Avoid becoming a victim of a "Tinder swindler"

Love scams on the increase

Mortgages and Tinder.

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 who are looking for their next mark.

In the old 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. The 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 when men have fallen prey to these scams pride prevents them from disclosing.

Over the last few 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 another, 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 were 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 none of the three are stupid women. They were trusting to a fault, and never thought for a minute their partners were anything other than the front 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.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Deciding the best way to go when renewing your mortgage

Mortgage renewal decisions

If your mortgage is coming up for renewal soon it’s a great idea to do some research before you sign on the dotted line and stick with your traditional lender and five-year term.

I don’t have a crystal ball, and even the most educated economists are unable to accurately predict what is coming our way interest rate wise. The popular consensus seems to be the rest of this year is going to continue to be bumpy, then early into next year, rates will start to trend down.

The challenge with this is the last year has shown us that it is impossible to accurately predict what’s coming. International conflict, supply chain issues and societal changes due to the pandemic are all impacting our rate environment.

There are differences in how lenders handle their upcoming renewals. Some are proactive, reaching out to their clients at least six months ahead of their renewal date. Others will email or mail out a renewal offer about 90 days ahead of the renewal date without ever calling their clients. Some wait until about a month before to reach out.

When I speak to my clients about their upcoming renewals, I generally look to see if their current lender is offering competitive rates. If I am able to (some lenders won’t work with brokers after the mortgage is initially advanced), I will connect with the current lender to see if we are able to negotiate a better rate for my clients.

The reason I try this first is that renewing with your current lender is usually pretty straightforward. You choose the term that you want and sign on the dotted line.

If there is a compelling reason to consider switching lenders I will research what is available and which mortgage might be the best fit.

What do I mean by a compelling reason?

From time to time, some lenders are far more competitive with their rate offerings than others. If my clients’ current lender is not matching rates that are available from different lenders that is one reason we would consider making a move.

If my clients are looking to access some of the equity in their property (refinance at renewal) I will again research to see which lender might be the best fit. Sometimes that is their current lender, and sometimes it means making a change.

Mortgage products change over time, and rates vary from lender to lender.

My recommendation is to connect with a mortgage specialist five to six months before your renewal date. That way you can explore options and find the one that is best for your situation.

It also gives you some lead time to address any issues that might affect your ability to renew or refinance your mortgage.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Finding a way to finance home renovations

Purchase plus improvements

In my last column, I wrote 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.

On Feb. 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 you may not be aware of is a “purchase plus improvements” mortgage. The short version is 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 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 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 five-year fixed rate of 4.69%). Adding the renovations funds in your payment would bring it to $2,452.19 per month. 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 has free admission this year—pop by and say hi.

If you’d like to talk about how a purchase plus improvements mortgage or how refinancing for renovations might be the right fit for you, I’ll be happy to answer your questions.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.

Using equity in your home to deal with debt

Consolidating debt

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 jumping 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.

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 who 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 more than 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. That, 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, you could refinance to a total of $400,000.

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 10 years ago for $400,000, depending on the amortization and payment schedule you chose, let’s say your mortgage balance is now $300,000. The current market value of your home is $600,000.00. That means, provided you qualify to carry the larger mortgage, you could refinance up to $480,000.

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.

This article is written by or on behalf of an outsourced columnist and does not necessarily reflect the views of Castanet.