Mortgage challenges for the self-employed

For many Canadians, proving their income to a Mortgage Broker or a lender for the purpose of obtaining a mortgage is as simple as providing T4 slips. For the self-employed, the process is more complicated than that. Self-employment is steadily becoming more and more common in Canada, and many who report only to themselves are becoming very financially successful. However, with fewer ways to prove income, lenders will still tend to proceed with caution when faced with a self-employed client.

Following the introduction of new mortgage legislation last summer, the screening of potential applicants has become more detailed. From analysing the income for the applicant based on the average income someone in their field would make, to assessing the length of time their particular operation has been established and carefully examining the income reported to the Canada Revenue Agency, it is a detailed process. Thankfully, there are several things that can be done to ease the process.

• Pay down debts, increase savings and check your credit. Lenders will want to see that you have a good credit score, and the ability to service any debts properly. Clients with several high-interest credit products and little savings are typically viewed as much less desirable candidates for a mortgage.
• Be prepared. It is suggested that you accumulate 3 years of tax documentation showing your reported income. Your business license, articles of incorporation, and client contracts are also important documents to have on hand.
• Consult a professional Mortgage Broker. Navigating the waters of mortgage lending isn't always easy, especially for those who are in business for themselves. A Mortgage Broker will do the navigating for you, negotiate with lenders, and find a mortgage that is the perfect fit for you.

Click here for the full article from the Toronto Star.

The language of selling houses

In an increasingly competitive housing market, the first impression potential buyers will have of a given property is extremely important, and the property listing is a big part of that. Professional photos and a descriptive write-up are a good way to draw potential buyers to your property. Many will be searching for properties online, and if the listing doesn't make an impact, it could simply be passed over in favour of another. A recent study from Point2Homes analysed 40,000 property listings Canada-wide to compile a list of keywords that are most often used to attract potential buyers, yielding some interesting results.

One of the most common terms used in descriptions of Canadian homes is "hardwood floors". "Beautiful" ranked high on the list, as well as "huge", "perfect" and "quiet". Homes in Saskatchewan are commonly referred to as "spacious", while Ontario homes talk about electric light fixtures. The study also showed how Canadian listings differ from the U.S., as a Canadian listing is likely to mention a home is close to schools, while an American listing is more likely to advertise that the home is priced to sell, or mention add-ons like a pool.

Click here for the full article from the Ottawa Citizen.

The purchase plus improvements mortgage

When shopping for your dream home, it is sometimes difficult to find a property that suits all of your needs perfectly. You may find a place that's in the perfect neighbourhood, close to work and schools, and it's everything you were looking for, except for one thing. Perhaps you want to update the kitchen, or install hardwood floors or new windows. Obtaining a purchase plus improvements mortgage can be the best solution in this case.

The purchase plus improvements mortgage allows a borrower to purchase a property and include home improvements in the cost. Basically any renovation that will increase the value of the home can be considered. In order to apply for a purchase plus improvements mortgage, you must obtain quotes for the improvements you plan to make, and submit them along with your mortgage application. The mortgage will then be approved for both the cost of the home and the renovations together.

Some advantages of purchase plus improvements:

• Can be done whether or not the purchaser has 20% down.
• Eliminates the need to seek other financing, perhaps at higher interest rates, after the home is purchased to make improvements.
• Opens up more options when looking at properties.

For more information on obtaining a purchase plus improvements mortgage, talk to a qualified Mortgage Broker.

Best places to live in Canada

Moneysense magazine recently released their annual list of the top cities to live in Canada. Not only do they rank the top cities overall, there are also rankings for top cities to raise a family, top cities to retire and top cities for new immigrants. The magazine takes into account several factors, from quality of weather and access to hospitals, to job availability and housing affordability. Cities with affordable housing when compared to local salaries ranked higher, as did cities with low crime rates and those with easy access to medical treatment.

Also included are individual articles about the top ranking cities and what makes them great, along with details on how cities were chosen, infographics, and an interactive map of a virtual "perfect" city.

Where did your city rank?

Have tougher mortgage rules created stronger borrowers?

In their latest public statements, the Bank of Canada has been much softer with their language when it comes to Canadian debt levels, signalling that they are less concerned than they once were about the possibility of a U.S. style housing crash. In this video from the Globe and Mail, Tara Perkins talks to Andrew Charles, CEO of Canada Guaranty (one of Canada's major mortgage insurers) and Benjamin Tal, Deputy Chief Economist for CIBC, about the likelihood of tougher mortgage regulations creating a culture of stronger and more educated Canadian borrowers.

The stricter mortgage regulations introduced in the summer of 2012 included decreasing the maximum amortization period for insured mortgages to 25 years from the previous 30 year maximum, limiting refinancing loans to 80% of the value of a home, and limiting the maximum gross and total debt service ratios.  These new regulations, Charles suggests, have caused many Canadian first-time buyers to "sit on the sidelines", thus resulting in better credit and more qualified, stronger borrowers. He went on to say that the majority of borrowers are opting for a 5 year term, giving them 5 years of certainty when it comes to mortgage payments.

The trio also take some time to discuss mortgage rates. Those who view the mortgage market in a negative light tend to believe that low mortgage rates will spur a wave of unnecessary borrowing - Tal disagrees. He goes on to say that when rates eventually do rise, it will not be a dramatic increase and we are unlikely to see a wave of delinquency like the U.S. did.

Click here to watch the full video from the Globe and Mail.

Mortgage shopping has never been easier

For those getting ready to purchase their first home, renew an existing mortgage, or refinance to take advantage of existing equity, saving money on interest is the easiest it's ever been. The Internet gives us a wealth of information, right at our fingertips, including where to find qualified mortgage professionals to assist with finding the right mortgage.

A recent report from Google found that when one of the major Canadian banks announced a new low mortgage rate, searches for the term "mortgage" increased by 50%. With spring well on the way, Canadians are getting ready to start hunting for that perfect property, and the perfect mortgage to go along with it. Ask any Mortgage Broker and they will tell you a low mortgage rate is important, but they will also emphasize you need to choose the mortgage with the right terms for you. Discounted rates are great, but if you're looking to pay your mortgage aggressively and the mortgage with the low rate doesn't allow pre-payments, you've likely chosen the wrong mortgage. This is just one of the many reasons Mortgage Brokers are rising significantly in popularity. A study from the Canadian Association of Accredited Mortgage Professionals (CAAMP) reported that 47% of Canadians who took out a mortgage in 2012 consulted a Mortgage Broker. However, only 27% of those renewing a mortgage sought the advice of the same professionals. After a 5 or 10 year term, your needs are sure to be different than they were when you first signed your mortgage, so why not consult a professional, even to simply ensure the terms and conditions of your existing mortgage are still suitable, especially when the service they provide is of no cost to you?

Click here for the full article from the Financial Post.

How to avoid costly mistakes when filing your income tax return

Income tax time is in full swing, and the question that remains top of mind for Canadians is how to maximize their refund. What many don't realize is that there are many small details that can be overlooked and end up costing more in the end. The following will show how to avoid making these common but somewhat costly mistakes when filing your annual income tax return.

Organization is key when it comes to planning for tax time. Rosa Iuliano, a chartered accountant with Collins Barrow Ottawa, suggests making a file at the beginning of the year, and filing all receipts, large or small, when they are received. This will ensure nothing is forgotten when it comes time to file. Failing to include income can cost much more than the time it's worth to find the paperwork. The Canada Revenue Agency does perform spot checks, and failing to report income can incur a penalty of as much as 10% of said income. Filing late is another misstep that can cost you big. Filing late causes penalties of 5% of anything that is owed and an additional 1% for each subsequent month until filed. If you fail to file within a three year time frame and were eligible to a refund, your refund can be denied.

Another common mistake many Canadians make is to overlook ways they can use their tax refund to make money. Some of the expenses most commonly overlooked are: charitable donations, out of country medical expenses, moving expenses (when moving at least 40 km closer to your place of work or school), home maintenance costs if your office is in your home, and child care expenses. Consult a tax professional for even more tips, and to make the most of your annual tax refund.

Click here for the full article from the Ottawa Citizen.

The return of the first-time buyer

Traditionally, January and February are seen as slightly slower seasons for real estate. However, Real Estate Agents and Mortgage Brokers are noticing an increase of clients house-hunting and looking to obtain mortgage pre-approvals. Many of these clients are first-time buyers, who stepped back from the housing market last summer when new mortgage regulations were introduced. The regulations, including shortening the maximum amortization period on insured mortgages to 25 years, were an obstacle for several first-time buyers, but as 2013 gets rolling, a stronger real estate and mortgage market seems to show that these buyers have had time to save a little more and are looking to try again. The Toronto Real Estate Board  is reporting a favourable start to the year. Sales are down 1.3% when compared to January 2012, which is a positive change following months of double-digit decreases.

Click here for the full article from the Toronto Star.

Secrets to finding a good handyman for your reno

The housing market is anticipated to experience an upturn in 2013, so it is certain that many home owners and real estate investors will start looking to renovate, add property value and put their houses on the market in the upcoming months. As there are always some jobs that simply require a professional, the following is a guide to what home owners should look for when hiring a handyman.

Before getting started, it is a necessity to decide what type of professional you are looking for. A handyman is very different from a general contractor. Neither are required to have a specific trade license, but a contractor is hired to find a variety of licensed tradespeople. If the job is larger and in need of professionals of varying skills, it is likely better to hire a contractor. For small jobs, a handyman is likely the way to go. Talk to friends, family or neighbours for recommendations, or check Home Builders Association websites for "RenoMark" contractors, who are members of the Canadian Home Builders Association and must adhere to their code of ethics and conduct. If you're hiring a contractor, it is a good idea to ask for at least three references. If the contractor is licensed, ensure it is not expired, and ask if they have insurance coverage. If the contractor is not insured, you can either request they purchase temporary insurance or go to a lawyer and draft a general release to ensure they understand they are responsible for any damage and / or accidents on your property. This releases you from any liability.

If you hire someone based on a referral, it is a good idea to ask a few questions before accepting their recommendation, including what jobs they performed, if they started and finished on time and on-budget, if there were any issues, if the referrer would use their services again and if they are receiving some sort of compensation by referring the professional. It is recommended to interview three potential candidates and ask for estimates from each. That said, it is always important to set aside a little extra to be prepared for any unforeseen circumstances.

The contractor will provide you with a detailed contract, which should include not only a detailed description of the work that needs to be done, but also permits, supplies, commencement and completion dates, terms of payment and a payment schedule, insurance details, legal information, dispute resolution and warranty information. The contract is vitally important, as it sets the expectations for the contractor or handyman. If there is any requirement for clarity at any time, it is in writing and can be referred to.

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

Why you should re-key the locks in your new home

Receiving the keys to your new home is likely one of the most exciting parts of the home buying process. What many home buyers fail to ask themselves, however, is how many copies of these keys have been made in the past. Over the course of the previous owner's tenure, copies of keys may have been supplied to family, friends, caregivers or maintenance companies. This article from the Ottawa Citizen details not only the security benefits, but also the insurance benefits of having your home re-keyed.

Re-keying your home is an inexpensive and fast procedure that can give peace of mind, and other benefits as well. Most home insurance companies will expect that the locks in a previously-occupied home were re-keyed when the new owners took possession. If a client reports a forced entry, the insurance company will want to see evidence to be sure that neglect on behalf of the home owner was not a factor.

So how does one go about re-keying the locks in a home? Contrary to popular opinion, the locks themselves do not have to be replaced. A professional locksmith will simply disassemble the current locks and replace the pins and keys. There are two options to complete this process; removing the locks and taking them to a locksmith, or hiring a locksmith to come on-site to perform the procedure. In some newer homes, locks can be re-keyed without calling a locksmith. If the home was built within the past few years, it is recommended to ask the previous owner to find out if this is an option.

For more information and tips for first-time home buyers, contact a professional Mortgage Broker.

Click here for the full article from the Ottawa Citizen.