16 Dec

3 reasons why there is such a demand for Canadian Housing from China

General

Posted by: Angela Calla

When asking this question to one of our clients (a new resident to Canada from China) they stated the following:

  1. 1.       In mainland China you cannot own a home, it can only be leased for 70 years.
  2. 2.       There are no “safe” retirement programs such as RRSPs or 401k’s.
  3. 3.       They didn’t feel comfortable leaving investments in a communist country.

Angela Calla, AMP
Mortgage Expert
Host of “The Mortgage Show” on CKNW AM980 Saturdays at 7pm

Phone: 604-802-3983
Fax: 604-939-8795
Toll Free: 1-888-806-8080
Email: acalla@dominionlending.ca
Apply Online: www.angelacalla.ca
CLICK HERE to Watch My Video Presentation

 

 

 

 

 

14 Dec

10 Questions Mortgage Borrowers Should Ask But Often Don’t-Angela Calla

General

Posted by: Angela Calla

10 Questions Mortgage Borrowers
Should Ask But Often Don’t

1. If I have mortgage default insurance do I also need mortgage life insurance?

  • Yes. Mortgage life insurance is a life insurance policy on a homeowner, which will allow your family or dependents to pay off the mortgage on the home should something tragic happen to you. Mortgage default insurance is something lenders require you to purchase to cover their own assets if you have less than a 20% down payment. Mortgage life insurance is meant to protect the family of a homeowner and not the mortgage lender itself.

2. What steps can I take to maximize my mortgage payments and own my home sooner?

  • There are many ways to pay down your mortgage sooner that could save you thousands of dollars in interest payments throughout the term of your mortgage. Most mortgage products, for instance, include prepayment privileges that enable you to pay up to 20% of the principal (the true value of your mortgage minus the interest payments) per calendar year. This will also help reduce your amortization period (the length of your mortgage). Another way to reduce the time it takes to pay off your mortgage involves changing the way you make your payments by opting for accelerated bi-weekly mortgage payments. Not to be confused with semi-monthly mortgage payments (24 payments per year), accelerated bi-weekly mortgage payments (26 payments per year) will not only pay your mortgage off quicker, but it’s guaranteed to save you a significant amount of money over the term of your mortgage. With accelerated bi-weekly mortgage payments, you’re making one additional monthly payment per year. In addition to increased payment options, most lenders offer the opportunity to make lump-sum payments on your mortgage (as much as 20% of the original borrowed amount each year). Please note, however, that some lenders will only let you make these lump-sum payments on the anniversary date of your mortgage while others will allow you to spread out the lump-sum payments to the maximum allowable yearly amount.

3. Can I make lump-sum or other prepayments on my mortgage, or will I be penalized?

  • Most lenders enable lump-sum payments and increased mortgage payments to a maximum amount per year. But, since each lender and product is different, it’s important to check stipulations on prepayments prior to signing your mortgage papers. Most “no frills” mortgage products offering the lowest rates often do not allow for prepayments.

4. How do I ensure my credit score enables me to qualify for the best possible rate?

  • There are several things you can do to ensure your credit remains in good standing. Following are five steps you can follow: 1) Pay down credit cards. The number one way to increase your credit score is to pay down your credit cards so they’re below 70% of your limits. Revolving credit like credit cards seems to have a more significant impact on credit scores than car loans, lines of credit, and so on. 2) Limit the use of credit cards. Racking up a large amount and then paying it off in monthly instalments can hurt your credit score. If there’s a balance at the end of the month, this affects your score – credit formulas don’t take into account the fact that you may have paid the balance off the next month. 3) Check credit limits. If your lender is slower at reporting monthly transactions, this can have a significant impact on how other lenders view your file. Ensure everything’s up to date as old bills that have been paid can come back to haunt you. Some financial institutions don’t even report your maximum limits. As such, the credit bureau is left to only use the balance that’s on hand. The problem is, if you consistently charge the same amount each month – say $1,000 to $1,500 – it may appear to the credit-scoring agencies that you’re regularly maxing out your cards. The best bet is to pay your balances down or off before your statement periods close. 4) Keep old cards. Older credit is better credit. If you stop using older credit cards, the issuers may stop updating your accounts. As such, the cards can lose their weight in the credit formula and, therefore, may not be as valuable – even though you have had the cards for a long time. Use these cards periodically and then pay them off. 5) Don’t let mistakes build up. Always dispute any mistakes or situations that may harm your score. If, for instance, a cell phone bill is incorrect and the company will not amend it, you can dispute this by making the credit bureau aware of the situation.

 5. What amortization will work best for me?

  • While the lending industry’s benchmark amortization period is 25 years, and this is the standard that is used by lenders when discussing mortgage offers, and usually the basis for mortgage calculators and payment tables, shorter or longer timeframes are available – to a maximum of 30 years. The main reason to opt for a shorter amortization period is that you’ll become mortgage-free sooner. And since you’re agreeing to pay off your mortgage in a shorter period of time, the interest you pay over the life of the mortgage is, therefore, greatly reduced. A shorter amortization also affords you the luxury of building up equity in your home sooner. Equity is the difference between any outstanding mortgage on your home and its market value. While it pays to opt for a shorter amortization period, other considerations must be made before selecting your amortization. Because you’re reducing the actual number of mortgage payments you make to pay off your mortgage, your regular payments will be higher. So if your income is irregular because you’re paid commission or if you’re buying a home for the first time and will be carrying a large mortgage, a shorter amortization period that increases your regular payment amount and ties up your cash flow may not be the best option for you.

 6. What mortgage term is best for me?

  • Selecting the mortgage term that’s right for you can be a challenging proposition for even the savviest of homebuyers, as terms typically range from six months up to 10 years. The first consideration when comparing various mortgage terms is to understand that a longer term generally means a higher corresponding interest rate. And, a shorter term generally means a lower corresponding interest rate. While this generalization may lead you to believe that a shorter term is always the preferred option, this isn’t always the case. Sometimes there are other factors – either in the financial markets or in your own life – that you’ll also have to take into consideration when selecting the length of your mortgage term. If paying your mortgage each month places you close to the financial edge of your comfort zone, you may want to opt for a longer mortgage term, such as five or 10 years, so that you can ensure that you’ll be able to afford your mortgage payments should interest rates increase. By the end of a five- or 10-year mortgage term, most buyers are in a better financial situation, have a lower outstanding principal balance and, should interest rates have risen throughout the course of your term, you’ll be able to afford higher mortgage payments.

7. Is my mortgage portable?

  • Fixed-rate products usually have a portability option. Lenders often use a “blended” system where your current mortgage rate stays the same on the mortgage amount ported over to the new property and the new balance is calculated using the current rate. With variable-rate mortgages, however, porting is usually not available. This means that when breaking your existing mortgage, a three-month interest penalty will be charged. This charge may or may not be reimbursed with your new mortgage. While porting typically ensures no penalty will be charged when you sell your existing property and buy a new one, it’s best to check with your mortgage broker for specific conditions. Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day, while others offer extended periods.

8. If I want to move before my mortgage term is up, what are my options?

  • The answer to this question often depends on your specific lender and what type of mortgage you have. While fixed mortgages are often portable, variable are not. Some lenders allow you to port your mortgage, but your sale and purchase have to happen on the same day, while others offer extended periods. As long as there’s not too much time between the sale of your existing home and the purchase of the new home, as a rule of thumb most lenders will allow you to port the mortgage. In other words, you keep your existing mortgage and add the extra funds you need to buy the new house on top. The interest rate is a blend between your existing mortgage rate and the current rate at the time you require the extra money.

 9. What steps can I take to help ensure I don’t become a victim of title or mortgage fraud?

  • The best way to prevent fraud is to be aware of how it’s committed. Following are some red flags for mortgage fraud: someone offers you money to use your name and credit information to obtain a mortgage; you’re encouraged to include false information on a mortgage application; you’re asked to leave signature lines or other important areas of your mortgage application blank; the seller or investment advisor discourages you from seeing or inspecting the property you will be purchasing; or the seller or developer rebates you money on closing, and you don’t disclose this to your lending institution. Sadly, the only red flag for title fraud occurs when your mortgage mysteriously goes into default and the lender begins foreclosure proceedings. Even worse, as the homeowner, you’re the one hurt by title fraud, rather than the lender, as is often the case with mortgage fraud. Unlike with mortgage fraud, during title fraud, you haven’t been approached or offered anything – this is a form of identity theft. Following are ways you can protect yourself from title fraud: always view the property you’re purchasing in person; check listings in the community where the property is located – compare features, size and location to establish if the asking price seems reasonable; make sure your representative is a licensed real estate agent; beware of a real estate agent or mortgage broker who has a financial interest in the transaction; ask for a copy of the land title or go to a registry office and request a historical title search; in the offer to purchase, include the option to have the property appraised by a designated or accredited appraiser; insist on a home inspection to guard against buying a home that has been cosmetically renovated or formerly used as a grow house or meth lab; ask to see receipts for recent renovations; when you make a deposit, ensure your money is protected by being held “in trust”; and consider the purchase of title insurance.

10. How do I ensure I get the best mortgage product and rate upon renewal at the end of my term?

  • The best way to ensure you receive the best mortgage product and rate at renewal is to enlist your mortgage broker once again to get the lenders competing for your business just like they did when you negotiated your last mortgage. A lot can change over a single mortgage term, and you can miss out on a lot of savings and options if you simply sign a renewal with your existing lender without consulting your mortgage broker The Angela Calla Mortgage Team

Angela Calla, AMP of Dominion Lending Centres is one of Canada’s Top Mortgage Experts and Host of The Mortgage Show Saturdays @7pm on CKNW and Mortgage Cents on TheFox 99.3FM she can be reached at acalla@dominionlending.ca 604-802-3983 www.angelacalla.ca

13 Dec

Will you get an extra paycheque in December?

General

Posted by: Angela Calla

Make use of extra ‘gravy’ at Christmas

Garry Marr  Dec 10, 2011 – 7:00 AM ET | Last Updated: Dec 12, 2011 1:18 PM ET

Christmas comes twice a year for some Canadians — or so they think.

The three-paycheque month is viewed across this country as some type of well-earned bonus that comes through the sleight of hand of being paid every two weeks as opposed to twice a month.

Instead of 24 paycheques a year, you get 26. When you get that “lucky” month depends on when your two-week pay period is calculated. For whatever reason, perhaps because people budget on a monthly basis, those two extra paycheques are considered gravy by many workers.

“Most people budget [monthly]. We do know people have their monthly mortgage payments and certainly households [expenses] are probably monthly but their paycheque is coming on a biweekly basis,” says Sandra Sutton, director of product strategy at Winnipeg-based Ceridian Canada Ltd.

Ceridian, which handles payroll for companies, says about 59% of Canadians get paid on a biweekly basis, opening up the possibility of the three-paycheque month. The good news is Ceridian also says 89% of people go for direct deposit — something that probably goes a long way to eliminating that feeling of money burning a whole in your pocket.

Ceridian can’t tell you specifically if people save more with direct deposit but the option does allow employees to split up their money into different accounts, pocketing some directly into a savings account or some other type of savings vehicle like an RRSP or TFSA.

Ms. Sutton says she herself gets paid semi-monthly but she once worked for an organization where people were paid biweekly and people did feel they had extra money.

“It was true. You had this extra chunk of money. You had already allocated for your regular two paycheques towards your mortgage and other bills. So, bonus?” she says.

Tom Hamza, president of the Investor Education Fund, says if you’re thinking you’ve got some sort of free month, then it likely means you are not doing a good job of co-ordinating your income with your bills.

“All of your payments should be co-ordinated,” says Mr. Hamza, well aware of the concept because he himself is paid every two weeks. “I’m a complete nerd. I think I’m the anomaly. We budget monthly based on paycheques. We put money aside. It makes sense that people think it’s free though.”

The problem is that’s a major mistake, and at the end of the day that third paycheque should probably be thought of more as opportunity.

“The other time people think money is free is RRSP time when they get their taxes [or refund] back from the government,” Mr. Hamza says.

“If you are complaining about not having enough money, use these opportunities to liberate what is yours. These are the times you should be dealing with your debt, if you are like many Canadians.”

Vancouver-based certified financial planner Anthony Windeyer, of Coast Capital, says there are a couple of ways of thinking when it comes to the so-called extra money.

“If you are an excellent saver and doing all the right things, I would suggest they could treat it like free money,” Mr. Windeyer says. “However, if you are having budget challenges and you know that’s the case, I would treat it as the ideal opportunity to get ahead of the curve and pay down some more debt.”

When you think about all the unpaid credit-card balances, leftover RRSP room, unopened registered education savings plans and underfunded tax-free savings accounts, there are plenty of places to put those extra paycheques.

In some ways, that extra paycheque is almost a bit of forced savings. It’s yours. Do what you want with it, but why not make it go a lot further by investing it?

Of course, it is December. So if this is your three-paycheque month, Merry Christmas

 

Angela Calla, AMP Dominion Lending Centres 604-802-3983

8 Dec

Buying in the off season pays off in real estate

General

Posted by: Angela Calla

If you’ve been thinking about buying a new home but don’t think that the cooler months make for an ideal time, you may actually benefit from changing your perspective. Though spring and summer are typically the most active real estate buying and selling seasons, house hunting in winter has its own benefits. Knowing what they are and how to use them to your advantage can put you on the path to homeownership sooner rather than later.

One of the best reasons to buy a house in winter is that there is less competition out there.  Because many people believe that buying a home in cooler months is a bad idea, they stay home waiting for spring to come instead of house hunting. After all, moving at this time can be inconvenient and messy if you have to deal with inclement weather. Additionally, families will be less likely to move in the months of September through June if their children are in school.

It’s the perfect time to start looking for a home during months when there are fewer house hunters. With fewer buyers in the market, homes move more slowly and sellers are more willing to negotiate on their asking price. They often need to move from the property in the near future, and you can use that to your advantage to get a favourable deal on a house that may otherwise be out of your price range during the peak selling seasons.

 

Lenders also usually have fewer loans to process and less paperwork to deal with in the off-season. With lenders less hassled, you can expect a smoother mortgage approval process.

Touring a home during the winter allows you to see things that you may not have been exposed to if you had come in the summer months. For instance, drafts may be a sign that windows need replacing or that there are air leaks that may need to be sealed. If the house feels warm without the thermostat being set too high, it may be an indication that the home has good insulation.

If you decide to brave the cold and hunt for a home during winter, there are a few things you should keep in mind. First, don’t feel like you’re going to inconvenience someone by viewing their home during the holidays, evenings or weekends. Sellers want to sell just as much as buyers want to buy. Also, don’t be overcome by holiday decorations, which can make a house look cramped or have the opposite effect of making the house more emotionally appealing than it otherwise would be.

Just like any holiday shopping sale, knowledgeable shoppers know where to find great opportunities. The same holds true for real estate. There are still homes for sale in winter and bargains to be found, so don’t let the seasons rule your search for a home.

Regardless of when you decide to buy or sell, answers to your questions are just a phone call or e-mail away!

 

 Angela Calla, AMP 604-802-3983 acalla@dominionlending.ca

6 Dec

EnRICHed Academy Smart Start for Financial Genius

General

Posted by: Angela Calla

Dominion Lending Centres Angela Calla Mortgage Team is proud to announce the launch of EnRICHed Academy’s “Smart Start for Financial Genius”! This program has been designed to educate young adults (13-23) and their families on the fundamentals that build wealth in an entertaining, funny and entirely interactive way.

No program like this currently exists, and the need and demand across North America is at an all-time high. This is our way of giving back to communities across Canada, ensuring our youth embrace financial literacy.

Click here to view the EnRICHed Academy trailer on YouTube.

Why we created EnRICHed

  • Statistically, 6 out of 10 Canadians live paycheque to paycheque, which means if their income stopped for only one pay period they’d have to rely on a Line of Credit or Credit Card to make ends meet 
  • From 1989 to 2006, total credit card charges rose from $69 Billion to $1.8 Trillion; a 2,600% increase 
  • Today the average household credit card debt is $16,007
  • The yearly savings rate of an average Canadian has gone from over 12% of income in the early 90s to under 2% today
  • Household debt in Canada has more than doubled over the past 10 years
  • 84% percent of college graduates in North America indicated they needed more education on financial management topics. Parents expect the schools to teach financial literacy and schools expect parents to. The fact is, most parents and teachers are ill equipped to teach students and kids on this subject and, therefore, don’t
 
  • The average college graduate is $23,186 in debt

What EnRICHed looks like

The program comes in a box and contains 5 DVDs of entertaining but highly educational video on creating a foundation for building wealth. There is a 100-page workbook that the family will work through that includes activities and exercises as well as other materials that correspond with the topics covered in the program.

15 key topics covered by EnRICHed

  1. Understanding money 101
  2. Why some people don’t save money… no matter how much they make
  3. How much we actually spend at an early age
  4. Saving money vs Making money
  5. Why starting to save at an early age is critical
  6. The magic behind compound interest and how it works
  7. How to buy your first investment property by the age of 23
  8. How to get into the stock market
  9. How credit cards work
  10. Good debt vs Bad debt
  11. How taxes work on a paycheque
  12. Why goals are critical to building wealth
  13. The difference between a dream and a goal
  14. How to write down goals and take action
  15. The importance of building your personal brand

Feel free to give me a call or send me an email if you’d like to learn more about EnRICHed Academy.

Angela Calla, AMP 604-802-3983

acalla@dominionlending.ca

6 Dec

Mortgage Penalties short term pain for long term gain

General

Posted by: Angela Calla

With mortgage rates still hovering near historic lows, chances are you’ve considered breaking your current mortgage and renewing now before rates rise any further.

Perhaps you want to free up cash for such things as renovations, travel or putting towards your children’s education? Or maybe you want to pay down debt or pay your mortgage off faster?

If you’ve thought about breaking your mortgage and taking advantage of these historically low rates, feel free to give me a call to discuss your options.

In some cases, the penalty can be quite substantial if you aren’t very far into your mortgage term, but we can determine if breaking your mortgage now will benefit you long term.

People often assume the penalty for breaking a mortgage amounts to three months’ interest payments so, when they crunch the numbers, it doesn’t seem so bad. In most cases, however, the penalty is the greater of three months’ interest or the interest rate differential (IRD).

 

The IRD is the difference between the interest rate on your mortgage contract and today’s rate, which is the rate at which the lender can relend the money. And with rates so low these days, the IRD tends to be greater than three months’ interest. Because this is a way for banks to recuperate any losses, for some people, breaking and renegotiating at a lower rate without careful planning can mean they come out no further ahead.

Keep in mind, however, that penalties vary from lender to lender and there are different penalties for different types of mortgages. In addition, the size of your down payment and whether you opted for a “cash back” mortgage can influence penalties.

While breaking a mortgage and paying penalties based on the IRD can result in a break-even proposition in the short term, if you look at the big picture, you’ll see that the true savings are long term – as we know that rates will be higher in the years to come. Your current goal is to secure a long-term rate commitment before it’s too late, and here lies the significant future savings.

As always, if you have questions about breaking your mortgage to secure a lower rate, or general mortgage questions, I’m here to help!

Angela Calla, AMP 604-802-3983 acalla@dominionlending.ca

5 Dec

Bank of Canada Likely To Retain Key 1.0% Interest Rate Dec 6th 2011

General

Posted by: Angela Calla


–External Headwinds ‘Blowing Harder’ So Stimulus Still Needed
–Some Few Analysts See Rate Cut Rather Than Hikes In Future

OTTAWA (MNI) – The Bank of Canada likely will maintain the economic stimulus of its 1.0% policy interest rate on Tuesday, for the 11th successive rate-setting time, and those who parse its words will be looking only for any change of tone.

Governor Mark Carney at the Bank has made clear in statements and in the most recent (October) Monetary Policy Report that there will be no change for the foreseeable future. He does, though, continue to insist that the Bank will remain “flexible,” in the light of world and domestic future developments. He speaks most particularly of the never-ending European debt and banking weakness.

There is near-unanimity among analysts that the Bank will stand pat with the 1.0% rate that it moved to on September 8, 2010, from 0.75% in July last year. Some see that rate continuing through the third quarter of 2012, and some see it continuing deeply into 2013. But with headwinds “blowing harder,” as Carney has put it, from Europe and the United States and some slowing of growth in Asia, there are a few who see the Bank lowering rates rather than hiking them in the future.

Michael Gregory, senior economist at BMO Capital Markets, is not one of them. He sees inflation as posing no concern, that high consumer debt and high house prices argue for increases over rate reductions, and that the Bank believes there already is “considerable monetary policy stimulus” from the “historically low” 1.0% rate.

Gregory does note, though, that the Bank, having joined with the Federal Reserve and other key central banks in expanding global banks’ access to U.S. dollars, clearly sees “some risk of the headwinds blowing even harder.” He adds, in a research note to clients:

“The market sees this too, currently pricing in a 25-basis points BoC rate cut by next June.”

Most analysts believe the Bank will take the longer-term attitude, with Dr. Sherry Cooper, chief economist for BMO Financial Group, that the international central banks’ reduction of the cost of dollar swaps better enables European banks to borrow, but is no long-term solution. “It does not address the underlying fundamental problems,” she wrote on December 2. “The solvency issues, the recapitalization of the banks, and the imbalances in the eurozone, have yet to be dealt with — not to mention the politics of greater fiscal integration.”

At TD Economics, macro strategist Mazen Issa writes that, short of European collapse, the BoC would prefer “to remain on the sidelines” at 1.0%. He expects the Bank to say that the previously noted risks to the Canadian economy, of Europe and of weak demand from the U.S. and some slowing down in China, have all materialized. He believes the BoC will say again, as it has, that “the current stance of monetary policy is appropriate and (that the Bank) stands ready to provide liquidity if needed” because of worsening funding market pressures.

Canada’s own economic indicators have been mixed. Jobs growth is slowing, although full-time work is increasing from the huge pullback in September. Exports have picked up. The current account deficit has narrowed, but still is a deficit. Statistics Canada recently reported third-quarter growth of the economy at an annualized and booming 3.5%, far above earlier Bank expectations of 2.0% growth for Q3 — but much of that growth represents a rebound from serious temporary factors that gave Canada a very low Q2. The Bank forecasts slow growth for Canada in 2012.

Ten of 11 senior economists from business and universities in Canada, grouped together by the C. D. Howe Institute, a leading economic think tank, have called for the Bank of Canada to stand pat on Tuesday. Nine of the 11 would have the BoC continue with 1.0% at the following setting, January 17. For six months hence, two would cut the rate and one would raise it. In a year’s time, six would still have the 1.0% rate while three would have raised it by then and two would have reduced it.

The main and shared outlook was that “Europe’s slide into recession, the likely intensification of its financial crisis, and the huge potential hit to global growth, inclined the group to urge no change.”

** Market News International Ottawa **

To learn how to use the low interest rate market to your mortgages advantage call the Angela Calla Mortgage Team 604-802-3983