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Mortgage-Matters

Programs to save you money

This is a busy time of year, but it is also a good time to review your finances by knowing what resources, grants and rebates are available for new and current home owners.

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

BC Property Transfer Tax (PPT) First-Time Home Buyers 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 $525,000.

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 such as paying off debts or to pay closing costs.

First-Time Home Buyers’ Tax Credit (HBTC): Eligible individuals who bought a qualifying home in 2018 can claim the home buyers’ amount of $5,000 when filing their 2018 income tax return. For 2018 the maximum tax credit is $750.

BC Seniors’ Home Renovation Tax Credit:
Assists eligible seniors 65 plus 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 Green Home:
If you buy, build, or renovate for energy efficiency using CMHC-insured financing, you could receive a 15 per cent rebate for building a home to Energy Star standards or up to 25 per cent for building a home to R-2000 building standards.

BC 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. This program will provide up to $20,000 in financial assistance; either as a grant or a forgivable loan. Landlords are also eligible for this program.

BC Home Owner Grant:
Reduces property taxes for home owners with an assessed value up to $1,650,000. The basic grant is $570 and an additional grant of $200 to rural home owners. There is also an additional grant of $275 to seniors aged 65 plus and veterans of certain wars.

BC Property Tax Deferment Programs:
Qualifying home owners aged 55+ can defer some or all of your 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.

Heritage Grants Program:
Maintaining older homes can be costly, but preserving our heritage is important, so Kelowna provides grants to owners of buildings with a Heritage Designation a maximum of $12,500 per three-year period and buildings listed on the Kelowna Heritage Register a maximum of $7,500 per three-year period to help with the costs incurred in exterior conservation work.

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.



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Can't pay your mortgage?

Sometimes an unforeseen financial situation can happen and you might not be able to make your regular mortgage payment.

I can’t stress this enough — take immediate action at the first sign of distress and work together with a mortgage broker to find a solution to this difficulty.

The worst thing you can do is ignore it as open and early communication with your lender is the best action to take. Lenders get upset when you ignore them and are less likely to negotiate with you.

This one step will increase the chance of managing this difficult situation and early intervention is very important. We need to fully understand your financial situation in order to assist but there may be a solution.

Most Canadians don’t know what options are available. Did you know that some lenders will allow you to ‘skip-a-payment’ and this option might be available as part of your mortgage features.

If you ignore the situation too long you could find yourself facing foreclosure if you are in one of these situations:

  • You are about to miss a mortgage payment because you don’t have the funds to pay
  • You have missed one or two mortgage payments
  • You have received a notice or demand letter from your mortgage lender
  • Or you have been serviced a Petition for foreclosure

If any of this applies to you, this is a serious situation and you may be on your way to foreclosure.

The easiest thing to do is ignore any phone calls from your lender or the demand letter that they may have sent to you, but doing so is really the worst thing you can do and here are some of the consequences of ignoring the situation.

  • You won’t have any say in the court proceedings and they will go on without you
  • If the home is sold you will get little if any notice that you have to vacate the property
  • You may have less time to stay in your home than if you had appeared in court

You may have some options to solve this problem but speaking early to a mortgage broker is really your best course of action if you are unable redeem your mortgage by bringing your payments up-to-date along with any legal costs incurred by your lender.

Here are some ways that a mortgage broker can advise you:

  • Perhaps you can refinance to lower your monthly payments to keep you within your budget.
  • We can see if we can obtain a new mortgage with another lender and pay off your current lender
  • We can take a look and see if there is enough equity in your home to make selling it yourself worthwhile
  • Or if we can’t solve your problem, then going to court may be the best option

If you fall behind on your mortgage the interest and costs can accumulate very quickly and it is critical to seek assistance early before things get out of your control so please give me a call at 888-561-2679 for a confidential conversation or email me at [email protected].



Carrying high interest debt?

A recent report from Equifax Canada in October 2018 concluded that consumer debt is still on the rise in Canada.  

“Consumers will have tighter cash flows as interest rates climb further, which can lead to people not paying off their credit cards in full each month.

After a period of sustained economic growth, we’re moving back to a slow and steady pace. And finally, new mortgage volume has been negative over the last three quarters.

Add these together and we should begin to see upward movement in delinquencies.”

It’s unfortunate that the government has been focusing on controlling mortgage borrowing and home ownership in Canada while neglecting the impact of high interest credit card debt and the affect it is having on the financial health of Canadians.

Statistically, the amount owing is less on credit card debt than mortgage debt but the overall cost of borrowing is so much higher.

Making these large monthly payments restricts your cash flow while reducing opportunities for retirement planning and saving for the future.

Let’s take a quick look. If you aren’t paying off your credit card balance monthly, how much do you think you really paid for the big screen TV that you bought on sale after Christmas?

If you carry on only making the minimum monthly payment on the credit card after purchase, here’s what it could cost you.

If you paid $2,000 for that TV with an interest rate of 19.5 per cent on your credit card and you are just make the minimum monthly payments, it will take you more than 14 years to pay for your TV.

Yes! Fourteen years!

And it will cost you over $4,000!. (It could actually take longer and cost you more depending on the minimum payment requested by your credit card company and the interest rate being charged).

Buying this TV on credit is not a bargain.

There are dangers to borrowing to the max on your credit cards as it can leave you with very little wiggle room.

What happens if interest rates start to rise? All indications are that interest rates are on the rise moving forward into 2019.

The answer is that your minimum payment will just get bigger and bigger. And what happens if you lose your job?

How can you possibly keep making those minimum monthly payments?

If you are a homeowner, there are great possibilities for real savings by using the equity in your home as a debt consolidation tool.

The most attractive reason for consolidating debt into a mortgage is that there will definitely be savings simply by lowering the interest rate you are paying on your debt.

Another reason would be to lower your monthly payments.

This could free up cash flow to start investing and saving for retirement.

There could be some costs involved if you must break your current mortgage and there are many variables at play here:

  • interest rates
  • amortization
  • fees
  • penalties for your specific situation.

You may find the overall cost of borrowing to be higher or lower than your current situation. Always run through the math with a mortgage broker.

The benefits really depend on how the math works out and whether you are committed to changing your lifestyle to prevent charging up the balances on those credit cards again.

You will need to master a budget.

If you would like a no obligation review of your current situation, please give me a call.



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Time to lock in mortgage?

With the Bank of Canada raising its key interest rate again last week you may be wondering if you should now lock-in your variable rate mortgage.

There is lots of chatter in the media about the rate increasing again over the next year up to another four times, so you may have some concerns.

The first question you should ask yourself is why you chose a variable rate mortgage in the first place.

Was it because it had a lower rate than a fixed term mortgage or did you have a plan to take advantage of that lower interest rate?

Historically, a variable rate has been a better option by just comparing rates, but those rates can change.

Potentially and depending on whether you have a variable rate mortgage or an adjustable rate mortgage, more of your payment will be going toward interest rather than principal if your payment isn’t adjusting accordingly as rates increase.

Another important consideration with variable rate mortgages is that they have lower prepayment penalties generally than a fixed rate mortgage should you decide to break your mortgage early.

Statistics support that this happens more often than not.

Instead of trying to guess where rates are headed, consumers would do better to think about their own situation. They should evaluate their personal balance sheets and risk tolerance.

The decision of whether to go short (variable) or long (fixed) will depend on the consumers’ tolerance for risk as well as their ability to withstand increases in mortgage payments.

You need a plan with a variable rate mortgage. The best thing is to do a review with a mortgage professional to determine your personal tolerance to rate increases and determine a strategy for managing your mortgage to reduce your overall cost of borrowing.

Something to consider about locking in your mortgage is that not all lenders are going to offer you the very best fixed rates. You are also hedging your bet that at some point. your fixed rate is going to be lower than a variable rate mortgage.

No one can predict where rates are headed; even the experts get it wrong. You decision to lock-in to a fixed rate mortgage should not be based on what you read in the media.

If you are at your maximum purchasing power or you’re a worrywart, lock-in, forget about it, and enjoy life.

If you would like a no obligation review and financial analysis for your personal situation please let me know.

We can compare your current variable rate mortgage to a fixed term option and even compare it to another variable rate mortgage that might have a deeper discount.

That way you can make an informed decision as to whether locking in is the best option for you.



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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