Historically low fixed rates have been one of the pandemic silver linings fueling the Canadian real estate market. However, in the last two weeks, we have seen fixed rates creep up twice since the pandemic began as a result of a rising yield on the Canada 5-year bond. The steeper bond yield reflects growing optimism among investors, who are pulling money out of relatively safe bonds and investing in stocks with higher earning potential. As optimism continues to build around the vaccine rollout and investors gain confidence in the economy, we could see further increases.

Record low mortgage rates have helped drive real estate sales, and it is unlikely that these modest increases will put a damper on the real estate market. But it does mean buyers will have larger fixed mortgage payments. For example, a homeowner with a 20% percent down payment on a $750,000 home, at a 5-year fixed rate of 1.69 percent, 25-year amortization (total mortgage amount of $600,000) has a monthly mortgage payment of $2,451.86. With an increase to 1.94%, their monthly mortgage payment has increased to $2,523.37. The rate increase would cost the homeowner $71.51 per month or $858.12 per year on their mortgage payments.

If you’re buying a home and worry about fixed rates rising further, you should get a rate hold for 90 to 120 days or consider a variable rate. There has been no change to Prime, the driver of variable rate mortgage rates and a great option in this market.

6 Important Questions to Ask Before a Big Home Renovation.

So you want to make a major home renovation. Congratulations! Now, you’ve got to find the right contractor for the job. While doing a thorough online search or asking family and friends is an important first step, once you find a potential contractor, it’s time to start treating the process like a job interview. Being prepared with the right questions protects you from future headaches, but also ensures that you’re happy with the end result.

Hiring a contractor for your big home reno? Ask these important questions to make sure you’re picking the right contractor.

1. What is your experience in home renovation?

This question can help you determine how long the contractor has been in the business, whether they’ve worked with similar challenges as those in your home and how they ensure that projects are completed on time. With this question, you get full insight into their methodology.

You can also find contractors in your area that might have positive Yelp reviews or other social media to see if others are happy with their work.

2. Do you have a contracting license?

Depending on where you live, there are different requirements for what type of license a contractor has to hold. Check the laws in your region to see what might apply, and ask potential contractors directly whether they hold those licenses.

3. Do you carry the appropriate insurance?

According to the Canadian Homeowner’s Association, hiring people without the proper insurance could put you at legal and financial risk should something happen in your home. Protect yourself (and the workers improving your home) by checking off this box in the beginning, and ensure they have both liability insurance and worker’s compensation.

4. Will we get a written contract?

This should be a given if you’re working with a contractor because if the answer is no, don’t even bother moving forward with the interview. The CHBA says contracts should cover the description of the work, the materials used and the price of the job. You should also take this as an opportunity to figure out your payment schedule, as the Better Business Bureau in the U.S. says that you should never pay the full price of the job upfront, and the specific timeline for completing your project.

Contractors should also always offer a warranty in writing that informs you of what is covered and for how long.

5. Can we get in touch with your past clients?

A contractor should be proud of their past work. Take this as an opportunity to figure out how contractors approach their work, whether they have effectively handled disputes and fact-check what contractors tell you about their working style.

6. Will you be responsible for building permits?

If there is a chance that your building requires permits, you want to make sure that your contractor is prepared in this area. Square One Insurance says you should try to be present for a contractor’s home inspection to ensure that you fully understand their feedback, and anticipate if any changes in your home need to happen.

Published by FCT

How to ace your credit score 

Whether you’re trying to increase your credit score to meet CMHC’s new minimum requirement of 680, need to improve poor credit, or are just aiming for the perfect score of 900, here are a few tips to get you closer to your goal: 

• Try to use less than 35% of your available credit. It’s better to have a higher credit limit and use less of it each month or split the balance between three cards. 
• Don’t close your unused accounts, closing accounts can actually cause you to lose that overall credit lowering your score.
• Have a mix of different types of credit. (credit card, car loan, line of credit)
• Review a copy of your credit report for mistakes or signs of identity theft.
• Consider a secured credit card if you’re building from the ground up.
• Pay bills on time and in full, do not carry a large amount of unpaid debt.
• Control how credit checks impact your credit by limiting the number of times you apply for credit, get quotes from different lenders within a two-week period so your inquiries will be combined and treated as a single inquiry for your credit score.
• If you are a homeowner consider refinancing your home to pay off debt.

Not all credit blunders are created equal, your bill-paying history makes up 35% of your credit score and is the most important factor. The amount owed makes up about 30% of your credit score. The longer your credit history is the better contributing to 15% of your credit score. Recent activity on your credit history, including new accounts and inquiries make up for approximately 10% of your credit score. The variety of the credit accounts you have account for  remaining 10% of your credit score. With the right approach, you can start seeing significant improvements in your credit score in as little as 30 days.

FIXED VS VARIABLE: The good the bad and the ugly
There is no ‘one size fits all’ answer to the fixed vs. variable rate debate, but understanding how rates work and evaluating your unique situation and financial goals will help guide your answer. 

Fixed -The good
You lock in a rate for years for a stable, consistent mortgage payment for years to come.
Fixed -The bad
If rates drop you’re locked in to a higher rate. In 2007 when we bought our first home we thought we scored locking in for seven years at 5%, less than two years later prime rates had dropped by over 2%.
Fixed -The Ugly
If you break the mortgage, there is often a bigger penalty called an Interest Rate Differential Penalty. A family member recently had to break their mortgage five months into a five year fixed term incurring a penalty of $22,800.  Had she been in a variable rate the penalty would have been around $1,400.00.
Variable – The Good
Typically a lower rate, historically and statistically shown to cost less than fixed. If you break the mortgage, the penalty is just 3 months interest and can be substantially lower than the Interest rate differential penalty on a fixed rate.
Variable – The Bad
Potential interest rate hikes will increase your interest payable. It can be harder to budget for the future as you can’t be sure how interest rates might move.
Variable – The Ugly
The ugliest it will get is a rate increase, not typically more than .25% that can happen at 8 pre-scheduled times throughout the year by the Bank of Canada increasing the prime rate. With their latest announcement on January 19th it’s unlikely we will see significant increases until 2023. If you are concerned that rates are going to rise you can always lock into a fixed rate. 

What could your next five years bring, is there a chance you’ll have to break your mortgage? If 2020 taught us anything it’s that nothing is certain in life. Consider the following:

Will you be selling your home to purchase another?
Will you need to take equity out of your home?
Will you need to pay off debt?
Family changes, Relationship/marriage break up
Health challenges & life circumstances
You win the lottery!

Nearly 70% of Canadians opt for the ‘security’ of a fixed rate mortgage and it is estimated that over 60% of borrowers end up breaking or restructuring their mortgage leading to massive penalties.

Choosing The Loan That’s Right For You

The reality is that the choice of loan should be determined by your situation and own financial goals and priorities. You need to take into account your cash flow and need for security and/or flexibility and any costs associated with changing your current loan structure.

What will the real estate industry look like in 2021?

If there is one word that defines life in 2021, that word is change. How much and for how long is uncertain. And while some changes may be temporary, many may be here to stay.

How will all of this change impact the real estate industry? Some key trends have emerged that bear closer scrutiny.

RESIDENTIAL REAL ESTATE

With more and more people working from home and the potential of many continuing to do so in a post-pandemic world, there is an increased need for more space. Enter suburbanization. Residents living in major urban centers are steadily moving to suburbia. Will suburbs become 18-hour cities? Who knows? One thing is certain, living cheek to jowl with thousands of other people is no longer a viable option for many.

OFFICE SPACE

For a while now, open-concept office space was the trend. That trend is now dead. While it allowed companies to downsize to smaller properties since less space was needed, after COVID-19, once workers begin to return to the office, we may see a return to traditional working spaces and the need for larger office buildings to accommodate them.

RETAIL SPACE

Bricks and mortar businesses have been hit hard and have seen a sharp decline in sales. Many big-name brands that previously anchored large retail spaces have permanently shut their doors. What does this mean for shopping malls? Will they survive? Experts suggest that to do so, they will have to be creative and embrace change. Think more medical clinics and multi-family residential homes rather than clothing stores with multi-user fitting rooms.

PROPTECH (PROPERTY TECHNOLOGY)

The real estate industry was on the brink of widely embracing proptech before the pandemic hit. That acceptance has accelerated like a rocket. In order to stay engaged with customers, service their needs and remain in business, companies have been forced to innovate in order to survive. This embrace of innovation will help to stabilize many sectors once the pandemic is behind us.

Published by FCT

Could your next break up save you thousands?

The most common question I’m asked by friends these days is “Does it make sense for me to break my mortgage?”. With record breaking low interest rates it is worth crunching the numbers. On top of interest savings, it can be a way to free up cash flow, or you may want to refinance to consolidate other debt, or extend your amortization to lower your monthly payments. Another important thing to consider is what interest rates will be when it is time to renew. 

Breakup costs can vary dramatically depending on your mortgage:

Fixed vs variable rate – penalties on fixed rate mortgages can be shockingly steep. In many cases the penalty essentially offsets the interest savings.
Your current interest rate – the larger the gap between your contract rate and current rates the higher the penalty.
Time remaining in your term – fewer month equals smaller penalty 
How much you still owe – a larger balance equals a higher penalty

Does the interest rate savings offset the prepayment penalty, administration, appraisal and reinvestment fees? Even if it’s a wash you may decide that it’s still worth it to free up cash flow, consolidate debt or reduce your monthly payments or lock in a lower interest rate for a longer term.  

If you’d like me to crunch the numbers to see if breaking your mortgage makes sense please reach out to me at jenniferb@seatoskymortgages.com or call or text 604 905 9790.

Canada has seen a surge of international migration over the last few years. In 2019, we welcomed a total of 313,580 immigrants to the country! This is an increase of 40,000 individuals when compared to 2017 numbers.

According to planned immigration levels, it is estimated that Canada will receive 341,000 permanent residents in 2020. In 2021, we are expecting 351,000 and 361,000 in 2022. Federal Immigration Minister, Marco Mendicino, stated that by 2022, “the year’s new permanent residents in Canada will account for one per cent of the population”.

With all these new faces wanting to plant roots in this great country, we wanted to touch base on how new immigrants can qualify to be homeowners!

PERMANENT RESIDENTS

If you are already a Permanent Resident or have received confirmation of Permanent Resident Status, you are eligible for a typical mortgage with a 5% down payment – assuming you have good credit.

NOT YET PERMANENT RESIDENTS OR HAVE LIMITED CREDIT

For Permanent Residents with limited credit, or individuals who have not yet qualified for Permanent Residency, there are still options! In fact, there are several ‘New to Canada’ mortgage programs. These are offered by CMHC, Sagen and Canada Guaranty Mortgage Insurance, and cater to this group of homebuyers.

NEW TO CANADA PROGRAMS

To qualify for New to Canada programs, you must have immigrated or relocated to Canada within the last 60 months and have had three months minimum full-time employment in Canada.

Individuals looking for 90% credit, a letter of reference from a recognized financial institution. Or, you will be required to provide six (6) months of bank statements from a primary account.

If you are seeking credit of 90.01% to 95%, you will need to produce an international credit report (Equifax or Transunion) demonstrating a strong credit profile. Or you will need to provide two alternative sources of credit, which demonstrate timely payments for the past 12 months. The alternative sources must include rental payment history and another alternative. This could be hydro/utilities, telephone, cable, cell phone or auto insurance.

ALTERNATIVE LENDERS

Another option for New to Canada residents, depending on your residency status and credit history, are alternative lenders such as B-Lenders and MIC’s (Mortgage Investment Operation). If you do not qualify for the New to Canada programs, or a standard mortgage, reach out to a DLC Mortgage Broker and they can help you navigate the alternative options!

new to canada? before submitting your mortgage application

Utilizing a mortgage professional will ensure you understand your options. They can also help determine the best program and mortgage choice for you. Before you talk with a mortgage professional, there are a few things you need to know when it comes to submitting an application – and getting approved – for your first mortgage in Canada:

SUPPORTING DOCUMENTS!

If you’re new to the country but have weak credit, supporting documents will be needed. These may include: proof of income, 12 months worth of rental payments or letter from landlord, documented savings, bank statements and/or letter of reference from recognized financial institution. These documents all paint the picture of whether you are a safe investment for a lender.

BUILD YOUR CREDIT RATING!

This is one of the most important aspects to getting a mortgage! Your credit rating determines your reliability as a borrower. In turn, this will determine your down payment rate. A great way to build your credit is by getting a credit card to use and pay off each month. Paying other bills such as utilities, cell phones and rent can also contribute to your credit score and reliability.

START SAVING! 

One of the most expensive aspects of home ownership is the down payment, which is an upfront cost but is vital to securing your future. As mentioned, the down payment can either be 5% or 10% depending on your status. However, if the purchase price exceeds $500,000, the minimum down payment will be 5% for the first $500,000 and 10% of any amount over $500,000 – regardless of your residency status.

CHOOSE A MORTGAGE PROVIDER! 

Once you are ready to get your mortgage, you need get in touch with a local mortgage professional. They can help you review your options and find the best mortgage product to suit your needs.

Buying a house is an exciting step for anyone, but especially for individuals who are new to the country. As daunting as it may seem, purchasing a home is completely possible with a little knowledge and preparation. If you are new to Canada and looking to get a mortgage, connect with a DLC Mortgage Professional today for expert advice and options that best suit you!

Published by DLC Marketing Team

Selling your home can be an extremely stressful experience. Between thinking about moving logistics and financials, it’s easy to miss the small details in between the process.

With that in mind, we’ve built this checklist for selling your home to help you keep track of the things that will get a potential buyer interested. Turns out, it’s not as simple as just fluffing pillows or doing a light dusting. “Put your buyer’s hat on and walk through your home like it is the first time,” Marilou Young, an Accredited Staging Professional and an Associate Broker with Virtual Properties Realty in the metropolitan Atlanta area, told Forbes.

Below is the ultimate checklist for selling your home.

GET FAMILIAR WITH THE PAPERWORK
For home sellers interested in the history of the house, make sure you’ve got all the information handy; this can include paperwork on renovations, property tax receipts, deeds and transferable warranties.

GETTING THE PRICE RIGHT
According to HGTV, it can be helpful to do some market research on what homes in your area are selling for- then shave 15 to 20 percent off that. This way, you attract multiple buyers who can end up outbidding each other and bringing up the price. While that can seem like a risky move, it could work in the competitive markets of big Canadian cities.

DEPERSONALIZE AND DECLUTTER
You want potential buyers to see themselves in the space, which is hard to do if you have family photos on the wall or personal items around. This would be a good time to start putting items in storage or try to keep your personal items out of sight. At the same time, you’re also ensuring that you’re keeping your house tidy—a must if you want to make your home sellable. Check around the house for dirt, stains or small cracks you might be able to fix. And if you have pets, make sure their litter boxes and play areas are also clean and odour-free.

FIND A QUALIFIED REALTOR
Realtors can be helpful to take some of the processes off your plate, including marketing your home and arranging open houses. If you do go this route, none of this list will matter if you decide to work with a realtor that doesn’t know the market inside out. You can search their name on the Real Estate Institute of Canada to ensure that they’re qualified, and meet with them to see if you mesh and understand how they price your unit. At Proptalk, we also have this handy guide for more details.

DON’T SKIP THE HOME INSPECTION
While presenting an unconditional offer may win you the home of your dreams, it can also end up costing you more than you expected. If you’re mortgaged to the max, you can’t afford surprises like repairs or replacements that you haven’t already budgeted for. Consider a Home Protection Plan that includes an 18-month warranty and up to $20,000 in warranty coverage for major household features such as foundation, roof, heating and cooling.

Published by FCT