Documents, documents and more documents. Yes that’s right you will need to provide your Dominion Lending Centres mortgage broker with as many documents that we request upfront as possible. Why? Because the more supporting documentation you have available will help us as brokers to find you your best mortgage options. If you don’t have everything on hand e-mail a PDF of what you have and start digging up the rest as soon as possible.

Why so many documents you ask? While the lending market isn’t what it used to be, it is now much more strict and complex then a few years ago. Lenders are asking for WAY more documentation before they will lend you money. Yes, there have been instances of mortgage fraud that likely led to more scrutinized lending and Government regulations that lenders have to abide by are always changing. Mortgage lenders need to protect their investors and help ensure our Canadian housing market remains strong.

It may seem like a pain but ask yourself this if you had a large amount of money would you lend it out to somebody without proof they have income stability and/or the means to pay it back? Pretty sure your answer is no (at least mine is).

Below is a list of typical documents lender and mortgage insurers request. If you would like a tailored list please contact your DLC Mortgage Professional to discuss your application.

Income – lenders are looking for proof of income stability.

Self-employed Income

* 2 years of Income Tax Returns, Business Financials, CRA Notice of Assessments. Often it’s best to have your accountant e-mail them to us so no pages are missing.

Rental income

* Lease agreements

* T1-General tax returns with the Statement of Real Estate Activities. If you don’t claim your rental income let us know as this may affect how your mortgage is approved.

* Proof of the rental income being deposit on a regular basis into your bank account.

Guaranteed Employment Income

* A couple of recent pay stubs

* A job letter confirming your position, guaranteed pay and hours, if you are seasonal, contract or any specific information that relates to your income stability. Lenders will call your employer to verify the letter and ask for more information as possible. (Sample Job Letter)

* 2 Years of CRA Notice of Assessments

* 2 Years T1-Generals

Commission, Overtime, Seasonal, Contact or Bonus Income.

* A couple of recent pay stubs

* Job letter

* 2 years of T1-General Income tax returns

* 2 years of CRA Notice of Assessments

Liabilities – We will see most of your consumer credit accounts on your credit report however we may require some additional paperwork

* Current mortgage statements

* Property tax statements and proof of payment

* Child Support Payments proof via court orders and bank statements

* Alimony via Separation Agreements

* Proof your income tax has been paid. This is the most important item to pay because the Government has more power than the lenders. If you are wanting to refinance your mortgage to pay CRA contact us to discuss your options.

* Proof debts have been paid. If a zero balance is require you must show the account at a zero balance or the current balance and the proof of payment

Down Payment & Closing Costs

* The last 90 days of savings history. Any larger deposits have to be sourced.

* Gift Letter (some lenders have prescribed forms)

* Statement showing gift deposited into your account

* Property sale contracts and mortgage statements

About Documentation from Financial Institute

* Must have account ownership proof. For example e-statements are the best as they typically have your name, account number and the providers details already on the statement

* Screenshots work if the providers logo/name are clearly shown on them as well as the account holders name. If the account number only shows then you will have to provide an additional document from the provider with both your account number and name.

* If you are having your account history printed at a Teller please have the Teller stamp the paperwork

Documentation varies by applicant and lender. Be prepared by contacting your mortgage professional today for your tailored documents list.

KATHLEEN DEDILUKE
Dominion Lending Centres – Accredited Mortgage Professional
Kathleen is part of DLC Integrity Mortgage BC based in Nanaimo, BC.

So 2016 was an exciting year in the mortgage world! The problem is that we mortgage professionals really hate it when things get exciting in our world. Between the economy and the federally mandated mortgage rule changes and their ensuing fallout, it is now more important than ever to get a solid pre-approval in place. I am not just speaking to first time home owners either! Before you list your current home or refinance your mortgage or consider buying a rental, you need to make sure that you qualify under the new mortgage rules.

The biggest change by far was the increase to the mortgage qualifying rate. Basically, no matter which term you are selecting you will have to qualify at the Bank of Canada posted rate which is currently 4.64%. The mortgage rate you are given will be considerably less than this and will be based on whichever term you choose. The rationale is that there is no way rates were going to stay at 2.39% and all of a sudden a lot of people could be hit with a significant mortgage payment increases which could mean increased foreclosures. When you remember that our federal government is actually financially backing those mortgages through the mortgage insurers, they had a vested interest in keeping the housing market secure.

So the things you need to know:

1. Rates have climbed since the rule changes were announced, so if a new home is in your future get a rate hold in place so you are protected against further increases. Most are good for 120 days.

2. Make sure they are checking your credit and not just seeing how much you are qualified for based on your income. Can you imagine selling your home only to be told that you do not qualify for the financing on the next because of something on your credit bureau? It has happened, I assure you.

3. Given the variety of ways in which we all get paid, you also need to make sure your pre-approval is solid given your situation. For example, the mortgage lenders require a 2 year history on all variable income. That means if your income is commission, bonuses, overtime or shift differential then you will need a 2 year history of it before it can be used for the mortgage qualification.

4. Porting is an area which is slightly misunderstood. You will have to qualify for the mortgage under the new rules even if you are just moving the mortgage from A to B. Please refer back to the previous horror story of the people who had sold and then could not buy a new home.

5. Ironically, the changes now mean that if you are refinancing your home, there is a possibility that you will have a higher mortgage rate than someone putting 5% down. This is because the 5% down mortgage is insured while yours with the significant amount of equity is not making it a higher risk for the bank. If you are considering a refi you may want to do it sooner rather than later given the rate increases.

6. Rental properties have been heavily hit by the changes. Our economy means that fewer lenders are willing to consider these mortgages to start with and those that still are have upped the ante. Some have increased the minimum down to 35% from 20%. Others require a very strong net worth in liquid assets. If you have multiple properties make sure they are reporting on your taxes.

So that’s about that. A solid pre-approval from a qualified mortgage professional is a very good peace of mind strategy for both the new home buyer and those veteran buyers. When you’re ready to talk of if you need more information, the mortgage professionals at Dominion Lending Centres are here!

Your Credit Score that the lenders use, not to be mistaken by the Credit Risk Score you see when you check your own credit, is one aspect of determining your borrowing power. The better your score, the length of established credit and your payment history the better when it comes to mortgage financing.

Let’s assume that all parts of an application are equal (available down payment, income, monthly liability payments etc.) except for the Credit Score. Established credit in this case would be any credit report that has at least 2 accounts reporting with a limit of $2,000 for 2 Years.

Comparing the credit profiles of Jane and John both who make a gross annual income of $50,000 the following would apply:

First Gross Debt Service Ratio (GDS) is the combined shelter expenses (heat, property tax, half of condo fees & mortgage payment) in relation to the borrowers gross income. And Total Debt Service Ratio (TDS) is the GDS plus all other monthly debt liabilities in relation to the borrowers gross income.

Jane has a Credit Score over 680

• GDS allowed is 39%
• TDS allowed is 44%

John has a Credit Score between 600-679

• GDS allowed is 35%
• TDS allowed is 42%

Each year Jane may allocate $19,500 towards GDS and $22,000 towards TDS.

And each year John may allocate $17,500 towards GDS and $21,000 towards TDS.

Lets assume heat and property tax combined are $300/month. This means that Jane with her excellent credit can allocate $1,325 towards her mortgage payment and John can allocate $1,158 toward his mortgage payment.

Using the current Benchmark Qualifying Rate of 4.64% to qualify Jane may qualify for a mortgage of $236,066 and John may qualify for a mortgage of $206,313, a difference of$29,735.

As you can see there is quite the difference in mortgage amounts allowed under each credit rating. If you’re thinking of buying it’s best to consult a Dominion Lending Centres mortgage broker who will check your credit, help you determine your maximum mortgage amounts and if necessary help you make credit decisions that may improve your credit score and buying power.

KATHLEEN DEDILUKE
Dominion Lending Centres – Accredited Mortgage Professional
Kathleen is part of DLC Integrity Mortgage BC based in Nanaimo, BC

If you have no desire at all to qualify for a mortgage, here are some great ways to make sure you don’t accidentally end up buying a house and taking out a mortgage to do so.

One of the best ways to ensure you won’t qualify for a mortgage is to be unemployed. Yep, banks hate lending money to unemployed people! Okay, so you have a job. Well, that’s okay, you can always unexpectedly quit your job just as you are trying to arrange financing! Even if you are making a lateral move, or taking a better job than the one you have now, that’s cool… any change in employment status while you are looking to get a mortgage will most likely wreck your chances of getting a mortgage for a while. This is because lenders want to see stability; they want to know that you have been in your current position for some time, that you are past probation, and that everything is working out well. By changing jobs right when you are looking to buy a property, you won’t instil the lender with confidence, and they probably won’t give you a mortgage. Mission accomplished.

Don’t wanna buy a house? Well, then it’s best you don’t save any money. Better yet, you should probably borrow as much money on credit as you can. One of the main qualification points on a mortgage is called your debt-service ratio. Simply put, the more money you owe in consumer debt, the less money you will qualify to borrow on a mortgage, because your ratio of income compared to your debt is higher when you owe more money. Consider this permission to go and finance a Harley-Davidson. Do it, right now. Not a big fan of motorcycles? That’s cool; a Ford 150 should do the trick nicely. The key here is to make sure you add as much monthly payment as you can. The bigger the payment, the better.

But let’s say that unfortunately your debt-service ratios are in line, you have been able to save up the necessary 5% down payment, and you are on your way to buying a house. What do you do? Ugly documentation! A great way to make sure your lender feels uncomfortable is to have really terrible bank statements. Typically when proving your down payment, the lender will require 90 days’ history of your account(s), with your name on the statement, showing that you have accumulated the down payment over time. Want to really mess things up? Make sure there are lots of deposits over $1000 that can’t be substantiated. This will look like money laundering. If that doesn’t work, you can always black out your “personal information.” Just use a black Sharpie and make your bank statements look like a classified FBI document. Lenders hate that!

So you’ve got a great job and lots of money… don’t panic, you can still absolutely wreck your chances of qualifying for a mortgage. Just don’t pay any of your bills on time. Seriously, borrow lots of money, and then stop paying! Boom. Why would any lender want to lend you money when you have a great track record of not paying back any of the money you borrow? Now, if this feels morally wrong, okay, here is an ethical way to wreck your credit. Don’t pay that cell phone bill out of principle. We’ve all been there — roaming charges, extra data charges that the cell company added on your bill… choose not to pay this on principle. This is a great way to sink your chances of getting a mortgage, I mean, how are you supposed to know that some collections (like cell phones) will show up on your credit report?

Last, if you want to make sure you never get financing, insist on buying the worst house in a bad neighbourhood. You see, the property you are looking to buy is very important to the lender. If they lend you the money to buy it and you stop making the payments, they will be forced to repossess and sell it. They are going to make sure they can recoup their initial investment. So, a “handyman special, fixer upper, with lots of potential” is a great option. As everyone knows, those words are code for “a giant dump.” Bonus points if you get those terms written in the MLS listing. Yep, insist on buying something that is falling apart and stick to it; don’t ever consider buying a solid home in a good neighbourhood.

So there you have it, if you don’t want a mortgage, no problem. Quit your job, borrow lots of money, wreck your credit, and insist on buying a dump.

However, on the off chance you feel homeownership is right for you, contact a Dominion Lending Centres mortgage professional. We can help you put a plan in place to avoid these (and many more) mortgage qualification pitfalls.

Michael Hallett
Dominion Lending Centres – Accredited Mortgage Professional
Michael is part of DLC Producers West Financial based in Coquitlam, BC

With an increase in concern about fraud, lending institutions are getting strict on documentation for mortgage approval.

As part of the mortgage approval process, your mortgage broker will ask for documents to show proof of your income, down payment and possibly other items such as proof of permanent residency and other identification. Since most of that paperwork is in your home in hard copy many people simply take a photo on their phone and send it over by email. As lenders are getting strict on documentation they are not accepting photograph copies and some lenders are not accepting a JPEG file or other formats. They will want a PDF copy of the document.

So I suggest to clients –keep it simple—and make a digital file of all of your important documents stored in a safe — place such as an external hard drive or offsite server location.

1. Your passport or other important forms of identification

2. PDF copies of your T1 General tax returns and Notice of Assessment from CRA.

3. If you need to make a copy of a bank statement get it scanned and copied to a PDF

DO NOT take a photo of your documents and keep them on your phone OR consider those as good forms for lender financing purposes.

When in doubt ask your Dominion Lending Centres mortgage professional.

Remember – these extra steps may be frustrating but this level of security are in place to protect all of us from fraudulent practices by criminals.

Pauline Tonkin
Dominion Lending Centres – Accredited Mortgage Professional
Pauline is part of DLC Innovative Mortgage Solutions based in Coquitlam, BC

Financing Solution – Home Equity Line Of Credit

The Home Equity Line of Credit (HELOC) lets you split up your mortgage debt and borrow against your equity at low rates.

The unique feature of this mortgage product is that you can slice the pie (the mortgage balance) into various segments. All of it is registered against the subject property title as just one charge. This gives you the ability to diversify your risk in the marketplace.

If you had a $480,000 outstanding mortgage against a property (with 20% equity or a value of $600,000) you could divide it up into different segments. For example, you might place $200,000 in a variable-rate mortgage, $200,000 as fixed term and $80,000 line of credit.

Spreading the risk across different markets helps you plan for the future, as there are different governing bodies controlling different aspects of the marketplace.

Variable-rate mortgages and lines of credit (LOCs) are based on the prime lending rate and controlled by the Bank of Canada. Fixed rates are based on bond yields and dictated by the lenders themselves. Most other lenders follow the trends of the major chartered banks in Canada.

There are two types of line of credit in Canada: secured (registered against real estate) and unsecured (guaranteed by one’s promise to repay). I can only assist with secured LOCs. The secured LOC means less risk for the lender as it is based on the market value of the home to a maximum of 80% loan-to-value. Therefor the rate is lower and the borrowing ceiling is higher. On secured LOCs the rate is Prime (2.70%) +0.50% which is 3.20%. This means that if you had a primary residence with a market value of $500,000 free and clear of any other type of mortgage then you could secure a $400,000 HELOC against it at 3.20%.

Unsecured LOC rates vary depending on lender, but a safe starting range is 5-7%. And on unsecured LOCs, lenders tend to forward much less than secured LOCs; they range from $5,000-$40,000.

Here is an example of a client I recently assisted. We were able to obtain a HELOC mortgage product from a Canadian charter bank.

Current residence (located in the Greater Vancouver area) appraised at $1.15MM.
Current mortgage balance, $445,000.
Maximum loan limit, $920,000 (80% of market value: 1,150,000 x 80%).
They opted to secure the current outstanding balance of $445,000 into a variable-rate mortgage at Prime-0.45% or 2.25%.
The additional equity of $475,000 was set up for access across 3 different LOCs; one at $159,000 and two at $158,000.
These clients now have access to $475,000 for any future needs: renos, emergency, investment opportunities, post-secondary education for their children.
But while a HELOC allows for product diversification and long-term planning, it is not for everyone. It can be a bad idea if it’s just used as access to easy cash. One needs to possess high self-discipline, as the funds are extremely accessible. Using the home as a piggybank can backfire disastrously.

A HELOC is also not available to all homeowners. There must be enough equity in the home before a lender will consider it.

Please contact your Dominion Lending Centres mortgage professional to discuss the potential of structuring a HELOC mortgage product against your home.

MICHAEL HALLETT
Dominion Lending Centres – Accredited Mortgage Professional
Michael is part of DLC Producers West Financial based in Coquitlam, BC.
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You’ve been offered an amazing rate and you just can’t believe how much you will save. You’re super excited and getting ready to go sign off on the papers when you randomly run into a mortgage broker and mention the deal you scored. The broker says to you that’s an awesome rate, any idea what the penalty calculation is if you need to refinance in the future?. Wait what…isn’t it the same as the last mortgage I had?

Maybe but maybe not. There are a lot of new mortgage products available on the market that offer lower rates while giving up other benefits. These mortgage options may have higher penalties, lower prepayment privileges or even worse they could have a bone fide sale clause.

I don’t blame a consumer for always thinking rate first. The industry as a whole is guilty of shoving rates in our face anytime they possibly can. It’s the easiest part of a mortgage to compare and easiest to advertise. But definitely not the most important part.

Being aware of all the terms and conditions is the key to finding your best mortgage option. You should be aware that there are mortgages that may come with one or more of the following terms:

* Sales only clause, meaning you may not be able to refinance your mortgage until your term is up

* A higher set pay out penalty. Meaning you may have to pay more than the standard 3 months interest or Interest Rate Differential penalty.

* Smaller prepayment options

* and more!

Always ask these 5 Questions when offered a mortgage:

1. How is the pay out penalty calculated if I break the mortgage?

2. Can I refinance with another lender before my term is up?

3. Is the mortgage registered as a Standard or Collateral charge on my land title?

4. What are my prepayment privileges?

5. Is the mortgage portable and assumable?

Bottom line is that knowing all the fine print is essential in making an educated mortgage decision. We never know what is going to happen in life and saving a little bit on your mortgage rate may cost you more in the long run.

Contact your local Dominion Lending Centres mortgage professional today to discuss your mortgage options!

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KATHLEEN DEDILUKE

Dominion Lending Centres – Accredited Mortgage Professional
Kathleen is part of DLC Integrity Mortgage BC based in Nanaimo, BC.

Looking to increase your homes property value? Here are five of the best renovations you can do to your home to increase property value. These five renovations can sometimes have a return on investment 5-6x what they cost.

# 5 Flooring

Flooring is one of the most important aspects of your house. You will see an immediate rise in property valuation with the installation of hardwood floors. Existing hardwood floors that you can refinish are ideal as they are less costly to restore and in higher demand than new flooring materials. For the bathroom, tile will always be in demand and retain value exceptionally well.

# 4 Fixtures

Kitchens often look tired and dated, in large part due to old fixtures. Replacing or updating cabinet hardware, light fixtures, countertops and faucets will result in an immediate increase in your home’s value. This small, but effective upgrade will also revitalize the entire home. Pot lights are in high demand in open concept style homes.

# 3 Bathroom

The bathroom is the second most important room in the home in terms of valuation. If you can add a three-piece bathroom to a home with only one full bathroom, you will see a dramatic rise in the market value of your home. While you should never compromise bedroom space for a bathroom, try sneaking one in dead space in the home. Scott managed to fit in a 3-piece bathroom under a staircase – the width of the room measured just 44 inches. As an added tip, use glass for the shower to make the bathroom feel more spacious.

#2 Kitchen

Kitchens are the single most important room in the home relating to valuation. The kitchen can make a significant difference in the value of your home. As such, it is crucial that you invest in having a modern, fresh and desirable kitchen. Modern cabinetry, under cabinet lighting and new appliances will all significantly increase the value of your home on the market. To save on cost without compromising construction and desirability, look at options like Ikea cabinets as opposed to custom cabinetry.

#1 An Income Suite

No surprise, but the single biggest way to increase the value of your home is to build an income suite within the property. Whether this is converting your basement into a rental, or another floor in the home, an income property will increase your home’s worth. The main reason for this is that it covers a portion, or sometimes all of your mortgage payments, and results in your home being cash flow positive – which creates real wealth that can supplement your income.

Speak with any Dominion Lending Centres mortgage professional about how Genworth Canada can help qualified home buyers make their new home just right for them, with tailored improvements, immediately after taking possession of the purchased property.

Check out this video for more information.

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MARC SHENDALE

Genworth Canada – Vice President Business Development

Financial difficulty can happen. Marital breakdown, economic downturn / job loss, health issues are all realty.

If I can give one piece of advice it’s this – in the face of financial difficulty the worst thing that a person can do is to go dark on their creditors.

In my experience, being 100% upfront and honest with creditors is by far the best 1st step in face of a cash crunch. CALL YOUR CREDITORS. EXPLAIN YOUR SITUATION. ASK FOR A TEMPORARY REPRIEVE. BE PROACTIVE WITH LOOKING AT A SOLUTION EARLY.

Trust me – most creditors DO NOT want to foreclose on homes, send you to collections or push you over the brink of financial ruin. Many will actually work to help you get back on your feet if you let them know early on that you are in a crunch. I have seen some of our lenders make amazing concessions for customers who hit a stumbling block financially when they have gotten in touch BEFORE they fall behind.

It’s when a person stops making minimum payments, avoids calls from creditors and just gives up on their situation / assumes they are up the creek or are too embarrassed to admit that they may not be able to meet obligations.

This looks to creditors that the person has abandoned the debt and is now looking to stick it to them.

Unfortunately, many times people call us at Dominion Lending Centres when they are already months behind and been served with collections / seizure notices and credit is ruined. At that time, they are too far gone and lenders/creditors are normally not able to help.

Any time a person calls to advise that they are looking for a solution to help with a cash crunch, the first question I ask is “Have you spoken to your creditors?”

Don’t be embarrassed, be proactive!! Save your credit standing, your assets and your future. Short term pain is much better than long term ruin any day.

We have seen it all at DLC and are here to help.

SHAUN SERAFINI