Here are the 4 Questions from City TV’s BT this morning

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. 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 installments 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.

3. 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.

 4. 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 will help you with your specific plan, as there is no such thing as “one size fits all” when it comes to mortgages!

 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

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

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

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

Good Morning,

No surprises this morning, the BOC rate remains stable the full report can be viewed here http://www.bankofcanada.ca/2011/12/press-releases/fad-press-release-2011-12-06/

Angela Calla, AMP

Dominion Lending Centres 604-802-3983

acalla@dominionlending.ca

Well it’s that time again when the Bank of Canada considers doing something with its overnight target rate, the benchmark interest rate that affects interest rates, directly and indirectly, throughout the country.

The Bank’s overnight target rate is currently one per cent, low by historical standards although it has been lower dropping to a record 0.25 per cent in the spring of 2009 and staying at that record low for more than a year.

Now the first murmurings to be heard (and I expect more will come in the next few days) are that while the bank will likely hold the rate steady next week the next move may be down not up.

“The worsening sovereign debt crisis in Europe, which the Bank now admits looks barely contained, has weakened global economic growth prospects,” writes David Madani of Capital Economics in Toronto. “As such, we think the Bank’s next move will be to lower interest rates, possibly in April or June next year, from 1.00% to 0.50%.

“More importantly,” Madani adds, “we doubt that interest rates will go up at all between now and the end of 2013.”

The last time we had a overnight target rate of more than one per cent was January 19, 2009, the day before the Bank lowered the rate from 1.50 per cent to 1.00 per cent. That’s a long time for consumers to have the benefit of low interest rates and it looks like it could last longer still.

Courtesy the Vanvouver Sun Nov 29th 2011

The BOC is set to make an announcment Dec 6th 2011

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