17 Dec

Parents on a mortgage, what you need to know!

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Posted by: Angela Calla

A lawyer and respected real estate veteran is offering a fresh warning for those enlisting the help of family members for a down payment – a word of caution brokers should share with all first-time buyers and, indeed, their parents.

“If the parents try to transfer the 1 per cent back to the kids without telling the lender, this will actually cause the mortgage to go into default,” Mark Weisleder wrote in a column for the Toronto Star. “That’s because the standard terms of a mortgage typically state that the mortgage comes due at the option of the lender, if someone sells their interest.”

It is worth noting that even if the parents transfer their 1 per cent share, he said, they are still responsible if the kids don’t make the mortgage payments, since they signed the mortgage originally.

“It’s always great to help your kids if you can, but you have to think carefully about what you’re doing,” Weisleder writes. “This will ensure everyone knows whether it’s a loan or a gift and their obligations going forward.”

Essentially, if it’s a gift, there are no strings attached, he said, but if it’s a loan, there will likely be a second mortgage registered on title to protect the parents

“The bank will have to know about it and approve,” Weisleder said.

Parents can offer to be a guarantor if their child buyer’s income doesn’t meet the necessary thresholds. However, lenders will often require the parent’s name to appear on the deed as well. And an important consideration – and one that may often be overlooked – is to figure out how to transfer the percentage owned by a parent back to the child.

One workaround, Weisleder notes, is to have the parent leave the rest of the property to their child in their will.

“It was suggested that the parents leave their 1 per cent share to the kids by just doing an amendment to their will, so the kids would end up with it later,” Weisleder writes. “Without a will, problems could arise later if other beneficiaries do not wish to co-operate and want to sell the home to get their share of the estate.”

At the Angela Calla Mortgage Team we look at all aspects of helping you with the best mortgage. As some lenders do not allow non residing applicants on a mortgage, or even to structure mortgages between spouses for certain tax benifits this is one of the many considerations we advise you on to ensure the lowest cost of homeownership. Cotact us today at 604-802-3983 or callateam@dominionlending.ca

17 Dec

How big banks make penalties higher

General

Posted by: Angela Calla

The Angela Calla Mortgage Team reported on this back in April and here it is again in The Globe & Mail.

The story in the link provided below contains great details and a side by side comparison where there is over a $3,000.00 difference in savings. This goes to show you there is more behind choosing a lender then the rate. Even when comparing the same rate side by side, this term & lender policy would cost you thousands if you didn’t know better. Every borroers circumstances are different and if you can be approved by a lender that can save you money, that’s the first option provided to you from our team so you understand your options.

http://www.theglobeandmail.com/globe-investor/personal-finance/mortgages/the-hidden-trap-of-mortgage-penalties/article15774375/

The Angela Calla Mortgage Team looks at the lowest overall cost in homeownership when considering your options for a mortgage. Contact us directly at 604-802-3983 or callateam@dominionlending.ca to get us to help you.