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.