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Navigating Mortgage Renewals in Uncertain Times

Thu, 02 Apr 2026 14:24:10 GMT

If you’re one of the many Canadians with a mortgage renewal coming up this year, you’ve likely felt a bit of unease reading the headlines. Interest rates, inflation, global tensions—it can feel like a lot. After more than two decades in this industry, I can tell you this: uncertainty is nothing new in real estate or lending. What matters most is how you respond to it.

The good news? You have more control than you might think.

Let’s walk through a few practical, level-headed strategies to help you approach your renewal with confidence—rather than stress.

1. Start Early—Earlier Than You Think

One of the biggest mistakes I see homeowners make is waiting for their lender’s renewal letter to arrive. By then, you’re already on their timeline—not yours.

I recommend starting the conversation at least 4–6 months before your maturity date. This gives you time to explore options, secure a rate hold if available, and avoid being rushed into a decision.

2. Don’t Just Sign the Renewal Offer

It may be convenient to simply sign and send back your lender’s offer—but convenience can come at a cost. In many cases, lenders don’t present their most competitive rates in renewal letters.

Think of your mortgage like any other major expense: it deserves a second look. Even a small difference in rate can translate into thousands of dollars over your next term.

3. Consider Your Risk Tolerance—Not Just the Rate

In uncertain times, it’s tempting to try to “time the market.” Fixed or variable? Short term or long term? These are important questions—but they shouldn’t be driven by headlines alone.

Instead, ask yourself:

Do I value stability and predictable payments?
Am I comfortable with some fluctuation if it means potential savings?
How long do I realistically plan to stay in this home?

There’s no universal “best” option—only the best fit for your comfort level and financial goals.

4. Explore Shorter Terms as a Bridge Strategy

With so much unpredictability in the global landscape, some homeowners are opting for shorter-term mortgages (1–3 years) as a way to “wait and see.”

This can be a smart approach if you believe rates may stabilize or improve, but it’s important to weigh this against current pricing and your tolerance for future changes.

Think of it less as gambling on rates—and more as maintaining flexibility.

5. Use This Opportunity to Restructure

A renewal isn’t just about accepting a new rate—it’s a chance to revisit your overall strategy.

You might consider:

Adjusting your amortization to improve cash flow or accelerate payoff
Consolidating higher-interest debt into your mortgage
Adding prepayment privileges to give yourself more flexibility

This is your moment to align your mortgage with your current life—not the one you had five years ago.

6. Build a Small Buffer Into Your Budget

Even if you secure a great rate, it’s wise to prepare for slightly higher payments—especially if you’re coming off a historically low rate.

Creating a bit of breathing room in your monthly budget can reduce stress and give you options down the road. If rates drop, you’re ahead. If they rise, you’re prepared.

7. Lean on Professional Advice

The mortgage landscape has become more complex, not less. Policies shift, lender appetites change, and new products emerge.

A good mortgage broker doesn’t just shop rates—they help you interpret the landscape and make decisions that suit your long-term financial well-being.

At the end of the day, uncertainty doesn’t have to mean instability. With the right preparation and a thoughtful approach, your renewal can be an opportunity—not a setback.

If there’s one takeaway I’d leave you with, it’s this: stay proactive, stay informed, and don’t be afraid to ask questions. You’re not just renewing a mortgage—you’re shaping your financial future.

And that’s worth doing well.

Purchase Plus Improvements

Thu, 19 Mar 2026 15:07:33 GMT

Hammer, Nails… and a Mortgage That Sees Potential

Over the years I’ve noticed a pattern: buyers fall into two camps. The “this house is perfect” crowd… and the “this could be perfect if we just fix a few things” crowd.

Today, we’re talking about the second group—and one of the most underused tools in the Canadian mortgage world: the purchase plus improvements mortgage.

What Is It (and Why Should You Care)?

A purchase plus improvements mortgage lets you roll renovation costs into your mortgage at the time of purchase. Instead of draining your savings—or worse, putting renovations on a high-interest line of credit—you finance those upgrades at your mortgage rate.

In plain English: you buy the house and fix it up, all in one tidy package.

You get to enjoy the renovations while you live in your home, rather than scrambling to renovate or update when you are getting ready to sell.

Lenders like this because you're increasing the value of the home. You should like it because you're borrowing at (usually) the cheapest rate you'll ever get.

Let’s say you’ve found a home priced at $700,000. It’s solid—but a little tired. You want to:

Upgrade a dated bathroom
Replace an aging furnace
Put on a new roof

Total improvement budget: $40,000

With a purchase plus improvements mortgage, your financing is based on the “as-improved” value, meaning:

Purchase price: $700,000
Improvements: $40,000
Total financed value: $740,000

Because the purchase price exceeds $500,000, the minimum down payment in Canada is not 5% flat.

It’s calculated as:

5% on the first $500,000 = $25,000
10% on the remaining $240,000 = $20,000

Minimum required down payment: $49,000

Mortgage Before Insurance

Total value: $740,000
Down payment: $49,000
Base mortgage: $691,000

Adding the CMHC Insurance Premium

Because your down payment is under 20%, mortgage default insurance applies.

At this loan-to-value (roughly 93.4%), the CMHC premium is 4%.

CMHC premium:
$691,000 × 4% ≈ $27,640

This premium is typically added to the mortgage, not paid upfront.

Total mortgage after insurance: ≈ $712,421

What Does That Payment Look Like?

Now let’s plug that into real numbers:

Mortgage: $712,421
Rate: 3.99%
Amortization: 25 years

Estimated monthly payment: ≈ $3,750–$3,760/month (call it $3,755/month for coffee-shop accuracy).

Why This Still Makes Sense

Here’s where people sometimes hesitate:
“Wait—I’m paying insurance and financing renovations?”

Yes. And in most cases, it still works in your favour.

Because:

You’re financing renovations at 3.99%, not 8–10%+
You’re improving the home’s value immediately
You’re avoiding the markup baked into fully renovated homes

In other words, you’re not just spending money—you’re strategically improving the value of your new home.

How It Actually Works Behind the Scenes

Here’s the part most buyers don’t realize:

You submit quotes for the renovations upfront
The lender approves the total (purchase + improvements)
The purchase closes as usual
The renovation funds are held back by your lawyer
You complete the work
Funds are released once the work is verified

It’s a bit of paperwork—but compared to juggling contractors and separate financing? It’s a win.

Why I Recommend This More Often Than You’d Think

After years in this business, I can tell you this - the “perfect home” usually comes with a premium price tag.

But the “almost perfect” home? That’s where the opportunity is.

With a purchase plus improvements mortgage, you can sometimes:

Buy in a better neighborhood
Customize the home to your taste
Avoid bidding wars on fully renovated properties
Finance upgrades at mortgage rates (instead of 8–10%+ elsewhere)

If you’re considering this route, here’s my advice:

Get detailed quotes (not ballpark guesses)
Plan for a buffer—renovations love surprises
Work with a broker early (this is not a last-minute add-on)

And most importantly: don’t be scared of a home that needs work. Some of the best purchases I’ve seen over the years started with the phrase, “Well… it’s not perfect, but…”

Final Thought

A purchase plus improvements mortgage isn’t just financing—it’s strategy.

It’s the difference between settling for someone else’s vision… and building your own, from day one.

And in a market like Canada’s, that kind of flexibility isn’t just nice to have—it’s powerful.

So Your Mortgage Is Approved

Fri, 06 Mar 2026 23:43:28 GMT

So Your Mortgage Is Approved… Now Don’t Break It

By the time a buyer gets the call that their mortgage has been approved, the reaction is usually somewhere between relief and a sudden urge to celebrate like they’ve just won the Stanley Cup. After weeks of paperwork, bank statements, document requests, and answering questions about that mysterious $73 e-transfer from your cousin, you’ve made it to the home stretch.

But here’s the thing many buyers don’t realize: a mortgage approval isn’t the finish line. It’s more like the last lap before the ribbon. And in this final stretch, there are a few things that can still trip you up if you’re not careful.

As a mortgage broker who has watched this happen more times than I care to admit, allow me to offer a friendly list of things you absolutely should not do between mortgage approval and possession day.

1. Do Not Finance a New Car (Even If It Smells Amazing)
You might think, “What better way to celebrate a new house than with a new truck in the driveway?”

The lender disagrees.

Taking on new debt before your mortgage funds can change your debt ratios, which were carefully calculated to get you approved in the first place. I once had a client proudly tell me about the brand-new SUV they bought the week before closing. Unfortunately, the lender was less impressed.

Celebrate later. The house comes first. The new car can wait.

2. Do Not Quit Your Job to ‘Follow Your Passion’
I’m a big supporter of people chasing their dreams. But if your dream involves leaving your stable salaried position to start a kombucha brewing company three days before your mortgage funds… perhaps give that dream a couple more weeks.

Lenders like stability. A sudden career change can send underwriting departments into mild panic mode.

3. Do Not Open New Credit Cards for Furniture, Appliances, or “Just in Case”
It’s very tempting. You walk into a furniture store, see the perfect sectional, and suddenly there’s a cheerful salesperson offering “12 months no payments!”

It sounds harmless, but that new credit line can affect your credit score and your debt calculations.

Also, you may be shocked to learn this: the house will still accept furniture purchases after you own it.

4. Do Not Move Money Around Like You’re Running an Offshore Hedge Fund
During the mortgage process, lenders carefully verify where your down payment and funds are coming from. If large, unexplained deposits suddenly start bouncing between accounts, it can raise questions.

Questions lead to paperwork. Paperwork leads to stress. Stress leads to calling your mortgage broker at 9:45 p.m.

Keep things simple and predictable until the deal is done.

5. Do Not Co-Sign a Loan for Someone Else
You may be the generous type. A friend or family member might ask you to co-sign for a car or a line of credit.

As noble as that is, lenders will treat that new obligation as your debt too. Even if your cousin promises they’ll “definitely make the payments.”

Your lender prefers promises backed by math.

6. Do Not Miss Any Bill Payments
Your credit report was likely pulled during the approval process, and lenders sometimes check again before funding the mortgage. A missed payment can ding your credit score at the worst possible moment.

In other words, now is the time to be the most financially responsible version of yourself.

The Bottom Line

Once your mortgage is approved, the best strategy is surprisingly simple: keep everything exactly the same until your home officially closes.

Same job. Same credit habits. Same bank accounts.

Think of it like carrying a tray of drinks across a crowded room. You’re almost there—now is not the time to start dancing.

The good news? Once the keys are in your hand and the deal is finalized, you’re free to celebrate however you like. Buy the couch. Paint the walls. Host the housewarming party.

Just maybe hold off on the kombucha startup for a week or two.

Reverse Mortgage follow up

Mon, 23 Feb 2026 18:07:46 GMT

Not long after my last column about reverse mortgages went live I received a thoughtfully written email from a reader challenging several of the points I made in my article.

He raised concerns about the cons around reverse mortgages and said he felt that I wasn’t diving into the potential negative impacts of reverse mortgage products.

Most of the concerns boiled down to the erosion of equity in seniors’ most significant asset due to the compounding of interest over time. He felt that I didn’t show any calculations so people would not see the long-term cost of a reverse mortgage.

When I work with my reverse mortgage clients I show them projections that include the interest cost. What people may not consider is the appreciation in value of homes over time.

Reverse mortgage lenders don’t automatically go to the maximum allowable amount for every client (ie: “up to 55% of the value of the home”). Mortgage size is determined by the age of the client and the type and location of the home that they are in so as not to erode all of the equity in the home. Mortgages are done on a sliding scale so the younger they are the less equity clients have access to.

The other piece to understand is that not every client pulls the entire amount they are approved for upfront. I encourage my clients to only pull what they require at the time and to have the rest available for if and when they need it.

Initially I was not a huge fan of reverse mortgages for a lot of the reasons that he shared. However, I have many clients who are house rich with very limited income. People living on CPP and OAS can’t afford the basic necessities never mind any frills.

Which leads to another reason I see the value in reverse mortgages. Many of the clients I work with have overextended themselves using credit cards or personal lines of credit and are in the position that they are making the minimum payment on their credit facilities by applying for more credit cards or loans, which leads to a spiral of increasing balances month over month with no way to repay these debts.

Downsizing doesn’t always work because moving to a smaller home often means now they have a strata payment. Even if they downsize and have cash in the bank to cover living expenses, the end result is that they are still eroding that equity and now are not in the home they spent their lives in.

I’ve seen reverse mortgages impact seniors in positive ways that you can’t even imagine. I’ve had clients supporting their middle-aged children while not having money to buy groceries. I’ve worked with clients who have needed to renovate their homes for accessibility issues due to health concerns as they age. I’ve seen clients leverage the equity in their homes to buy vacation homes.

There are many types of clients who use reverse mortgages to achieve their financial goals. I do find that some of the loudest objections come from the families of clients. In these situations I first ask my clients if their families know the true extent of their financial distress.

Next I ask if they would like to include trusted family members in the conversation so that we can address any concerns so that everyone is on the same page.

Not all reverse mortgage clients are naïve. Many have already done their homework before they call.

Reverse Mortgages

Fri, 06 Feb 2026 17:31:55 GMT

Reverse Mortgages: A Tool More Canadians Should Understand

After years in the mortgage business, I’ve learned that few financial tools are as misunderstood as the reverse mortgage. I’ll admit it upfront: for a long time, even mentioning the words made people tense up. I’d see shoulders tighten, brows furrow, and someone would inevitably say, “Isn’t that how you lose your house?”

Let’s clear the air.

A reverse mortgage is simply a way for Canadian homeowners aged 55 and over to access some of the equity they’ve built up in their home—without having to sell it or make monthly mortgage payments. For many retirees, that alone is a game changer.

Many Canadians I work with are “house rich and cash poor.” They may own a home worth a significant amount, but their retirement income hasn’t kept pace with the rising cost of groceries, utilities, property taxes, or helping adult kids and grandkids. A reverse mortgage can help bridge that gap by turning part of that home equity into tax-free cash.

That money can be taken as a lump sum, regular payments, or a combination of both. Some homeowners use it to top up their retirement income. Others use it to pay off an existing mortgage or line of credit, eliminate monthly debt payments, or fund renovations that let them age comfortably in place. I’ve even seen clients use it to cover medical expenses or make their home safer with mobility upgrades.

One of the biggest benefits—and one that surprises people—is that you don’t have to make monthly payments. Interest is added to the balance, and the loan is typically repaid when the home is sold or the owner moves out permanently. As long as you keep the home maintained, insured, and pay your property taxes, you remain the owner of your home.

Another common concern is inheritance. It’s a fair question. What happens to the house? The reality is this: when the home is eventually sold, the reverse mortgage is paid off, and any remaining equity goes to the homeowner or their estate. These products in Canada are regulated and include safeguards so you’ll never owe more than the fair market value of your home.

Are reverse mortgages right for everyone? Absolutely not. They tend to work best for homeowners who plan to stay in their home long term and need access to equity but don’t want the pressure of monthly payments. They’re also something that should be discussed openly with family and reviewed with a qualified professional who understands the fine print.

What I always encourage is education—not fear. Too many homeowners dismiss reverse mortgages based on outdated information or horror stories that don’t reflect today’s Canadian market. Like any financial tool, they have pros and cons, but when used appropriately, they can provide flexibility, dignity, and peace of mind in retirement.

At the end of the day, retirement isn’t just about numbers on a page. It’s about choices. Staying in the home you love. Reducing financial stress. Enjoying the life you worked so hard to build. For many Canadian homeowners, a reverse mortgage can be one of the tools that helps make that possible.

And that’s worth a second look.

Trying to Buy a Home in a Competitive Market

Fri, 23 Jan 2026 04:26:34 GMT

Trying to Buy a Home in a Competitive Market? You’re Not Imagining Things

After years as a mortgage broker, I can tell you this with confidence: buying a home in a competitive market isn’t just hard.

It’s emotionally exhausting.

I talk to buyers every day who feel like they’re doing everything right. They’ve saved a down payment, checked their credit, talked to a lender, and started house hunting with realistic expectations. And yet, they’re still losing out.

Multiple offers.
Bidding wars.
Homes selling in days — or hours.

It can make even the most level-headed buyer question whether homeownership is still within reach.

One of the biggest challenges I see is speed . In competitive markets, hesitation can cost you the house. Buyers are often expected to make quick decisions on the largest purchase of their lives, sometimes with limited conditions and tight timelines. That’s a lot of pressure, especially for first-time buyers who are still learning the process as they go.

Then there’s the financing side. In a hot market, a strong offer isn’t just about price. It’s about certainty .

Sellers want to know the deal will close. That’s why buyers with solid pre-approvals, flexible closing dates, and fewer conditions tend to stand out. Unfortunately, many buyers don’t realize how important this is until they’ve already lost a few bidding wars.

Another challenge is expectations versus reality . Online listings and headline prices don’t always tell the full story. I often see buyers fall in love with homes that are priced low to attract attention, only to sell well above asking.

That can be discouraging, especially when it happens repeatedly. It’s not that you’re doing something wrong.

It’s that the market is playing a different game.

Appraisals can also throw a wrench into things. Even if you’re willing to pay more, the lender still needs the property to appraise at or near the purchase price. When prices are rising quickly, appraisals sometimes lag behind the market. That can mean buyers need to come up with extra cash or renegotiate.

That’s not a conversation anyone wants after winning a bidding war.

And let’s not forget the emotional toll. I’ve seen buyers go from excited to deflated more times than I can count. Losing out on a home — especially one you pictured yourself living in — hurts. Do it three or four times, and it’s easy to feel burnt out or start second-guessing your plans entirely.

So what helps?

Preparation. Flexibility. And a good team.

Getting your financing sorted early — ideally before you start house hunting — gives you clarity and confidence. Understanding your true budget (not just the maximum you qualify for) helps you move decisively when the right home appears. Being open on location, property type, or timing can also make a big difference.

Most importantly, remind yourself of this:
This market is not a reflection of your worth or your effort.

It’s competitive because demand is high and supply is tight.
Not because you’re failing.

I’ve seen many buyers feel like they’d never catch a break, only to end up in a home they love — sometimes one they hadn’t even considered at first. The path may be longer and bumpier than expected, but with the right guidance and a bit of resilience, it’s still very possible.

If there’s one thing I want buyers to know, it’s this:

You’re not alone. And you’re not crazy.

This market is tough — but tough doesn’t mean impossible.

FTHB readiness

Thu, 08 Jan 2026 23:58:54 GMT

First-Time Home Buyers: How to Get Ready Before You Fall in Love With a House

After years of working with first-time buyers, I’ve learned this: most people don’t struggle because they can’t afford a home — they struggle because they start in the wrong order.

Buying your first home isn’t complicated, but it is sequential. A little preparation goes a long way toward making the process smoother, less stressful, and more affordable.

Step one: know your numbers.
Before talking listings, take an honest look at your income, debts, savings, and credit. Lenders don’t just look at what you earn — they look at how you manage credit. Pull your credit report early and fix any issues before they become deal-breakers.

Step two: understand the full cost.
Your down payment is just the start. First-time buyers should also budget for legal fees, land transfer tax, moving costs, and everyday expenses that come with homeownership. A good rule of thumb is to have an extra 1.5%–4% of the purchase price set aside.

Step three: timing your mortgage pre-approval matters.
Ideally, speak with a mortgage broker three to six months before you plan to buy. This gives you a realistic budget, time to improve credit if needed, and the ability to lock in a rate. A proper pre-approval isn’t just a number — it’s a strategy.

Step four: build your team early.
A mortgage broker, real estate agent, lawyer, and insurance advisor should all be in place before you make an offer. When they work together, surprises are minimized and decisions are clearer.

Finally: stay financially boring.
Once you’re pre-approved, avoid changing jobs, taking on new debt, or making big financial moves without checking first. Lenders re-check everything.

Preparation doesn’t take the excitement out of buying your first home — it replaces panic with confidence. And when the right home comes along, being ready makes all the difference.

What Canadian Mortgage Clients Are Really Asking Right Now

Tue, 23 Dec 2025 15:24:11 GMT

After more than two decades as a mortgage broker in Canada, I can tell you this: the questions I’m getting today are different from the ones I heard five or even three years ago. They’re more urgent. More personal. And often, more anxious.

It’s not that Canadians suddenly forgot how mortgages work. It’s that we’re in a period of change — and change creates uncertainty. With so many mortgages coming up for renewal over the next couple of years, interest rates still higher than what people grew used to, and household budgets already stretched, clients want clarity. They want to understand how their financial lives might look one, two, or three years from now — and what they can do now to avoid being caught off guard.

Here are some of the most common questions I’m asked right now:

“How bad is my renewal going to be?”

This is, without question, the number one concern.

Many homeowners took out five-year fixed mortgages between 2019 and 2021, when rates were historically low. At the time, locking in under 2% felt smart — and it was. The challenge is that those mortgages are now coming due in a very different rate environment.

Clients want to know:

How much will my payment increase?
Can I absorb that increase without changing my lifestyle?
Is there anything I can do to soften the blow?

The honest answer is that some people will see a noticeable jump in payments, especially if they haven’t reduced their balance much. For others, the increase is manageable — but only with planning. That’s why I encourage clients to look at their renewal at least a year in advance. The earlier we run the numbers, the more options we have.

“Should I go fixed or variable this time?”

This question never really goes away, but it’s taken on new meaning lately.

People aren’t just asking about rates — they’re asking about peace of mind. After the rollercoaster of the past few years, many borrowers are prioritizing predictability over squeezing out the absolute lowest possible rate.

Some are still open to variable rates, especially if they believe rates may continue to ease over time. Others want the certainty of a fixed payment so they can plan their budgets with confidence. There’s no universal right answer — the best choice depends on your income stability, risk tolerance, and how tight your monthly cash flow already is.

What I remind people is this: choosing a mortgage isn’t about guessing the future perfectly. It’s about choosing an option you can live with even if things don’t go exactly as expected.

“Can I still afford my home long-term?”

This is where the conversation gets more personal.

Rising mortgage payments don’t happen in a vacuum. Clients are also dealing with higher grocery bills, insurance costs, childcare expenses, and everything else that seems to cost more than it used to. So naturally, they’re asking whether their home still fits comfortably within their overall financial picture.

For some, the answer is yes — with a few adjustments. For others, it means deeper discussions about amortization changes, refinancing strategies, or even downsizing down the road. None of these are failure scenarios. They’re planning conversations.

One thing I stress is that affordability isn’t just about what a lender will approve. It’s about what allows you to sleep at night and still enjoy your life.

“Is now a good time to buy — or should I wait?”

First-time buyers and move-up buyers are asking this constantly.

They’re watching rates. They’re watching home prices. They’re hearing headlines that point in different directions. What they really want is reassurance that they’re not making a mistake.

My answer is always the same: the “right time” to buy is when it fits your life, your finances, and your timeline — not when the headlines look perfect. Trying to time the market is incredibly difficult, even for professionals. What buyers can control is how prepared they are, how conservative they are with their budget, and how well they understand their mortgage options.

“What happens if things get tight?”

This is one of the most important — and often unspoken — questions.

Clients want to know what safety nets exist if their financial situation changes. What happens if a renewal payment feels overwhelming? What if income drops? What if life throws a curveball?

This is where strategic planning comes in. We talk about:

Building flexibility into mortgage terms
Choosing products with reasonable prepayment options
Keeping amortizations realistic
Understanding lender policies before you need them

The goal isn’t to assume the worst — it’s to make sure you’re not boxed in if circumstances change.

“Do I really need a broker, or can I just renew with my bank?”

This question comes up a lot, especially at renewal time.

Banks make renewing easy — sometimes too easy. A quick email. A rate offer. A couple of clicks. What’s often missing is context. Is that rate competitive? Does that product fit your future plans? Are there better options available elsewhere?

More clients are realizing that mortgage decisions today have longer-lasting consequences than they did when rates were ultra-low. They want advice, not just a rate quote. They want someone to help them think through the next three years, not just the next three months.

Looking Ahead: The Next 1–3 Years

What all these questions have in common is uncertainty about the near future. Canadians know their mortgages matter — not just to their housing costs, but to their entire financial lives. With so many renewals approaching and the day to day cost of living still elevated, people want to feel prepared, not surprised.

As a broker, my role isn’t to predict the future. It’s to help clients understand their options, model different scenarios, and make choices that align with their real lives — not just spreadsheets.

If there’s one thing I’ve learned over the years, it’s this: the best mortgage decisions are made early, thoughtfully, and with good advice. And in today’s environment, that guidance matters more than ever.

Challenges

Sat, 29 Nov 2025 22:28:27 GMT

The topics I’ve written about over the years are almost always a reflection of a common theme I’ve seen or challenge I’ve dealt with since the last column I wrote.

This one is no different.

The last few months, and particularly the last few weeks, have been among the most challenging in my mortgage career. I say challenging but that might also mean stressful.

When working with clients and finding the right fit for their mortgage I look at many different factors. Rate is obviously one of the most important considerations.

I also try to get a solid understanding of my clients’ short and longer term goals. For instance if the clients are looking to upsize from a home in the city to a rural property with acreage I will look at chartered banks or credit unions instead of a monoline lender.

If the clients are purchasing a lease-hold property there are only a few lenders that will provide financing so that narrows the field.

If the clients want direct access to manage their mortgage themselves I will place them with one of my favorite lenders that has an amazing client portal.

Sometimes despite the client and the broker doing everything possible to ensure a smooth mortgage process things go sideways.

Due to incredibly high volumes over the last few months I’ve seen refinance at renewal mortgages delayed by days or weeks.

The stress for everyone involved is overwhelming.

The most valuable lesson I’ve learned as a mortgage broker came from a wise more-seasoned broker about ten years ago.

She said to me “when things are going sideways on a file, don’t get caught up thinking about what’s going wrong – think about what you need to do to fix it.”

I have been hearing these words on repeat the last two weeks, and I think this is helping to keep me (and my clients) on track.

If things do appear to be going sideways for you, I encourage you to connect with your mortgage person for regular updates.

Changes Affecting Financing

Fri, 14 Nov 2025 23:06:12 GMT

I consider myself a lifelong learner, which is part of the reason I love my work. Every day there is something new and exciting to learn, or in some cases re-learn.

When I first came back to the mortgage world a more seasoned broker gave me a copy of a handout she used with clients. It talked about the ten most important things NOT to do between removing your financing subject and finalizing the purchase of your home.

At the time I remember thinking that the handout sounded patronizing and I assumed clients just understood they shouldn’t do any of the ten things.

You know what they say about assuming things.

Once or twice my clients have made decisions that have almost jeopardized their financing.

The reason this came up for me right now is that I am working my way through a training course which is geared towards helping me re-design my team and my workflow, with the ultimate goal of providing even better support to my clients.

One of the changes I am going to implement is adding a list very similar to the original ten things not to do list to my signing packages so that we are all on the same page and avoid any potential challenges down the road.

What are the ten things?

I won’t go over all of them, but here are a few of the things that have surfaced recently:

If you change the closing date on your purchase or if you receive the Notice of Completion on a newly built home, advise your mortgage person right away. Never assume your realtor will do this for you.
Do not go out and finance anything without checking with your mortgage person. If you are pushing the upper limit of your buying power even a small loan for furniture might put your financing at risk. Many lenders pull your credit again shortly before your mortgage finalizes.
Along the same lines, make sure all of your payments are made on time.
Do not co-sign a loan for anyone.
Do not quit your job or change employers without talking to your mortgage person ahead of time.
Do not spend any of the money you have tucked away for your down payment. If you have money sitting in higher-risk investment better to move them to something more stable in case of market fluctuations.

Most people think that once they get the ok to remove their financing subject that their mortgage is a done deal. The small print on every mortgage commitment includes a clause that says something along the lines of “Your financing is based on your current situation. Material changes to your situation prior to the funding of your mortgage may affect your approval.”

I’m currently working with a young lady that decided to purchase a boat between the time we had our pre-approval conversation and the day she wrote her offer to purchase. She had decided not to buy a home then found her dream property.

We’ve had to look at a few options as the boat payment threw her ratios out of line. She is fortunate that her parents are very supportive and are going to gift her the money to pay off the boat loan, but if she didn’t have that back up plan the new loan would have reduced her borrowing power by over $100,000.

The reason I added the comment “without checking with your mortgage person” in the bullets above is that every client’s situation is unique and some of those changes might be just fine. Some might not, and the last thing you want to do is find yourself scrambling to figure out a Plan B shortly before closing.

Best to have the conversation and be certain.

Mortgage Options

Sat, 01 Nov 2025 20:41:46 GMT

In past columns I’ve covered when no means no and when no means maybe there’s another option.

There are many aspects of my work that I love. One is that I learn something new each and every day. No two clients are the same and no two applications are the same.

Some are easier than others to put together.

Another thing I love is that we have so many options to consider when working on our files. I do find immense satisfaction when I tackle a complicated file and find a great solution for my clients.

I am working with an amazing young couple as they build their portfolio of rental properties. They are relatively young but both work incredibly hard and really have their ducks in a row.

The plot twist they have is that they both transitioned from salaried positions to being self-employed over the last year.

Their credit scores are both in the high 800s (900 is a perfect score), they are both making substantial income, and they have saved over $100,000 for their down payment.

Seems like a slam dunk right?

Because they don’t have two years of filed tax returns as self-employed business people our options are a bit limited. There is a program we use in this situation but their scenario does not fit within the guidelines.

Their dream home just came on the market so they are wanting to buy and convert their current home to a rental property. This particular home came up in the neighborhood they really want to be in, and homes don’t come up very often. It is immaculate and has a legal suite.

They had originally approached their bank and been told it was a hard no.

I work with their realtor fairly often and she suggested they give me a call. Within 24 hours we had the approval in place for them.

We ended up taking the application to an alternative lender for a two-year term. The interest rate is about .5 per cent higher than a chartered back and there is a 1 per cent fee charged.

We weighed out the pros and cons of going this route versus holding off until their next tax returns are filed before purchasing another property.

After chatting with their financial advisor and accountant they felt it was worth the slightly higher interest rate to be able to buy the home now.

I will say I love straightforward simple applications but in reality those are few and far between. Most of the applications I work on these days seem to have some sort of plot twist like this one so I am very grateful there are so many options available to help clients who may fall a little outside of the standard lending guidelines.

Marital Breakdown

Sat, 18 Oct 2025 04:46:43 GMT

One topic I haven’t tackled for a long time is marital breakdowns. When you are working your way through what is arguably one of the most difficult times of your adult life it’s important to know that you have options.

There is a program available for refinancing your home specifically for spousal buyouts. Under this program we can refinance your home back up to 95 per cent of the value of the home and use the new funds to pay out your ex-partner and pay out marital debts (provided this is written into your separation agreement).

Qualifying this to say that we can refinance to 95 per cent if the value of your home is under $500,000. If the value of your home is over $500,000 we need to ensure you have 5 per cent of the first $500,000 and 10 per cent of any value over the $500,000 left as equity in your home. It’s a small distinction but in the Okanagan the second calculation is the one I see the most.

With recent changes to the First Time Home Buyer’s program we can now extend the amortization out as far as 30 years if needed to make the numbers work.

It is important to note that this program is an insured program meaning that a premium is added to your mortgage so its important that you work with someone who is familiar with this program.

You will require a finalized separation agreement to refinance to pay out the other party.

If you have significant equity in your home and we can make the numbers work a traditional refinance is also an option. In this case we can only increase your mortgage to 80 per cent of the value of your home but there is no default insurance premium required so this is usually the preferable option.

A question to ask yourself is whether it makes sense to refinance your current home or to sell and buy a new home. The list of pros and cons will be different for each person, but one of the most important things to consider is whether or not you can afford the higher mortgage payment on your own to stay put.

Also key to consider is whether or not you need the same space or whether downsizing might be another option.

Do you have children that you want to keep in the same area and same school?

Is your current home in a convenient location for work, school, and social activities?

Or are you needing a fresh start somewhere new?

If you find yourself in this situation and are considering your options with respect to refinancing your home I encourage you to reach out to a professional that can help you take a good hard look at your situation. Doing a bit of legwork upfront may help relieve at least one part of the mental load as you work your way through a separation or divorce.

Is this the right time to buy a home?

Sat, 04 Oct 2025 19:34:22 GMT

Is this the right time to buy a home?

Who has your best interests at heart?

Buying a home can be either an incredibly exciting experience or a very stressful time. Or it can be a combination of both.

Part of the challenge can be committing to the decision to move forward with buying a home. How do you know if you are ready? How do you know if this is the right time to buy?

I love working with first-time home buyers. I particularly love when they reach out well ahead of time to do their research and get their ducks in a row.

I have been working with one such young lady. She has been watching for the right home to pop up. She fell in love with one of the listings that she viewed and moved forward with an offer.

She reached out to her investment advisor to make arrangements to move the funds she needed for her deposit from her investments to her bank account. Oddly he did not reply to her three phone calls nor multiple emails. She was forced to walk into his office to deal with this.

When she got there he essentially told her she was foolish for buying a home. She should leave her funds in her investments and continue to save with him. She agonized for a few days and ultimately collapsed her offer.

He told her that this house, over the long run, was going to cost her $1,000,000. The purchase price was $650,000. The total of the purchase price plus interest over the long run seemed like an astronomical sum.

He persuaded her that she would be better off continuing to rent and that at the end of the same time period she would have over $1,000,000 in her investment account.

That’s all well and good in theory. In the meantime she still needs a place to live. And there are no guarantees as to what investments will do over time, nor what property values will do.

I did some math to see what this actually looked like long term. We have to make some assumptions that the financial advisor is good at what he does and that her investments will do well over the long term.

As a rule real estate appreciates over time and rent increases over time. That being said, here is the math I did.

Making some assumptions that the mortgage rate stays the same and your rent never increases:

$2400 rent per month x 360 months (30 years) = $864,000
$2833 per month mortgage payment x 360 months = 1,019,880 (monthly payments / I suggest you go bi-weekly to pay off quicker)

At the end of 30 years renting you have nothing to show for the $864,000 you’ve paid out.

At the end of 30 years paying your mortgage you will have a home free and clear – normally real estate increases in value over time so in theory it will be worth way more than what you’ve paid.

If you wait another year to buy $2400 x 12 = $28,800 towards someone else’s mortgage.

Here’s the wild card. If you choose to rent and choose to invest in a portfolio instead of buying, even if your portfolio is worth $1,000,000 at the end of the same time frame you need to subtract the $864,000 you paid in rent.

This leaves you with a net gain of $136,000.

If you had purchased a home, your payments of $1,019,880 would be offset by the value of the home you purchased. In this case, assuming no change in value, you now have a home worth $650,000 paid off.

The wild card to run these comparisons is how much you need to invest monthly to accumulate the $1,000,000. Either way, you are making this payment on top of your rent payment. Another wild card of course is what property values and investment portfolios do over time.

We know rent will continue to increase and mortgage rates will change but I think it warrants looking at this from another perspective. I am not a proponent of aggressive scare tactics so was disappointed in how this advisor handled his conversation with her.

Some people are more cautious with their financial plans and I appreciate that. Being certain about your long-term goals will help you navigate the path forward that suits your own situation. Make sure you have trusted people in your corner as you make these big life decisions.

Reverse Mortgage Solutions

Mon, 22 Sep 2025 17:59:22 GMT

For every problem there’s a solution. Sometimes more than one.

It seems like there is an ebb and flow in the types of mortgage products clients choose. Over the last few years I have definitely been fielding more inquiries about reverse mortgages.

Although they are becoming more widely accepted, reverse mortgages had a lot of bad publicity. The negative press I’ve seen relates to the American housing market where predatory lenders were taking advantage of vulnerable seniors.

Reverse mortgages in Canada are highly regulated so that this does not happen.

For some clients it takes a while for them to wrap their heads around reverse mortgages as an (or the best) option for them. Particularly in the Okanagan we see many clients who are house-rich but cash poor. Or at least have limited income to cover their day-to-day living expenses.

Sometimes even when the clients recognize that a reverse mortgage is the right plan for them their families or children have objections.

When I am working with clients and we are looking at a reverse mortgage as an option I always invite them to include their families / children to our conversations. Often clients are too embarrassed to share with their children exactly how dire their finances are.

Sometimes clients can’t get past the stigma of refinancing via a reverse mortgage because all their lives they have worked hard to make sure their mortgage is paid off.

Cliché as it sounds, times have changed. The cost of living has risen far quicker than increases to pension income.

A friend of mine shared a conversation he had with reverse mortgage clients and their children. The children were vocally opposed to their parents moving forward with a reverse mortgage.

Paraphrasing a bit but it went like this:

“The way I see it” he said “after completing a thorough review of your parents’ finances, we have three options.

Downsizing isn’t an option as they are already in a condo.

Number one, they carry on with the current mortgage that they can’t afford. Their expenses come to about $2,000 per month so you can each transfer them $1,000 per month to help cover their payments.

Number two, your parents can sell and move in with one or the other of you.

Third, we take a closer look at a reverse mortgage to see if that helps them stay in their home without any financial help from you.”

Apparently there was a very long pause.

After a more thorough conversation about the pros and cons of a reverse mortgage and answering more questions the family did indeed feel a reverse mortgage was the best option for their parents.

If you (or your parents) are thinking about a reverse mortgage make sure you take your time and ask all the questions you need to so you are confident moving forward.

I have seen reverse mortgages have a profound impact on quality of life for many of my clients. I did not used to be a huge fan of reverse mortgages but have to say I am using them more often to help clients enjoy their retirement years without losing sleep trying to figure out how to cover their expenses.

Mortgage Crisis

Fri, 05 Sep 2025 22:55:24 GMT

A wise broker friend of mine once told me there is no such thing as a mortgage emergency. I think this may depend on whose perspective this is. I’ve thought about her statement over the years. I think what constitutes a mortgage emergency really depends which end of the transaction you are on.

One situation I run into regularly is clients who have left dealing with their mortgage renewal until the bitter end. This doesn’t necessarily constitute a mortgage emergency if you are not planning to make any changes to your mortgage and you intend to stay with the same lender.

However, if you are in a private mortgage that was intended to be a short-term solution leaving your renewal until the bitter end can put you in a precarious position. Not all private lenders automatically offer renewals. Some charge a significant fee to renew for another term. Some will renew but dramatically increase your rate.

If your plan was to move to a traditional lender once your private mortgage comes up for renewal this process can take weeks and in some case months. Depending on your situation a refinance to pay out your private mortgage can be very challenging right now with stricter qualifying guidelines and higher interest rates.

Sometimes clients are proactive with their plan to move from a private mortgage and we run into problems and additional document requests from the new lender or challenges like delays in getting appraisals done.

Whether you are in a private mortgage or your mortgage is with a traditional lender I suggest you start looking into renewal options about six months ahead of your maturity (renewal) date. We can lock down an interest rate hold for you four months ahead of your maturity date but I love to have a conversation with my clients about six months prior so we can develop a plan as to how we will handle their upcoming renewal.

Not all lenders offer an open mortgage at renewal so if you dawdle too long you may end up locked in with your current lender for a bit longer.

If you have left your mortgage renewal until it is right around the corner don’t panic. Many lenders do offer an open mortgage so you can opt for this to buy yourself some time if you are planning to make any changes to your mortgage.

Take some time to evaluate your options. Small tweaks can potentially make a significant difference to your bottom line so it is key to work with a professional that has your best interests at heart.

Early Renewal

Wed, 27 Aug 2025 03:54:50 GMT

Does an early renewal make sense?

2020 was a very busy year for home buying and mortgages. This means that 2025 is and has been a busy year for mortgage renewals as the majority of clients seemed to choose five year terms in 2020.

I’ve had lots of conversations with my own and new clients about whether it makes sense to renew early. Each conversation is slightly different based on client needs and their individual circumstances.

Most of the time I suggest that clients stay with their current lenders until their renewal dates because their current interest rates are anywhere between 1.6 per cent and 2.79 per cent. If you don’t need to make any immediate changes it makes the most financial sense to stay put until your term runs out.

We can start the process of either switching or refinancing mortgages four months ahead of your renewal date and lock in a rate for you. As a generalization, when people ask about doing a straight switch (not adding any money to their mortgage) I will do a survey of what interest rates are available so they can go back to their lender to try to negotiate a great rate.

Time and time again I’ve worked with clients on switches for them to cancel at the last minute as their current lender finally sharpens the pencil rather than lose the client. This is why I always try to help people negotiate with their current lender rather than put everyone through the work of having a new mortgage approved.

If clients are wanting to add money to their mortgage to pay out consumer debt or pay for home renovations that changes things a bit. Some lenders are more aggressive with their refinance rates so it makes sense to make a move.

Another situation has popped up this week that has had me crunching numbers for multiple clients.

One of my favorite lenders came out with a quick-close rate special that is pretty hard to pass up. The fine print is that the new mortgage has to finalize within thirty days.

I have been working on a refinance at renewal for clients that is set to close at the beginning of November. I took a look at how their current lender calculates the payout penalty when they are this close to renewal. It turns out they charge daily interest instead of a three-month interest penalty or interest rate differential.

So I did the math.

If we pay out early to take advantage of this great interest rate their payout penalty is around the $1000 mark.

Over the term of the new mortgage they will save approximately $5500 in interest cost and their monthly payment will be about $85 per month less. Even after they pay out the penalty to move a bit early they will still be $4500 ahead over the term of their mortgage.

This is one of the few times I’ve recommended that it makes sense to move forward ahead of the renewal date.

If you have a renewal coming up over the next few months I’d say it’s a good idea to connect with your mortgage person to look at what rates are available now and figure out whether it makes sense to consider making a move sooner rather than later.

Lenders will pop up with rate specials from time to time so it is worth having your mortgage professional keep an eye open for you as your renewal date comes closer. It may just save you a significant amount of money.

Purchase Checklist

Mon, 11 Aug 2025 14:38:04 GMT

Last week was a vivid reminder of the importance of finalizing your home insurance as soon as you are within thirty days of your closing date on a home purchase.

I had three clients with purchases closing on the Friday after the fire broke out in Peachland. All three had to push their closing dates back because they couldn’t get their insurance in place due to an active fire.

Thinking about this led me to consider a few of the key steps involved when purchasing a home.

I’ve written about this in prior columns but I feel a reminder is never a bad idea.

There are a few areas of crossover between the guidance your realtor gives you and the advice you receive from your mortgage person.

When your realtor writes your purchase contract there are some standard conditions that are added to the agreement. You will generally see the following:

Subject to the purchaser obtaining satisfactory mortgage financing
Subject to the purchaser having a home inspection conducted
Subject to the purchaser arranging home insurance
Subject to review of strata documents if applicable
Subject to the sale of the purchasers’ current home if applicable

The financing end is obviously our responsibility.

I do double-check with my clients that they have taken care of the other conditions. Most realtors are great at offering support to their clients with respect to addressing the relevant conditions.

In some cases I feel like realtors tell clients the steps they need to take but my guess is that the whole process can feel or become overwhelming. Before I give my clients the ok to remove their financing subject I confirm that they have taken care of the home insurance as this is one piece they sometimes miss.

If you are going through the process of purchasing a home my suggestion is keep a notebook (aging myself by suggesting a paper version) or a list on your phone to keep track of your must-do tasks as you go through the process. I have a checklist that I’m happy to share if you would like a copy.

What does your mortgage broker bring to the table

Sat, 02 Aug 2025 16:04:57 GMT

What does your mortgage broker bring to the table?

I love what I do. Every day I learn something new. I meet amazing people. Each day is different and knowing that what I do is important is good for my soul.

I had someone call the other day to ask some questions about a pre-approval and he finished up the call with a genuine question.

Why would he want to work with a mortgage broker instead of his bank?

There are many ways to answer that question. This isn’t intended to be a sales job about working with me but rather with mortgage professionals in general.

Before you read any further understand that working with your bank may be the easiest solution for you. There are some amazing employees within the branch system so this is not intended in any way to make light of the work they do.

As licensed professionals we work with mortgages every day. Most of us seem to live and breathe mortgages all the time including evenings and weekends. For many of us our families are annoyed by the constant distraction of our work.

Boundaries are important of course and some brokers work a strict schedule.

Many of us do make ourselves available evenings and weekends to help our clients because not everyone has the flexibility in their workday to deal with their mortgage.

We work for you rather than one specific lender or financial institution so are looking for options that fit your situation rather than making your mortgage fit within one product.

One of the most important differences between working with your bank and working with a mortgage professional is options. Not every client fits a cookie cutter approach. There are some situations where clients’ income doesn’t support their application in the traditional lending world. Sometimes clients have credit challenges. Sometimes clients are looking at a unique property.

Mortgage professionals have access to a wide range of lenders, some of whom offer specialty products not available at your bank.

Product knowledge and expertise can be another difference. As an example I work with many clients who are self-employed. There are mortgages specifically geared for self-employed clients that are available at banks as well but often the employees are unaware of these options.

For me, the relationship I build with my clients is the main differentiator about why I say clients should work with a mortgage professional rather than their bank. I take the time to get to know my clients and their situations and longer-term goals. I will still be here when their mortgage comes up for renewal and am able to answer questions in the meantime. I’ve had many clients comment over the years how much they appreciate the personal approach rather than feeling like a number at their bank - having to start from scratch with someone new each time they need help.

A Breath Of Fresh Air

Fri, 11 Jul 2025 23:03:49 GMT

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Read the Fine Print

Thu, 12 Jun 2025 23:01:07 GMT

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Credit Reports

Mon, 02 Jun 2025 16:18:34 GMT

Its been a while since I wrote about the importance of your credit report. This topic popped up twice this week so I think a refresher is not a bad idea.

When we submit a mortgage application lenders look carefully for a few specific things:

Is the home you are looking to buy or refinance readily marketable / appeals to a wide range of potential buyers?
Do you have your down payment in order?
Do you have consistent income to repay your mortgage?
Does your overall financial profile show you manage yourself responsibly?
Does your credit report reflect a history of payments made on time and as agreed?

When they are reviewing your credit report they are also looking for a few specific things.

How long have you had active credit facilities (credit card/line of credit/mortgage etc)?
Do you have a history of making your payments on time?
Do you pay most of your credit card balances off regularly or do you run with cards maxed out all the time?

Lenders fully understand that sometimes life happens and we can sometimes explain one-off blips or issues. If you have a consistent history of late payments that can become a bit more challenging to explain.

One thing that I chat about with my clients is how making your credit card payment a few days ahead of your statement cutoff date can really help boost your score.

Over the last few years it has become more common that people use their points cards for everything over the course of the month then pay their card in full once they get their statement. If you operate your credit card this way your credit report only picks up the balance as reported on your statement so it can look like you are always carrying a significant balance even though you always pay in full.

For most people this is not a big deal, but if you are working on improving your credit score this small tweak can have a huge impact.

The other issue that popped up this week was incorrect information on a client’s credit report. Part of her first name was missing and the birthdate was incorrect.

The client was able to confirm everything on her credit bureau for me right down to previous addresses, employers, and old loans that had been paid off.

Lenders would not move forward until her credit report was corrected and in this case because two items were wrong the client needs to correct it herself (normally we can help make changes fairly quickly).

Its always a good idea to review your credit report at least once a year to make sure that all of your information is reporting correctly. If there is an issue you can catch it early and correct it before you are in a panic midway through a mortgage application.

Changing topic a wee bit as my daughters are on evacuation alert already …

If you are in the process of buying a home as we move into fire season please make sure you have a clause in the agreement as to what will happen should there be an active fire nearby. Nail down your home insurance as early as possible because once there is an active fire close by securing an insurance policy can be very difficult if not impossible.

I know this is a dumb question but

Mon, 19 May 2025 16:43:15 GMT

I know this is a dumb question but ….

I should probably know this already ….

I’m sorry to ask so many questions but ….

So many times clients start out with one of these statements. They feel like they should have a better understanding of the mortgage process or terminology.

The truth is that buying a home is not a simple journey.

Applying for a mortgage is not a cake walk.

And even if you’ve been through the process in the past the goal posts seem to move faster than you can keep up.

One of the reasons I love (most days) my work is that I am able to spend as much time as I need with my clients helping them understand their financing. When I worked for one of the chartered banks in a previous life I was so tightly scheduled that when our time was up that was it. Someone else had an appointment that I needed to be on time for.

Clients have different learning and communication styles. Some come well-versed and understand the mortgage process; others have not done any research and need a lot of hand-holding.

My goal is to make sure that by the time they are signing their legal paperwork in front of their lawyer my clients understand the decisions they have made and the rationale behind them.

Whether it is the first time you are buying a home or you are looking to refinance your current mortgage it is important that you find a professional to work with that is patient and non-judgmental. In a beautiful world you connect with someone that has bought and sold a few of their own homes and has been working in the mortgage world for a while.

It can feel very intimidating to bare your soul to a complete stranger. We often don’t share details of our finances with anyone except our banker / spouse and in some cases I find clients may feel embarrassed about the state of their finances. We see via social media others living lavish lifestyles and somehow feel we should be doing the same.

The bottom line is that whether this is your first plunge into the homeownership pool or you are a veteran in the market, it is so important to connect with someone that takes the time to understand your situation and your goals. Knowing your long-term plan and how you handle your finances can help your mortgage professional set you up for success.

Please please please make sure you ask all of the questions, even if you think you should know that answers. Guessing that you understand something or bluffing without listening to your mortgage professional’s advice can cause unnecessary grief down the road.

Conditions of Mortgage Financing

Mon, 05 May 2025 18:11:33 GMT

When I work with clients that say they are writing an offer on a private sale I always talk about the benefits of working with a realtor. Realtors do so much legwork that happens behind the scenes that clients aren’t even aware of. Most times it is challenging on my end when clients try to tackle the process of writing an offer on a private sale themselves.

I joke and say I am going to charge them an extra fee because of the additional work it creates on our end.

I don’t actually charge a fee to be clear but I am only half kidding.

When you start down the road of buying a home there are many new and unfamiliar terms you may hear. Whether you are working with a realtor or not, arguably some of the most important things you need to learn about are the “subject to” conditions to include in your offer to purchase.

When you write an offer to purchase a home, your realtor will offer guidance as to the conditions you

include. Common conditions you will see are:

 Subject to arranging suitable financing
 Subject to a satisfactory home inspection
 Subject to arranging home insurance
 Subject to review of strata documents
 Subject to the sale of your current home

If you are purchasing a rural property or are in a unique situation you may also see:

 Subject to a water potability test
 Subject to an inspection of the septic system
 Subject to the seller finding a suitable home to purchase

These lists are not all-encompassing by any means.

The purpose of adding conditions to your offer is to protect you in case there are any issues with the home you are looking to purchase.

In previous columns I’ve written about the potential dangers of writing a subject-free offer. The high- level, quick position is that if you write a subject-free offer you’d better have cash on hand to buy the home.

I have worked with several clients over the last few months that have written private offers. We do absolutely everything ahead of time to try to ensure they will be successful with their financing.

These files stress clients more than you can imagine. They have to either find templates to fill out or pay a lawyer or notary to prepare the documents for them. Either way they need to quickly learn about the conditions I listed above and understand key dates involved in the buying process.

The clients need to deal directly with the sellers on any issues that may arise. When you are working with a realtor they handle these issues on your behalf. A knowledgeable realtor also helps avoid issues by taking any of the personal contact and emotions out of any potential areas of conflict.

Make sure you do your due diligence and have your ducks in a row as you move forward with an offer to purchase whether writing an offer with a realtor or on your own.

Now that the sun has come out and the election is over I’ve seen my clients more actively shopping which is encouraging. As always, my advice is to work with a realtor that you are comfortable with and who knows your area well.

Not all lenders are created equal

Mon, 21 Apr 2025 19:04:58 GMT

Not all lenders are created equal

Just as no two clients are the same, not all lenders are created equal.

For the majority of clients getting the best interest rate is their primary concern. For me as a broker it is as important to find a lender that provides a smooth process from start to finish and excellent customer service once a mortgage has finalized.

What do I mean by this?

When new lenders pop into the mortgage market they often offer low interest rates or better compensation to encourage mortgage brokers to send files their way. Sometimes these new lenders are amazing, and sometimes not as much.

Once in a while more established lenders will offer brilliant rates in order to increase the number of mortgages they have on the go. We see lenders float in and out of the competitive rate market based on how much money they have available to lend at any given time.

While this can be great for clients, it can also be a nightmare. If a lender does offer rates much lower than other lenders they end up flooded with applications. They may or may not have the staff / staff with expertise to handle larger volumes and increased time pressures.

If we are working on a refinance with flexible dates this isn’t necessarily a problem. If we are working on a purchase application with deadlines this can become stressful for all involved.

On top of that lenders have different processes for handling the legal paperwork that goes to your lawyer’s office. Some lenders handle everything in-house and have very responsive teams to handle getting the documents to your lawyer and addressing any changes that need to be made.

Other lenders hire third-party service providers to produce their documents and this adds an extra day or two to the process.

As a broker I try to learn about my clients’ longer term plans and find the right fit lender-wise. I look at lenders’ policies for portability, pre-payment options, flexibility with respect to their guidelines, broker support, and equally as important client service experience after the mortgage finalizes. Does the lender have a portal? Will they allow me as a broker to help my clients or do they require clients to work with them directly for any changes?

We sent applications to two newer lenders over the last month because they had fantastic rate specials available. Both files ended up being very stressful as we were down to the wire waiting for mortgage instructions to be sent to the clients’ respective lawyers.

I prefer not to have to deal with last-minute stress on my files.

Rate is of course incredibly important to your long-term financial health. In my mind a smooth process before and after your purchase or refinance is also important. There are many considerations that go into choosing the right package for our clients. My recommendation one day may change the next depending on both your situation and what I am seeing behind the scenes with various lenders.

I hope you had a beautiful Easter weekend!!

Home Inspection

Fri, 28 Mar 2025 17:23:49 GMT

In an ideal situation I have some time upfront to work with clients on their pre-approval. I like to go over what to expect in terms of both the process and what to expect in terms of closing costs when they have an accepted offer on a home. We usually talk about potential expenses like property transfer tax, an appraisal, a home inspection, home insurance, and legal fees.

This time of year we also talk about upcoming property taxes for anything they are purchasing before July 1st.

I think human nature is that we want to minimize our expenses and make sure we are getting the most bang for our buck.

There are a few areas of cross-over where I anticipate the clients’ realtor will be speaking to them about items like the requirement to organize home insurance and the importance of a home inspection.

In practice I think most realtors encourage their buyers to move forward with a home inspection because they want to ensure clients are not buying any surprises that will create headaches down the road.

Sometimes clients are buying privately and are not represented. In those cases I always urge them to include a home inspection as one of their conditions.

I have had clients question the need for a home inspection, particularly if they are buying a condo or a new build.

Two recent examples have popped up that reinforce for me the importance of a home inspection:

- We are working with a lovely first-time home buyer in the lower mainland. Her budget isn’t huge so she has been waiting and watching for the right property to come up, and for her offer to be the one chosen. The stars aligned for her last week.

Her financing was approved and all of the financing conditions were signed off by the lender. We were doing a happy dance for her and had a rude awakening the day she did her home inspection.

The home inspector found an ongoing leak in the kitchen that has created a soft wall which is indicative of a bigger problem. On a surface level the kitchen is beautiful and relatively recently updated. As a first-time home buyer with no family nearby our client was thrilled by the aesthetics of this condo, then devastated by the potentially expensive work needed to repair / rectify the damage.

- The second situation really caught us by surprise.

We have clients on Vancouver Island who have an accepted offer on a brand-new home that has never been lived in. They did choose to invest in a home inspection and we are so glad they did. It turns out that somehow some of the larger windows were installed incorrectly and this has created damage to the windows and a leak in one corner.

Again, with a new build the temptation would often be to skip the home inspection.

Yes, any issues with this home will be covered by warranty. Having the home inspection done and being aware of the issues upfront gives them a lot more power with respect to having these defects repaired quickly.

Now that I’ve driven that point home, its important to know that not all home inspectors are created equal. Do your due diligence – look at reviews, look at the home inspector’s qualifications and length of time / experience doing home inspections.

Going with the cheapest option is not always the best option.

Buying a home is the biggest investment you will likely make. Trying to save a few hundred dollars upfront may end up costing you thousands of dollars and sleepless nights down the road. Save yourself the pain and aggravation of hidden issues in your home.

Rate Wars

Mon, 24 Mar 2025 16:49:22 GMT

Annnnnnnd …. Its on!

Spring has arrived and with it comes a significant drop in mortgage interest rates. Over the last few months when I’ve chatted with clients who are renewing or planning to buy in the spring market I have said in almost every conversation that by mid-March

rate wars tend to start. Regardless of what is happening in the interest rate environment as a whole it seems by the third week of March lenders start sharpening their pencils.

Over the last two weeks we started to see lender bulletins trickle in advertising quick- close rate specials (ie: for mortgages finalizing within 60 days) and rate drops across the board.

Today I have had updates from six different lenders and its only noon.

Why is this important to you?

Not all lenders have the same policies with respect to dropping their rates once your mortgage has been approved. When you go into a holding pattern after your mortgage has been approved but before it has finalized rates can change. If they go up, you are covered by the rate you have in place.

If they go down, how does your lender deal with your file?

Some lenders won’t drop your rate. Some lenders will drop it once. Some maybe twice. There are a few lenders that will drop your rate an unlimited number of times up to a few days before your mortgage finalizes. When I am choosing a lender for my clients this is absolutely one of the most important things I consider. All things being equal, if I can place a mortgage with a lender that

offers unlimited rate float downs I will.

I watch my calendar of upcoming closings and proactively reach out to those lenders to request better rates for my clients. It’s a win to be able to get the benefit of falling interest rates without having to change lenders. If you are buying a home, renewing your mortgage, or looking to refinance this is a key question you should ask your mortgage person. Find out whether they will adjust the

rate on your mortgage and what the process is (do you have to request this?). At the same time, find out how many times they are able to reduce the rate for you.

Regardless of the answer I suggest touching base with your mortgage person or lender periodically up to the time your finalize your mortgage to confirm you are receiving the lowest rate they have available for you.

Buying a Strata Property

Thu, 06 Mar 2025 18:31:30 GMT

Read the Fine Print

After a few recent escapades with condo purchases I think I’d like to talk a bit about doing your homework when purchasing a strata property.

Strata properties can offer the convenience of shared maintenance costs, security, benefits like pools and workout rooms, and in some cases a more attractive price point. For people with busy schedules that don’t have the desire to spend time on yard work (or shoveling!) strata properties can be a great fit.

Strata properties are usually managed by strata councils. There are legal requirements with respect to meetings, finances and insurance, record keeping, maintenance and upkeep, as well as bylaws and rules.

Not all strata properties are created equal.

People don’t realize the importance of taking the time to read through the strata documents when they are considering buying a strata property.

From a financing perspective there are several pieces that lenders look for.

Lenders and insurers (CMHC, Genworth, Canada Guaranty) will read through strata documents, particularly meeting minutes, financials, and depreciation reports. They are looking to see if the building(s) have been well maintained, and if there are adequate funds in the strata’s contingency reserve fund (CRF) to cover any upcoming projects or unexpected issues.

They will look to see if the strata has planned and budgeted for ongoing maintenance and updates to ensure the buildings stay in marketable condition.

Lenders look to see if there is a rental pool or if there are rental restrictions. They are looking to see if there are any age restrictions.

So how does this affect you as a potential buyer?

If buildings have not been properly maintained or have had significant structural issues, they are sometimes flagged by mortgage default insurers. This means that those insurers won’t cover new mortgages for people trying to build into the complexes until those issues have been rectified or remediated.

If the building has been flagged, it can mean that you are unable to find mortgage financing to purchase a unit in that building.

This can also mean increased strata fees to cover big repairs. This may also lead to special assessments. Special assessments are used by stratas to raise significant funds relatively quickly to deal with major expenses.

Over the last year I’ve talked to clients that have had to deal with special assessments of $23,000 and $10,000 respectively. Neither of these clients were in the position to come up with the cash, so they are both on payment plans. In both situations this additional monthly payment has created financial distress.

Increased strata fees and special assessments can happen in any strata complex, but if you are looking at purchasing a unit in a complex that has ongoing issues or minimal funds in the contingency reserve fund you need to think about what that may look like down the road for your finances.

Having said that, just because a building has had issues in the past does not mean you should cross it off your list of potential purchases.

Do your homework. Check to see if the strata has dealt with any outstanding issues, and if they have documentation to confirm that.

We were recently able to obtain approval in a complex that the insurers had flagged.

For over two years the building had been flagged due to maintenance issues. In this case any units that sold were sold to cash buyers as lenders wouldn’t touch the complex.

Major work was done and an engineer’s report was ordered to confirm the damage had been dealt with.

Both the lender and the insurer went through all of the documents and approved the financing because all issues had been dealt with and the strata has taken steps to rebuild their contingency fund and ensure necessary maintenance is planned for in the future.

This felt a bit cautionary. The intent of this information is not to scare you off of purchasing a specific property, but rather to encourage you to do your homework and learn about the strata you are buying into. Your realtor will be able to help you find answers to your questions, and it is important to have your lawyer or notary review the strata documents before you move forward with your purchase.

The spring market feels to be picking up. If you are looking to get into the housing market, a strata property might be the ideal fit!

A Fresh Perspective

Mon, 24 Feb 2025 19:17:58 GMT

Part of what we do as mortgage brokers is explore options for clients.

Recently I worked with two families whose financing had been declined by their banks as the numbers didn’t work.

In both cases, the families had already sold their existing homes and written offers to purchase new homes. Both had done well on their sales and had significant equity to work with. They were shocked to learn they didn’t qualify for similar size mortgages.

Sometimes a fresh perspective makes all the difference.

When I reviewed the first application I took a look at what the outstanding debt. Since they bought their previous home they had purchased two vehicles and were carrying about $12,000.00 on an unsecured line of credit. The vehicle payments were $457 and $692 respectively.

For context here, your mortgage borrowing power decreases by about $100,000 for every $475 you have in payments for consumer credit (loans, credit lines, credit cards, etc).

Looking at this family’s situation, I suggested using some of the equity from the sale to pay off their truck loan and line of credit.

This reduced their monthly payments by $1,052 ($360 towards the credit line plus $692 for the truck) and meant that the numbers work for them to move forward with their purchase.

This was a small tweak but made all the difference.

My preference is that people put their equity back into a new purchase as opposed to paying off consumer debt. However, this decision needs to be made carefully by the clients as they are the ones ultimately responsible for paying the bills each month. In some cases this is the only way to qualify for a new mortgage.

The second family’s application involved a slightly different tweak.

When I calculated the funds they had available for their down payment and closing costs, it looked like they had $100,000 available for their down payment. The purchase price on their new home was $549,000.

We discussed increasing their down payment to $109,800 which is twenty per cent of the purchase price. They spoke to her parents, and the parents agreed to gift them $10,000 to make up the difference.

What this meant for the clients was that we were able to get an approval with a thirty-year amortization. With the increase in amortization and slight reduction in the mortgage amount (additional down payment + no default insurance fee), they qualified for the new mortgage they needed.

Again, my preference is to see clients stick with shorter amortizations whenever possible.

This family has chosen to have one parent stay at home while the children are young, so the smaller mortgage payments are a good solution for the short term. We talked about options for increasing their payments once the children are in school and the dad is back to work.

Each family and situation is different, and often we are able to look for creative options to help find the right mortgage. Sometimes a second set of eyes is all it takes.

Mitigating Mortgage Moments

Fri, 07 Feb 2025 19:06:39 GMT

This week I had a panicked call from a realtor I work with on a regular basis. One of her sellers had a sale that looked like it was going to collapse. He was counting on the sale of that home for the down payment of his next home.

She called mid-day Wednesday. The sale was supposed to complete on Friday. She asked if I could talk to the purchaser and potentially arrange financing for her.

Before you read the next part, this is not intended to single out any particular bank or mortgage person. It could just as easily be a mortgage broker or a branch employee.

The back story is that the purchaser had been working with a mortgage specialist from one of the chartered banks since mid-December. The specialist gave the client the go-ahead to remove her financing subject January 17th.

The specialist then said they needed to extend the closing date by a week. Then by another week. Then she told the client she would have to come up with twenty per cent for her down payment. The client scrambled and came up with the additional money needed for her financing to be approved.

I might not have believed this story except I did see the email chain.

So what actually happened? My guess is that the mortgage specialist did not have an approval in place with the insurer or her bank when she gave the client the ok to remove her financing.

The client had not seen nor signed any mortgage paperwork before removing her financing subject; she was trusting that her mortgage person had things well in hand being as she was told she was approved and things were fine.

The buyer in this case is a first-time home buyer and did not know any different.

I have pulled off the odd miracle in my days but I had serious doubts about being able to help this client in one day, especially being as she was buying in a smaller remote community so we had fewer options.

We were working on her application and 6:00 pm Wednesday evening had word that the bank she was originally working with had come through and would be sending mortgage instructions to the lawyer the following morning (we are now at the day prior to closing).

When you are purchasing a home and applying for mortgage financing, I feel it is so important to work with a team of professionals that have your back.

As someone who has never bought a home before or maybe hasn’t done so in many years its important to do your homework and understand the process.

If you think things are going sideways with your financing please make sure you ask questions to better understand what’s happening. If you have a feeling that something is really wrong, don’t wait until you have no other options.

When you choose a mortgage professional to work with (and realtor for that matter) do a bit of homework. Ask your friends who they have used and what their experience was like.

Buying a home is stressful enough on a good day, but what this poor client has been through could have been avoided had she had a better idea of what the home-buying process was supposed to look like.

Private Lenders

Fri, 24 Jan 2025 22:16:09 GMT

The easy fix isn’t always the right fix.

I’ve been wondering how long it would take to see the fallout as clients who have been paying really low interest rates come up for renewal.

We have all experienced a steep increase in the cost of living. Even though rates now are sitting where most clients qualified with the stress test when they originally got their mortgages, for many people life has happened in the meantime.

What do I mean by that?

Often clients are having to push right to the top of what they qualify for just to get into the housing market. As we are going through the mortgage approval process we talk about keeping big consumer purchases (financing a car or furniture as an example) to a minimum as additional loan payments reduce borrowing power.

Once clients are into a home life does indeed happen. The older car dies and a new car is necessary. Little ones come along and that can affect family income and add a daycare bill to the bottom line. Property taxes increase. Grocery prices skyrocket. You know the list.

Balances start creeping up on credit cards or lines of credit.

There are lots of different mortgage products to help with consolidation of debt. Lately the challenge has been that even if clients have significant equity in their homes with the increased interest rates they may not qualify with traditional lenders.

Alternative lenders and private lenders come into play as options in this case. I’ll leave the alternative lenders to another day because I have a cautionary tale about private lenders.

Not all private lenders are created equal. I have several that I work with when my clients need a solution in the private world.

There is a time and a place where a private mortgage is the ideal fit. As long as you have an exit strategy (a plan as to how it will be paid out in a relatively short time frame ie: one year) this can be a great option for clients.

Then there is the private lender that hurts my heart.

Heavy catchy marketing bombards us from multiple venues. Their jingle is running through my head as I write this. For them the bottom line is that if you have adequate equity in your home you are approved.

Cool. That fixes the immediate problem. However, more times than I like to think about, this lender creates far bigger problems for people.

Despite the fact that you have equity in your home you still have to make the payments on these private mortgages. Interest rates are usually around the 14% mark so payments are high and you are not making any headway with paying down the mortgage.

If there is no significant increase in your income you struggle and find yourself in a financial bind again. They set up another mortgage with an even higher rate.

When you sign on for a private mortgage your are responsible for covering your legal fees, the lender’s legal fees, and there is also a lender fee that is included. Even a small private mortgage can end up costing almost $10,000 to put in place.

If you couldn’t cover expenses with your first mortgage (at reasonable rates) guess what happens when you start adding in more and bigger payments on top of your normal expenses?

For most people the only out at this point is selling their home.

That is a very hard conversation for me to have with clients, especially when they’ve been in their home for many years.

If you are finding that there is more month than money, sitting down and reviewing your expenses is the first step to take. Are there any areas that you are able to cut back? Do you have any options for increasing your income?

If the answer is no, talking to a mortgage professional sooner rather than later may help identify some options before you end up in a never-ending cycle of sleepless nights and missed payments.

New Year, New Mortgage

Mon, 30 Dec 2024 14:50:18 GMT

As we close out 2024 and prepare to ring in 2025 today’s column will be short and sweet. Well, short in any case.

I think many of us tough out difficult financial situations until we are through the holidays. We put on a brave face and do our best to make everyone’s holiday season fun and festive.

January hits as does reality when we look at our bills and our account balances.

If you are feeling overwhelmed with your financial commitments and don’t know where to start, a conversation with your mortgage professional might be a good place to start. If you have equity in your home it may make more sense to remortgage and consolidate your consumer debt.

My advice is to try not to do that if you can avoid it, but feeling like you shouldn’t then falling behind with your credit cards and other loans will do more damage to your financial health in the long run.

Credit counselling organizations are already advertising heavily to this target audience. Clients sometimes think (or are led to believe) that this is an easy solution and better for their credit long-term. Not all credit counselling agencies are created equal and I can’t count how many clients are still dealing with the fallout from these arrangements years down the road.

If you have tried to refinance in the past and been told no, it may be worth taking another look at this approach. Lenders change their policies and your situation likely has changed as well.

Going into January can feel a bit heavy after the holiday celebrations and I encourage you to take a close look at your finances and set yourself up for a successful year.

Mortgage Timing

Sat, 21 Dec 2024 19:52:18 GMT

Navigating Bridge Financing When Selling and Buying a Home

When clients are selling one home to buy another, realtors strive to align the sale date of the current home with the purchase date of the new one. However, when clients need a few days or even months to transition between homes, bridge financing may be a viable option.

What is Bridge Financing?

Bridge financing allows clients to buy a new home before selling their current one. Depending on the lender, arranging bridge financing can be straightforward, but not all lenders offer this service. In such cases, private bridge financing might be necessary.

Key Considerations Before You Begin

Before agreeing on dates with your realtor, it’s crucial to explore your options:

Traditional Banks & Monoline Lenders : Bridge financing is usually simple to organize, with an administrative fee (around $250) and daily interest on the borrowed funds.
Strategic Timing : In some instances, bridge financing might not be an option, requiring careful coordination of sale and purchase dates.

When Bridge Financing Might Not Work

Your lender doesn’t offer bridge financing.
The cost of bridge financing seems excessive.
Your current home is on First Nations land (terms of lease agreements often preclude bridge loans).
Private bridge financing costs far outweigh the benefits.

Alternative Solutions

If bridge financing isn’t feasible, there are alternatives:

Shipping Containers : Companies like Securite or Big Steel Box can provide a container for temporary storage. It’s delivered to your home before the sale, stored securely, and then transported to your new home on possession day. This approach might involve a hotel stay or staying with friends or family.

For example, a recent cost-benefit analysis showed clients saving approximately $4,500 by opting for a shipping container over private bridge financing—even after accounting for hotel stays and dining out.

When Bridge Financing Works

For those able to use bridge financing through a monoline lender, the process is simple and cost-effective. One client paid a $250 fee and approximately $650 in interest for a week, giving them the flexibility to clean both homes and move at a relaxed pace.

Plan Ahead

If you’re planning to have sale and completion dates on different days, consult your mortgage professional before finalizing contract dates.

Thank You for a Wonderful Year
As we head into the new year, I want to express my gratitude for your trust and support. Wishing you and your family warmth and happiness in the year ahead!

Making Good Decisions

Fri, 13 Dec 2024 19:27:52 GMT

Last Minute Mortgages

Do your homework. Be prepared. Make good decisions. Don’t gamble on an outcome.

Maybe most importantly don’t rush.

These are lessons that can be applied to almost every aspect of our lives.

This week I jumped in to help another broker. A client of his had written an offer on a new home priced at $1,000,000. The client’s current home was owned free and clear (no mortgage outstanding) but was worth slightly less than that.

The broker had a mortgage arranged to cover the difference between the purchase price and the anticipated sale proceeds of the current home.

The client removed all of the subjects on his purchase before his current home was sold – basically rolling the dice and assuming it would sell.

I bet you already know where this is going. There is a plot twist though.

As it turns out, the other broker is unexpectedly away dealing with a health emergency.

The client’s original home has not yet sold.

He has to complete the purchase on his new home by the end of next week.

We scrambled this week to line up private financing to cover the shortfall needed to complete the purchase of the new home.

The broker had urged the client not to remove subjects on the purchase until the other home was sold. I have seen the email. The client decided to move forward regardless.

This client is fortunate that he still qualifies for the new mortgage even with the current home not sold.

The client will, however, be covering some unanticipated expenses. Between fees for the private loan and additional legal fees the client will be paying over $10,000 at closing on top of the expected closing costs for the purchase. As well, the monthly payment on the private loan is approximately $4500 per month so we are all hoping an offer comes in soon.

The thing about houses is that they make them every day. Maybe not everyday but certainly new homes come onto the market all the time. Its hard if you are emotionally attached to the idea of a shiny new home, but I lean to the conservative side and encourage my clients to look at the long term outcome should all the pieces not fall into place.

As we move into (what we expect to be) a busy spring market, I encourage you to make thoughtful decisions and not put your financial well-being at risk by jumping into something you shouldn’t.

Mortgage Conditions

Fri, 29 Nov 2024 21:46:10 GMT

Time is of the essence.

Whether you are looking for a mortgage preapproval, have an accepted offer on a home, or are in the middle of a refinance, we are generally working towards meeting a deadline whether it is a financing subject removal date or an upcoming renewal date.

I feel like mortgage professionals all have their individual styles and processes as to how they work with their clients.

One of the things I’ve learned over the years is the importance of gathering my clients’ documents upfront and reviewing them thoroughly. There are times when a client calls with an accepted offer so we are starting a little behind with respect to document collection.

Another of the things I’ve learned over the years is that regardless of how thorough I try to be when collecting and submitting clients’ documents to lenders there are often additional requests for clarification that come from the lender.

Hands-down I feel like organizing and sending your paperwork to your mortgage person is the most frustrating part of the process for clients.

So what can you do to make this smoother?

First, if you receive a list of required documents please provide them all. Take a minute to confirm that your documents clearly show your name and account number if applicable. Send all pages of the documents; don’t guess at the pages you think the lender needs.

There are reasons lenders need specific documents and information. They are doing their due diligence to do their best to avoid mortgage or identity fraud. They want to make sure you truly have the capacity to make your mortgage payments.

Most days I spend time explaining to my clients why we need particular information and documents and help them access and submit them. If paperwork is not your forte I completely understand the frustration as you do your best to send your information.

Even if paperwork is your forte I get your frustration.

Why is there such a high level of due diligence on our parts?

I recently had a chat with a friend that works at a TD branch. Because of the three billion dollar fine that TD was handed in the US their mortgage rates are suddenly a wee bit higher and they don’t have the same wiggle room they did earlier in the year.

This is also due to the mortgage interest rate environment overall. However, when huge fines like this cut into profitability the loss has to be covered from somewhere.

Thorough document review and multiple ways to verify information feel like a pain but if these steps help identify potential money laundering or fraud this will save us all as consumers from higher interest rates and even stricter lending guidelines.

It's important to understand when you feel like the paperwork is driving you crazy. If you are having troubles finding the necessary paperwork, pick up the phone and speak to your mortgage professional. There may be alternate ways to access or confirm the same information.

The more organized you can be with your paperwork, the smoother your mortgage approval will be.

Mortgage Rule Changes

Sat, 16 Nov 2024 19:50:56 GMT

Things are picking up. I have seen a significant increase in the number of purchases I am working on with clients. I’ve done an informal poll of some of my realtor and broker friends and we are all seeing the same increase in activity.

This week I attended a learning session about the recent and upcoming changes to mortgage rules. This year it has felt like changes have been rolled out so often that its hard to stay on top of new policies.

I thought it might be good to go over some of these changes as they will benefit many homeowners and homebuyers. Please note that this is a quick explanation and you may have questions or need clarification on some of what follows so please make sure you speak with your mortgage professional before moving forward with a purchase.

In the order the changes were discussed in our session, here is a high-level overview for you.

Effective August 1, 2024 first-time home buyers (FTHB) were able to purchase a newly built home using a thirty year amortization with a minimum down payment. Prior to this change the maximum amortization allowed for buyers with less than twenty percent down was twenty-five years.

Key to note here is that the definition of a FTHB for purchasing homes is based on the CRA explanation of home buyers starting out or starting over; this includes buyers who have not owned their primary residence (nor lived in a home owned by their significant other) for the last four years. It also includes buyers who are recently separated or divorced.

Also key to note is that only one of the borrowers must qualify as a FTHB for these rules to apply.

For the purposes of Land Transfer Tax in BC, even if clients are considered FTHB under mortgage rules, they will still have to pay Land Transfer Tax if they have ever owned a home anywhere in the world.

There is a small increase to the insurance premium (,2 per cent) if borrowers elect to use the thirty year amortization.

Effective December 15, 2024 the price cap for insured mortgages will be increased from $1,000,000 to $1,500,000. Clients will be able to purchase a home up to this price with a minimum down payment of five per cent of the first $500,000 and ten per cent of any balance over that and up to $1,500,000. For the full $1,500,000 the minimum down payment will now be $125,000 as compared to the previous minimum down payment of $300,000.

Trying to come up with the required twenty per cent down payment has been a barrier for many borrowers.

The changes coming into effect December 15 also include the ability for repeat buyers to new builds with a thirty year amortization.

As well, all FTHB will be eligible to qualify based on a thirty year amortization regardless of whether they are buying a newly built home or an existing home.

For these guidelines to apply mortgage applications must be submitted AFTER December 15.

The final change I’m going to touch on today rolls out effective January 15, 2025.

Existing homeowners will be able to refinance their homes up to ninety per cent of the as-improved value of their home if they are pulling equity to create a secondary suite in their home using a thirty year amortization.

What does “as-improved value” mean?

With these applications we will need to order an appraisal which shows the current value of the home as well as the value of the home once the proposed work is completed.

Current rules limit refinances to eighty per cent of the value of the home so I see this as a significant benefit for clients who are maybe newer to the housing market and can really use the income from a secondary suite.

There are of course requirements for this program including:

Either the borrower or close family member must live in one unit of the property
You can add more than one unit to the home (up to a total of four) providing zoning allows for this
Units must be completely self-contained
Financing limit cannot exceed actual costs of the work

Is your head spinning yet? Mine certainly is, trying to keep all of these changes straight.

Many lenders are still determining their own policies as to how they choose to incorporate these rule changes into the mortgages they offer. It is important to speak with a mortgage professional to see how these changes may impact your borrowing power.

As I mentioned we are already seeing a definite increase in purchase activity. It will very interesting to see if there is a flurry of activity following the implementation of the December 15 changes as well.

Planning (Your Mortgage) Ahead

Mon, 04 Nov 2024 14:31:26 GMT

With the challenges in the mortgage world over the last few years I’ve had a few people ask if I am still enjoying my work. Fair question as there are many days I’ve felt like I’m fighting an uphill battle.

The truth of the matter is that I absolutely love what I do. I had a call with a young couple last week that reminded me why I enjoy helping people with their mortgage financing.

I helped this couple buy their first home about nine years ago, then helped them again at their renewal. They booked an appointment to chat about their future plans and asked how best to set themselves up for success.

After they brought me up to date with the renovations they’ve done to their home and the upcoming expansion of their young family, we spent an hour exploring different options and talking about which route would likely be the best for them. In their case we have decided to wait until their renewal next summer before we make any changes.

I started my mortgage career with one of the big banks. We were always busy and tightly scheduled so my meetings were all business. I didn’t have much opportunity to get to know my clients. My schedule did not allow for much social chit chat.

Interestingly these conversations are what I enjoy most about my work.

Being able to spend time with my clients building a plan and creating a strategy around next steps is very rewarding. I often have calls from clients who are almost apologetic because they aren’t ready to buy right away and are concerned about wasting my time.

I love these calls. Having the time to dive in and make sure clients are well organized to buy at some point down the road means we can outline concrete steps to help them get set up for success.

If you are starting to think about purchasing a home down the road I encourage you to connect with a mortgage professional sooner rather than later. Taking some time to learn about your options and the requirements for obtaining mortgage approval can help save much stress down the road and give you a clear goal to work towards.

Secondary Suite Financing

Fri, 18 Oct 2024 18:26:10 GMT

Mortgage rule changes seem to be coming at us fast and furious. This isn’t surprising given we are in an election year.

Several weeks ago I wrote about the change to the ceiling for the purchase price of insured homes and the extended amortization that will be available.

On October 8, 2024 the government announced a new program that will come into effect January 15, 2025.

The new program will enable clients who already own their homes to refinance up to 90 per cent of the value of the home to use the available equity to create a secondary suite.

Current rules only allow refinances up to 80 per cent of the value of the home, regardless of the purpose of the refinance.

The parameters of this new program, taken directly from the CMHC website ( Mortgage Insurance Rule Changes to Enable Homeowners to Add Secondary Suites - Canada.ca ) are as follows:

This measure will apply to all borrowers seeking to access mortgage insurance in Canada to add more units (secondary suites). These borrowers must satisfy the following requirements:
Already own their properties;
The borrower or a close relative are occupying one of the current units;
Intend to construct additional units; and,
The additional unit(s) must not be used as a short-term rental.
Refinancing: Insured refinancing will be allowed for the purpose of building additional unit(s).
Legal units: The new units must be fully self-contained units (e.g., basement suites with separate entrances, laneway homes) and meet municipal zoning requirements.
Number of units: Maximum of four dwelling units including the existing unit.
Maximum Property Value Limit: The “as improved” value of the eligible residential property against which the loan is secured must be less than $2 million.
Maximum Loan-to-Value limit: Up to 90 per cent of the property value, including the value added by the secondary suite(s), in combination with any other outstanding loans secured by the property.
Maximum amortization: 30 years.
Additional financing must not exceed the project costs.

We are still waiting on clarification from lenders as to their specific guidelines around this program so I will provide more information as it becomes available.

With respect to what this means in dollars and cents, using a home valued at $800,000 we will now be able to refinance up to $720,000 for the purpose of adding an additional legal suite. Under previous guidelines we would only be able to refinance up to $640,000 so in this example clients will be able to access $80,000 more of the equity in their home.

It will be interesting to see what the uptake is for this program.

One particular group of clients I see this benefitting is clients who have only been in their home a few years that have seen a moderate growth in their equity after only having put down the minimum down payment when they purchased their home.

With carrying a higher mortgage and the increased cost of living overall these clients may really benefit from access to funds to add a secondary suite to their home.

Navigating Mortgage Decisions: Finding the Right Amortization and Term for Your Situation

Mon, 07 Oct 2024 13:38:30 GMT

When I am working with clients on their mortgage approvals there are several decisions they need to make. The questions differ a bit based on whether we are working on a purchase, a refinance, or a straight renewal.

We talk about amortization, term, and the specific mortgage product. These questions differ a bit based on what we are doing and the clients’ specific situation. Amortization refers to the total length of time required to pay your mortgage in full. Term refers

to the length of time you choose to lock into a specific rate.

Some of the decisions can be scripted if you are purchasing with less than twenty per cent down and your mortgage requires default insurance. These rules have recently changed (again situation specific) but length of term is up to the individual client.

Historically many people choose five year terms because lenders offer lower rates for this term. Over the last two years I’ve had far more people opt to pay a slightly higher interest rate and choose a three year term, gambling that rates will be lower then.

Over the last year specifically as home prices have risen at the same time as the cost of living has escalated I’ve had different conversations with clients about the amortization they choose. With the recent announcement of changes coming to maximum amortizations for new builds and first time home buyers it will be interesting to see how these discussions change over the

next few months.

For clients who were working on refinances or purchases with over twenty per cent down we had the option of extending to a thirty year amortization.

Some clients are resistant to stretching out the length of their mortgage and for solid reasons. Our parents’ generation was all about getting their mortgages paid off as soon as possible. This is obviously the choice that made the most sense and was more achievable for them and has been ingrained in many of us.

Our current reality is that home prices and cost of living have skyrocketed while wages have not kept pace. I’ve heard the argument that our parents were not enjoying a life style that included $6 coffees every day. Fair enough.

However, I have clients that live very frugally and are still struggling. Life happens. Divorce or separation happen. Devastating accidents or illness happen. Childcare bills escalate. Jobs are lost. Stuff happens.

Particularly when I am working with clients that are consolidating or buying at a significantly higher price point we have a thorough discussion comparing the difference in monthly payments for (usually) a twenty-five amortization versus a thirty year amortization.

Signing for a shorter amortization makes better sense for your long-term financial plan. However, if the higher payment causes you stress month after month and you end up in the same boat again a few years down the road the long term benefit is not there.

Every lender offers several ways to make extra payments against the principal of your mortgage. Interest rates will likely be different every time you renew your mortgage. Your income and bills change over time.

I will always be an advocate for paying your mortgage off sooner but many of my conversations with clients are pretty raw about the reality of making your payments every month.

The positive news is that rates have been trending down over the last month which will help provide a bit of relief. The better news is that by making thoughtful decisions around your choices for amortization and term you may help reduce your overall stress level.

Mortgage Rule Changes

Sat, 21 Sep 2024 21:14:33 GMT

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Fixed versus Variable

Mon, 09 Sep 2024 13:48:00 GMT

One of the questions I am most often asked is “should I take a fixed or a variable rate”?

My answer to this question is different for each client.

My answer to this question may change based on the interest rate environment.

The last few years have been sobering to say the least. We were riding the high of historically low fixed interest rates and beginning to see them as the norm.

Where interest rates are sitting now (mid four to five per cent) is closer to the average interest rate Canadians have paid over the last twenty years.

This week I attended a learning event and the economist that presented to the group spoke the words we have all been waiting to hear. He did qualify his thoughts with the comment that no one has a crystal ball and we’ve all seen what can happen with Bank of Canada monetary policy.

What he did say is that he feels we will see prime rate drop 1.25 to 1.5 per cent over the next year.

What does that mean in dollars and cents?

As an example, if your mortgage is $500,000 and your variable rate mortgage is priced at prime less 1.05 per cent, if prime drops one per cent this means your payment will be $283.28 per month lower.

This math applies if your variable rate mortgage has a payment that changes every month. If your variable mortgage has a static payment (payment that does not change to follow changes in prime) your payment stays the same but more money goes towards the principal instead of interest.

So it seems like variable is the obvious choice if you are finalizing your mortgage right now.

But it may not be.

Circling back to where I said each client has a unique set of circumstances, variable may not be the best option.

Fixed rates for insured mortgages are hovering around 4.59 per cent (some lenders lower, some higher). For clients that are pushing to qualify for the maximum purchase price they can the one per cent difference between fixed and variable rates absolutely affects their borrowing power.

Lets say we are working with a family earning $120,000 annually. When we calculate their maximum purchase price using the minimum down payment and assuming $3,000 a year for property taxes here is the difference:

Using a fixed rate of 4.59 per cent we are looking at a purchase price of $525,000
Using a variable rate of prime less .95 per cent (5.49 per cent) we are looking at $475,000

Another consideration before choosing fixed or variable is individual risk tolerance. Do you have room in your budget if rates trend up instead of down that you will not be stressing if prime does increase?

Exit strategy is yet another thing to consider. With variable mortgages the maximum penalty you will pay if you pay your mortgage in full early is three months’ interest whereas with a fixed rate mortgage you will pay the greater of three months’ interest or your lender’s interest rate differential calculation. There can be quite a spread between the two.

If you are planning to pay off your mortgage in the next few years variable may be the route to go strictly for that reason.

And if you opt to choose a variable rate mortgage then decide you are not comfortable with potential changes, or if a few years in the fixed rates are far more attractive you can convert from a variable to a fixed rate mortgage. Win-win.

Deciding whether to go fixed or variable is absolutely an individual decision for all of the reasons above.

When the economist was asked whether he would choose a fixed or a variable mortgage himself right now there was no hesitation whatsoever.

“Variable all day long” was his answer.

It will be interesting to see where rates are a year from now.

Mortgage Marathon

Mon, 26 Aug 2024 17:29:08 GMT

Getting across the finish line is sometimes more challenging than getting your initial mortgage approval.

Lenders have different processes for evaluating mortgage applications. With some lenders we need to submit all of your supporting documents upfront; others send out the initial approval with a list of what they want to review.

Process-wise I collect all (or most) of my clients’ documents before I ever submit for an approval. This means we can be flexible when choosing which lender we are going to work with. In some cases when I know it will be a few days before the client is able to provide everything I will work with a lender that sends out their approval then asks for the documents.

There are pros and cons to both lender processes.

For the lenders that need everything upfront, in an ideal situation their approval arrives with very few additional document requests. This feels smoothest for our clients.

Lenders that issue an approval without reviewing all documents are great to work with when we are in a time crunch. If I am pretty confident of the information my clients have provided verbally but am just waiting on certain documents (ie: a T4 or bank statements) I will often use these lenders to make sure we stay on track to meet deadlines like our subject removal for financing.

Sometimes, even after working with clients for months, surprises pop up.

This week felt like a game of Whack-A-Mole dealing with just such surprises on several of my files.

First surprise: my client has a credit score in the high 800s (900 is the highest available) and has been with the same employer for over fifteen years. She is putting down 50 per cent of the cost of her home from savings. A beautiful application all the way around.

Our approval came back requiring confirmation that her cell phone bill has been paid in full. Apparently her Transunion credit report shows she is in arrears with her cell bill.

The back story was that her employer had sent her out to work one of the active fires and she was putting in long exhausting days so it was an oversight.

In view of the application I felt this was an absurd ask but the lender would not budge on it. My client was very unhappy being asked to provide this as the mortgage application was with her bank.

Another challenge was after working with clients for almost a year on their preapproval (and having reviewed their credit history ten months ago) they finally had an accepted offer. We pulled their credit history to update their application. There was now an outstanding collection that had not been there before. It was for an old student loan that they assumed had finally gone away.

Even trying to verify basic information can seem daunting. As a prime example, CRA has changed the format of the T4s that clients can pull from their My Account portal. The T4s no longer include the clients’ names. To pull from My Account clients need to do a screen shot that includes their name on the portal. This can be a royal pain for clients to access the information in a format that lenders require.

All this to be said that lately many clients have been frustrated by some of the document requests we are making. From my perspective, if we are asking to borrow hundreds of thousands of dollars I appreciate that lenders are doing their due diligence. Identity fraud and mortgage fraud are out there and in the long run cost us all money.

If you are finding yourself a bit frustrated with the process you are not alone.

There are days where I put on my helmet and flak jacket before reaching out to clients for yet another document. This week there were five days.

Then there are the days when a particularly challenging mortgage finalizes and my clients now have keys to their dream home. Today is just such a day, and days like this remind me that persistence is worth it in the long run.

Porting Your Mortgage

Fri, 09 Aug 2024 22:53:40 GMT

Most lenders say that their mortgages are portable.

What does this mean?

The simplest way to explain porting is this – if you sell your current home, rather than charging a penalty to pay out your current mortgage, your lender transfers the terms and conditions (and balance) of your mortgage to your next home.

Key here is knowing that porting isn’t always an option. Its also important to note that porting isn’t always the best option.

Its important to do the math to see if porting makes sense.

Porting policies differ from lender to lender and product to product.

As an example, my favorite lender will only port a variable mortgage on the same day (ie: the current mortgage is paid out and the replacement mortgage finalizes the same day) and dollar-for-dollar. This means you take the exact same amount of money and are not able to increase the size of the mortgage if you need more money.

Another of my go-to lenders will allow a port of a variable rate mortgage and use their blend and extend policies so you can increase the amount of funds if needed.

Many lenders offer a blend and extend option when porting their mortgages. This means that should you need additional money for your purchase those funds are added to your current mortgage and the lender comes up with a new blended rate based on a calculation of original mortgage funds sitting at the rate you initially signed at and the new funds needed sitting at current interest rates.

One of the chartered banks moves the exact same mortgage to the new property and adds a second mortgage for any additional funds required.

I like to do the math for clients to see if porting is the best route, or if it makes more sense to pay a penalty to take completely new rates.

As an example, I’m working with a young couple right now that renewed into a new five year term in May at 5.14 per cent. After two years of searching their dream home came on the market. They are needing almost three times the amount of mortgage as compared to their current mortgage.

In this case, as we are working with the same lender they are being charged three months’ interest penalty instead of an interest rate differential penalty which would be approximately four times higher.

They are electing to pay the penalty (calculated at $2600) and take a completely new mortgage at 4.59%.

I looked at the interest savings and in this case the clients are saving over $9,000 over the next five years by paying the $2600 penalty.

Staying with the current lender and porting the current mortgage is almost always what I recommend to my clients. I do the math and most times it makes sense to port.

Sometimes, however, it does make sense to pay a penalty and start fresh.

If you are selling and buying mid-way through your mortgage term I encourage you to connect with your mortgage person to see what makes the most sense for you financially. You may be a bit surprised as to where the numbers land.

Prime Drop

Fri, 26 Jul 2024 22:24:08 GMT

With the announcement this week that prime had dropped by a quarter point (.25 per cent) I had a number of calls from clients wondering how this would affect their mortgage.

We haven’t seen any changes to what lenders are offering for fixed rates yet. This may follow, but fixed rates follow the overnight bond yields as opposed to prime rate.

For clients who have variable rate mortgages, this change to prime means that the interest cost on their mortgage will decrease by that quarter point as well.

There are two types of payments with variable mortgages.

Some lenders have a static payment, meaning regardless of what prime does your payment stays the same. If prime goes up you pay less towards principal and more towards interest. If prime goes down, you pay more towards the principal of your mortgage.

The second type of payment on variable mortgages is an adjustable payment. This means that as prime changes your payment also changes. You pay the same amount against the principal of your mortgage, but your payment will drop if prime drops, or increase if prime increases.

Some people prefer a static payment for budgeting purposes. Others are comfortable with a little fluctuation with their payment amount.

What does a drop in prime equal in dollars and cents?

As an example, I ran the numbers for a $500,000 mortgage priced at prime minus one percent using 5.95 per cent, then at 5.7 per cent to reflect where clients might be right now.

In this example, the payment decreased by $74.00.

$74.00 a month may not seem like a big deal, but that covers either my hydro or my natural gas bill every month.

I feel as if many people have been sitting back waiting to see what direction the government is going to take with respect to monetary policy.

Over the last few weeks it feels like our market in the Okanagan has been picking up. It will be interesting to see if this most recent change sparks changes to the fixed rates as well, and if that translates to better renewal rates and more home sales.

Side note: if you have a home purchase in the works that is set to close soon, I encourage you to finalize your home insurance policy sooner rather than later. So far we have been fortunate, but if there is an active fire within a 50 km radius some insurance companies will not provide coverage for new policies. The companies that do charge higher premiums because of the perceived risk.

Mortgage Renewal Homework

Mon, 15 Jul 2024 15:33:38 GMT

Unprecedented activity five years ago means that there are now a significant number of mortgages up for renewal.

Most clients initially sign a five-year mortgage term. That means that at the end of the five years their mortgages come up for renewal.

Statistics that I’ve seen from several different sources indicate that approximately two out of three Canadians break their mortgages early.

What do I mean by break?

What I mean by break is that if at some point during the five years they move, sell their home, or refinance their original mortgage they have broken their mortgage.

If you have not made any changes to your mortgage, at the end of the five-year term your mortgage comes up for renewal.

Lenders handle renewals differently. Some start aggressively offering renewal options to their clients at least six months ahead of time. Others send renewal offers at the three-month mark. Some follow up repeatedly with phone calls; others wait for the client to reach out to them.

A significant number of lenders offer a 120 day rate guarantee for clients that are approaching their renewal date.

If your mortgage is coming up for renewal it is important that you do your homework to make sure you are being offered a competitive rate.

A client that had just received a renewal offer in the mail from her financial institution called me last week to talk about the rate the bank was offering her. She felt it was much higher than what she was seeing advertised online.

I reviewed my rates. The same lender was offering new clients in the door a rate that was almost one per cent lower.

My suggestion to her was to go call the lender and see if they were able to offer a lower rate. Less than five minutes on the phone with the lender’s customer relations team and they had reduced the rate to match what was currently available for new clients.

In some cases lenders are not offering competitive rates. If so, you are able to switch your mortgage to a new lender at the maturity date.

Many lenders review their clients’ financial situations before offering renewal rates. If there have been significant changes, they may offer a higher rate to account for (perceived) higher risk. As an example, if the client’s credit score has dropped considerably or if there is a great deal of new debt they may not be offered the lowest rates available.

In some cases, clients who do have multiple loans and credit cards outstanding may find that renewal is a good time to refinance and consolidate their consumer debt. A consolidation may help reduce their monthly expenses and will over time help bring their credit score back up.

Whether your mortgage is coming up for renewal, you are initially purchasing your home, or you are restructuring down the road, it is important to spend some time looking into your options.

We are happy to discuss current rates with you if your mortgage is coming up for renewal. In most cases it makes sense to stay with your lender as they will most often match rates available with other lenders. In others, it makes sense to look at switching to a new lender if the rate you are being offered is not competitive.

Take a few minutes and do your homework. An informed decision can save you thousands of dollars in the long run!

Mortgage Planning for Next Steps

Fri, 28 Jun 2024 16:06:34 GMT

While working with my clients I take the time to understand not only what they are hoping to accomplish right now but also where they see themselves headed in the future.

Why is this important?

Sometimes clients have a short-term goal of getting into the housing market and planning to upgrade within the next few years. Sometimes clients are relocating but are nearing retirement so will be looking to downsize soon. Others may be in it for the long haul – starting their families and buying a home they intend to raise their children in.

Qualifying what comes next to say that the best laid plans can often go awry. Rate is not always the deciding factor. When I am choosing a lender for my clients, knowing what their longer-term plans are may steer me one direction or another.

For example, if I know that my clients may potentially make a move and upsize in the next few years I will most likely choose a lender that has favorable policies around porting their mortgages and that offers a blend and extend option.

If my clients express the intention that they will be downsizing in the next few years, and potentially into an age-restricted complex, I will likely choose a different lender. If my clients feel that they will be staying put for the long haul I may well look at yet a different lender.

Why might I look at one lender over another?

As an example, certain lenders will not offer mortgages in age-restricted complexes. Some lenders have very restrictive policies around how they offer clients the option to port their mortgage from one home to the next.

Lenders can have different geographical lending areas, so we also consider that if a client tells us they may be wanting to move to a more rural area. Some lenders are far more aggressive at renewal with respect to what they will offer their clients in terms of a rate for their next term.

I also consider the client service provided by lenders after the mortgage has been advanced.

There are a few lenders that I will not place clients with because of the experience I or other clients have had with them in the past. These particular lenders often have the lowest of the low rates but in this case you get what you pay for.

In my earlier days brokering I used the tagline “creating clients for life”. That was of course interpreted by some as meaning clients would have mortgages for life – this was not what I meant. The intent behind the phrase was that I aim to build relationships with my clients to make future moves and changes to their mortgages much smoother for them.

Quick reminder: if you haven’t already claimed your Home Owner Grant – do it sooner rather than later!

Happy Canada Day all.

Prime Change

Tue, 18 Jun 2024 14:29:24 GMT

On June 5 The Bank of Canada announced they were dropping their key policy rate. In practical terms this meant that prime rate dropped by a quarter per cent (.25 per cent).

I’ve had many conversations since the announcement about how this affects (or does not affect) my clients’ mortgage rates.

Fixed rates change based on many criteria; the key factor I watch is the overnight bond yields. When this figure drops, ideally fixed rate mortgage products will drop also.

Key to note that this means new mortgages may be offered lower rates. If you are already locked in to a fixed rate mortgage, your rate stays the same until your mortgage reaches its renewal date.

If you are in a variable rate mortgage this will affect you in one of two ways.

If you have a static payment on your variable rate mortgage (the payment does not change based on changes to prime until there has been a dramatic increase to the prime rate) this change to prime rate means more of your payment will be going towards the principal of your mortgage and less to interest.

If your variable mortgage has an adjustable payment this means your payment should go down next month because you will be paying less interest.

For the last few months it has felt like many people have been waiting for this announcement. It has been interesting to see what has happened to the fixed rates offerings from lenders since the change to prime.

Coincidentally the overnight bond yields have been dropping for the last few weeks as well.

We are seeing rate drops and specials from multiple lenders.

I feel like this has created a flurry of activity with home purchases from clients that have been sitting on the sidelines waiting for positive news.

If you have been shopping and have a pre-approval or rate hold in place, I suggest you connect with your mortgage person to see if there is a better rate available for you.

Changing gears a bit:

If you are already a homeowner, make sure you claim your Home Owners Grant to ensure your property taxes are calculated correctly for this year.

If you purchased a home over the last year and your lender is collecting your property taxes, check the upper right corner of your property tax bill to confirm your lender is listed. If the lender’s name is not there, reach out to your lender directly to make sure they are set to pay your taxes appropriately.

Sometimes with the first year there can be a disconnect. Its easier to be proactive and catch this before you get a surprise bill with a penalty for not paying your taxes on time.

Mortgage Rollercoaster

Mon, 03 Jun 2024 21:48:07 GMT

So I ran into an odd situation recently.

I’ve been working with clients whose application is not completely straightforward. Their credit is squeaky clean and they have their down payment well in hand. They faced two significant challenges:

One borrower had only rental income reported (some lenders are not keen on this as the only source of income)
The other borrower is self-employed and showed minimal income on her tax returns

Another broker had actively worked the file without any luck so their realtor asked if I might be able to take a look with fresh eyes before they collapsed their offer.

Once I started working on the file I decided to take a different approach and use the business for self stated income program.

For borrowers that are self-employed and have a minimum of ten per cent down, we are able to consider what they report on their tax as compared to industry standard income for the same type of work. We also look at what they have written off as expenses and present a slightly higher income (provided its reasonable).

This is a very simplified explanation but this program has worked brilliantly for many of my clients.

I restructured their application and submitted to one of my favorite lenders. The key pieces all lined up with respect to income, down payment, and community that the home was located in.

Plot twist: the insurer declined the application due to marketablility of the home.

What does this mean?

In the event that a mortgage ever goes in to foreclosure and a sale is forced, both the bank and the insurer (ie: default insurer / CMHC, Sagen, or Canada Guaranty) want to make sure they are dealing with a home that would appeal to a wide number of potential purchasers.

After all of the hoops this couple had jumped through trying to have their mortgage approved this was something we did not see coming.

We do have an approval in place now with a local credit union but I will say that this has been a roller coaster of a week.

Why am I sharing this?

As I sat back after a particularly challenging week of working on the file I realized that not everyone realizes that no doesn’t always mean no. Sometimes it might.

But sometimes it may be well worth your time to explore your options with an experienced mortgage broker if your bank has said no.

Confusing Mortgage Rules

Mon, 20 May 2024 23:35:30 GMT

Mortgage rules have changed and evolved over the years.

I was chatting with one of my broker friends to clarify one of the newer guidelines and she sighed and commented how hard it it is to stay on top of the policies when they shift so often.

With the introduction of the Stress Test in 2016 we were qualifying clients either the Bank of Canada Benchmark rate (which changed multiple times) or the clients’ interest rate plus two per cent. Most of my clients that are coming up for renewal now had to qualify at 4.94 per cent or even 5.25 per cent.

Interestingly this is the ballpark range of where interest rates with many lenders are sitting now.

I have been discussing his upcoming renewal with one of my favorite clients. His current lender offered him a renewal rate that he was not happy with. Because I have consent from the client I called the lender to double check if they could do any better than their initial offer.

They can’t. Because of their internal policy and the terms of this client’s mortgage it truly is the best they can offer him.

Because of a fairly recent change to qualification guidelines, other lenders are able to offer far more attractive rates because of the amount of equity he has in his home and the initial purchase price of his home five years ago.

His particular lender is one of my favorites and is usually highly competitive at renewal time. I was really surprised about this loophole in their policy.

Long story short, we will be switching to a different lender and saving my client .8 per cent on his mortgage rate which in his case equates to a savings of $21,315.00 over the next five years.

While rate isn’t always the deciding factor, it really pays to do your homework at renewal time.

Read your mortgage paperwork.

Fri, 03 May 2024 19:54:46 GMT

Sharing this situation as a reminder of the importance of reading the fine print. I have been working on a refinance at renewal for clients in northern BC. They had tried to sell their home but their acreage is unique so they did not have any offers. Their home sat on the market for over a year and their mortgage was coming up for renewal.

In the meantime life happened. They were at limit on multiple credit cards and credit limits and were stretched pretty thin. Work slowed for a bit so his income was down and they had a new baby so she was on maternity leave.

They did have a significant amount of equity in their home so the plan was made to consolidate

their debt to improve cash flow for the short term.

We got an approval with a great rate. So far, so good.

The approval stipulated that most of their credit cards and lines of credit would be closed. I had submitted the application specifying which ones were to be left open and which were to be closed. When the mortgage commitment came from the lender I double-checked the list and all was in order.

The lender pulled the clients’ credit reports about two weeks before closing and came back with a few changes because they were now over limit on two more cards. The clients went to the lawyers and learned that the new lender wanted an additional credit card closed. This particular card was one they used for rewards points so they were not willing to close that specific card.

They discovered this change when they were signing with the lawyer two days prior to their scheduled closing date. I became aware of this the morning their mortgage should have finalized. Their lawyer had told them it wasn’t an issue and that she would sort it out, but the lender was unwilling to compromise on this.

The clients called me and were very frustrated. After several calls back and forth with the lender and the client we were able to reconfigure their file a bit so that card stayed open and another credit line was closed.

So where does reading your mortgage paperwork come in?

Most people thing that once they sign their original documents from their mortgage person that their financing is set in stone. In point of fact, there is always fine print that includes something to say that any material change to the clients’ financial situation may cause their financing to be altered or cancelled.

A wise broker I know shared a list of Ten Mortgage Commandments with me in my early days. It laid out ten things you should never do between the time your mortgage is approved and the time it finalizes. It included things like you should not change jobs, buy a new vehicle, co-sign for any loans, spend your down payment, go over limit on your credit cards, etc.

At the time I remember thinking to myself that the list was so condescending that I would never share it with clients. After many years and interesting scenarios as a broker I go over this list with almost every client. If you think no one would do those things I can assure you I’ve seen it happen. In this situation we were able to sort things out and their mortgage funded the next day.

If you run into something similar at the last minute, loop your mortgage person in. They will likely have no idea that things are happening behind the scenes and they are in the best position to help you navigate through it. Our goal is to help you have a smooth experience so we are here all the way through the process.

Part of my practice is to connect with my clients’ legal representatives so that they have my contact information in case anything like this pops up last minute. Clients often don’t know that they can reach out for help, and the lawyers may not think to ask.

Should something like this happen to you at closing time, take a deep breath and reach out to your mortgage person. It may be very simple to solve when the right people are helping.

Procrastination

Fri, 19 Apr 2024 18:18:01 GMT

This morning I was up with the birds (literally) and really wanted to sleep a bit longer. I decided to listen to a podcast rather than get up. The podcast, ironically, was about procrastination.

Her general message was that procrastinating often makes us feel bad. There are things we want to accomplish or feel we should do but we choose the immediate gratification / dopamine hit of time in front of the TV or mindless scrolling (or more time in bed) rather than the satisfaction that comes with achieving our larger goals and dreams.

She talked about procrastinating with both our actions and making decisions.

The irony that I was listening to the podcast rather than getting up and tackling my day was not lost on me. There were a few comments the podcaster made that struck home.

Making a decision, any decision, is better than no decision.

Human nature (for many of us) is that when facing a tough decision we freeze. We over-analyze the “what-ifs” and potential outcomes. We worry about what others may think of our choices. We may not even know what our options are.

While procrastinating opportunities are lost or we dig ourselves in a bit deeper.

The last year in particular has been challenging with higher interest rates and a steadily increasing cost of living. Many families are struggling to cover their bills and put food on the table.

I’ve written columns before about how if you have equity in your home it might be wise to consider a consolidation of your consumer debt to free up cash flow. Making lifestyle changes can be easier said than done.

I believe that staying the course and getting your mortgage paid off as soon as possible is always the best plan, but there comes a time when you also need to look at how your finances are affecting your physical and mental health.

When we get behind with our bills or are teetering on the edge of not being able to cover everything this month we are also concerned about what people might think. We are worried about a call from our creditors asking for a payment. We project a certain lifestyle and feel the pressure to maintain this even though we can’t actually afford it right now.

We lose sleep at night thinking about the “what-ifs”.

If you are in this situation and have equity in your home, I encourage you to take action to explore your options sooner rather than later.

I have worked with clients who have never missed a payment ever but their credit scores were in the 500 range (not good) because they are over-extended and maxed out on multiple loans, credit cards and / or credit lines.

Had they reached out sooner we would have had more options to help them with a fresh start. This doesn’t mean we can’t find options, but there are certainly more available when credit scores are higher.

As a rule I don’t get into the discussion of why you would work with a mortgage broker versus a bank but this is one of those times. I do place many of my clients with chartered banks when that is the right fit.

When you approach your bank your situation might not be a fit for their lending guidelines. They may tell you they are not able to help you and that you will have to sell your home or look at a consumer proposal or bankruptcy.

Selling your home may be the right answer, but before you jump to that place take a look at other options. Pick up the phone. Don’t procrastinate.

If you are working with a mortgage broker they are able to explore multiple lenders and programs to help you try to find a solution to put you on the right track sooner rather than later.

Mortgage Puzzles

Mon, 08 Apr 2024 15:09:55 GMT

I’ve written about mortgage documentation in several columns over the years. This week I had an interesting call with several of my colleagues about trends we are seeing in the mortgage world around paperwork right now.

There are people who think that mortgage brokers are able to cut corners and have an easier time getting a mortgage approved. Ironically, I believe we are held to a higher standard which sometimes translates to frustration for clients as we are doing our due diligence with document collection.

When starting with new clients part of my conversation includes an overview of the documents we will need as well as an explanation of why. This conversation also includes a bit of an apology because I know how challenging this process can sometimes be.

“My bank has never asked for that” is something I hear often. What clients don’t consider is that their bank has a full historical view of their day to day banking as opposed to new lenders who are just being introduced to these clients.

If you were asked to lend someone half a million dollars would you do it on a handshake?

Would you assume they will repay you in a timely manner (as agreed) because they seem like good people?

Likely no to both questions.

That’s one part of the puzzle.

The other piece to the puzzle is the increasing trend of fraud in the mortgage world.

From my perspective, my reputation and livelihood are too important to entertain clients that I suspect are not quite as they appear. I explain I am very particular about gathering documents upfront to make sure we are not going to run into any unexpected or unpleasant surprises.

From time to time we come across documents that are glaringly obvious attempts at fraud. With today’s technology fictitious documents are becoming easier to create and harder to detect.

As brokers we represent both our clients and the lenders we are placing their mortgage with. I discovered fraudulent documents on one of my files recently and cancelled the application and notified the lender.

My (ex) client was very very angry. He didn’t see what the big deal was. He went to a local branch and his mortgage was approved.

Where is the harm?

If part of the fraud includes income documents, will this client actually be able to make his mortgage payments down the road? Because he did have a substantial down payment relative to his income, does he have a sideline that isn’t declared or legal?

I absolutely agree that collecting the required documents for your mortgage can seem frustrating, and you may question why your mortgage person is asking for the weird and wonderful collection of paperwork they are asking for. Or you may question why they are asking for more and more paperwork.

Please understand that these requests are coming from the lender and we are doing our best as the middleman to help ease the process for you. Lenders want to be confident that they are making solid decisions with their approvals and are doing their best to prevent mortgage fraud.

Different Approaches to Pre-Approvals

Fri, 22 Mar 2024 16:28:24 GMT

As a mortgage broker I am able to work with clients all over BC. I grew up in Mackenzie, a small community in northern BC, and still have ties to the area.

I worked with the realtors there before I moved to the Okanagan, and we continue to work together over fifteen years later.

This week we’ve seen a surge in homes selling in Mackenzie and I’ve had interesting conversations with both of the realtors I work with.

They had questions around how I figure out price points for clients when I am working on a pre-approval. More specifically, they asked about whether or not I collected documents from my clients before they had an accepted offer to purchase.

My answer was that I absolutely gather the bulk of the documents we will need ahead of sending my clients out shopping.

I also pull credit reports about 95 per cent of the time before I send people out looking for a home.

Why?

Even with clients that I know to be squeaky clean and solid financially, over the years I’ve had to deal with surprises that might have affected their approval.

Recently I was working with a client that has been with the same employer for 25 years, has over $300,000 in his account, and whose credit score was 821 (900 is a perfect score). Slam dunk, right?

As it turned out, he has a fairly common name. At the very bottom of his credit report was an outstanding collection to an insurance provider. I was surprised to see it as I know he is meticulous with his finances.

He had never had any dealings with that particular company, and it took him almost three weeks to get confirmation from the company that it was not his debt, and another few days to have his credit bureau corrected.

Another client I worked with had everything in order and looked like she was ready to write an offer at the $650,000 price point.

I pulled her credit report and found a vehicle loan with a payment of $785 per month. When I asked her about it she said she hadn’t mentioned it because she didn’t make the payments. She had co-signed a loan for her daughter.

When you co-sign a loan, you are jointly and severally responsible for the amount outstanding. That means that should the other person ever default on a payment you are responsible for making the payment.

This means that we have to factor that payment in when calculating what you qualify to borrow. In her case, this dropped her purchase price considerably.

I’ve also run into situations where clients tell me how much they earn, and when they send their documents in the T4s and paystubs don’t support what they’ve told me. In one case the gentleman said he told me what he figured he would make this year.

As a general rule lenders won’t use predicted income (other than a few specialty products); they work with historical information and what can be confirmed via employment letters and contracts.

So why is all of this important?

If I send you out shopping for a home, I want to be certain that I am able to arrange a suitable option for you. If I send you out shopping for a home, you get excited about the possibilities and write an offer. Now the sellers of that home are also excited and are out looking for their next property.

We’ve tied up two or potentially more homes, and realtors have spent hours working to show homes and make magic happen to bring offers together.

If I haven’t done my due diligence and missed something that will affect your approval we have wasted a lot of time and energy for everyone involved.

Sometimes clients just want to know generally the price point they are looking at and want to know if there is anything they need to deal with before heading out shopping. If they are looking at buying a home six months or a year down the road it is a different conversation and I don’t ask for documents upfront.

When you are working on a pre-approval and your mortgage person asks for a full document package upfront, don’t roll your eyes. Fully disclose your financial situation. This helps us put you in the best position to be successful once you’ve found a home you love.

PSA: If you haven’t already dealt with the Speculation Tax Declaration, take a minute and do it today.

Strategy For Downsizing

Thu, 07 Mar 2024 19:54:07 GMT

One of the things that I love about my work is that I am able to connect with all types of homebuyers.

I am able to support first-time homebuyers as they make the leap into the housing market, clients looking to upsize from their first homes, clients who are wanting to refinance for renovations or to consolidate consumer debt, and more established clients who are looking to downsize.

Lately it feels that clients who are wanting to downsize are having a tough time.

They want to be able to confidently write a subject-free offer on their next home but are concerned about listing their current home for sale in the event it doesn’t sell in time.

They don’t want to list their current home for sale and potentially find themselves without a suitable property to buy.

What is the answer?

If the current home is mortgage-free, there are several mortgage options available. There are also private lenders that will register a mortgage over both the current home and the home being purchased (provided the numbers work).

Provided the current home is mortgage-free we can look at registering a credit line against that home in preparation for finding the next home to buy. When the clients find their next home we can use a combination of the funds from that credit line plus a mortgage on the new property to move forward with the next home.

This strategy is not for everyone.

In the Okanagan, people who are making this move may be downsizing, but downsizing to what in terms of purchase price? Often the next home is still priced near or over $1,000,000. To carry financing on a purchase at that price can cost upwards of $7,000.00 per month plus significant fees if using a private mortgage option.

One creative option clients used recently was listing and selling their current home knowing that they were prepared to wait for the right home to pop up. As they neared their sale date they had not found their next home yet, so they rented a storage container and packed everything up temporarily.

They were fortunate that they were able to stay with family for several months until the right home popped up. This put them in a brilliant position to buy with no financing subject in their offer.

Another option that clients have used recently was truly downsizing in both price and space. Their home in Kelowna was appraised at $1,750,000. Based on their financial picture we were able to secure a credit line for $800,000.

It took just over a year but they fell in love with a beautiful patio home in West Kelowna. Their new home was priced at just under $700,000 so they knew they had the funds available if they listed their home and it did not sell in time.

Over the last few months I have spent time at several open houses in West Kelowna with realtors I know. It has been interesting to chat with people about the specific things they are looking for in their retirement home.

Part of what we have talked about are future life plans. Many people have talked about wanting to do more travelling and / or spending winters in warmer places. As people ease into retirement their needs change. Homes in age-restricted gated communities with amenities like pools and recreation centres are becoming more popular.

This coming weekend (Saturday March 16,2024 from 12:00pm to 2:00 pm) I will be at 3407 Ironwood Drive in West Kelowna, which is listed by Sharon Walton with Royal LePage Kelowna (MLS ®10302186).

If you are looking to right-size for retirement, a home like this might be exactly what you are looking for.

Exciting Announcement

Mon, 26 Feb 2024 17:44:58 GMT

There were several announcements made recently that I am very excited about – changes that will help make it easier for people to afford to buy and afford homes.

Effective April 1, 2024 the BC Provincial Government has increased the purchase price for First Time Home Buyers (FTHB) and buyers purchasing newly built homes to qualify for the Property Transfer Tax (PPT) Exemption.

Up until then, FTHB who bought a home with a fair market value of $500,000 or less (assuming they met all of the program qualifications) were exempt from paying PPT. PPT on a home priced at $500,000 would normally incur PPT of $8,000 so this is a considerable help for FTHB.

After April 1st, the exemption will now be granted for FTHB purchasing homes up to a fair market value of $835,000. There will be a partial exemption up to $860,000.

On a home with a purchase price of $800,000 this means a savings of $14,000 for FTHB.

This is particularly significant because this is a closing cost that cannot be added to the mortgage; it must be paid up front. Using this same example, the minimum down payment on an $800,000 home is $55,000.

One of the biggest challenges people face is trying to save their down payment, so this increase in the exemption will be a huge help for many clients.

There are other exemptions to the PPT that have changed. People buying newly built homes, regardless of whether they are FTHB or not, can be exempt from paying the PTT. Up until April 1, 2024 the purchase price for this exemption is $750,000. Effective April 1st, this exemption will increase to $1,100,000 with a partial exemption up to $1,150,000.

The second program that is being introduced April 1, 2024 is the Secondary Suite Incentive Program.

In a nutshell, the provincial government will provide a forgiveable loan of up to fifty per cent of the cost of renovations to add a secondary suite to an existing home, to a maximum of $40,000.

Applications for this program will be accepted starting April 17, 2024.

For the loan to be fully forgiven there are conditions that must be met:

The unit must be built in the same location the homeowner lives
The unit must be rented out below market rates for five years

I attended a learning session with one of my favorite lenders this week about the program and they are still trying to sort out how we will be able to combine this with a purchase or a refinance to help clients get the funds they need to participate in the program.

There are many details we do not have yet, but you can find the initial information at Secondary Suite Incentive Program | BC Housing .

There are many listings my clients look at that can be easily renovated to facilitate a secondary suite so it will be interesting to see how we can use the program to help clients generate income to help cover their mortgages while at the same time creating more affordable housing options for renters.

Common Frustrations Shared By Mortgage Applicants

Mon, 12 Feb 2024 18:08:38 GMT

“Why do they need THAT?”

“It wasn’t like this the last time I bought a house”.

One of the common frustrations shared by mortgage applicants is the amount of paperwork required to get a mortgage. With interest rates higher right now I’m finding lenders are being even more particular about what they require to approve mortgage applications.

While it may seem like a tremendous amount of documentation is required, we need to step back and think about the fact that we are asking a lender for several hundred thousand dollars.

Would you lend this amount of money to someone you barely know?

Lenders don’t ask for additional paperwork to make your life difficult. They are doing their due diligence to ensure that you will be able to repay your mortgage.

Under Canada’s anti-money laundering legislation and anti-terrorist financing regime, potential lenders are required to document large or suspicious deposits.

How can you make this a little more straightforward on your end?

If you are getting ready to buy a home, make sure your paperwork is organized.

Process-wise, I send my clients a list up front of the documentation they will most likely need for their mortgage approval. It may seem like overkill in some cases, but by being organized upfront I am often able to have an approval within a few days … and sometimes even the same day.

Regardless of how prepared we are upfront, lenders will sometimes ask for additional information, so don’t be surprised if you are asked for even more documentation.

Many lenders require verification of two years consistent employment so it is helpful to dig out T4s and Notices of Assessment from Canada Revenue Agency for the last two years.

You will need to ask your employer for a letter that outlines your salary, position, and start date. You will also be asked for a current pay stub.

You will need to demonstrate where your down payment is coming from. Lenders need a ninety-day history, so that means you will need to provide bank statements for the last three months. It is key that the statements you provide clearly show your name and account number. DO NOT scratch out the transaction list as lenders will not accept this.

If you have any large deposits during the last three months (generally over $2,000) you will also have to show a ninety-day history for those funds.

If you are self-employed, you will likely require additional information. Depending on the mortgage product you are using, expect to be asked for your Notices of Assessment and complete T1 Generals for the previous two years. If you are incorporated, you will likely be asked for confirmation of that.

A mortgage broker recently used an analogy with one of his clients. The client was a tradesperson. The broker explained that if the client didn’t have all of the materials and supplies needed he would not be able to complete his construction project. For a mortgage broker, your paperwork is the equivalent of those materials and supplies.

Without the proper paperwork, we cannot get your mortgage approved.

If you are thinking about buying a home, or already out looking, the more prepared you are with your paperwork the smoother your approval will go. And your mortgage professional will be very grateful.

Renewal Options

Fri, 26 Jan 2024 21:16:10 GMT

It feels like I’m harping on the subject of mortgage renewals, and that may well be the case.

Many of my conversations with clients right now are deep dives into renewal options.

One of my calls this week really struck me. I was talking to Jim (name changed of course), a new client whose mortgage is currently with one of the big banks.

After we worked through the initial questions I start with, he shared that the renewal department of his current bank had started calling him in December. His mother had just had a stroke and he was at the hospital with her.

He tried to tell the renewal officer that it was a bad time. The person calling kept pushing him to commit to locking into a 5 year fixed term for his renewal and told him this ”great rate” would not be available if he didn’t commit that day.

He hung up. The renewal officer called repeatedly, sometimes up to three times per day.

Once I had a better idea of Jim’s situation and plans for the future we chatted about options for him.

As it turns out, he is on the home stretch towards having his mortgage paid out. More important is his plan to retire in three years, sell this home, and move to a smaller home that he already owns in the Oliver area.

He had no idea that he could even choose a three-year term. He has always gone with a five-year term thinking that was his only option.

We played with some figures to see how he could pay his mortgage off within his three-year plan. In his case, he will be staying with his current lender because that makes the most sense given his timeframe to retire and sell his home.

The eye-opening takeaway for me was the high-pressure sales tactic used by the renewal officer. Not all banks nor renewal officers operate the same way, but they often don’t take the time to get to know the clients they are working with never mind offer them options and solutions with the clients’ needs in mind.

If you have a mortgage renewal coming up over the next few months I encourage you to reach out to a mortgage professional to look into your options. Your renewal is the best time to make changes to your mortgage so it is important to invest some time to make sure you make the decision that is best for you, not your bank.

New Year, New Mortgage

Tue, 02 Jan 2024 15:41:43 GMT

During the week between Christmas and New Years I spent time reflecting on my past year and did my planning for the upcoming year. This included a review of my financial situation as well as a look-back over the fun things I did, what I feel went well and what I would like to do differently for the coming year, as well as setting new goals for 2024.

One of the things I took a look at was my mortgage. I have stayed with my variable rate over the last year (ouch) but I did make a dent in the principal which was satisfying to see.

There are a significant number of Canadian mortgages coming up for renewal in 2024 and 2025. For my clients that I’ve chatted with already there is a bit of sticker shock with where interest rates are now. Interestingly, when I compare the stress-test rate we used to qualify the clients originally it is not far off from the interest rates available now.

Mortgage renewals are not just about getting the best rate.

I had a great conversation with a friend of mine the week before Christmas. We did a quick review of her current finances and talked about her plans for the next few years. Her mortgage comes up for renewal mid-March.

Her first question was with respect to the best rate that I could get for her.

I reviewed several lenders and went over the rates they were offering for a fixed rate five-year term. Her mortgage was originally insured (default insurance with CMHC) so several of the options were very appealing.

When we dove into her finances and her plans for the next few years we ended up looking at several other options.

In her case she is carrying significant balances on her credit line and credit card. She has been renovating her home and has more work to do. She also needs to replace her furnace and hot water tank. Her goal is to sell her home over the next few years then move somewhere very warm for her retirement.

Based on this information, we looked at other lenders that offer hybrid mortgages. Hybrid mortgages offer both an amortizing portion and a credit line.

We are going to refinance to pay off her credit line and credit card and pull some funds for the work she has left to do.

More importantly, we are going to move forward with a three year term instead of a five year term. She wants the stability of a fixed rate but the flexibility of a shorter term so she doesn’t have a significant penalty to pay if she sells her home shortly before the three year term is up. We are not moving forward with the lowest rate I could find but rather with the package that best fits her financial goals.

If your mortgage is coming up for renewal (or even if it isn’t) my recommendation is that you connect with a mortgage professional to review your options rather than just signing the renewal offer that your current lender sends out.

Wishing you all a wonderful 2024!

Mortgage Planning

Fri, 15 Dec 2023 23:01:52 GMT

As we move into the busiest part of the holiday season mortgages are the last thing on most peoples’

minds.

I’ve been working on a home purchase for a young client that is set to close the week before Christmas. This file has reminded me of how important it is that people do their homework before writing an offer to buy a home.

My client lives and works in northern BC. He moved from the Okanagan to complete his apprenticeship. He is very careful with his finances. He chose to share a basement suite with a fellow employee rather than rent an apartment. He has been saving a significant chunk of his pay the entire two years he’s been there and has a sizable down payment.

You’d think this application would be a slam dunk.

What he did not do was establish a credit history. He has paid cash for everything he has, including

choosing to pay cash for a used truck rather than financing a new one even though he would have no

issues making the payments.

I tried several different lenders to see if we could get an exception to the lack of credit history using

alternative credit sources, but due to the remote location I could not find a suitable option.

We ended up adding his parents to the application and the plan is to remove them from the mortgage in two to three years once he has an established credit history.

His case is a bit unique in that he had a significant down payment but that was not enough to get an

approval for him.

In most areas of the province, saving the down payment is often a challenge. If you are a first time home buyer, one thing I’d encourage you to do is open a First Home Savings Account so that your down payment funds are out of reach and working for you.

If you have been saving already and haven’t opened FHSA yet, it might be a wise idea to open one

before the end of the year so you are able to contribute for 2023 and enjoy the tax break for your

contribution.

If you are starting to think about buying a home over the next few years, I encourage you to speak to a

mortgage professional early on to make sure you are doing everything you can to make sure you are

ready to move forward.

Thank you so much for the support and feedback during the last year. I appreciate the people that have connected to ask questions about the mortgage process and look forward to a less challenging interest rate environment for 2024.

Wishing you and yours a wonderful holiday season filled with much love and laughter.

Rate Drops

Sat, 02 Dec 2023 03:45:39 GMT

Usually when I write my column I seem to be sharing stories of what not to do with respect to your financing.

Today is a little different.

This week I have had the pleasure of working with a most lovely client. Her application is the cleanest and most straightforward file I have seen in several years.

We started her application and her home sold the next day. Several days later she found exactly the new home she was looking for. Everything proceeded according to plan.

The closing date on her purchase is about three months out because the home she’s buying is currently a rental so the tenants need adequate notice.

Part of our conversation as she was signing off her initial mortgage paperwork was around the choice of lenders. I sent her application to her current lender because she is happy with them and requested we use them again.

In other columns I’ve shared how not all lenders are created equal.

One of the reasons that I like this particular lender is that they will continue to reduce her rate should they drop their interest rates.

Lenders have different policies as to how they handle rate reductions.

For instance, one lender I work with will only allow one rate reduction and there are no backsies … meaning that if rates drop even further we need to be able to guess when the lowest rate they will offer between now and closing might be. If we ask too early we are stuck with a potentially higher rate than what is offered currently. If we wait too long and rates increase then we lose on a better rate.

Some lenders do a look-back at closing and automatically offer clients the lowest rate from when they approved the mortgage to when the mortgage finalizes.

Other lenders are open to multiple requests to reduce the rate.

Unless there is a compelling reason to use the lender that only allows one rate change, I work with other lenders that allow multiple rate changes.

I’m seeing fixed rates trending down right now and am cautiously optimistic we will see more of this in the spring.

If you are working on a purchase or have a renewal coming up, one of the questions to ask your mortgage person is around how your lender handles your rate should rates continue to trend down. This seems like a simple thing but working with the right lender (and mortgage person) may make quite a difference in your bottom line.

A significant percentage of Canadian mortgages are coming up for renewal in 2024.

Fri, 17 Nov 2023 18:26:32 GMT

A significant percentage of Canadian mortgages are coming up for renewal in 2024. Considering the low rates we’ve enjoyed for the last few years clients are in for a bit of shock with where mortgage rates are now.

Although the Bank of Canada held prime steady with the last rate announcement, we are starting to see fixed rates trend down which is a relief. A significant change has been rolled out with how lenders are qualifying clients who are doing switches

at renewal (no new funds added). With the implementation of the stress test in 2016 we had to start qualifying clients at their contract rate (the interest rate the lender was offering) plus two per cent, or the Bank of Canada Benchmark rate, whichever was higher. When mortgages that were in place prior to the new rules came up for renewal we could qualify them at the contract rate or the Benchmark rate, whichever was higher.

Mortgages put in place after 2016 have all been coming up for renewal for two years now and these clients have been disadvantaged by the stress test calculation for switches at renewal. Many lenders have now adopted the recent change to the policy and we are now able to qualify clients at their contract rate or the Benchmark rate, whichever is higher, without adding the two per cent buffer to the contract rate.

Several clients I chatted with prior to this change were essentially stuck with what their current lender offered them for their renewal because they did not qualify anywhere else when we used current rates plus the two percent calculation.

And another positive note is what we are seeing with the fixed rate mortgage products.

Traditionally I see lenders offering rate specials through November and December during the slightly slower winter months, then popping rates up a bit as we start the new year. This year seems no different. Over the last two weeks I have seen rate reductions almost every day.

As a broker, one of the things I do for my clients is watch what interest rates are doing. When I am working with clients who are purchasing a home or refinancing, I choose lenders that are willing to continue to reduce my clients’ interest rates up until (shortly before) their closing date if the lenders drop their posted rates.

What can this mean in dollars and sense?

Two years ago some of my favorite clients were upsizing and buy a new home in Kelowna. Their mortgage new mortgage was going to be $700,000. Three weeks before their closing date rates started to drop. Three times the lender reduced their rate so that at closing time they were .25 per cent lower than the contract they originally signed.

The lower rate meant a savings to them of $7900 over their five year term.

If you have a renewal coming up over the next four months, I’d suggest looking into your options before we move into the new year. You should be able to have an interest rate held for 120 days which will provide some stability should rates trend up again once we are into the new year.

Creating your dream home

Sat, 04 Nov 2023 15:24:39 GMT

Having troubles finding your dream home? Are the houses in your price range looking a little dated? If you find a home in your preferred neighbourhood that has the features you want, but needs a little updating, you may want to think about a Purchase Plus Improvements mortgage.

This option is designed for people who wish to purchase a home that may require some immediate upgrades:

updated electrical service
sewer hookup
a new roof
central air
a new furnace
new siding
eaves
soffits
fascia
doors
windows
a new kitchen
carpeting
or any other renovation that would increase the value of the home.

It is important to know that this program covers permanent updates to the home, but cannot be used for moveable assets such as appliances. This can be a great solution if you find a house you love but realize that it will take some time to save for any renovations that you want to do.

Here’s how it works. Let’s assume that you have a five per cent down payment. Before the mortgage financing is finalized, you will collect written quotes for the repairs or improvements to be done.

When the application for financing is submitted, the request is made for 95 per cent of the purchase price plus 95 per cent of the cost to complete the improvements.

It is important to know that the lender will hold-back the improvement portion of the mortgage until the work has been completed and inspected, normally within 30-60 days of closing.

Once the work has been completed, the lender will advance the balance of the funds and the contractor can be paid.

This means that you will need to find a way to cover the cost of the renovations temporarily, or work with a contractor who is willing to be paid at the end of the project. Some clients use a credit line to cover the costs until the mortgage funds are released.

What does this mean? Let me give you an example, with the client putting five per cent down:

Purchase price: $400,000 X 95% = $380,000

Cost of improvements: $40,000 X 95% = $38,000

Total mortgage: $440,000 X 95% = $418,000

An application is made for a mortgage in the amount of $418,000, which represents 95 per cent of the purchase price plus 95 per cent of the improvements.

On the closing date, the mortgage advanced to complete the purchase is $380,000 plus the original five per cent from the purchaser’s down payment ($20,000), which provides sufficient funds to complete the purchase of $400,000.

The seller is paid in full and the house is transferred in to the name of the purchaser.

After closing, the contractor completes the improvements (normally within 30-60 days after the closing) and the lender advances the hold-back of $38,000.The purchaser pays the additional five per cent of the cost of the improvements ($2,000) and the $40,000 owed to the contractor can be paid.

Last summer, I worked with clients who bought a rural property. When the septic inspection was done, they were told that the system was on its last legs.They made the decision to use a Purchase Plus Improvements mortgage and replaced the system before they ran into difficulties.

I’ve also work with clients who used the program for cosmetic upgrades.They renovated their kitchen and bathrooms and changed out all of the flooring.They essentially moved in to a brand new home in the area they wanted to live.

The appraisal at the end of their project showed an increase in value of almost $75,000 based on $35,000 worth of improvements they had done.

With this program, purchasers are happy because they have done extensive improvements to their homes with a minimal cash outlay (the balance was financed with their mortgage).

In both cases they get to enjoy an updated home without scrimping and saving to come up with the funds for improvements.

Your Mortgage Person

Thu, 05 Oct 2023 21:49:58 GMT

I had a call from one of my favorite realtors a few weeks ago asking if I could help her clients. She told me that the clients had started with another broker but that things didn’t seem to be going well. I told my realtor that I would chat with her clients but would not compete with another broker – I know how much work goes into putting a file together and won’t try to undercut another professional. I did chat with the clients. Their broker had an approval in place and their closing date was less than three weeks away. They were getting extremely frustrated with the multiple requests for documents. They couldn’t understand why the broker kept coming back for more and more paperwork.

I asked a few questions about their particular situation then spelled out the list of documents I would typically ask for (specifically for their situation) upfront. They got very quiet. It was almost exactly what their broker had asked for. In fact, the other broker had also asked for all of the documents upfront. They decided they would send bits and pieces based on what they felt like providing.

The other broker had the approval in place with a great lender and had a great package for the clients. We had a discussion about why lenders ask for the documents they do, and I told them that they were actually slowing their broker down by not providing the information he needed right away.

Not entirely sure that they were happy with my thoughts but they did send the rest of the documents to their broker the same night. Their financing was signed off the following day. Problem solved. The same realtor called last week with another set of clients who were struggling with their lender. After listening to what was happening I did end up working with these clients. They had shopped for the lowest rate online and reached out to one of the well-advertised discount brokerages. They had an accepted offer on their dream home. The clock was ticking on their financing clause.

I am assuming that they ended up working with a less experienced broker at the firm. They had been told the incorrect amount for their minimum down payment, no discussion was had about closing costs, no documents had been requested, and they were told in error that they would be exempt from the property transfer tax.

A week and a half of the time they had to line up their financing had already passed. They had four days left to finalize their financing. They are an amazing young couple who have worked hard to save their down payment and get their ducks in a row. They sent me their documents within a day and we had an approval with all of the conditions signed off in two days.

Two learnings out of these situations:

When your mortgage person asks for specific documents, it makes the process go much smoother for you if you send in what they’ve requested. Taking a few minutes to make sure your documents clearly show your name is important. Sending all pages of the documents key.

2. Work with a mortgage professional. Much like most other industries there are mortgage providers with different levels of knowledge and experience, and different personalities. Working with someone from a smaller firm (as compared to a high-volume discount brokerage) often means you will have someone who is far more attentive to your needs. It is wise to do your due diligence to make sure the person you are working with knows their stuff and is a good fit with you personality-wise.

a. Longer time in the industry does not necessarily mean more knowledge or experience. Some people who are newer to the industry take ongoing learning and work with mentors to offer their clients amazing service.

Buying a home is a huge investment and commitment. It is very challenging to qualify for a mortgage

right now, so working hand-in-hand with your mortgage person will help the process go much smoother for you.

Mortgage Renewal Options

Sat, 09 Sep 2023 23:04:53 GMT

Right now I am fielding a high number of calls from people looking for information about renewal options.

In 2016 when the Stress Test was introduced I remember questioning the wisdom of the new qualification guidelines. I also remember qualifying clients based on a rate of 4.64 per cent when their mortgage rate was only 2.24 per cent (that was the Bank of Canada Benchmark rate at the time) and feeling a bit frustrated that their borrowing power had been reduced.

Clients had to look for ways to strengthen their applications. Over the last few years with prices and rates increasing this has meant clients have been leaning on family for help with their down payment or adding them to their applications as co-signors.

By 2018 the Bank of Canda Benchmark rate we were using to qualify clients had risen to 5.25%. Fast forward to 2023 and those mortgages are now coming up for renewal and clients are looking at renewal rates around 6 per cent.

In theory the Stress Test was bang on and clients were qualified to actually make the payments based on the renewal rates they are facing today (plus or minus a half per cent). In theory clients should be able to carry their new higher payments based on today’s interest rates. In theory clients’ income would have risen over the last five years. Reality looks a bit different.

The cost of living has skyrocketed. I’m sure we all feel it every time we see our bill at the grocery store or the fuel pump.

I don’t have official statistics but am seeing many clients carrying more consumer debt when I review their updated applications. It is not unusual to see people trying to manage a credit line, multiple credit cards, and even one or two vehicle payments. What this increased consumer debt means for a few clients that I’ve worked with is that they either need to stay with their current lender and accept the renewal rate offered, or they need to consolidate their consumer debt into their mortgage in order to afford to stay in their homes.

The significant increase in house prices over the last five years means that refinancing at renewal is an option. Sometimes, arguably many times, this is the right decision in order for clients to reset their finances. Sometimes harder decisions need to be made.

Is this the right decision long term? One of the other options is selling their homes to get out from under the consumer debt but the challenge with this decision is that suitable rentals are hard to come by and in many cases the monthly rent payment is higher than what a mortgage payment would be.

The sticker shock of renewal rates and payments has been sobering this fall. If you have a mortgage coming up for renewal over the next few months I encourage you to connect with your lender or mortgage person at least four months ahead of time to look at what your options are.

Were you affected by the fires?

Fri, 25 Aug 2023 17:44:33 GMT

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How To Navigate This Market

Sun, 13 Aug 2023 22:47:10 GMT

Sometimes when I sit down to write my column I struggle to find a topic that I’d like to write about. Other times like today I have a clear idea of what I’d like to say. For the most part I love what I do. I enjoy meeting and working with my clients, and there is something to learn every day. Many days I come across a new product or lender, changing guidelines to offer better solutions for my clients, or ways to enhance my process.

The last few months have been challenging for everyone in the mortgage world. With rates continuing to rise and no noticeable drop in housing prices many clients are finding it tough to qualify to purchase a home. More troubling for me is seeing more families struggling to make ends meet.

I feel like many lenders are hunkering down and tightening their belts. Some are running short-handed

or operating with many new staff members that are trying to learn the ropes.

Over the last few weeks I’ve had conversations with two of my favorite lenders about changes behind the scenes. On overall strong files (not high ratio insured files) there are lenders that will consider exceptions if the numbers are not where they need to be. What this means is that in cases where clients have significant equity in their home and a clean credit history these lenders will allow the numbers to go a little higher than their published guidelines.

Over the last few weeks both of these lenders have had policy changes limiting the exceptions they can ask for and approve. Files that I would have been confident submitting even two or three months ago are now being declined if the ratios are out of line. I understand the logic – these files are a higher risk to the lender. However, particularly with refinances, the new mortgage payment will actually put the clients in a far better position with respect to cash flow.

Equally frustrating, it feels like lenders are becoming even more particular with their document requests. As an example, specialty programs designed to provide solutions for high net worth clients require every document you can imagine plus a pint of blood.

The pint of blood was not really asked for, although I did have one client comment that they figured a full cavity search was coming next.

Being the intermediary between a client that doesn’t want to provide any more information and a lender that requires it is a balancing act. I understand how clients can feel that the document requests are over the top and intrusive. Putting myself in the lender’s position I understand why they want to be confident in their clients before handing over mortgage funds. They have no interest in foreclosing on properties – their income comes from collecting interest on their mortgage funds.

When I start working with clients I do my best to explain how particular lenders can be with respect to the documents they ask for. I find it very frustrating to have to explain and justify what we are asking for.

The other challenge with staffing levels at certain lenders is that it can take them four or five days to review and sign off on documentation submitted. There are some lenders who are easier to work with in terms of documentation but the tradeoff can be higher rates or slower turnaround time. The mortgage world is certainly challenging right now but the positive news is that lenders are constantly looking for better options for their clients.

My suggestion is to have all of your paperwork organized and a mortgage pre-qualification in place well before you move forward with writing an offer to purchase a home. Take your time and educate yourself as much as you can. Choose a mortgage professional that is able to help educate and support you as you navigate your mortgage application.

Getting into the Housing Market

Fri, 28 Jul 2023 17:27:33 GMT

Whether it is your first or subsequent venture into the housing market, it will likely look a bit different than it did even a few years ago.

Rising interest rates and changing qualification rules mean you may have to wait a bit longer, or rely on help from family.

This week I had a call with a young lady that is looking to buy a home in the Okanagan. She said she has been saving her down payment but feels like it will take a while to save enough. She also said she needed some help trying to figure out a game plan.

What I most appreciated about the call was her realistic approach. She said she felt it would be two to three years before she would be ready to move forward with a purchase and wanted to make sure she was doing everything she could to get ready.

The same day I sat in on a learning session about the First Home Savings Account (FHSA). Starting April 1, 2023 Canadians can contribute up to $8000.00 per year to a maximum of $40,000.00 to be used towards the down payment on a home. The contributions are tax deductible.

Who can open an FHSA? You must be:

 Between 18 and 71 years of age
 A resident of Canada
 Considered a First Time Home Buyer

How do you open an FHSA?

Contact any FHSA issuer. This can be a bank, credit union, or a trust or insurance company. They will be able to advise you as to what type of savings or investment products your money can be invested in. The funds in your FHSA can be combined with funds withdrawn from RRSPs under the Home Buyers Plan (HBP) to be used towards your down payment. The total between the two would be $75,000.00 or $150,000.00 per couple.

These may seem like pie-in-the-sky numbers, but even leveraging the plans for part of those funds may help significantly with the purchase of your home. Saving your down payment can be a real challenge, particularly if you are renting. The cost of living is

increasing and making it more difficult to tuck money away. When life happens it can be tempting to dip into your down payment savings.

A significant advantage to opening a FHSA or contributing to your RRSP is that it is not so easy to dip into your down payment savings. Perhaps an even more significant advantage is that your contributions are tax deductible which ultimately helps your savings plan.

Check out highlights of the First Home Savings Account here.

What Do I Do With My Mortgage?

Fri, 14 Jul 2023 16:25:23 GMT

The question I am fielding most often right now is “what do I do with my mortgage?”. Clients with mortgages coming up for renewal are seeing rates almost triple what they were paying at their last renewal.

Prime went up another .25 per cent this week which puts it at 7.2 per cent now. Clients who are sitting in variable mortgages (including myself) are continually questioning whether they should stay the course or be looking to lock into a fixed rate mortgage.

Clients who have mortgages coming up for renewal are understandably concerned about what type of rate they will be renewing into and what their payments will look like. Clients are still purchasing homes. Many seem to have confidence that rates will start trending down soon. I’m seeing more clients opt for two or three year terms as compared to automatically choosing a five year term. What has changed for clients that are purchasing is their maximum purchase price.

By raising interest rates the government is trying to slow inflation. In May we saw the annual inflation rate drop to 3.4 per cent, down from 4.4 per cent in April. This is the lowest it's been since June 2021. Many people took a deep breath and felt that maybe things were turning and we were done with rate hikes for a bit.

This has proven not to be the case.

If you are currently shopping for a home based on a rate hold or calculations from several months ago, I encourage you to double-check with your mortgage person to make sure you still qualify for the same size mortgage. Rate holds are generally good for either 90 or 120 days and your new mortgage needs to finalize within that time frame. Some clients think they just need to have an accepted offer to purchase within the rate hold period and may get caught not qualifying for the same amount now.

For people in a variable rate mortgage who are debating locking in to a fixed rate, remember that you will have to choose a term that has the same amount of time outstanding as is left on your current mortgage (or longer), so please take the time to have a thorough discussion with your mortgage person to make sure this is a wise decision for you.

The mortgage world is definitely challenging for many right now. My hope is that you make thoughtful, educated decisions as opposed to knee-jerk reactions. The right decision for you is based on your financial situation and future plans. This may mean locking in for some stability with a guaranteed rate, or it may mean staying flexible if you have plans to sell or move over the next few years.

Minimum Mortgage Down Payment

Fri, 30 Jun 2023 15:22:25 GMT

Recently I worked with a couple who was selling their home in northern BC and moving to the Okanagan. It had been many years since they applied for a mortgage as they had been in their home for over twenty years.

When we were looking at different options for them we discussed the minimum down payment they

would need. Because of the price difference between the two areas they were concerned they would

not have enough of a down payment to buy a home.

They didn’t realize they could get into a home (under $500,000) with five per cent down. They thought

they would need ten per cent at minimum.

I’ve run into a few people who thought the same thing. Not to age myself, but when the five per cent

down payment option was introduced it was initially available to first-time buyers only. That has changed over time.

What has also changed is the minimum down payment for homes priced over $500,000. The minimum down payment for homes priced over $500,000 is now five per cent of the first $500,000 plus ten per cent of the purchase price over $500,000.

As an example , if you are buying a home priced at $750,000 your minimum down payment will be

$50,000. Five per cent of $500,000 is $25,000. Ten per cent of the purchase price over $500,000 in this

example is another $25,000 (750,000 – 500,000 leaves 250,000 multiplied by ten per cent).

At price points over $1,000,000 this changes again. A minimum of twenty per cent is required. Some

lenders also use a sliding scale to calculate the required down payment for homes priced over

$1,000,000. Some lenders will require a down payment larger than twenty per cent as the price of the

home you are buying increases.

The minimum down payment can apply to a second residence as well. I am seeing more situations

where spouses live or work in different communities and rather than rent they are opting to purchase a second home.

If you have been holding off on a purchase thinking you need ten per cent down payment it will be

worth looking into exactly what you need for a down payment. Speak to a mortgage professional to find out exactly what you need to buy your next home.

Hope you enjoyed the Canada Day weekend!

Mortgages on Fire

Thu, 15 Jun 2023 00:48:13 GMT

I sat down to write my column and there were two themes from the last few weeks that jumped out at

me. Mortgages on fire is a bit tongue in cheek. The two things that have been a theme in my conversations lately are how the fires throughout the province are affecting both the housing market and the purchase process, and how pre-build purchase files are feeling a bit like we need a whole team of firefighters to bring them across the finish line.

Purchasing a pre-build unit can be both lucrative and very stressful. When I say pre-build, I refer to

buying a home from a developer that has not yet been built. You choose your floor plan and color scheme, make a deposit to the developer, and wait for the project to be built.

I have seen pre-builds with completion dates ranging as far out as three years down the road. The

lucrative part I referred to is that (as a general rule) real estate increases in value over time. If you buy a unit now, it may be worth considerably more by the time the project is finished and you take

possession.

In the olden days (say two or three years ago) the time to completion wasn’t a big issue. Interest rates

were lower and people qualified for more borrowing power than they do today. Some people invest in a pre-build intending to sell it closer to the time the project is complete. What they are doing is selling their contract to a new purchaser. This is called assigning the contract, or if you are the purchaser you are buying an assignment of the original contract for a higher price than the original purchase paid based on current market value of the home.

Over the last few months I’ve seen clients in tough spots as their home is nearing completion and they

no longer qualify for financing with traditional lenders. After years of dreaming about their new home clients are suddenly facing much higher payments than they planned for when they initially signed their purchase agreement. In some cases they have had to come up with additional down payment in order to complete their purchase.

On the other end of the spectrum I’ve worked with several clients who have faced delay after delay of

the completion of their new build. During the height of the pandemic this was attributed to supply chain issues and challenges finding trades to actually do the build. Over the last few months I’ve seen stories on the news and seen a few cases of developers who are facing financial challenges, which then drags out the completion date even further.

If you are considering purchasing a pre-build, I cannot stress enough the importance of doing your due diligence. Research the developer. Does the developer have a strong reputation for building quality homes and completing them on time?

More importantly, do your homework with respect to your financing. Don’t purchase something at the

top of what you qualify for anticipating that everything will be status quo two or three years from now.

Shop at a lower purchase price and save as much for your down payment as possible between now and closing.

If you are buying a pre-build, please make sure you have your ducks in a row and have a backup plan for your financing … just in case.

Back to the other part of mortgages on fire. With such an early start to the fire season this year, I expect we are in for a challenging summer.

If you are purchasing a home, one of the conditions you have to satisfy for your lender is that your home is insurable and that you have adequate insurance in place.

If a fire flares up close to the home you are purchasing, you may have a difficult if not impossible time

trying to coordinate home insurance. As a rule, insurers require that the home you are buying is a

certain radius or distance from an active fire in order to provide an insurance policy.

In order to protect home buyers that are not able to finalize their home purchase due to an active fire,

realtors ensure that there is a force majeure clause in the purchase contract.

According to google, force majeure is a contractual clause intended to protect the parties from events

outside normal business risk. The clause may be used to manage the risk of unforeseeable future events that could impact a party's ability to complete its contractual obligations.

I’m dealing with this right now with clients that are buying in Chetwynd (not far from Tumbler Ridge).

The first thing I checked was that their contract included the force majeure clause.

Regardless of the time of year you are purchasing this clause is one you should look for in your purchase agreement.

As a reminder, if you haven’t already claimed your Home Owner’s Grant, take a moment to do that. It

takes less than five minutes to complete the online form.

The Importance of a Pre-Approval

Fri, 02 Jun 2023 20:30:57 GMT

The subject of mortgage pre-approvals has been beaten to death, but I am going to circle back to this

from a different perspective.

Over the last few months I’ve run into several situations where clients have reached out with an

accepted offer in hand but have not done their homework with respect to arranging their financing.

Sometimes this is not an issue, but sometimes it is. For everyone involved in a real estate transaction there is a fair bit at stake.

For your realtor, there are countless hours spent preparing and taking you to listed properties. This can involve hours and hours, sometimes over many months, of research, coordination, and travel. When you do find a property that you want to write an offer on your realtor spends a great deal of time preparing and negotiating your offer.

For the listing realtor, there is time spent back and forth with their client and the realtor representing

the potential purchasers in addition to the time they have already spent working with the sellers getting ready to list their home.

For both realtors there is much that goes on behind the scenes to make an offer come together.

Once a seller has an accepted offer, their home is tied up while they wait to see if you have your

financing approved. They may already have an offer on another home so are making plans and spending money on inspections and appraisals for their own potential move. They are also likely excited about their upcoming move and are spending time coordinating everything from new schools or daycare to home insurance and utility hookups.

There is you. You have spent hours watching Realtor.ca and scouring listings to find your next home. You have explored potential neighbourhoods and spent days checking out possible homes. You have made arrangements to move and are excited about the home you’ve found. Then there is your mortgage person. I love what I do, and feel a great deal of satisfaction when I can find a lender for a complicated situation.

Complicated situations take hours and hours of time and research to find suitable (and palatable)

solutions.

Each application and client is slightly different, and lenders have adapted to offer a wide range of

mortgage products to suit most situations.

However, sometimes just because we are able to find a mortgage approval for you does not make it

wise to move forward with a purchase.

Lenders have different criteria and programs. Most are looking for a few basics to be in place:

Are you working consistently?
Have you paid your previous credit facilities on time and as agreed?
Do you have a down payment organized?

Now, mortgage options can change based on the answers to these questions.

There are a few other things that are important:

Have you been bankrupt in the past? Are you discharged from your bankruptcy?
Do you have any spousal or child support payments?
If your income is casual or commission-based, do you have a two-year history?

If you have not done your pre-work and its been a while since you last applied for a mortgage you may be shocked to learn that you don’t qualify for as much as you used to. You might be horrified to know that even with twenty per cent down the only option we can find is a private lender. You may not be able to wrap your head around the fact that your financing team cannot find a suitable option because of a written-off fine that you thought was not big deal.

It is heartbreaking to learn that you don’t qualify for the mortgage you need. I cannot stress enough the importance of doing your homework to have your financing lined up before you start shopping. I also cannot stress enough the importance of full disclosure with your mortgage person. Sharing any of the skeletons in your closet can help us get ahead of any problems they may cause.

I really take it to heart when I can’t find a suitable option for good people. I want to set my clients up for long-term success and make sure I am not setting them up for disaster or disappointment.

I do love spending as much time as needed educating my clients and helping them prepare so that when they are ready to move forward we find a great mortgage product for them. On a different note – if you are a home owner you should have your 2023 tax bill by now. Make sure you read the form and claim your Home Owners Grant.

If this is your first year in your home and your lender is collecting your property taxes for you, check the upper right corner of your tax notice to make sure it shows your lender. If not, reach out to your

mortgage lender (or broker if you worked with one) to make sure the lender is paying your property

taxes as agreed. Every once in a while there is a disconnect and it is far easier to sort out ahead of time

as opposed to when you get a notice in August that your property taxes are owing.

Emotional Mortgaging

Fri, 19 May 2023 17:51:51 GMT

For the last few months I have felt a bit of a return to normal in the mortgage world. Fixed rates have

been trending down and we’ve seen some great rate specials available. More importantly, it has felt like a more balanced market where people are taking a bit more time to do their due diligence and make more educated and thoughtful (as opposed to emotional / panicked) decisions about their home

purchases.

The last few weeks I’ve felt a subtle shift. The housing market is starting to heat up a little, in that I’ve seen a few situations where there are multiple competing offers. Inventory still seems a little low which is likely fuelling this. I have been dealing with two families that have taken completely different approaches. The first family is looking to right-size their home and move from a condo to a single family home. They already have two littles and a third on the way. They are wanting more space and a better neighbourhood to raise their children in.

They wrote an offer on a lovely home before they looked into their mortgage options. They came to me with an accepted offer and are madly in love with the home they wrote the offer on. They are willing to move heaven and earth to make it happen. The challenge is that they have not had an offer on their condo yet. They both make great income and have investments that will cover the necessary down payment. The trick is that if they have haven’t sold and have to move forward with their purchase they will have to use a private lender to make it happen because their ratios are too high carrying both properties.

Two years ago I might not have been so concerned but with the market being a bit slower there is

significant risk that their condo might not sell in the time frame they need it to.

If this happens and they choose to go the private lender route, they are looking at roughly $20,000 in

fees and closing costs and an interest rate of ten per cent. Monthly payments are $4400.00. They will not be able to rent out their condo because of restrictions in their strata. With strata, property taxes, and their mortgage payment they are looking at about $2600.00 per month. If they end up having to carry both of the mortgages for more than a few months they are going to burn through their savings very quickly. They may end up having to drop the price of the condo significantly which means they might take a loss on the condo as their mortgage balance is close to the break even mark after realtor fees.

They are determined to move forward regardless and quite honestly it concerns me. Another family I am working with has taken a different view. Similar situation and they can more than cover both mortgages if they have to. They have done a very thoughtful analysis of their finances and lifestyle and have taken the approach that it will all come together if it is meant to, and that if their current home doesn’t sell they will not put themselves in jeopardy to buy this particular home.

This approach makes me much more comfortable. What is the danger in the first situation? If for some reason they do move forward and their condo doesn’t sell for several months I don’t think they will be able to afford the payments on both homes. If they fall behind they will have no buffer left and could potentially end up in foreclosure. Maybe it doesn’t get that drastic, but the stress of carrying both properties will be overwhelming.

Before you write an offer on a home, I cannot stress how important it is to connect with a mortgage

professional to get your financial ducks in a row. Knowing what you qualify for (and if you qualify for

that matter) and the costs of making a move will help set you up for success.

There is often a way to arrange temporary financing to cover both homes, but the big question is does it make sense to move forward if you are madly in love with the home? Only you can make that decision.

Read Your Mortgage Renewal Offer

Thu, 20 Apr 2023 16:00:00 GMT

Twice over the last week I’ve had conversations with clients regarding their mortgage renewal offers that have really concerned me.

If you are new to the mortgage world, when you first get a mortgage you choose a term of anywhere from 6 months to ten years. Your interest rate (if fixed) is locked in for this period of time. At the end of whichever term you chose, your mortgage is up for renewal. You can choose to stay with your same lender or look for another lender.

As a rule, when I am working with my clients leading up to their renewal date I research to see what is available for them in terms of options. If they are planning to renew their mortgage without making any changes the first place I check is their current lender. Signing a renewal offer is pretty straightforward. You consider the options presented by your current lender, select your preferred choice, and sign on the dotted line.

If clients are planning on going this route I offer guidance and support to try to get them the best rate possible with their current lender. Unless there is a dramatically better offer with another lender this is the path of least resistance for you. For my own clients, I selected their original lender for a combination of reasons so it often makes sense for them to stay put.

If clients are wanting to pull equity from their home or add a credit line to their current mortgage then we look a little further afield. The two conversations that concerned me this week were with clients planning to stay the course with their current lender. Both clients were with the same lender.

Their renewal offers arrived with the rate of 6.14 per cent for a five-year term. In one case the clients had an insured mortgage, and in the other the client owed less than fifty per cent of the value of his home.

For perspective, most lenders are offering around 4.64 per cent for insured mortgages right now. Several lenders, including the one both of these clients are with, are offering the same rate for clients who have more than 35 per cent equity in their homes. After several back and forth requests with the lender, both of these clients signed their renewals at 4.64 per cent.

For the larger of these two mortgages, the interest difference between the two rates amounted to a savings of $26,673 over the next five years. Better yet, the difference in the monthly payment was $328.94. With costs soaring across the board $328.94 a month goes a long ways towards covering other expenses.

What was particularly concerning for me was a comment from one of these clients. She said “If you hadn’t reached out to help us with our renewal we would have just signed off thinking that was the best rate they would offer us”. I cannot stress enough how important it is to connect with a mortgage professional to look into your mortgage renewal options. Have your mortgage balance at renewal available, as well as the value of your home. It is also important to know if your mortgage is insured (when you purchased you had less than 20 per cent down payment).

Having this information handy when you reach out to your mortgage professional will help them narrow

down the best options for you.

Homes Are Starting To Move

Fri, 07 Apr 2023 17:16:44 GMT

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Mortgages and Tinder

Fri, 10 Mar 2023 21:57:57 GMT

What do the two have to do with each other? This week I learned a new term – Tinder Swindler...

This comes from a Netflix movie about a fellow in Europe who duped numerous women out of money by borrowing funds with promises to repay them. This is a con that has been around forever in different forms but the increased prominence of online dating has really extended the hunting grounds for people that are looking for their next mark. In the olden days (like when I was young) this scam looked more like a wealthy older man being taken advantage of by a much younger woman. This was the stereotype in any case. This profile has now changed and the swindlers come in many different forms and of all ages. Although what follows is going to feel like I’m hammering one gender over the other, believe me the con comes from both genders. My hunch is that when men have fallen prey to these scams pride prevents them from disclosing.

Over the last few weeks years I have worked with three different women who have been conned out of thousands of dollars by men they met through online dating portals. In all three cases these are strong, independent women who work hard and have always taken care of business. All three own their own homes and have great jobs and clean credit. The game starts easily enough. They each met someone who seemed like a great partner. He was charming, caring, and seemed to have his act together. One case started with a request to borrow cash as the partner was in a bit of a jam. Then, in all three cases, for one reason or another the new partner couldn’t seem to hold down a job. In one case the partner was starting a new business and just needed some cash to get things off the ground. In one case the new partner used her computer to apply for additional credit and intercepted the mail before she knew she had new cards coming. It goes without saying that in all three cases the women are left holding the bag with no hope of recovering any of the money they are owed.

For two of these women we were able to refinance their homes to consolidate all of their debts, but for

the third she found herself in the horribly difficult position of having to sell her home. After three years

of hard work she was able to buy a home again but this was definitely a huge hit to her retirement plans.

Before you are tempted to judge these women for allowing themselves to be victimized, understand

that none of the three are stupid women. They were trusting to a fault, and never thought for a minute

that their partner was anything other than the front that they saw. This is intended as a cautionary tale. If you are early on in a relationship and your new partner is looking to borrow money or asking for you to apply for credit on their behalf, open your eyes.

Trust your gut. Question why they are in the situation they are in. Get the details. Don’t be afraid of difficult conversations to get to the truth. Life happens to us all, and sometimes things are as they seem. However, if you are in a relatively new relationship and your partner is looking for money … think long and hard. It’s a slippery slope. One woman said to me “In for a penny, in for a pound. I kept hoping things would turn around and if I held out he would pay me back. In fact it just cost me more money.”

If you find yourself in this situation, I urge you to make a move and get help sooner rather than later. There are often options you are not aware of so you need to make changes as soon as possible so your credit and financial situation are not compromised.

On a different note, if you own a home you should have received mail from the provincial government asking you to complete a declaration regarding the Speculation Tax. Make sure you take care of it before the March 31 2023 deadline or you may receive a tax bill of up to two per cent of the value of your home.

Financing Home Renovations

Fri, 10 Feb 2023 17:51:28 GMT

My last column I talked about looking at refinancing your home to consolidate debts or pull money for

renovations to your home. It struck a nerve with several people – I’ve had great conversations with

people I wouldn’t normally have connected with.

February 25 and 26 I will be at the Kelowna Home Show at Prospera place. As I’ve been busy preparing

the subject of home renovations and products has been very much on my mind. If you are going to the

trade show you may come away with ideas for new projects you want to tackle at your own home.

One option that you may not be aware of is a Purchase Plus Improvements mortgage. The short version is that you add the cost of renovations into your home upfront when you buy.

Here’s how this can work.

Let’s say you found a home in a terrific neighbourhood that checks almost all of the boxes on your wish list. The home has a great layout, is in the right school catchment area, and is central to all of the things you like to do in your spare time. The only thing is that the house is really dated inside. Or maybe you want to renovate the basement to add a rental suite.

You have scrimped and saved for your down payment but there is no chance you can come up with

another $40,000 to renovate the kitchen and bathroom and change out the flooring. The house has

great bones but you would like to invest in a home that you will be happy to come back to at the end of your work day.

A Purchase Plus Improvements mortgage can be a brilliant option for you. Here is how the program

works. You find a home priced at $400,000. You do some homework and know that for $40,000 you can give the main floor a complete overhaul and update.

We would put your new mortgage together to reflect your purchase price of $400,000 + $40,000 for the renovations. Your down payment would be $22,000 – only $2,000 more than if you did not add in the renovation budget.

In the first scenario where you buy the home with no renovation funds your monthly payment would be about $2,229. 26. (based on a 5 year fixed rate of 4.69%).

Adding the renovations funds in your payment would be $2,452.19.

For a difference of $222.93 per month, you could move into a freshly updated home that suits your

tastes and family needs.

The additional renovation funds will be held in trust with your lawyer or notary until the renovations are complete, so the challenge can be paying for the work and materials upfront but there are options

available to help with that. If you come to the home show – which is free admission this year – pop by and say hi.

If you’d like to talk about how a Purchase Plus Improvements or a refinance for renovations might be the right fit for I’m happy to answer your questions.

Consolidation

Mon, 30 Jan 2023 16:17:31 GMT

Just over a year ago I shared my thoughts about whether it might make more sense to stay in your current home and renovate as opposed to jump into the frenetic housing market. I also talked about the logistics of paying off consumer debt (ie: credit cards, lines of credit, car loans) by refinancing your home to pay them out.

Towards the end of 2022 we certainly saw the housing market calm. Rates have increased exponentially and prices have softened. People are stepping back to think about whether buying a new or different home is in the cards for them.

Since the middle of December we have seen fixed rates start to come down.

I am working with several families who have renewals coming up this year. They are definitely feeling the pinch financially. Even though they are in fixed rate mortgages, with the prices of everything else increasing they are finding it more challenging to make ends meet.

I am not a huge fan of refinancing to pay off consumer debt. Although the interest rate will be lower on a mortgage than on credit cards or unsecured credit lines, you are taking a much longer time to pay off the debt. You are also eating into the equity in your home.

Sometimes, however, a careful look at your monthly expenses may show that refinancing to consolidate your debts is the right move.

As an example, last year I worked with a couple that found they were in over their heads.

Their mortgage balance was $285,000. Their previous rate was 2.79 per cent so their payment was $1318.23.

They had a car loan of $38,000 with a payment of $700.00 and combined credit cards and lines of credit totaling $65,000. Monthly payments between all of them came to about $1350.00.

I looked at several options for them. If they went with a straight renewal of their mortgage, the payment at the current rate of 4.79 per cent would be $1623.67.

If they wanted to roll all of the debt from the credit cards and lines of credit into the mortgage, their rate would be 5.34% and their monthly payment would be $2314.27.

Initially they were hung up on the difference between the two rates and the higher payment. The payment was almost $700.00 per month higher.

What we looked at was the total monthly cash flow. They were paying over 10 per cent interest on their credit lines, and 29.9 per cent on their cards. Their monthly commitments between the car loan and the other debt was $2050 per month.

$2050.00 plus $1623.67 came to $3673.67 monthly towards debt repayment.

Adding the $100,000 to their mortgage meant a monthly commitment of $2314.27. This meant they were paying out $1359.40 per month LESS for their debts.

Another consideration was that they weren’t making any headway on their consumer debts at all. By just covering the interest they were on the never-never plan and getting incredibly discouraged by their situation.

Current guidelines allow clients to refinance to 80 per cent of the value of their home. For instance, if your home appraises at $500,000.00 you could refinance to a total of $400,000.00.

If you bought your home several years ago, it is likely the value has increased enough to allow for a refinance. Let’s say you bought your home ten years ago for $400,000.00.

Depending on the amortization and payment schedule you chose, let’s say your mortgage balance is now $300,000.00. The current market value of your home is $600,000.00.

This means, provided you qualify to carry the larger mortgage, you could refinance up to $480,000.00.

I don’t recommend maxing out your mortgage based on current property values. However, exploring whether using some of the equity in your home to repay your consumer debt, or better yet to renovate or expand your current home, might be something to think carefully about.

The hardest step in this process can be picking up the phone to get the ball rolling. Sometimes its hard to admit we are swamped or even drowning from the debt we have. We feel that others will judge us and I assure you that is not the case. You would likely be surprised to know how many people are in the exact same position.

If you are struggling I encourage you to reach out to a mortgage professional to see what options you may have. It might be a tough call to make, but the outcome may help you sleep better at night.

Mortgage Pre-Approval: Why do the numbers keep changing?

Wed, 11 Jan 2023 23:54:19 GMT

From a broker’s perspective, trying to nail down an upper price point for clients is a little like (aging myself here) the sliding puzzles that were around when I was young.

I had a conversation with a young couple recently who were frustrated with a broker they were working with. They said every time they spoke with the broker their numbers seemed to change.

I explained a bit about how we calculate our pre-qualifications / pre-approvals and told them their broker is being very thorough to make sure they don’t end up writing a price point they won’t qualify for. I showed them how their broker is doing an amazing job of making sure they are set up for success.

Sometimes it gets frustrating on both ends being as it feels like the goal posts move faster than clients can find a suitable home to write an offer on. Having a rate hold in place helps eliminate part of this uncertainty.

Each mortgage application is slightly different.

Each lender is slightly different.

Clients may have T4 income or self-employed income, as well as other sources including things like Child Tax Income, pensions, interest or dividend income, RRIF payments, and co-borrower income.

Likewise, down payments come from different sources:

Savings
Proceeds of sale from another property
RRSP (First Time Home Buyer withdrawals)
Gifts from family
First Time Home Buyer’s Incentive Program
Borrow sources (Flex Down Mortgages)

And of course the Stress Test comes into play.

If you don’t know about the stress test, the short version is that we have to qualify your mortgage application at either your contract rate plus two per cent or the Bank of Canada Benchmark rate, whichever is higher. The contract rate means the actual rate you will be approved at.

This calculation was a lot easier when fixed rates were below 3.25 per cent as we could use the Benchmark rate of 5.25 per cent and be certain of our numbers.

Right now most lenders have 4.89 per cent (plus or minus a little) available for a five year fixed rate on an insured mortgage. So I would run your calculations at 6.89 per cent and have a rate hold in place for you to be certain of your price point.

Easy, right?

Now we move onto the lender end of things. As an example, some lenders will use the full amount of CTC income. Others will only use a percentage.

Some lenders will accept down payment from the First Time Home Buyer’s Incentive program while others won’t.

Some lenders will finance properties with wood foundations, while others won’t.

You get the picture here – the calculations that work with one lender to maximize your price point may not work with the lender that will actually finance the home you’ve written your offer on.

My best advice if you are venturing into the world of home ownership is to take your time and do your homework. One of my columns from November talks about the challenges you can face if you don’t have your ducks in a row.

In many markets we need to help you maximize your mortgage amount just to get you into the market, so it will likely be several conversations before you have an exact number nailed down. Be patient with the process and learn as much as you can before you write an offer. The time invested upfront will help to make the process a smoother one for you.

Buyers' second thoughts

Tue, 03 Jan 2023 16:48:59 GMT

New B.C. law allows home buyers to back out of sales

What exactly is the Home Buyer Rescission Period (HBRP)?

For months now, we’ve been hearing about a proposed cooling off period for home purchases. This is it.

Qualifying what is to follow with the fact I am not a realtor and that is not my area of expertise, I want to share a few important pieces I’m learning and how they may affect you, as a buyer or a seller.

Please do your homework and confirm with your realtor what your rights are with respect to rescinding any offers you are considering collapsing.

On Jan. 3, legislation comes into effect in B.C. that will allow purchasers a brief window of time to back out of a purchase contract for residential real estate. This timeframe is up to three clear business days (business days do not include weekends or statutory holidays) after an offer is accepted.

Opting out doesn’t require a reason, but it does come at a price. Should you choose to exercise your right to rescind a contract, you must pay the seller 0.25% of the purchase price.

As an example, if you were to rescind a contract on a $750,000 home, you would be obligated to pay the seller $1,875.

If an offer is collapsed, the rescission fee is payable to the seller. If there is already a deposit held in trust with a lawyer or notary, the fee will be deducted and paid to the seller before the deposit is returned to the buyer.

Realtors must provide information to their clients about the HBRP by way of a specific form that needs to be included in their contracts.

There are several key points to note:

The HBRP cannot be waived, even by mutual agreement.
There are exemptions to this legislation, including, but not limited to:
Sales by way of foreclosure
Pre-build sales
Sales on leasehold land
Sales by auction or assignment
The legislation also applies to private sales.
There are specific steps that must be followed if you are choosing to rescind an offer.

More information can be found at the B.C. Financial Services Authority FAQ website 's Home Buyer Rescission Period Frequently Asked Questions.

So what does this mean in practice?

It will be interesting to see how many times we see this provision in action. I feel a little like it is closing the barn door about a year too late, but hopefully this will discourage some of the panic buying we’ve seen over the last few years.

I do feel for realtors who will be working their way through this.

Most of the offers I see have the deposit being made by buyers once they have removed all their conditions and gone firm on their purchase. Will this mean that buyers will have to make deposits at the same time their offer is accepted? Will realtors have to chase down the funds payable to the seller if a buyer backs out?

Some of the offers have come across my desk in the last two years have concerned me, more so the knowledge some clients felt forced to write subject-free offers just to have their offers considered. I imagine this new legislation will change that market dynamic.

Again, I am not a realtor ,so if you are actively buying or selling please make sure you talk to your realtor to see how this legislation may affect you.

On to a new and exciting 2023. I hope you and yours stayed safe and warm. Happy New Year.

Fixed Rates Dropping

Mon, 19 Dec 2022 19:12:21 GMT

Most years we see fixed rates start to drop towards the end of the calendar year as lenders try to boost their business to end the year strong. This year has been no exception.

Over the last few weeks I’ve seen fixed rates drop from close to six per cent about six weeks ago to 4.79 per cent and better as of this week. These rates vary depending on whether your mortgage is insured or not, but in relative terms we have seen close to a one per cent drop in many cases.

What does this mean in practical terms?

For one client I’m working with who is a single mom who is searching for a home to call her own, this increase in affordability has increased her purchase price by almost $20,000 which in her community puts her into a house rather than a condo.

For people who have upcoming renewals it may be time to connect and explore your options. If you are coming out of a fixed rate mortgage in the two per cent range, it is likely that you will be looking at a three month interest penalty to switch out of your current mortgage if you choose to do so before your actual renewal date.

I don’t advocate jumping ship really early in every case. Paying a prepayment penalty AND a higher interest rate isn’t always a great plan, but each situation is unique.

The next year is looking to be a bit bumpy with interest rates still, and from what I’m hearing rates will start trending down again towards the end of next year.

However, if you have a renewal coming up in the next four months I encourage you to reach out to explore your options now. With no historical research to support this, what I have seen for many years is interest rates pop up again as the new year starts.

I sat in on a call yesterday with the president of one of my favorite lenders. He had some interesting thoughts on the variable versus fixed conversation. Their firm has been watching delinquency rates carefully, and I was quite surprised to learn that the numbers of variable rate clients in arrears was actually far lower than the number of fixed rate clients in arrears.

I’m not sure whether that has to do with the proportionate split as to how many clients choose fixed over variable, or if there is something else that really affects these stats. I do know I am concerned for some of my variable rate clients as I know I am feeling the pinch with my own monthly mortgage payment increasing substantially.

I was also surprised to hear that most of the lender’s variable clients were choosing to stay the course

rather than lock into fixed rate terms.

If you are exploring whether locking in at this point makes sense for you, I encourage you to do your homework. Reach out to your mortgage person to run the numbers and see if this makes sense for you. With fixed rates now less than variable it may make sense, particularly if you are losing sleep at night.

However, if you are planning to make any changes over the next few years and are variable it most likely makes sense to stay the course.

Grateful to all who have reached out after reading my column to share their thoughts and feedback. Wishing you and yours a wonderful holiday season filled with love and laughter!!

Mortgaging into the Sunset

Mon, 05 Dec 2022 19:50:02 GMT

I feel like I am getting more calls these days from older clients who are finding that the increased cost of living is really affecting their month to month cash flow.

For people who have worked their entire lives to make sure their homes were paid off heading into retirement, finding out that their pension income isn’t enough to cover basic living expenses can be a real kick in the teeth.

I’m also getting calls from people who are down-sizing for retirement but don’t want to sink all of their equity into a new property because they want to have a decent contingency fund so they don’t find themselves scrambling for cash when they need it.

There are several options for clients that have a significant amount of equity in their homes, or have a sizeable down payment to buy a home.

One option is using a reverse mortgage to either free up cash flow or buy a new home. Many people I talk to aren’t aware that they can use a reverse mortgage to buy a home. Sometimes we can use a reverse mortgage to do both at the same time.

The last reverse mortgage I did was used to pull equity from the clients’ home to use as the down payment to purchase a rental property. This was a great strategy for these clients as they were looking to build generational wealth for their children while increasing their cash flow for retirement.

Another option I use regularly is a hybrid mortgage product. By this I mean a mortgage that has an amortizing portion and a home equity line of credit. These mortgages are offered by multiple lenders and can be a great solution for clients who are trying to set themselves up for retirement.

When working with clients who are starting to see retirement in the near-ish future I will go over these products. Experience has shown me that it is a lot easier to obtain credit when you don’t actually need it than once you are scrambling to find options.

Whether you are gearing up for retirement or if your mortgage is coming up for renewal, it may be a good time to look into options like the hybrid products. They may not be the right fit yet, but it is good to be aware of the options that are available to you.

If you are finding things tight with the increased living expenses we are all facing right now it might just be the right time to talk to your mortgage professional to see what your options are.

It's worth it to work with a trusted mortgage broker

Mon, 21 Nov 2022 17:44:05 GMT

Last week I ran into a situation with clients who didn’t understand what they were signing. The fallout has been expensive for them.

The clients are selling a home in Toronto and moving to the Okanagan for a well-deserved retirement. They both grew up in B.C. and knew they wanted to move back at some point. They came out for an exploratory trip and found a patio home in Osoyoos that checked all their boxes.

They wrote an offer with a fairly standard two-week financing subject clause but they did not add a clause to make the offer subject to the sale of their home in Toronto.

They went home to Toronto and lined up financing with their bank, including a provision for bridge financing in case the sale of their home did not close before their purchase was scheduled to close. They listed their home for sale the first day they were back in Toronto. Two weeks flew by with a few viewings but no offers on their home.

In the meantime, a backup offer came in on the home in Osoyoos. My clients still had six weeks before they were supposed to close on the new home. They asked their realtor in Ontario how likely it was that their home would sell in the next few weeks. He told them it would absolutely sell, no concerns whatsoever.

And he said even if it didn’t sell, their would be options for financing.

Based on their realtor’s confidence, they removed the subject to financing clause and went firm on their purchase in the Okanagan.

One week went by. Two weeks went by. Three weeks went by.

Fast forward to 10 days before closing on their new home. Crickets. Not so much as an offer, even a lowball offer, for them to consider.

They called their bank and asked what to do to line up alternative financing. The bank sent them to a broker in Ontario who reached out to me. Based on their circumstances and the tight turnaround time, their options were limited. Most private lenders prefer larger centres and many private lenders are tapped out right now as more and more clients have had to go the private route.

After an incredibly hectic and stressful week, the clients did complete the purchase on their new home.

I mentioned at the beginning of the story that this was an expensive journey for the clients. Due to the request being so last-minute, the private lender that did provide an approval and charged an extra fee for the rush. The lawyers charged almost double for the rush. The clients now have a $3,500 a month payment on the new home, plus the mortgage payment on their current home until the current home sells. At minimum, this cost the clients more than $40,000, an amount that could have been avoided.

Over the last few years, rolling the dice on selling a home would still have been a dicey move but odds were in the sellers’ favour that their home would sell, usually quickly and often with multiple offers.With the rapid increase in interest rates however, the market has definitely cooled, making this a very risky proposition.

In previous columns I’ve talked about investors choosing to walk away from properties, and risk being sued as they felt that would be less of a hit than moving forward with a purchase where the value of the property had dropped so much. In this case, I truly feel the clients did not understand the implications of their decision to go firm without a sale in the works.

If you are considering making a move now (or ever), I cannot stress enough the importance of working with a mortgage professional that you trust. Try your best to take the emotion out of the home-buying process and consider the possible consequences if you move forward without a firm sale in place.

There will always be other homes. Losing a significant chunk of the money you have worked hard for can really put a dent in your pocketbook.

Make sure you have someone who you trust to help guide you through the process.

Interest rate increases – Are we done yet?

Mon, 07 Nov 2022 20:18:50 GMT

While many in the mortgage world anticipated rates to increase this year, I don’t think anyone expected them to increase so much and so quickly.

What we’ve seen is unprecedented. If you are in a fixed rate mortgage these rate increases won’t affect you until you reach the end of your current term. At that point you will need to carefully consider where rates are at the time and decide whether you are going to opt for a fixed rate again, and if so for how long.

If you are currently in a variable mortgage there are a couple of things that may be happening for you right now. If you are in an adjustable rate mortgage (ARM), your mortgage payment will have increased as prime has increased. That means that your remaining amortization is still on track.

It likely also means, however, you are starting to feel a pinch when making your mortgage payment. I know, I’m in an ARM and my payment has increased by more than $500 per month since March.

If you are in a variable rate mortgage (VRM), your mortgage payment will have stayed the same despite the rate increases but you are now at a tipping point, where the payment you are making may not even be covering the interest due on your mortgage. That can potentially mean either you are no longer paying down any of the principal balance or the principal balance is increasing.

That means the remaining amortization (length of time to pay off your mortgage) will be increasing as well.

For clients who are in VRMs, they are reaching what is known as the “trigger” rate (the tipping point I mentioned above). Financial institutions are starting to reach out to those clients to make alternate arrangements to make their mortgage payments.

Some of the options presented will likely include:

• Increasing your payment based on the current variable rate to bring the payment back to the point that it is paying down principal again.

• Make a lump sum payment and keep your payment the same.

• Convert to a fixed rate which will be increased to keep your amortization on track.

Whether you are in a VRM or an ARM, the increases to your mortgage payments smart.

Before you consider a knee-jerk reaction of locking into a five-year, fixed term, it is important to ask yourself why you are in a variable mortgage in the first place.

It is also important to do some serious thinking about your plans for the next few years.

While locking in for a longer term may feel attractive after how unsettling this year has been, if you are anticipating any kind of a major change to your life or your financial situation it may be a wise choice to stick with your original plan of the variable mortgage.

I am seeing a fair number of people choosing shorter, fixed terms in anticipation of rates softening again.

As a positive sign, I am starting to see rate specials posted by multiple lenders. This week, my favourite lender dropped its five-year fixed rate (for insured mortgages) from 5.84% to 5.44% and then again to 5.29%.

I think we will see rates drop a bit more before the next rate announcement on Dec. 7.

If you are struggling with the increased payments on your mortgage, I urge you to reach out to your mortgage person as soon as possible.

Lenders do not want to be in the foreclosure business, so most are open to working with their clients to find a solution that provides some relief and stability

Fixed or variable mortgages in a time of interest hikes

Mon, 24 Oct 2022 19:24:13 GMT

Last weekend I attended the mortgage professionals conference in Vancouver. My goal was to take in as many professional development sessions as possible because I’m finding we are moving forward in a very strange interest rate environment.

Ironically, and I never thought I’d ever say this, the session I got the most from (and arguably enjoyed the most) was the presentation by Benjamin Tal. Tal is the managing director and deputy chief economist at CIBC Capital Markets Inc.

He spoke about his thoughts on our current rate environment, the forces driving the Bank of Canada’s economic policies, and where he felt rates will go.

He also spoke about the unprecedented rate hikes we’ve seen this year. The Bank of Canada is trying desperately to curb inflation and he thought the bank has gone too far and has overreached with the rate hikes this year.

I am a fan of variable rate mortgages. One of the key factors that influences this is the cost of breaking your mortgage early. If you need to pay your mortgage in full and it doesn’t make sense (or doesn’t work) to port your current mortgage, the maximum penalty you will be charged is three months’ interest.

With a fixed mortgage, the penalty to break your mortgage is normally the greater of either the interest rate differential (IRD) or three months’ interest. Investopedia.ca shows how an IRD penalty is calculated:

“An IRD weighs the contrast in interest rates between two similar interest-bearing assets. Most often it is the difference between two interest rates.”

This type of penalty can be substantial. I’m currently working with a client who is selling a luxury property whose current mortgage is up for renewal. It is a sizeable mortgage and he is understandably concerned about the volatility of mortgage interest rates right now.

I did the math for him. Had he locked into a five-year fixed-rate mortgage, based on where rates are now and the balance of his mortgage, his penalty was in the range of $32,000. The variable rate penalty, again based on today’s balance and rate, would be around $6,000. So for this particular client who is absolutely going to be selling his home in the next year the potential increase in payment due to rising rates was a far more palatable option than a penalty in the $32,000 range.

All this aside, for many Canadians in variable mortgages the incredible rate hikes we’ve seen this year make a massive dent in their monthly budget. It’s really tempting to think about locking into a fixed rate product for the stability of the payment.

One consideration is how you will feel if you lock into a rate in the mid to high five per cent range when rates start to move down again. Will you sleep better at night knowing you have the security of a fixed payment? Are you losing sleep thinking about where rates are going?

I recommend you think about why you chose variable in the first place. You likely enjoyed really low rates for the first part of your term and will very likely enjoy lower rates towards the end of your term as rates start to trend down again.

I guess I should have started with that. Tal’s take is that we are in for another significant rate hike very soon but he feels rates will stabilize next year and start trending down again towards the end of next year or early 2024.

One option is splitting the difference. There are lenders who offer true variable mortgages with a static payment. This means that regardless of where rates move your payment stays the same. I should say, it stays the same until the increase in rate means you aren’t paying enough to cover the interest due which in turn will affect your amortization.

You would have to pay a three-month interest penalty to break your current mortgage to switch to a lender that offers a static payment. Most lenders will allow you to capitalize up to $3,000 of your penalty into your new mortgage (more if you do a refinance instead of a straight switch, providing you have enough equity for this to work).

Going this route you will still enjoy the benefit of a variable rate mortgage once rates start moving down again, without worrying about potential penalties if you have to pay out your mortgage unexpectedly.

If you’d like to chat about this, and see if it’s a fit for you, I am happy to do a mortgage check-up and offer some insight.

Is a cash-back mortgage right for you?

Mon, 10 Oct 2022 19:27:46 GMT

With rates rising and house prices dropping slowly, I’m finding some clients are having a tougher time qualifying right now.

I feel like I have been saying the same thing for different reasons over the last few years.

A significant number of the clients I work with live in northern B.C. I was chatting with a realtor in Fort St John this week and shared that the challenge finding financing for northern clients is slightly different (sweeping generalization here) than clients in the Okanagan.

I have not done statistical research, so I am speaking based on my experience with my clients in both areas, and my comments don’t apply to clients across the board in either area as there are always exceptions.

In northern B.C., in resource-based communities, I regularly see family incomes of $150,000 or more. In the Okanagan, I see family incomes more in the $75,000 to $90,000 range.

House prices are of course very different in various parts of the province. In Mackenzie, I have clients buying fully renovated family homes with large yards for under $200,000. In Smithers and Fort St John prices run between $400,000 and $500,000 for similar homes.

In the Okanagan. I’m noticing more of price drop but similar homes to what I’ve just described are still well over $700,000.

What evens the playing field is lifestyle choice.

In northern B.C., it’s rare for me to work on an application where the clients don’t own several “toys” (trailers, quads, boats, etc) which usually come with loan payments. Although some clients in the Okanagan also have those items, I find more of my applicants might have a vehicle payment and otherwise limited credit usage.

This week, I’m working with first-time buyers in northern B.C. I took their application and was pleased to see all of their toys but one were owned outright. They did, however, finance a brand-new, shiny pickup truck three months ago to the tune of $80,000, or $1,350 per month.

Then he was offered an amazing opportunity in a different community. They have been saving for a down payment, so have their down payment and closing costs taken care of.

They found a home they love but with the new truck payment and the quad payment their ratios are a little high.

For these clients, we will be working with a lender that offers a cash-back program. They will be getting three per cent of the mortgage balance as cash at the time of closing.That cash will be used to pay off their quad loan. Win-win.

As a rule, I am not a huge fan of cash-back mortgages.

There is one particular chartered bank that really promotes its cash-back option, but if the borrowers need to pay the mortgage out early for any reason (before their initial five-year term is up) they have to repay every single penny of the cash-back funds, regardless of how long they have been paying on the mortgage.

The lender I took these clients to also offers three per cent cash back, and if clients have to pay the mortgage off before the initial five-year term is up, they have to repay a portion of the cash-back funds, but on a sliding scale depending on how long they have had the mortgage.

The key takeaway here is if you are considering a cash-back mortgage program, it is important you understand the fine print. Life happens so a little time researching up front may save aggravation down the road.

For these particular clients the mortgage is the right fit.

If you are looking at applying for a mortgage in the near future, I suggest holding off on any purchases that require financing until you’ve had a chance to work with your mortgage person to see how a new loan payment might affect your borrowing power.

If you’d like to play with numbers to see what you qualify for, and how a potential loan payment might affect your borrowing power, feel free to download the link to My Mortgage Planner.

If you are able to hold off on a purchase until you are into your new home, you will likely find it easier to arrange mortgage financing.

Happy Thanksgiving.

A topsy turvy mortgage world

Tue, 27 Sep 2022 04:09:28 GMT

Over the last few weeks, I’ve had tough conversations with a few clients.

With unprecedented rate hikes over the last few months, borrowing power and affordability for clients has declined sharply.

The housing market is softening, but not enough for the clients who need a correction the most. I had a conversation this week with one of my favourite appraisers. He said that from April to the end of June he saw a sharp correction and that he feels prices are starting to normalize now.

I feel like the housing and mortgage worlds are a bit topsy turvy right now.

One interesting (and I’m not sure that is the right word) thing that I’ve seen happen three times over the last month is backyard developers walking away from properties they wrote offers on in the first quarter of the year.

By backyard developers I mean people that have been buying up properties zoned for multi-family development on spec, hoping to flip them down the road as land assemblies or even pull together financing themselves to develop these properties.

Early in the year these people wrote subject-free offers with long closing dates (ie: September/October) in the frenzy of the spring market.

One couple accepted an offer on a home they owned with a long closing and wrote an offer to purchase another home intending to tear it down and build a fourplex on the property. Two weeks before closing their purchaser backed out and left them without the funds to complete their purchase.

They in turn looked at the decrease in value of the home (over $300,000 based on the current appraisal) they were supposed to purchase and decided they no longer wanted to move forward. They walked away from the contract.

I’m not sure of the chain reaction this caused, but most people I work with enter into these contracts in good faith. I was floored by the callous nature of these clients that choose not to move forward and am curious to see if they will be sued by the sellers.

Another challenge I’m coming across is clients who signed purchase agreements on pre-builds a year or more ago who are no longer qualifying for the financing they need because rates have increased so dramatically over the last few months.

I have four on the go that are all set to complete over the next few months. I have lost a bit of sleep over these lately. I am, however, very pleased with how the lenders have gone to bat for these clients to help make their financing work.

If you have a pre-approval or rate hold in place, or are coming to completion on a new build, I urge you to reach out to your mortgage person to confirm that your numbers still work, and that your price point hasn’t changed.

That all felt a little dark, but I really want to make sure that potential buyers know how the increased rates might affect their purchasing power. On a brighter note, I am starting to see things pick up again with more homes selling, and feel like we are moving to a more balanced market than we’ve seen over the last few years.

The changing mortgage world

Tue, 13 Sep 2022 04:12:02 GMT

One night last week, I met with several other brokers after a learning session we attended. The group included brokers from B.C., Alberta and Ontario.

Our evening included a great discussion about the changes we are seeing in our mortgage applications these days.

It is rare for most of us to see a straightforward application where all of the pieces line up. The common theme around the table was how more often than not, our clients are having to consider different ways to qualify for their mortgages.

What do I mean by all of the pieces lining up?

In an ideal world, clients will have squeaky-clean credit with limited consumer debt, have stable employment and have the appropriate down payment saved and ready to go.

For bonus points, they are able to find a home they love in their price range and preferred neighbourhood and negotiate an accepted offer.

More often than not, we are finding that some or most of the pieces don’t line up at first glance.

I am seeing more families buying homes together – several generations contributing to the down payment and coming together so that they have enough income to qualify for the home they want to purchase.

COVID-19 affected many peoples’ finances. Some took advantage of payment deferral options even if they didn’t need to, and that has been questioned by lenders. By virtue of their type of work, many clients went weeks or even months with reduced or no income, which led to bumps in their credit.

With interest rates rising the goal post has been moved a little further away so either more income or a larger down payment is needed to qualify for the same mortgage amount.

Our conversation turned to financial management and savings habits. We talked about different ways to build your savings and the importance of having a safety net set aside for the unexpected things life throws at us.

We then shifted into different options for helping clients qualify for the mortgages they need. What was particularly interesting to me was that regardless of the province or city we are working in, these brokers are all experiencing a sense of frustration with how clients seem to be facing more and more barriers to entering the housing market.

I was grateful for this conversation as it reinforced that, as brokers, we do have many tools and products available to help our clients get into their new homes.

Although interest rates are rising, housing prices are dropping in many markets. Even with higher rates, based on lower purchase prices we are starting to see the scale levelling out a little with monthly payments.

If you have been concerned about affordability with rates on the move it is a great idea to reach out to your mortgage person to see what you qualify for before you head out shopping.

Selecting the best mortgage for you

Tue, 30 Aug 2022 04:14:04 GMT

I had a call with one of my favorite clients recently. We are working on a refinance and lining it up for when her current mortgage term is set to renew.

We worked through everything and got to the age-old question of whether she wanted to go with a fixed rate or a variable rate.

We chatted about the refinance about two months ago, and at the time I suggested a variable rate mortgage. Her home is on a huge lot in an area of Rutland where developers are buying homes in order to tear them down and build new multi-family complexes.

She has already been approached by a realtor who is representing a developer. The realtor dangled a potential figure in front of her that has her thinking about selling and relocating. To this point, the realtor has not brought her a written offer so she is not sure whether this will actually come to pass.

So, during our call we went over the final details for her approval and circled back to the rate decision. We talked about variable because if the right offer comes along she will sign before the ink is dry. Choosing a variable means she will have a three-month interest penalty to get out of the mortgage, even if the offer comes in the month after we process her refinance.

She did mention that several people she knows went into variable mortgages earlier this spring and are not very happy with their decisions.

We circled back to her situation, and I calculated what a potential penalty might be if she opted for a fixed rate term then decided to sell right away.

Based on today’s rates and her new mortgage balance, the fixed rate mortgage would cost (approximately) an additional $13,000 should she choose to pay the mortgage out in the next few months.That being said, for the amount she stands to gain by selling to a developer, the $13,000 is a drop in the bucket. However, I’d far rather see that money in her pocket if we can make that happen.

Over the last few weeks, I have had calls with many clients asking about what interest rates are doing and in particular how the rate changes are affecting their bottom lines. During all of these calls, we talked about why they chose variable in the first place, and what their future plans are.

Sitting with a variable mortgage can feel a little stressful right now. The key is to remember why you made the decision in the first place. I have seen lenders start to drop their fixed rates over the last few weeks. However, we are still in the position of having reduced borrowing power if you choose a fixed rate term over a variable.

As an example, I’m seeing 4.59% (and lower) for five-year fixed rates on insured mortgages. Using the stress test, that means we need to calculate the payment based on a rate of 6.59%, which means one would qualify for less mortgage than if he or she opted for a variable rate.

The key is to think carefully about your options and your budget. Consider what your longer-term plans are before you sign into a longer fixed-rate term.

Life happens, plans change. Know what your options are and make sure you talk to your mortgage person about what really is the best rate decision for you.