Mortgage broker commissions
On January 18th I did an interview on CBC Radio Kelowna regarding the FICOM proposal for more disclosure on the Form 10 used by mortgage brokers. FICOM is asking mortgage brokers to disclose the exact amount of commission they are paid by the lender.
I, along with many mortgage brokers in the Okanagan, the Mortgage Brokers Association of BC, and the Mortgage Professionals of Canada do not support the proposed change - not because we have anything to hide, but because we don’t want to confuse our clients.
On December 14, Patti Anderson, Dean Larson, Karen Shale, April Dunn, and I met with our three MLAs, Norm Letnick, Steve Thomson, and Christy Clark’s designate, Becky Harmata.
I asked the other brokers if they had ever had a client ask them how much commission they were making on their mortgage. Not one of us had, in our combined 80 years in the industry, such a conversation with our clients. This suggests that it is not a concern to the average consumer.
We explained the proposed disclosure requirements to the MLAs, who were not aware of FICOM’s plans. The MLAs seemed concerned, and promised to speak to the appropriate ministers involved.
It is unclear what brought this issue of commission disclosure to light, as there have not been any complaints or instances of mortgage brokers not acting in the client’s best interests.
Mortgage brokers help 55% of new mortgage clients, and 30% of clients overall, according to the Bank of Canada. On average, we obtain 19 basis points off the rate that consumers would get if they applied for the mortgage on their own.
We provide choices to meet our clients needs, taking into consideration interest rate, prepayment options, and payout penalties.
In most cases, these services are free to our clients (exceptions are when we place a private mortgage or deal with a lender who does not pay us).
By disclosing our commission to our clients, there could be a perception that they are paying more to deal with us than they would if they dealt with their own bank’s sales force, who do not have to disclose the commission they are paid.
New downpayment rules
If buying a home is on your list of to dos for 2016, then you may be affected by the new downpayment requirement rules announced by Finance Minister Bill Morneau.
As of February 2016, you will need a 10% downpayment for any portion of the home purchase price over $500,000. The portion of the home purchase price up to $500,000 will continue to require 5%.
Homes under $500,000 will also continue to require a minimum of 5% down payment.
The government says that it is continuously monitoring the housing market, and is committed to implementing policy measures that maintain a healthy, competitive and stable housing market. It is felt that higher homeowner equity will play a role in this.
If you want to know exactly what this change will mean to your home purchase plans in 2016, talk to me.
I'm you mortgage expert, and can help you with your home ownership goals. You can call me at 250.862.1806 or email me at [email protected]
With talk about the climbing real estate prices, a recovering global economy keeping investment analysts cautious, and the decline in oil prices, it is challenging for the average Canadian to know where to invest, or even how to manage personal funds.
The good news is, 2016 is no different when it comes to the basic rules on sound personal financial planning.
The first rule has been, and always will be, to review your personal and household debts. Reviewing how much debt exists, how it could be lowered, and setting a time frame for repayment or eliminating it can help you take control of your money and focus on your financial goals and priorities for the year.
Once your debt is under control, and it is determined whether or not you are living within your means, cash flow can be considered. The traditional idea that monthly expenses are identified first, and leftover savings second, still applies.
Upon confirming cash flow, tax review comes next. Experts recommend families look at all tax incentives they can take advantage of. Although the anticipation for 2016 is that the Tax Free Savings Account limit will be clawed back from $10,000 to $5500, tax analysts report middle class families should watch for a tax break on the rate for the middle income tax bracket moving from 22% to 20.5%.
Discussing your financial situation with the whole family is a another recommended step in your personal financial planning process. By involving family members, the final financial plan can better reflect everyone's interest equally. Experts point out that today's family definition may extend beyond the conventional family unit, and include siblings, aging parents, or close acquaintances.
Finally, after the year's plan has been established, experts recommend families look to resources for more detailed information about financial planning.
As a mortgage professional, I can be a crucial resource and tool to help you. Ask me how you can reduce your overall mortgage costs so that you can put more into your home equity or savings. Please feel free to call me at 250.862.1806 or email [email protected]
Welcome to your five-step guide to turn holiday chaos into stress-free celebration:
The kids are off from school, family and work obligations are competing for your time, and the items on your to-do list are growing by the minute.
So, while we might want to be singing, "Tis the season to be jolly", we might be better off singing, "Tis the season to stay organized”.
"Being disorganized is a huge stressor that is amplified by the increased demands put on us during the holidays," says Tara Redmond, Vice-President of plant engineering at UPS Canada. "Time is a valuable asset, and everybody needs more of it. You can actually maximize the amount of time you spend enjoying the season by staying organized and prepared for what's ahead."
Here's a way to prevent burn-out this season, using five steps from the experts at UPS for managing your time, completing your to-do list, and remaining stress-free.
One ~ Plan in advance
Whether you are buying gifts for loved ones or cooking for the family, it's important to plan ahead. Make a to-do list and plant to tackle one thing per day to help ease the stress.
Two ~ Mark important dates in your calendar
Highlight important dates, especially if tasks require multiple steps. If you are sending gifts to loved ones, make sure shipping cut-off dates are clearly marked, to ensure they arrive on time.
Three ~ Buy gift online
Eliminate the hassle of finding a parking spot by shopping from the couch in your cozies. And consider shipping packages directly to the doorstep of the recipient. It takes the task of gift wrapping off your to-do list, and many online retailers offer this service.
Four ~ Stay within budget
Set a budget and stick to it. At the end of the season you'll be proud of yourself, and will feel confident when you receive your credit card bill.
Five ~ Take a pause
In all the commotion that comes with the holidays, we sometimes forget to look after ourselves. Balance spending busy social time with friends and extended family with rest, relaxation, and quiet time spent at home.
Now you can sing, "Tis the season to be Zen"!
More The Mortgage Gal articles
- First-time home buyer? Nov 30
- Fixed or variable-rate? Nov 16
- The reverse mortgage Nov 2
- Renovations for rebates Oct 19
- Perfect (reno'd) home Oct 5
- Collateral mortgage Sep 28
- Turn home equity to income Sep 14
- Reverse mortgages Aug 17
- Mortgage policy changes? Aug 3
- Income from home equity Jul 20
- Increase property value Jul 6
- Renovation dreaming Jun 22