What is an Uninsurable Mortgage?.

When it comes to mortgages, insurance is necessary to protect the lender on these types of loans, which deal in large sums of money. There are three different tiers relating to insurance, which all have different minimum down payment amounts and varying premium insurance fees.

1. Insured mortgages have a less than 20% down payment and are insured with mortgage default insurance through one of Canada’s mortgage insurers: CMHC, Sagen or Canada Guaranty. In these cases, the premium is based on a percentage of the loan amount, which is added to the mortgage and paid monthly.
2. Insurable mortgages typically have a 20% or higher down payment and do not require mortgage insurance, though they can qualify for it. In these cases, the homeowner wouldn’t have to pay an insurance premium, but the lender can if they choose to.
3. Uninsurable mortgages do not meet mortgage insurer requirements; some examples of these types of mortgages can include: refinances, mortgages with an amortization longer than 25-years or mortgage files where the real estate is more than $1M in value and/or purchase price. No insurance premium required.

Insured and insurable mortgages are typically more cost-effective when it comes to lending money, therefore clients who opt for these mortgages often get better rates.

When it comes to an uninsurable mortgage, this means that the lender is providing their own funds to the client without the protection of insurance, and have to commit to the loan for the entire term. Due to this, uninsurable mortgages tend to have higher interest rates as they are a higher risk loan.

Typically, uninsurable mortgages require a minimum of 20% down on the loan and are available for up to 30-year amortization. It is also important to note that an uninsurable mortgage will often require a higher Gross Debt Service (GDS) and Total Debt Service (TDS) ratio to indicate that you can carry the loan without high risk.

While some lenders may offer more flexibility when it come to an uninsurable mortgage, if you are looking to refinance or change to a longer amortization period, please book a strategy call with me before making any changes to your mortgage.

So, You Want To Be A Landlord?.

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, please book a strategy call with me to discuss your options and understand what is required.

So, you’re moving! Before you hunker down in your new home, there are a few things you will want to take care of regarding your new address.

Personal Contacts

First and foremost, if you haven’t yet, make sure to tell all your personal contacts about your address change, including:

• Relatives
• Friends
• Employer
• Schools, colleges, universities, daycares
• Landlord (if necessary)
• Clubs, associations and charities

Healthcare Professionals

For the purposes of keeping your health care records up to date, make sure to update your professional contacts:

• Doctor(s)
• Dentist
• Veterinarian
• Other healthcare specialist(s)

Creditors and Services

If you haven’t yet reached out to your services, you will want to do so as soon as possible for a smooth change of service from your existing address to your new address. These services include:

• Phone, cable, internet, mobility company
• Electricity / hydro
• Natural gas
• Heating fuel company (ask if you receive a deposit refund)
• Financial institution
• Credit card companies
• Insurance companies / broker(s)
• Lawyer / notary
• Subscriptions (e.g., newspapers, books, music, loyalty programs)

Government Services

Lastly, it is vital to inform the federal and your provincial/territorial government if your address changes to ensure all your data and ID cards are updated:

• Driver’s license
• Health Card
• Vehicle registration
• Canada Post / epost
• Canada Revenue Agency
• Canada Pension Plan / Quebec Pension Plan
• Old Age Security
• Employment Insurance

Need assistance in your search for a new home? Please book a strategy call with me today!

When it comes to getting a mortgage, there is a common misperception that a low rate is the most important factor. However, while your rate does matter for your mortgage, it is not the only component to consider.

If you’re looking to get a mortgage, these are some other important factors that you should look at beyond simply the interest rate:

Term: The length of time that the options and interest rate you choose are in effect. A shorter term (eg: 2 years) allows you to make changes to your mortgage sooner, without penalties.

Amortization: The length of time you agree to take to pay off your mortgage (usually 25 years). This determines how the interest is amortized over time.

Payment Schedule: How often you make your mortgage payments. It can be weekly, every two weeks or once a month and will affect your monthly cashflow differently depending on your choice.

Portability: An option that lets you transfer or switch your mortgage to another home with little or no penalty when you sell your existing home. Mortgage loan insurance can also be transferred to the new home.

Pre-Payment Options: The ability to make extra payments, increase your payments or pay off your mortgage early without incurring a penalty.

Penalty Calculations: Where variable rates typically charge three-months interest, a fixed rate mortgage uses an Interest Rate Differential (IRD) calculation. This can add up quite quickly! In fact, in some cases, penalties for breaking a fixed mortgage can sometimes be two or three times higher than that of a variable-rate.

Variable versus Fixed: For fixed-rate mortgages, the interest rate does not fluctuate over time. For variable-rate mortgages the interest rate fluctuates with market rates, which can be great when rates drop but not so great when rates are rising.

Open versus Closed: An open mortgage is similar to pre-payment options, allowing you to pay off your mortgage at any time with no penalties. A closed mortgage, on the other hand, offers limited to no options to pay off your interest in full despite often having lower interest rates.

When considering your mortgage, the above components all have a part to play in your overall mortgage as well as your homeownership experience.

It is easy to think that a low-interest rate is good enough, sign on the dotted line… but you may be overlooking important options such as portability, which allows you to switch your mortgage to another property should you choose to move. Or pre-payment options, which give you the choice to make additional payments to your mortgage. Without looking deeper at your mortgage, you may find yourself being forced to pay penalties in the future because you wanted to make a payment or a change to your mortgage structure. In some cases, agreeing to a higher rate to have more options and flexibility is better in the long run than the savings received from a lower rate.

Before agreeing to any mortgage, please book a strategy call and we can talk about the contract, as well as your future goals and any potential concerns you have to ensure that you get the best mortgage product for YOU.

Are you looking to sell your home? We have a few tips to help you make the most of the spring season!

1. Hire an Experienced Realtor: Before preparing your home for the Spring market, you will want to hire an experienced realtor! A good realtor will serve as your guide through the entire sales process, helping you get your home ready for listing, showing potential buyers and finalizing the eventual sale. This is even more important given the changing landscape in relation to additional safety protocols with viewings and even virtual viewing options. Now, more than ever, the expertise of a realtor will help you navigate the sales process.
2. Prioritize Repairs and Improvements: Before listing your home, it is important to go through room-by-room and address any issues such as chipped paint, small holes in the wall, broken fixtures, old appliances, etc. Correcting these minor issues will help your home truly shine when buyers walk through.
3. Clean and Stage Your Home: Now that you have made the necessary minor repairs, you can start staging your home! Start with the exterior of your home and ensure you tidy up the yard, remove any junk and wash your windows! When it comes to the interior of your home, you will want to declutter and do a deep clean (a professional cleaning service can come in handy for this!). Once your home is decluttered and clean, your real estate agent can help you stage it so that it appears spacious and inviting.
4. Consider a Pre-Listing Inspection: Once you are ready to list your home, it can be a good idea to consider a pre-listing inspection. The inspector would conduct a complete visual inspection of all interior and exterior elements (including HVAC systems, wiring, ceiling, chimneys, gutters, etc.), which would help put prospective buyers at ease.
5. Organize The Paperwork: There is a lot of paperwork when it comes to selling your home. Having all of these documents organized and together for potential buyers will help to speed up the process and allow them to address any questions before the deal is finalized. Permits, renovation or repair receipts, warranties, rental agreements and copies of your utility bills are all good records for potential buyers.
6. Find an experienced Mortgage Broker: If you are planning to purchase another property around the time you are selling, having a mortgage broker ready will make the process much easier. They will be ready to help you submit an offer when you find your new home, and possibly help with bridge financing.

Whether you are looking to buy or sell, I can help ensure the best outcome for you and your family! Please book a strategy call and I can help you with a custom budget for purchasing your next home.

The housing supply shortage is one of the top issues in Canada’s real estate market. To address it, cities are seeing a massive boom in new-build housing.

New construction offers many advantages, like more energy-efficient heating and cooling systems. Their titles can also feel less risky to transfer. After all, if the land was previously vacant, there’s no chance of unpermitted work from a previous owner causing losses for new buyers.

But did you know that new builds carry most of the same title and off-title risks as existing homes? Here’s why.

the home may be new, but the land isn’t

Even unimproved land belongs to someone. The land for the new construction may have changed hands several times before the developer bought it. Every transfer of the land can add defects to the title. Those defects can cause losses for the people who buy homes built on that land. On top of that, both the municipality and the developer might make a mistake or miscommunicate, which can end up causing a problem with the property.

Here are just some of the issues that can cause losses for owners, even on new constructions:

• Zoning mistakes, which can happen on either the municipality or the developer side.
• Setback agreements the developer didn’t know about, which results in homes built too close to the road.
• Pre-existing liens, for example from property tax still owed by the previous owner.
• Errors in the registration of the title.
• Pending legal action against the property that the developer didn’t know about.
• Builders’ liens, if the developer wasn’t able to fully pay a supplier or contractor.

subdivisions can add extra complications

When an owner buys a property in a subdivision, they’re getting the title to that specific property. But all the land in that subdivision would have been under one original title before it was parceled out. The problem is, if someone has a claim against that original title, every property in the subdivision could be subject to it.

If the land for the subdivision was assembled from existing properties, that can add complications to the title of the assembled land. Those issues can then impact the new properties parceled out of that assembled land.

The developer could also make mistakes setting the property lines in a subdivision. If that happens, or if there are issues with the Real Property Reports/surveys conducted for any of the properties, the owners of those properties could have to deal with the consequences down the road.

how can title insurance help new housing starts?

Title insurance is a great solution for new construction because it can cover homebuyers for the risks associated with all properties, risks introduced by subdividing land, and even title fraud. A title insurance policy protects the insured for as long as they have an interest in the property.

Builders help with some of the risks of new construction by issuing a Real Property Report to the owner. It’s a useful document, but it has a limited scope and doesn’t offer owners any recourse if an issue comes up. It also becomes obsolete if an owner puts up a new exterior structure, like a fence or a deck. A title insurance policy covers the outside elements of a property as well as the home itself, which means it still provides protection to future buyers if the current owner adds structures.

If you are looking to buy a home or want a current value of your property, you will need an appraisal.

Before banks or lending institutions can consider loaning money for a property, they need to know the current market value of that property. The job of an appraiser is to check the general condition of your home and determine a comparable market value based on other homes in your area.

While you may think “it is what it is”, we actually have a few tips that can help improve your home’s appraisal to ensure you are getting top market value!

1. Clean Up: The appraiser is basing the value of your property on how good it looks. A good rule of thumb is to treat the appraisal like an open house! Clean and declutter every room, vacuum, and scrub to ensure your home is as presentable and appealing as possible.
2. Curb Appeal: First impressions can have a huge impact when it comes to an appraisal. Spending some time ensuring the outside of your property from your driveway entrance to front step is clean and welcoming can make a world of difference.
3. Visibility: The appraiser must be able to see every room of the home, no exceptions. Refusal to allow an appraiser to see any room can cause issues and potentially kill your deal. If there are any issues with any spaces of your home, be sure to take care of them in advance to allow the appraiser full access.
4. Upgrades and Features: Ensuring the appraiser is aware of any upgrades and features can go a long way. Make a list and include everything from plumbing and electrical to new floors, new appliances, etc. This way they have a reference as to what has been updated and how recent or professional that work was done.
5. Be Prudent About Upgrades: While the bathroom and kitchen are popular areas, they are not necessarily the be-all-end-all for getting a higher home value. These renovations can be quite costly so it is a good idea to be prudent about how you spend your money and instead, focus on easy changes such as new paint, new light fixtures or plumbing and updated flooring to avoid breaking the bank while still having your home look fresh.
6. Know Your Neighbourhood: You already know where you live better than the appraiser. Taking a look at similar homes in your neighbourhood and noting what they sold for will give you a ballpark. If your appraisal comes in low, you will be prepared to discuss with the appraiser the examples from your area and why you believe you property is worth more.
7. Be Polite: The appraiser is there to get in and get out. Avoid asking them too many questions or making too many comments and simply be prepared should they have questions. Once they have completed the review of your home, that is a good time to bring up any comments you might have.

Don’t forget to please book a strategy call if you have any questions about your existing home or mortgage, or if you are looking to sell and relocate in the future!

The current economic landscape can be challenging for young Canadians to navigate as they face great uncertainty with heightened interest rates and inflation. It can be frustrating as they are just starting to build their career, considering buying a home or starting a family. If you are a parent, you may be thinking about how you can help your child during this period. A Reverse Mortgage is a sound financial solution that can help you support your loved ones by providing a tax-free gift.

The Gift of Early Inheritance 

As a parent, you may want to provide an early inheritance to see your adult children use the funds to improve their lives in a time of need. By giving an early inheritance, you can avoid probate fees (estate administration tax) and save money by bringing you to a lower tax bracket*. With an early inheritance, your children can pay for their wedding, start a business, pay off student loans, make a down payment on their home, and much more. Speak to your tax specialist for more details.

How a Reverse Mortgage Works

You may have heard of people using a home equity line of credit (HELOC) or liquidating their investments to gift an early inheritance. However, there are disadvantages associated with loss of earnings or tax payable when it is time to sell their investments. A Reverse Mortgage allows you to unlock up to 55% of the equity in your home without any of these challenges. With a Reverse Mortgage, your investments remain intact, and no monthly mortgage payments are required. Therefore, your income is not affected, and best of all, the money you get from the Reverse Mortgage is tax-free!

If you want to provide a tax-free gift to your children, please book a strategy call and I can help guide you through how a Reverse Mortgage can help you.

*Reverse Mortgages require all clients to receive independent legal advice to review the mortgage contract and ensure they fully understand the terms and conditions.

If you are a self-employed client who owns your own business, you may have chosen to set that business up as a corporation. This means the business operates as essentially its own person. They have income through business revenue and expenses from marketing costs, materials, office space, etc.

When it comes to getting a mortgage, there are a few benefits to putting that mortgage under the corporation instead of your individual self:

1. Corporations tend to pay a lower tax rate than the personal income tax rate and only pay taxes on the net business income.
2. When it comes to qualifying for a mortgage, a lender can look at the business income or the personal income they pay themselves.
3. Adding the net business income or the personal income from year 1 and year 2 and dividing it by two is the income a lender will associate with that borrower. Keep in mind though this will also be affected if there is more than one shareholder.

There are two ways one can go about this type of corporate mortgage, depending on if the corporation is the operating company or acts as the holding company.

Mortgages and Operating Companies

As with any mortgage, there are considerations and more-so when looking to put your mortgage under your corporate umbrella. While you would essentially qualify as though you’re buying a property in your name, your application will be packaged much differently to the lender. You would be instead qualifying as a corporation with a personal guarantee from yourself.

It is also possible to do a mortgage deal under your personal name but utilize both personal and corporate income. Lenders can do this by looking at both personal T1 generals and respective NOA, plus you can qualify by looking at the Net Business Income before taxes as seen on company financials.

When it comes to getting a mortgage under an operating company (versus a holding company), you may encounter limitations with the lenders that provide this type of deal. You would be looking at an Alt A (B Lender) to finance this particular mortgage, which may come with higher interest rates.

Mortgages and Holding Companies

When it comes to getting a mortgage under a holding company, you will find things are a bit easier. Having a mortgage under a holding company, versus the operating company, essentially removes any limitations or liability from the operating company with regards to the mortgage.

However, to be eligible, you must meet the definition of a Personal Holding Company (PHC) or Personal Investment Company (PIC) per the bank. This is typically considered “a Canadian incorporated entity established by an individual or individuals for the purpose of conducting investment activities, which can include holding real estate, and/or investments. Personal Holding or Investment Companies, and the owner of the PHC or PIC must qualify personally, and sign as covenantor”.

Some additional reasons to consider a mortgage under a corporation or holding company include:

1. If your intent is to flip properties rather than hold them as rental revenue, it might make sense to consider holding it through a corporation
2. You have retained corporate profit that can be used to buy a property without withdrawing money personally and incurring personal tax.

The most important thing to note when going this route for a mortgage is that ALL DIRECTORS listed on the corporation MUST also be listed on the mortgage application. For a sole proprietorship, this is easy as there is typically only one director, however on larger corporations this is something to consider.

For some individuals, the benefits might not be enough to convince them to put their property under the corporation but for others, it may be the perfect solution.

To find out how your income would be viewed by a lender if you have your business set-up as a corporation, please book a strategy call and I can help guide you.

Most of us like where we live, but we might not love it. Have you fallen out of love with your home? No sweat! We have the tips to help you fall in love with your home, all over again!

Cleanse and Purge

Depending how long you have lived in your home, you have probably gathered up a number of items that you no longer need, want or use. One of the first steps to falling in love with your home again is purging your space of all that unnecessary stuff – whether it is old clothes, furniture you hate, outdated accessories – removing the old to make way for the new can have a huge effect on how you feel about your home.

Rearrange Your Rooms

Once you have purged all of the unwanted items around your home, you probably have a bit more space to work with! A great way to breathe new life into your space is by re-arranging your furniture! While not all rooms will have optimal space, you might be surprised if you just try and see how it would look with a different layout! Simply moving around your furniture will make your home feel revived, without any extra spend!

Consider a New Colour

If you’re looking for that little extra refresh, a new coat of paint is a great way to get the job done! Changing the tone of your room from darker to lighter, or warm to cool, can make the space feel brand new again! This year’s tones include purples and pink hues, matched with grey and white or pops of teal and blue for that extra 70s vibe!

Or Try a New Style

If you’ve always had a home with traditional cupboards or furniture, it might be time to mix it up! Swapping out a few old pieces for something new, perhaps with a modern twist, can revive any space. Consider starting small by swapping lamps or your coffee table and moving up to larger items like TV stands and bookshelves for that fulsome redo!

Enhance Your Lighting

Lighting has a big effect on mood, and it is the same for your home. Installing new light fixtures, adding or removing lamps, or even changing your bulbs from a bright white to warm or vice versa for a different environment. If you’re looking for that extra ambiance, try a lava lamp or a cute candle tray!

Retouch and Refinish

If you’re not interested in going all out on your home makeover, you don’t have to! There are still plenty of ways you can fall in love with your home again… such as with a little retouching and reviving! A great place to start is your kitchen cupboards. refinishing and painting your existing cabinets is easier than you may think!

Don’t Forget About the Exterior!

While we spend a lot of our time indoor our home, you don’t want to forget about the exterior! New and inviting front door lighting, a cute brick path and some new flowers can create a whole new world for you to enjoy. Consider also adding wicker furniture, an outdoor rug and hanging fairy lights or adding a water feature for that extra relaxation.

Not sure if you can afford updates to your home? Consider utilizing your home equity! Don’t hesitate to reach out for a strategy call so I can assist you.