When you apply for a loan, lenders assess your credit risk based on a number of factors. Your credit score, as well as the information on your credit report, are key ingredients in determining whether you’ll be able to get financing and the rate you’ll pay. To get approved for a loan and to pay a lower interest rate it’s important that your credit report reflects that you’re a responsible borrower who pays their debts on time with a low risk of defaulting.

Credit Report vs. Credit Score
To start with, it’s important to understand that your credit report and your credit score are two separate things.

Credit Report – Your credit report contains information detailing your credit history. Sources include lenders, utility companies and landlords. This information is compiled by one of two major credit-reporting agencies (Equifax and TransUnion) that try to create an accurate picture of your financial history. Credit files include information such as:
• Name, address and social insurance number
• Types of credit you use
• When you opened a loan or line of credit
• The balances and available credit on your credit cards and other lines of credit
• Information about whether you pay your bills on time
• Information about any accounts passed to a collection’s agency
• How much new credit you’ve opened recently
• Records related to bankruptcy, tax liens or court judgments
Errors on your credit report can reduce your score artificially. In fact, 1 in 4 consumers have damaging credit report errors. Therefore, it’s important to stay up-to-date on your credit report history. If there is an error, you should dispute it and get it removed as soon as possible. Last year, 4 out of 5 consumers who filed a dispute got their credit report modified, according to a U.S. study by the Federal Trade Commission.

Credit Score – Your credit score is the actual numeric value extrapolated from the information in your credit report. A credit-reporting bureau applies a complex mathematical algorithm to the information in your credit file to create your numerical credit score.
Beacon is the most widely known credit scoring formula in Canada and is used by many creditors. Your FICO score can range from 300 to 850, with under 400 being very low and 700+ putting you in the healthy range. Your credit score is meant to give potential lenders an idea of how big of a financial risk you are. The higher your score, the less likely you are to default or make late payments and the more likely you are to be approved for financing.
Your score is based most strongly on three factors: your payment history (35% of your score), the amounts owed on credit cards and other debt (30%) and how long you’ve had credit (15%).

What Are They Used For?
Lenders glance at your credit score to determine your credit risk. Most traditional lenders have pre-set standards. If your credit score is within a certain range, they’ll offer you certain credit terms. If you don’t fall within their approved range, then you may be denied. Most banking institutions will only approve a loan if the client has a credit score of at least 640. A score of 700, however, gives you a much better chance at gaining approval at most lending institutions and at reasonable rates.
As far as interest rates are concerned, banks use an array of factors to set them. The truth is they are looking to maximize profits for themselves and shareholders. On the other hand, consumers and businesses seek the lowest rate possible. A commonsense approach for getting a good rate would be having the highest credit score possible.
It’s important to note that if you apply for a loan, the lender will most likely pull your credit score through what is commonly called a “hard inquiry” on your credit, which slightly lowers your credit score. Therefore, it’s important to know your credit score ahead of time, fix any errors, and apply for loans which you have a good chance of being approved for.

Things You Can Do to Improve Your Credit Score

1. Check your credit report for errors – While the credit agencies do their best to keep your record free of errors, they can make mistakes. It’s important to check your credit report at least once a year — consumers are entitled to one free credit report every 12 months — to ensure all of the information is correct. Each agency may have slightly different information and, consequently, may have errors another credit report doesn’t.
2. Set up payment reminders – Making credit payments on time is one of the biggest contributing factors of your credit score. It may be helpful to set up automatic payments through credit card or loan providers so you don’t forget to pay when payment is due.
3. Reduce the amount of debt you owe – Stop using your credit cards. Use your credit report to make a list of all your accounts and check recent statements to determine how much you owe on each account and what interest rate they’re charging you. Then create a payment plan to lower or eliminate the debt you still owe.

How Dominion Lending Centres Can Help
Many businesses need financing to start or expand. Although your credit score is only one component of your lender’s decision, it’s an important one. If you have a low credit score and are unable to secure financing through a traditional bank, DLC Leasing will be able to get you approved with our team of lenders. When the bank says no, our team will still say yes with flexible terms and interest rates.

If you have a mortgage, chances are unless you win a lottery (cha-ching $$$) you’ll be doing a mortgage renewal when your current term has finished.

While most Canadians spend a lot of time, and expend a lot of effort, in shopping for an initial mortgage, the same is generally not the case when looking at mortgage renewals.

So what is a mortgage renewal?

Mortgages are amortized* over a set term* which can vary from 1-10 years.

About 6 months before the end of your term, your current lender will suddenly become your “Best Friend” showering you with attention and trying to entice you with early renewal offers… Please, please, please Mortgage borrower, sign here on the dotted line to renew… it’s sooo easy!!   

You have 3 options

1. Sign and send back as is (don’t do it, really I mean it… don’t do it!!)
2. Check the market to make sure you are getting the best rate and renegotiate with your current lender
3. Talk to a Dominion Lending Centres Mortgage Expert and together we can discuss the best options available for your situation.

Lenders know that 80% of people will sign their renewal forms, because it’s easy.  Banks & Lenders are a business and as such they want to make the highest profits to keep their shareholders happy. As an educated consumer, you need to take the time to ensure you are being offered the best possible rate & terms you can get.   Remember all those hours of research you did regarding lenders and mortgage rates when you were buying your first home?

Yes, signing the renewal document is easy, however, it’s in your best interest to take a more proactive approach.  Money in the lenders pocket comes directly out of your pocket… so its time to get to work!

5 steps to save you money on your mortgage renewal

1. Receive the renewal offer from your current mortgage lender and examine immediately, which gives you enough time to make an informed decision.
2. Do your research via the internet and phone calls to find out about current rates.
3. Phone your current lender and negotiate!
4. If your lender will not offer you a better rate then it’s time to move your mortgage. YES, you will have to complete a mortgage application and gather documentation, just like you did for your original mortgage.
5. Take a look at your budget and see if you can increase the amount of your mortgage payments above the mandatory payments and save money by paying off your mortgage quicker.

Your mortgage is one of your biggest expenses.   For this reason, it is imperative to find the best interest rates and mortgage terms you possibly can.

Nothing seems to perk up interest in home buyers like the mention of a ‘secondary suite,’ which brings up those other sweet words — ‘mortgage helper.’ However, due diligence is necessary to confirm the legal parameters of having a secondary suite, which varies somewhat from one municipality to another.In the Fraser Valley, all municipalities require registration of secondary suites by the home owner and fees payable to the municipality to compensate for the increase in residential usage for services such as; water, sewer, garbage and recycling. That can be considerable when a secondary suite could up to double the volume of services required.

In each of the Fraser Valley Board communities, all secondary suites are defined as livable units that provide the essentials of an independent living space and follow these rules:

• Meet the BC Building Code which sets out minimum provisions for public health, fire protection, and structural sufficiency. Section 9.36 of the BC Building Code outlines specific requirements for secondary suites, including requirements for fire separation, smoke alarms, access and egress, and other safety standards as defined by the Code.
• Must meet all municipal bylaws.
• Must be registered as secondary suites.
• Must comply with the BC Building Code which stipulates a size not more than 40 per cent of the total building floor area, or 90 sq. m. (968 sq. ft.) of total floor space.
• Property owner must live on the premises; the exception is Delta where it’s not required.
• Property owner must agree to an inspection by the bylaw department.
• Permitted in certain zones of each city, but not all zones.
• Only one secondary suite is permitted on each property.
• The suite must be located in the single family dwelling, not in a townhouse unit, row house, duplex, coach house or multi-family building or detached building (The exception is in Mission).
• Under the Strata Property Act, a secondary suite cannot be subdivided from the building.
• You may need to conduct a Property Title Search to determine whether there are any restrictions registered on the title of the property that may not allow the owner to have a secondary suite such as a restrictive covenant or a Land Use Contract.
• The existence of a secondary dwelling unit is not determined by the payment of rent, nor is it negated by occupancy by family members or property owners.  If the facilities for an independent residence exist, then it is a secondary suite and subject to local bylaws and fees and provincial statutes.
• Realtors must not advertise suites in their property listings unless the suites have been registered.

The following highlights secondary suite guidelines that are specific or unique to each of the Fraser Valley municipalities.

Abbotsford

Describing its new Official Community Plan as “suite‐friendly,” Abbotsford allows the removal of old restrictive covenants in the hope that an estimated 80 per cent of Abbotsford homes will be eligible for suites.

• To accommodate parking, suites are generally allowed with the following conditions: not located in: a cul‐de‐sac, strata land, or arterial street. There must be a minimum 12 metre frontage.
• At least one off-street parking space must be provided for the secondary suite, in addition to the two spaces provided for the principal dwelling.
• Existing suite registration fee (infrastructure fee also required for current year) – $572
• New suite registration fee – $260
• Infrastructure fee paid through property taxes on annual basis – $260
• Suite removal permit – $62.50

Delta

• The $300 annual reduction in flat rate utility fees will continue to be offered to secondary suites with an Occupancy Permit until a water meter is installed.
• All properties with a secondary suite will be receiving a water meter installed at Delta’s cost. Once the meter is installed, the property will be charged based on water consumption.
• Secondary suites are permitted in all single family zones with the exception of the RS9 zone, which allows a detached secondary suite also known as a Coach House.
• Boarders are not permitted.
• One off-street parking space must be provided for all secondary suites. The precise stipulations, size and placement, is explained in detail on the Corporation of Delta’s website here.

Langley City

• All single family homes must have at least two off-street parking spaces. A secondary suite will require one more off-street parking spot.
• Fees:
  $40 re-inspection fee if initial inspection reveals changes have to be made to get legal standing as a secondary suite.

Langley Township

• Fees:
  Licence: $350 (For secondary suites occupied by family members where there is no income generated, there is a family rate of $175; but a statutory declaration exemption must be provided with the application.)
  Utilities: 30% of applicable water/sewer charges to be included on the Property Tax Statement

Mission

A secondary dwelling unit is one in addition to the main dwelling unit, (suite, coach house or cottage) used or capable of being used as an independent residence by one or more persons, having sleeping and living spaces, a bathroom and cooking facilities and that can be a suite, coach house or cottage.

• Fees:
  $77.44 For both the Decommissioning a Secondary Dwelling Unit form and the Application for a Secondary Dwelling Exemption
  $1,188 Water, sewer, garbage and recycling annual services cost above the base rate for a single family

Note: An exemption may be available to the home owner for an unoccupied secondary dwelling unit. Any existing exemption is void from the date of a sale. It is the seller’s responsibility to inform any potential buyers of the conditions of the exemption. It is the new homeowner’s responsibility to apply for the utility exemption if they qualify or apply to decommission their Secondary Dwelling Unit within 60 days of the sale.

Surrey

• an additional off‐street parking space is required for the suite
• Fees:
  Secondary Suite Service Fees $568
  Garbage $144
  Water, based on consumption or $332
  Sewer $580 or based on 80 per cent water consumption
  Penalty of $1,000 if the City of Surrey becomes aware of a suite that is not registered

White Rock

• one additional on-site parking space for occupants of the registered secondary suite
• Fees:
  An annual service fee of $270

**The information on secondary suites within each jurisdiction as cited in this article comes with a disclaimer that the information is accurate only to the best of our knowledge at the time of publication, and does require original source verification for legal, financial, or other than general information purposes.**

If you happen to be going through, or considering a divorce or separation, you might not be aware that there are mortgage products designed to allow you to refinance your property in order to buyout your ex-spouse.

For most couples, their property is their largest asset and where the majority of their equity has been saved. In the case of a separation, it is possible to structure a new mortgage that allows you to purchase the property from your ex-spouse for up to 95% of the property’s value. Alternatively, if your ex-spouse wants to keep the property, they can buy you out using the same program.

Here are some common questions about the spousal buyout program:

• Is a finalized separation agreement required?

Yes. In order to qualify, you will be required to provide the lender with a copy of the signed separation agreement. The details of asset allocation must be clearly outlined.

• Can the net proceeds be used for home renovations or to pay out loans? 

No. The net proceeds can only be used to buy out the other owner’s share of equity and/or to pay off joint debt as explicitly agreed upon in the finalized separation agreement.

• What is the maximum amount that can be withdrawn?

The maximum equity that can be withdrawn is the amount agreed upon in the separation agreement to buy out the other owner’s share of property and/or to retire joint debts (if any), not to exceed 95% loan to value (LTV).

• What is the maximum permitted LTV?

Max. LTV is the lesser of 95% or Remaining Mortgage + Equity required to buy out other owner and/or pay off joint debt (which, in some cases, can total < 95% LTV). The property must be the primary owner occupied residence.

• Do all parties have to be on title?

Yes. All parties to the transaction have to be current registered owners on title. Solicitor is required to do a search of title to confirm.

• Do the parties have to be a married or common law couple?

No. The current owners can be friends or siblings. This is considered on exception with insurer approval. In this case, as there won’t be a separation agreement, there is a standard clause that can be included in the purchase contract that outlines the buyout.

Looking to Renew Your Current Mortgage or Purchase a Home.

Call today for a Rate HOLD.

Effective Friday , September 1, 2017 some of our mortgage rates will be increasing.

Keeping you informed, Kimberly and Cindy Walker, Dominion Lending Centers 778-828-6186 kimberlywalker@dominionlendingcenters.ca

Ever wonder how your mortgage rate is determined? What factors make it jump from percentage to percentage? We are getting down to the nitty gritty today and giving you the facts on what impacts mortgage rates.

What affects a Mortgage Rate?

There are 10 factors that affect a mortgage rate:

1. Location
Depending on which province your home is located in, this will have an overall effect on your mortgage rate. Generally speaking, provinces with more competitive markets will have lower rates.

2. Rate Hold
A rate hold is a guarantee on a rate for 90-120 days. If your closing dates do not fall within this timeframe, then your hold will be re-assessed. If your rate hold is re-assessed and the lender’s rates at that time of re-assessment are higher than your initial rate, then your rates will go up accordingly. We always follow up with all of our clients on a regular basis to avoid this situation whenever possible!

3. Refinancing
Movement on your mortgage of any form can affect your rate typically when you are working with your existing lender. New buyers will have lower rates than refinances, but refinances will have lower rates than mortgage transfers. Mortgage Brokers can access multiple lenders to find the most suitable product for their client’s unique needs.

4. Home Type
Lender’s assess the risk associated with your home type. Some properties are viewed as higher risk than others. If the subject property is considered higher risk, the lender may require higher rates.

5. Income Property/ Vacation Home
As previously mentioned, lenders assess the risk on your property. If you are buying an income property or a vacation home than the lender can assess at a higher risk and a higher rate may apply. This is one of the major benefits to having a mortgage broker on your team! They have access to a variety of lenders that can offer you a rate lower than others as they can compare a large variety.

6. Credit Score
We have talked a lot about credit on our blog, and there is a reason for that. Your credit score is a large determining factor for your rate. Lenders want to see that you have a history of managing your credit well and that you will be able to pay back the lender overtime. For more information on fixing your credit, check out our free e-book, Credit Medic.

7. Insured or uninsured
With the changes that the federal government made back in October 2016 this has had a significant impact on mortgage rates if your mortgage is insured or not. Read our Change of Space guide to find out the full impact of these changes.

8. Fixed/Variable Rate
The type of rate you are wanting to get will also affect your rate. Fixed rates are based on the bond market and variable rates are based on the Bank of Canada (economy).

9. Loan to Value (LVT)
The higher the Loan to Value the higher the risk. You can have someone who has a $1 million mortgage but has $2 million in equity in that property and they would be viewed as a lower risk than someone who has a $200,000 mortgage and their property is only worth $220,000. To boot with the federal changes, the person with the higher risk mortgage (insured) is likely to get a more competitive interest rate than the client with $2 million in equity.

10. Income level
The final part in this rather large equation is your income level. Although this does not necessarily impact the rate itself, it does impact your purchasing power and the amount you are able to put down on a home. Essentially indirectly impacting the rate.

Each of these factors plays a factor in the rate you will be able to get through a lender. The easiest way to get the lowest rate is to work with a dedicated mortgage professional. They will put together a fail-proof plan to get you the sharpest rate. They also have access to a variety of lenders which saves you the time and trouble of shopping for your mortgage on your own. As a final point, mortgage brokers can also assess your unique situation and find the right mortgage for you. Their goal is to see you successfully find and afford the home of your dreams and set you up for future success.