10 Oct

Should you lock in your variable rate mortgage? October Newsletter

General

Posted by: Anne Martin

Welcome to the October issue of my monthly newsletter !

This month’s edition delves into the details of breaking a mortgage early, as well as highlights some important details when your kids become renters.

Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!

Is It Time To Lock In A Variable Rate Mortgage?

Approximately 32 per cent of Canadians are in a variable rate mortgage, which with rates effectively declining steadily for the better part of the last ten years has worked well.

Recent increases triggers questions and concerns, and these questions and concerns are best expressed verbally with a direct call to your independent mortgage expert – not directly with the lender. There are nuances you may not think to consider before you lock in, and that almost certainly will not be primary topics for your lender.

Over the last several years there have been headlines warning us of impending doom with both house price implosion, and interest rate explosion, very little of which has come to fruition other than in a very few localised spots and for short periods of time thus far.

Before accepting what a lender may offer as a lock in rate, especially if you are considering freeing up cash for such things as renovations, travel or putting towards your children’s education, it is best to have your mortgage agent review all your options.

And even if you simply wanted to lock in the existing balance, again the conversation is crucial to have with the right person, as one of the key topics should be prepayment penalties.

In many fixed rate mortgage, the penalty can be quite substantial even when you aren’t very far into your mortgage term. People often assume the penalty for breaking a mortgage amounts to three months’ interest payments, which in the case of 90% of variable rate mortgages is correct. However, in a fixed rate mortgage, the penalty is the greater of three months’ interest or the interest rate differential (IRD).

The ‘IRD’ calculation is a byzantine formula. One designed by people working specifically in the best interests of shareholders, not the best interests of the client (you). The difference in penalties from a variable to a fixed rate product can be as much as a 900 per cent increase.

The massive penalties are designed for banks to recuperate any losses incurred by clients (you) breaking and renegotiating the mortgage at a lower rate. And so locking into a fixed rate product without careful planning can mean significant downside.

Keep in mind that penalties vary from lender to lender and there are different penalties for different types of mortgages. In addition, things like opting for a “cash back” mortgage can influence penalties even more to the negative, with a claw-back of that cash received way back when.

Another consideration is that certain lenders, and thus certain clients, have ‘fixed payment’ variable rate mortgages. Which means that the payment may at this point be artificially low, and locking into a fixed rate may trigger a more significant increase in the payment than expected.

There is no generally ‘correct’ answer to the question of locking in, the type of variable rate mortgage you hold and the potential changes coming up in your life are all important considerations. There is only a ‘specific-to-you’ answer, and even then – it is a decision made with the best information at hand at the time that it is made. Having a detailed conversation with the right people is crucial.

It should also be said that a poll of 33 economists just before the recent Bank of Canada rate increase had 27 advising against another increase. This would suggest that things may have moved too fast too soon as it is, and we may see another period of zero movement. The last time the Bank of Canada pushed the rate to the current level it sat at this level for nearly five full years.

Life is variable, perhaps your mortgage should be too.

As always, if you have questions about locking in your variable mortgage, or breaking your mortgage to secure a lower rate, or any general mortgage questions, I’m here to help!

Teaching Your Kids About Renting

Fall is here! The kids have moved out for school. Help them learn about renting and coping with issues during their tenancy.

One property manager, who has been in the business for decades, compares landlord and tenant relationships to marriage. Initially, both parties are enthused with one another and things look rosy. As the tenancy progresses, the initial rosy viewpoint shifts to a more realistic one as issues arise. These could be minor issues, such as a tenant wanting repairs to happen more quickly, or there could be major issues, such as non-payment of rent.
The below links address practical tenancy issues:

  •     Emergencies and Repairs – Defines emergency repairs and explains how to respond to them.
  •     Regular Repairs – Looks at the proper process for getting non-critical things fixed.
  •     Handling Complaints – Explains how to effectively handle complaints.
  •     Rent Increases – Provides an overview of the process for increasing the rent.
  •     Lease Renewals – Provides an overview of how leases are renewed.

If you’re a tenant, landlord or property manager, Canada Housing and Mortgage Corporation (CMHC) can offer you information on tenant and landlord rights, responsibilities and rental practices across the country: www.cmhc.ca


 

  Homeowner Tips
Fall Lawn Care:
 
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 they’re going to be able to recover the money they’ve 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.) 

 

It’s fall, and that means it’s time to get outside and rake the falling leaves. Below is a list of tips compiled by Popular Mechanics to help get the job done.

PATIENCE
Clear your pathways and high-traffic areas of leaves on an ongoing basis, but don’t bother raking your whole yard until all the leaves are down.

USE THE RIGHT TOOLS
That rusty metal fan rake in your shed might seem like an old friend, but perhaps its useful days are over. There are also rake alternatives, including push-power leaf collectors that help take some of the backache out of raking.

TAKE CARE OF YOUR BODY
Speaking of backache, be sure to practice proper raking technique before, during, and after your work. Raking is a real workout, and you need to warm up your body by stretching before you start.While you’re raking, be sure to keep a good posture and stand upright. Switch your main (bottom) hand on a regular basis, and always bend at the knees (not the back) when you stoop to pick up a pile.

WORK SMART
This is the key to efficient raking. Rake your leaves into small piles on top of a tarp or a piece of plastic, then drag that pile to your main pile or compost.

RAKE WHEN IT’S DRY
This one is simple but important. Wet leaves are heavier than dry ones, so try to do your raking during a dry stretch of weather.

 

27 Sep

What should we be talking about? Taxes or real estate?

General

Posted by: Anne Martin

Welcome to the September issue of my monthly newsletter !

This month’s edition addresses the imbalance of time we spend discussing real estate (in most cities) as compared to income taxes, as well as a look at the age old real estate related topic of ‘Location, location, location.’

Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!


Time To Talk Taxes

In Canada, and certainly in the large urban centres, there are few topics that get more press than real estate these days. It seems that few conversations are capable of lasting more than a single digit number of minutes before some aspect of the topic arises.

Much of the talk is about how action should be taken to rein in rising prices — and to be fair, even those who currently own property are part of this group, as many are parents who would one day like to see their adult children living in homes of their own.

According to a new study by the Fraser Institute, the average Canadian family spent more on taxes in 2016 than any other one thing.

The study cites average family earnings in 2016 as $83,105. Housing costs, which considered both rents and mortgage payments, combined with food and clothing, totaled $31,069.

Total taxes came to $35,283.

Housing costs alone stood at 22.1% of household costs, yet taxes took a 42.5% share.

While taxes are important, as of course they fund many critical public services that we rely on, there is still some question as to the return on investment of our tax dollars.

Perhaps there is a certain sense of futility we feel when it comes to changing taxation in any way, and perhaps that is why there are few rallies to reduce taxes, or to encourage more efficient use of tax dollars, as compared to rallies for action on affordable housing.

The level of futility seems to be growing when it comes to real estate though. And no doubt it is always a concern when governments do take specific actions in a free market society, as often those actions have unintended consequences.

In any event, it would be interesting if, instead of discussing real estate, an equal amount of time, energy, and media attention focused on where our tax dollars go, and why the government requires so many of them.

Location, Location, Location

The true costs of commuting are often overlooked during the home-buying process. Few homebuyers fleeing city-living for the suburbs ever make the advance effort of spending a dark winter’s week purposely engaging in what will be their new commute during peak travel times. Instead it is usually a Sunday afternoon drive that leads them to their new home. And when the reality of the daily commute from Monday to Friday takes effect, it can be quite painful to adjust to.

Having done a bit of research at www.caa.ca around the cost of commuting, a fair figure to use is 45 cents per kilometre. With the average commute at 40 km for many Canadians, this is a $36 daily cost, excluding parking. Aside from the financial cost, there is the social and emotional cost of spending an average of one hour per day alone in a car to consider.

Admittedly there are public transport options that save money, although this is often in exchange for even more time sacrificed due to less than perfect public transit solutions in many suburban areas. Also a consideration is the inflexibility with transit of fitting errands, especially child related errands, into the commute.

Ten hours per week spent commuting is ten hours not invested in…

  •     Socializing
  •     Finding a mate (if this is a goal)
  •     Having children (if this is a goal)
  •     Raising children
  •     Relaxing (absence of children)

Ten hours per week goes a long way.Some might be inclined to work those extra two hours, which even at a reasonable $20 per hour is an extra $10,400 per year gross income.Less the expenses of commuting: $7920 ($36 x 220 working days).The extra earnings, combined with the added savings, may well make staying closer to your workplace the more affordable option.

Perhaps, after deeper reflection, spending the hours focused on career or on the social side of life, rather than commuting is the sensible plan.If we apply this math to a double-income household, and were the wage closer to $25 per hour for those extra two hours per day, the purchasing power increases that much more. Food for thought during today’s hour-long commute.

Did you know…
Only 23% of Canadians know their credit score, and just 26% knew their credit rating at the time they applied for a mortgage, reports a recent Equifax survey. A good credit score can be a major negotiating tool in getting lower interest rate mortgages from financial institutions. The study also found that 10% of Canadians surveyed say it’s okay to inflate your income when applying for a mortgage. And 9% say they have lied on credit card or mortgage applications. The numbers came as a shock to Equifax officials, given that the July survey of 1,500 Canadians was really aimed at gauging their concerns about protection of personal data.
Homeowner Tips Fall Lawn Care:
What you do for your lawn during the fall will have a great impact on what your lawn will look like next spring. There are four simple steps you can take to help ensure your lawn will be healthy, green and the envy of the neighbourhood next year:

  • Aerate. This means to puncture your lawn with small holes throughout to allow the fertilizer, sunlight, water and important nutrients that grass needs to grow deep within the ground;
  • Fertilize. Basically this means feed your lawn before it goes to sleep for the winter;
  • Overseed. This is when you spread new grass seed all over your existing lawn with a spreader; and
  • Mow. In November, mow your lawn one more time as short as you can without scalping your lawn. This will help all the other steps above work better.

16 Aug

Ten things to know about the prime lending rate. Consumer’s Home Digest August 2017

General

Posted by: Anne Martin

Welcome to the August issue of my monthly newsletter !

This month’s edition offers ten things to know about the Prime lending rate and your mortgage, as well providing insight on exactly how to determine if your mortgage is truly portable.

Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!


Ten Things to Know About Prime & Your Mortgage

  1. Fixed-rate mortgage holders are not affected by Bank of Canada rate changes during their current term. Only those in either adjustable-rate or variable-rate mortgages need read on.
  2. On July 12 lenders increased variable-rate borrowing costs by 0.25% to match the Bank of Canada increase of the same amount on the same day.
  3. There are three more scheduled Bank of Canada meetings this year, and there remains doubt about any further increases this year. Few expect anything more than a 0.25% further increase.
  4. This was the first increase to Prime in nearly seven years, and it follows two 0.25% reductions in 2015.
  5. A 0.25% rate increase equals a payment increase of $13 per month per $100,000 of outstanding mortgage balance for those in an adjustable-rate mortgage. That means a $300,000 mortgage balance will see payments rise by $39 per month.
  6. Not all payments increase. Several lenders differentiate from an adjustable-rate product by offering what is called a ‘variable-rate’ mortgage and their clients will not have any payment change at all. Instead, the life of the mortgage is extended slightly. A letter in the mail from your lender should be arriving to confirm which camp you are in.
  7. There is no penalty or fee to convert to a fixed rate. Whether in an adjustable-rate mortgage or a variable-rate mortgage, you have the option of locking into a fixed-rate at any time without cost. The length of the term offered varies according to policy and remaining time to maturity, with some lenders allowing conversion to a three-year fixed from day one, but most ensuring they have you under contract for the full original term.
  8. Locking in can be very costly. The prepayment penalties differ significantly between variable- and fixed-rate products. Be careful about locking in. Aside from immediately increasing your payment even further, you stand to increase your potential prepayment penalty by up to 900%. Few think they will trigger a penalty, yet more than half of borrowers actually do.
  9. No surprises. Mortgage lenders failed to give us the full 0.25% decreases in 2015, instead only reducing rates by 0.15% both times. Counting on our short memories and lack of uproar, lenders chose to increase by the full 0.25% on July 12, rather than doing what would have been fair and only increasing 0.15%
  10. Future increases will depend largely on consistent economic good news. This is what drives interest-rate increases.

Stay tuned for next month’s newsletter as we weigh the likelihood of another 0.25% increase at the September Bank of Canada meeting.

Is My Mortgage Portable?

The question: ‘Is my mortgage portable?’

The answer most often given: ‘Yes.’

This answer is increasingly wrong.

In reality, you may qualify to move 80% or less of the current balance.

The proper question: ‘Do I need to re-qualify for my current mortgage to move to a new home?’

The proper answer: ‘Yes, your mortgage is portable, but only if you re-qualify under today’s new and more stringent guidelines.’

Who is the very best person to answer the portability question? Your mortgage broker.

They will answer this question accurately. And it can only be answered accurately with a complete and updated application, along with all supporting documents to confirm the maximum mortgage amount under current guidelines.

Calling the 1-800 number on your mortgage statement, or asking the teller while depositing cheques is far less likely to get you an accurate answer. Instead that tends to be the origin of the one word answer.

Call your mortgage broker as soon as you start thinking about moving.

Too many clients learn this lesson the hard way. They sell their existing property before speaking with their Mortgage Broker, and in some cases they also enter binding purchase agreements under the mistaken assumption they can just ‘port their mortgage.’

What is the problem?

Key Point – The Federal Government has created a dynamic in which there are two different qualifying rates used for approvals. One is for the initial purchase or refinance, and the other is for when it comes time to move to a new home.

So the qualifying rate used yesterday to get you into a five-year fixed rate mortgage on your current home is not the one being used to qualify you to move that same mortgage to a new home down the street, even just one day later.

Key Point – One day into your new five-year fixed mortgage you are now subject to a ‘stress test’. In a nutshell, the stress test effectively reduces your maximum mortgage amount by 20%. Meaning that you can only port 80% of the current balance to another property… just one day later.

So, what’s the fix?

The best fix – The government could add a simple sentence to their lending guidelines along the lines of ‘If a borrower qualified for their mortgage at the five-year contract rate at inception, then the borrower shall be allowed to re-qualify at the original contract rate when moving their mortgage to a new home.’

Currently this fix does not exist.

The current fix – You pay a penalty to break the current five-year fixed mortgage you have and then apply for a new five-year fixed mortgage. Which is as ridiculous as it sounds.

The penalty amount? Approximately 4.5% of balance, i.e., $14,000 on a $300,000 mortgage balance. Yes, you read that correctly.

This is entirely unreasonable. It is not a fix at all. If you bought with 5% down, and then a few months later were transferred to another province and had no choice but to move, this represents your entire down payment vanishing due to a simple oversight by the federal regulators

Did you know… Homeowner Tips
Paint Brush Tips:
The majority of wealthier Canadians mortgage their homes by choice. 67% of high net worth Canadians (those with $500,000 or more in investable assets) with a mortgage have the cash to pay off their home – in full – but don’t, according to a survey for Investors Group. Their reasons for holding on to their mortgage vary, including tax planning and income-generating rental properties. In Canada, mortgage interest on rental properties is tax deductible. When it comes to painting, many people will buy the big package of brushes for $7. But the bristles on these brushes may be coarse or could fall out. In addition, they can end up looking ratty after a while and the paint won’t spread evenly. The key is to buy a good quality brush and clean it properly as specified on the label. And if you have a big job and find yourself having to paint in intervals, you can wrap your wet brushes in kitchen wrap. Place the oil-based brushes in the freezer and the latex-based in the fridge. When the job has been completed, you can then clean them and put them away. In many cases a good brush will last for dozens of paint jobs.

 

 

11 Jul

NDLC Newsletter for July 2017. Are rate hikes looming?

General

Posted by: Anne Martin

Welcome to the July issue of my monthly newsletter !

Summer vacation at last! Two months of fun in the sun lie ahead! This month’s edition takes a look at the recent interest rate-hike warnings in the media, and a closer look at the housing market.

Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!

 

Rate Hikes: Still As Much A Matter Of ‘If’ As ‘When’

One month of headlines suggest interest rates are dropping to new lows, another says no changes anytime soon, and recently many headlines seem to be suggesting an increase soon. This stream of mixed messages contradicting one another has been steady since rates dropped to 50-year record lows in 2009.

Many were adamant in 2009, and each year since, that rates could go no lower, and yet they have. Sure there have been a few shortlived blips upward along the way, in defiance of all who are calling for a return to normal… whatever normal may now be.

The key driver of interest rate movement is the economy in general. Not a thin slice of it such as real estate. What drives interest rates down? Economic bad news. What will drive rates up? Economic good news.

Economic good news seems in short supply since 2008.

Interest rates are a very large economic lever, far too large to be used simply to cool the arguably overheated real estate markets of two particular cities. Cooling of real estate is not addressed via interest rate hikes, markets are cooled and have been cooled as of late through lending policy changes.

Many commentators forget that only a few short years ago there existed 40-year amortizations with 100% financing not just for owner-occupied but for investment properties, and variable-rate mortgage qualifications that were much easier than today.

The reality is that borrowers in 2007 – at nearly double the current interest rates – qualified for larger, and arguably riskier, mortgages than borrowers today do.

And always do the math, yes math is no fun, but here is a shortcut:

A 0.25% rate increase equals a $13 per month increase in payments per $100,000 of mortgage balance.

And keep in mind that the majority of Canadians are in fixed rate mortgages, and the majority of them have renewal dates a year or two away. And for those mortgage holders an increase from todays rates of 0.25% – 0.50% would in fact only be equal to their current rate.

A 0.25% increase in the Bank of Canada rate would impact less than 10% of households across Canada, perhaps less than 5% of households. And that impact would be on average ~$39 per month.

Could you handle a $39 increase in your mortgage payment? Odds are you have actually already increased the minimum payment on your own as so many Canadians do. In that case you are already ahead of any increase.

Is the economy truly strong enough for an increase? We shall see come July 12 what the Bank of Canada thinks.

Are the small percentage of variable rate mortgage holders in Canada not already making higher payments ready for a 0.25% increase – overwhelmingly yes, they absolutely are.

The big beneficiaries of these uncertain times or trepidation around even a slight interest rate increase will be those in fixed rates approaching renewal dates over the next 12 months, and those enjoying the ride in their variable rate mortgages.

Be sure to start the renewal conversation with your broker six months out from the mortgage renewal date. Your current lender may suggest that rates are about to move and suggest locking into something early as the right move, but always consult with your independent mortgage broker first to determine if the move being suggested is right for you – or simply just right for the lender.

What is right for you matters to us.


 

Canadians have options when it comes to housing

By Dr. Sherry Cooper

Despite the variation in real estate markets across Canada, homebuyers face the same fundamental question whether they are first time buyers in Toronto, families purchasing a fixer-upper in Atlantic Canada, or down-sizing boomers in the West, says Dominion Lending Centres chief economist Sherry Cooper: What are you willing to do to achieve your goal.

“For the first-time homebuyer, it’s a trade-off between living close to your workplace and having to pay more for your home versus living farther away and facing a meaningful commute to get more for your money,” she says.

Baby boomers with their retirement nest egg tied up in their single-family homes, face very similar circumstances. For boomers, staying in the city usually means downsizing to a condo, which is more expensive per square foot and can take a serious bite out of that nest egg.

Moving out of the city often means giving up family, friendship, and services.

In between, there’s the move-up market – people with growing families who are looking for their second home. They have equity, so they can afford a larger down payment and typically, they are close to their peak earning years. The challenge they face, particularly in regions where the market is strong, is a shortage of suitable homes. Investors and developers are frequently bidding for the same properties. People thinking of moving up may want to consider another option: Buying a larger condo in the suburbs or in smaller communities. There is a demand for more choice in this market segment, she says, that has led to developers start building two and three-bedroom units in the suburbs thatinclude amenities like indoor and outdoor play areas.

The lifestyle issues, Cooper says, are best solved by family discussion. First, sit down and talk. Then, talk to a mortgage broker, a real estate agent and possibly an accountant.

“For a first-time home-buyer in particular, you really do need to know how much you can afford. It may be less than what you can borrow. You don’t want to go right to the edge because there’s just too much risk,” she says. “You want to have enough of a cushion that you could take care of an emergency, or in the event of one of you losing a job. You have to have some precautionary savings.”

For all demographic groups Cooper advises locking into a fixed-rate mortgage. “I would go for a five-year fixed if I were buying right now. Because rates are low and the chances are that in the future, they will be higher.”

Mortgages are complex, and she cautions against simply taking the best deal a bank has to offer. For example, the first-time buyer may want the option of paying down the principal more quickly.

“That’s the whole story of why mortgage brokers make so much sense, because they can shop the loan for you and can find something that is much more customized to what your personal needs are.”

For first-time buyers and boomers, renting is also an option that shouldn’t be ignored, she says. Boomers can then get the full amount of equity from their home while first-time buyers can continue to save for their down payment. Similarly, those in the move-up market may want to consider using the equity in their home to finance a home renovation rather than buying a new residence.

21 Jun

Consumers Home Digest – Mortgage Newsletter June 2017

General

Posted by: Anne Martin

 

Welcome to the June issue of my monthly newsletter which is designed to help keep you in the know regarding Real Estate and Mortgage related matters!

Summer is here!  This month’s newsletter talks about Pre-Approvals & Credit Score Compatibility.

Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!

Summer is here!  This month’s newsletter talks about Pre-Approvals & Credit Score Compatibility.

Please let me know if you have any questions or feedback regarding anything outlined below.

Thanks again for your continued support and referrals!


A Mortgage Pre-Approval is not what you might expect it to be

Although going through the pre-approval process is more important than ever, the actual term ‘pre-approval’ is often misleading. It really addresses just a few variables that may arise once in the middle of an actual offer.

The pressure in many markets has never been greater to write a condition-free offer, yet due to recent changes to lending guidelines by the federal government, the importance of a clause in the contract along the lines of ‘subject to receiving and approving satisfactory financing’ has also never been greater. (There are variations to be discussed with your Realtor around the specific wording of such clauses.)

Often clients are reluctant to write the initial offer on a property without feeling like they are 100 per cent pre-approved. An understandable desire. Many clients falsely believe they have a 100 per cent guarantee of financing, and this is not at all what a pre-approval is.

A lender must review all related documents, not just the clients personal documents, but also those from the appraiser and the realtor as the property itself must meet certain standards and guidelines.

The pre-approval process should be considered a pre-screening process. It does involve review and analysis of the clients current credit report, it should also include a list for the client of all documents that will be required in the event that an offer is written and accepted. Ideally your Mortgage Broker will review all required documents in advance, but few lenders will review documents until there is an accepted offer in place.

Clients should come away from the initial process with a clear understanding of the maximum mortgage amount they qualify for along with the various related costs involved in their specific real estate transaction. Equally as important; a completed application allows the Mortgage Broker to lock in rates for up to 120 days.

Why won’t a lender fully review and underwrite a pre-approval?

  • Lenders do not have the staff resources to review ‘maybe’ applications – they have a hard enough time keeping up with ‘live’ transactions.
  • The job you have today may well not be the job you have by the time you write your offer. (ideally you do not want to change jobs while house-shopping)
  • If more than four weeks pass then most of the documents are out of date by lender standards, and a fresh batch needs to be ordered and reviewed with the accepted offer.
  • The conversion rate of pre-approvals to ‘live trasnactions’ is less than 10 per cent, and this alone prevents lenders from allocating recources to reviewing pre-approvals.

It is this last point in particular that makes it so difficult to get an underwriter to completely review a pre-approval application as a special exception. Nine out of ten times that underwriter is spending their time on something that will never actually happen.

The bottom line is that a clients best bet for confidence before writing an offer is the educated and experienced opinion of the front-line individual with whom they are directly speaking, their Mortgage Broker. Although this individual will not be the same person that underwrites and formally approves the live transaction when the time comes they likley have hundreds of files worth of experience behind them. That experience is valuable.

It is due to the disconnect between intake of application and actual lender underwriting a live file that having a ‘subject to receiving and approving satisfactory financing’ clause in the purchase sale agreement is so very important.

Without a doubt the most significant factor in recent years which has undermined clients preapprovals is the relentless pace of government changes in lending guidelines and policies. Change implemented not only by the Government also by the lenders themselves. It is very easy to have a pre-approval for a certain mortgage amount rendered meaningless just a few days later through changes to internal underwriting guidelines. Often these changes arrive with no warning and existing pre-approvals are not grandfathered.

So, while it is absolutely worthwhile going through the pre-approval process before writing offers, and in particular before listing your current property for sale it is most important to stay in constant contact with your Mortgage Broker during the shopping process.

Be aware that aside from the key advantage of catching small issues early and securing rates a pre-approval is NOT a 100 per cent guarantee of financing.

Credit Score Compatibility: The Connection Between Financial Wealth and Romantic Health

In a study from 2015, researchers found a connection between the likelihood of a breakup in a relationship and the credit scores of each person.

Essentially, this study suggested that two people with excellent credit scores are far more likely to stay together long-term than a couple where one or both parties have abysmal scores. Because finances are such a significant aspect of relationships, the couple’s credit score compatibility is a reliable indicator of potential strains down the road.

Much marital discord is found in household in finances. According to a different study from 2012, “financial disagreements are stronger predictors of divorce relative to other common marital disagreements.”

Money is a significant dynamic in people’s social and romantic lives.

This begs the question, should you request a credit report for your significant other? (ideally before they become too significant) A pre-screening for fiscal health prior to the co-mingling of assets may well be prudent, but few of us would feel polite asking…at least the first time around.

Did you know… Homeowner Tips
Summer Vacation Note:
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 September of 2010. 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.

 

  1. Book that vacation sooner rather than later. Camping sites seem to book up faster than ever each year.
  2. Many homeowners insurance policies require that someone physically check in on the home a minimum of once per week during your absence. Ideally there is an alarm monitoring record of somebody attending the property, if not then at the very least keep a record of an email exchange confirming that your property was viewed at a certain time and date. A burst hot water tank or even a leaking pipe left unattended for days or weeks on end can result in a denied insurance claim.
  3. Get out there and enjoy the great outdoors. Make the most of the Summer of 2017!