Introducing EnRICHed Academy

Dominion Lending Centres is proud to announce the launch of EnRICHed Academy’s “Smart Start for Financial Genius”! This program has been designed to educate young adults (13-23) and their families on the fundamentals that build wealth in an entertaining, funny and entirely interactive way. No program like this currently exists, and the need and demand across North America is at an all-time high. This is our way of giving back to communities across Canada, ensuring our youth embrace financial literacy. Click here to view the EnRICHed Academy trailer on YouTube. Why we created EnRICHed Statistically, 6 out of 10 Canadians live paycheque to paycheque, which means if their income stopped for only one pay period they’d have to rely on a Line of Credit or Credit Card to make ends meet  From 1989 to 2006, total credit card charges rose from $69 Billion to $1.8 Trillion; a 2,600% increase  Today the average household credit card debt is $16,007 The yearly savings rate of an average Canadian has gone from over 12% of income in the early 90s to under 2% today Household debt in Canada has more than doubled over the past 10 years 84% percent of college graduates in North America indicated they needed more education on financial management topics. Parents expect the schools to teach financial literacy and schools expect parents to. The fact is, most parents and teachers are ill equipped to teach students and kids on this subject and, therefore, don’t

The average college graduate is $23,186 in debt What EnRICHed looks likeThe program comes in a box and contains 5 DVDs of entertaining but highly educational video on creating a foundation for building wealth. There is a 100-page workbook that the family will work through that includes activities and exercises as well as other materials that correspond with the topics covered in the program. 15 key topics covered by EnRICHed Understanding money 101 Why some people don’t save money… no matter how much they make How much we actually spend at an early age Saving money vs Making money Why starting to save at an early age is critical The magic behind compound interest and how it works How to buy your first investment property by the age of 23 How to get into the stock market How credit cards work Good debt vs Bad debt How taxes work on a paycheque Why goals are critical to building wealth The difference between a dream and a goal How to write down goals and take action The importance of building your personal brand Feel free to give me a call or send me an email if you’d like to learn more about EnRICHed Academy.

It Can Pay to Break Your Mortgage

With mortgage rates still hovering near historic lows, chances are you’ve considered breaking your current mortgage and renewing now before rates rise any further. Perhaps you want to free up cash for such things as renovations, travel or putting towards your children’s education? Or maybe you want to pay down debt or pay your mortgage off faster? If you’ve thought about breaking your mortgage and taking advantage of these historically low rates, feel free to give me a call to discuss your options. In some cases, the penalty can be quite substantial if you aren’t very far into your mortgage term, but we can determine if breaking your mortgage now will benefit you long term. People often assume the penalty for breaking a mortgage amounts to three months’ interest payments so, when they crunch the numbers, it doesn’t seem so bad. In most cases, however, the penalty is the greater of three months’ interest or the interest rate differential (IRD).

The IRD is the difference between the interest rate on your mortgage contract and today’s rate, which is the rate at which the lender can relend the money. And with rates so low these days, the IRD tends to be greater than three months’ interest. Because this is a way for banks to recuperate any losses, for some people, breaking and renegotiating at a lower rate without careful planning can mean they come out no further ahead. Keep in mind, however, that penalties vary from lender to lender and there are different penalties for different types of mortgages. In addition, the size of your down payment and whether you opted for a “cash back” mortgage can influence penalties. While breaking a mortgage and paying penalties based on the IRD can result in a break-even proposition in the short term, if you look at the big picture, you’ll see that the true savings are long term – as we know that rates will be higher in the years to come. Your current goal is to secure a long-term rate commitment before it’s too late, and here lies the significant future savings. As always, if you have questions about breaking your mortgage to secure a lower rate, or general mortgage questions, I’m here to help!

Three Holiday Spending Tips

Whether you’re planning for Christmas, Hanukkah, a big New Year’s Eve party, a trip to visit family or friends, or a winter vacation, the time is now to get your finances in order to avoid debt and regrets that can lead to the holiday blues. The season of gift-giving and fellowship too often creates the spirit of giving far beyond what you can realistically afford. But if you start now you can be holiday guilt- and debt-free for the New Year. Here are three tips to help you stay on track. 1. Create Expectations and Family Buy-In.You may have a magic budget number in mind, but unless everyone is willing to stick to it, then the target is useless. The key is to communicate with family members and begin planning now to avoid last-minute weaknesses and over-buying. Minimal lifestyle changes such as skipping dessert in a restaurant, packing a lunch, or renting fewer movies can help save money that can be earmarked for the holidays. Kids can contribute to a coin jar and learn about the value of saving as well.

2. Make a List & Definitely Check it Twice.Record everyone on your gift-giving list and be sure to check it twice. Set recommended amounts and then keep track of spending along the way. Recognize that over-spending in one area means that you must reduce costs in another – a notion that’s easier said than done when you’re in the throes of the holiday spirit. Check your list for necessities and consider changing the amount of a gift if your budget is looking tight. Remember that it really is the thought that counts! 3. Say No to Last-Minute Temptations. Stores know the temptation of exquisite decor displays and fabulous clothing that lead to impulse purchases and, with it, a case of buyer’s guilt later. Be strong and don’t give in. A pass on that $100 lush velvet skirt today may ultimately lead to a much happier and financially-fit spring season next year. A general guide: if it’s not on your “approved” list, then the answer is no. Exceptions can occur, of course, on last-minute party invites or occasions, but keep close watch on overall costs.

Refinancing to Ease Holiday Spending Woes

Planning ahead really can save you money down the road. And with the high-cost holiday gift-buying and entertaining season quickly approaching, this may be the perfect time to refinance your mortgage and free up some money instead of relying on high-interest credit cards. You may find that taking equity out of your home will help bring joy back into your holiday season – and start the New Year off on a debt-free note, as you may also be able to use some of the equity in your home to pay off high-interest debt such as your credit card balances. This will enable you to put more money in your bank account each month. And since interest rates continue to hover near historic lows, switching to a lower rate may save you a lot of money – possibly thousands of dollars per year. There are penalties for paying your mortgage loan out prior to renewal, but these could be offset by the lower rates and extra money you could acquire through a refinance. I can sit down with you and work through all of the equations to ensure this is the right move for you. With access to more money, you’ll be better able to manage both your holiday spending and existing debt. Refinancing your mortgage and taking some existing equity out could also enable you to do many things you’ve been

longing to accomplish – such as purchasing an investment property, taking that well-deserved vacation, renovating your home or even investing in your children’s education. Paying your mortgage down faster By refinancing, you may extend the time it will take to pay off your mortgage, but there are many ways to pay down your mortgage sooner to save you thousands of dollars in interest payments. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This will also help reduce your amortization period (the length of your mortgage), which, in turn, saves you money. You can also increase the frequency of your mortgage payments by opting for accelerated bi-weekly payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage. By refinancing now – before the holiday season is in full swing – and planning ahead, you can put yourself and your family in a better financial position. As always, if you have any questions about refinancing, reducing debt or paying down your mortgage quicker, I’m here to help!

DIY or an Expert's Touch?

Many homeowners these days are willing to get their hands dirty with home improvement projects in the hopes of saving money – especially with the fabulous free courses being run by many home improvement superstores on an ongoing basis. But although some projects can be tackled by homeowners, the do-it-yourself (DIY) route isn’t always the most economical – or safest, for that matter. It’s often difficult to determine if a project entails more than you can realistically handle. Most people tend to gauge the complexity of a project by doing research online, as some DIY websites grade a project’s difficulty. But you should also look at the tools that are required for the job. If you come across complex tools you know little about, it may be best to call in an expert. If you’re unsure about your ability to correctly finish a project, get an expert opinion before proceeding. Sometimes, you may end up spending more money to repair a bungled DIY job than if you had hired someone to do it right from the onset of the project. Following are some examples of when you may want to consider turning to a pro: When safety is an issue. Getting involved with your home’s electrical system can be risky. Not only could you be electrocuted, but doing a job incorrectly could also create a safety hazard within your home’s structure. Another often unsafe DIY project includes extending a gas line. If you don’t know how to check for gas leaks, for instance, this DIY project could lead to an explosion or carbon monoxide poisoning. As well, if you’re considering tackling a project that involves heights, make sure you have the know-how to safely complete the job or call in an expert. Even some power tools can be beyond your capabilities and result in serious injury or death. It’s always important to remember that potential money savings aren’t worth risking safety.

When water is involved. Leaks and water damage can lead to more costly and complicated repairs. If left unfixed, they can lead to mould, which affects air quality and, if found during an inspection, can be a deal breaker on a home sale. Water-related projects don’t have to strictly involve your home’s pipes. Putting in a skylight may seem like a DIY job you can handle. Do it incorrectly, however, and you could end up with a leaky roof, water damage and mould. If the costs of materials or tools are too high. Sometimes the costs of materials and the expense associated with making a mistake are enough to make hiring an expert a no-brainer. For something like crown moulding, for instance, you need an expensive tool and the material itself is costly. A kitchen cabinet can cost a couple hundred dollars and, if you order incorrectly, there may be a restocking fee and special orders may be non-returnable. Being off on measurements for granite countertops can also prove to be a costly error. If the project is too big. If you’re planning on replacing all the windows in your home or remodelling your kitchen, think twice about how much of the project you want to take on yourself. Often, you can leave the heavy lifting to the experts, and work on the finishing touches, such as painting or tiling backsplashes. But, while installing hardwood or laminate flooring can be a good DIY project, its complexity will largely be determined by its scale. For instance, installing laminate flooring in a small, square bedroom is often manageable for homeowners to do on their own. But doing a larger-scale flooring project – involving a transition between rooms or perhaps around a kitchen island – is where people often get tripped up. If you decide to call in an expert, make sure you do your research, get multiple quotes, ask friends and family for referrals and check references. Unfortunately, there are many contractors who claim to know what they’re doing and then get in over their heads, which could end up costing you in the end as well. Remember that when doing renovations, I may be able to help find an economical financing solution for you by accessing your home equity.

Quick Tips for Boosting Credit

Planning ahead to ensure your credit is healthy before applying for a mortgage can translate into a better mortgage rate and product – which can save you significant money throughout the term of your mortgage. Following are five steps you can use to help attain a speedy credit score boost: 1) Pay down credit cards. The number one way to increase your credit score is to pay down your credit cards. Revolving credit like credit cards seems to have a more significant impact on credit scores than car loans, lines of credit, and so on. 2) Limit the use of credit cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there is a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you may have paid the balance off the next month. 3) Check credit limits. If your lender is slower at reporting monthly transactions, this can have a significant impact on how other lenders may view your file. Ensure everything’s up to date as old bills that have been paid can come back to haunt you. Your best bet is to pay your balances down or off before your statement periods close.		4) Keep old cards. Older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. As such, the cards can lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the cards for a long time. You should use these cards periodically and then pay them off. 5) Don’t let mistakes build up. You should always dispute any mistakes or situations that may harm your score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation. If you have repeatedly missed payments on your credit cards, you may not be in a situation where refinancing or quickly boosting your credit score will be possible. Depending on the severity of your situation – and the reasons behind the delinquencies, including job loss, divorce, illness, and so on – I can help you address the concerns through a variety of means and even refer you to other professionals to help get your credit situation in check. As always, if you have any questions about you credit situation or your mortgage in general, I’m here to help!

The Value of a Rate Hold

Securing a rate hold is like having insurance on your mortgage rate – you no longer have to worry about mortgage rates increasing while you find your new home over the next 90-120 days. And if rates drop within that same period, so too will your preapproved rate.

For instance, if you obtain a 3.39% rate hold and then global risks subside and the economy strongly recovers over the next three to four months, that 3.39% could easily jump to 4% or higher. In this case, your rate hold for 3.39% would have saved you more than half of a percentage point, which would translate to a savings of a significant amount of money over the term of your mortgage.

But a rate hold means nothing if you don’t meet the lender’s qualifications. By obtaining a pre-approval and a rate hold, you can be confident you have access to mortgage financing and you’ll know how much you can spend before you head out shopping for a property.

It’s important to note, however, that there is a significant difference between being pre-approved and prequalified. In order to obtain a pre-approval, the lender fully underwrites the deal, whereas with a prequalification only the most basic details are considered. Remember that many banks will only issue a prequalification, while mortgage brokers will ensure you’re pre-approved.

Certified Financial Planner (CFP) / mortgage broker

Broker: Industry set to double number of CFP/mortgage brokers

_{By Vernon Clement Jones} 


A CFP/broker is predicting the mortgage industry will more than double its number of dually-certified professionals in the next five years as brokers look to differentiate themselves from the madding crowd and broaden their usefulness to clients.

“What people will do is look at the CFP designation and want to have that prestige behind them,” Greg Stanley,  head of Home n Work Mortgages and one of an estimated 20 mortgage professionals across Canada now holding Certified Financial Planner certifications. “I see the current number of us more than doubling in the next five years, with brokers who are of the mindset taking the CFP courses over a couple of years as a way of broadening their utility to the client, but also of better marketing themselves and truly becoming trusted advisors to their clients.”

That expanded advisory role effectively encompasses both asset and debt management. It also holds the potential to significantly strengthen the broker’s referral network, said Stanley, pointing to added credibility attached to the CFP, especially among other CFPs and other financial advisors.

“I give 20 talks a year to financial planners who are duly licensed in both the  insurance and mutual fund industries,” he told MortgageBrokerNews.ca. “Most recently, I spoke to 278 Canadian financial planners in Las Vegas that were all attending a National Advisor Conference about paying off mortgages faster to build faster net worth with their cleints. This is something I probably wouldn’t have been able to do without the designation as I am able to 'talk the talk and walk the walk' with my fellow advisors.

Outside of referrals, the designation has also been an important calling card with clients, often with little to no knowledge of the AMP certification Stanley also holds, but a much broader understanding of the CFP.

The difference in name recognition isn’t lost on CAAMP.

The Financial Planning Standards Council’s CFP, in fact, scored better on CAAMP’s own consumer recognition testing, with 50 per cent of respondents to a recent poll indicating awareness. Only 17 per cent answered the same in regards to the AMP.

Critics charge that discrepancy indicates that CAAMP hasn’t done enough to promote the designation. The association’s most recent numbers undercut that argument, said CAAMP Chair Joe Pinheiro. Of the $641,830 in AMP dues collected for the year ended April 30, 2011, he said, $607,269, or 94.6 per cent, was spent on advertising. “The reality is that that is still a pretty small sum in terms of promoting the AMP nationally,” Pinheiro said, suggesting brokers may need to adjust expectations.

The mortgage broker designation may be years away from catching up to the rigorous testing standards of other financial advisory certifications, including the CFP. It’s something that may ultimately limit the number of mortgage professionals willing to invest the time and money needed to take the mandated courses.

Still, that academic heavy lifting has the potential to strengthen the work brokers are already doing, Stanley suggested, pointing to the CFP emphasis on helping clients develop both short- term objectives and long term goals but also in continually monitoring their progress, long after the initial origination.

It’s why Stanley focuses on equipping clients with a cash management software program, which takes an holistic approach to debt management.

“The most important thing a mortgage broker should do is make sure that the client eliminates debt as fast as possible,” he told MortgageBrokerNews.ca. “If you improve someone’s mortgage freedom date then you’ve made a client/friend for life.”


Source: http://www.mortgagebrokernews.ca
Link: 'Click Here' 

5 Questions Every Borrower Should Ask

As a mortgage borrower – particularly if this is your first time embarking upon homeownership – there’s no doubt you have a load of questions related to the mortgage process. Aside from the most common questions, such as those relating to mortgage rate, the maximum mortgage amount you’ll be able to receive, as well as how much money you’ll need to provide for a down payment, the following five questions and answers will help you dig a little deeper into the mortgage financing process. 1. Can I make lump-sum or other prepayments on my mortgage without being penalized? Most lenders enable lump-sum payments and increased mortgage payments to a maximum amount per year. But, since each lender and product is different, it’s important to check stipulations on prepayments prior to signing your mortgage papers. Most “no frills” mortgage products offering the lowest rates often do not allow for prepayments. 2. What mortgage term is best for me? Terms typically range from six months up to 10 years. The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate and a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this isn’t always the case. Sometimes there are other factors – either in the financial markets or in your own life – you’ll also have to take into consideration. If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you’ll be able to afford your mortgage payments should interest rates increase. 3. Is my mortgage portable? Fixed-rate products usually have a portability option. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current rate. With variable-rate mortgages, however, porting is usually not available. This means that when breaking your existing mortgage, you will face

a penalty. This charge may or may not be reimbursed with your new mortgage. Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day, while others offer extended periods. 4. What amortization will work best for me?The lending industry’s benchmark amortization period is 25 years, and this is also the standard used by lenders when discussing mortgage offers, as well as the basis for mortgage calculators and payment tables. Shorter or longer timeframes are also available – up to 30 years. The main reason to opt for a shorter amortization period is that you’ll become mortgage-free sooner. And since you’re agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced. A shorter amortization also affords the luxury of building up equity in your home sooner. While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. Because you’re reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you’re paid commission or if you’re buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be your best option. 5. How do I ensure my credit score enables me to qualify for the best possible rate? There are several things you can do to ensure your credit remains in good standing. Following are five steps you can follow: 1) Pay down credit cards. This the #1 way to increase your credit score. 2) Limit the use of credit cards. If there’s a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you may have paid the balance off the next month. 3) Check credit limits. Ensure everything’s up to date as old bills that have been paid can come back to haunt you. 4) Keep old cards. Older credit is better credit. Use older cards periodically and then pay them off. 5) Don’t let mistakes build up. Always dispute any mistakes or situations that may harm your score by making the credit bureau aware of each situation. As always, if you have any questions about the information above or your mortgage in general, I’m here to help!

Magazine Article: Down Payment, Down Payment, Down Payment

Here is a recent article I wrote for the July issue of the New Condo Guide:

Down payment, Down payment, Down payment

Much like the tenet of real estate is ‘location, location, location’, the tenet for mortgage financing is ‘down payment, down payment, down payment’. Understanding the various options available for providing a mortgage down payment is critical and could lead to significant savings, or simply being able to purchase a home that you may have believed was out of your reach.

First, a conventional mortgage requires the buyer to make a down payment of 20% or more towards the purchase price of the home. If the buyer isn’t able to put 20% down, the mortgage becomes high-ratio, which means the buyer is putting down somewhere between the minimum 5% and 20% (there are also ‘no money down’ options, but more on that below).

Down Payment Sources

Down payment sources are either referred to as ‘traditional’ or ‘non-traditional’.

Most buyers use savings or investments as the source of their down payments. Typically, lenders will require three months’ history or statements to prove the gradual accumulation of assets.

RRSP withdrawals are another common source for down payments. The government has set up the Home Buyers’ Plan (HBP) as a means for first-time homebuyers to use up to $25,000 (each) of their RRSPs as a down payment on the purchase of a home. This is essentially an interest-free loan and, as with most loans, the amount borrowed has to be repaid – 1/15^th of the total amount each year. Another stipulation is that the funds have to be in the RRSP account for a minimum of 90 days.

There are a number of other rules and qualifications for the HBP, so buyers should speak with a mortgage broker to clarify the details.

Gifted down payments round out the top three sources of down payments. Lenders have specific guidelines when it comes to this source of down payment. The gift must come from an immediate family member – mom, dad, brother, etc. It has to be a gift and not a loan of any kind. Typically, a gift letter is required to confirm the funds are not part of a loan.

The non-traditional sources of down payment can be lumped together as the ‘zero’ down options. Zero down means the buyers are not using their own verifiable assets to form the down payment.

There are certain situations, such as where the buyer has significant income but simply doesn’t have funds for a down payment, where they could use borrowed funds or the ‘flex’ down program – qualifying for both the new mortgage and the credit facility providing the down payment.

Cash-back is the other significant source of non-traditional down payment. This program was set up to assist buyers using a significant amount of their saved assets to purchase a home, but who would be left with minimal resources to complete the transaction (lawyer fees, closing costs, etc). A maximum of 5% was given as a cash-back to pay for the additional cost associated with purchasing a home. The program has manifested itself into the 5% cash-back being used as the actual down payment. Essentially, this is a variation of the ‘flex’ down program, and lenders are only willing to provide this type of mortgage to borrowers with good credit and repayment history (credit scores at 650+). There are other factors to consider with a ‘zero’ down or cash-back mortgage, so again speak with a mortgage professional.

There’s an endless amount of information available to prospective homeowners – through the Internet, friends, family members and anyone willing to voice their opinion on a given subject. Speaking to a licensed mortgage professional and obtaining a mortgage preapproval prior to setting out home shopping can help set your mind at ease, and truly let you know where you stand when it comes to a home you can comfortably afford.

Beyond the Banks: Mortgage options outside the major banks

Beyond the Banks

As we use and rely on the Internet more each day, the World Wide Web truly is changing the way we view the world and interact throughout our day-to-day lives.

Last May, Statistics Canada released data showing that more than 73% of Canadians used the Internet in 2007. That number jumped to 80% in 2009. An article in the Globe and Mail this March suggests that the average Canadian spends 43 hours per month on the Internet, compared to the world average of 23 hours per month. This gives Canadians ‘tops in online engagement’. This level of engagement means that Canadians are confident and comfortable online.

One aspect that has changed considerable over the past few years is online banking and financial transactions. Companies such as ING Direct and PC Financial were novelties just a few years ago, but have since become household names. At the time that we started to see their magnetic orange branding, ING didn’t have any ‘bricks and mortar’ branches. Years later we still don’t see ING branches, but we all know ING and what they represent: innovation, savings and not your ‘traditional’ bank.

The savings that ING was able to pass on to customers is also true for the mortgage industry. As many are finding out, there are many options available outside ‘The Big Five’ banks. But as Canadians secure more financing outside the ‘Big 5’ do they know these other institutions? Many of these companies fund billions of dollars each year but, unlike ING, they don’t have flashy advertising. They too don’t have traditional ‘bricks and mortar’ branches and overhead costs, instead passing these savings on to clients in the form of more mortgage options and lower rates.

Below are just a few of the non-bank lenders available:

In 1995, CIBC bought FirstLine Trust and transformed it into FirstLine Mortgages, a division of CIBC Mortgages Inc. FirstLine focuses on selling mortgages through independent mortgage brokers and is a leading issuer of mortgages through mortgage brokers in Canada. CIBC has invested in FirstLine and, as a result, FirstLine has grown from originating $0.5 billion in mortgages in 1995 to originating $10 billion in 2005: www.firstline.com

First National Financial (TSX: FN) is a Canadian-based originator, underwriter and servicer of predominantly prime residential and commercial mortgages. With more than $53 billion in mortgages under administration, First National Financial is Canada’s largest non-bank originator and underwriter of residential mortgages, and is ranked third in market share in the growing mortgage broker distribution channel: www.firstnational.ca

Since commencing operations in 2007, Street Capital has rapidly grown to become a significant and successful participant in the prime residential mortgage market in Canada, originating more than $5.3 billion in mortgages to date. Street Capital was ranked 8^th in the Canadian mortgage broker channel in terms of mortgages originated during the quarter ended September 30^th, 2010.

Recently Counsel Corporation (TSX: CXS) signed a non-binding letter of intent to acquire 100% of the outstanding shares of Street Capital. Counsel Corporation is a private equity investor and alternative asset manager: www.streetcapital.ca

MCAP is Canada’s largest independent mortgage and equipment financing company, with more than $25 billion in assets under administration. The company operates in four key lines of business: residential mortgages, commercial mortgages, construction loans, and equipment financing. MCAP originates, underwrites, securitizes and services mortgages, and has more than 100 institutional investors and more than 130,000 borrowers: www.mcap.com

Institutions such as the ones described above are typically at the forefront of bringing innovations to the mortgage industry with unique mortgage features, payment options and payment frequencies. Although these institutions are not considered banks, they have to follow the same rules, regulations and underwriting guidelines as the major banks. These non-bank lenders and many others help create a robust and competitive mortgage industry in Canada. 

Variable vs Fixed Mortgages

Here is a graph from Firstline Mortgages showing the comparison between fixed and variable mortgage rates over the past 25 years - Historically variable has been the way to go.

My article in the New Condo Guide. Feb4 - Mar4, 2011

New rules to address a long-term problem.

Finance Minister Jim Flaherty introduced new changes to mortgage rules to address a long-term problem -- Canadians carrying an historically large amount of debt. The recent financial crisis may have brought more attention to this growing problem, and this is the government’s way of trying to avoid anything like what we have seen in the United States.

Mortgages are one of the largest household expenses and one of the few areas the government can still impact consumer spending. The government attributes a lot of the growing problem to high-risk mortgages, credit card debt, longer mortgage amortizations and the Home Secured Line of Credit (HELOC).

The new changes are aimed chiefly at these issues:

•  The amortization period is reduced to 30 years from 35 years

•  The loan to value available for refinancing your home is 85%

•  Secured lines of credit will no longer be insured, maximum loan to value will now be 80%.

This would not be the first time the government has taken action in the mortgage market. In 2008, the Government reduced 40-year amortizations to 35 years, eliminated the 100% financing and the interest only mortgages. So the Finance Ministry is slowly repealing some of the more ‘lenient’ lending practices from a few years ago.

  

Two of the three changes address the concern the government has with Canadians taking on too much debt, that being, the changes to refinances and HELOCs. Essentially, those are the two methods that some Canadians use to take on large amounts of 'Bad' debt, debt that is used to purchase depreciating assets or consumer goods versus 'Good' debt, debt used to purchase investments, start a business or buy appreciating assets like real estate.

Regarding the reduction in amortization to 30 years, it affects the homebuyer, but only marginally. Payments are approximately $100 more per month on a 30-year amortization versus a 35-year based on $300,000 mortgage at today’s rates.

Although these changes may restrict the number of individuals that qualify for a mortgage, it may provide the incentive to those considering a home purchase to act.  Three compelling reasons to purchase sooner, rather than later:

•  Recent correction in Home prices

•  Interest rates are still at historic lows

•  Pending mortgage rule changes

These are prudent steps the government has taken to tackle a long-term problem. Hopefully potential homebuyers not only take advantage of the current low interest rates and home prices, but also take a serious look at their finances and make a responsible decision on their next home purchase.  

Edmonton Reno Show

My colleague Stacey Petruch and I will be participating in this year's Reno Show.  Feb. 4-6, 2011

We will have information on:

• Ways to make your home more energy-efficient
• Hiring a Contractor
• Tips on renovating your Windows/Doors
• Tips on renovating your Bathroom
• Tips on renovating your Kitchen 

And obviously, we'll be there to answer your questions on how to pay for it all. Stop by our booth, say hello and enter our draw to win a new iPad. 

Future tools for future homeowners

People shopping for new homes will have more power in their pockets this spring, as banks and real estate companies unroll a host of branded mobile applications intended to help consumers find their dream house.

Mobile apps have been slow to appear in the Canadian marketplace, as the companies that hold the data have been loath to give up control of the information needed to power them. But a ruling from Canada’s Competition Bureau that encouraged the real estate industry to throw open its multiple listings service has forced the industry to adopt new methods of fostering loyalty among the clients it depends upon for commissions.

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Source: The Globe and Mail

Are U.S. brokers giving Canadian brokers a bad name?

Canada’s mortgage brokers are voicing concerns that negative press in the United States is hurting their business, and their reputations. 

 The findings are a result of a survey of over 500 Canadian mortgage brokers conducted by the Real Estate and Mortgage Institute of Canada (REMIC), which found that 72 per cent feel that they are being inaccurately tarnished by their American counterparts. Broken down by province the numbers varied however, with 80 per cent in Ontario, 78 per cent in BC and 56 per cent in Alberta agreeing with the statement.

 “Canadians have been inundated with stories of how mortgage brokers in the United States, due to questionable business practices, contributed to the American mortgage meltdown,” said REMIC President Joseph White. ”Canadian mortgage brokers typically employ sound business practices, are highly regulated and ongoing surveys show that their customers exhibit high levels of customer satisfaction, a far different experience than what has been reported in the United States.

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Source: mortgagebrokernews.ca

Major changes to Mortgage Rules.

Finance Minister Jim Flaherty announced major changes to mortgage rules effective in 60 days. Amortization period reduced to 30 years from 35 years. Further, Canadians can only refinancing their mortgages to 85 per cent from 90 per cent of the value of their homes. The other change, Flaherty has withdrawn government insurance backing on lines of credit secured by homes.