Things to consider prior to making a prepayment

Paying down your mortgage is a smart step that’s always encouraged.
We recommend you first consider the following for your financial well-being as making a lump-sum pre-payment on a mortgage is one sided. Once you’ve made the payment, there are only two ways to get the money back out. Sell or pay an exit fee to refinance.

This is what you should consider prior to a lump-sum payment:

1- Do you have any debts at an interest rate higher than your mortgage you can use the money for instead to stop paying unnecessary interest?

2- Do you have six months of living expenses set aside so you don’t have to acquire debt if something comes up?

3- Have you topped up your RRSPs or RESP if applicable to take advantage of any government matching programs or tax advantages that can result in an income tax refund?

4- Are you looking at doing any home renovations, new vehicle purchase or job changes in the next while?

5. Are you considering making another property purchase in the next while (as you will need a deposit handy in cash)

If all the above are covered, that’s awesome and congratulations in having this capital to pay down your largest debt! All lenders have different pre-payment terms and timing in which they allow. The goal is to get the most flexible mortgage initially, and we can help. This is the reason when The Angela Calla Mortgage Team sets up a mortgage initially, we start with the minimum payment, while other increases are happening separately once we have a strategy in place. If you decide to execute a pay down strategy with periodic payments, we can cancel that at any time with no costs. There is always a reason behind “why” we ask what we ask and “why” we set things up as we do initially with the end result being the lowest cost of borrowing and best wealth strategy being the result. Remember- check your statements. Even with confirmation a task has been complete, we are not the ones physically processing the payments and technology is not perfect. The borrower is ultimately responsible to ensure there strategies are carried out!

Please reach out to us directly with any questions. We are always here to help you and thos you care most about.

Five points to consider before you list your home.

There are several things to consider before you take the plunge and put your home up for sale. This might sound obvious, but the first step is to call your mortgage broker, not your lender directly or your realtor. You don’t have to look long for an unfortunate story of someone who didn’t understand their portability, penalty or transfer costs. Here’s how you avoid this scenario.

1.The anniversary date of your mortgage will depend on your penalty. If you are in a variable rate you usually will pay 3 month’s interest payment. In a fixed rate, it can be up to one to 4.5% of the outstanding mortgage balance. Remember we can estimate things, the only guarantee you will have of your penalty is when the lawyer requests the payout statement.

2.Just because a mortgage says its portable doesn’t mean you don’t have to completely re-qualify. Changing properties means complete re-qualification of everything; credit, income and property. Less than one per cent of mortgages actually get ported due to the changes in the market, or your circumstances.

3.If you have accumulated outside debt, you may not even qualify to purchase for more due to recent rule changes. You’ll need clarity on what the approximate net will be after anything that is required to be paid out to improve qualification.

4.If you list your property and want to buy first or need money for a deposit, you may need to change your mortgage first which you won’t qualify for if your property is already listed. This happens frequently when people who are downsizing are selling their home.

5.Making a purchase requires a deposit that later forms part of the down payment, so understanding this before you go out shopping helps you plan for it

A little preparation helps the process go more smoothly, and we are here to help.

The best mortgage plan is one that is developed by assessing your goals and life stage. The Angela Calla Mortgage Team will help you personally call us at 604-802-3983 or email callateam@dominionlending.ca to contact Angela Calla directly call 604-802-3983 or visit www.angelacalla.ca.

What you need to discuss with your lawyer and what role they play in your mortgage:

When you are completing a mortgage, for a purchase, refinance or registration of a secured loan a lawyer will be involved. Their level of involvement can vary depending if they are from a closing service (which is allowed for refinances and switches) or a purchase.
It’s critical that you are clear on what their role is and who they represent. If you don’t feel you are getting clarity on what you need to know, ensure you have a lawyer you are comfortable with.

In most cases (except for private mortgages) they represent the lender and the borrower.

Here is a list of things to cover with them that are the borrower’s responsibility.

1. The pros and cons of the different ways of registration that are available so you get the best choice.
2. Qualification for First Time Home buyers Grants
3. Any other tax rebates available
4. Adding spouses on previously owned properties and any taxes that could come up
5. ILA – Independent Legal Advice
6. Spousal consent

In our office we do everything possible to ensure the process with lawyers goes smoothly. When we get a file complete from a lender, we just don’t count on that. We then send all our paperwork to the lawyer and tell them to contact us if they have ANY questions that come up prior to the client coming in. We then follow up further to confirm they have no questions and have made an appointment with the borrower. Not all lawyers have experience with all lenders, and they do not understand the nuances of why the specific lender and terms where selected, and they’re not in a position to comment. Their job is to register title and advise on the grants and tax/cost implications of each way. I hope that helped you gain clarity on the lawyer’s role in your mortgage transaction.

Angela Calla, Mortgage Expert, AMP of the Year in 2009 has been helping British Columbia families save money with the best mortgage strategy for over a decade from her Port Coquitlam office location. She is a regular contributor to national and regional media outlets and long time host of The Mortgage Show on CKNW Saturdays at 7pm, and sits on many advisory boards for mortgage lenders & insures. She can be reached directly to help you at 604-802-3983 or callateam@dominionlending.ca www.angelacalla.ca

It appears the bottom is behind us, expect lending rates to rise.

This news is no reason to panic, we just want you to be aware of possible changes upcoming.

With Angela Calla Mortgage Team, we’re committed to helping you get clarity on financing, and get in front of market changes proactively with up to date information. We have a collision of circumstances where the bond market that impacts fixed interest rates and prime rate show all the indications to get ready for an increase.
http://www.bankofcanada.ca/rates/interest-rates/canadian-bonds/ http://globalnews.ca/news/3527352/business-report-bank-of-canada-its-time-to-raise-interest-rates/

Understanding how to brace for impact so you can decide your route of action.

If there is a .25 basis point increase in fixed or a variable rate mortgage based on a 25 year amortization, the impact is $13 per 100,000 in mortgage. With the average mortgage in Canada at $350,000 that will be $47 dollars a month.

1. If you have a fixed rate- review it, pending the renewal date and your financial circumstances you may want to redo and renew your mortgage for a longer period of time to take advantage knowing the bottom is behind us. If you do nothing, you will have no impact until your renewal date, however you will want to check in with us and consider increasing your payment now to avoid payment shock. This is reviewed annually for existing Angela Calla Mortgage Team clients automatically.

2. If you have a variable rate, you are the only one who can decide what you want to do: stay put or lock in. Your lender will be able to provide you with a lock-in offer valid only for a day, and you can take it or leave it. They can change their mind in 24 hours and change their offers. Check with us to ensure you don’t get “sold” an option that might not be right for you. Each lender is different, some allow us to help you, and others will make you go it on your own. Consulting with us will assist in helping you clarify your thoughts based on your future goals and risk tolerance. Ultimately, the borrower is responsible for their decision and the timing.

Remember once you lock in you penalty goes up significantly to exit that mortgage pending the lender at a later date, the benefit of having a variable rate is that more money goes towards principal as rates are lower and it’s only 3 months of interest to pay out completely. Rates generally only go up on variable products 0.25 per cent at a time.

3. Changes on a mortgage rate/product are limited to once a year, so if you have done a mortgage in the last year, you will likely have to wait till your anniversary date.

4. It’s likely the increases we will see will be gradual over a longer period of time, rather than a sudden substantial increase. At the moment, we have seen no increases. The next announcement for the Bank of Canada is July 12, 2017.

5. There is history. In November 2016 TD bank decided to raise their prime rate, not simultaneously with the Bank of Canada- so their prime rate has already been higher for their customers for several months http://www.cbc.ca/news/business/td-bank-mortgage-prime-rate-1.3830878

So if you have questions, we are here to help.

Angela Calla, AMP, is host of The Mortgage Show on Saturdays at 7 pm on CKNW, one of Canada’s Top Mortgage Professionals, a Woman of Influence and a CMP ‘Young Gun’. She has been helping Canadians avoid costly mistakes with mortgages and taking the fear out of financing for over 13 years from her Port Coquitlam Office. She can be reached at 604-802-3983 or callateam@dominionlending.ca

Lower Mainland parents buy properties for when children become of age

Parents are always worried about something with their children, and where they are going to live and how they are going to afford it is no exception.
The bank of mom and dad is a common source of down payment for their children, and the strategy continues to grow with the significant rise in prices and wage gap growing in today’s marketplace.

For example, the upper middle class are buying properties for their kids and grand kids and the benefits are multifaceted: they generate income now, while someone else pays the mortgage (a tenant) and the value increases.

The families can then refinance at a later date and gift some equity that was pulled out what was essentially paid for by a tenant and continue generate income to assist with retirement, as most of this class sector doesn’t have the company pensions that were available a generation ago. However, even this group feels they are in crisis by not having enough cash flow to save for retirement. But with the above strategy, essentially your downsize home was purchased early with the basic principal of time working in your favor to get ahead even further ahead financially so everybody wins without sacrifice in this scenario.

Our demographics are changing rapidly and this is something that is motivated by families who want to keep their children close to them and hope to have them enjoy the same lifestyle they have created. The majority of Canadians implementing these strategies are households earning $200,000 a year and have a net worth of over $2 million, including real estate.

The amount parents have gifted their children has changed dramatically with the inflation changes over the years. In the 1980s, a gift for a down payment averaged $10,000, but today that amount is between $200,000 and $500,000!
According to mortgage insurer Genworth Financial, 40 per cent of first time home buyers in Vancouver had help from their parents, compared to 22 per cent in the rest of Canada.

These strategies are often not commonly considered and depending on the mortgage-provider choices you make early on, having a provider like the Angela Calla Mortgage Team that focuses on these wealth building strategies will help you avoid missing opportunities. Mainly because these are practices implemented by the team members personally.

Anybody can get you a mortgage, however, a proactive provider can assist you and show you what the wealthiest Canadians are doing so you don’t not miss opportunities.

Angela Calla, AMP, is host of The Mortgage Show on Saturdays at 7 pm on CKNW, one of Canada’s Top Mortgage Professionals, a Woman of Influence  and a CMP ‘Young Gun’. She has been helping Canadians avoid costly mistakes with mortgages and taking the fear out of financing for over 13 years from her Port Coquitlam Office. She can be reached at 604-802-3983 or callateam@dominionlending.ca

6 Deadly Financial Mistakes Canadians Make

Most working Canadians have a middle-class income range. This income class includes teachers, firefighters, plumbers, engineers, nurses, construction managers, and chefs – workers from across the professional spectrum. They provide and consume the bulk of services that keep society afloat, driving economic growth and investment with every purchase.

The middle class also has great challenges. Wages have been stagnant and the cost of housing and everyday goods puts a squeeze on the average budget, leaving 6 out of 10 Canadians living paycheque-to-paycheque with most accumulating debt.

In part, this has to do with everyday life and the growing demands of our set of unique challenges. However, we need to “control the controllable” and be smart and strategic to get ahead.

1. Spend within your means
Most people keep a balance at month’s end on their credit cards and lines of credit – some out of necessity, but some by choice because they want to keep up with the Joneses or fill an emotional void. If you are trying to get ahead financially, ask yourself what your plan is to get rid of that debt. It should not be something that is with you to carry over a balance. It’s time to assess your lifestyle and how you are using your home equity and the market to your advantage if you own a home.
Holding the debt is a costly mistake – most debts outside a mortgage charge interest ranging from more than 5% to 19%. Credit is an important part of life and you need it. The biggest life hack is to pay it in full every month with an auto setup payment – this one strategy saves costs, debt, and stress.

2. An emergency fund is a must
Ask yourself this, what would happen right now if your car broke down, your house needed a new roof, or you lost your job? Most Canadians would have to go to credit cards or lines of credit.
You need 6 months of expenses put aside, period. If you don’t have this you will begin a cycle of debt. There are ways to do this automatic withdrawal into an account from your paycheque or when your mortgage renewal is up.

3. Giving your retirement a raise and start in high school
Consider how long wages have felt stagnant while the cost of everything goes up. When you are young and your wages go up, increase your retirement contribution. Get compound interest working for you. Time is your friend. By saving a percentage automatically by paying yourself first, your investment grows your options.
There are tax-free savings accounts and RRSP’s that will begin the foundation of your financial future. It should start from the moment you get your first job, then when you fast forward through your 20s to 50s, your investment doesn’t have to be as large. Life will throw you enough challenges at that time to deal with, and you already have time and compound interest working for you, and you are in front of it, not chasing to catch up.

4. Relying on RRSP’s, OAS and CPP
Contributing to tax-advantaged products is one component of investing, but there are restrictions. Also, future government income plans are always going to be changing. Having a proactive mortgage and finance plan will allow you to get your assets working for you, so you can have multiple streams of income. Being self-sufficient is empowering, then if and when the other options are still available and advantageous, they are a bonus and you are in control based on your proactive abilities.

5. Spending too much on depreciating assets
The average Canadian spends $570 a month on a new car payment. This can go up to as much as $1,400 per month- that’s just for the car, not insurance, gas, or maintenance. The problem is that it’s a depreciating asset. To put it into perspective, that range in payment takes away qualification for a whopping $150,000 to $400,000 in mortgage amount qualification.
For someone in the middle class who intends to buy a home, which is an appreciating asset, the car payment should be the absolute lowest priority and should be avoided whenever possible. Think of the power you could have saving that kind of money or having it in an income-generating asset.

6. Having a will and keeping it current
Your will should include your up-to-date investments, insurance policies, real estate and family gems. With life happening so quickly, it’s easy to let a few years fly by, but then things can get messy. You don’t want your hard-earned money in the hands of anyone but for whom it’s intended.
If you want to learn more, a recently published study by Point2 Homes investigates whether various Canadian professions earn enough to live comfortably with a mortgage.

Angela Calla, AMP, is host of The Mortgage Show on Saturdays at 7 pm on CKNW, one of Canada’s Top Mortgage Professionals, a Woman of Influence  and a CMP ‘Young Gun’. She has been helping Canadians avoid costly mistakes with mortgages and taking the fear out of financing for over 13 years from her Port Coquitlam Office. She can be reached at 604-802-3983 or callateam@dominionlending.ca

https://www.point2homes.com/news/canada-real-estate/6-deadly-financial-mistakes-canadians-make.html