28 Sep

Post Consumer Proposal – How to qualify for a mortgage

General

Posted by: Tracey Robinson

How To Qualify For a Mortgage Post Consumer Proposal

How To Qualify For a Mortgage Post Consumer Proposal

Congratulations you have made it through one of the toughest financial times in your life. It feels good to have this under control and know there is a light at the end of the tunnel.

There is no shame in going through either a consumer proposal or bankruptcy. Life throws wrenches into our well laid out plans. This is why we have these financial resources to get us back on our feet.  What is most important is that we don’t make the same mistakes again, really get to know how the mortgage and credit world works and use a mortgage planner along with your trustee or debt counsellor to have a plan of action!

There are no quick fixes or programs to get you back on track! Don’t get sold on some “swindler” taking advantage of your situation. There is a company out there that will loan you $2,500 that you pay back over 2 years and they report it to bureau for you. The cost – $900! That’s crazy and completely unnecessary.

Here are the Coles notes on what you need to know for those in consumer proposal. Remember, every situation is unique, so always have an experienced broker work with you:

  • You can refinance your home when in a consumer proposal and pay it out. You need more than 20% equity to do this. The sooner you pay it off, the faster it comes off your credit bureau.

  • If you are going with an INSURED mortgage (ie. 5-20% down) then you must be discharged from consumer proposal for two years and your credit has to be re-established.

  • Most lenders want the consumer proposal paid in full prior to mortgage approval. Very few will look your deal while in proposal.

  • Area dependent – Fort Mac or small rural communities are harder to get approvals.

  • We can use a bundled product strategy with a 1st mortgage to 80% LTV and 2nd mortgage to 90% to get your approval. Expensive, but works for many clients.

  • You want to plan to have some savings that are more than just your down payment if you are buying. Don’t be house rich and cash poor.

  • Sometimes we can use secondary credit like your car insurance, cell phone, or your rental payments to a landlord. If we can prove good repayment for the last couple years, we should be able to take it to a bank.

  • Also, you really need to ensure that, at the three year mark after you are done, that your consumer proposal is removed from credit bureau. I have seen someone refinance 2 years into their 5 year proposal and pay it out and forget to remove it from the bureau a  year later, so it keeps hurting your score and years of damage for no reason.

How long does a consumer proposal stay on a credit report?

Once you enter into a consumer proposal, it will start reporting on both Equifax and TransUnion credit reports within 30 days. Depending on your consumer proposal agreement with creditors, you will be making payments in a consumer proposal generally between three to five years.

Consumer Proposal will stay on your credit report for 3 years from the date you are discharged (made your last payment) regardless if you are looking at your Equifax or TransUnion report.

 How To Qualify For a Mortgage Post Consumer Proposal

Where do I start in building my credit again?

You can start rebuilding your credit as soon as you file your proposal. Bankruptcy is a bit different. You need to aim for TWO credit cards, open for TWO years, with an eventual available credit of $2500 each.  Just get TWO that start reporting.

  1. Apply for a secured credit card with HomeTrust Visa. You give them $500, they give you a credit card.

  2. Affirm Financial will approve $1000 credit card UNSECURED to those that are in consumer proposal.

  3. Scotia No Fee Credit Card

  4. TD Secured Credit Card

  5. Capital One Secured Credit Card

  6. Peoples Trust Secured Credit Card

Your credit and what have you can do to make it better:

They are lending YOU money, so a good broker will need to explain your situation, who you are, why you had issues and what you have done to improve your situation. This is called the 5 C’s of credit. This is a method used by lenders to determine the credit worthiness of potential borrowers. The system weighs five characteristics of the borrower, attempting to gauge the chance of default or you being a chronic mismanager of debts.

  1. Character – When lenders evaluate character, they look at stability — for example, how long you’ve lived at your current address, how long you’ve been in your current job, and whether you have a good record of paying your bills on time and in full. If you want a loan for your business, the lender may consider your experience and track record in your business and industry to evaluate how trustworthy you are to repay.

  2. Capacity – refers to considering your other debts and expenses when determining your ability to repay the loan. Creditors evaluate your debt-to-income ratio, that is, how much you owe compared to how much you earn. The lower your ratio, the more confident creditors will be in your capacity to repay the money you borrow.

  3. Capital – refers to your net worth — the value of your assets minus your liabilities. In simple terms, how much you own (for example, car, real estate, cash, and investments) minus how much you owe.

  4. Collateral – refers to any asset of a borrower (for example, a home) that a lender has a right to take ownership of and use to pay the debt if the borrower is unable to make the loan payments as agreed. Some lenders may require a guarantee in addition to collateral. A guarantee means that another person signs a document promising to repay the loan if you can’t.

  5. Conditions – Lenders consider a number of outside circumstances that may affect the borrower’s financial situation and ability to repay, for example what’s happening in the local economy. If the borrower is a business, the lender may evaluate the financial health of the borrower’s industry, their local market, and competition.

It all starts with the planning the day you decide to file for a consumer proposal. If you are finding you are starting to fall behind in payments or considering a consumer proposal call us at Dominion Lending Centres – we may be able to help.

25 Sep

5 C’s of mortgage lending!

General

Posted by: Tracey Robinson

Know Your 5 C’s of Mortgage Lending

Know How to Get the Best Mortgage at the Best RateWe all know the real estate industry is hot right now and for many getting into the housing market, it can be a pipe dream. With tightening government and lending regulations, historically low interest rates and soaring housing prices, it can be a daunting endeavour for anyone.

Whether you are a first time home buyer, wanting to upsize to accommodate your growing family or purchasing an investment property, these are the factors that lenders will be looking at. This will determine which mortgage type and interest rate will be available to you.

Know Your 5 C’s:

Collateral – The property itself that you are hoping to purchase.

Capital – Where is your down payment coming from? At a minimum, you need 5% down for a “high ratio” insured mortgage or a “conventional” mortgage with 20% down. This money can come from your own resources or can be gifted from a family member. Requirements will vary, so make sure to check with your mortgage professional.

Credit – Do you have proven credit and show a good history of repayment?

Capacity – The most important by far! How are you going to pay for your mortgage? Proof of income and requirements differ depending on whether you are salaried, self- employed, paid hourly or somewhere in between!

Character – Are you a super person? This is the least important factor to lenders these days.

Just as important to consider, when deciding on your mortgage, is to determine your current financial situation and longer term goals. This will help you decide which mortgage term and amortization (for example a 5 year term with a 25 year amortization) and mortgage rate (variable or fixed) is best for you. Finally, don’t forget to discuss the FEATURES that come with your mortgage as this could save you thousands of dollars and potential grief over the term of the mortgage. These features can include pre-payment options, lower early payout penalties and portability, providing you with flexibility and options for paying down your mortgage faster or making changes, should the need arise.

Mortgages are NOT a one size fits all, so always make sure to contact and discuss your options with a licensed mortgage professional BEFORE preparing to find the home of your dreams.

23 Sep

The truth about the “cash back” mortgage

General

Posted by: Tracey Robinson

The Truth About the Cash Back Mortgage

The Truth About the Cash Back Mortgage

We often see ads from the major lenders offering cash back incentives on their Mortgage products.

Gone are the days where a Cash Back Mortgage could be used to facilitate a purchase without the required minimum of a 5% down payment. Cash Back incentives are now made available for other enticing uses; New Furniture and Appliances, Renovations and the other great hook…..Apply the cash back portion directly on your Mortgage for a better effective rate!

Just a few weeks ago, I was emailed an offer from a major lender who shall remain unnamed;

“NEW PROMO … Cash back for purchases. Effective 5 year Rate as low as 2.62%….”

First off, the Cash Back Mortgages are offered at a premium (higher) compared to other standard rates available. The ploy suggested by the lender here is pay it straight down on principle and lower your effective interest rate over time.

READ THE FINE PRINT

The kicker here and warning to all….there IS a catch! If you are to break the mortgage midterm, whether to sell your home or refinance, you not only have to pay the interest penalty, you also have to return the Cash Back portion to the bank. Even if you used it to pay down your Mortgage. This is in the fine print on the websites and in your contract for you to see.

I have seen this happen to a few people that I know and it ended up being a $10,000 – $20,000 factor in their decision not to move or change careers!

There are other more cost effective ways to obtain financing in better programs such as Purchase Plus Improvements, or Home Equity Lines of Credit (HELOC), that expose you to less future risk and still provide you with flexibility to accomplish your goals.

This is why you need a certified Mortgage Broker – like me! We know of these programs and can offer advice on which ones most suit your situation.

16 Sep

Test Drive A New Mortgage Payment!

General

Posted by: Tracey Robinson

 

 

 

 

 Test Drive a New Mortgage Payment Today

 
         
 

In both rising markets and softer markets there will be many people contemplating making a move to a larger home and with that larger home often comes a larger mortgage. Last month’s newsletter offered technical tips to help prepare for the process of porting your mortgage to a new property, this month we will talk about preparing for a payment increase in advance.

We test drive cars before we buy, we try on clothes before we buy, we even sample wines or beers before we commit. Yet when it comes to taking on a mortgage payment, or increasing our mortgage size, and thus payment, few of us take the new monthly payment around the block. Instead, we are often so caught up on other aspects of the process that 30 days after moving in when that first payment is withdrawn, there can be a degree of post-closing payment shock.

Knowing your numbers in advance is one thing – living with the numbers in advance is another.

 

Here is a table for quick calculations of the possible increase in mortgage amount you may be considering:

Mortgage Amount Monthly Payment
$10,000 $45.75
$25,000 $114.37
$50,000 $228.74
$100,000 $457.48

*Based on a 2.69% 5yr fixed rate amortised over 25yrs.

The key to this is not simply doing the math and knowing what you future payments will be for the next 25 years. The key is to actually increase your current mortgage (via your prepayment privleges) by the corresponding amount so that you are making that new payment for a few months prior to taking action. Alternatively, you might choose to withdraw an amount equal to the proposed increase from your account and stash it in a ‘safe‘ place like a savings account, an actual safe, or a parents care. The key is to start replicating that new payment and confirm you can live with it prior to actually taking it on.

 

11 Sep

4 things that will kill your mortgage approval!

General

Posted by: Tracey Robinson

4 Things That Will Kill Your Mortgage Approval

4 Things That Will Kill Your Mortgage Approval

So, you’ve worked hard to save every penny and have managed to finally afford the down payment necessary on a home. You have searched high and low, only to find the house of your dreams at a price you can afford. Though your credit rating is good and you have a stable job, there are some key things to avoid while waiting for your mortgage to be approved.

Here are 4 things you must absolutely avoid to ensure that you get that dream house:

1. Buying a Vehicle

Your current car may have finally given up or a great deal has arisen, but before making any decision on a new vehicle, check with your mortgage professional. You need to ensure that the numbers you provided on your mortgage application hold true in order to be approved!

2. Changing your Credit or Payment Routine

Before putting extra money towards a debt or changing your payment schedule on any liability, you must check with your mortgage professional. Again, anything that doesn’t align to the information you provided on your mortgage application could put your approval in jeopardy.

3. Changing Jobs

There are many opportunities and challenges that come with any job, but before deciding to drastically change your employment situation, keep the following in mind:

  • If you are accepting a new position you need to ask if you will be given a probation period. Any mortgage lender will not accept probationary employment on a mortgage application.
  • If your income situation is changing, such as receiving bonuses, overtime, or commissions, you could be putting your approval in limbo. This is risky because these job perks require a 2 year history before a lender will accept them as income.
  • If you cannot stand your job any longer and are considering leaving the position, you need to talk to your mortgage professional immediately. The information you provide on your application must check out, especially when it comes to your employment. Most likely, you will need to wait to leave your job until after the mortgage has been approved and you’ve taken possession of the home or you’ll risk losing your dream house.
  • If you are considered a contractor or self-employed person, you must provide a 2 year history in order to be approved for a mortgage. If you are considering going into this line of work you’ll need to wait until after you take possession.

4. Making Payments Late

While waiting for your mortgage to be approved, make sure you make every payment early or on time! If your credit experiences even a slight drop because of a late payment or maxed out credit card, a lender will not approve your mortgage and will cancel the application.

Getting approved for a mortgage doesn’t have to be difficult! As long as you do your due diligence and know all the information, you will be on the path to a happy home-buying process. Contact Dominion Lending Centres to inquire about mortgage approvals. We’re always happy to lend a helping hand!

9 Sep

Weekly Rates – With rates at an all time low, there’s no better time to buy!

General

Posted by: Tracey Robinson

Tracey Robinson
Mortgage Broker
DLC White House Mortgages
Phone: 1-778-476-6096

Cell: 1-250-328-9096
Email: traceyrobinson@dominionlending.ca
http://www.traceyrobinson.ca



This edition of the Weekly Rate Minder has the latest, best rates for Canadian mortgages. At Dominion Lending Centres, we work on your behalf to find the mortgage that suits your needs. Best of all — our service is free.* It’s the selected lender that pays us and YOU get the best rate. *(O.A.C., E.&O.E.)

• Our Best National Rates
• Explore Mortgage Scenarios with Helpful Calculators on http://www.traceyrobinson.ca

Terms Bank Rates Our Rates
6 Month 3.14% 3.10%
1 YEAR 2.89% 2.29%
2 YEARS 2.84%

2.19%

3 YEARS 3.39% 2.25%
4 YEARS 3.89% 2.49%
5 YEARS 4.64% 2.54%
7 YEARS 5.30% 3.39%
10 YEARS 6.10% 3.84%

Rates are subject to change without notice. *OAC E&OE

 

Prime Rate is 2.70%


Variable rate mortgages from as low as Prime minus 0.65%

 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.

*O.A.C., E.& O.E.

 

  • We are Canada’s largest and fastest-growing mortgage brokerage!
  • We have more than 2,200 Mortgage Professionals from more than 350 locations across the country!
  • Our Mortgage Professionals are Experts in their field and many are ranked among the best nationally.
  • We work for you, not the lenders, so your best interests will always be our number one priority.
  • We have more than 100 mortgage programs, making it easy to choose the best fit for your unique situation.
  • We close loans in all 10 provinces and 3 territories.
  • We can process your mortgage in as few as 7 days.
  • We are the preferred mortgage lender for several of Canada’s top companies.
  • Dominion Lending Centres’ Mortgage Professionals are available anytime, anywhere, evenings and weekends – and we’ll even come to you!
9 Sep

No changes in Bank of Canada Rate

General

Posted by: Tracey Robinson

No Surprises From the Bank of Canada

Bank of Canada 
 
As expected, the Bank of Canada refrained from cutting interest rates at today’s policy meeting. The recent economic news has shown a marked improvement, precluding the Bank from following on the previous two rate cuts this year. The key policy overnight rate is only 50 basis points (one-half of one percentage points) and another 25 basis point (bp) cut would only reduce the Bank’s ability to take action, if needed, in the future.

The slowdown in the Canadian economy in the first half of this year had nothing to do with interest rates and had everything to do with the massive decline in oil prices. As the Bank has noted, “financial conditions are accommodative and provide considerable support to economic activity”.

In addition, a 25 bp rate cut would only translate into a 12-to-15 bp cut in mortgage and other consumer and business borrowing rates, as we have seen with the January and July cuts. The reason is the cost of funds for the lenders has risen relative to risk-free government five-year bond yields–normally linked to mortgage rates–as investors risk appetites have declined. This rise in so-called credit spreads reduces the stimulative effect  of any rate cut by the Bank of Canada. 

Moreover, the interest-sensitive sectors of the Canadian economy–housing, autos and other durable goods purchases–are already booming. Business investment has declined sharply, but only in the oil patch, which would not be reversed by lower interest rates. Another rate cut would only encourage increased household indebtedness and, at the margin, make little difference. 

The good news is that the U.S. economy has rebounded sharply from the first quarter slowdown, with second quarter growth of 3.7 percent surprising on the high side. This has helped to boost Canadian exports, particularly for autos and aircraft. As the Bank expected, the weaker Canadian dollar has spurred the demand for Canadian products in the U.S. and elsewhere.

To be sure, the Chinese economy has slowed, putting downward pressure on certain commodity prices important to Canada’s exports, but the pick up in the U.S. has finally provided a meaningful offset.

The Bank of Canada is at last seeing the stimulative effects of its earlier rate cuts and is confident that the five-month decline  in economic activity has halted with the stronger-than-expected 0.5 percent growth in June. The increase in June was broad-based. Also, more recent data show a strong uptick in employment growth. Third quarter GDP growth is in train to meet or exceed the Bank’s forecast of 2.5 percent, a welcome reversal of the first-half slide. 

While core inflation has been about 2 percent, the Bank judges that the underlying trend in inflation remains at about 1.5 to 1.7 percent. 

To be sure, the heightened volatility in financial markets, the slowdown in emerging economies and the potential further decline in oil prices will keep the Bank ever watchful. If the rebound in economic activity peters out later this year, which I doubt, the Bank will act quickly to cut rates once again. The next policy announcement date is October 21, just two days after the Federal election.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres

8 Sep

Verifying Your Down Payment

General

Posted by: Tracey Robinson

Verifying Your Down Payment:

What You Need To Know

Verifying Your Down Payment - What You Need To Know

 

Saving for a down payment is often one of the biggest challenges facing young people looking to break into the real estate market.  The source of your down payment could come from your own savings, a gift from a family member, your RRSP if you’re a first time home buyer or from the proceeds of selling your current home.

No matter where your down payment comes from, one thing that is for certain is your lender will be verifying your down payment prior to full approval.  It’s required by all lenders to protect against fraud and to prove that you are not borrowing your down payment, which can change your lending ratios and your ability to repay your mortgage.

Documents You Will Need To Show When Verifying Your Down Payment

1. Own Savings/Investments:  If you’ve saved enough money for your down payment, congratulations!  What your lender will want to see is a 3 month history of any source accounts used for your down-payment such as your savings account, TFSA (Tax Free Savings Account) or Investment account.

Your statement will need to clearly show your name and your account number.  Any large deposits outside of your normal contributions will need to be explained i.e.  you sold your car and deposited $12,000 or you received your bonus from work.  If you have transferred money from one account to another you will need to show a record of the money leaving one account and arriving in the other.  The lenders want to see a paper trail of where the money came from and how it got in your account.  This is mainly to combat money laundering and fraud.

2. Gifted Down Payment:  Especially in the pricey Metro Vancouver and Toronto real estate markets, the bank of Mom and Dad is becoming a more popular source of down payments for young home buyers.  You will need a signed gift letter from your family member that states the down-payment is indeed a gift and no repayment is required on the funds.

Be prepared to show the funds on deposit in your account no later than 15 days prior to closing.  Again, the lender wants to see a transaction record.  i.e. $25,000 from Mom’s account transferred to yours and a record of the $25,000 landing in your account.  Documents must show account number and name.

Gifted down payments are only acceptable from immediate family members (parents, grandparents, siblings). You can learn more about gifted down payments and get a sample gift letter here.

3. Using your RRSP:  If you’re a First Time Home Buyer, you may qualify to use up to $25,000 from your Registered Retirement Savings Plan (RRSP) for your down payment.  To see if you qualify for the Home Buyer’s Plan to use your RRSP’s as a down payment visit here.  You will need to complete a Form T1036 to withdraw your funds without penalty.

Verifying your down payment from your RRSP is just like verifying from your savings/investment accounts.  You will need to show a 3 month history via your account statements with your name and account number on them.  Funds must have been in your account for 90 days.

4. Proceeds From Selling Your Existing Home:  If your down payment is coming from the proceeds of selling your current home then you will need to show your lender a fully executed purchase and sale agreement between you and the buyer of your home.  If  you have an outstanding mortgage on the property, be prepared to provide an up-to-date mortgage statement as well.

5. Money From Outside Of Canada:  Using funds from outside of Canada is acceptable but be prepared to have the money on deposit in a Canadian financial institution at least 30 days before your expected closing date.  Verifying your down payment from overseas will also require that you provide a 90 day history of your source account.

No matter what the source is, verifying your down payment will require you to show documentation of where the money originated from and be ready to explain any large deposits.  Making regular contributions into your savings or investment accounts will help develop a pattern of deposits and avoid any red flags.  Don’t stockpile your cash and make large lump-sum deposits.

Most lenders will want to see that you have 1.5% of the purchase price on deposit as well to cover your closing cost.  If you buy a home for $650,000 you will need a minimum of 5% down ($32,500) and another $9,750 (1.5%), for your closing cost.  You will need to show a total of $42,250 available on deposit.

Thanks for reading and if you need more information, please don’t hesitate to contact me at 250-328-9096!

4 Sep

Fall Lawn Care

General

Posted by: Tracey Robinson

 

Home Owner 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:

1) 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;

2) Fertilize. Basically this means feed your lawn before it goes to sleep for the winter;

3) Overseed. This is when you spread new grass seed all over your existing lawn with a spreader; and

4) 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.