Is your mortgage coming up for renewal? Do you know about all the incredible options renewing your mortgage can afford you? If not, we have all the details here on how to make your mortgage renewal work for you as we start to think about 2024.

Get a Better Rate

Are you aware that when you receive notice that your mortgage is coming up for renewal, this is the best time to shop around for a more favourable interest rate? At renewal time, it is easy to shop around or switch lenders for a preferable interest rate as it doesn’t break your mortgage. With interest rates expected to come down as we move into the New Year, taking some time to reach out to me and shopping the market could help save you money!

Consolidate Debt

Renewal time is also a great time to take a look at your existing debt and determine whether or not you want to consolidate it onto your mortgage. For some, this means consolidating your holiday credit card debt into your mortgage, for others it could be car loans, education, etc. Regardless of the type of debt, consolidating into your mortgage allows for one easy payment instead of juggling multiple loans. Plus, in most cases, the interest rate on your mortgage is less than you would be charged with credit card companies.

Start on that Reno

Do you have projects around the house you’ve been dying to get started on? Renewal time is a great opportunity for you to look at utilizing some of your home equity to help with home renovations so you can finally have that dream kitchen, updated bathroom, OR you can even utilize it to purchase a vacation property!

Change Your Mortgage Product

Are you not happy with your existing mortgage product? Perhaps you’re finding that your variable-rate or adjustable-rate mortgages are fluctuating too much and you want to lock in! Alternatively, maybe you want to switch to variable as interest rates start to level out. You can also utilize your renewal time to take advantage of a different payment or amortization schedule to help pay off your mortgage faster!

Change Your Lender

Not happy with your current lender? Perhaps a different bank has a lower rate or a mortgage product with terms that better suit your needs. A mortgage renewal is a great time to switch to a different bank or credit union to ensure that you are getting the value you want out of your mortgage if you are finding that your needs are not currently being met.

Regardless of how you feel about your current mortgage and what changes you may want to make, if your mortgage is coming up for renewal or is ready for renewal, please don’t hesitate to reach out today! I’d be happy to discuss your situation and review any changes that would be beneficial for you to reach your goals; from shopping for new rates or utilizing that equity! Plus, I can help you find the best option for where you are at in your life now and help you to ensure future financial success.

There are several taxation and investment growth benefits to the Smith Maneouver.

What is the Smith Manoeuver? ™ 

• It is a legal tax strategy that effectively makes interest on a residential mortgage tax-deductible in Canada.
• The strategy has a remarkable snowball effect that generates large and growing annual tax returns, enables the homeowner to knock years off their life of a non-deductible mortgage, and builds an impressive financial portfolio at the same time. 
• The Smith Manoeuver is not an overly complicated financial strategy but there are a number of moving parts.  Educate yourself from the source – www.smithmanoeuver.com

The Basics

• By turning your mortgage into an ‘investment loan’ you can claim the interest that you pay on your mortgage.  This is done by first getting a readvanceable mortgage in Canada.
• Readvanceable mortgages combine a mortgage with a home equity line of credit.  As you pay off your mortgage the credit limit of your HELOC increases.
• You then borrow from your HELCO to invest.  Since your HELCO is now an investment loan, you can claim the interest that you pay as a deduction against your income.  You can then use the extra tax savings to pay your mortgage, which will allow you to borrow more money from the HELCO to invest.

Are you dreaming about owning a rental property and making some extra income each month? Before diving into becoming a landlord, there are some things you should know from the advantages and disadvantages to some tips when it comes to buying a rental property.

Advantages of Owning a Rental Property

If you’re looking to purchase a property for rental and become a landlord, you are likely already aware of some of these advantages, but just in case, some benefits to this include:

• Earning additional regularly monthly income
• Allows you to continue to build home equity in the property(s) that you rent
• Ability to deduct certain items from your gross rental income such as mortgage interest, property taxes, insurance, maintenance costs, property management fees and utilities.

Disadvantages of Owning a Rental Property

As with any investment, there are also some disadvantages to owning a rental property, which are important to consider before you make the leap. These can include:

• Responsibility of maintaining the rental property and managing your tenant(s)
• Rental income is taxable and must be included on your income tax. Depending on the value of the extra income, it may push you into a higher tax bracket.
• Unexpected expenses and issues may crop up over time. It is ideal to budget 2% of the purchase price of your property for potential repairs. You’ll also want to keep some money aside should your tenant leave and you need to cover a few months to find a new tenant.
• If you choose to sell the rental property in the future, it will be subject to capital gains tax.

What to Know BEFORE You Buy

Before getting started, it is important to calculate the cost of your investment (purchase price and closing costs), as well as consider maintenance amounts (approximately 1% of the property value for the year) and compare to current rental prices to be sure it is a profitable investment before purchasing. In addition, note the following:

• The minimum down payment required is 20% of the purchase price, and the funds must come from your own savings; you cannot use a gift from someone else. Another option is to utilize existing equity in your primary residence and refinance for the cash to purchase your rental or investment property. Be sure to factor in funds for closing costs, potential repairs and maintenance in your amount.
• Only a portion of the rental income can be used to qualify and determine how much you can afford to borrow. Some lenders will only allow you to use 50% of the income added to yours, while other lenders may allow up to 80% of the rental income and subtract your expenses.
• Interest rates usually have a premium when the mortgage is for a rental property versus a mortgage for a home someone intends on living in. The premium can be anywhere from 0.10% to 0.20% on a regular 5-year fixed rate.

Final Tips on Becoming a Landlord

If you’ve decided to move forward with getting a rental property and becoming a landlord, here are some tips to consider:

• Don’t forget about insurance! Ensure you have proper coverage for a rental situation and to cover any unforeseen events.
• Educate yourself on what it means to be a landlord in your province from tenant laws to rental responsibilities.
• Do your research on rental rates and locations before you choose to buy so that you are aware of where the market is at when it comes to potential earning power.
• Choose the right mortgage for your rental property. Your mortgage broker can help you with this!
• If you’re looking to run multiple rental properties, consider hiring a property manager who can be a go-between with you and the tenants.

With the right purchase price and rental costs per month, a rental property can be a great way to supplement income. If you’re looking to purchase an investment property, be sure to reach out to discuss your options and understand what is required.

Consider this scenario:   You are living with family and want to invest in an investment property, and will not occupy property.  Does that mean you forgo your First Time Home Buyer privilege’s when you do purchase your first primary residence in the future?

The short answer: Purchasing an income property will not prevent you from taking advantage of first-time home buyer programs  in the future.

Here is the definition of a first-time home buyer, taken from the CRA website:

“You are considered a first-time home buyer if, in the four-year period (prior to a home purchase), you did not occupy a home that you owned.”

In this scenario, If the buyer will not be living at the income property, it will not be considered their first home.

Whether you are the borrower who needs a co-signer or someone has asked you to co-sign for them in securing a mortgage approval, you should read this article to fully understand all of the implications. The mortgage landscape has changed a lot over the last couple of years and as a number of new mortgage rules have come into effect, it’s not as easy to qualify for a mortgage as it was 5-years ago.

What is a co-signer?

There are a variety of reasons an applicant may need the assistance of a Co-Signer for a mortgage application. Perhaps a borrower has weak credit, or their income does not support the mortgage amount they have applied for, a co-signer may be requested. A co-signer is an additional borrower put onto the mortgage application in order to add strength to the approval of the mortgage financing. The idea being, the stronger the application, the more appealing it is for a potential lender to approve the financing. You can have more than one co-signer on an application and an example of this is two parents co-signing for their child who is buying their first home. Keep in mind the purpose of a co-signer is to improve the odds of a mortgage approval, so a borrower with poor credit history, or limited / no income, would not

make a good co-signer in this situation. In addition to a co-signer going on the mortgage (the debt) they will also go on the accompanying property land title (the asset).

What is a strong co-signer?

The financial profile of a suitable co-signer will be dependent on why a co-signer is required. If the main borrower’s credit is weak, the lender will be looking for a co-signer who has a strong credit history, though if the primary borrower’s qualifying income is hard to prove, the co-signer will have to have a strong reliable income source with minimal debt. A suitable co-signer has to look good where the main borrower doesn’t.

Difference between a co-signer and guarantor

A few notable mortgage terms to differentiate between are a co-borrower, co-signer, and guarantor.

 A co-borrower is just another applicant, such as the spouse or siblings buying a house together. All borrowers are qualifying together and all will likely occupy the subject property. Whereas a co- signer is usually brought on to add strength to a mortgage application where the main borrower lacks and it’s not unusual for the co-signer to occupy a different property.

A guarantor is not as common as a co-signer as future liabilities and implications for a guarantor can be quite different than that of a co-signer depending on the specific transaction. A guarantor would personally guarantee the mortgage repayment in the event the primary borrower does not pay, however, a notable difference with a guarantor is that a guarantor will only go on the mortgage (the debt) and not on the title of the property (asset).

How the co-signer is affected

As a co-signer on a mortgage, you are now 100% responsible for that debt even if the primary borrower makes all of the payments from their own bank account. In the case of a mortgage loan, this not only applies to the principal and interest payments, but also to the property taxes too and condo fees if applicable. Basically, if the primary borrower doesn’t pay, the lender will be calling you to make the payments. Further to that, the lender often doesn’t notify you, the co-signer, of any delinquent payments until the loan is already significantly behind and has already negatively affected your credit rating which could affect your future borrowing potential. The co-signer also needs to be aware ALL of the costs associated with this new home as mentioned above will now have to be disclosed on any future credit applications you enter into which could impact on how much you can now borrow.

Removing a co-signer

The primary borrower cannot make any changes to the mortgage without the consent of the co-signer and approval from the lender. It is important to confirm the lender’s guidelines and requirements on removing a co-signer at the initial stage of acquiring the home.  ( These will all differ from lender to lender.)  

1. Don’t apply for new credit 

It may seem natural to apply for a credit card at a home improvement store or a furniture store when you are bout to become a homeowner, but applying for credit can lower your credit score. Not only will you lose a few points because of a credit inquiry, but if you are approved for new credit, a lender may worry that you will spend up to your new credit limit and then default on your loan. 

2. Don’t close any credit accounts 

You may be feeling that this is a good time to get your financial house in order by closing unused credit accounts or transferring your debt to a new credit card with a zero-interest balance transfer offer. While that’s a smart move financially, it’s a bad one for your credit score because you lose points when you have a higher usage of debt compared to your limit on one credit card and to your overall credit availability. Wait until your closing is complete before you make these changes. 

3. Don’t move your money around  without a paper trail 

Your lender will need the most recent bank statements before you go to settlement, so if you have any unusual deposits you will need to provide complete documentation of where the money came from.  If possible, it’s best to move the cash you will need for your home purchase into one account before you apply for a mortgage. If not, make sure you have complete and accurate records readily available. 

4. Don’t increase your debts 

In addition to your credit score, your debt-to-income ratio is extremely important to a loan approval. If you take on more debt you could be in danger of going above the maximum acceptable debt-to-income ratio.

5. Don’t skip, or make late payments One of the most important elements of your credit score is your history of on-time, in-full payments, so don’t get so caught up in your move that you forget to keep up with paying basic bills. 

6. Don’t buy a car 

You may be feeling that a new car would be a nice addition to the driveway of your new home. Resist that feeling. Even if you can easily afford a new car, the depletion of your savings or the addition of a new car loan could derail your mortgage application. Wait until after you have moved to switch to a new car. 

7. Don’t change jobs if you can help it While a job change could mean a raise or a path to a better future, it could also delay your settlement.  Your lender needs to verify employment and will need pay stubs to prove your new income before your loan can go to settlement. 

8. Don’t spend your savings 

You’ll need cash on hand at the settlement for your down payment and closing costs and your lender may even verify your cash reserves one more time, so make sure the funds stay in place.

In other words, no matter how hard it is at this exciting time, it’s better to do nothing  than to do anything. Give me a call today to get started on your home buying journey!

Advice for Single Homebuyers.

Buying a home is an exciting experience for anyone, and even more of a milestone when you’re doing it solo, but it can be a little different when you’re purchasing on your own. While it can be easier to tailor your mortgage and home search to exactly your needs, it can be somewhat more stressful handling the purchase of a home on your own… fortunately, that’s where a mortgage expert can help! They assist with your mortgage application, pre-approvals and final financing to make the entire mortgage process much smoother.

In addition to using a mortgage expert and having a trusted realtor, here are some other tips that can help improve your homebuying experience:

1. Be Aware of Your Financial History

Understanding your credit score and your financial history can help to improve your qualification potential. If your credit score is a little lower than it should be, or lower than you’d like for what you are trying to qualify for, you can take steps to improve this prior to seeking a mortgage and get better results.

2. Ramp Up Your Savings

Of course, while a mortgage will cover a large chunk of your home purchase, you are also required to have a down payment. In addition, you need to consider closing costs (1.5-4%) of the purchase price, as well as ongoing maintenance and costs for your new home (repairs, utilities, property taxes). It is important to determine your budget so you are aware of what you can afford monthly.  BUT before you shop is also a great time to start ramping up your savings account so you can put more down and potentially reduce the overall mortgage.

3. Study The Marketplace

One of the most important aspects of homeownership is understanding what you can afford and where you want to live. These two key components can help you to determine your budget and the areas that you should be looking for a home, as well as what type of home size, amenities, etc. Understanding what is available can provide you with more information and help you fine-tune your shopping list.

4. Be Flexible When Possible and Firm When Not

While shopping for a home on your own can be much easier as you’re only concerned about your own needs, it is still important to be flexible. While it is easier to find a home that fits just ‘you’, keeping your options open can also have its benefits. Of course, if there are things you cannot live without or a location you really need to be in, it’s important to be firm about those things as well. Creating a list of wants and needs can help you determine where there is room to be flexible, and where there isn’t.

5. Consider Your Present and Future Needs

While you’re shopping for your new home for you today, you will also want to consider what your life might look like in the future. What are you doing 5 years from now? 10 years? Do you want to start a family or have children? Do you plan on changing jobs or perhaps requiring a move in a few years? All these things are important to be aware of so you can make the best choice for you today, but also ensure that you are considering your future needs.

6. Protect Yourself

Lastly, while you might not be purchasing your current home with a partner, it is important to leave room for this in the future to ensure that you and your home are protected. If you have another individual move into your home down the line, you could become common-law and that could cause complications. Having an honest conversation about expectations and responsibilities can help, as well as writing up a document for both parties to sign, indicating these responsibilities as well as outlining the investment made by the original owner and new partner.

If you are a single homeowner looking to make a purchase, but are not sure where to start, don’t hesitate to reach out to me, your mortgage expert. As an expert in mortgages, I have experience in all types of situations and purchases and the knowledge to walk you through the process and ensure you get the best home and mortgage for YOU.

🚨 Alberta home buyers across the province are in a property tax predicament.

As of June 1, Land Titles are processing new registrations from March 1, 2022… so unfortunately, this may put new property owners in a bind when it comes to paying property taxes at the end of June.

If the legal land transfer has not been completed through land titles, new property owners won’t receive the bill from the municipality, and the municipality could be reluctant to receive payment from a “third party”.

But, the new (and current) owners are still required to pay the property taxes on or before the due date.

If you are in this situation, read below to find out what you should do!

Some municipalities are accepting a copy of the Transfer of Land to verify ownership of property or additional information and providing a verbal notice of the amount owing. Others are suggesting property owners fill in an online form or call 311 to find out tax balance/account summary and sign up for the monthly payment program.

Others are not as lenient and have been very clear that the municipality is not responsible for delays and may penalize property owners if the property balance is not paid before the due date.

Some lawyers are encouraging sellers to pay the property taxes in full and adjust through the Statement of Adjustments. Or they can request the copy of the tax notice from the seller so a copy can be provided to the purchaser. Purchasers are being encouraged to work with the municipality and their lawyer to provide closing information or request a tax certificate.

In summary, if you have purchased a property and have not received your tax statement, please contact your lawyer or your municipality.

Buying a home is exciting, but no one ever said it’s cheap. There’s your mortgage payment, of course. But there are also several ongoing expenses you need to plan for.

Homeowner costs:

• Condo maintenance fees

  If you buy a condo, you’ll be required to pay monthly fees for the maintenance of the common areas of the property (lobby, parking, grounds, etc.). Your condo developer should be able to tell you what these fees will be.

• Home/property insurance

  This insurance protects your valuable assets in case of fire, theft or other damage. Costs vary depending on the size and location of your home as well as the value of your personal property.

• Mortgage life insurance

  This is an optional life insurance you can choose to purchase when you get your mortgage. It repays some or all of your mortgage debt in the event of death. Mortgage disability and job loss insurance are also available.

• Mortgage payments

  Your mortgage payments include a part of the original loan amount and interest.

• Monthly utilities

  Utilities include services like hydro, electricity, gas, cable and internet.

• Property and school taxes

  Homeowners pay taxes to their municipality or town for local services such as hospitals, schools and garbage collection. They’re calculated based on the location and size of your property, as well as the value of your home. Tax information is included with the listing when a home goes up for sale, and you can also ask your real estate agent about it. You can pay property taxes directly to the town or have them included in your regular mortgage payments.

• Property maintenance/repair costs

  This category includes expenses that keep your new home in working order such as furnace maintenance, roof repairs, eavestroughs maintenance, drain repair and tree trimming etc.

• Living expenses
• Routine costs

  These are the costs that maintain your lifestyle – for example, groceries and clothing. You can use a budget tool to help keep track of your expenses and identify areas where you may be able to cut back. The lower your spending, the higher your savings.

• Renovations

  If you plan to upgrade your new home, you’ll need to put money aside to pay for the renovations. You could also take out a loan but, if you do, the monthly payment must be added to your budget.

• Emergency savings fund

  This is your “just in case” money used to cover the cost of unplanned expenses. It’s important for everyone to have emergency savings, and setting aside a little money each month can help you build your fund.

Did you know? Close to 70 percent of mortgages never make it to the end of their term! This means that, for a variety of reasons, homeowners are ending their mortgages early. However, that still leaves a solid 30 percent of home buyers who keep their mortgage until the term is up and it is time to renew!

If you are not planning to move in the near future and are happy with your current mortgage, you are likely one of the 30 percent who will renew once the term ends. So what does this process look like?

When it comes time to renew your mortgage, most lenders will send you a renewal letter when there is around 3 months remaining on your term. While nearly 60 percent of borrowers simply sign and send back their renewal without ever shopping around for a more favorable interest rate, this is actually the best time to check out your options.

Most standard terms are 5-year terms and, with that much time having passed since signing, the market rates could be very different once the term is up! Despite this, lenders tend to provide higher rates on renewals versus new clients as they are hoping that the ease of renewal will prevent you from seeking out new rates. However, shopping around for a better rate is not as difficult as it sounds – especially with the help of a mortgage broker – and it could end up saving you a couple hundred dollars a month (depending on your situation)! Ideally, you should be keeping track of your own mortgage term end date as shopping for a new rate between four and six months before your expiry will ensure you are able to find the most affordable option for you.

After shopping around, you may find that your bank is actually offering a great rate – in which case you can simply submit the renewal! But if you are able to seek out a lower rate, we promise you will thank yourself for putting in the effort to find out! As another point of interest, renewal time is also a great time to make an extra payment on your mortgage, if you are able!

Beyond renewing your mortgage, home owners also have the option to transfer or switch the mortgage. This can be done any time during the term of the mortgage but may have penalties associated with breaking the mortgage before the term is up. Transferring to another lender is generally done to get a better rate, but you will need to go through the entire mortgage process again – including the ‘stress test’ – which makes shopping around at renewal time an even smarter option.

If your mortgage is coming up for renewal and you want to find out what lower rates may await you, contact your local mortgage professional! They can help you find the best option for where you are at in your life now and help you to ensure future financial success.