What is a Purchase Plus Improvement Mortgage?


What is a Purchase Plus Improvement Mortgage?

 
Purchase Plus Improvement MortgageHave you ever been in this situation? You have been searching for a new home and you have finally found one that you like. It’s in your approved price range and all it needs is a few improvements. Some new laminate flooring, update the kitchen and bathroom, a coat of paint and it will be good as new.

The only problem is that once you calculate the total amount you’ll need for the down payment, taxes, and legal fees, you realize you won’t have enough money for the renovations. Luckily, there is a mortgage for that!

Whether it’s a new kitchen, bathroom or windows, this mortgage provides you with the flexibility
to purchase a home and include the cost of the
renovations in the price.

It’s called a Purchase Plus Improvement Mortgage

 
And I can help you get approved for one!

The Purchase Plus Improvement Mortgage is a great option for many people who find themselves in this situation. They are able to complete the upgrades right away and live in the home they really want.

Guidelines

 
The guidelines for the Purchase Plus Improvements Mortgage states that:

  • The cost of the home improvements must not exceed 10% of the purchase price or $40,000
  • The money must be used for improvements or upgrades, not repairs like damage or structural issues
  • You will needs to get a quote for the cost of the improvements prior to subject removal
  • You cannot change the scope of the work after it has been approved
  • An inspection report from an appraiser is required when the work is complete

This mortgage is available at the best rates and may help to make it easier for you to decide which home is best for you and your family.

If you think this type of mortgage would be perfect for yourself or someone you know, then contact Milka Lukacevic from The Mortgage Centre TMK Team, today!

What is a Gifted Down Payment?


What is a Gifted Down Payment?

Mortgage Information from your Trusted Mortgage Knowledge Professionalt

The high real estate prices in the Greater Vancouver Area and new mortgage rules designed to crackdown on risky lending have made it harder than ever for first-time home buyers to get into the market. The new Stress Test that came into effect in early 2018 means that many first-time home buyers who were previously approved for a high-ratio mortgage are now completely shut out of the market.

Desperate to move out of their parent’s homes and get into the housing market, cash-strapped millennials are accepting financial help from their parents in the form of gifted down payments. Did you know that financial gifts from parents have doubled since 2000? They are up from 7% in 2000 to 15% in 2016. At the same time, young adults still living at home with their parents is up 13.3% since 2001, and young adults living with a spouse or partner is down 14.6%.

If you’re in the fortunate position to help your children buy a home (and help yourself reclaim your home), you have a few options. One of them being to provide a gifted down payment.

What is a gifted down payment?

 
A gifted down payment, also known as a living inheritance, is a financial gift from the buyer’s immediate family member that will go towards the down payment. All that is required for documentation is a signed Gift Letter from the family member which states that the money does not have to be re-paid, and a snapshot of the child’s bank account showing that the gifted funds have been transferred.

Gifting money makes sense for tax reasons

 
As a baby boomer, you’re in the middle of an unprecedented wealth transfer of cash, property, and investment holdings. If you’re in the position to not need the money coming to you, then that windfall will just result in a big tax hit. However, if you were to gift it to your children, it is no longer a tax burden for you or them as there is no gift tax in Canada. In the long term, your children will pay less in estate tax when you pass away.

Of course, the best part of gifting your children money to buy a home will be when you see the fruits of your labour – a better start in life for your children and their young family.

Do you know a first-time home buyer looking to get into the local Port Coquitlam real estate market? Refer them to Milka Lukacevic of The Mortgage Centre TMK Team for mortgage pre-approval and real estate market guidance.

Types of Mortgages


Types of Mortgages

Types of Mortgages from your Trusted Mortgage Knowledge Professional

Purchasing a new home can be a stressful experience. On top of that, there are enough mortgage options in the marketplace to make your head spin. When it comes time, how will you know which one is right for you? Here are the most common mortgage options that you will come across, and why they may (or may not) be right for you.

Conventional Mortgage
As long as you have a 20 percent down payment, you will be able to apply for a conventional mortgage. These have a low loan-to-value ratio, meaning that the amount of the loan is low, relative to the value of the property.

High-Ratio Mortgages
This is a mortgage option where the borrower is contributing a down payment of less than 20 percent. These mortgages must have Mortgage Default Insurance through the Canada Mortgage and Housing Corporation (CMHC).

Open Mortgage
An open mortgage allows you the flexibility to make a lump sum prepayment or accelerated payments at any time before the end of the amortization period, without penalty. Although this option has greater flexibility, it tends to have a slightly higher interest rate.

Variable Rate Mortgage
These mortgages are initially set up like a standard loan, based on the current interest rate. The mortgage is reviewed at set intervals and if the prime rate has changed, either changing the size of the payment or the length of the amortization period, the lender will then alter the repayment plan.

Capped Rate Mortgage
This mortgage option offers a variable rate that is capped by the lending institution. Rates may fluctuate in the market, but the lender will offer a guarantee that you will never pay an interest rate above their cap.

Fixed Rate Mortgage
A fixed rate mortgage features an interest rate that is fixed for a set period of time. It’s easier to manage a budget as your payments won’t change during the term. Not only does this bring peace of mind, but you will also benefit from a lower rate than that of a variable rate mortgage.

Convertible Mortgage
With this option, you can move from a variable to a fixed rate, or a shorter to a longer term, at any time without a penalty. This is a good option to consider if you want to stick with a variable rate for the moment, but expect rates to rise in the near future.

Reverse Mortgage
A reverse mortgage provides you with the opportunity to transfer the equity in your home into cash value, if you have a need to do so. You will not have to worry about selling or vacating your home in the process. It has been touted as a good option for home owners who are nearing retirement and who have considerable equity in their home.

So, as you can see, there are many mortgage options available to you. If you’re feeling overwhelmed by all of this information, set up an appointment to discuss all of these options and more with a Trusted Mortgage Knowledge Professional.

Contact Milka Lukacevic of the Mortgage Centre TMK Team, today!

When Should You Begin the Mortgage Renewal Process?


When Should You Begin the Mortgage Renewal Process?

The mortgage renewal process from your Trusted Mortgage Knowledge Professional

The mortgage renewal process is something that everyone with a mortgage needs to be fully aware of. If you have a mortgage agreement, then you are required to receive a renewal statement from your lender at least 21 days before the end of your current mortgage term.

Did you know that many people simply sign on the dotted line, without shopping around for a better rate? A Manulife survey found that almost two out of three Canadians surveyed stayed with their current provider and didn’t even try to negotiate.

I understand that people are busy; however, it is important to understand how much a percentage point can affect the total amount you pay over the lifetime of your term. Just a few tenths of a percentage point could mean thousands of dollars less in your pocket.

If you are renewing your mortgage, here are a few things to keep in mind before you sign the renewal document.

When should you begin shopping around?

 
It is never a good idea to wait until you receive the renewal notice from your lender to begin shopping around for a better rate. The banks send these notices so close to the renewal date to deter people from shopping around. However, being proactive can help you to save a significant amount of money. I recommend beginning to shop around four months prior to your renewal.

The posted rate isn’t necessarily the best rate

 
Always think of the posted rate as the opening offer in a negotiation. Banks often use the posted rate to provide a value proposition to their clients. It is a better idea to shop around. If you only get rates from one financial institution, you may be paying a premium compared to other available rates in the market. A trusted mortgage knowledge professional will be able to help you negotiate with your current lender. It is important to do some legwork with a mortgage broker to ensure that you are getting access to the lowest interest rate possible.

Bank or mortgage broker?

 
A broker is an independent licensed mortgage specialist who negotiates with a variety of lenders to get their clients the best possible rate. Mortgage brokers can offer a better rate than the bank due to their access to multiple lenders. A Bank of Canada survey found that using a mortgage broker resulted in many Canadian’s getting a lower rate than what was offered by their bank.

Review the terms before you sign

 
As with any agreement, always read the small print before you sign. Make sure the mortgage product you choose offers other options such as the ability to pay extra on your mortgage and clearly defines any penalties, should you decide to break your mortgage agreement early.

Automatic Renewal

 
If you don’t take the time to be proactive, then your mortgage will be automatically renewed after the 21-day period passes.

If you have any questions or if you want to begin shopping around well before your renewal notice arrives, get in contact with your local Port Coquitlam Trusted Mortgage Knowledge Professional, Milka Lukacevic of the TMK team.

Bank or Mortgage Broker?


Bank or Mortgage Broker?
The benefits or your own personal mortgage consultant

The benefits of your own personal mortgage consultant from your Trusted Mortgage Knowledge Professional

So, you’re thinking about buying a home. Should you get your mortgage through a local Port Coquitlam mortgage broker or your bank? In the past, it used to be that if you wanted to do something substantial, like buy a home, your best course of action was to turn to your bank. While this remains an option, banks are no longer the sole option available to Canadians. A local, trusted mortgage broker may be a better choice when it comes to buying that new home.

 

What is a mortgage broker?

 
A mortgage broker is an independent licensed mortgage specialist. When using a mortgage broker, essentially, you are hiring someone to act on your behalf. It is important to remember that mortgage brokers are not actual lenders themselves. Rather, they work with a variety of lenders and mortgage rates.

One of the main benefits of using a mortgage broker is that they have access to, and knowledge of the entire mortgage market. They understand the market, follow the trends, and know which institutions offer which mortgage products. Mortgage brokers can also access exclusive deals that are not available to the open market and can negotiate a better interest rate or lower application fees from the lender.

Mortgage brokers will assist you in the application process, from pre-approval to home appraisal. Most importantly, they can save you time. An experienced broker can identify the most appropriate lender for your specific circumstances and they will know which mortgage will be the most appropriate. To help further relieve your stress, they also handle the hassle of paperwork and interaction and negotiation with lenders.

Advantages of using a mortgage broker:

  • They can meet with you on your time
  • You will be able to see all of your options
  • You are guaranteed to get a lower rate
  • The mortgage broker will do all of the negotiating for you

 

Applying for a Mortgage from your Bank

 
When you set up a meeting with one of Canada’s major banks for a mortgage, they will usually have you sit down with a loan officer. One of the main disadvantages of using your bank is that they can only access their own rates and products, even if there are better rates available in the market. As a result, you will always receive a higher interest rate from your bank.

 

Finding the right mortgage product for you

 
For most of us, our mortgage will be the biggest financial decision we ever make. Working with a trusted Port Coquitlam mortgage broker is highly recommended.

It is important to understand how much a percentage point here and there can affect the total amount you pay over the lifetime of your mortgage. Just a few tenths of a percentage point could mean thousands of dollars less in your pocket. Understanding how to save yourself a percentage point could mean additional family trips, a maxed our RESP for your children or speeding up that retirement date by a couple of years.

The way we see it, the banks just can’t beat what we have to offer! If you want to experience the difference of a mortgage broker, set up a meeting with your local Port Coquitlam Trusted Mortgage Knowledge Professional, Milka Lukacevic of the TMK Team.

Purchasing a Rental Property


Purchasing a Rental Property:
What you need to know before becoming a landlord

What you need to know before becoming a landlord from your Trusted Mortgage Knowledge Professional

 
Rental PropertyPurchasing a rental property and becoming a landlord can be a great way to generate extra income and it has the potential for capital growth.

Are you considering purchasing a rental property? In this blog post, we will be discussing everything you will need to know before becoming a landlord.

Real Estate Investment Basics

 
First things first: can you afford this kind of commitment? You will need to ensure you have a steady income and a sufficient savings fund. All of your high-interest debts will need to be paid off and you should be on track to meeting your retirement savings goals.

After carefully considering your overall financial picture, you will want to map out all of the costs associated with purchasing a rental property. It is important to factor in:

  • Down payment
  • Property tax
  • Monthly mortgage bill
  • Repairs and maintenance

Purchasing a property as an investor rather than an owner-occupant typically requires a larger down payment. You will need to have a 20-25% down payment available to apply to the purchase of the rental property.

As a homeowner with an existing mortgage, you will need to apply for a new mortgage on the rental property. An investment property mortgage requires specialty financing. This customized mortgage loan is slightly different from a traditional second mortgage. An experienced mortgage broker can help you find the right mortgage for your situation, and at a great rate.

Will you be able to afford the mortgage on the rental property if you are without a tenant for a month or two? Ensure you have enough saved to cover your two mortgage payments, recurring expenses, and routine maintenance and repairs.

 

Buying a Rental Property

 
When it comes to purchasing a rental property, it helps to find a realtor who’s interested in establishing a relationship, owns rental properties themselves, and specializes in the buying and selling of investment properties. Your local Port Coquitlam realtor can give you good advice about the neighbourhoods that are popular with renters in the community.

 

Finding the Right Tenants

 
Another responsibility of a landlord is finding and evaluating tenants. Taking the time to evaluate potential clients will make a big difference on your experience as a landlord. Your goal is likely to find the perfect tenants. You know the kind? The renters who take immaculate care of their home. The ones who decorate for the holidays and take pride in their rental as if it was their own home. If you find renters like this, do everything you can to hold on to them. These kinds of tenants tend to require fewer repairs and will leave far less wear and tear behind when they eventually move out.

Another option is to use a property management company. They will likely use a professional tenant screening service to check credit reports, references, and perform a criminal background check on perspective tenants.

The extra work upfront is worth it in the long run. If you’re interested in obtaining a rental property mortgage, contact your local Port Coquitlam Trusted Mortgage Knowledge Professional, Milka Lukacevic of the Mortgage Centre TMK Team.

Tips to Pay Off Your Mortgage Faster


Tips to Pay Off Your Mortgage Faster

 
Mortgage Tips from your Trusted Mortgage Knowledge Professional

 
MortgagePaying down your mortgage faster is one of those suggestions that financial advisors love to make to their clients. And while many Canadian’s dream about the financial freedom of being completely debt-free, most are unaware of the simple strategies they can utilize to shed years off their mortgage.

In this blog post, I will highlight four strategies you can implement into your life to help pay down your mortgage faster.

Tip 1: Accelerated Bi-Weekly Payments

 
Are you currently making monthly payments 12 times per year? Instead, try speeding up the process with an accelerated bi-weekly payment plan. With this plan, you end up paying 26 bi-weekly payments per year. So in effect, you are paying the equivalent of 13 payments per year. Prior to setting up accelerated bi-weekly payments, confirm that there are no pre-payment penalties.

Tip 2: Round Up Mortgage Payments

 
A pain-free way to help your debt disappear faster is to round up your payments. For example, if your accelerated bi-weekly payments are $848, consider rounding the payment up to $900. The additional $52 will make a significant difference over time, and chances are, you will barely notice a difference in your monthly budget.

Tip 3: Make a Lump Sum Anniversary Payment

 
Most closed mortgages will allow borrowers to make an extra payment each year. This additional payment can be 10%, 15% or 20% of the original principal in each calendar year, without penalty.

Tip 4: Stay Informed

 
So you’ve purchased a house, have a mortgage and have begun making monthly payments. At this stage, it can be easy to fall into a routine as the payments come out of your accounts automatically. Don’t fall into this routine. As a homeowner, you need to stay up-to-date with interest rate changes and the new options available to you.

 
While paying off your debt early will result in less interest paid over the lifetime of your loan, it is not always the best option for every homeowner. If you fall into one of these three categories, then the interest you would save on your mortgage would not be as beneficial to you as addressing your other financial issues first.

  • High interest debt on credit cards
  • No emergency fund savings
  • No savings for retirement

It is very easy to virtually play around with the various payment scenarios available to you. Most financial institutions, banks, and brokers have online mortgage calculators. If you are using an online calculator, make sure it is from a Canadian source. American mortgage calculators are calculated differently and will provide you with inaccurate information.

Armed with this information, I hope these tips will help you pay off your debt sooner. If you have any questions, feel free to contact your local Port Coquitlam Trusted Mortgage Knowledge Professional, Milka Lukacevic of The TMK Team.

Self-Employed Mortgage Tips


Self-Employed Mortgage Tips

Self-Employed Mortgage tips from your Trusted Mortgage Knowledge Professional

Self-employed mortgageAccording to Statistics Canada, just over 2.7 million Canadians declared themselves as self-employed in 2016.

As a large, growing section of the population is working for themselves, the mortgage banks in British Columbia are starting to take notice. Many have begun introducing Business for Self-Employed mortgage programs to help make the application process more straightforward.

While these options are a step in the right direction, there is no such thing as a self-employed mortgage. Rather, you are going to get a normal mortgage and you will have to jump through more hoops to get it.

In this blog post, we will discuss what you will need in order to obtain a mortgage.

 

What do you need to get a mortgage?

 
As someone who is self-employed, you will need to prove your income to any mortgage lender you apply to. Most lenders will want to see at least 2-3 years of financial statements or tax returns. The more information you can show, the better. You will need:

  • Proof that you are the principal owner of the business
  • 2-3 years of financial statements for your business
  • An accountant
  • A good credit history
  • A proven track record of consistent work
  • A sufficient down payment

 

How do you prove your income?

 
Being accountable and organized is key for any self-employed or freelance worker. In order to prove your income, you will need at least 2-3 years of accounts. It is recommended to get these put together by a chartered accountant.

There are a couple of common issues that may come up against someone who is self-employed and applying for a mortgage. Previously, you and your accountant may have been legally reducing your taxable income as a way to pay less tax. Although this will have saved you money then, it could end up costing you now. When applying for a mortgage, it is always better to be able to show the largest income possible.

 

Finding a mortgage

 
An experienced mortgage broker is essential when applying for a mortgage. They will be knowledgeable about which lenders are open to lending to self-employed and most importantly, who will be able to offer you the best rate.

When it comes to mortgages, there is no one-size-fits-all solution. If you’re unsure how to navigate through the self-employed mortgage options out there, talk to a Trusted Mortgage Knowledge Professional. Contact Milka Lukacevic of The Mortgage Centre TMK team, your local Tri-Cities Mortgage Broker.

When Should You Obtain a Mortgage Pre-Approval?


When Should You Obtain a Mortgage Pre-Approval?

Mortgage Pre-Approval from your Trusted Mortgage Knowledge Professional

As many first-time home buyers know, one of the most important steps during the home buying process is obtaining financing. But what they may not know is when they should get a mortgage pre-approval. The answer is simple – you should get a mortgage pre-approval prior to beginning your house hunt.

To find out why it is so important and to learn the difference between mortgage pre-approval and pre-qualification, continue reading.

Pre-Approval vs. Pre-Qualification

What is a mortgage pre-approval? A mortgage pre-approval is the process in which a lender gives their written commitment to a potential borrower to loan money. A pre-approval determines the house price that the borrower can afford, which allows them to budget for the home purchase and associated costs.
In comparison, a mortgage pre-qualification is simply a prediction of the amount a person will be able to borrow. In many cases, a pre-qualification is only as good as the piece of paper it is written on.

When Should You Obtain A Mortgage Pre-Approval?

Before you begin your house search, you should get mortgage pre-approval. Many buyers do not understand why this is important. Below are several reasons you will be glad you obtained a pre-approval for a mortgage before beginning your house hunt.

Correct Potential Credit Problems

It is not unusual for a potential buyer to not know what their credit score is – especially first time home buyers. If there is an error affecting your credit score, the sooner you know about it, the better. The process to get errors removed and your credit score re-adjusted can take a couple of months.

Eliminate Disappointment

Another important reason why a pre-approval should be obtained prior to looking at houses is to eliminate disappointment. Unfortunately, there are many real estate agents who show their buyers homes, even though they have no clue whether the buyer can afford the home or not. This can be avoided by getting a mortgage pre-approval prior to heading out with a realtor and looking at potential homes.

Understanding the Costs

There are many costs associated with buying a home – some that you may not have even thought about. It’s not quite as simple as a 5-10% down payment. Typically when you buy a home, you have to pay a full year’s real estate tax, an entire year’s homeowners insurance, and other miscellaneous expenses.

Multiple Offers

In today’s local, real estate market, there is a strong possibility that a home up for sale will receive multiple offers. Did you know that a buyer who is pre-approved for a mortgage will have the advantage in a multiple offer situation?

When it comes to getting pre-approved for a mortgage, the sooner you meet with a Trusted Mortgage Knowledge Professional, the better. Contact Milka Lukacevic of The Mortgage Centre TMK Team, your local Tri-Cities Mortgage Broker, to set up an appointment today!

Refinancing Your Mortgage to Pay Off High Consumer Debt


Refinancing Your Mortgage to Pay Off High Consumer Debt

 

Refinancing your mortgage to pay off high consumer debt from your Trusted Mortgage Knowledge Professional

RefinancingDebt is a major problem for many Canadian households – especially for those who have credit card debt in addition to mortgages, auto loans, and student loans. Are you drowning in credit card debt and sitting on equity in your home? If so, have you considered refinancing your mortgage?

There are steps you can take to lower your high consumer debt. For homeowners, one of them is to refinance your mortgage to help pay off your high consumer debt. Refinancing your mortgage can be beneficial for your financial future. That being said, deciding whether it makes sense to refinance your mortgage will depend on your individual situation.

 

Should you be refinancing your mortgage?

 

Before refinancing a mortgage, consider the following:

  • Why do you want to refinance?
  • What will the money be used for?
  • Will it have a positive or negative effect on your net worth?
  • What effect will it have on your long-term financial goals?
  • Do you have a mortgage with a prepayment penalty? If so, how much is the penalty to refinance?

 

How does it work?

 

You’ve probably noticed how low mortgage rates have been in the past few years. This is great for homeowners who want to lower their monthly mortgage payment by refinancing to a lower rate. But it can also help you reduce and eliminate high-interest credit card debt.

Almost 10 percentage points separate the average 30-year mortgage rate from the average credit card interest rate. This is because credit card debt is perceived as riskier than mortgage debt, thus, credit card companies charge interest accordingly.

There are many factors to consider when thinking about refinancing a mortgage to pay off high consumer debt. When it is done correctly, a refinance can save you money on long-term interest. If you are considering your options, talk with a Trusted Mortgage Knowledge Professional today – contact your local Port Coquitlam Mortgage Broker Milka Lukacevic of The Mortgage Centre TMK Team.