26 Oct

So, you need a tenant.

General

Posted by: Kevin Green

So, you need a tenant.

If you have a basement suite or rental property and you are currently looking for a tenant, there are some things to know! Whether this is your first tenant or you have other rental properties, it is a good idea to familiarize yourself with the specifics to ensure a harmonious tenancy.

As always, your responsibility as the landlord is to keep your rental properties in good condition and ensure they meet health, safety, and housing standards. However, as a landlord, you also have additional responsibilities around the rental agreement and tenant regulations.

Tenancy Agreement

Landlords are required to prepare a written agreement for every tenancy. Bear in mind, if this agreement is not prepared the standard terms for your province will still apply, especially if a security deposit is paid. This agreement should clearly outline the following:

  • Who the agreement is between
  • The length of the tenancy
  • Rent amount and due date
  • Required deposits (if any)
  • Pet restrictions (if any)
  • Additional terms (smoking or non-smoking, etc)

The tenancy agreement should also outline if there is the ability to add a roommate, and whether or not utilities, parking, storage, laundry, etc. are included.

Deposits

Typically, a security or damage deposit is requested by the landlord to establish tenancy and cover any unexpected issues that may arise. The deposit can be no more than half of the first month’s rent.

If you are charging a pet deposit fee, note that guide or service pets are exempt from any damage deposits. In addition, you cannot charge fees beyond the pet damage deposit.

Move In

To ensure the move-in goes smoothly, tenants and landlords should schedule a move-in time that works for everyone. At the beginning of the tenancy, you may also consider an inspection before the new tenant has moved in to ensure everyone is on the same page and the condition of the unit is clear in regard to any potential damages or fixes needed.

As a landlord, you are also responsible for changing the locks (at your cost) should the new tenant request it.

Additional Considerations

As a landlord, you will want to assess the suitability of any new tenant before signing the agreement. There are a few things you can do to ensure a smooth process and the right choice of tenant:

  • Ask for proof of identity
  • Thoroughly check all references
  • Contact previous landlords to ask about rental and payment history
  • Conduct a credit check to confirm income and financial suitability
  • Get the names of all persons to be living in the rental unit

Once you have reviewed the above, you will be in a good position to determine if the potential tenant is a good fit for the rental space.

However, keep in mind that you cannot refuse to rent to a tenant based on any discriminatory aspects such as race, gender, sexual orientation, religion, etc. In addition, you cannot refuse to rent to individuals on income assistance.

While it can seem like a lot, with the proper preparation and understanding of tenant laws and regulations in your area, you can ensure a smooth and successful rental process!

 

First Published by DLC Marketing Team Oct 17 2023

11 Feb

Staying Out of the Penalty Box

Mortgage Tips

Posted by: Kevin Green

When it comes to mortgages, it is easy to focus on the rates and your current situation, but the reality is that life happens and when it does, rates won’t be the only thing that matters.

First and foremost, the most important thing to remember is that a mortgage is a contract. That means that there is a penalty involved if the contract is ever broken. This is something that every homeowner agrees to when you sign mortgage paperwork, but it can be easy to forget – until you’re paying the price.

why break your mortgage?

You’re probably wondering why you would ever break your mortgage contract? Well, you might be surprised to find out that 6 out of 10 mortgages in Canada are broken within 3 years and there are typically nine common reasons that this happens:

  • Sale and purchase of a new home
  • To utilize equity
  • To pay off debt
  • Cohabitation, marriage and/or children
  • Divorce or separation
  • Major life events (illness, unemployment, death of a partner)
  • Removing someone from title
  • To get a lower interest rate
  • To pay off the mortgage

It is always important to think ahead when signing a mortgage agreement, but not everything can be planned for. In that event, it is important to understand the next steps if you do indeed need to break your mortgage.

calculating penalties

Typically, the penalty for breaking a mortgage is calculated in two different ways. Lenders generally use an Interest Rate Differential calculation or the sum of three months interest to determine the penalty. You will typically be assessed the greater of the two penalties, unless your contract states otherwise.

INTEREST RATE DIFFERENTIAL (IRD)

In Canada there is no one-size-fits-all rule for how the Interest Rate Differential (IRD) is calculated and it can vary greatly from lender to lender. This is due to the various comparison rates that are used.

However, typically the IRD is based on the following:

  • The amount remaining on the loan
  • The difference between the original mortgage interest rate you signed at and the current interest rate a lender can charge today

In this case, these penalties vary greatly as they are based on the borrower’s specific mortgage and the specific rates on the agreement, and in the market today. However, let’s assume you have a balance of $200,000 on your mortgage, an annual interest rate of 6%, 36 months remaining in your 5-year term and the current rate is 4%. This would mean an IRD penalty of $12,000 if you break the contract.

Ideally, you will want to be aware of what your IRD penalty would be before you decide to break your mortgage as it is not always the most viable option.

THREE MONTHS DIFFERENCE

In some cases, the penalty for breaking your mortgage is simply equivalent to three months of interest. Using the same example as above – balance of $200,000 on your mortgage, an annual interest rate of 6% – then three months interest would be a $3,000 penalty. A variable-rate mortgage is typically accompanied by only the three-month interest penalty.

paying the penalty

When it comes to making the payment, some lenders may allow you to add this penalty to your new mortgage balance (meaning you would pay interest on it). You can also pay your penalty up front.

Whenever possible, if you can wait out your current mortgage term before making a change to your mortgage, it is the best way to avoid being stuck in the penalty box. If you cannot avoid a penalty, do note that, while only calculators can be great tools for estimates, it is best to call your lender or mortgage broker directly for the accurate number in the case of determining penalties.

If you are unsure about getting the best penalty terms, reach out to me today! I can help you find the best mortgage product for you.

kevin.green@dominionlending.ca

Apply Now

 

First Published by DLC Marketing Team Feb 1 2022

8 Oct

They Keys to Good Credit

General

Posted by: Kevin Green

Your Credit Rating: The Four C’s.

Buying your first home is an incredible step in life, but it is not without its hurdles! One of which is demonstrating that you are creditworthy, which all comes down to your credit rating. This is how lenders and credit agencies determine the interest rate you pay, or whether you will qualify for a mortgage at all.

As mortgage rules continue to change, the credit rating is becoming even more important as a higher credit rating could mean a lower interest rate and save you thousands of dollars over the life of your mortgage.

If you’ve never given much thought to your credit rating before, don’t worry! It is not too late and we are going to take through everything you need to know. The most important of which is that, in order to qualify for a home, you must have a credit rating of at least 680 for one borrower.

There are several attributes that factor into your credit score, and these are commonly referred to as the “Four C’s” and consist of: Character, Capacity, Capital and Collateral. Let’s take a closer look at each:

Character

The character component of your credit score is essentially based on YOU and your personal habits, which comes down to whether or not it is in your nature to pay debts on time. Some of the components that make up this portion of your credit score viability, include:

  • Whether you habitually pay your bills on time
  • Whether you have any delinquent accounts
  • How you use your available credit:
    • Quick Tip – Using all or most of your available credit is not advised. It is better to increase your credit limit versus utilizing more than 70% of what is available each month. For instance, if you have a limit of $1000 on your credit card, you should never go over $700.
    • If you need to increase your score faster, a good place to start is using less than 30% of your credit limit.
    • If you need to use more, pay off your credit cards early so you do not go above 30% of your credit limit.
  • Your total outstanding debt

Capacity

The second component relating to your credit rating is your capacity. This refers to your ability to pay back the loan and factors in your cash flow versus your debt outstanding, as well as your employment history.

  • How long have you been with your current employer?
  • If you are self-employed, for how long?

Don’t be confused as capacity is not what YOU think you can afford; it is what the LENDER thinks you can afford depending on the debt service ratio. This ratio is used by lenders to take your total monthly debt payments divided by your gross monthly income to determine whether or not you are able to pay back the loan.

Capital

Capital is the amount of money that a borrower puts towards a potential loan. In the case of mortgages, the starting capital is your down payment. A larger contribution often results in better rates and, in some cases, better mortgage terms. For instance, a mortgage with a down payment of 20% does not require default insurance, which is an added cost.

When considering this component, it is a good idea to look at how much you have saved and where your down payment funds will be coming from. Is it a savings account? RRSPs? Or maybe it is a gift from an immediate family member.

Collateral

Collateral is something that is pledged against a loan for security of repayment. In the case of auto loans, the loan is typically secured by the vehicle itself as the vehicle would be repossessed and re-sold in the event that the loan is defaulted on. In the case of mortgages, lenders typically consider the value of the property you are purchasing and other assets. They want to see a positive net worth; a negative net worth may result in being denied for a mortgage.

Overall, loans with collateral backing are typically more secure and generally result in lower interest rates and better terms.

There is no better time than now to recognize the importance of your credit score and check if you are on track with the Four C’s and your debt habits. A misstep in any one of these areas could be detrimental to your efforts of getting a mortgage.

If you are not sure or want more information, reach out to a Dominion Lending Centres Mortgage Professional for a FREE review!

 

Published by DLC Marketing Team

8 Sep

Choosing Your Mortgage Broker.

General

Posted by: Kevin Green

Choosing Your Mortgage Broker.

The biggest purchase of your life will likely be your home. When embarking on your homeownership journey, having the right support and information will make all the difference. Fortunately, a mortgage broker can help!

With access to more than 230 lenders including big banks, credit unions and trust companies, mortgage brokers are experts in mortgages. These connections allow them familiarity with a vast array of available mortgage products, and also ensures that the advice they offer is unbiased. Unlike banks focused on signing you for profit reasons, a mortgage broker is a third-party service who gets paid no matter which bank they sign you with. This means they can provide the best rate AND unbiased advice because they are focused on helping you achieve your dream.

It is estimated there are nearly 20,000 mortgage professionals in Canada. With so many choices, it is important to find a mortgage broker who works best FOR you.

With so much information at your fingertips on any given broker, it is easier to help narrow down the search. Especially with tools like the Dominion Lending Centres exclusive My Mortgage Toolbox app. Available on Google Play and the iStore, My Mortgage Toolbox makes it easy for potential homeowners to find a mortgage broker nearest them!

“The idea behind My Mortgage Toolbox was to make it simple for Canadians to manage the mortgage process by putting all the information they need into the palm of their hand,” noted Gary Mauris, Founder and CEO of Dominion Lending Centres.

Some features available through this application include a variety of calculators to help clients determine:

  1. What they can afford
  2. The minimum down payment required
  3. Closing cost estimates
  4. Total monthly ownership costs

Click here to download the app today!

While online tools and apps can give you pretty good insight into a potential broker, there are a few other things you might also want to consider to help make that decision a little easier.

While it is never a bad idea to go with an established professional with an abundance of clients and years of experience, you should also open to considering newer, hungrier brokers who are striving to make their mark in the mortgage space. At a busy firm, it is easy for you to feel like a small fish in a big pond, especially with a smaller portfolio, whereas a smaller brokerage can likely provide you more attention.

While brokers spend a lot of their time neck-deep in mortgages and tend to use industry jargon, a professional broker will understand if you are a first time homebuyer and will do their best to explain the terms and the process to you. Understanding is vital in your homeownership journey  so make sure to seek out a broker who is going to keep it simple for you and be honest, allowing you to understand exactly what you’re getting in your mortgage.

Ultimately, it comes down to the mortgage product but don’t be blinded by interest rates. It is important that your broker explains everything to you from term conditions to penalties, as well as why you qualified for the rate you need. It is also important to use caution if a broker is selling you on a rate and making promises to pay for fee; this is a red flag. If they say they’re going to pay for everything, they’re desperate for anything.

Of course, the rate matters, but the characteristics of your mortgage matter more and could end up costing you in the long run. You want a broker who’s going to listen to you and ask you about your needs and future goals. What are your plans five or ten years from now? Why are they so important to you as an individual? When looking at any mortgage product, consider that nearly 70 percent of mortgages are broken within three years. Even if you’re sure of today, life happens and tomorrow could be different. Therefore, you must consider the penalties for ducking out of your mortgage earlier and you should know if it is portable.

The best mortgage brokers in the business will make sure all of your bases are covered, and you’re fully aware of what you’re signing onto. The right broker will make the process easier for you, whether it’s buying your first home, shopping for a better rate, or even jumping into investment properties. No matter what stage of life you are in, we’ve got a mortgage product – and a broker – for that!

19 Aug

Are You Ready for Home Ownership?

General

Posted by: Kevin Green

While most people know the main things they need to buy a home, such as stable employment and enough money for a down payment, there are a few other factors that may help you realize you’re ready – perhaps even earlier than you thought! In fact, there are four main things that can help you determine if you are ready for home ownership:

YOU CAN AFFORD YOUR DOWN PAYMENT AND ONGOING COSTS

It is easy for potential homeowners to get wrapped up in focusing on having enough money for the down payment and then forget about afterwards. It is important that you are not only financially able to afford the down payment, but that you can manage the monthly mortgage payments and ongoing maintenance as well. My Mortgage Toolbox app from Dominion Lending Centres has some great calculators to help you determine what you can afford on a monthly basis before you get in too deep. If you have enough funds in the bank for a down payment and are able to manage the monthly costs associated with the size and price range of home you would need, then you may be ready to start house-hunting!

YOU HAVE GOOD CREDIT

As most people know, credit score plays a major role in qualifying for financing to purchase a home. If you have a good credit score, which should now be at least 680 to qualify, then you have nothing to worry about! However, if your credit score is below this, it is more likely that you will be paying higher interest rates (and therefore have higher payments), or that you could be denied all-together. Before you begin your home buying journey, it is vital to have your credit score in order to ensure you can get the best mortgage product and rates. Working with a mortgage professional can help you get on the right track in the shortest time possible. Sometimes all that’s needed are a few subtle changes, or debt consolidation, to improve your credit score within a couple months.

NO OTHER LARGE, UPCOMING EXPENSES

Do you plan on buying two new vehicles in the next two years? Are you thinking of starting a family? Are you considering going back to school? Although you may think you can afford to purchase a home right now, it is vital to be honest about your future plans. What does your life look like in 1 year? 5 years? 10 years? If you know that you aren’t planning on incurring big expenses that you need to factor into your budget anytime soon, then that’s something that may help you decide to buy a home.

YOU ARE DISCIPLINED

One of the most important factors for purchasing a home is budgeting. You have to know what you can afford – and stick with it! It is easy to be tempted by a gorgeous 6 bedroom home or a backyard pool or private community, but at what cost? If going all-in is going to leave you scrambling each paycheck or derail any plans of future financial stability, it is worth rethinking. Understanding what you NEED in a new home, versus what you WANT, is a good step towards determining what you’re looking for and planning a budget that suits your needs so that you can continue to live comfortably.

These are just four signs that you may be ready to purchase a home. If you’re seriously considering buying or selling, talking with a Dominion Lending Centres mortgage professional can help ensure you have the best experience when it comes to buying a home!

Published by DLC Marketing Team

Click here for my online application

Download My Mortgage Toolbox App to your smartphone. It has everything you need to estimate your home ownership costs, calculate mortgage scenarios, get pre qualified and so much more.

 

16 Jul

The Mortgage Financing Process.

General

Posted by: Kevin Green

The Mortgage Financing Process.

The number one question for any potential homebuyer or someone new to the mortgage process is “what does this process entail?”. The following is a simple outline to give you an idea of the process and help you understand what to expect as you embark on your home buying journey!

STEP 1 – BE PREPARED

Having the following information on hand before meeting with your mortgage professional will help them determine what you qualify for and help them determine the best mortgage product for you:

  • Contact information for your employer and your employment history
  • Proof of address and your address history
  • Government-issued photo ID with your current address
  • Proof of income for your mortgage application
  • Down payment proof (amount and source)
  • Savings and investments proof
  • Details of current debts and other financial obligations

STEP 2 – GET PRE-APPROVED

One of the best things any potential homeowner can do when starting the home buying process is to get pre-approved. Mortgage pre-approval requires submission and verification of your financial history and can help you determine your price range, understand the monthly mortgage payment associated with that price range and provide the mortgage rate for your first term.

It is important to note that pre-approval does not mean that a lender has fully reviewed your documentation and you may still need the approval of a mortgage insurer. However, it does have a lot of benefits that can give you a “leg-up” in your search!

BENEFITS OF PRE-APPROVAL

Getting pre-approved not only makes the search easier by helping to determine your price range and budget, but pre-approval also guarantees the interest rate for 90-120 days while you search for that perfect home. Plus, the rate will automatically be adjusted down with any market reductions. Another benefit to pre-approval is that, when it comes time to purchase, pre-approval lets the seller know that securing financing should not be an issue. This is extremely beneficial in competitive markets where lots of offers may be coming in.

Quick Tip: Being entirely candid with your home-buying team throughout the process will be vital! Hidden debt or buying a big-ticket item during your 90-120 day pre-approval can change the amount you are able to borrow. It is best to refrain from any major purchases (such as a new car) or life changes (such as changing jobs) until after closing and you have the keys to your new home!

STEP 3 – HIRE A REALTOR

In today’s competitive real estate market, it can be very difficult to acquire property WITHOUT the help of a realtor. One of the reasons realtors are integral to the home buying process is that they can provide access to properties that never even make it to the MLS website. Realtors also gain access to information about homes that may come onto the market before a listing is even signed.

Most importantly though, a realtor understands the ins-and-outs of the home buying process and can tell you how to be successful in your endeavors to purchase a home by guiding you through the process from the first viewing to having your bid accepted.

STEP 4 – SHOP THE MARKET & MAKE AN OFFER

Once you have found the property that meets your needs, you’ll put in an offer that’ll be accepted or countered. This may go back and forth until you reach an acceptable price with the vendor. To start home shopping today, check out the listings on Rew.ca!

STEP 5 – OFFER IS ACCEPTED

Once your offer is accepted with the condition of financing, you will need to do a few things to finalize the sale:

  • Ask for a realtor intro between your mortgage professional and realtor.
  • An appraisal may be required, which will be determined and arranged by your mortgage professional.
  • Send in any remaining documents required for financing (income confirmation, down payment confirmation, etc).
  • Arrange a home inspection.
  • Receive the lender’s approval on property and final approval letter.

STEP 6 – REMOVE CONDITIONS

At this point, your financing is in place and you’re ready to proceed with the purchase of the property.

STEP 7 – LAWYER’S OFFICE

You’ll be asked to provide any money that’s to be used as your down payment, which is not already on deposit with your realtor. Typically, you’ll go in 1-2 days prior to the completion date.

Before you start on your home buying journey, be sure to take advantage of the expert advice that DLC Mortgage Professionals can offer. As experts in mortgages, brokers can help walk you through the process and find you the best mortgage product to suit your unique needs! The best part? It won’t cost you a penny! Mortgage professionals are paid out by the lender when they register a new contract. Therefore, all that matters is finding YOU, the client, the best possible mortgage.

 

Published by DLC Marketing Team