28 Jun

UNIQUE DETAILS ON PROPERTIES WHICH WILL MAKE YOUR PRE APPROVAL VOID

General

Posted by: Anne Martin

UNIQUE DETAILS ON PROPERTIES WHICH WILL MAKE YOUR PRE APPROVAL VOID

Unique Details On Properties Which Will Make Your Pre Approval VoidShopping for a new home can be fun and exciting, but there are many details that contribute to a property’s marketability.

Mortgages that have the lowest total cost are reserved for the most marketable properties that are in prime locations as per the lender’s criteria.

Please remember that a mortgage professional can never advise a buyer to make any conditional-free offers or even to remove the condtions on an offer.  The decision to remove conditions is one that the buyer has to make once all of the conditions for their mortgage approval have been satisfied with the lender(s).    Also remember that there cannot be any major changes to the borrower’s application details prior to the completion of their purchase as it may affect the borrower’s qualifications and change the conditions of the approval.

A Dominion Lending Centres mortgage professional will provide a buyer with the lowest cost and best mortgage for their scenario and for the property that they select to purchase.   This comes without limitations as we are without bias to any particular lenders and we protect a buyer’s credit score, which is another contributing factor to the best mortgage.

Here are some of the property details that can affect a lender’s decision on whether or not they approve a mortgage:

Property Zoning- if the zoning is anything other than plain residential then your options will be limited.  This sounds simple.  However, some condos are zoned commercial if there is a large commercial component to the complex. Industrial, Agricultural Land Reserve (ALR), or leasehold (government or otherwise) will limit a buyer’s options.

Here is a list of some other potential deal breakers:

  • cable cord construction
  • oil tank(s) on the property
  • self-managed condos (no condo management company)
  • size of the property- below 500 sq. feet,
  • doesn’t use municipal sewage or waste
  • former marijuana grow op or used for illegal activity
  • outdated electrical
  • over 1 Acre and/or multiple buildings
  • age restriction(s)
  • rental usage
  • any animal use
  • any structural issues/damages work done without permits
  • ongoing or upcoming assessments or legal proceedings
  • prior fixes in the building not done to the lender’s preference
  • strata contingency fund with less than $1,500 per unit in the entire strata

The lender always reviews the details of each property only when an accepted offer is in place.  The request for information can be a simple document or it can require an explanation/written documentation from various parties.   This information may go back several years in order to get to the source of the issue.   This, of course, takes more time.

With complexities such as these, it’s important that a real estate agent discloses the information to their buyer right away so that it can be brought to the lender’s attention.    The agent should also be proactive in getting any and all documentation pertaining to the building/property so that the buyer can evaluate if a property has long term value to them.    Many of the issues stated above can affect the long term value and marketability of a property.

As a mortgage professional, we share any and all information that the lender provides to us if they decide not to approve a property that is being purchased.   We care about protecting borrowers from a bad real estate investment and are without bias in the advice that we provide.

We are always here to help,

Angela Calla

ANGELA CALLA

Dominion Lending Centres – Accredited Mortgage Professional
Angela is part of DLC Angela Calla Mortgage Team based in Port Coquitlam, BC

24 Jun

What Does Brexit Mean for Canada? Mortgage Market Update June 24, 2016

General

Posted by: Anne Martin

 
20 Jun

WHY YOU SHOULD CONSIDER USING A MORTGAGE BROKER

General

Posted by: Anne Martin

Mortgage Brokers make mortgages easy

 

WHY YOU SHOULD CONSIDER USING A MORTGAGE BROKER

New home buyers who in any way fail to meet the restrictive definition of the “typical” borrower imposed by the big banks, often find themselves unable to secure a mortgage. Self-employed individuals, those lacking Canadian credit history, and anyone with previous credit issues most definitely fall outside this preferred profile.

Consider the case of a self-employed business owner; in order to assess the client’s ability to afford a mortgage, it is necessary to conduct a detailed review of the business. The overall business plan must be examined as well as the history of expenses versus revenue. Client details and receivables are also reviewed and from all this information, a determination is made regarding the client’s financial standing.

Of course, this level of client service takes extra time and effort, and unless it is a multi-million dollar deal at stake, the big banks are simply not prepared, nor do they have the processes in place, to accommodate these types of applicants. Mortgage brokers understand the importance of working with clients and providing a degree of personalized service simply not available from a bank representative.

The success that mortgage brokers and the lenders who work with them have had in helping underserved clients may have contributed to the belief that they are only able to help those who don’t qualify for a mortgage with the big banks. This is an unfair characterization of the role of the mortgage broker, and I am pleased to say this outdated way of thinking is on the decline.

Brokers continuously monitor rates and know which lenders are currently offering the best deals. They’ve also established relationships with many lenders and can present your application to a lender with the underwriting expertise to evaluate your application no matter how unique your profile is. Best of all, a mortgage broker can negotiate on your behalf often obtaining multiple offers from which you can choose the mortgage best suited to you.

According to Mortgage Professionals Canada (MPC), the percentage of mortgages arranged though the broker channel has increased from just over one in four in 2004, to more than 40% today. Clearly, Canadians are increasingly opting to hire a mortgage broker as their preferred means of obtaining the best possible mortgage.

At Home Trust, we have a decades-long history of working with mortgage brokers and we are proud to have played a role in helping deserving Canadians purchase a home.

Pino Decina
EVP Residential Mortgage Lending
Home Trust Company

20 Jun

DON’T RENEW! RENEGOTIATE!

General

Posted by: Anne Martin

DON’T RENEW! RENEGOTIATE!

Don't Renew! Renegotiate!Everybody wants to save money on their mortgage!

A new home buyer is especially diligent when shopping for the best mortgage.

They make the effort to:

find out the options

compare rates and costs

compare flexibility

This home buyer then moves into their new home and their mortgage can easily become something they don’t think about often. They might have a growing family and an ambitious career. In the meantime, the mortgage payments are happening on automatic pilot.

Eventually their lender sends them a letter to let them know that their mortgage is coming up for term renewal. That borrower is faced with some decisions to sort out.

1. Should they do things the “easy” way and sign the offer from their current lender?

2. Should they ask their lender for a better rate?

3. Should they move their mortgage to another lender?

The answer? You guessed it! Don’t Renew! Renegotiate!

1. Call your lender and ask them for their best offer and ask them to send it to you in writing.

2. Work with a broker who has access to many different lenders so you can better assess your options. Even if that broker has not worked with you before, they can still help you sort out your renewal.

3. Have the broker compare options for you including the option from your current lender. This analysis will include any possible costs for moving the mortgage and list possible advantages to moving to another lender.

4. Then decide. It will cost you nothing to ask and it could save you thousands of dollars.

Remember the effort when you first bought your home? Well you only need a small fraction of that effort to ensure you get the best mortgage when renewing your mortgage term.

It is not unheard of to have a mortgage renewal offer of a whopping 1% higher than competitive rates. On a mortgage of $400 000 that would cost approximately $4000 extra per year! I have also seen decent renewal offers where it was clear that the client was fine to stay where they were.

No matter what your final decision, it pays to consult with a Dominion Lending Centres mortgage broker before you sign the “easy “offer from your current lender. Go ahead and make that call.

Christina Horvath

CHRISTINA HORVATH

Dominion Lending Centres – Accredited Mortgage Professional
Christina is part of DLC Primex Mortgages based in Coquitlam, BC

13 Jun

8 CONSIDERATIONS FOR THE FIRST TIME HOME BUYER

General

Posted by: Anne Martin

8 CONSIDERATIONS FOR THE FIRST TIME HOME BUYER

Top 8 Benefits of Using a Mortgage Broker

1. Create yourself a Budget and stick to it, so you can keep your finances on track. Planning a budget will help you identify uneconomical expenditures and help you achieve your financial goals. Having a budget can also decrease your stress levels, prepare you for unexpected costs and help you plan for your future of home ownership.

Some of the things you should consider in a budget are all your sources of income, mortgage payment, all loans, condo fees, utilities, cable, internet, phone bills, credit card debts, entertainment expenses, clothing, food, transportation expenses, Insurance (auto, house, life), personal grooming, pet care, donations, child care and an emergency fund which can assist in those unexpected costs like an exterior leak, plumbing issues or just those unforeseen repairs and maintenance issues that could arise.

2. Before you start looking at homes, meet with your Mortgage Broker so they can assist you in figuring out how much home you can afford, get you pre-approved for a mortgage loan and give you the information you need for planning and preparing to save for your down payment. It can be very disappointing to find your dream home only to find out you don’t qualify.

During your qualification period and before you purchase a home, avoid making any big purchases like a new car or buying furniture as these expenses will have to be factored into your debt servicing ratios and could seriously jeopardize your loan approval.

3. Part of your budget plan is to know and consider the additional costs before the purchase of your home. Legal fees, mortgage insurance premiums, life and disability Insurance, Fire Insurance, house insurance, strata fees, appraisal, home inspection, property survey, moving costs, appliances, home maintenance equipment, purchase deposit, down payment, GST if it’s a new construction, property tax, and possibly property transfer taxes. The amount of this property transfer tax will depend on your province and the amount of your home purchase price.

4. Your realtor should be someone you can trust, who understands your needs and will take the time to educate you through the home buying process and the current real estate market conditions in your chosen area.

Your realtor will provide a variety of services to make the complexity of purchasing a home seamless. For example, they will arrange appointments of potential homes, assist in the Contract Of Purchase And Sale agreements, obtain and review the strata minutes, negotiate the home offer on your behalf, inform you of facilities and public services that are available in your neighborhood and current future zoning regulations. Simply, they will streamline the biggest investment purchase that you will ever make.

5. Have your home or strata property inspected. This is one of the most important steps to consider when buying a home, to make sure your home is a sound investment and a safe place to live. If significant defects are revealed by a home inspection, you can back out of your offer, free of penalty, within a certain time frame. Condominium buyers will tend to focus on the Form B certificate that will identify any major issues and costs by the condominium corporation.

6. If there is anything unclear to you while you are preparing the Contract Of Purchase And Sale have the Purchase And Sale Agreement reviewed by your real estate attorney before signing this legal document.

7. Subject Clauses on your Offer To Purchase is highly recommended, especially for first time home buyers. For example a

  • subject to a satisfactory home inspection
  • subject to arranging your mortgage financing

It is of great significance to know that “subject clauses” do not “elude” you to avoid your legal responsibilities in the contract and you must make every attempt to fulfill the conditions that you have set. During this time, it is the seller’s discretion to continue to accept other offers even after the seller has accepted your offer with subjects.

8. On Closing Day, all parties will sign the papers at the lawyer’s office, officially sealing the deal. This is the day that ownership of the property will be transferred to you. On this day it is your job to provide your mortgage broker with your lawyer’s information, as they will be the ones to forward a copy of the Purchase And Sale Agreement to your lawyer as well as inform your lender of your lawyer’s information.

Proof of insurance will need to be obtained, so arrange your Home Insurance before closing and bring the policy with you to your appointment, have your certified cheque or bank draft with closing balance payable to the lawyer’s firm’s trust account, a VOID cheque or a pre-authorized payment form and bring two pieces of valid identification with you like a valid driver’s license or passport. The second piece of identification can be your social insurance card, birth certificate or credit card from a major bank.

Closing funds will be arranged by your lawyer to the seller’s lawyer, the transfer and mortgage will be registered and you will be given the keys to your new home! Finally you take possession.

There are many aspects to consider with your mortgage and home purchase so it would be wise to contact your trusted Dominion Lending Centres Mortgage Professional who can navigate you through the home buying process and give you the resources you need for a successful first home! Give us a call today so we can help you through these steps of home ownership!

Josee Picco

JOSEE PICCO

Dominion Lending Centres – Accredited Mortgage Professional
Josee is part of DLC City Wide Mortgage Services based in Vancouver, BC

8 Jun

6 TIPS ON HOW TO REPAIR, INCREASE AND MAINTAIN YOUR CREDIT

General

Posted by: Anne Martin

6 TIPS ON HOW TO REPAIR, INCREASE AND MAINTAIN YOUR CREDIT

6 Tips on How to Repair, Increase and Maintain Your Credit

Credit scores are like report cards for grown‐ups. The score you get ranges from 300 to 900. Your score indicates your creditworthiness to potential lenders, banks, landlords, insurance companies, and even to some employers. The higher your score the better.

1. GET A COPY OF YOUR CREDIT REPORT

Make an inquiry once a year, twice is much better. If you are planning on purchasing anything that requires a credit check, keep track of your credit. This is something that is 100% in your control. As a consumer you have ability to make a soft/consumer inquiry to Equifax as many times as you want without it affecting your score. Here is a link to Equifax. If something doesn’t look right, contact the creditor immediately. Don’t wait to report an incorrect or fraudulent transaction. Is there an outstanding collection? If so, deal with it immediately, and by that I mean pay it. Then argue to get your money back. Do not leave this on your credit report hoping that it will disappear. No matter what, the collection will not be removed until it’s paid unless taken to litigation. Once dealt with, it will still take months to recover the points lost and 6 years to fall off your credit report.

2. NEVER MISS A MINIMUM PAYMENT

Because this attributes to 35% of your overall score, delinquencies have the biggest negative effect on your credit score. If you have overdue bills, make the necessary arrangements with your creditors. They would much rather work with you than file collections against you. If you can’t pay it all back, it’s better to pay some.

3. DON’T CLOSE UNUSED CREDIT CARD ACCOUNTS

Got a credit card that you have had ten years and hardly use? Keep it. It takes 12 years of history with the same specific card in good standing to crack 800 and enter that top 2% tier of quality credit. Cancelling a card can actually lower your score. Keep the old cards and only use them occasionally so the issuer doesn’t stop reporting your information to the credit bureaus. Having a long credit history helps increase your score. Don’t jump around to credit providers. Most ‘large’ providers have several different products. There is likely one that will fit your needs.

4. NEVER MAX OUT YOUR CREDIT CARDS

A good rule of thumb when considering building your credit is to keep the balance at or below 30% of the limit. Furthermore, a balance of 50% of the limit will maintain existing levels and over 75% will start to decrease it. NEVER exceed the limit, by even a $1.

5. DON’T LOOK FOR MORE CREDIT

Don’t shop around for credit or open several credit accounts in a short period of time. It raises alarms at credit bureaus and financial institutions, especially when you don’t have a long‐established credit history. Work with your existing creditors, as there is more relevant history. They are more likely to work with you, especially if you are looking to resolve some credit hardship(s). Always ensure you give your permission before allowing a credit check.

6. RULE OF 2

Ideally, you want to have 2 sources of credit solely in your own name for a minimum of 2 years with at least a $2,500 credit limit. This would be either 2 credit cards or one credit card and a line of credit. Ensure this is in addition to any joint accounts. Joint credit is only reported to the primary credit holders credit bureau and will not have any positive effect on the co-account holder.

If you ever have questions about your financial situation or want to discuss your credit score, please contact Dominion Lending Centres.

Michael Hallett

MICHAEL HALLETT

Dominion Lending Centres – Accredited Mortgage Professional
Michael is part of DLC Producers West Financial based in Coquitlam, BC

7 Jun

CHOOSING THE RIGHT MORTGAGE

General

Posted by: Anne Martin

CHOOSING THE RIGHT MORTGAGE

 

Choosing the Right MortgageChoosing the right mortgage to meet your needs is a process best handled with the support of a mortgage professional. Just as there are many homes to choose from, there are many types of mortgage financing options.

Choosing the right mortgage can save you thousands of dollars and give you the flexibility to make informed choices in your life. It is important to take the time to review each option considering your personal and financial goals and resources. This will help you make the best decision and get you into the home of your dreams.

An important first step in choosing the right mortgage begins with asking yourself a few questions.

What kind of property are you buying?

You may want a starter home such as a condo to build equity that you can rent out later or sell and buy another home. Or you may prefer to buy a house with suite income. In each case you will want to consider how much you can afford including the strata fees and property taxes.

How long do you plan to stay in this home?

If you only plan to live in your home for 5 years or less, you may want to keep your options open and consider a variable or short term loan when choosing the right mortgage. If you are settling in for the long haul you may consider a longer term fixed rate mortgage or a combination of mortgage terms (fixed and variable). Each come with different benefits and deserve consideration as part of your home purchase and mortgage planning.

Would a fixed mortgage or variable be best for you?

A fixed rate mortgage is exactly that, a mortgage with a fixed rate over a fixed period of time. A variable rate mortgage is based on the prime lending rate (ie. Prime – .5% or 2.5%). As the prime lending rate moves up or down (in relation to the overnight lending rate set by the Bank of Canada) your cost of borrowing will fluctuate. If you need to know exactly what you will be paying every month for the full term of the mortgage (ie. 5 years) then a fixed rate mortgage may be best for you. Typically the cost of borrowing over time is lower with a variable rate mortgage. However, the interest rate environment can change and you should review both options when choosing the right mortgage with your mortgage broker.

How much do you have for a down payment and other costs?

If you have access to funds in your own account, RRSP or family gift, you may want to make a larger down payment to lower your mortgage payment and avoid high ratio insurance premiums.

Any purchase with less than a 20% down payment is a high-ratio mortgage and must be insured by the Canada Mortgage and Housing Corporation (CMHC) or Genworth Financial Canada (Genworth). The fee for this insurance varies according to the amount borrowed and the percentage of your down payment, ranging from 1.00% to 2.90% of the mortgage. This one-time, upfront fee can be added to the mortgage.

If the home may need some renovations, you could consider a purchase plus improvement mortgage. It is also prudent to keep some funds in your savings for at least 3 months of mortgage and property taxes as a buffer.

Other Factors to Consider in Choosing the Right Mortgage

Loan Term

A short-term mortgage is usually for three years or less. Short-term mortgages are appropriate for buyers who believe interest rates will drop at renewal time. Long-term mortgages are suitable when current rates are reasonable and borrowers want the security of budgeting for the future. The key to choosing between short and long term is to feel comfortable with your mortgage payments and how long you are making those payments. After a term expires, the balance of the principal owing on the mortgage can be repaid or a new mortgage agreement can be established at the current day interest rates.

Open or Closed Mortgage

Open mortgages can be paid off at any time without penalty and are usually negotiated for very short terms. They are suited to homeowners who are planning to sell in the near future or those who want the flexibility to make large, lump-sum payments before maturity. Closed mortgages are commitments for specific terms, 1-10 years for example. They can come with fixed interest rates or variable interest rates. If you want to pay off the mortgage balance, you will need to wait until the maturity date or pay a penalty on the outstanding balance, if any.

For help in choosing the right mortgage, contact a mortgage professional at Dominion Lending Centres.

Pauline Tonkin

PAULINE TONKIN

Dominion Lending Centres – Accredited Mortgage Professional
Pauline is part of DLC Innovative Mortgage Solutions based in Coquitlam, BC

3 Jun

Shocking US Jobs Report and Toronto and Vancouver Housing Too Hot.

General

Posted by: Anne Martin

Very Bad Jobs News In US and Bubbly Housing in Vancouver and Toronto
View this email in your browser
Dr. Sherry Cooper
This announcement available in Autopilot as “SC Shocking US Jobs Report and Red Hot Housing in Toronto and Vancouver”.

French translation of this email will be available by 5pm ET today.

Traduction de cet e-mail sera disponible 17 heures HE aujourd’hui .

Shocking US Jobs Report and Toronto and Vancouver Housing Too Hot

Shocking US Jobs Report and Toronto and Vancouver Housing Too Hot
 
First on the U.S. Jobs Front

The May employment report was released this morning in the US and it was shockingly weak–indeed, the weakest number in almost 6 years. Nonfarm payroll employment was up only 38,000, well below the market expectation of 160,000. Not only was May incredibly weak, but the March and April job gains were revised down sharply, by 59,000. This represents a dramatic slowdown from last year’s average monthly growth of 229,000. 

Economists had expected the May job gain to be depressed by the Verizon strike and information and telecommunications jobs were down by 34,000, but employment declines were also posted in manufacturing, construction and mining. 

The average workweek was unchanged for all workers and was up slight in manufacturing. A bright spot in the report was worker pay. Average hourly earnings rose by 0.2 per cent in May after a 0.4 percent gain in April that was a bit stronger than initially reported. Worker pay increased 2.5 percent over the 12 months ended in May. 

In addition, 458,000 people left the workforce last month, taking the labour force participation rate down to 62.6 per cent. In consequence, the unemployment rate fell by 0.3 percentage points to 4.7 per cent, the lowest level since November 2007. The drop in the jobless rate is nothing to cheer about since it was caused by Americans leaving the labour force. 

Dismal employment gains reduce the chances of a pronounced upturn in household spending and economic growth from the disappointing first quarter pace. This takes a Federal Reserve rate hike off the table for June. Job growth has slowed in concert with weaker corporate profits and a weak global economy.

The Canadian dollar rose in the wake of this report as the US dollar plunged. Clearly, the weakness in the US is not good news for Canada as 77 per cent of Canadian exports go to the US. The Bank of Canada is counting on the export sector to pick up the slack from the hammered oil sector.

Red-Hot Housing Continues in May in Toronto and Vancouver

The release of the May data from the Real Estate Boards in Vancouver and Toronto show a continued record surge in sales and house prices. Both markets and their surrounding regions have posted enormously frothy gains, which appear to be accelerating. How much of the activity is attributable to foreign buying is unknown, but there is evidence that capital inflows to housing markets from China have risen in the past year.

Housing affordability is plunging in both regions and there has been a rising number of voices calling for government action of some sort. Some have suggest an increase in the minimum downpayment, tightening credit conditions or a rise in the cost of CMHC mortgage insurance–all of which would hurt first-time home buyers the most, exacerbating affordability. As well, the idea of action to slow foreign buying–such as, for example, a luxury tax–has also been floated.

This is a very tricky issue. The strength in housing (in these two regions) has been a key underpinning to economic growth this cycle. As well, 70 per cent of Canadian households own their own homes and home equity is for most people the largest component of household wealth, so the government is leery about triggering a collapse in housing. Nonetheless, housing growth this strong does not usually end well.

In Vancouver, the Multiple Listing Service reported unprecedented growth in home sales and prices. Last month’s sales were 35.3 percent above the 10-year sales average for May and ranks as the highest sales total on record for that month. While demand is very hot, the total number of listings in Metro Vancouver has declined 37.3 per cent from a year ago, helping to explain some of the upward pressure on price. Home prices in Greater Vancouver are up a stunning 48.3 per cent in the past three years and the one-year change has been close to 30 per cent. The numbers are similar for the Lower Mainland as a whole. The price gains are even larger for single family detached homes as supply is very limited.

In Toronto, the story is much the same, although the activity and price increases are slightly less frenzied, which isn’t saying much as multiple offers and paid prices well over asking has become increasingly common. The Toronto Real Estate Board reported a new record month for May sales, up 10.6 per cent from a year ago as the number of new listings was down 6.4 per cent. The excess demand in the Greater Toronto Area (GTA) continues to push prices higher and, in some cases, to create panic buying. 

The MLS Home Price Index was up 15 per cent year-over-year, with the surge even stronger for detached homes. Gains in the 905 area (the suburbs and exurbs of Toronto) outpaced those in the 416 area (Toronto proper), likely reflecting the supply and affordability issue. The average price of a detached home in the 416 area is now $1.3 million compared to $892,000 in 905. Condo prices are considerably cheaper at an average price of $443,000 in Toronto and $347,000 in the burbs–still beyond the reach of many first-time homebuyers. Even move-up buyers are choosing to renovate their existing homes because they cannot afford to pay the prices for larger properties. Downsizers have an incentive to wait, thinking that price increase will only continue.

This is certainly top-of-the-market thinking, but as we have seen, it can last for a considerable period. Most everyone is predicting a slowdown in the housing markets next year. We better hope so. A soft landing is what we all want as prices cannot go up forever, especially at this pace.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drcooper@dominionlending.ca
3 Jun

Free Financial check up.

General

Posted by: Anne Martin

FINANCIAL CHECK-UP

Financial Check-Up

Welcome to your free financial check-up, discussing 5 key factors to assist you in ensuring you are on the right track to a solid financial future.

Credit

Ensuring you are using credit wisely will pave the way to making sure you have options available to you if or when you need them. One thing we can all do is check our credit report on a regular basis – at least once each year – so you know where you stand and whether your credit score has been compromised in any way, especially through fraud. You can contact Equifax at 1-800-465-7166 or go to the website at www.equifax.ca for more information.

There are many people who believe that it is more responsible to not use credit at all but, in fact, if you don’t have any credit accounts reporting to the credit bureau, financial institutions have no way of knowing how responsible you are with credit and you will likely be turned down if you need a loan or credit card in the future.

Making payments on time is critical to maintaining a good credit score but also keeping your account balances below 75% of the maximum limit is another way of boosting your credit score. If you have multiple accounts, spreading the balances evenly among them using balance transfer methods can help to bring some accounts in line.

It’s wise to pay off your higher interest credit accounts first but that decision needs to be balanced with whether to pay down the higher-payment accounts.

Savings

The old adage, “10% of the money you earn should be tucked away into savings” is a good one. Although it may be difficult to be disciplined enough, if you “pay yourself” every month, the savings will start to build and you may find you don’t need to rely on credit to handle those unexpected expenses.

I personally have a monthly allotment that I transfer to my savings account the same day each month. I have a reminder in my phone to physically do the transfer and it is built into my budget as if it were another utility payment I have to make.

Taking advantage of a Tax Free Savings Account (TFSA) is a great way to earn higher interest on your savings as opposed to the low rate you are paid for a standard bank savings account. If your TFSA is managed by a Financial Planner you can see very good returns on your investments. Any money earned within your TFSA is tax-free and can be withdrawn at any time.

Retirement

Part of the savings picture is, of course, planning for retirement. If you can, work an RRSP contribution into your budget as soon as possible so you will be much further ahead when you want to put your feet up and enjoy.

I follow my Financial Planner’s recommendations when it comes to how much I contribute each year. As I am self-employed, the amount I contribute each year varies but I always make a contribution.

Contributing to an RRSP also gives you a tax break at the end of the year and you can use your tax return money to put towards paying down your mortgage or put it towards a vacation. Both of those are win-win scenarios.

Mortgage

Being the largest loan most Canadians will ever have, your mortgage deserves attention and regular check-ups. Choosing the right mortgage structure for you and taking advantage of today’s historically low rates, can put you on track to huge savings.

Take a look at your debt-structure. If you are making high monthly payments on high-interest loans and/or credit cards, you could easily restructure your circumstances by refinancing your credit accounts into your home. In most cases, this reduces the amount of interest you are paying overall and lowers your monthly payments. At the same time, if you take advantage of an accelerated payment structure (bi-weekly or weekly) and bump up your minimum required payment by the 15-25% that your institution allows, you can pay down your principal and be mortgage free much sooner!

In today’s mortgage climate, if you currently have a mortgage rate anywhere over 4% you should do yourself a favour and have me do a Free Mortgage Analysis for you so you can see apples to apples whether there are any financial advantages to breaking your existing mortgage for a better rate. When you can see the costs vs. benefits in black and white, the answer as to whether to refinance will be crystal clear.

Insurance

Making sure you have adequate insurance is essential in protecting yourself and your family in the event of a crisis or emergency. Whether it be home, health, life or disability insurance, it is always a good idea to review all of your insurance coverage at least once a year to make sure you are fully covered.

Mortgage insurance is a great idea but most clients benefit more from having independent mortgage insurance coverage as opposed to taking the insurance coverage offered by the institution that has your mortgage. The average Canadian makes a change to a mortgage every 38-42 months, you may have to re-apply for the same coverage at an older age and higher premiums. If your mortgage insurance is through a company that is independent of the bank, you would have the ability to keep the coverage and premium you initially had even if moving your mortgage to another institution at a better rate works better for you.

Another way to go is Term Life Insurance. Securing a policy that will cover all costs and pay out all obligations should anything happen to you will give your family peace of mind in the worst circumstance.

Critical Illness Insurance offers protection should you become affected by one of the approved conditions and is often paid in a lump sum amount once you have survived the specified waiting period. It gives you the assurance that the costs of a serious medical condition, as well as living expenses, will be covered.

Wrap Up

I recommend talking to your Dominion Lending Centres mortgage professional to make sure you make the best decision on all insurance needs.

I hope you have found some value in the information provided. As always, I recommend seeking out the experts and gaining knowledge before making any important decisions that will affect your future.

Written by:

KRISTIN WOOLARD

Dominion Lending Centres – Accredited Mortgage Professional
Kristin is part of DLC National based in Port Coquitlam, BC.