Mortgage Brokers find you the best mortgage and interest that suit your unique needs. They do that by comparing all the offerings from the major banks, trust companies and credit unions. You get personalized service, flexibility, products at no cost to you, and yes, better rates!

Twenty-five or thirty years can sound like an impossibly long time to service a loan – and for many of us, it is. If you are looking to pay off your mortgage faster, here are some tried-and-true tactics to get you to financial freedom that much sooner!

Make a Double Mortgage Payment: A double payment once a year can shave over four years off the total life of the mortgage! Better yet, if your mortgage allows for double-up payments, another option is paying an extra $100 into your mortgage – per month. This can save you over $26,000 in interest on a 5.5% fixed-rate, 25-year amortized mortgage.

Increase Your Payment Frequency: Changing your mortgage from monthly to bi-weekly accelerated payments can shave over three years off your mortgage. At $2,000 a month, three years of no payments is worth $72,000 (not to mention the interest saved!).

Increase Your Payment: Did you know? A one-time 10% increase can shave four years off the mortgage. That’s $96,000 in savings! Imagine if you bumped the payment 10% every year from the get-go. You would be mortgage-free in 13 years—start to finish! Can’t do it? How about 5% every year? You would be mortgage-free in 18 years! You can also consider increasing the payment by the amount of your annual raise.

Lump Sum Payments: This is another option to become mortgage-free even faster! Even just one extra payment a year equivalent to one monthly payment will give you similar results as #2 above. Annual work bonuses or other extra-income is a great option for this.
Renegotiate When Rates Drop: Revisiting your mortgage is a good idea when rates drop. However, it is always best to get expert advice from a mortgage broker to ensure it makes sense for you. If so, the benefits can be huge! For instance, a 1% reduction on a $300,000 mortgage will save $250 a month—times five years, that’s $15,000.
Maintain a High Credit Rating: Even if you have already qualified for the mortgage you want, don’t let your credit rating slip. Pay your bills on time and keep balances low in relation to limits on credit cards, lines of credit, etc. Ideally, using 30% or less of your available credit will garner the highest results (assuming you pay the balances in full every month). Even if you’re filling your card to its credit limit max and paying it off in full each month, it will look like you are maxing out your credit limit and your credit score will drop accordingly.

Increase Your Mortgage: Increasing your mortgage for the purpose of debt consolidation can be helpful for paying off credit card debt, line of credits, car loan and so on for a better rate and a set payment plan.

Make an RRSP Contribution: By making an RRSP contribution, you can then use your income tax refund to pay down your mortgage!
Switch to a Variable Rate: Switching your mortgage to variable-rate while keeping your payments the same as if on fixed can help you pay your mortgage faster. Since variable rates are typically lower, you will be paying more to your principal loan versus the interest.
Caution: Variable rates are not for everyone. Always be sure to seek the help of a mortgage broker to find out if variable-rates are the best choice for you.

Take Your Mortgage With You: When you move, switch your old mortgage to the new property to avoid a penalty or higher rate on a new mortgage. This is called “porting”, however not all mortgages have this feature so be sure to ask! It is not widely known but could save you a ton of money.
Set Up Automatic Savings: Even setting aside $10 per paycheck can help! When your extra savings reaches the amount of one mortgage payment, apply it to the mortgage! This concept goes nicely with #4.

Unhook From The Money Drip: Stop paying with your fancy points credit or debit card. These make it way too easy to overspend. Go old school, go off the grid and pay cash. It works and can help you stay on track!
Don’t Buy on Layaway: You know, those don’t-pay-for-six-month “deals”, well a lot can change in six-months and you’ll still be on the hook. If you cannot afford it now, don’t buy it. Wait until you are financially able to make the investment.

Downsize Your House: Are you living in a 5-bedroom family home but your kids are grown up and moved out? Consider downsizing to a smaller house. It will save you money on your mortgage payments and maintenance fees in the long run!

Rent Out the Basement: Not ready to move? Consider converting spare rooms to rental and use the income to pay down debt.

Make Your Mortgage Tax-Deductible: If you are self-employed, own rental property or have investments, this is likely possible. Check with your Dominion Lending Centres mortgage broker to see if this option is right for you!

Prioritize Your Payments: Define your various debts by category. This can help you see where you spend your money and also help you pay off your debt faster.

Start With the Highest-Interest Rate: Pay off loans with the highest interest rates first, as these are the ones eating into your extra income!
Leave Tax-Deductible Until Last: Pay the non-tax deductible loans first and fastest and leave tax-deductible debt to the end.

Focus on Ugly Debt First: Debt such as credit card balances are the worst on your credit rating. Pay these off first.

Pay Off Bad Debt Next: Debt for items that depreciate in value, such as car or boat loans, should be the next on your priority list.

Clear Good Debt Last: Loans such as mortgages or investments for assets that should appreciate in value are the least harmful to your net worth and can be paid out last.

Buy a New Car – Outright! Finance it if you have to but don’t lease, unless you are self-employed in which case leasing makes more sense.

Use Your Secret Stash: If you have $20,000 in a bank account for a rainy-day or vacation and yet owe $20,000 on a line of credit, you need to reconsider. The bank account is paying you next to no interest (which is taxable income) and the line of credit rate is way higher (and not tax deductible). You know what to do. You can keep the line of credit open and on standby for a rainy day. Make it the secret line of credit that you have but never use.

Give your Banker More Money: No, really. Keep enough in your chequing account to meet the minimum requirement to waive your service charges. Some banks charge a fee for transactions and nothing, zero, zilch, zip if you keep $2,500 in the account. Let’s see, $10 x 12 is $120 a year to pay off debt. I’d have to earn 5% with the $2,500 in my savings account to come out ahead. No-brainer here. Oh yeah, if you need more than 25 transactions a month, see #12 above.
Let’s face it, your financial future will not get any brighter if you continue to run deficits forever. Unlike a bank or big company, you won’t get a bailout! Stop procrastinating and take charge of your own finances with the above tips!

If you are looking for expert advice about your mortgage and how to pay it down faster, contact a Dominion Lending Centres professional to discuss YOUR situation and options.

BORROWER BEWARE:
It is always important to take things with a grain of salt. This is especially important when it comes to too-good-to-be-true, ultra-low-rate mortgages. These “no frills” mortgages are often loaded with restrictions such as pre-payment limitations, fully-closed terms, stripped-out features or unusual penalties. If you’re not looking at what you’re giving up, you may regret it in the future. These hidden terms alone could prevent you from taking advantage of tips #1, 2, 3, 4, 5, 7, 8, 9, 10, 14, 16 and 22!

A down payment is one of the most essential aspects of every mortgage application and new home purchase. In Canada, home purchases require a minimum cash payment from your own funds that is put towards the purchase. This is your down payment and is considered your stake in the deal.

Many home buyers understand that a certain amount of money down will be required on a home. However, most don’t realize the ins-and-outs of down payments, such as where the funds are allowed to come from and ensuring a proper paper trail.

Here are a few things to keep in mind while preparing your down payment and working towards your perfect home!

SOURCES OF DOWN PAYMENT
Most home buyers are aware that they will require a certain amount of money for a down payment. What many do not realize, is that lenders are required to verify the source of the funds. This allows them to ensure that they are coming from an acceptable source. Sources that further contribute to indebtedness are less-likely to be considered (such as line of credit or credit card). Instead, the best and most traditional options for your down payment are:

SAVINGS ACCOUNT
The first and most traditional method is your savings account, where you have been pinching your hard-earned pennies to save up for this day!

If you are utilizing your personal savings for a down payment, note that lenders will require three months of full bank statements. This includes name, account number, transactions and balance history. For any large deposits made in that time (sale of a car, work bonus, etc.), explanations and supporting documents will be required.

GIFT FROM FAMILY MEMBER
If you are fortunate enough to receive help from the Bank of Mom and Dad for your down payment, there are certain requirements:

A signed gift letter from the immediate family member contributing the fund
Proof of the transfer into your bank account. This can be a bank statement documenting the money being moved from the donor’s account and into yours. The statements must include names, account numbers and the full transaction history during the time period in question.
Important note: If money is being received from immediate family overseas, most lenders will require copies of the wire transfer. In addition, they may ask for account history.
RRSP WITHDRAWAL
Another option for down payment is the use of Registered Retirement Savings Plan (RRSP), but only if you are a first-time buyer. This is part of the Home Buyers’ Plan (HBP), which allows first-time buyers to borrow up to $35,000 from their RRSP’s (tax-free!) -as long as the money is repaid within 15 years. Please note: The minimum repayment is 15 equal instalments paid once per year.

HOW MUCH DOWN?
When it comes to putting money down on your new home, you need to consider the minimum down payment required as well as additional fees.

The minimum amount required in Canada is 5% for the first $500,000, with 10% down on any amount beyond that threshold. For example, on a $600,000 house you would need to put $35,000 down at minimum ($25,000 on the first $500,000 and $10,000 for the additional $100,000 purchase price).

Keep in mind, if your down payment is less than 20% of the price of your home, you will be required to purchase mortgage loan insurance in case of default. These premiums range from 0.6% to 4.50% of the total amount of your mortgage. Using the example above, this would mean $3,600 to $27,000 in mortgage insurance premiums.

If you are able to put 20% down on your new home (which is the recommended amount), you would be looking at an investment of $120,000 down with no mortgage insurance premiums required.

ADDITIONAL COSTS AND FEES
One component of the purchase process that homeowners often forget about, are the closing costs. These are typically 1.5% up to 4% of the purchase price. In order to get financing, you are required to show that you have enough to cover these costs, which include legal fees.

When you have collected the funds for your down payment and closing costs, you must ensure those funds remain in your bank account once you’ve provided confirmation. They should only leave your account when they are provided to your lawyer to complete the purchase. This is because lenders will often request updated statements closer to the closing of the sale, to ensure nothing has changed. If money has been moved around, or if there are new large deposits or withdrawals, they will all need to be confirmed and could affect approval.

The last thing that anyone wants when purchasing a property is added stress or for something to go wrong late in the process. Consider contacting a DLC Mortgage Professional today to help guide you through the process! Make sure you are upfront about your down payment amount, and where it is coming from. This will help a mortgage broker determine whether or not it is suitable, and allow them to find the best lender and mortgage product for you!

You worked hard for that equity. Maybe it’s time you make that equity work for you. Refinancing your mortgage can be a great way to leverage equity in your home to balance debt, do renovations or to support kids going off to college. Through refinancing you can tap into 80 per cent of the value of your home but are required to re-qualify under the current rates and rules.

Home prices are expected to finally level off from the “unsustainable” increases that have been seen over the past year, says the Canada Mortgage and Housing Corporation (CMHC).

“Low mortgage rates, high savings rates and persistent, uneven impacts of the pandemic and low immigration are forecast to continue to support sales of more expensive housing types while limiting rental demand,” the agency said in its latest Housing Market Outlook report. “Existing home sales and price growth will moderate from unsustainable 2020 pace of increase but will remain elevated.”

Home sales topped 550,000 in 2020, but could rise to 602,300 in 2021 before falling back to 547,100 in 2022 and 561,100 in 2023, CMHC noted. It also expects national prices to average $649,400 in 2021, which would mark a 14% rise from last year. CMHC sees prices continuing to march higher over the coming years, with a forecast average of $704,900 by the end of 2023.

“Economic conditions are expected to return to pre-pandemic levels by the end of 2023, if broad immunity to COVID-19 takes hold by the end of 2021,” said Bob Dugan, CMHC’s chief economist. “This includes the pace of home sales and prices, which we expect to see moderate from 2020 highs over the same period. However, significant risks remain with respect to the path, timing and sustainability of the recovery.”

Big-City Home Prices Fall Back Slightly from March Highs
After soaring to record highs in March, preliminary data from April shows average home sales and prices pulling back on a monthly basis.

There were 13,663 home sales in the Greater Toronto Area in April, a 362% increase from last year’s pandemic-induced drop-off in activity, but a 13% drop compared to March. Similarly, the average price in April was $1,090,992, according to the Toronto Regional Real Estate Board (TRREB), a 33% year-over-year increase, but down slightly from last month.

“It makes sense that we had a pullback in market activity compared to March,” said TRREB President Lisa Patel. “We’ve experienced a torrid pace of home sales since the summer of 2020, while seeing little in the way of population growth. We may be starting to exhaust the pool of potential buyers within the existing GTA population.”

It was a similar story in Greater Vancouver, which saw 4,908 home sales in April, up 342% year-over-year, but down 14% from March. Meanwhile, the MLS Home Price Index composite benchmark price for all property types was $1,152,600, a 12% year-over-year gain and modest 2.6% increase from March.

Montreal’s real estate market saw a similar trend, with its 6,237 home sales representing a 231% annual increase, but a 1.7% decline from March. The median single-family home price came in at $500,000 (up 39% YoY and 4% MoM), while the median condo price was $357,750 (up 23% YoY and 3% MoM).

“The low inventory of single-family homes for sale and the dramatic increase in prices in April continue to drive the demand for condominiums, which are more affordable and have lower maintenance and renovation costs,” said Charles Brant, director of market analysis for The Quebec Professional Association of Real Estate Brokers.

NDP Promises New Foreign Buyers’ Tax
An NDP government would implement a 20% levy on home purchases made by non-residents.

That was one of the pledges made by NDP leader Jagmeet Singh recently, along with a promise to make a “massive” investment in housing supply to ease the price pressures being seen across the country.

“Let’s massively invest in housing as a way to create jobs locally in communities and as a way to ensure people have a place to call home,” Singh said, promising a $14-billion investment in housing construction to build over 500,000 new units over four years.

He also promised a nationwide 20% tax on home purchases by foreign buyers, similar to the 20% Foreign Buyers Tax currently in place in B.C., and Ontario’s 15% Non-Resident Speculation Tax (NRST).

“We know that people are treating Canada like a stock market when it comes to housing and just plopping their money into the housing market, hoping it will continue to grow,” Singh said.

In comparison, the Liberal government recently announced a 1% foreign owner’s tax on vacant properties in its spring budget, a measure TD economics said is “unlikely to significantly dent current activity.”

Steve Huebl
Mortgage Broker News
May 12, 2021

More and more Canadians are choosing to buy a second property in retirement. Reasons for doing this vary. Some want to reap the rewards of a lifetime of saving and treat themselves to a vacation home. Others, on the other hand, view their second property as an investment, intending to rent it out and use the rent to bolster their income.

Whatever your reasons for wanting to buy a second property, there are various ways you might choose to pay for it – let’s have a look at what those are.

PAYING THE DOWN PAYMENT
Just like your first property, you’ll need a down payment for your second property. This can be as little as 5% but ideally should be higher – try aiming for 20%.

CASHING IN INVESTMENTS
One way that you may choose to make the down payment is by cashing in on investments. When considering this, however, caution should be exercised. Cashing in on investments in a taxable account can trigger taxes and OAS clawback, as well as potentially pushing you into a higher tax bracket. Taking large sums from your investments will also reduce the size of your portfolio, which can have a knock-on affect on your retirement income. Outliving savings is something all retirees should be conscious of, so think carefully before making large withdrawals that may deplete your pension pot too quickly.

TAKING OUT A HELOC
A Home Equity Line of Credit (HELOC) is a revolving line of credit secured against your primary residence which allows you to access up to 65% of your home’s value. Taking out a HELOC to pay for the down payment can be a good option to avoid cashing in on investments, but they’re not without their limitations. It’s recently become more difficult to get approval for a HELOC, and many retired Canadians without a fixed monthly income have seen their applications denied. If you manage to get approved for the loan, be aware that you need to service it each month, which will have an affect on your monthly cashflow.

USING THE CHIP REVERSE MORTGAGE
Another way to afford the down payment on your second property is with the CHIP Reverse Mortgage. The CHIP Reverse Mortgage allows you to access up to 55% of your home’s value in tax-free cash, meaning it won’t trigger taxes or OAS clawback, or push you into a higher tax bracket. Unlike a HELOC, with a reverse mortgage you don’t repay what you owe until you move out of your home or pass away, so there are no monthly repayments eating into your cashflow. What’s more, depending on how much equity you have built up in your home and how much your home is worth, you may be able to pay off a significant amount of your second property – perhaps even paying for it outright!

PAYING OFF THE MORTGAGE
Unless you were able to pay for your second property outright, chances are you’ll have a monthly mortgage to pay.

If your second home is an investment property, you likely intend to rent it out. In this case, the rent you charge should be enough to cover your mortgage payments (and hopefully a little extra for you each month).

On the other hand, if your second property is a vacation home, you’ll need to factor mortgage repayments into your monthly budget. One way to get the best of both worlds is by renting your vacation property out for short-term holiday lets. This will help you cover some, if not all, of the mortgage payments, while also giving you the flexibility to enjoy your vacation home whenever you want. Want to know more about how the CHIP Reverse Mortgage could help you afford a second property? Contact your DLC Mortgage Professional to learn more!

Written By: Agostino Tuzi
Post Sponsored by HomeEquity Bank

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Canada Mortgage and Housing Corporation has announced that the Government of Canada has expanded the eligibility criteria for the First Time Home Buyer Incentive (FTHBI) in the higher priced markets of Toronto, Vancouver and Victoria, effective as of today May 3rd, 2021.

Start preparing today:

Find out now if the home you are looking to buy is located in the Census Metropolitan Areas (CMAs) for Toronto, Vancouver and Victoria.
Use this calculator to review different scenarios and help inform your decision.
The FTHBI makes it easier for you to buy a home and lower your monthly mortgage payments. While the program originally had uniform eligibility requirements across Canada, expanding eligibility requirements in higher priced markets will support more first time homebuyers.

For eligible applicants in Toronto, Vancouver and Victoria, the key changes include:

Raising the annual household income threshold from $120,000 up to $150,000.
Increasing the borrowing amount for eligible applicants from 4.0 to 4.5 times their annual household income.
The original parameters will remain the same in all other housing markets.
Should you have any questions about the FTHBI program expansion, please contact the FTHBI Team at FTHBI@cmhc.ca

My Personal View:
While it’s great that the maximum income limit was raised to $150,000 annually, and it’s now 4.5 times your income as opposed to 4 times, it still does not make since in the GTA and GVA market. For instance, Someone making $80,000 annually can qualify for a maximum purchase price of around $460,000 as opposed to $360,000 using the incentive program. That’s a huge stretch, and potential homebuyers need all the purchasing power that they can get in this market. So this program still proves to be useful only in other non-hot markets.