Now is a good time to look at your finances

New year, new mortgage

We are off and running in the early days of 2025, so today’s column will be short and sweet.

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. Then 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 and 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) 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 continue to deal 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. Rates have come down about a full percentage point from this time last year.

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.

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

Dealing with bridge financing when selling your home and buying a new one

Mortgage timing

When clients are selling one home to buy another, realtors try their best to line up the sale date of the current home with the purchase date of the new home.

When clients want a few days, or even a few months, ahead of the sale of their current home to move from one home to another, they can look into bridge financing.

Depending on the lender you are working with, bridge financing can be very easy to arrange, or it may be the lender you are working with does not offer bridge financing so you need to arrange private bridge financing.

Before you agree to any dates with your realtor, it is important that you look into your options.

If you are working with a traditional bank or one of the monoline lenders, bridge financing is fairly simple to organize. Generally there is an administrative fee of approximately $250 and daily interest on the funds you borrow to bridge your down payment.

This year, I’ve had a couple of situations where bridge financing was not an option, so clients had to time their moves strategically.

When might bridge financing not be the right option?

• When your lender doesn’t offer bridge financing.

• When the cost of bridge financing through your current lender seems excessive.

• When the current home is located on First Nations land. (Most lenders will not offer bridge loans because of the terms of the lease agreements.)

• When the cost of arranging private bridge financing far exceeds the benefit of having a few days to move.

So, if you need a few days to empty your current home, what do you do? Over the years, several of my clients have used companies like Securite or Big Steel Box. They have a shipping container brought to their home a few days ahead of their sale date. The company will pick the container up once the home is emptied and store it for a few days, then bring it to the new home for possession day.

There is a bit of coordination required with this strategy and maybe a night or two in a hotel or staying with friends or family.

I did a cost benefit analysis with clients last week comparing using the shipping container versus arranging private bridge financing. In their case, they will save approximately $4,500 (using a container), even factoring in the hotel stay and eating out for a few days. For a few days of inconvenience I’d rather see those funds in their pockets.

I also helped clients arrange bridge financing through the monoline lender they are working with. In their case, it was the $250 fee and the interest for the week that will be about $650. In their case, the $1,000 investment will give them time to clean both homes and move their things over the course of a week rather than panic packing a moving truck the night before and exhausting themselves with the logistics.

When you are planning a move and considering have the sale and completion dates on different days, make sure you check with your mortgage professional before you sign off on a date change to your contract.

Thank you for your feedback and support throughout the year. Wishing you and your family warmth and happiness as we head into the new year!

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

Getting ahead of yourself when buying a home

Last minute mortgages

Do your homework. Be prepared. Make good decisions. Don’t gamble on an outcome and maybe, most importantly, don’t rush. These are lessons that can be applied to almost every aspect of our lives.

Last week. I jumped in to help another mortgage broker. A client of his wrote an offer on a new home priced at $1 million. 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 know where this is going. There was a plot twist though.

As it turned out, the other broker was unexpectedly away dealing, with a health emergency. The client’s original home had not yet sold and he had to complete the purchase on his new home by the end of the following week. We scrambled 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. He was fortunate he still qualified for the new mortgage, even with the current home not sold.

The client would, however, cover some unanticipated expenses. Between fees for the private loan and additional legal fees the client will be paying more than $10,000 at closing on top of the expected closing costs for the purchase. As well, the monthly payment on the private loan will be approximately $4,500 per month, so we are all hoping an offer comes in soon.

The thing about houses is more are built all the time, maybe not everyday but certainly new homes come onto the market regularly. It’s 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.

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

Dealing with mortgage conditions

Mortgage paperwork