20 Dec

10 First Time Homebuyer Mistakes


Posted by: Kimberly Walker

If you’re on the hunt for your first home and want to have a smooth and successful home purchasing experience avoid these common first-time homebuying mistakes.

1. Thinking you don’t need a real estate agent

You might be able to find a house on your own but there are still many aspects of buying real estate that can confuse a first-time buyer. Rely on your agent to negotiate offers, inspections, financing and other details. The money you save on commission can be quickly gobbled up by a botched offer or overlooked repairs

2. Getting your heart set on a home before you do your homework

The house that’s love at first sight may not always be what it seems, so keep an open mind. Plus, you may be too quick to go over budget or may overlook a potential pitfall if you jump in too fast.

3. Picking a fixer-upper because the listing price is cheaper

That old classic may have loads of potential, but be extra diligent in the inspection period. What will it really cost to get your home where it needs to be? Negotiating a long due-diligence period will give you time to get estimates from contractors in case you need to back out.

4. Committing to more than you can afford

Don’t sacrifice retirement savings or an emergency fund for mortgage payments. You need to stay nimble to life’s changes, and overextending yourself could put your investments – including your house – on the line.

5. Going with the first agent who finds you

Don’t get halfway into house hunting before you realize your agent isn’t right for you. The best source: a referral from friends. Ask around and take the time to speak with your potential choices before you commit.

6. Diving into renovations as soon as you buy

Yes, renos may increase the value of your home, but don’t rush. Overextending your credit to get it all done fast doesn’t always pay off. Take time to make a solid plan and the best financial decisions. Living in your home for a while will also help you plan the best functional changes to the layout.

7. Choosing a house without researching the neighbourhood

It may be the house of your dreams, but annoying neighbours or a nearby industrial zone can be a rude awakening. Spend time in the area before you make an offer – talk to local business owners and residents to determine the pros and cons of living there.

8. Researching your broker and agent, but not your lawyer

New buyers often put all their energy into learning about mortgage rates and offers, but don’t forget that the final word in any deal comes from your lawyer. As with finding agents, your best source for referrals will be friends and business associates.

9. Fixating on the lowest interest rate

Yes, a reasonable rate is important, but not at the expense of heavy restrictions and penalties. Make a solid long-term plan to pay off your mortgage and then find one that’s flexible enough to accommodate life changes, both planned and unexpected. Be sure to talk your your Dominion Lending Centres mortgage professional to learn more.

10. Opting out of mortgage insurance

Your home is your largest investment so be sure to protect it. Mortgage insurance not only buys you peace of mind, it also allows for more flexible financing options. Plus, it allows you to take advantage of available equity to pay down debts or make financial investments.

15 Dec

Bank of Canada Takes Action


Posted by: Kimberly Walker

The Bank of Canada raised the target overnight rate another 25 basis points to 1.0% making it two hikes in a row following seven years of increasing monetary stimulus. The outsized 4.5% growth in GDP in the second quarter precipitated this action, despite two offsetting factors: the recent surge in the Canadian dollar, up more than 8% in the past three months, to over 81 cents U.S.; and the continued below-target rate of inflation.
Today’s monetary tightening comes at the same time that Federal Reserve officials are suggesting that another rate hike in the U.S. next week is unwarranted–adding further upward pressure on the loonie. The economic and political uncertainty in the U.S. has put considerable downward pressure on U.S. bond yields, while in Canada, interest rates are rising.

The Canadian economy is on a tear, dramatically outperforming the U.S., and the battering by both Hurricanes Harvey and Irma will only widen the disparity. The growth in Canada is becoming “more broadly based and self-sustaining,” according to the Bank’s press release. Last week’s Q2 GDP release showed that consumption is robust, supported by “solid employment and income growth”. Business investment and export growth have also picked up. The central bank does, however, expect a more moderate pace of economic growth in the second half of this year.

The housing sector has slowed in some markets–particularly around the GTA–in response to recent changes in tax and housing regulations in Ontario. But this is a change welcomed by the Bank and government authorities concerned about the continued rise in household debt. Tighter monetary policy portends further increases in mortgage and other lending rates. The Bank suggests that “given elevated household indebtedness, close attention will be paid to the sensitivity of the economy to higher interest rates.” You can’t get more transparent than that. The Bank of Canada welcomes a slowdown in housing and borrowing activity.

Questions remain regarding the potential growth of the economy, which was earlier estimated by the Bank’s economists to be about 1.7%. While the economy is closer to full employment than earlier forecasted, the Bank believes there remains excess capacity in the jobs market. This statement possibly suggests that the economy can grow at a faster pace than the Bank initially thought without triggering inflation.

Inflation does not currently appear to be of primary concern. While inflation remains below the target rate of 2% and wage pressures are subdued, there has been a slight increase in the consumer price index and the Bank’s core measures of inflation, which is “consistent with the dissipating negative impact of temporary price shocks and the absorption of economic slack.”

Once again the Bank of Canada reminds us the path of further policy decisions is not predetermined but will be dependent on incoming economic and financial data. This cautionary note is consistent with the “significant geopolitical risks and uncertainties around international trade and fiscal policies.”

14 Dec

Stress test, supply issues will limit home prices says Royal Le Page


Posted by: Kimberly Walker

The impact of the B-20 mortgage rule changes by OFSI which come into effect in January will, along with supply issues, limit national home prices in the year ahead.

That’s the forecast by Royal Le Page which expects a 4.9% rise in price appreciation across 53 key Canadian cities by the end of 2018 to $616,919.

“It is prudent that policy makers introduce measures that help protect the housing market from runaway price inflation,” said Phil Soper, president and CEO, Royal LePage, “However, natural supply and demand forces will always triumph over regulatory tinkering. Attempting to use public policy to steer property prices in huge, rapidly growing cities like Toronto and Vancouver is like a tugboat trying to turn an ocean liner. Consistent, measured policy can have a positive impact. Just don’t try to turn the market on a dime or you risk sinking the ship.”

Soper added that the continued tight supply in some markets will continue to drive prices higher once the initial impact of the OSFI stress tests moderates, while those with softer demand will struggle to adapt to the affect of the tightened mortgage rules.

Prices in the GTA are forecast to outperform the national average with a 6.8% increase to an aggregate $901,392 with condos fueling the rise.

The Greater Montreal Area will see the second highest growth at 5.5% to $408,285.

Greater Vancouver will see a 5.2% price rise to an aggregate $1,353,924.

“We are watching how the new OSFI stress test will impact the Greater Vancouver market,” said Randy Ryalls, general manager, Royal LePage Sterling Realty. “Low inventory will continue to put upward pressure on prices. However, with the introduction of the stress test, as well as other factors such as potential interest rate hikes, price growth will likely be limited to mid-single digits.”

The price rise forecast for Ottawa is 3.2% to 458.208; Calgary up 2.3% to $494,109; Edmonton up 1.5% to $382,180; Winnipeg up 4% to $315,120; and Halifax up 2.5% to $326,975.

14 Dec

Why So Many Mortgage Documents?


Posted by: Kimberly Walker

Documents, documents and more documents. Yes that’s right you will need to provide your Dominion Lending Centres mortgage broker with as many documents that we request upfront as possible. Why? Because the more supporting documentation you have available will help us as brokers to find you your best mortgage options. If you don’t have everything on hand e-mail a PDF of what you have and start digging up the rest as soon as possible.

Why so many documents you ask? While the lending market isn’t what it used to be, it is now much more strict and complex then a few years ago. Lenders are asking for WAY more documentation before they will lend you money. Yes, there have been instances of mortgage fraud that likely led to more scrutinized lending and Government regulations that lenders have to abide by are always changing. Mortgage lenders need to protect their investors and help ensure our Canadian housing market remains strong.

It may seem like a pain but ask yourself this if you had a large amount of money would you lend it out to somebody without proof they have income stability and/or the means to pay it back? Pretty sure your answer is no (at least mine is).

Below is a list of typical documents lender and mortgage insurers request. If you would like a tailored list please contact your DLC Mortgage Professional to discuss your application.

Income – lenders are looking for proof of income stability.

Self-employed Income

* 2 years of Income Tax Returns, Business Financials, CRA Notice of Assessments. Often it’s best to have your accountant e-mail them to us so no pages are missing.

Rental income

* Lease agreements

* T1-General tax returns with the Statement of Real Estate Activities. If you don’t claim your rental income let us know as this may affect how your mortgage is approved.

* Proof of the rental income being deposit on a regular basis into your bank account.

Guaranteed Employment Income

* A couple of recent pay stubs

* A job letter confirming your position, guaranteed pay and hours, if you are seasonal, contract or any specific information that relates to your income stability. Lenders will call your employer to verify the letter and ask for more information as possible. (Sample Job Letter)

* 2 Years of CRA Notice of Assessments

* 2 Years T1-Generals

Commission, Overtime, Seasonal, Contact or Bonus Income.

* A couple of recent pay stubs

* Job letter

* 2 years of T1-General Income tax returns

* 2 years of CRA Notice of Assessments

Liabilities – We will see most of your consumer credit accounts on your credit report however we may require some additional paperwork

* Current mortgage statements

* Property tax statements and proof of payment

* Child Support Payments proof via court orders and bank statements

* Alimony via Separation Agreements

* Proof your income tax has been paid. This is the most important item to pay because the Government has more power than the lenders. If you are wanting to refinance your mortgage to pay CRA contact us to discuss your options.

* Proof debts have been paid. If a zero balance is require you must show the account at a zero balance or the current balance and the proof of payment

Down Payment & Closing Costs

* The last 90 days of savings history. Any larger deposits have to be sourced.

* Gift Letter (some lenders have prescribed forms)

* Statement showing gift deposited into your account

* Property sale contracts and mortgage statements

About Documentation from Financial Institute

* Must have account ownership proof. For example e-statements are the best as they typically have your name, account number and the providers details already on the statement

* Screenshots work if the providers logo/name are clearly shown on them as well as the account holders name. If the account number only shows then you will have to provide an additional document from the provider with both your account number and name.

* If you are having your account history printed at a Teller please have the Teller stamp the paperwork

Documentation varies by applicant and lender. Be prepared by contacting your mortgage professional today for your tailored documents list.

13 Dec

RBC says housing, economy will ease in 2018


Posted by: Kimberly Walker

Canada’s strong economy is set to continue into 2018 but it – and the housing market – are set to moderate.

In its latest Economic Outlook, RBC says that although Canada’s economic growth will lead the G7 nations, it will fall from 2017’s predicted 2.9% GDP growth to 1.9% in 2018, followed by 1.6% in 2019.

“Canada’s robust growth in 2017 is likely to moderate somewhat in 2018 as key economic drivers shift, but we still anticipate the economy will continue to outperform its potential,” said Craig Wright, Senior Vice-President and Chief Economist at RBC.

The housing market was one of the key drivers of Canada’s economy in 2017 but for next year there will be a shift to business investment and government infrastructure spending.

The cooling of the housing market which has already begun in recent months will continue with mortgage underwriting rules tightening, and interest rates rising to 1.75% by the end of 2018 RBC forecasts.

All provinces are forecast to grow their economies in 2018 but generally at a slower pace than in 2017. However, RBC expects Saskatchewan and Newfoundland and Labrador to buck this trend with growth exceeding that of 2017.

7 Dec

Strength in Turbulent Time – Impacts of Canada’s New Mortgage Rules


Posted by: Kimberly Walker

Mortgage brokers have become an integral part of Canada’s financial landscape. Rather than deal directly with banks, about 30 per cent of Canadians turn to independent brokers to help them secure the best terms for their loan.

But as residential real estate markets continue to power ahead at a time of economic uncertainty, government regulators have started to tap the brakes. And it’s understandable that many mortgage brokers are getting edgy about what lies ahead.

Lending rules for homes worth more than $500,000 have been toughened, lowering the amortization period to 25 years for high-ratio insured mortgages and tightening processes for mortgage approvals based on income.
New mortgage “stress tests” from the Office of the Superintendent of Financial Institutions (OSFI) take effect on January 1. They’re designed to ensure that if interest rates begin to rise from historically low levels, Canadian homeowners will be able to withstand the resulting pressure. It’s not an altogether unreasonable move given the context: Canada has the highest level of private debt of all G-7 countries.

It’s all the more relevant because the Bank of Canada has raised its key interest rate target by a quarter of a percentage point twice this year. In turn, those increases have pushed up the big bank prime lending rates which are used to determine rates for variable-rate mortgages and lines of credit.

The new rules are expected to reduce the number of first-time homebuyers entering the market. Now, even with a top-up from the Bank of Mum and Dad that bumps them over the 20 per cent insurance threshold, borrowers still have to pass that stress test for higher rates.

Many mortgage brokers are rightly concerned about an immediate hit to the overall volume of their business.

After all, many Canadians will now need more income for the same amount of mortgage. Early estimates suggest that a potential buyer of a $1-million home putting down 20 per cent, would see about a 15 per cent reduction in purchasing power.

There’s another downside to the coming change as well: The rules will not apply to mortgage renewals with an existing lender which has the effect of entrenching existing relationships and reducing the incentive to shop around for a better deal – and new lender.

For the overwhelming majority of brokers, however, any short-term impact is offset by the promise of a more sustainably healthy residential real estate market.

Mortgage brokers with high standards, who have a practice rooted in robust verification, due diligence and KYC rules, will be nominally affected. That’s also true for those who already adhere to the industry “best practice” of thoroughly reviewing the sources of a down payment.

As it is in any sector, disruption of the status quo causes anxiety. But in the case of mortgage brokers, the changes that lie ahead will lead to a stronger business in turbulent times.

4 Dec

3 Mortgage Terms You Need to Know


Posted by: Kimberly Walker

Prepayment, Portability and Assumability


One of the most common questions we get is about mortgage prepayments. The conditions vary from lender to lender but the nice thing about prepayments is that you can pay a little more every year if you want to pay off your mortage faster. A great way to do this is through prepayments.

They’re always something to ask your broker about because each lender is very different. You can always do an increase on your payments and that means that you pay a little bit more each week or each month when you make your mortgage payment. You can also make a lump sum payment. Perhaps you get a bonus every year or you get a lot of Christmas money. You can just throw that on your mortgage. It goes right on the principle so you’re not paying interest on those extra funds. Paying a big chunk at once also means that a higher percentage of future payments will also go towards the principle.


Portability means that if you sell your house and you want to take your current mortgage and move it to your new house you can. The one thing about portability that we always have to keep in mind is that we can’t decrease the mortgage amount but we can do a little bit of an increase often through a second mortgage or an increase we call a blend and extend. It just gives you the flexibility of moving the mortgage from one property to the next property. It also gives you the flexibility of being in control of where you mortgage is going and not having to break your mortgage every time you decide to move.

Moving a mortgage to a new property avoids things like discharge fees, the legal cost of registering a new mortgage and the possibly of a higher interest rate. It’s great to be able to keep that rate for the full term rather than having to break and pay those penalties half way through.


Assuming a mortgage comes into play more often where there are family ties. Say your parents have a mortgage and you move into that house. Rather than you going out and getting a new mortgage and your parents having to pay those discharge fees, you have the ability to assume their existing mortgage at that current rate. All you have to do is apply and make sure you can actually afford the mortgage at what they’re paying. You have to be able to be approved on the remaining balance on the mortgage just like you would on any other mortgage. Just because your parents have an eight hundred thousand dollar mortgage doesn’t mean you’ll be able to take that over.