27 Feb

Loyalty or Habit: How have you chosen your mortgage provider by Angela Calla

General

Posted by: Angela Calla

Everybody wants to belong somewhere – whether it involves finding comfort in a brand or being part of a culture – because it’s how we put our emotions into our finances.

Emotion in finances can be a good thing when the connection makes sense.

Loyalty should be based on a systematic, proactive commitment coupled with processes and strategies on how you’ll continue to benefit via savings, value and education throughout the life of your mortgage. The fact is, loyalty is earned based on the fundamental goal of transparency in a clear plan.

Habit is what most lenders rely on as they typically only have 3 products available to you and they often “sell” you the product that represents the most profit. We all see how well the Canadian banks do. The habits they look for are the same. Here are the top 3 habits banks love:

1. All your accounts are with the bank and your cheques are also deposited there.

2. You’ve had the same bank account since you were a kid.

3. You believe it would affect your relationship with your bank if your mortgage was with another institution.

Sound Familiar?

These are not tangible reasons to do business with someone (not to mention that if you have a mortgage elsewhere, the lender will automatically withdraw payments by void cheque with no disruption to your accounts). When you consult an independent AMP (free of charge), you’ll often be shown better options that your bank just can’t provide – or simply chooses not to offer. It’s each borrower’s responsibility to make sure companies earn your loyalty. We all have a choice to make our decisions based on knowledge and work with people who want to empower us. In other words, people who want loyal clients are willing to go above and beyond to earn that loyalty.

The Angela Calla Mortgage Team is there for you throughout the life of your mortgage to save you money. Contact 604-802-3983 callateam@dominionlending.ca

 

27 Feb

Pre-Qualifying has Never Been More Important

General

Posted by: Angela Calla

Interest rate volatility, policy changes, product variations and a general tightening in consumer lending are making this one of the most demanding and concerning times to finance residential real estate. Never before has it been more important to speak to a qualified mortgage specialist BEFORE you buy (or sell) a home.

The busy spring market is just around the corner and the housing markets in cities across Canada are beginning to heat up. It’s an exciting time for those thinking of buying their first home, moving out of a condo and into a house, or finding a cottage on their favorite lake. Yet most people thinking of buying have not taken the time to see how much they can buy, and under what conditions.

Canada’s lending environment has been the object of intense scrutiny over the past several months, with government Ministers, bank CEO’s, regulatory officials and a slew of economists voicing concerns about how (and how much) Canadian consumers are borrowing to buy or refinance their homes. Policies have been put under review, lending programs curtailed, and “special offer” rates given and then taken away within weeks. What does this mean for borrowers and homebuyers? It means this:

Don’t just get a quote on a rate – it means NOTHING. Get pre-qualified for a mortgage. Whether you own a home or not, or have lots of savings and income or not, it has never been more important.

Here’s why:

1) Policy changes. All the big banks and most smaller lenders (including brokers, who finance the majority of their deals through two or three big banks’ wholesale arms) are asking borrowers to provide a LOT more information in order to approve their financing.

Income requirements must be proven with more than a job letter or contract – you need to show Notices of Assessment for at least two years, current paystubs, and, in some cases, proof of pay being deposited into your account.

If you are using rental income to qualify for a purchase or refinance, be prepared to provide complete lease information (signed, initialed, with lessee information on the documents). Current homeowners will need to show their most recent mortgage statements and municipal tax bills.

Proving the liquidity of your downpayment has become increasingly important because of fraud concerns. Tracking where your downpayment came from means providing savings account or investment records that show the flow of funds through your accounts. If you are receiving some or all of your downpayment from relatives, basic Gift Letters may not be sufficient; the source of funds and transfer of funds to your custody – in advance of closing – must be documented.

The government program that allows you to use RRSP’s to purchase your first home also has restrictions – deposits must have been made at least 90 days before withdrawal, all buyers on the deal must be first-time owners, and so on. Know all the details about the RRSP program if you are hoping to take advantage of it.

Aside from documentation, the qualification itself may have changed. At some institutions, so-called stated income” programs have been curtailed or abolished altogether. Where you once had to provide a notice of assessment to show you didn’t owe back taxes, you may now have to provide your tax returns to prove that you can in fact afford the purchase you are making. You may also need to prove your ability to repay by showing a large amount of savings (at least one bank requires self-employed or stated income borrowers to have THREE YEARS worth of monthly payments as savings!). Business for self or incorprated borrowers may need to show articles of incorporation, business account statements, and other documentation to support their business status.

2) Product changes – a lot of attention was given to record-low fixed rate mortgages over the past month, but many borrowers were unaware of the restrictive conditions that were involved with the deal. Bank profit margins are very thin right now so the pre-payment restrictions, duration of rate hold, and discharge penalty structures for some products may have changed. Be fully aware of all aspects of the particular product you are interested in before signing off on the deal.

3) Volatile Rates – five-year fixed-rates may have hit record lows but soon bounced back up off the “floor” they had established. Getting pre-qualified locks in a rate for you for an extended period (usually 90 to 120 days, depending on the institution and the rate offer) so that you know what you are going to be paying if you close a purchase by a certain time. Special offer rates can have much shorter windows, and if it is unreasonable to expect you will find, purchase, and close the deal on a home within a short period of time then the special offer rates may not be for you. Again, a qualified mortgage specialist should be able to provide a full explanation of how long your rate is held for, and should explain what will happen if you buy but close AFTER the rate expiry date (sometimes the hold can be extended, sometimes not – find out BEFORE you agree to a specific closing date in your offer of purchase!).

4) Property valuations – depending on where you live and where you plan to buy, the valuation of homes (for the purpose of calculating financing) may be more restrictive than you think. One way for lenders to protect their investments is to restrict how much they will lend on a property (loan-to-value ratio) OR restrict what kinds of properties they will lend on. Simply put, homes may not be appraised for the same value as they were purchased. There are many homes out there that have multiple kitchens, that have unfinished renovations, or that have uninsurable wiring (knob and tube), outer siding (insulbrick) or other construction, that has made lenders unwilling to finance them. Vacation properties that have lake-intake water supply are another example.

It is critical for borrowers to understand that just because you are approved to borrow, that doesn’t mean the property will be approved to borrow on. An experienced mortgage specialist should warn you that eligibility (because of construction) or over-valuation of a property (through multiple offers, for example) could result in the lender being unable to finance the property the way you expected.

Here’s an example: You get approved for a  300k purchase with 20% down (60k) for a total mortgage of $240k. You buy a house in multiple offers for $320k. The extra valuation may not seem like much to finance (an extra 4k down and 16k on a mortgage) – but then the bank values the home at only 280k (because of the multiple offers and the home itself). You are now only able to borrow 80% of 280k (224k). That means you need to provide a downpayment of $96000 (an extra $36k!!) OR have to re-qualify at a smaller downpayment and incur higher monthly payments – plus CMHC fees.

Buying a home is the biggest investment most Canadians will ever make. It affects everything – your savings, your financial plans, your family’s activities and your happiness. Take it seriously and speak to a qualified professional BEFORE you go out and start looking at homes, and especially do it before you make a legal offer to purchase (or sell) one. The pain and penalties of not being prepared can cost you thousands of dollars  – and the opportunity of owning the home of your dreams.

Courtesy of Borrow Better

To understand the best mortgage options for you contact

Angela Calla Mortgage Team 604-802-3983 callateam@dominionlending.ca

27 Feb

Mortgage Payment Vacation = Bad Idea

General

Posted by: Angela Calla

Why A Mortgage Payment Vacation Is A Bad Idea

We have been paying an extra $600 per month on our mortgage since we moved into our new house last summer.  We are taking advantage of increased payment options to reduce our total interest costs and pay down our mortgage faster.  Our goal is to pay off our mortgage in less than 15 years.

Apparently our bank doesn’t think this is such a good thing.  I received a note last month from TD Bank informing me that I’ve won a vacation – a mortgage payment vacation, that is.  I’m going to explain what a mortgage payment vacation is, and why it’s a bad idea:

Mortgage Payment Vacation

The note from TD Bank said that I may apply an approved amount that I already prepaid to a maximum of 4 consecutive monthly or equivalent to monthly regular mortgage payments for a mortgage payment vacation.  Interest continues to accrue during the mortgage payment vacation.

Since we’ve already prepaid the equivalent of 2 or 3 extra mortgage payments, the nice folks at the bank figure we can take a break for a few months while the interest builds back up.

It seems like the banks are trying every marketing tactic they can in order to make more money in this low interest rate environment.  No wonder Canadians are in trouble when it comes to household debt.

The Sales Pitch

I was curious to hear more about taking a mortgage payment vacation so I checked out TD’s website for more information.  They have a whole exercise dedicated to this feature:

If you’re planning for a big or life-changing event like staying home with a new baby, taking a sabbatical from work, taking an extended trip or pursuing your studies while working part-time, a mortgage payment vacation is a good option to consider.

Ken and Cheryl are expecting their first child.  They meet the eligibility requirements and would like to take a mortgage payment vacation during their parental leave. To do so, they’ll need to accumulate a prepaid amount in the time before baby arrives.

Here’s how this works:

Ken and Cheryl’s regular monthly mortgage payment is $902 per month.  Ken and Cheryl would like to take a mortgage payment vacation for 4 months while they’re on parental leave.  Their prepayment goal is $3,608 ($902 x 4 months).

Ken and Cheryl have 9 months to prepay $3,608.  They will need to pay an extra $401 per month, so their monthly mortgage payment over that time will be: $902 + $401 = $1,303 per month.

Now they can apply any prepaid amounts accumulated from lump sum payments or accelerated payments to take a break from their mortgage payments for up to a 4-month period.

This feature is available on new mortgages, or when you renew your existing mortgage.  You must have accumulated the prepaid amount by taking advantage of prepayment privileges.

Mortgage Payment Vacation – A Bad Idea

A mortgage payment vacation results in interest capitalization.  This means interest will be added back onto the outstanding principal on your mortgage.

TD Bank also says that, if necessary, they will adjust the amortization period remaining at renewal so that the mortgage does not exceed the original amortization period remaining.  This may result in an increase to the amount of your regular payments after the renewal.

The bottom line is that taking a break from paying your mortgage is a bad idea.  The banks are trying to turn your good savings habits into bad ones.  They’re making it too easy for people to get sucked into the debt trap forever.

It’s pretty obvious that Ken and Cheryl should just set aside the extra money in a high interest savings account every month until their ready take parental leave.  They can continue to make their monthly mortgage payments, and maybe they can treat themselves to a real vacation when it’s paid off.

Courtesy of Boomer and Echo

Questions on your mortgage and debts? Contact-Angela Calla Mortgage Team 604-802-3983 callateam@dominionlending.ca

 

23 Feb

Understanding the Buyers Bonus-Angela Calla

General

Posted by: Angela Calla

It is important that we understand the nuances of this program released in our BC Budget, so we have put together a few key points to consider.

  • The credit is equal to 5% of the home price, subject to a maximum of $10,000
  • The bonus is based on your income and phases out for higher income families
  • The bonus is will be revieved after approval and a cheque will be sent to you after approved by the Goverment (avaliable later this year on the goverment website is sent from the borrower with your annual tax return).  Hence, it is not to be construed as funds that are available at closing date on a purchase.
  • This credit only applies to brand new homes
  • This credit only applies to first time homebuyers

For more information please see http://www.bcbudget.gov.bc.ca/2012/homebuyers/2012_First_Time_Home_Buyers_Fact_Sheet.pdf or call The Income Taxation Branch 1-877-387-3332 and press 0 to speak with them directly.

We look forward to helping you with the best mortgage for your next purchase, contact us directly to get started.

Angela Callla, AMP Dominion Lending Centres 

acalla@dominionlending.ca 604-802-3983 t: angelacalla

22 Feb

Own a 3 bdrm townhome in #portmoody #tricities for $34 a day!

General

Posted by: Angela Calla

As heard on this weeks Mortgage Show on CKNW with Angela Calla Saturday Feb 25th 2012. To get pre approved for this property or any other purchase email us at callateam@dominionlending.ca or call 604-802-3983

This weeks deal of the week has been brought to you by:

http://rboies.mlslink.mlxchange.com/?r=1511113359&id=363434333136.312

Robert Boies
Royal LePage Coronation West
cell: 604 341 3009 t: willingtwo
E-mail: robboies@royallepage.ca
www.willingsellerwillingbuyer.com

Please note that properties like this move quickly and getting set up with Rob Boies directly robboies@royallepage.ca will keep you abreast of all of these types of oppertunities meeting your speciafications

Thanks for visiting

Angela Calla, AMP

 

22 Feb

Eligibility for First Time Homebuyers Credit

General

Posted by: Angela Calla

 [ 1 ]

THE B.C. FIRST-TIME NEW HOME BUYERS’ BONUS

Subject to approval by the legislature, the B.C. government intends to implement a temporary BC First-Time New Home Buyers’ Bonus. Effective February 21, 2012, to March 31, 2013, the bonus is a one-time refundable personal income tax credit worth up to $10,000.

Requirements to Qualify for the Bonus

ELIGIBLE FIRST-TIME NEW HOME BUYER

You will qualify as a first-time new home buyer if:

                        You purchase or build an eligible new home located in B.C.;

                        You, or for couples, you and your spouse or common law partner, have never previously owned a primary residence;

                        You file a 2011 B.C. resident personal income tax return, or if you move to B.C. after December 31, 2011, you file a 2012 B.C. resident personal income tax return (you will not be eligible for the bonus if you move to B.C. after December 31, 2012);

                        You are eligible for the B.C. HST New Housing Rebate; and

                        You intend to live in the home as your primary residence.

 

ELIGIBLE NEW HOME

An eligible new home includes new homes (i.e., newly constructed and substantially renovated homes) that are purchased from a builder and that are owner-built. The bonus will be available in respect of new homes purchased from a builder where:

                        A written agreement of purchase and sale is entered into on or after February 21, 2012;

                        HST is payable on the home (e.g., HST will generally be payable if ownership or possession of the home transfers before April 1, 2013 – see further details below); and

                        No one else has claimed a bonus in respect of the home.

 

The bonus will be available in respect of owner-built homes where:

                        A written agreement of purchase and sale in respect of the land and building is entered into on or after February 21, 2012;

                        Construction of the home is complete, or the home is occupied, before April 1, 2013; and

                        No one else has claimed a bonus in respect of the home.

 

A substantially renovated home is one where all or substantially all of the interior of a building has been removed or replaced. Generally, 90% or more of the interior of the house must be renovated to qualify as a substantially renovated home (90% test).

Amount of the Bonus

MAXIMUM AMOUNT

The bonus is equal to 5% of the purchase price of the home (or in the case of owner-built homes, 5% of the land and construction costs subject to HST) to a maximum of $10,000.

PHASE-OUT FOR HIGHER INCOME EARNERS

The bonus will be reduced based on an individual’s/couple’s net income (line 236 of your income tax return) using the following formula:

                        For single individuals, the bonus is reduced by 20 cents for every dollar in net income over $150,000 (bonus is reduced to zero at $200,000 net income).

                        For couples, the bonus is reduced by 10 cents for every dollar in family net income over $150,000 (bonus is reduced to zero at $250,000 family net income).

 

THE B.C. FIRST-TIME NEW HOME BUYERS’ BONUS

[ 2 ]

Additional Information

APPLICATION PROCESS

Individuals must apply for the bonus through the B.C. government. Individuals can apply once application forms have been posted on the B.C. Ministry of Finance website later this year. Applicants will be required to submit documentation demonstrating eligibility for the bonus.

ELIGIBLE NEW HOME

The bonus is available in respect of new homes (i.e., newly constructed and substantially renovated homes) where HST is payable. HST will generally be payable on homes purchased from a builder where ownership or possession transfer before April 1, 2013. Potential buyers should consult with the builder to determine if the home will be subject to the HST.

For owner-built homes, the bonus will be based on land and construction costs subject to the HST. Eligible new homes will include:

                        Detached Houses, semi-detached houses, duplexes and townhouses,

                        Residential condominium units,

                        Mobile homes and floating homes, and

                        Residential units in a cooperative housing corporation.

 

For More Information

INCOME TAXATION BRANCH

Ministry of Finance

Province of British Columbia

Telephone: (250) 387-3332 or 1 (877) 387-3332

Email: ITBTaxQuestions@gov.bc.ca

 

22 Feb

BC Budget 2012 Grants for First Time Buyers and Seniors

General

Posted by: Angela Calla

Good Morning,

In light of the budget that came out yesterday, I wanted to share this PDF with you – www.bcbudget.gov.bc.ca/2012/highlights/2012_Highlights.pdf – to highlight a few key points as it relates to first-time homebuyers.

Further to the changes in HST that came out last week – available at www.angelacalla.ca/blog – the provincial government has announced they will issue:

  1. A tax credit for up to $10,000 for first-time homebuyers purchasing new construction over the next year
  2. A $1,000 home renovation tax credit for seniors

Remember these are tax credits, so they must be claimed and applied for when you do your income tax return or upon conveyance with your lawyer/notary.

With tax time just around the corner, be sure to check with both your lawyer/notary and accountant to ensure you receive the maximum amount, and grants and refunds applicable to you.

Let us know if we can help you with any questions regarding a mortgage!

Tune into this Saturday’s The Mortgage Show on CKNW with me at 7pm!

Thanks and have a great day,

Angela Calla, AMP
Dominion Lending Centres-Angela Calla
Host of ” The Mortgage Show” Saturdays @ 7pm on CKNW AM980
Phone : 604-802-3983 Fax: 604-939-8795
Email: acalla@dominionlending.ca
www.angelacalla.ca

17 Feb

$325k raise of threshold for HST rebates so 90% of homes will be exempt from this tax

General

Posted by: Angela Calla

British Columbians will have to wait until April 1st of next year, for the return of the PST.

The province set the date, as it announced HST transition rules for the housing industry today.

Those rules raise the current HST housing rebate threshold to 850-thousand from 525-thousand on new home purchases.

That will exempt 90 percent of new homes sold.

The province is also handing out a grant of up to 42-and-a-half thousand dollars to people who purchase recreational rental properties below 850-thousand dollars.

These rules will stay in place until the PST returns.

Angela Calla, AMP

acalla@dominionlending.ca @angelacalla 604-802-3983

13 Feb

Emotion and Finances by Angela Calla

General

Posted by: Angela Calla

There is no question that your emotions and finances are connected. This has been reported by physicians across the globe. I have also personally experienced this in my business and while working with a doctor on Million Dollar Neighbourhood for the OWN network. For instance, if you’re worried about money, chances are, you get less sleep and your appetite/food choices are affected. And when lack of sleep and poor eating habits are combined, you’re more likely to become short or testy with your spouse or children. The likelihood of getting sick or injuring yourself also becomes greater… you can see the path we are going down here.

The question is: are you standing in your own way of achieving your very best possible financial situation?

3 common excuses for not properly reviewing your financial options:

1.            I don’t have time

2.            It’s too much work

3.            I don’t have options

If you’ve made any of the above excuses when it comes to your finances, you’re likely standing in the way of your own success and thousands of dollars in savings.

Let’s look closer at these excuses and what they may be costing you:

1.            I don’t have time. Many people experience time management issues. It’s what you don’t know that costs you the most amount of money. One thing that separates people who do better financially from everyone else is that they make the time to learn. It’s like saying investing in your education is a waste because you know everything in life and there’s nothing more you can possibly learn. It takes approximately 15 minutes, regardless of your organizational level, to call your AMP and review your mortgage to see what you could be doing to find more money in your mortgage. In today’s market, if you’re paying 4.25% on a $300,000 mortgage, for instance, a refinance will save you more than $18,000 in interest alone (even after including the penalty in the new mortgage) and save you more than $ 54,000 in mortgage payments! How long does it take you to net that amount after taxes? It’s safe to say that for 99% of borrowers, it would be worth it. If it’s not, at least you’re in the right mindset to save, which will serve you well in the future.

2.            Too much work. You’ll only need about 15 minutes and perhaps a few documents. If you’ve ever bought a lottery ticket, waited in line for a movie, searched in your home for a sweater or waited to be served in a restaurant, getting a few easy documents together – such as your pay slips and a copy of your mortgage statement – is definitely not “too much work”.

3.            I don’t have options. People tend to get intimidated before they have the facts. Why would you cut yourself off without knowing the full story? Knowledge is Power. We encounter many people who say they did their own calculations and, based on the penalty, refinancing is not a worthwhile endeavor. Or, sometimes their lender also says the penalty is too high to justify a change. Remember that the people making money on you by carrying debt want you to stay there. It’s how they make money! So if they can detour you and, therefore, make more money for the company, they are the ones who benefit – not you! That’s why it’s important to seek advice from an unbiased mortgage professional who does not charge you for the review and can offer multiple options that best meet your unique needs. The great thing about numbers is they’re not jaded by emotion and are completely transparent – remember that 1+1=2, no matter how you slice it!

Every day we can make better choices that empower us and those we care about. Little things can make a HUGE difference.

Angela Calla is one of Canada’s top mortgage experts and AMP of the year in 2009. Angela Calla can be contacted at 604-802-3983 or acalla@dominionlending.ca t:@angelacalla