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Mortgage-Matters

Plans that save you money

This is a busy time in the real estate market, and both the federal and provincial government offer resources, grants and rebates for new and current home owners.

There are several savings programs available. It’s a great idea to be aware of these programs when making your financial decisions.

Here’s a list of 10 of these programs, but there are probably close to 30 available.

  • B.C. Home Owner Mortgage and Equity (HOME) Partnership program: Assists eligible first-time homebuyers by providing repayable down payment assistance loans. It contributes to your personal down payment, up to a maximum of five per cent of the purchase price. The loan is interest-free and payment-free for five years.
  • B.C. Property Transfer Tax (PPT) First-Time Home Buyer’s Program: Qualifying first-time home buyers may be exempt from paying the PTT of one per cent on the first $200,000 and two per cent on the remainder of the purchase price of a resale home priced up to $475,000.
  • Home Buyers’ Plan: Qualifying home buyers can withdraw up to $25,000 (couples can withdraw up to $50,000) from their RRSPs to assist with the purchase of a home. The funds are not required to be used only for the down payment, but for other purposes to assist in the purchase of a home.
  • First-Time Home Buyers’ Tax Credit (HBTC): Eligible individuals who bought a qualifying home in 2016 can claim the home buyers’ amount of $5,000 when filing their 2016 income tax return. For 2016, the maximum tax credit is $750.
  • B.C. Seniors’ Home Renovation Tax Credit: Assists eligible seniors 65+ with the cost of some permanent home renovations to a principal residence to improve accessibility. The maximum refundable credit is $1,000 per tax year.
  • CMHC Mortgage Loan Insurance Premium Refund: Provides home buyers with CMHC mortgage insurance, a 10 per cent premium refund and possible extended amortization without surcharge when buyers purchase an energy efficient home or make energy saving renovations.
  • B.C. Property Transfer Tax Newly Built Home Exemption: Qualifying buyers of new homes may be exempt from paying the PTT on a newly built home or newly subdivided unit priced up to $750,000.
  • Home Adaptations for Independence (HAFI): A program jointly sponsored by the provincial and federal governments provides up to $20,000 to help eligible low income seniors and disabled home owners and landlords finance modifications to their homes to make them accessible and safer.
  • B.C. Home Owner Grant: Reduces property taxes for home owners with an assessed value up to $1,600,000. The basic grant is $570 here in the Okanagan plus and additional grant of $200 to rural home owners. There is also an additional grant of $275 to seniors aged 65+ and veterans of certain wars.
  • B.C. Property Tax Deferment Programs: Qualifying home owners aged 55+ cam defer property taxes. Qualifying low-income home owners can defer property taxes and qualifying home owners who financially support children under the age of 18 can defer property taxes.

If you would like further information on any of these programs or other programs that might be available in your area, please let me know.





4 things that can go wrong

Here are four things that can derail your mortgage financing even if you’ve been pre-approved by your bank or a mortgage broker.

If you can avoid these types of issues, you’ll be more likely to receive a “final approval” green light from the mortgage lender.

You have insufficient documentation.

Mortgage lenders request a variety of financial documents when approving borrowers for mortgages. You can reduce the chance of document-related problems by rounding up your documents in advance.

This is why, as your mortgage broker, I always try to anticipate the documents that a mortgage lender is going to request and work with you to gather them before you have found your dream home.

You don’t have enough funds for your closing costs.

These days, many mortgage lenders and all mortgage insurers are requiring borrowers to have additional “cash reserves” in the bank, prior to closing to cover the closing costs. 

Borrowers can be denied a mortgage after being pre-approved if they can’t provide documentation confirming you have these funds available.

You made a large purchase, or purchases and taken on additional debt since pre-approval.

Being pre-approved for a mortgage, or even approved if you are at that stage, doesn’t mean you can go out and make large purchases.

Debt-to-income ratios are very important during the mortgage process.

This ratio is basically a comparison between the amount of money you earn and the amount you spend to cover your monthly debts. Having too much debt can hurt your chances of getting mortgage financing.

To prevent these types of problems after pre-approval, avoid making major purchases or opening new lines of credit. Keep those credit cards in your wallet until you receive a final approval and until after you have moved into your new home.

Your income or employment situation has changed.

The mortgage lender will pre-approve you based on your current income and employment situation. However, if your status changes sometime during the underwriting process, it could cause you to be denied the mortgage.

Just do everything within your power to keep your income and employment situation static until after you have found a home and moved in.

Here’s what you need to take away from this:

  • A pre-approval can be a helpful step in the mortgage process. It allows you to narrow your search to homes that fit your budget and secure an interest rate. But it’s not a guarantee of financing.
  • A pre-approval is not a mortgage commitment. It is the lender’s way of saying they will likely give you a mortgage for a certain amount, as long as your financial situation doesn’t change prior to closing and they like the property you are purchasing.
  • Even having a pre-approval letter does not mean you are home free. Things can still go wrong before the final closing causing the mortgage to be denied.

My role as your mortgage broker is to reduce the possibility of any of the above happening to you during the mortgage process and endeavor to make the process go as smoothly as possible.

A mortgage pre-approval is the first step to home ownership.



Buying In a seller's market

The most recent stats from OMREB (Okanagan Mainline Real Estate Board) confirm that there is low inventory to choose from for those hoping to buy a home.

This will create more competition for the available properties and potentially multiple-offer situations with homes selling for higher than the asking price.

If you are in the market for a home or are considering a purchase this spring, here is my tip to increase the odds of you being the successful bidder in a possible multiple offer situation. Take these steps you might avoid some of the craziness that could happen this spring market.

This is my best tip and easiest tip:

  • Get pre-approved for your mortgage financing. Not pre-qualified but a full pre-approval.

Prior to looking for a home or placing an offer, work with your mortgage broker to complete a full mortgage pre-approval. This will include the collecting of all supporting documentation that a lender will require to provide a final approval for your financing.

We will advise you of your purchasing budget, review any potential challenges and ensure you are set to go other than finding a suitable property.

We can also review the types of properties you are interested in and advise whether there might be any potential financing challenges because of property issues.

If you do all the work upfront, it could prevent your offer from falling apart because you were not able to secure financing for your purchase or possibly losing the property by needing to request an extension to finalize your financing, which the seller may not be prepared to offer because there are backup offers on the property.

Being a pre-approved buyer could also place you in a more favourable position in a multiple offer situation.

But a word of caution: do not be tempted to place a subject-free offer. Subject to satisfactory financing is a key clause that needs to be included in every offer.

You could be the most well qualified purchaser in history. Stellar credit, great income and job stability with a significant down payment but in the end a lender could still decline your request for financing.

Here’s why: mortgage financing approval not only includes the lender being happy with your qualifications, but they must also approve the property. Essentially, it’s a two-step process.

My best advice to you would be to:

  • never place a subject-free offer regardless of what others are recommending and to think long and hard about it unless you have the cash in the bank to cover your purchase in the event that you can’t secure satisfactory financing.
  • Or have a detailed conversation with your mortgage broker well in advance to place a subject-free offer. There are some strategies to minimize your risk, but an individual conversation would be required.

In a seller’s market, you need to be prepared to successful, so please give me a call to review your options at 888-561-2679 or email [email protected].



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Mortgage renewal checklist

Here are nine things to consider before your mortgage renews:

Have you explored all your options?

Once you receive your mortgage renewal statement, there’s nothing easier than simply signing on for another term.

While this may make sense in many cases, your family or financial situation may have changed over time. We can look for opportunities that could better meet your needs right now. 

Are you comfortable with your payments?

If you’ve been feeling financially strapped each month making your mortgage payments, this could be the time to reduce them to a more easily managed level. On the other hand, if you’re earning more, why not pay down your mortgage faster and save thousands of dollars in interest over time? 

Do you need cash flow for other things?

Your priorities may have shifted since you first bought your home, and your cash flow needs can shift, too. Things like paying for a child’s education, changing careers or a major purchase such as a vacation property may call for spending money on things other than your home. You may be able to refinance your mortgage to consider this. 

Can you handle fluctuating rates?

Some homeowners are nervous about any hikes in interest rates, while others are comfortable to go with the flow. Rates are tough to predict. It’s best to base your decision on your personal situation, not what you read in the news, and tailor your mortgage renewal around your needs. We can help you decide whether to opt for fixed or variable rates — and we don’t want you to lose any sleep over your decision.

Will you sell soon?

If you are likely to sell soon, consider a shorter-term mortgage or one that has flexible terms so you’re not penalized if you sell your house before the mortgage comes due. 

Are you thinking about a major renovation?

You know that projects such as a new kitchen or an addition can make your home more valuable. But the cost of having the work done can tie up a lot of money. Before you renew, look at all your financing options, which may include getting an additional line of credit or keeping your monthly mortgage payments low so you have money on hand to finance the renos.

When do you want to be “mortgage-free?”

If you’re planning extended time away from work—or perhaps an early retirement—it may make sense to pay down your mortgage sooner rather than later. While increasing your payments will raise your monthly costs now, you’ll ultimately save on interest in the long term and can prepare for that fabulous, mortgage-free lifestyle. 

Could you use your home equity to fulfill other goals?

Refinancing a mortgage can be one way to free up cash you need for other things, which could even include buying another property. Mortgage renewal time is an ideal occasion to review all your options. 

Are you getting the best rates and terms?

In a competitive mortgage environment, your good credit history can make refinancing work to your advantage. We analyze mortgage markets daily to ensure you don’t miss any money-saving opportunities.



More Mortgage Matters articles

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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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