. A closed mortgage does not allow additional payments without penalties.

High Ratio vs. Conventional

A conventional mortgage is where you put the standard 20% down on your home. However, as not everyone is able to do this, many buyers will end up with a high-ratio mortgage product. High-ratio mortgages need to be insured due to financial institutions only being allowed to lend up to 80 percent of the homes purchase price WITHOUT mortgage default insurance. Therefore, if you choose a high-ratio mortgages over a conventional one, you will pay a monthly insurance premium.

Contact me today to get started on your homebuying journey with expert advice and solutions to suit YOUR unique needs!

Written by DLC Marketing Team

When it comes to mortgages, insurance is necessary to protect the lender on these types of loans, which deal in large sums of money. There are three different tiers relating to insurance, which all have different minimum down payment amounts and varying premium insurance fees.

1. Insured mortgages typically have a less than 20% down payment and are insured with mortgage default insurance through one of Canada’s mortgage insurers: CMHC, Sagen or Canada Guaranty. In these cases, the premium is based on a percentage of the loan amount, which is added to the mortgage and paid monthly.
2. Insurable mortgages typically have a 20% or higher down payment and do not require mortgage insurance, though they can qualify for it. In these cases, the homeowner wouldn’t have to pay an insurance premium, but the lender can if they choose to.
3. Uninsurable mortgages do not meet mortgage insurer requirements; some examples of these types of mortgages can include: refinances, mortgages with an amortization longer than 25-years or mortgage files where the real estate is more than $1M in value and/or purchase price. No insurance premium required.

While insured and insurable mortgages are more common and typically more cost-effective when it comes to lending money, therefore clients who opt for these mortgages often get better rates.

When it comes to an uninsurable mortgage, this means that the lender is providing their own funds to the client without the protection of insurance, and have to commit to the loan for the entire term. Due to this, uninsurable mortgages tend to have higher interest rates as they are a higher risk loan.

Typically, uninsurable mortgages require a minimum of 20% down on the loan and are available for up to 30-year amortization. It is also important to note that an uninsurable mortgage will often require a higher Gross Debt Service (GDS) and Total Debt Service (TDS) ratio to indicate that you can carry the loan without high risk.

While some lenders may offer more flexibility when it come to an uninsurable mortgage, if you are looking to refinance or change to a longer amortization period, it is best to discuss with your DLC mortgage expert before making any changes to your mortgage.

Written by DLC Marketing Team

You work a lifetime building your nest egg, so the thought of losing financial control can be difficult at any point in life. However, having a trusted document like a power of attorney (POA) can bring you and your loved ones peace of mind. Contrary to what some believe, the reality is that your POA does not own your money or property, and they cannot change your will, make a will, or change a beneficiary on an insurance plan. Your POA is there to learn about your life events, needs, or concerns and help make financial or medical decisions on your behalf if you are unable to.

This is a decision that requires careful consideration, and like any financial tool, there are pros and cons:

Pros 

• The document makes it clear who is responsible for your money and property, even temporarily, if you need help managing them. Your attorney must manage your money and property responsibly and for your benefit. If questioned, they may be required by law to account for their actions.
• The document can be as flexible or time-sensitive as you would like or as general or specific as you need.
• You can appoint multiple attorneys and request they make decisions in unison or highlight that they can act separately if one attorney is unavailable. You can also appoint an alternate or successive attorney. This may help reduce the chance of fraudulent activity.

Cons 

• There is a risk that if the wrong attorney is designated, you can become vulnerable to financial abuse. It can happen where an attorney makes decisions based on their best interest rather than the interests of the estate they manage.
• If your document lacks clarity, there is a risk that your finances could be managed in ways you do not simply agree with.
• If multiple attorneys are appointed, disagreements could cause problems or delays in managing financial affairs.

You should always seek independent legal advice to ensure your needs and expectations are clear. Appointing a POA is dynamic; it can be changed or revoked at any time. Contact me for more details.

Written by DLC Marketing Team

Are you finding that your current home is no longer meeting your needs and are looking to upsize, downsize or simply relocate? We have some tips for you on staging your home so you can get the best results (and the best offer!):

1. Utilize Mirrors: Mirrors can really help to open up a space to make it seem much larger and brighter, which are two aspects that really appeal to most buyers.
2. Pare Down Your Furniture: Depending on your space and room design, it can be a good idea to pair down furniture (such as extra chairs in a living room) to help open up the space more and allow the buyer to see its potential – without it being bare!
3. Bring on the Hotel Vibe: When staging your bedroom and bathroom, think HOTEL aesthetic; clean white sheets, a single fluffed pillow, white towels for a clean and welcoming look.
4. Declutter Your Spaces: While clutter makes your home feel you and feel lived in, for potential buyers it distracts from the room and makes the home feel like there is less space.
5. Remove Personal Items: It is important to remember that buyers in your home are looking at it to become THEIR home. Removing any personal photographs and other items will help give them a sense of the space and ability to picture their own life there without distractions.

By doing these five things, you can help your home standout on the market and make the best first impression possible!

Looking for mortgage advice before you sell? Want to ensure your new home has the best rate? Reach out to me today to discuss your goals and current situation!

Written by DLC Marketing Team

The current economic landscape can be challenging for young Canadians to navigate as they face great uncertainty with heightened interest rates and inflation. It can be frustrating as they are just starting to build their career, considering buying a home or starting a family. If you are a parent, you may be thinking about how you can help your child during this period. The CHIP Reverse Mortgage by HomeEquity Bank is a sound financial solution that can help you support your loved ones by providing a tax-free gift.

The Gift of Early Inheritance 

As a parent, you may want to provide an early inheritance to see your adult children use the funds to improve their lives in a time of need. By giving an early inheritance, you can avoid probate fees (estate administration tax) and save money by bringing you to a lower tax bracket*. With an early inheritance, your children can pay for their wedding, start a business, pay off student loans, make a down payment on their home, and much more. Speak to your tax specialist for more details.

How the CHIP Reverse Mortgage Works

You may have heard of people using a home equity line of credit (HELOC) or liquidating their investments to gift an early inheritance. However, there are disadvantages associated with loss of earnings or tax payable when it is time to sell their investments. The CHIP Reverse Mortgage by HomeEquity Bank allows you to unlock up to 55% of the equity in your home without any of these challenges. With the CHIP Reverse Mortgage, your investments remain intact, and no monthly mortgage payments are required. Therefore, your income is not affected, and best of all, the money you get from the CHIP Reverse Mortgage is tax-free!

If you want to provide a tax-free gift to your children, contact me for details on how the CHIP Reverse Mortgage by HomeEquity Bank can help you.

*HomeEquity Bank requires all clients to receive independent legal advice to review the mortgage contract and ensure they fully understand the terms and conditions.

Written by DLC Marketing Team

If you are looking to buy a home or want a current value of your property, you will need an appraisal.

Before banks or lending institutions can consider loaning money for a property, they need to know the current market value of that property. The job of an appraiser is to check the general condition of your home and determine a comparable market value based on other homes in your area.

While you may think “it is what it is”, we actually have a few tips that can help improve your home’s appraisal to ensure you are getting top market value!

1. Clean Up: The appraiser is basing the value of your property on how good it looks. A good rule of thumb is to treat the appraisal like an open house! Clean and declutter every room, vacuum, and scrub to ensure your home is as presentable and appealing as possible.
2. Curb Appeal: First impressions can have a huge impact when it comes to an appraisal. Spending some time ensuring the outside of your property from your driveway entrance to front step is clean and welcoming can make a world of difference.
3. Visibility: The appraiser must be able to see every room of the home, no exceptions. Refusal to allow an appraiser to see any room can cause issues and potentially kill your deal. If there are any issues with any spaces of your home, be sure to take care of them in advance to allow the appraiser full access.
4. Upgrades and Features: Ensuring the appraiser is aware of any upgrades and features can go a long way. Make a list and include everything from plumbing and electrical to new floors, new appliances, etc. This way they have a reference as to what has been updated and how recent or professional that work was done.
5. Be Prudent About Upgrades: While the bathroom and kitchen are popular areas, they are not necessarily the be-all-end-all for getting a higher home value. These renovations can be quite costly so it is a good idea to be prudent about how you spend your money and instead, focus on easy changes such as new paint, new light fixtures or plumbing and updated flooring to avoid breaking the bank while still having your home look fresh.
6. Know Your Neighbourhood: You already know where you live better than the appraiser. Taking a look at similar homes in your neighbourhood and noting what they sold for will give you a ballpark. If your appraisal comes in low, you will be prepared to discuss with the appraiser the examples from your area and why you believe you property is worth more.
7. Be Polite: The appraiser is there to get in and get out. Avoid asking them too many questions or making too many comments and simply be prepared should they have questions. Once they have completed the review of your home, that is a good time to bring up any comments you might have.

Don’t forget to contact me if you have any questions about your existing home or mortgage, or if you are looking to sell and relocate in the future!

Written by DLC Marketing Team

If you are a self-employed client who owns your own business, you may have chosen to set that business up as a corporation. This means the business operates as essentially its own person. They have income through business revenue and expenses from marketing costs, materials, office space, etc.

When it comes to getting a mortgage, there are a few benefits to putting that mortgage under the corporation instead of your individual self:

1. Corporations tend to pay a lower tax rate than the personal income tax rate and only pay taxes on the net business income.
2. When it comes to qualifying for a mortgage, a lender can look at the business income or the personal income they pay themselves.
3. Adding the net business income or the personal income from year 1 and year 2 and dividing it by two is the income a lender will associate with that borrower. Keep in mind though this will also be affected if there is more than one shareholder.

There are two ways one can go about this type of corporate mortgage, depending on if the corporation is the operating company or acts as the holding company.

Mortgages and Operating Companies

As with any mortgage, there are considerations and more-so when looking to put your mortgage under your corporate umbrella. While you would essentially qualify as though you’re buying a property in your name, your application will be packaged much differently to the lender. You would be instead qualifying as a corporation with a personal guarantee from yourself.

It is also possible to do a mortgage deal under your personal name but utilize both personal and corporate income. Lenders can do this by looking at both personal T1 generals and respective NOA, plus you can qualify by looking at the Net Business Income before taxes as seen on company financials.

When it comes to getting a mortgage under an operating company (versus a holding company), you may encounter limitations with the lenders that provide this type of deal. You would be looking at an Alt A (B Lender) to finance this particular mortgage, which may come with higher interest rates.

Mortgages and Holding Companies

When it comes to getting a mortgage under a holding company, you will find things are a bit easier. Having a mortgage under a holding company, versus the operating company, essentially removes any limitations or liability from the operating company with regards to the mortgage.

However, to be eligible, you must meet the definition of a Personal Holding Company (PHC) or Personal Investment Company (PIC) per the bank. This is typically considered “a Canadian incorporated entity established by an individual or individuals for the purpose of conducting investment activities, which can include holding real estate, and/or investments. Personal Holding or Investment Companies, and the owner of the PHC or PIC must qualify personally, and sign as covenantor”.

Some additional reasons to consider a mortgage under a corporation or holding company include:

1. If your intent is to flip properties rather than hold them as rental revenue, it might make sense to consider holding it through a corporation
2. You have retained corporate profit that can be used to buy a property without withdrawing money personally and incurring personal tax.

The most important thing to note when going this route for a mortgage is that ALL DIRECTORS listed on the corporation MUST also be listed on the mortgage application. For a sole proprietorship, this is easy as there is typically only one director, however on larger corporations this is something to consider.

For some individuals, the benefits might not be enough to convince them to put their property under the corporation but for others, it may be the perfect solution.

To find out how your income would be viewed by a lender if you have your business set-up as a corporation, contact me to find out more.

Written by DLC Marketing Team

Are you looking to sell your home? We have a few tips to help you make the most of the spring season!

1. Hire an Experienced Realtor: Before preparing your home for the Spring market, you will want to hire an experienced realtor! A good realtor will serve as your guide through the entire sales process, helping you get your home ready for listing, showing potential buyers and finalizing the eventual sale. This is even more important given the changing landscape in relation to additional safety protocols with viewings and even virtual viewing options. Now, more than ever, the expertise of a realtor will help you navigate the sales process.
2. Prioritize Repairs and Improvements: Before listing your home, it is important to go through room-by-room and address any issues such as chipped paint, small holes in the wall, broken fixtures, old appliances, etc. Correcting these minor issues will help your home truly shine when buyers walk through.
3. Clean and Stage Your Home: Now that you have made the necessary minor repairs, you can start staging your home! Start with the exterior of your home and ensure you tidy up the yard, remove any junk and wash your windows! When it comes to the interior of your home, you will want to declutter and do a deep clean (a professional cleaning service can come in handy for this!). Once your home is decluttered and clean, your real estate agent can help you stage it so that it appears spacious and inviting.
4. Consider a Pre-Listing Inspection: Once you are ready to list your home, it can be a good idea to consider a pre-listing inspection. The inspector would conduct a complete visual inspection of all interior and exterior elements (including HVAC systems, wiring, ceiling, chimneys, gutters, etc.), which would help put prospective buyers at ease.
5. Organize The Paperwork: There is a lot of paperwork when it comes to selling your home. Having all of these documents organized and together for potential buyers will help to speed up the process and allow them to address any questions before the deal is finalized. Permits, renovation or repair receipts, warranties, rental agreements and copies of your utility bills are all good records for potential buyers.

Whether you are looking to buy or sell, contact me to discuss the options to ensure the best outcome for you and your family!

Written by DLC Marketing Team

When something goes wrong with your home and you suffer a loss, you need to be able to rely on your insurance coverage. Knowing which of your insurance policies to turn to isn’t always easy. Title insurance and home insurance both offer important protection, but many get them confused. So, what’s the difference between home insurance and title insurance?

what is home insurance?

Home insurance is a type of property insurance that can provide coverage for:

• losses from damage to your residence as well as other structures on your property;
• losses from property damage due to natural disasters like fire and windstorms (flood and earthquake coverage is often a separate purchase);
• stolen or damaged items in your home;
• potential liability or medical coverage if someone gets hurt on your property.

Many lenders require their borrowers to buy home insurance as a condition of securing a mortgage.

what makes title insurance different from home insurance?

A title insurance policy protects your title, which is your legal ownership of the property. It can provide coverage for a number of risks stemming from title defects, which prevent free and clear ownership. It can also cover losses due to encroachment and zoning issues, unpermitted work by a previous owner, and even title fraud.

When you buy home insurance, it’s to prevent losses from events that might occur in the future. Most title insurance coverage focuses on existing, unknown issues or defects relating to the property and/or its title. It’s a subtle difference, but an important one. Unfortunately, one of the most common reasons we have to deny claims for is because the homeowners thought they had a title insurance policy when all they had was home insurance.

THERE ARE LENDER AS WELL AS HOMEOWNER TITLE INSURANCE POLICIES

Title insurance does more than just protect you once you take ownership of your property—it can help the closing process itself go more smoothly. That’s one reason why many lenders require borrowers to purchase a lender title insurance policy or loan policy as part of getting their mortgage. To get protection for yourself, you also need a homeowner title insurance policy. Knowing the distinctions between the two policies can save you from losing out.

TITLE INSURANCE IS A ONE-TIME COST

One big difference between home insurance and title insurance is the way their premiums are set up. You pay for home insurance every month, and that payment potentially increases if you have to make a claim. With title insurance, you buy your policy with a one-time premium that’s based on your property’s location and size. The premium also varies by province, but $150 – $350 is a reasonable range to expect based on average 2021 home prices.

HOW LONG DOES TITLE INSURANCE LAST?

Your homeowner title insurance policy lasts as long as you have an interest in the property. The policy can also pass to your heirs or other beneficiaries if they inherit title from you.

Your lender title insurance policy lasts as long as your mortgage does. That means that if you refinance the mortgage with a new lender, you might need to get a new lender policy. Home insurance coverage isn’t normally affected by refinancing, as long as you keep paying the monthly premium. Your lender may require you to show proof of home insurance for a refinance, just like with a new mortgage.

which type of insurance is better?

Title insurance and home insurance cover different risks of home ownership. Having both policies can help you properly prepare for what the future may bring. The risks that title insurance covers are both expensive and hard to anticipate, but protecting yourself is simple. For a one-time premium, you can make sure you’ve got the coverage you need with a homeowner title insurance policy from FCT.

Written by DLC Marketing Team