Did you know

By Refinancing your Mortgage, you can eliminate High Interest Personal Debt such as Credit Cards, Car Loans and Lines of Credit.

In this manner you can increase your Monthly Cash Flow and use that money to Invest in your future like RRSPs and so on.

This makes perfect sense in that you can earn more interest though investments than you will pay on your new mortgage at today’s all time low Interest rates.

You will also save on the amount of interest you are paying on your outstanding debt.

For example, Car loans can be 5-6 % interest. Credit Cards can be anywhere from 18 – 28% interest. Unsecured Lines of Credit ae generally lower than Credit Card but still very high.

Its also worth noting that if your Mortgage was taken in 2017 or 2018, you will likely be paying 3 – 3.5 % interest and you current Mortgage will be coming due soon making it easier to Pre-Maturely break and Refinance elsewhere.

Excellent food for thought.

Always speak to a trusted Mortgage Professional

Tom Parent – Mortgage Agent

Parenting People to Their Dreams!!

You always here the term, but people always ask me what it means. “Accelerated Weekly or Bi-Weekly Payments”.

So here goes……..

Mortgage payments are calculated on (12) Monthly or (24) Bi-Monthly payments per year.

But when you pay Bi-Weekly you make 2 extra payments (26) per year. So you pay the same yearly amount but roughly 8 % less per payment.

So Bi-weekly accelerated means you pay the Bi-monthly amount 26 times per year or roughly 8% extra per year and in this way you Accelerate your payments.

So for example:

$500,000 Mortgage Payment = $1058.19 / bi-month (24) or $25407.12 / year

$500,000 Mortgage Payment = $977.17 / bi weekly (26) or $25407.12 / year

$500000 Mortgage Payment = $1058.19 / Accelerated Bi Weekly (26) or $25407.12 / year

I Hope this helps

As always, feel free to reach out anytime.

Tom Parent

Parenting people to their dreams!

When conventional lenders (such as banks or credit unions) deny mortgage financing, it can be easy to feel discouraged. However, it is important to remember that there is always an alternative!

If you’re seeking a mortgage, but your credit score is damaged in some way and big institutions won’t lend you the money, you’ll find yourself in what’s commonly referred to in the industry as the “Alternative-A” or “B” lending space.

Much like the A Lender space (big banks, credit unions, etc.), there are various companies which operate in the B lending space. Alternative lenders cater to individuals who lack a strong credit history, or a guaranteed income (recent immigrants, or the self employed, for instance). As a result, these lenders generally have lower entry qualifications, which are offset by higher interest rates.

Why is alternative lending necessary? 

• CRA arrears
• Income issues such as non-traditional income as with self-employed borrowers
• Credit issues such as low credit score, credit arrears, current mortgage or even bankruptcies
• Unexpected liens on title
• Foreclosure situations
• Unique financing needs/opportunities

Beyond B-lenders are another alternative, which are known as Private or Unregulated lenders. These could just be individuals with money who are looking to invest. They are not regulated by any agency, and their rates and fees could be quite high.

These lenders are not required to stress test mortgage applicants, but many will abide by lower qualification rates. As a result, getting approved for a loan through an alternative or uninsured lender can be much easier than going through a traditional bank or credit union. Again, it is vital to pay close attention to the deal an unregulated lender offers. Lower qualification rates tend to come with baggage in the form of high interest rates or penalties.

Considerations for Alternative Mortgages Due to the “B” Lender space, it is important to take a good look at the conditions for these mortgage products to ensure that you won’t get trapped with rates you can’t afford.

Before considering an alternative mortgage, there are a few things you should ask yourself:

1. What issue is keeping me from qualifying for a mortgage today?
2. How long will it take me to correct this issue and qualify for a mortgage?
3. How much do I currently have available as a down payment?
4. Am I willing to wait until I can qualify for a regular mortgage, or do I want/need to get into a certain home today?

If you are someone who is ready to go ahead with an alternative mortgage due to a bruised credit score, or you don’t want to wait until you’re able to qualify with a traditional lender, these are five questions you should ask when reviewing any alternative mortgage product:

1. How high is the interest rate?
2. What is the penalty for missed mortgage payments? How are they calculated? What is the cost to get out of the mortgage altogether?
3. Is there a prepayment privilege? For example, are you able to avoid penalties if you give the lender a higher mortgage payment once a month?
4. What is the cost of each monthly mortgage payment?
5. What does it look like when it comes to renewal?

When it comes to the alternative lending space, things can get a bit murky. If you are struggling to obtain an A-Lender mortgage, I would be happy to discuss your options with you and help you source an alternative.

You might be surprised to learn that you don’t need to be one of the Ultra rich or make six figures to have a second property. You just need to have knowledge, determination and financial planning!

If you are purchasing a secondary property with the intention to rent, here are a few extra things to know:

1. The minimum down payment required is 20% of the purchase price, and the funds must come from your own savings; you cannot use a gift from someone else.
2. Only a portion of the rental income can be used for qualifying and determining how much you can afford to borrow. Some lenders will only allow you to use 50% of the income added to yours, while other lenders may allow up to 80% of the rental income while subtracting your expenses. This can have a much higher impact on how much you can afford.
3. Interest rates typically have a premium on them when the mortgage is for a rental property versus a mortgage for a home someone intends on living in. The premium can be anywhere from 0.10% to 0.20% on a regular 5-year fixed rate.
4. If you do eventually want to sell this property, do note that it will be subject to capital gains tax. Your accountant will be able to help you with that aspect if you do decide to sell in the future.

Prior to taking on a secondary property, you will need to have your down payment in order (whether from savings or home equity) based on the minimum requirements, and also have sufficient credit score to qualify. In addition to the down payment, you will also need to pass the stress-test and prove that you can financially carry your existing mortgage and the new application.

If you are looking to purchase a rental property, give me a call before you start. I would love to help review your financial situation, current mortgage and equity, and help you make a plan. The keys to success are right around the corner with a little bit of expert advice!

A credit score is a Credit Rating. There are 2 different Credit Rating sources, Equifax and TransUnion. Equifax is by far the more popular.

All the Creditors you deal with including Car Loans, Credit Cards, Communication Services etc., all report to Equifax on a monthly basis about your debt servicing. They report missed payments, how much you owe, bankruptcies, how many months you are late with a payment and so on.

they report on:

R – Revolving credit (Credit Cards)

I – Installment Debt (Car Loans)

M – Mortgage

C = Line of Credit

O – Open Account (a new account where they borrower hasn’t had to make a payment yet)

From there they develop a Rating represented by a number. So the higher the number the better of rating to a maximum of 900.

Typically anything above 680 is considered very good. Below 680 is considered a little bruised. So Prime A institutional lenders generally deal above 680. Where Subprime Lenders deal below 680.

Even if you have a history of bad credit, its not to late to start to repair it.

Here are some ways to repair Damaged Credit Ratings:

1. Create a Budget – this helps you be realistic about  your spending habits. Be honest with yourself though about needs and wants when creating a budget.

2. Pay Down existing debt – this may be overwhelming but with a budget it will be much easier.

3. Pay bills on time – This is very important. In fact it counts for 35% of your credit score.

4. Credit Utilization – Try to keep you balance below 35% of the limit. In fact if you have one Credit Card maxed out and you have another Credit Card with a very low balance, you should transfer some balance to this card.

5. Apply for new credit sparingly – every application for credit is reported as a “hard inquiry” and all though this has limited impact on your score, a hard inquiry can work against you  (if you already have bad credit).

6. Get a Secured Credit Card – this is credit secured by cash. So if you deposit $2000 toward your card, you now have $2000 to spend.

7. Transfer balances with caution – its a good idea to balance your debt with Credit Utilization in mind but be careful of the Interest rates. This may negatively affect you.

8. Keep old accounts open – once paid off it is very tempting to close that account, but actually your credit “history” is more easily tracked and calculated with older accounts as you appear more credit worthy to Lenders with older accounts. Also if you have a lot of credit cards maxed out, closing an account can affect your credit utilization (average credit) negatively as opposed to having Zero owing on an account.

Thanks for reading

Tom Parent – Mortgage Agent.

Parenting people to their dreams.

Dreaming of Home Renos?

By using the Equity in your Home, you can access the funds you need to renovate your home and make it your own! This is known as a Refinance or Equity Takeout.

Imagine a New Kitchen or New Bathrooms or a Redesigned Backyard, New Flooring, a Basement Family Room, a Pool, Landscaping. All possible by using you Homes Equity.

When it comes to home renovations, always do the things that are going to valuate you home the most. Those items in order are: Kitchen, Bathrooms and Curbside appeal and useable living space (i.e. finishing basement)

As always

Reach out to me at any time.

Tom Parent

“Parenting” you to Better Mortgage Solutions.

(519) 301 5149

Did you know? The majority of Canadian mortgage consumers typically opt for Fixed-Rate Mortgages? More specifically, those with 5-year terms. This is largely in part because these are the most successful/profitable products for Lenders.

Although 5-year Fixed rate Mortgages are Popular and the Interest Rates are very attractive, it doesn’t necessarily mean that this is the best product for a particular individual. In fact 66% of all 5 year Fixed Mortgages are broken 2.7 years into the 5 year term.

Before deciding on a Mortgage Term Length and Product, always ask your self a few questions:

1. Where do I see myself in 1 year, 2 years, 5 years etc.?
2. Will I have more kids?
3. Will I be retired?
4. Will I have to move to a new city for my career?
5. Will I still bein my current relationship?

These questions are important because it will really qualify what Mortgage Product you need. In other words, if your planning on moving to another city or buying a bigger house in 2 years, then you will not want to commit to a 5 year Fixed Mortgage. When Fixed Mortgages are broken, very often Pre-Payment Fees will apply which can be catastrophic to your Financial well being. These Penalties or fees can be in the Tens of Thousands of dollars. I personally have seen them upwards to $47,000.

So, perhaps a shorter term Mortgage might be better for your life or even a Variable rate Mortgage.

Always seek a Mortgage professional’s advice and be sure to be as Transparent as possible. It could mean a world of difference when your Life unexpectedly changes.

As always, reach out anytime!!

Tom Parent “ing” you to Better Financial Solutions

phone: (519) 301-5149

email: tom.parent@domionlending.ca

#fixedratemortgages #mortgageadvice #mortgageprofessional #mortgageagent #mortgagebroker

Did you know?

Using a Mortgage Broker can:

1) Save you time when it comes to applying to lenders.

2) Often result in a better Mortgage rate than a bank.

3) Ensure unbiased advice and greater choice of Mortgage Product.

4) Save you money as we are compensated directly by the lender and most of the time there is no cost to the customer.

5) Find Mortgage solutions that banks don’t want to deal with such as bruised credit or high debt load.

As Canadians , we are very Institutionalized. We have been taught by our Parents before us to think that we go to the Bank for Money. We view banks as Institutions of Trust where we can “rest assured” knowing we have left our most feared worries and concerns are in the hands of extremely capable individuals and Officers.

The Reality is that Canadian’s and Mortgage seekers the World over, are becoming more and more used to the idea of dealing with Mortgage Brokers for the reasons listed above. I often tell my clients, “If you need Insurance, you go to an Insurance Broker, If you need to buy Stock, you go to a Stock Broker because they do the work for you.” That’s right, I go shopping to 115 different Lenders to find the right Mortgage Solution for you while developing the Mortgage Strategy that best suits you life.

In most cases, people think that Mortgage shopping is buying a rate or getting the best rate but they couldn’t be more wrong. Rates work on a sliding scale that the Mortgage shopper must qualify for. The determining factors are 1) Loan Amount to Property Value Ratio. 2) Credit Rating/Score. 3) Income to Debt Load ratio. After we have determined this, we look to a Mortgage Product that suits each individuals needs and situation.

In addition, the biggest thing that we Mortgage Brokers take Pride in and what sets us apart from the Banks, is our concern for our Clients well being. It is absolutely prudent that a Mortgage Professional digs deep into your current life and future life plans by asking these questions. “Where do you see yourself in 5 Years or 10 years? Will you have more kids? (Upsize), Will your kids move out of the house? (downsize), Will you retire? Will you job or career take you to another city? All these questions have serious impacts on the mortgage product that should be selected for you. If these questions are not answered, the results could be absolutely Catastrophic. I recently heard a story on the News where a fellow was charged a $47000 penalty by one of the major banks because he sold his house. Had these very simple questions been asked, this fee could have been very simply avoided.

I can’t tell you the number of times I have heard someone say “I wish I would have talked to a Mortgage Professional” or ” I am so glad I reached out to you because I almost made a very bad mistake”

signing off for now.

As always, call me or reach out with questions.

Tom Parent”ing” people to better Mortgage Solutions