7 Feb

Strong Canadian Job Growth in January 2020

General

Posted by: Anne Martin

January Starts 2020 With Strong Canadian Job Growth
January follows December in erasing the weak November job numbers providing good news for the Canadian economy. Manufacturing led the way as the jobless rate fell, and wage growth accelerated meaningfully. The robust labour market, coupled with consumer confidence holding firm in January at about historical averages, is a reassuring sign for the resilience of the economy.

Canada’s economy created 34,500 net new jobs in January, all in full-time positions, beating economists’ expectations. The unemployment rate fell slightly to 5.5%, wage growth accelerated to 4.4%, and hours worked rose by 0.5%. This second strong reading of Canada’s job market will reinforce the Bank of Canada’s assessment of the underlying health of the Canadian economy.

Slowing activity in the second half of last year was more a function of temporary disruptions and geopolitical tensions. Some of these factors remain, augmented by the coronavirus, which has disrupted travel and trade and dramatically reduced energy and other commodity prices.
Manufacturing and construction led the job gains, and agriculture picked up as well. Quebec, Manitoba and New Brunswick posted employment gains. Fewer people were employed in Alberta, and the jobless rate spiked in Saskatchewan. The resumed decline in oil and other commodity prices has hit both prairie provinces hard.

British Columbia continued to boast the lowest unemployment rate by province, followed by Manitoba, Quebec and Ontario (See table below).
Bottom Line: Canada’s economy has been boosted by the fastest pace of immigration in the Group of Seven countries, spurring a housing boom that is pushing up demand for everything from plumbers to electricians. Indeed, Bloomberg News recently highlighted the more substantial surge in male employment in Canada relative to the US, where women have eclipsed men as the majority of jobholders.

Female job growth in Canada is also strong, and labour force participation rates are higher in Canada than in the US. The jobless rate for women age 25 and older is only 4.6% in Canada, compared to 4.9% for men.

According to Bloomberg News:

  • Jared Menkes, executive vice president at Toronto-based Menkes Developments Ltd., said finding enough labour is a constant source of angst. Central Toronto posted the fastest-growing population in North America last year with a dozen office buildings and countless condos under construction, along with 25 light rail stations, hospitals and all sorts of infrastructure work (see chart below). “We are short actual labour, whether it’s a crane operator, whether it’s drywallers, electricians, plumbers, drivers,” Menkes said. “We’re short truck drivers, architects, consultants.”

Roughly half of all immigrants to Canada located in Ontario, but as the second chart below shows, Quebec and British Columbia garnered their fair share of new residents as well. The Bank of Canada highlights this factor in suggesting that the economy will continue to grow in 2020 and 2021. Certainly, it is a strong positive for the housing markets in these provinces. 
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drcooper@dominionlending.ca
24 Jan

Understanding your mortgage. Mortgage Market Update January 24, 2020

General

Posted by: Anne Martin

MARKET UPDATE

Do you understand everything
you need to know about your mortgage?

A survey conducted for the Financial Consumer Agency of Canada and the Bank of Canada found that, when it comes to simple mortgage terminology like “term” and “amortization”, most Canadians don’t know their proper meanings.

Given that Canadian households are carrying $1.6 trillion worth of residential mortgage debt, it’s important to understand everything you can about your mortgage.

I’m always here to help ensure you understand all you need to know to secure the best mortgage for you. Let’s chat.

Best fixed rates are as low as *2.59 – 3.69 % for a 5 year fixed,
variable rate mortgages from as low as p-.95%
Prime Rate is 3.95%

*High Ratio/Quick Close Specials
This is a critical time to sit down and review your household financing needs. Please do not hesitate to contact me should you have any questions.

If you are in the market for a home, book an appointment today to see how the recent regulatory changes by the Office of Superintendent of Financial Institutions will affect your purchase.

**rates subject to change with market conditions – *OAC  **conditions apply E. & O. E.

 
Terms Bank Rates Our Rates
6 Month 3.34% 3.30%
1 YEAR 3.59% 3.04%
2 YEARS 3.74% 2.89%
3 YEARS 3.89% 2.89%
4 YEARS 3.94% 2.94%
5 YEARS 5.34% *2.59 – 3.69 %
7 YEARS 5.80% 3.44%
10 YEARS 6.10% 3.7%
Rates are subject to change without notice. *OAC E&OE

 **Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.”

Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.
28 Nov

Housing in Canada in full rebound. October Stats, Dr. Sherry Cooper

General

Posted by: Anne Martin

October Data Confirm That Housing Is in Full Rebound

Statistics released today by the Canadian Real Estate Association (CREA) show that national home sales rose for the eighth consecutive month. Activity held steady in October at the relatively robust September pace following a string of monthly increases that began in March. Existing home sales are now almost 20% above the six-year low reached in February 2019, but remain 7% below the heights reached in 2016 and 2017 when many fretted over a housing bubble (see chart below).

Housing activity in roughly half of the local markets rose offset by the other half that fell. Higher sales in Greater Vancouver (GVA), the neighbouring Fraser Valley and Ottawa offset a monthly decline in activity in the Greater Toronto Area (GTA), particularly in Central Toronto, and Hamilton-Burlington.

Actual (not seasonally adjusted) activity rose 12.9% year-over-year. Transactions were up from year-ago levels in 80% of all local markets in October, including all of Canada’s largest urban markets.

All was not rosy, however. “It’s a full-blown buyer’s market or on the cusp of one in a number of housing markets across the Prairies and in Newfoundland,” said Gregory Klump, CREA’s Chief Economist. “Homebuyers there have the upper hand in purchase negotiations and the mortgage stress-test has contributed to that by reducing the number of competing buyers who can qualify for mortgage financing while market conditions are in their favour.”
New Listings

The number of newly listed homes fell by 1.8% in October, with the GTA and Ottawa posting the most significant declines. Almost a third of all housing markets posted a monthly decrease of at least 5%, while about a fifth of all markets posted a monthly increase of at least 5%.

Steady sales and fewer new listings further tightened the national sales-to-new listings ratio to 63.7%. This measure has been increasingly rising above its long-term average of 53.6%. Its current reading suggests that sales negotiations are becoming more and more tilted in favour of sellers; however, the national measure continues to mask significant regional variations.Based on a comparison of the sales-to-new listings ratio with the long-term average, just over two-thirds of all local markets were in balanced market territory in October 2019, including the GTA and Lower Mainland of British Columbia. Nonetheless, sales negotiations remain tilted in favour of buyers in housing markets located in Alberta, Saskatchewan and Newfoundland & Labrador.

The number of months of inventory is another important measure of the balance between sales and the supply of listings. It represents how long it would take to liquidate current inventories at the current rate of sales activity.

There were 4.4 months of inventory on a national basis at the end of October 2019—the lowest level recorded since April 2017. This measure of market balance has been retreating further below its long-term average of 5.3 months. While still within balanced market territory, its current reading suggests that sales negotiations are becoming more tilted in favour of sellers.

National measures of market balance continue to mask significant regional variations. The number of months of inventory has swollen far beyond long-term averages in the Prairie provinces and Newfoundland & Labrador, giving homebuyers an ample choice in these regions. By contrast, the measure is running well below long-term averages in Ontario, Quebec and Maritime provinces, resulting in increased competition among buyers for listings and providing fertile ground for price gains. The measure is still well centred within balanced market territory in the Lower Mainland of British Columbia.
Home Prices

The Aggregate Composite MLS® Home Price Index (MLS® HPI) rose 0.6%, marking its fifth consecutive monthly gain. Seasonally adjusted MLS® HPI readings in October were up from the previous month in 14 of the 18 markets tracked by the index. (Table below)

Recently, home price trends have generally been stabilizing in the Lower Mainland and the Prairies. While that remains the case in Calgary and Saskatoon, home prices in Edmonton and Regina continue to decline. By contrast, home price trends have started to recover in the GVA and the neighbouring Fraser Valley.

Meanwhile, price growth continues to rebound in the Greater Golden Horseshoe (GGH). In markets further east, price growth has been trending higher for the last three or four years.

Comparing home prices to year-ago levels yields considerable variations across the country, with mostly declines in western Canada and mostly price gains in eastern Canada.

The actual (not seasonally adjusted) Aggregate Composite MLS® (HPI) was up 1.8% y-o-y in October 2019, the biggest year-over-year gain since November 2018.

Home prices in the GVA (-6.4%) and the Fraser Valley (-4.2%) are still below year-ago levels, although declines are becoming smaller.

Elsewhere in British Columbia, home prices logged y-o-y increases on Vancouver Island and in the Okanagan Valley (3.1% and 2%, respectively) while having edged marginally higher in Victoria (0.5% y-o-y).

Calgary, Edmonton and Saskatoon posted price declines in the range of -1.5% to -2.5% on a y-o-y basis in October, while the gap between this year and last year widened sharply to -6.8% in Regina.

In Ontario, price growth has re-accelerated well ahead of overall consumer price inflation across most of the GGH. Meanwhile, price growth in recent years has continued uninterrupted in Ottawa, Montreal and Moncton.

Bottom Line

This report is in line with other recent indicators that suggest housing has recovered from a slump earlier, helped by low mortgage rates. The run of robust housing data gave the Bank of Canada another reason– along with healthy job gains and higher wage rates — to hold interest rates steady. However, the central bank has become more cautious in its outlook. Bank of Canada Governor Stephen Poloz, one of the few central bankers to resist the global push toward easier monetary policy, acknowledged he’s begun to consider the merits of joining other countries in lowering borrowing costs.

At a press conference after the Bank of Canada’s decision to keep the current 1.75% policy interest rate unchanged for an eighth straight meeting, Poloz said his governing council discussed the possibility of implementing an “insurance” cut to counter the global economic headwinds. But, the council decided against it because of the potential costs to such a move. These include driving up inflation already at the central bank’s 2% target and fueling household debt levels that are among the highest in the world.

“Governing Council considered whether the downside risks to the Canadian economy were sufficient at this time to warrant a more accommodative monetary policy as a form of insurance against those risks, and we concluded that they were not,” Poloz said. The Bank of Canada “is mindful that the resilience of Canada’s economy will be increasingly tested as trade conflicts and uncertainty persist.”
18 Nov

Who is best at mortgage discharge penalties?

General

Posted by: Anne Martin

There are several reasons why consumers sign up for five year mortgage terms even though statistically the average mortgage only lasts 3 years.  Most of us don’t plan to leave our lending institution early and break our mortgage contract however, life happens.  Perhaps you leave your job, change locations, run into financial trouble, get divorced, have a baby and need more space or just plain want to move, or many other possible reasons.

Many consumers opt to use the big banks for their mortgage even though they will have to pay substantially more at the time of early discharge.  More often than not, I suspect, the consumer doesn’t know how the policies work or think that they will ever be faced with the situation.  Even porting your mortgage (moving it to another house) can be costly.

How do you avoid this?  Many lenders that are accessed through mortgage brokers calculate their penalties in a more fair fashion.  This makes them more competitive with the big banks and provides better customer service.  These lenders are reputable government regulated companies that accumulate funds from investors who are also reputable and reliable.

Consumers should make informed choices when deciding on where they should obtain their mortgage including what it will cost them to get out early if necessary.

Click here for and article in the Globe and Mail for further info.

12 Nov

General

Posted by: Anne Martin

Disappointing Decline in Jobs in October, But Wage Growth Surges
One month does not a trend make. Statistics Canada announced this morning that the country lost 1,800 jobs in October following two months of blockbuster employment gains. October marks the first month of job losses since July, but as the chart below shows, the employment data are notoriously volatile. The Canadian dollar sold off on the news of the small job loss. Even with the slight drop in October, job gains so far this year are the strongest in 17 years. The country has added 391,00 jobs in the first ten months of this year.
The labour market remains a bright spot for the Canadian economy, and income growth has boosted consumer spending and housing this year. The unemployment rate remained at a mere 5.5% in October–just one tick above a 45-year low–and best of all, wage gains for permanent employees surged 4.4% year-over-year, the best reading in ages. Accelerating wage growth is a sign that the tight labour market is boosting pay. With overall inflation at only 2% or less, real family purchasing power is rising. As well, hours worked advanced 1.3% from a year earlier, matching September’s pace.

There is nothing in this report that changes the Bank of Canada’s likely actions. I believe the Bank will remain on the sidelines when it meets again in December, but could well take an “insurance” rate cut early next year. Bank of Canada Governor Stephen Poloz, one of the few central bankers to resist the global push for lower interest rates, acknowledged he’s begun to consider the merits of joining other countries in lowering borrowing costs. Currently, Canada has the highest overnight interest rate among the majors, as the US once again cut rates late last month. Poloz said that the Bank of Canada “is mindful that the resilience of Canada’s economy will be increasingly tested as trade conflicts and uncertainty persist.” The Bank of Canada remains bullish on consumption and housing — which are being fueled by a robust labour market.
In October, employment increased in British Columbia and Newfoundland and Labrador and was little changed in the other provinces. Employment declined in manufacturing and construction. At the same time, net new jobs were up in public administration and finance, insurance, real estate, rental and leasing. The number of self-employed workers decreased, while the number of employees in the public sector increased for the second consecutive month.
Click on the image above to watch DLC Chief Economist Dr. Sherry Cooper providing insight on the latest national employment numbers on BNN.
Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drcooper@dominionlending.ca
24 Oct

Election results and your mortgage.

General

Posted by: Anne Martin

24 OCT 2019

WHAT THE ELECTION RESULTS MEAN FOR YOUR MORTGAGE

With all the news we have seen on the election, I thought I would sum it up from a mortgage industry perspective.

What the liberal win means for your mortgage:
1. We will see the continuation of the First Time Home Buyers’ Incentive. Check out the link for more information here:
2. Property Transfer Tax modifications were on the platform, so we will await the date that change is applicable.
3. Consumers will still be able to withdraw up to $35,000 from their RRSPs as part of the government’s Home Buyers’ plan.
4. Bank of Canada Rates may not decrease as expected this year – unless there is a significant downtown in the market suddenly- based on the snapshot of recent activity that doesn’t appear as likely. It certainly makes it easier for the lenders not to pass the decrease down the line to the consumer.
5. We will likely see a national housing foreign buyers tax implemented in addition to the provincial ones already in place.
For items 1, 2 & 5, here is a link.
It doesn’t appear we will see any of the changes to the stress test or amortization hoped for by many.
Stay tuned for more updates and what the BOC decides to do Oct. 30 and Dec. 4.
While the constant in our market will always be change, Dominion Lending Centres mortgage professionals are here at the frontlines to help you navigate the market to your advantage and save you money. Please reach out to us with any mortgage questions on how we can help you or those you care most about.

16 Sep

Are you a first time home buyer? If so, you’ll want to read this. Mortgage Market Update September 16, 2019

General

Posted by: Anne Martin

MARKET UPDATE

Are you a First Time Homebuyer?

Good news for those looking to break into the Canadian housing market: the new federal First-Time Home Buyer Incentive (FTHBI) officially opened for business on September 2nd.

Designed to alleviate mortgage costs for first-time homebuyers, the FTHBI will take a bite out of monthly payments by providing shared equity loans of 5% toward the down payment of a resale home and 10% for newly-built homes. By boosting the size of buyers’ down payments, the FTHBI whittles down monthly mortgage costs, offering some relief on the costs of homeownership.

Thinking of buying a home? Let’s chat!

Best fixed rates are as low as *2.59 – 3.69 % for a 5 year fixed,
variable rate mortgages from as low as p-.95%
Prime Rate is 3.95%

*High Ratio/Quick Close Specials
This is a critical time to sit down and review your household financing needs. Please do not hesitate to contact me should you have any questions.

If you are in the market for a home, book an appointment today to see how the recent regulatory changes by the Office of Superintendent of Financial Institutions will affect your purchase.

**rates subject to change with market conditions – *OAC  **conditions apply E. & O. E.

 
Terms Bank Rates Our Rates
6 Month 3.34% 3.30%
1 YEAR 3.59% 3.04%
2 YEARS 3.74% 2.89%
3 YEARS 3.89% 2.89%
4 YEARS 3.94% 2.94%
5 YEARS 5.34% *2.59 – 3.69 %
7 YEARS 5.80% 3.44%
10 YEARS 6.10% 3.7%
Rates are subject to change without notice. *OAC E&OE

 **Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.”

Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.
30 Aug

How millennials view home ownership. Mortgage market update September 30, 2019

General

Posted by: Anne Martin

Anne Martin
Mortgage Agent #M1000225739 Collier St. #306
Barrie Ontario L4M 1G5
Phone: 705-791-6683 | Email: anne@ndlc.ca
http://www.barriemortgagelocators.com

MARKET UPDATE

Millennial Views on Partners & Home Ownership

Investment options and long-term savings have typically not been seen as sexy – until now.

A recent HSBC study found that many Canadian millennials – aged 23 to 38 – are attracted to partners based on their home buying aspirations.

Of the 1,077 surveyed, 12.7% said that property goals and home ownership topped their list of what they look for in a partner. This was compared to 2.8% of respondents who said appearance was a high priority. Because looks don’t last forever, but an investment property will.

Best fixed rates are as low as *2.59 – 3.69 % for a 5 year fixed,
variable rate mortgages from as low as p-.95%
Prime Rate is 3.95%

*High Ratio/Quick Close Specials
This is a critical time to sit down and review your household financing needs. Please do not hesitate to contact me should you have any questions.

If you are in the market for a home, book an appointment today to see how the recent regulatory changes by the Office of Superintendent of Financial Institutions will affect your purchase.

**rates subject to change with market conditions – *OAC  **conditions apply E. & O. E.
Terms Bank Rates Our Rates
6 Month 3.34% 3.30%
1 YEAR 3.59% 3.04%
2 YEARS 3.74% 2.89%
3 YEARS 3.89% 2.89%
4 YEARS 3.94% 2.94%
5 YEARS 5.34% *2.59 – 3.69 %
7 YEARS 5.80% 3.44%
10 YEARS 6.10% 3.7%
Rates are subject to change without notice. *OAC E&OE

 **Please note that rates shown above are subject to change without notice. The rates shown are  posted rates and the actual rate you receive may be different, depending upon your personal financial situation. “Some conditions may apply. Rates may vary from Province to Province. Rates subject to change without notice. *O.A.C. E.& O.E.”

Check with your Dominion Lending Centres Mortgage Professional for full details and to determine what rate will be available for you.
27 Jun

Monthly Mortgage Newsletter, Consumer Digest June 2019

General

Posted by: Anne Martin

3 steps to take you from Pre-approval to getting the keys

Picture this: You’ve finally been able to put away enough for a down-payment on your dream home. It’s taken you five years of diligent saving, but you did it! You have also been diligently working on improving your credit score and paying off debts and are at a place of financial stability. So, first of all, KUDOS TO YOU! Second…now what do you do? Here are the three steps that will take you from browsing new homes to getting the keys to your new place.

STEP 1: PRE-APPROVAL

This should actually be the step BEFORE house hunting. Visiting your mortgage broker to get pre-approved is the first step anyone looking to buy a home should do. When you meet with your broker for the first time they will:

  • Have you fill out an application (or you might be able to fill out one online)
  • Pull your credit
  • Determine what your maximum purchase price will be.

Be aware that you will also be asked for additional information when you visit your broker to apply, including a letter of employment/pay stub, down payment verification, two years notice of assessment and/or T4’s, a void cheque, and a number of other potential documents.

Once you are pre-approved it’s house hunting time for you! The benefit of having this done BEFORE you start looking is that you can work with your realtor to find properties within that price range.

When you do find just the right home for you, it’s on to step two.

STEP 2: APPROVAL

If you were able to provide the bulk of the paperwork for your pre-approval, then it will be smooth sailing from here. You may have to supply a few pieces of updated information but otherwise, it’s up to the lender to do the hard work at this point.

Now that you have final sign-off and are waiting for the final conditions to be met, it’s on to step three.

STEP 3: FINAL STEPS

Your broker will notify you once the conditions have all been met, and the lender will send the paperwork over to the Lawyer’s office. The lawyer will take a few days to go through the mortgage and prepare it for your final sign off. When you go, you will be asked to present:

  • Void Cheque
  • Two forms of identification
  • Balance of the down payment in the form of a bank draft

On the day of funding, the lender will send the funds to the lawyer who sends them to the seller’s lawyer who upon receiving the funds will give you the all clear.

All that’s left is to hand you the keys to your new home!

As one final step, keep asking questions at each stage of the mortgage process. You should check in with your mortgage broker if you have any questions along the way. They are happy to guide you through the process of not only getting a mortgage but also having a mortgage too!

Is owning a home truly the best bet?

If you’re reading this and just bought your first home, or you’ve been a homeowner for years, there’s good news. You can feel confident you made the right decision for your long-term economic wellbeing. That’s according to the findings of a study by Mortgage Professionals Canada, the national association that represents the mortgage industry.

The organization decided to take a deep dive and compare owning versus renting in Canada, and conclude which one option would be the best financial decision in the long run.

As it turns out, the cost of ownership was lower than the cost of renting in more than three quarters of the 266 combinations or cases studied.

As of the second quarter of 2018, the monthly cost of owning was lower than the cost of renting for 72 (just 27% of the 266 cases).

But, the study noted, costs of homeownership include considerable amounts of repayment of mortgage principal. This is a form of saving. When this saving is considered, the “net” or “effective” cost of homeownership is correspondingly reduced.

On a net basis, the cost of ownership is lower than the cost of renting in 202 of the 266 cases (76%), according to the study.

On average across the 266 cases, the monthly cost of owning exceeds the cost of renting an equivalent dwelling by $541 per month. But, when the principal repayment is considered, the net cost of owning is $449 less than the cost of renting.

MPC’s study also found the largest element of the ownership cost (the mortgage payment) is fixed for some time. The result is that the cost of renting will increase more rapidly than the cost of homeownership. The analysis projects the costs of owning and renting for five years and 10 years, assuming that all of the cost components (apart from the mortgage payments) rise by 2.5% per year. The study concluded that homeownership becomes increasingly advantageous over time.

The study concluded by the time the mortgage is fully repaid in 25 years (or less) the cost of owning will be vastly lower than the cost of renting, in every one of the 266 cases. On average across the 266 cases, the cost of owning is projected at $1,549 per month versus $4,655 for renting equivalent dwellings.
HOMEOWNER TIPS…
5 Ways to Stay Cool Without Air Conditioning:

  1. When it’s cooler outside than inside, open your windows instead of using air conditioning. Use a window fan, blowing toward the outside, to pull cool air in through other windows and to push hot air out. When it’s hotter outside than inside, close your windows and draw window coverings against direct sunlight.
  2. On hot days, delay heat-producing tasks, such as dishwashing, baking or doing laundry, until the cooler evening or early morning hours.
  3. Caulk around window and door frames, use weather stripping on exterior doors, and have a professional seal gaps where air can travel between the attic and your living space.
  4. Use energy-efficient lighting in your home. CFL and LED light bulbs operate cooler and cost less to use because most of their energy produces light instead of heat. Incandescent light bulbs, on the other hand, lose 90% of their energy as heat.
  5. Leafy shade trees planted on the east and west sides of your home can improve comfort and decrease cooling needs by blocking heat and sunlight. You’ll still have the benefit of heat from the sun in the winter, after the leaves fall. Check with your local garden centre for recommendations.

 
DID YOU KNOW…
There are two types of debt: secured and unsecured. When you borrow money to buy a house, the bank can take back the house to recoup their money if you don’t pay the debt. That means the debt is secured – it’s being balanced against something that you want to keep, and gives the bank some measure of security that it’s going to be able to recover the money it’s loaned you. Unsecured debt, on the other hand, means the bank can’t reclaim the thing you’re buying with the borrowed money. (Credit card debt is unsecured, and so are student loans.)

 

  • opener
26 Apr

General

Posted by: Anne Martin

Welcome to the April issue of my monthly newsletter!

This month’s edition looks at protecting your pre-approval and options for up or downsizing. Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!

Protecting your pre-approval

People mistakenly believe once they’ve been pre-approved or approved by a lender it’s all done.

But what they don’t realize a lender may pull their credit 30 days prior to close. They also don’t realize lenders can request updated documents in that time. And, if some of the original information that got you the mortgage approval in the first place changes, and for the worse, you could lose your financing. Here’s a short list of actions that could put your approval on pause:

Having additional credit reports pulled by another broker or lender

The lender will often pull your credit again right before financing. If the lender sees that other brokers or lenders have pulled your credit, the lender views this as credit seeking and it can put your funding in jeopardy.

Applying for additional credit elsewhere

The lender calculates your debt based on the amount of credit you have. If you are applying for new credit, the obvious assumption is that you are planning on using it. Don’t get any new credit until the closing date is passed.

Closing out credit accounts

Credit is not a bad thing… unless you are having a hard time managing it. Old credit shows a long history of being able to handle credit. Lenders like that, so don’t rush to cut up your credit cards just yet. If you can, make above your minimum monthly payments to get in a better standing with your current accounts.

Moving money around without a paper trail

When you settle with the bank on the contract of the mortgage, the lender will require bank statements showing your saved money. They look at the history along with the balance. If there are any unusual deposits, you will need to explain where the money came from. Be prepared to show a paper trail. If your downpayment comes from savings, keep in mind the bank will want 90 days bank statements to ensure the money is accounted for.

Increasing your debt

The lender always looks at your debt-to-income ratio. If you increase your debt, you can risk going over the maximum amount of debt compared to your income.

The biggest, and most common offence to this rule is buying a new car or obtaining a big box store credit card.

Don’t be tempted! If you want to keep your current pre-approval amount, keep your ratio steady.

Moving up or down the property ladder

At some point, the place that we thought would be our forever home for one reason or another just isn’t working. That’s the time to consider moving up in size or potentially downsizing depending on where you are in life.

If you’re feeling squeezed or have a little one on the way, your current digs may not be enough. If you want to upsize during your mortgage cycle, keep in mind you’ll be breaking your mortgage and will have to go through the entire qualification process again.

That means you will need to re-qualify at the current rates offered by lenders and be subject to government changes and recent “stress test” rules. You’ll also be breaking your mortgage which will come with a variety of penalties depending on the terms in your mortgage and the lender. You may be able to port the mortgage, essentially taking the existing mortgage and its terms and transferring it to another property, but not all mortgages are portable. You’ll need to talk to a mortgage broker to find out if this is an option for you.

Moving on UP

If you’re trying to move from a condo or apartment to a single-family home, it’s all about the pros and cons. First, you have to decide if you can afford to make the move and buy something bigger. A larger purchase price comes with larger closing costs. Depending on the province in which you reside, you’re Property Transfer Tax will be larger and you’ll be paying realtor fees on the sale of the home you’re leaving. Canadians typically pay between 2.5 and five per cent their home’s selling price in realtor fees.

Don’t forget the costs of owning a single family home. Unlike a strata, you are responsible for all the maintenance of your home. One rule of thumb is to consider saving one per cent of the purchase price of your home each year for maintenance. If your home cost $500,000, that would mean $5,000 a year in savings. The good news is you won’t have to pay a monthly strata fee and you won’t be kept up at night worrying about a special assessment for major repairs on the building.

Scaling it DOWN

There comes a time when owning a home becomes a little too much to handle. The cleaning, the yardwork and the maintenance can be a pain. And why keep extra bedrooms when they’re just collecting dust? It may be time to downsize. If you’re mortgage free, depending on where you live, you could actually be sitting on a gold mine. While you may be in for a windfall, there are costs to selling your existing home for something smaller and cheaper.

  • Realtor commission (between 2.5 and five per cent depending on where you live in the country and what you are able to negotiate). In Toronto for example, the standard realtor rate is 5%. So for a $1,000,000 home, you would need to pay the realtor $50,000.
  • Closing costs and legal fees – approximately 1.5 per cent of the purchase price
  • Miscellaneous costs – $1,000-plus (moving expenses, upgrading appliances and buying new furniture)
HOMEOWNER TIPS…

Exterior Renovations:

If you’re thinking of selling your home, or you simply want to spruce it up, exterior renovations can significantly increase its value and curb appeal. Aside from more expensive undertakings such as new roofing and siding, there are some projects you can take on yourself, such as creating attractive flower beds or purchasing a new front door. With each project completion, you will be happier with your home, and increase its appeal to buyers when it comes time to sell!

You also need to consider strata or condo fees and the potential for special assessments on the building and all the standard costs that come with buying a place, even if there’s no mortgage.

Another more recent option to the real estate landscape is reverse mortgage. A reverse mortgage is a loan secured against the value of your home. It is exclusively for homeowners aged 55 years and older. It enables the homeowners to convert up to 55% of the home’s value into tax-free cash. With a reverse mortgage, you maintain ownership of your home. You only have to repay the loan once you chose to move or sell.
DID YOU KNOW…
There are eight preset dates per year on which the Bank of Canada makes decisions which affect variable rate and short term fixed rate mortgages. The last increase to the Prime rate by the Bank of Canada was in 2018. No increase is expected anytime soon.

Longer term, i.e. the five year term, fixed rates are influenced by the bond market, and this is arguably less predictable and more volatile.

 

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