Three tips for first-time home buyers

Purchasing your first home is an exciting process, and with research and assistance from the right professionals, it can also be stress-free. As a first-time buyer, you're bound to have questions. Here are some helpful hints for home buyers who are just starting out.

Before starting to search for your dream home, it is extremely important to know what you can realistically afford. It is too easy to get caught in a cycle of disappointment when you're finding properties you love, but that don't fit your budget. Additionally, you need to make the distinction between what you will be approved for versus your budget. Acquiring a mortgage for a lower amount than a lender will allow will not only make budgeting easier, it will also give you the opportunity to pay it off faster.

The recent reduction of the maximum amortization period on insured mortgages from 30 to 25 years has had a dual effect. While it has increased the amount of a monthly mortgage payment on any given mortgage, it has also allowed home owners to reduce their mortgages at a faster pace, which shouldn't break the bank if you have budgeted correctly. Colette Delaney, Executive Vice-President of Mortgage Lending, Insurance and Deposit Products at CIBC says, "Your mortgage payments should fit your life - you shouldn't have to fit your life into a mortgage payment."

Finally, before diving in to your house hunt, talk to a Mortgage Broker and obtain a pre-approval. Securing a pre-approval not only gives you an idea of what your mortgage rate and payments will be, but will make the process much smoother when you finally do find your first home. It gives you time to iron out any potential issues that may come up when securing financing and take care of them before you make an offer.

Click here for the full article from Moneyville.

The costs of buying and selling a home

Saving up for a down payment on your first home can be a long process, and once that goal has been reached, the additional costs to purchase a home are often forgotten. Legal fees, property tax adjustments and interest adjustments are among the most commonly overlooked fees associated with buying or selling a home. In this article from Moneysense, Gail Vaz-Oxlade gives an overview of the costs you should be prepared to pay before signing for your first mortgage.

When buying a home, you will need a lawyer to close the deal. Legal fees will vary depending on the lawyer you choose, so it is a good idea to consult your Mortgage Broker, who will be able to provide recommendations. It also doesn't hurt to shop around a little and compare who charges what. Vaz-Oxlade recommends going to a lawyer who specializes in real estate law, as chances are you will pay less.

For those who are new to the home buying experience, paying a "property tax adjustment" may come as a surprise, but the process is actually quite simple. If the current occupant of the home you are purchasing has paid property taxes for months that you will be living in the house, as the new occupant, you are responsible for paying those back. Your real estate lawyer will take care of the calculations and reimburse the seller.

Follow the link for the full article from Moneysense.

You and your credit score

When going through the mortgage application process, your lender will need to access your credit file. Your credit file contains a history of what you owe, including credit cards with no outstanding balance. This report is one of the ways a lender will assess if you are a favourable candidate to lend to. So what if an application is denied, citing the applicant's credit report as the reason? In this article, Gail Vaz-Oxlade talks about companies who will offer to fix a less than stellar credit score for a fee, and how more often than not, these are fixes you can do yourself.

It is recommended to check your own credit file every six months to ensure the information contained is correct. You can request a copy of your personal file to be mailed to you at no charge by contacting one of the main credit reporting firms in Canada: Equifax Canada Inc. or Trans Union of Canada Inc. If your file contains erroneous information, simply contact the reporting firm, show proof of the error, and your report will be repaired.

In a case that a credit report is damaged because of late or missed payments, higher than normal balances or financial hardships such as bankruptcy, the only thing that will fix it is time. Paying bills promptly and managing credit wisely over time will repair a damaged credit report. For more hints on controlling your credit rating, talk to a qualified Mortgage Broker.

Click here for the full article from Moneysense.

Mark Carney to give ample notice of any interest rate hikes

The Bank of Canada decided once again to hold the benchmark rate at 1%, a decision that didn't come as a surprise to Canadians. The most significant change in this announcement was that the bank's governor, Mark Carney, omitted his usual statement about the necessity to raise rates in the future. Previous to the bank's announcement, Carney gave a speech in Nanaimo, B.C., and pledged to Canadians that going forward,  he will be transparent regarding the central bank's decisions - thus limiting the uncertainty many are feeling.

This piece from CBC news cites the example Carney gave in his speech; that if the decision to raise rates was made, he would make it clear how long the measure would take to work. He added that raising rates remains a "hypothetical question" at this point, yet the bank is not ruling it out. It is the Bank of Canada's intent to supply Canadians with a sense of security when it comes to planning their finances. The hope is that this transparency will give Canadians this confidence. The bank's main concern has been household debt, however recently introduced mortgage regulations have proved to have their desired effect, thus eliminating the immediate need to raise the benchmark 1% rate.

Carney also spoke about the resiliency of the Canadian economy, pointing out that in the wake of the global financial crisis, it has strengthened. "As Canadians, we need to focus on what we can control," stated Carney. "We can improve Canada's low productivity growth and sharpen our focus on emerging markets. And we can continue to invest in our greatest resource - our people."

Click here to read the full article from CBC News.

Canadian home sales in September

The Canadian Real Estate Association (CREA) released their monthly statement this week detailing resale home activity for the previous month. According to this report, Canadian resale housing activity saw its first monthly increase since the spring, up 2.5% from August. The activity is positive news, marking a recovery from the drop the market experienced in the wake of new mortgage legislation initiated earlier this summer.

Markets reporting an increase in activity include Vancouver, Calgary, Edmonton, Toronto and Quebec City. Despite the new mortgage regulations slowing national sales activity, CREA President Wayne Moen advises not to rely heavily on national sales figures. " ... national figures mask diverging trends in different markets, with activity down in some places while sales elsewhere remain strong. As always, all real estate is local, so buyers and sellers should talk to their Realtor to understand how the housing market is shaping up where they live or might like to."

As new mortgage legislation is likely to make many buyers reassess their dreams of home ownership, it is recommended to talk to a qualified Mortgage Broker, who can assist in creating a realistic budget and examine if now is the time to buy.

Click here for the full article from The Canadian Real Estate Association.

Canadian Mortgage Broker Launches a Mobile Mortgage App

Mortgage Brokers City has officially announced the launch of a free mortgage calculator app with access to live up-to-date mortgage rates, information and mortgage advice. Available on all Android, Blackberry and iPhone devices, the app allows users across Canada to have a seamless mortgage experience from start to finish.

One of the most valuable features of the app is the live rate feed, that gives users access to a real-time representation of the lowest mortgage rates available. Unlike other apps, which may post default rates or higher rates, the Mortgage Broker City app gives users a real representation of what their mortgage payments will cost, allowing them to plan accordingly and build a budget. Sheri Creese, Vice President of Sales and Service for Mortgage Brokers City said: "This app gives instant answers to the two questions we get most often from our clients; How much will my payments be, and how much will it cost up front, including my down payment?" In addition, the app provides province specific calculations that incorporate Land Transfer Tax and PST, some of the most commonly overlooked inclusions in the cost of a mortgage.

Users of the app that wish to have additional information or advice can contact Mortgage Brokers City at the touch of a button. Licensed representatives are able to assist clients in Alberta, British Columbia, Saskatchewan, Manitoba, Ontario and Quebec.

To download any version of the free app, visit www.mortgagebrokers.ca or click on the appropriate link below:

Mortgage Brokers City App for Blackberry: http://tinyurl.com/9slmex7

Mortgage Brokers City App for iPhone: http://tinyurl.com/94r2q4t

Mortgage Brokers City App for Android: http://tinyurl.com/8w3orpe

Click here for the full press release from Marketwire.

Mortgages for the self-employed

There are many challenges to being self-employed, but home ownership shouldn't be one of them. For self-employed individuals, the process of applying for a mortgage or refinancing is likely to be more complex than it is for salaried workers. Proof of income is an essential part of the qualification process, and obtaining this proof is not always easy for those who own a business and do not have the same income from week to week. This can be not only challenging when approaching a lender, but frustrating for the applicant. This article from the Globe and Mail provides readers with a helpful basis to better prepare for the application process.

When a lender deals with a client who is self-employed and cannot provide what is referred to as verified income, they instead must rely on stated income. Stated income can be proven to a lender through tax returns, notices of assessment, and financial statements. Although the mortgage is for the individual, the lender is examining the business in addition to the applicant. Simply put, the applicant must show the strength of the business to prove they will continue to have the income to pay the mortgage in the future. The more information an applicant can provide to their lender, the easier it is for the lender to make an objective decision to approve or decline the mortgage. Other information it may be prudent to provide can include: proof that HST or GST payments are up to date, business contracts to show expected revenue, personal and business credit scores, and proof of assets owned by the business.

An easy way to make the somewhat complicated process a little smoother is to consult a qualified Mortgage Broker, an individual who will not only cultivate a relationship with the client, but their business as well. A Mortgage Broker will navigate the process with the client, find out exactly which documents the lender will need, and handle any negotiations.

Click here to read the full article from the Globe and Mail.

Single home buyers face different challenges than couples

Recently released information from Statistics Canada shows that the percentage of Canadians purchasing homes alone is increasing. According to the recent statistics, 27.6% of all homes in Canada are occupied singly. A shift in lifestyles (including people choosing to marry later in life or not at all) combined with low mortgage rates, is believed to be a significant factor influencing this increase. In a recent Globe and Mail article, readers learn that along with the many rewards of home ownership, single home buyers will likely face challenges that differ from those couples face.

Budgeting methods are bound to change slightly when making the transition from renting to owning. Home owners are solely responsible for maintenance, repairs and emergencies that occur within a home, and saving for the unforeseen can be more difficult when there is only one income supporting the household. Mortgage payments will become the number one priority, meaning some will have to sacrifice other expenses. Experts suggest making small changes where possible, such as cutting down on evenings out or forgoing vehicle ownership in favour of public transit. Some home owners take advantage of their new property by renting out parking spots, spare rooms or basements to provide extra income.

Saving for a down payment can be one of the largest hurdles a new home buyer will face. Saving as much as possible will not only cut down on monthly mortgage payments, but will decrease the total amount of interest over the lifetime of the mortgage. One should also be mindful of the extra costs associated with purchasing a home, such as legal fees, closing costs, land transfer tax and moving expenses. When it comes to home ownership, saving as much as possible is key. For those who are still unsure if it's the right time for them to pursue home ownership, experts suggest making a detailed budget to see if they can realistically carry a mortgage. There are multiple resources available, such as online mortgage calculators and professional Mortgage Brokers, to assist in making this important financial decision.

Click here for the full article from the Globe and Mail.

Understanding your mortgage options

For many home buyers, the most important feature of their mortgage is the interest rate. As your mortgage is likely the largest debt you will acquire, paying the least amount of interest possible is important. Aside from a low mortgage rate, there are several other factors to take into account when shopping around for a first mortgage, or renewing for another term. Before settling in for five or ten years, be sure to look into the additional features of your new mortgage and whether they will fit your needs.

When deciding on a mortgage rate, it can be difficult to decide between fixed or variable. A fixed rate offers the security of always knowing what your interest rate is and what your monthly payments will be, while a variable rate offers the ability to take advantage of the lowest rate possible, depending on market conditions. Many will shy away from variable rate mortgages because of the uncertainty of fluctuating mortgage payments. However, many lenders offer the option to make fixed payments on a variable rate mortgage. If the interest rate decreases, a larger percentage of the monthly payment goes towards the principal and vice versa. This option offers the best of both worlds: the stability of the same mortgage payment each month with the benefit of the lowest possible mortgage rate.

An increasing number of Canadians are paying their mortgages off faster by periodically making lump-sum payments, also known as pre-payments. This is a fantastic way to reduce the debt, but it is important to note that lenders will normally set a limit to how much can be pre-paid. For most lenders, the limit is set at 15-20% of the mortgage balance per calendar year, but can differ from one lender to another, so find out for sure before diving in. Consulting a professional Mortgage Broker is an easy way to navigate the sea of mortgage questions. They will seek out lenders on your behalf to find not only the lowest possible mortgage rate, but also the most favourable mortgage terms based on your financial situation.

Click here to read the full article from Moneysense.

Personal Finance 101

For many, the month of September means back to school. Whether starting classes or setting kids up for their first year of college or university, this month is the time to start thinking about hitting the books. In this article from the Globe and Mail, we learn that the majority of students believe that money management should be among the subjects offered to students. On average, when students finish their tenure at a post-secondary institution, they will be in approximately $27,000 in debt, and among those surveyed, very few feel they will be prepared to manage their finances. The survey found that 69% of students polled believe personal finance should be brought to the classroom, an increase of 12% from 2009, when the survey was last conducted.

With tuition fees rising, and the issue of personal debt becoming more prevalent, students are becoming more aware of the importance of being prepared. However, the survey noted that only a quarter of respondents believe that their school supplied them with the necessary financial information. Students are saying their main financial concern is paying for post-secondary education, yet only 3 out of 10 are saving for school. Bigger financial steps like applying for a mortgage or saving for retirement may seem far off, but giving students the tools they need early on will give them a good foundation for financial success later in life. A non-profit financial literacy group, the Investor Education Fund, is assisting in the creation and implementation of a program that will introduce money management into the curriculum for grades 4-12. It is the hope that schools will begin to acknowledge that financial literacy is of significant importance for students.

Click here for the full article from the Globe and Mail.

Pros and cons of faster mortgage repayment

According to a recently released survey, the majority of Canadians who currently have a mortgage intend to have it fully paid by the time they reach 55. The thought of being mortgage-free by retirement is definitely a desirable option, and with mortgage rates at historic lows, this could be the best time to achieve this goal. Alternatively, low mortgage rates could prompt some to opt for carrying low interest debt over a longer period while using excess funds to invest. It can be argued that placing the majority of your net worth into your home is the best investment, as a home is the only investment you live in. Alternatively, the importance of investing in a more diversified way can be argued as well. Finding the balance is different in every case.

Canadians have been taking advantage of different repayment options to pay their mortgages off faster. These include accelerating payments from monthly to bi-weekly or weekly, making lump-sum payments toward their mortgage, and in many cases, both. Access to easy to use mortgage calculators allows you to easily fit accelerated payments into your budget. Each financial situation is different, so to find a repayment plan that works for you, talk to a qualified Mortgage Broker.

Click here for the full article from Moneyville.

Take advantage of your TFSA

A recently released survey shows that 47% of Canadians have opened a Tax Free Savings Account (TFSA.) Out of that 47%, only half stated they have made a contribution to their account this year. Evidence from other surveys conducted over the past few years suggests that the reason for the lack of participation stems from many Canadians not understanding exactly how a tax free savings account works.

TFSAs were introduced in 2009 by the Government of Canada. Savings in the account can be invested multiple ways, from mutual funds to Guaranteed Investment Certificates (GICs.) The account allows contributions up to $5,000 per calendar year. Any unused contribution room carries over to the following year. For example, if you only contribute $2,000 this year, you will be able to contribute the remaining $3,000 next year, in addition to the regular $5,000. This rule also applies if you require access to your savings. Any funds withdrawn during the calendar year are re-payable in the next calendar year. These are important rules to take into consideration, as those who over-contribute are subject to tax penalties.

Another reason Canadians are not taking advantage of TFSAs is believed to be they simply don't have a savings plan. From saving for a family vacation, to building a larger down payment when you apply for a mortgage, the possibilities are truly endless.

Click here for more information on TFSAs.

Making moving day stress-free

Moving day is an exciting step in the process of purchasing a home. It can also prove stressful, especially if you don't do the necessary research beforehand. This article from the Globe and Mail recommends some steps to take to make your moving day as smooth as possible.

The summer months tend to be the busiest month for moving, so ensure you start calling companies early to secure a date. Call several companies for quotes, making sure not to simply choose the company with the lowest rates. Ask family or friends about their experiences, or contact your Mortgage Broker or Real Estate Agent for recommendations. It is also important to make sure the company you choose is insured, and complies with the good practice guidelines for movers, set forth by Industry Canada, who also provide a Consumer Checklist for choosing a moving company. Don't be afraid to ask your company to provide references, a common practice when shopping for movers.

If you do have a bad experience with a moving company, there are services available to assist you. Some have found it helpful to contact their local Better Business Bureau. You can also find assistance through the Consumers' Association of Canada.

Click here for the full article from the Globe and Mail.

Financial tips for recent graduates

After completing the years of schooling it takes to get a diploma, and a job, many recent graduates fall into a heavy spending pattern, simply because they have never been able to do so previously. However, in an age of rising home prices, it has never been more important to start out on a well-planned financial track. This article from the Financial Post provides helpful tips for recent graduates.

The most recently released national average home price sits at $353,147, according to the Canadian Real Estate Association. With recent mortgage regulation changes, if an applicant wishes to amortize their mortgage over more than 25 years, a down payment of 20% or more (almost $71,000) must be accumulated. This combined with the other benefits of a larger down payment, such as paying less overall interest on your mortgage, make saving early vitally important. Making a detailed budget should be the first step in the process, as budgeting is often new territory for those just starting out in the work force. The article also suggests researching how to get the best possible return on accumulated savings, as not all savings accounts are created equal.

Saving for a down payment may seem like a daunting task, but the long-term benefits are well worth the time and effort involved. For more information on purchasing a first home, contact a qualified Mortgage Broker.

Click here for the full article from the Financial Post.

The importance of a thorough home inspection

Before settling on a home, and finalizing mortgage funding, a home inspection is an absolute necessity. One of the most important issues explored in a home inspection is potential water damage. A thorough home inspection can save time, and costly repairs, in the future. This article from the Toronto Star's Moneyville gives a list of items home inspectors and potential owners alike should be aware of to prevent water damage.

Ensuring the roof is in good shape is of extreme importance in a home inspection. Necessary roof repairs can go unnoticed, and will tend to be expensive to fix, so ensure the home inspector looks at the roof. Asking the approximate age of the roof can be helpful as well, as most roofs are not meant to last more than 15 years.

Water in the basement is another potential issue no home owner wants to encounter. Check for cracks in the foundation, the slope of the ground around the house, rust stains, mould and water marks. Recent basement renovations are also something to keep an eye on. Some sellers may be trying to inexpensively cover damage.

Finally, a detailed inspection of the plumbing is a must, including checking for sewer backups. In this article, we learn that clients can have a video made of their sewer system to check for future issues. It is important to remember that not every home inspector will have the same checklist, so buyers are encouraged to do their own research and ask for referrals from mortgage brokers, Real Estate Agents or Lawyers.

Click here for the full article from Moneyville.

How to safeguard yourself in a home bidding war

Once your mortgage financing has been secured, finding a home you love is an exciting part of the process. It is easy to get swept up in the excitement of it all, and it is also commonplace for a listing agent to indicate there are other offers to stimulate a faster response from a client. A trend that has emerged and is gaining a lot of media attention, is bidding wars that emerge with only one bidder. Recently, a Toronto couple 'won' the bidding war on their desired property with a bid that was $90,000 over the asking price. They discovered after the fact that they had been the only bidders. In this article from Moneyville, we learn there are methods to protect ourselves against these situations.

The law does state that in the event of a bidding war, an agent must inform all bidders how many offers have been made. However, bidders names and offer amounts are never disclosed. A practice has been recently developed in Toronto for the buyer's agent to call the seller's agent to inform them a formal offer will be made later that day, although the potential buyer can always back out. This can result in a seller receiving several 'registered offers' throughout the day, with no guarantee any will actually become a legitimate bid. Still, a listing agent may tell potential buyers there are several offers, in hopes of encouraging them to make one as well.

So how can potential buyers protect themselves? Mark Weisleder, a Toronto real estate lawyer, has developed a bidding war clause that has proven very useful. The clause states that the buyer is making an offer based on the belief that other offers will be received that same day, and goes on to say that if there are no other offers received by a certain time that day, the buyer can rescind the offer or change the price. If the buyer's offer is accepted, the seller must provide the name, address and phone number of the real estate agent that presented the other offer. This clause gives potential buyers the security of knowing there is at least one rival bid. To learn more about the process, contact a qualified real estate agent or Canadian mortgage broker.

Click here for the full article from Moneyville.

Bank of Canada holds lending rate, cuts growth forecast

The Bank of Canada decided to keep its main interest rate unchanged yet again on Tuesday, a decision that was widely anticipated by economists. The rate remains at 1%, unchanged since September of 2010. This article from the Financial Post shares the highlights of Tuesday's announcement.

Taking into account the current global economic state, The Bank of Canada kept the wording of the announcement similar to that of the previous release in June, stating, "to the extent that the economic expansion continues and the current excess supply in the economy is gradually absorbed, some modest withdrawal of the present considerable monetary policy stimulus may become appropriate." This is surprising to some, as the economic outlook caused many to believe the Bank of Canada would possibly lower rates or give a longer time line for borrowing costs to rise.

The Bank of Canada also revised predictions for Canada's economic growth, stating results for 2012 to lower to 2.1% and 2013 at 2.3%, a departure from the previous forecast of 2.4% for both years. It was acknowledged that while the global economy is straining Canada's economic activity, "domestic factors are expected to support moderate growth." Bank of Canada Governor Mark Carney touched on a slowdown in the housing market, but did not mention new mortgage lending regulations. Carney will expand on the Bank of Canada's outlook for Canada's economy on Wednesday when the quarterly monetary policy report is released.

For more information on how these factors affect you, contact a Canadian mortgage broker.

Click here for the full article from the Financial Post.

Add value to your home with an addition

In an era of uncertainty surrounding home prices and the mortgage market, several home owners are looking to increase the value of their property by renovating. Kitchens, bathrooms and finished basements tend to be the most popular projects, but an addition can provide greater reward, if planned properly. A recent article from the Globe and Mail provides some helpful hints, and shows readers how adding to the home may be a better investment than simply relocating to a larger home.

As with any renovation, it is important to start with the proper research. The article suggests consulting a real estate professional in your area to find out what potential buyers are looking for. This information can be very beneficial when you decide on your expansion. The agent can also keep you informed on prices and recent sales, so you can stay within a reasonable price for your neighbourhood. It is also important to be honest about how much more time you plan to spend in the property. If you intend to sell shortly after completing the expansion, you will likely have a very different renovation plan than you would if you wish to spend 5 or 10 more years in your home.

If the idea of the research and costs of an expansion seems like too much, relocating may seem like an attractive option. This article includes a helpful chart to estimate the potential moving costs, making it easy to compare what will be the more feasible option for you.

To find out more about refinancing to renovate, contact a Canadian mortgage broker.

For the full article from the Globe and Mail, click here.

Canada’s housing market at ‘tipping point’: Royal LePage

Although it is believed that new mortgage legislation will keep a number of buyers out of the housing market, a recent study from Royal LePage forecasts that the year will end ahead of its expected growth percentage. This article from the Financial Post shares the highlights of the recent report.

Phil Soper, chief executive of LePage Real Estate says that although growth in home prices has been steady for almost three years, they cannot be expected to continue to increase faster than salaries and the economy. Recent historically low mortgage rates have caused several regions to reach what is believed to be an upper level of price resistance. Historically, following a period in which home prices increase significantly, statistics show that Canadian home prices have tended to stay flat, rather than decline. The report also states that the last marked national price drop was in 2008, after a 16 year period with no decline. The drop lasted 11 months.

The new tighter mortgage regulations were announced June 21st and came into effect July 9th. It is believed the changes, most notably decreasing the maximum amortization period of insured mortgages to 25 years, will have a significant impact on many first time home buyers. However, a recent survey estimates that approximately 50% of Canadians are still unaware of the changes. To find out more, contact a Canadian mortgage broker.

For the full article from the Financial Post, click here.

In Vancouver, the seller's market recedes

June is traditionally one of the busiest months in real estate, yet one of the country's priciest cities saw a significant decline in activity. Vancouver's June sales fell by 17% compared to the previous month, and 27.6% below June 2011. Economists are seeing this drop as a sign of market correction, and predict that home prices will start to decrease as well. This article from the Globe and Mail explores industry statistics and possible causes.

The average price for a detached home in Vancouver has reached a high of $961,600, an increase of 35% from the average three years ago, and 50% higher than the Toronto average. A price decrease would move Vancouver closer to a buyer's market, a welcome change for those seeking their first mortgage.

Financial analysts are unsure of the exact cause of the slowdown, but it is believed that new lending regulations are partly responsible. Industry professionals in the city have seen buyers back out of potential sales, citing new income requirements as the reason. Over the month of June, only 2,362 properties were sold, the lowest Vancouver has seen since the year 2000. Following the Vancouver slowdown, some analysts believe the Toronto market will follow.

To read the full article from the Globe and Mail, click here.

Tips for first-time landlords

In a time when single family homes are more and more expensive, acquiring a renter may be an attractive option for many homeowners. The extra income from a tenant is a terrific way to pay off a mortgage faster, or simply free up space in a tighter budget. This article from the Globe and Mail gives a list of helpful hints for those thinking of renting out the basement.

When making a change as significant as this, it is important to do the proper research. Every province has different regulations for landlords, so ensure you are complying with the proper guidelines. There are several helpful hints on the CMHC website. It is also prudent to research the tax implications of becoming a landlord. Any rental income acquired must be claimed as income on your yearly tax return. Finally, ensure you alert your home insurance company. Failing to report a rental suite to your insurance company can void the policy if anything were to occur in the suite itself.

Another important consideration when thinking of renting out your personal space is privacy. If your suite isn't equipped with a separate entrance, be prepared to see a virtual stranger in your house and around your property. If this is an uncomfortable feeling for you, it may be wise to consider renovating to allow for a private tenant-entrance.

For more information on taking on a tenant in your own home, contact a Canadian Mortgage Broker.

To read the full article from the Globe and Mail, click here.

Mortgage Brokers City announces the launch of Advanced Private Lending

Mortgage Brokers City is pleased to announce the launch of its sister company, Advanced Private Lending. As Mortgage Brokers City expands, an increased need for private mortgage financing has emerged. An ever-changing economy, coupled with stricter lending regulations, has made it difficult for many hard-working Canadians to qualify for a mortgage.

Advanced Private Lending is a licensed Mortgage Administration Company located in Ontario, but has a network of Accredited Mortgage Professionals across Canada to assist clients in any province. In many cases, the company also assists other Mortgage Agents and Brokers in funding their own deals.

Advanced Private Lending specializes in turning challenging credit situations into great opportunities. If a traditional lender is unable or unwilling to lend money, private lending sources are a good opportunity. Whether you are experiencing a difficult separation, consolidating debt, borrowing for education or have bad credit, an Advanced Private Lending professional can find the solution.

Follow the link for the full press release from PR Web.

Mortgage rules could cool hot market

Jim Flaherty's recent announcement that the government has chosen to tighten mortgage lending regulations has led to much discussion surrounding potential effects to the housing market, specifically higher priced areas such as Vancouver and Toronto. This piece from the Vancouver Sun explores the possible outcome these new rules will produce.

Under the new regulations, including a lower maximum amortization period and increased gross and total debt service ratios, it is speculated that the average first-time buyer would have to earn an extra $500 and pay $209 more to their mortgage each month. First-time buyers, notably those in Vancouver and Toronto, are typically singles or young couples who are looking to enter the condo market. Price ranges of $350,000 - $400,000, combined with shorter amortization periods will mean many buyers will no longer qualify for a mortgage. Many analysts believe the new regulations were an unnecessary attempt to slow the heated housing market, which has already been slowing steadily. Over the last six months, home prices in Vancouver have lowered 12% and sales volumes have slowed as well, signs that the market is correcting.

For those who are unsure about how the new regulations will effect their ability to qualify for a mortgage, it is prudent to seek the advice of a professional Canadian Mortgage Broker. A Mortgage Broker will assess an individual financial situation and budget to find the mortgage solution that is best suited.

To read the full article from the Vancouver Sun, click here.

Mortgage controls hurt young buyers: expert

After the government's recent announcement surrounding tightening lending guidelines, many young Canadians are left wondering if there's still a chance for them to enter the housing market. In this article from the Ottawa citizen, Mortgage Broker and Managing Partner Frank Napolitano of Mortgage Brokers City voices his concerns about how these changes will affect home buyers, specifically those just entering the market.

First-time buyers have been a driving force in the housing market for the last five years, and the move to decrease the maximum amortization period from 30 to 25 years is believed to make first-timers think twice. In this interview, Napolitano said, "There are a lot of young Canadians who are renting right now and have aspirations to own a home and this is setting them back two or three years." A recent report from the Canadian Association of Accredited Mortgage Professionals stated that between January of 2011 and May of 2012, 47% of all home purchases were made by first-time buyers.

The changes set forth in the June 21st announcement are an attempt to slow the accumulation of consumer debt, however, Napolitano believes the wrong area is being targeted. Although a mortgage is considered a debt, it also builds equity and increases in value as the borrower pays the mortgage down. "The message we're giving to young Canadians is, it's OK to have bad debt like credit cards. The government is doing nothing about that stuff. But, they are going to clamp down on good debt which is a mortgage," Napolitano stated.

Any home buyer with questions or concerns about the recent guidelines and how they will be affected are strongly urged to seek the advice of a professional Mortgage Broker.

To read the full article from the Ottawa Citizen, click here.

New Canadian mortgage lending guidelines announced

Full Mortgage Brokers City response to changes to Canadian mortgage lending rules

The much anticipated announcement of the new guidelines for Canadian mortgage lending occurred on June 21st, sparking a media frenzy. Jim Flaherty announced the government is setting forth four major changes, which will come into effect on July 9th, 2012. These changes include:

• Reducing the maximum amortization period on mortgages with default insurance from 30 years to 25.
• Lowering the maximum amount Canadians can borrow when refinancing from 85% to 80% of the value of the home.
• Fixing the maximum gross debt service ratio at 39% and the maximum total debt service ratio at 44%.
• Limiting the availability of government-backed insured mortgages to homes with purchase prices under $1 million.

In this video, Mortgage Broker Frank Napolitano addresses the above changes, how they will affect the average Canadian borrower and how the advice of a qualified Mortgage Broker can help. Frank also discusses the changes put forth by the Office of the Superintendent of Financial Institutions regarding Home Equity Lines of Credit, which were announced the same day.

Those with further questions or concerns should feel free to consult a professional Mortgage Broker in Canada.

Officials expected to finalize lending guidelines by end of June, early July

The draft recommendations recently put forth by The Office of the Superintendent of Financial Institutions (OSFI) have been the subject of much recent discussion. The recommendations, released March 19th are to be finalized by late June or early July, and would significantly change the mortgage underwriting process.

Some of the proposed changes include:

• Reducing the maximum loan-to-value ratio for Home Equity Lines of Credit from 80% to 65%
• Lines of credit to be amortized, or amortized after a certain period of time, eliminating borrowers making interest-only payments indefinitely
• Stricter income requirements from the self employed
• The possibility to re-qualify upon renewal
• Disallowing the funds from a cash-back mortgage to be used as a down payment

After announcing the proposed changes and discussing with industry professionals, OSFI has chosen to relent on certain changes, most notably withdrawing the requirement to re-qualify upon mortgage renewal.

It is reported that these changes are an attempt to moderate consumer debt growth without raising mortgage rates, however, implementing all of the proposed regulations simultaneously would likely have a negative impact on potential borrowers, making obtaining financing more difficult. The changes are also fuelling an increase in the number of borrowers seeking advice from professionals, such as Mortgage Brokers, who have access to multiple lenders and mortgage solutions for individual financial situations.

For more information, contact a qualified Mortgage Broker.

Click here for the full article from the Vancouver Sun.

CREA Updates Resale Housing Forecast

A recent report from the Canadian Real Estate Association (CREA) forecasts anticipated resale activity for the remainder of 2012 through 2013. In the June report, we learn that Alberta and Saskatchewan markets are expected to see stronger than expected growth, and Ontario (specifically Toronto) should continue to expect continued robust sales activity. Ontario's forecasted sales activity and home prices were revised upward to account for stronger demand in the Toronto area.

Resale activity is expected to reach 475,800 units in 2012, an increase of 3.8% over last year. Wayne Moen, the president of CREA, is quoted as stating "National activity over spring months was stronger than anticipated ... This shows clearly how the continuation of low interest rates is keeping homeownership affordable and within reach."

The report also forecasts an increase in the national average home price to 370,700, citing a trend of stronger than expected price increases in the early months of 2012. The rise of interest rates is still expected to be gradual, and Canada's housing market is expected to remain resilient.

For more information, contact a qualified Mortgage Broker.

Click here for the full report from the Canadian Real Estate Association.

Canada’s housing market still outshines rest of world

According to a recent report from Scotiabank, Canada's housing market is continuously outperforming other developed nations, despite cooling market conditions. This article from the Financial Post shares these statistics, and the proposed effects on the mortgage market.

Home prices are reported to be holding steady in many markets, with some, Toronto in particular, showing increases. In the first quarter of 2012, the average national home price fell by 1.6%, compared to the last quarter of 2011 when the inflation-adjusted average showed an increase of 1.3%. The demand for housing is said to have cooled owing to moderate growth of income, stricter mortgage insurance regulations and an increase in homes on the market. It is believed that average prices and home sales will stay at the current level for the remaining months of 2012.

The remaining global markets, notably European countries, are experiencing the weight of the eurozone debt crisis. Home prices in Ireland dropped 18.9%, while Spain experienced a decrease of 9.1%. Most of the countries included in the recent report showed an average price drop. It is believed, however, that increasing affordability coupled with a growing demand will start to balance out these markets.

For more information contact an accredited Mortgage Broker.

Click here to read the full article from the Financial Post.

Saving 20% down for a house was worth the wait

For those looking to enter the mortgage market, saving 20% isn't a requirement. The availability of default insurers like the Canada Mortgage and Housing Corporation (CMHC) and Genworth Financial make it possible for those with less savings to enter the housing market. In this article, Robb Engen discusses why saving 20% to upgrade to a larger home worked for his family.

When using existing home equity to purchase a new home, it is important to keep in mind what you're asking for your property may not always be what you get. This combined with closing costs, real estate fees and moving expenses can have a significant impact on your savings. Engen stresses the importance of updating your budget and planning how much you want to set aside each month. Using this plan, he was able to achieve his savings goal in a little over a year.

For more information and to find the right mortgage for you, contact a qualified Mortgage Broker.

To read the full article from Moneyville's Robb Engen, click here.

Half of Canadians expect to be debt-free by 2017

According to a recent survey, half of the Canadian population have stated they expect to be debt-free by 2017. A poll conducted by Leger Marketing revealed that the debt of the average Canadian sits at $112,329. In this article from the Financial Post, we also learn that 43% of Canadians aged 35-44 owe more than $100,000.

Despite interest rates sitting at historic lows, Canadians are still encouraged to reduce their amount of household debt. Recent statistics have shown that a large percentage are heeding these warnings and taking steps towards becoming debt-free. Another recent survey found that 25% of Canadians currently have no debt, and Statistics Canada reports that mortgage debt accounts for 63% of household debt, while consumer credit comes in at 28%. Many still view residential mortgage debt as "good debt."

For those hoping to become debt-free faster, there are several ways to accomplish this goal. Many looking to renew their mortgages are reaping the benefits of low mortgage rates, and locking in for a ten year term. Many of the current ten year mortgages allow generous pre-payment privileges - one more way to pay down a mortgage faster. Some other steps toward financial freedom include increasing the frequency of mortgage payments or decreasing the mortgage amortization period. A recent post shows many Canadians are taking at least one if not more of these steps to reduce their debt.

For more information about paying your mortgage off faster, contact a qualified Mortgage Broker.

To read the full article from the Financial Post, click here.

How to get started with a savings plan

Whether you're saving for a mortgage, to finance a trip or start your retirement, a savings plan is essential. This article from Moneyville's Robb Engen is a comprehensive guide for anyone looking to save - regardless of their savings goal.

Before diving into any savings plan, it is important to first know how much you need to save, when you will need access to the funds, and your comfort level with risk. Those with shorter term plans may have less of a risk threshold than those who are saving for many years. To ensure funds are protected, Engen suggests GICs or high interest savings accounts for short term saving. If you have a larger cushion of time, stock market investments may offer higher returns, but assessing your comfort level with potential losses is still of vital importance.

To read the full article from Moneyville, click here.

More Canadians locking in low-rate mortgages, reducing debt

The Canadian Association of Accredited Mortgage Professionals (CAAMP) has stated in their spring release that an increasing number of Canadians are reducing debt by locking in low mortgage rates. This article from the Financial Post explores newly released statistics that show the efforts Canadians are taking to pay their mortgages down faster.

At one time, taking a mortgage at a variable rate seemed like the best way to save on a mortgage. Now, with rates at historic lows, even those who started out with a variable mortgage are renewing with a low fixed rate and a longer term. Facing uncertainty surrounding the direction interest rates will take later this year, locking in for a ten year term offers a sense of security a variable rate wouldn't necessarily provide. CAAMP's report shows that 14% of the 3.8 million Canadians holding a fixed rate mortgage made this choice within the past year. It is also reported that in 2011, Mortgage Brokers accounted for 26% of the overall market, showing the necessity for qualified mortgage advice.

In addition to taking advantage of low rates, a large percentage of Canadians are using pre-payment privileges to decrease debt. We learn that 23% increased the amount of their regular payments, 19% made lump sum payments and 10% did both. An encouraging 50% of borrowers pay at least $100 more than required on their monthly payments. Jim Murphy, chief executive of CAAMP, reports these statistics show that the majority of Canadians are in a position to safely absorb a potential interest rate increase.

Click here for the full article from the Financial Post.

Maybe debt isn't so bad after all

One of the most discussed issues in financing recently has been the difference between "good debt" and "bad debt." It has been reported that Canadians' debt-to-income ratio is hovering around the 150% point, making financial analysts nervous. This article from the Financial Post gives some relevant examples of what constitutes "good debt" and how Canadians can use it to their advantage.

Unlike citizens of the United States, Canadians are unable to write off mortgage interest on their taxes. Still, there are methods Canadians can easily use to translate debt into profit. One example is the Tax Deductible Mortgage Plan, which converts a regular mortgage to an investment loan. This article also explores the benefits of using a line of credit to invest in capital markets. This is also classified as a "good debt," as the interest is tax deductible.

It is important to remember that the ability to borrow can improve an individual's financial situation, if used responsibly. Applying for a credit card will build credit history, a student loan can allow for a higher paying job, and a mortgage gives Canadians the chance to invest in their future.

For more information, or to find out if a Tax Deductible Mortgage is right for you, contact a qualified Mortgage Broker.

To read the full article from the Financial Post, click here.

Lessons learned from a year as a home owner

Purchasing a first home is an exciting time, filled with new challenges. The process is an important learning experience, and this article from Moneyville's Krystal Yee explores several important learning points for first time homebuyers.

Once you are pre-approved for a specific mortgage amount, it can be easy to get swept up in the excitement and start searching for homes in that range. It is not necessary, especially for a first home, to borrow the maximum amount possible. Remember to allow room in your budget for the unexpected. It is always possible to upsize in the future.

As you start settling into your new home, it's tempting to want to make changes right away and make it your own. One point Yee stresses is the importance of saving for home improvement projects. When it comes to renovations, it is easy to go over budget. Yee suggests making a budget with a cushion of 10 to 15% and sticking to it, keeping in mind that more changes can always be made later.

Possibly one of the most important points touched on in this piece is checking up on your finances. Spend some time making sure your any debts are in order and that you have an adequate amount for a down payment, closing costs and other fees associated with a home purchase. Sending away for a free copy of your credit report is also a good idea. This way, you can review it yourself first and ensure it is up to date and error free, before applying for a mortgage.

For more helpful tips about buying your first home, talk to a qualified Mortgage Broker.

For Krystal Yee's full article from Moneyville, click here.

Buy now, save later

For first time homebuyers, trying to save for a down payment and retirement simultaneously is a difficult task. Additionally, suggestions for what percentage of your income should be going towards each are constantly streaming in. This article from Moneysense acknowledges that each financial situation is unique, therefore, saving and spending strategies must be customised, just like household budgets.

One suggestion explored in this article is brought forward by Malcolm Hamilton, from Mercer, a human resources company. His strategy suggests putting 20% of your income towards the mortgage until it is paid in full, then applying that 20% to an RRSP. This method seems to be a workable option for most Canadians in their 20s and 30s, as purchasing a home is top priority.

Of course, when adopting the 20% strategy, there are several factors to consider. The strategy is based on an average Canadian income, and those with higher or lower incomes should adjust accordingly. Those with student loans and those who are part of a workplace pension program should take these factors into account.

Finally, taking on a saving strategy of this sort requires discipline. It is reported that although many Canadians are extremely focused when it comes to paying down debt, they don't necessarily apply the same standard to saving. It can be tempting to use that suddenly available 20% for other purposes. The article also stresses the importance of creating an emergency fund. For advice tailored to your specific financial situation, contact a qualified Mortgage Broker.

For the full article from Moneysense, click here.

Yes, you can reestablish your credit rating

When applying for a mortgage, your credit rating is extremely important. It has the ability to dictate the type of mortgage and interest rate you will qualify for. For those who have experienced financial hardships such as bankruptcy or simply bad credit, their credit score can be seen as a bump in the road to home ownership. Thankfully, it doesn't have to be that way. This Financial Post article offers some tips for those looking to restore a credit rating.

First and foremost, start out small. Borrowing is based largely on trust, and applying for a large line of credit right away gives a lender the impression the bad credit cycle will start all over again. A secured credit card is a good place to start. In this case, you make a deposit to the bank to cover the credit limit. In essence, you are using your own money but using the card helps to build credit history.

It is easy to fall into the trap of using your new credit as much as possible, but this tactic is counter-productive. Try to keep the balance of any credit card below 30% of the limit, and never underestimate the importance of making payments in full and on time. It is also a good idea to avoid applying for multiple credit products. Each time an application goes through, your credit file is accessed. This also reflects negatively on your credit score.

For more helpful tips on reestablishing your credit rating, contact a qualified Mortgage Broker.

To read the full article from the Financial Post, click here.

Making An Offer on a Home



  It is important to remember when making an offer on a home that the offer to purchase is a contract. Putting emotions aside and protecting yourself is paramount. This article from Money Sense is a comprehensive guide for first-time home buyers and veterans alike. From the appropriate amount to offer, to the deposit, to getting everything in writing, there is more to making an offer than meets the eye.

The first task on your list should be educating yourself on the value of other recently sold properties in the neighborhood. If you have chosen to work with a real estate agent, s/he should be able to assist you with this. Knowing what similar homes in a similar location have sold for will give a good basis on which you can measure what is a fair offer for your desired property. You should also be informed if there are others interested in the property. The possibility of multiple bids can make a difference as to your first offer, and it is important to know your limits. A bidding war can drive the price higher than the mortgage amount you have set for yourself.

After your bid has been accepted, don't delay getting the offer in writing. Again, if you have chosen a real estate agent, s/he will work as an intermediary between you and the seller. If not, standard offer forms are available from real estate lawyers. Homebuyers are advised to not include too many conditions in the contract to avoid putting off the seller. However, the importance of acquiring a home inspection can never be understated. After the conditions have been agreed upon, a deposit will be expected, the amount of which often depends on the purchase price of the home. Remember, the deposit cheque should be made out to a third party and held until closing. At this point you can choose to turn to an experienced mortgage broker to help find the best possible mortgage rates and financing solutions to meet your specific needs.

Click here to read the full article from Money Sense.