First, let’s dive into what is a cashback mortgage.

With a cashback mortgage your lender advances you a cash lump sum. When your mortgage closes, the most common sum you receive is 5% of your mortgage amount, but it’s possible to get between 1% and 7% depending on your lender. This is tied into your mortgage amount and is not separate.

For example, someone purchasing a $350,000 home and putting $70,000 down (20%), they’ve opted for a five-year fixed mortgage rate of 2.45%, offering 1% cashback. That would give them a cashback amount of $2,800. This is included in their total mortgage amount borrowed, but the cash is accessible right away. Sounds great doesn’t it? Sometimes this product can help with qualification, and strategically might be the right decision for the client. However, other times, it is important to keep in mind that cashback mortgages may come with clauses that are typically not very favorable for the borrowers.

For instance, we recently had a client who was in a cashback mortgage, who wanted to break their mortgage before the term was up (this is very common! 6 out of 10 people will break their mortgage before the term). In this particular case, the borrower had to pay back all the money that the cashback mortgage had given them, and the penalty was actually higher than normal, due to the cashback mortgage incentive. It was the regular penalty to break their mortgage (click here to find out how a mortgage penalty is calculated) plus an admin fee of 0.75% of the total mortgage amount! That adds up quickly and the penalty to break can increase by thousands of dollars due to the admin fee associated with the cashback mortgage product.

Now, what about a Cash Bonus Mortgage?

A cash bonus mortgage is an incentive that the lender offers once the mortgage is funded. There’s a maximum amount that can be given and it’s not included in the mortgage amount. There are no strings attached; it’s simply money that is given to you once the mortgage funds. There are no penalties associated with it and you would not have to pay back the cash bonus at any time. It’s a great way to capitalize on working with a specific lender and your broker can help you compare incentives of each lender to help you make the decision that is right for you.

Sometimes these words can be interchangeable from lender to lender, so it is important to know the type of cash bonus or cashback mortgage you’re entering into and understand how that might impact you in the short and long term.

If you have any questions about a cashback or a cash bonus mortgage or a curious about what that would mean for you, please give us a call. We’re happy to help you find the mortgage product that is best suited to you!

The post Cashback vs. Cash Bonus Mortgages appeared first on GLM Mortgage Group.

1. If you act as a co-signor or guarantor, you are entrusting your entire credit history to the borrowers. What this mean is that late payments on the loan will not only hurt them, but it will also impact you.
2. Understand your current situations—taxes, legal, and estate. Co-signing is a large obligation that could harm you financially if the primary borrowers cannot pay.
3. Try to understand, upfront, how many years the co-borrower agreement will be in place and know if you can make changes to things mid-term if the borrower becomes able to assume the original mortgage on their own.
4. Consider the implications this will have regarding your personal income taxes. You may have an obligation to pay capital gains taxes and we would highly recommend talking to an accountant prior to signing off.
5. Co-signors should seek independent legal advice to ensure they fully understand their rights, obligations and the implications. A lawyer can lay it out clearly for you as well as help to point out any things you should take note of.
6. Carefully think about the character and stability of the people that you are being asked to co-sign for. Do you trust them? Are you aware of their financial situation to some degree? Are you willing to put yourself at risk potentially to take on this responsibility? Another consideration is to think about your finances down the road and determine how much flexibility will be needed for yourself and your family too! If you have plans of your own that will require a loan, refinancing your home, etc. being a co-signor can have an impact.

Co-signing for a loan is a large responsibility but when it is set-up correctly and all options are considered, it can be an excellent way to help a family member, child, or friend reach their dream of homeownership. If you are considering being a co-signor or wondering if you will require a co-signor on your mortgage, reach out to us. We are always happy to answer any questions and guide you through processes like this.

The post 6 Things all Co-signors should consider appeared first on GLM Mortgage Group.

1. Closing Costs.

Congratulations! Your offer was just accepted on your new home, you’re one step closer to adding a major asset to your portfolio!  We don’t want to shock or dampen the excitement of this moment. However, it’s important that you factor in closing costs right at the beginning of your purchase.

The best time to do this is before even applying for your pre-approval or making any offers on a home. Closing costsmayinclude:

>insurance

>taxes (Land Transfer, Property, and others depending on what province you are in)

>legal/notary fees

>inspection/appraisal fees.

A general rule of thumb is to set aside 1.5% of the purchase price to account for the closing costs above. To plan ahead, consider speaking to a mortgage broker and your realtor. They can help you determine just how much you should set aside to accommodate thoseadditional closing costs.

2. Utility Bills.

If you’ve gotten used to living in a small space, such as a condo or an apartment, you may be surprised how much more water, heat, and energy you consume in a larger space such as a detached home or a townhouse.

It’s important to prepare for these as you do not want to have a “surprise” when your bill arrives in the mail and it’s nearly double what you are used to spending!

Factoring in these bills is also crucial if you are going from renting to owning! Often times the landlord will cover a portion of your utility bills or your cable/internet depending on the contract you had with your landlord. Of course, once you are a homeowner, you are covering the entire cost! Ask family members, friends, even your mortgage broker or realtor what is a realistic cost for things such as cable and internet, water, heat, etc.  You’d be surprised how fast they can add up!

3. Renovations and Updates.

Unless you bought a newly built, brand new home, there is undoubtedly going to be future renovations and updates that you will need to do on your home. They may not need to happen right when you move in, but sometimes the unexpected does happen and having money set aside can make a world of difference! When you have your home inspection completed, make a prioritized list of what will need to be fixed/updated first and set aside money each month for it.

In addition to the “must do” updates/renovations, new property owners may also want to make aesthetic improvements, whether they mean to reside there or not. Naturally, a homeowner wants to make the place feel more like their own, and investors want to add value their investment or make adjustments to make the asset more aesthetically pleasing.

4. Ongoing Maintenance

Home’s require maintenance—all the time! Ask any homeowner and they will tell you that there is always home maintenance in one form or another happening. A few common home maintenance costs may include:

• Gutter cleaning
• Roof repair/maintenance
• Drywall repair
• Furnace cleaning
• HVAC and Duct cleaning
• General plumbing and electrical fixes

Every home is different in regards to how much you should budget annually for regular maintenance. It will depend on the age of your home, square footage, climate in your region, and overall condition of your home.

In closing, property ownership shouldn’t be dampened by financial rules caused by lack of preparation. All of these costs, as well as additional other costs, are easy to plan ahead for and to ensure that you have budget set aside each and every single month to make sure that you stay on track. As a rule of thumb, the CMHC states that your housing costs including mortgage payment should not exceed 39% of your monthly income. Treat this number as a point of reference when you’re doing your budget and consider leaving room for the unexpected. It’ll give you peace of mind on the long run and allow you to actually enjoy your new home!

The post 4 Costs to Consider as a First Time Home Buyer appeared first on GLM Mortgage Group.

• Lease agreements for two suites (loft and basement)
• Notice of assessment and T1 generals from the last two years
• Standard income documentation for full-time employment
• Confirmation of self-employment for the last two years

 
Step 3: Calculate the total debt services ratio.
We took the above numbers and worked with them to present a debt service ratio that started out as 47.74% and brought it down to 42.5%
 
Step 4: Share the mortgage solution!
The down payment was provided by the parents and the rental income from the subject property was used. All their remaining debts were paid with $25,000 cash back from the lender who also provided an interest only payment Line of Credit to cover both the mortgage and consumer debt.
 
Our clients were thrilled to be able to purchase their dream home and to have their consumer debt under control. We are proud to be able to help couples like this to make their dreams become a reality, and really, all it took was 4 simple steps to get them into their home!

The post Client Story: 4 Mortgage Steps to Overcoming High Consumer Debt appeared first on GLM Mortgage Group.

• Have at least 2 credit lines at all times

 
This means that you should always have 2 “tradelines” going. Whether this be 2 credit cards, a credit card and a line of credit and a car loan etc. You want to show that you can manage credit, and this is one easy way to do it. As an added note, the limit on the credit lines will need to be set at a minimum $2,000.
 
 

• Make your payments on time each and every month

 
No skipped payments! You should ALWAYS make the minimum payment required on all your lines of credit each month.
 

1. Do not let your credit be pulled too often.

This one is something people often forget about. Having your credit pulled for new credit cards, car loans, and other things frequently raises a red flag for lenders and can significantly lower your credit score
 
 

• Do not exceed 50% of the available credit limit on your credit card or credit line.

 
We know this one can be hard to do. One easy way to monitor this is to only use a credit card for certain fixed bills such as a cable/internet bill, cell-phone bill, etc. This way you can easily keep track of what credit you have used and what is available still.
 
 

• If you have missed a payment, get back on track right away.

 
If you did, by chance, miss a payment, do not fret. Instead, get back on track with your month by month payments. Lenders would look at the one missed payment as an abnormality versus a normal occurrence if you are back on track by the following month.
 
 

• Make sure each partner has their own credit.

 
We cannot tell you how frustrating it can be for couples when they realize that all their credit cards and lines of credit are only under one name…leaving the other person with no proven track record of managing credit! We advise clients to both grow their credit by making sure all joint accounts report for you both.
 

7. Do not exceed the Credit limit.

It is important to not go over or exceed the credit limit you have been given. Having overdrawn credit,  shows the lender that you are not able to responsibly manage credit.
 
If you follow these 7 steps and are responsible with your credit, you will have no problem when it comes time to purchase a home! In need of more advice? Contact a Dominion Lending Centres Broker-they will be more than happy to help you.
 

The post 7 Sure-Fire Ways to Grow Your Credit Score appeared first on GLM Mortgage Group.

1.    Easy NOA

Easy NOA is a document retrieval service that allows you to request CRA and non-CRA documents for your clients. Chances are you have had a client that is in the process of applying for a mortgage, only to find that they are unable to locate a key CRA (or non-CRA) document. You could go through CRA but we all know the time associated with that. This is where Easy NOA comes in.
 
They are able to access your client’s documents within 24 hours or less or it’s free. Our experience has been that they are able to pull the documents on average within 4 hours. We have also found them to be affordable, easy to use, and 100% secure. Our team uses their services regularly and would highly recommend you try them out.
To see their full list of non-CRA Documents you can click HERE and for their CRA documents, click HERE.To find out more about them, you can visit their website www.easynoa.ca
 

2.    Home Deposit Loans

This service has quickly become one of our favourites! Over the years, we have found that clients that are set to purchase another one often have the down payment tied to thahome. . The deposit on the new home is due before the sale is complete, but they don’t have the ability to pay it unless their current homes sale goes through.
 
Cue Home Deposit Loans. They offer a short-term loan to cover the deposit required on the new property before the existing property is sold. Their approval process is easy and fast (normal approval takes 24 hours or less). Their fees are more than reasonable, and the terms are excellent!
For instance:

• Interest rate of 9.95% with a minimum of 60 days.
• Low setup fee of $695.00 and legal fees of $395.00.
• All costs will be paid back from the proceeds of the sale of your existing property.
• No income documents required

Home Deposit Loans has helped many of our clients through those down payment hurdles! Check them out on their website  www.homedepositloans.com
 

3.    Bundle 25

Bundle 25 is one of the best services you can have in your tool box! They provide you with GUARANTEED mortgage leads; something all brokers can use more of.
 
25 leads cost $500 with an average of 1 in 25 leads funding over time if followed up with properly. Speaking in terms of value and numbers, if the average file is $300,000 with a $3,000 commission that gives you a net profit of $2,500 (a 500% return on your investment).
 
The leads come from a highly reputable real estate firm that generates 1,200 leads per week. Bundle 25 collects these leads and sells them to brokers-easy, simple and guaranteed!
 
As an added guarantee, they offer broker support to ensure success and if the phone number or email is invalid, the lead is replaced within 72 hours, no questions asked.
 
Interested in learning more? Visit their website www.bundle25.ca
 
 

4. OMVP & MJ Digital Marketing

Your clients are all asking it: What’s in it for me? The multiple email newsletters you send out, the follow-up phone calls and most methods of marketing leave clients feeling as though they walked away without benefitting from the transaction.
 
This is why we started using the OMVP marketing system. It’s a monthly email that is sent out to your clients featuring a new contest each month. There are no strings attached for your clients to enter-all they have to do is enter in their name, and email and they are automatically placed in the draw.
 
The benefits of this email system are multiple, including

• connecting with your clients in a positive way each month
• Keeping your brand top of mind without being “pushy” with your marketing
• Your clients genuinely feel that you care about them, not just the dollar value they represent
• Higher open rate (up to 36% open rate on average)

 
The system is offered through MJ Digital Marketing (they are fantastic with social media for brokers too!) check them out on their website: www.mariahjdigital.com
 
We are hopeful that these three services can help you continue to grow your business. We personally have had great experiences with all three and they have helped us to not only grow GLM Mortgage Group | Dominion Lending Centres but have also allowed us to better serve our clients.
***full disclosure on our part as we are a silent and investing partner in each of these services.
 

The post 4 Services To Add To Your Broker ToolBox appeared first on GLM Mortgage Group.

1. We were able to use the income received from disability and refinanced their existing mortgage
2. We consolidated the credit card and line of credit debt at a rate of 2.35% in doing so we reduced their current monthly payments by $1500 with an annual savings of $18,000! Or $90,000 over five years!

 
 
Here is a brief number summary to give you the full recap:
 
Value of the Home: $525,000
Requested Mortgage Amount: $420,000
Loan to Value: 80%
 
Income Documentation:

1. Letter of employment and pay stub
2. Letter from insurance company detailing disability payments and confirmation of deposit into current bank account.

 
Credit Score: 746 & 676
 
Total Debt Service Ratios: 41%
 
Mortgage Solution: All debts were paid with proceeds from their 5-year variable-rate mortgage with a 30-year amortization. The annual savings was MORE THAN $18,000!
 
We helped this couple get back on track and allowed them to keep on dreaming! We understand that life rarely will stay on course and go just as you picture it, but there is often a creative solution that can help you get back on track. If life has handed you a few lemons and you aren’t sure where to start, visit a Dominion Lending Centres Mortgage Broker—they can make some of the best lemonade!

The post When Life Gives You Lemons… appeared first on GLM Mortgage Group.

• You are putting less than 20% down
• Requires mortgage insurance

 
Conventional Mortgage

• You are putting more than 20% down
• Generally, does not require mortgage insurance

 
Subject Property

• What you are buying

 
Non Subject Property

• Other properties that you own

 
LOAN to VALUE (LTV)

• What you owe on your “loan” to what to what the property is valued at

 
SECURED and UNSECURED Lines of Credit
 
Secured

• “Tied” to something you own – usually your home

Unsecured

• Not “Tied” to anything

Amortization

• The length of time it takes to pay off your mortgage
• Affects your monthly payment at times much more than the rate

Fixed term mortgage

• Locked in for a “fixed term” you have chosen
• 1 -1 0 years
• Penalty if you break the “fixed term” typically calculated on the remaining term of the mortgage based on Bank of Canada 5 year posted rate OR discounted contracted rate OR 3-month interest penalty whichever is greater

Variable Rate Mortgage (AVRM)

• Can be Open
  • No penalty if you break
• Can be FIXED TERM
  • Penalty to break is typically 3-month interest

Flex down

• Using untraditional sources for your down payment such as loan from your Employer, Credit Cards, Unsecured Lines of Credit

Stated Income – self employed (Business For Self – BFS)

• What you report as income to Canada Revenue Agency vs what you “STATE” your income to be to the Lender based on the amount of time you have been self employed for and the amount of time you have been working in the industry.

Refinancing

• To take a percentage (currently 80%) of the equity out of your home and use that money to pay off debt or set up lines of credit for reinvestment purposes.

Transfer/Switch

• Taking the your existing mortgage and not changing any of the details of the mortgage (loan amount, names on title and amortization) from one lender to another

 
RENTAL terms when using RENTAL INCOME for a mortgage application
ADDBACK (subject and non-subject properties)

• To take a % of the rental income from investment properties and ADD it BACK to your income

OFF SETS (subject and non-subject properties)

• Reduces the rental expense add balance back to Gross Income

NET RENTS (subject non-subject properties)

• Taking the 2-year reporting average from your T1 Generals (Statement of Rental Activities)
• Determine if there is a surplus/loss
• Input that surplus/loss into the application
• Do not include any NON-SUBJECT and SUBJECT properties debt into the file

DEBT CALCULATION RATIOS (DCR) (subject and non-subject properties)

• Calculate the NON-SUBJECT and SUBJECT property debt
• Determine if there is a surplus/loss
• Input that surplus/loss into your application
• Do not include NON SUBJECT and SUBJECT properties debt into the application

The post Mortgage Terms 101 appeared first on GLM Mortgage Group.

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Mortgages that have the lowest total cost are reserved for the most marketable properties that are in prime locations as per the lender’s criteria.

Please remember that a mortgage professional can never advise a buyer to make any subject-free offers or even to remove the subjects on an offer. The decision to remove subjects is one that the buyer has to make once all of the conditions for their mortgage approval have been satisfied with the lender(s). Also remember that there cannot be any major changes to the borrower’s application details prior to the completion of their purchase as it may affect the borrower’s qualifications and change the conditions of the approval.

A Dominion Lending Centres mortgage professional will provide a buyer with the lowest cost and best mortgage for their scenario and for the property that they select to purchase. This comes without limitations as we are without bias to any particular lenders and we protect a buyer’s credit score, which is another contributing factor to the best mortgage.

Here are some of the property details that can affect a lender’s decision on whether or not they approve a mortgage:

Property Zoning- if the zoning is anything other than plain residential then your options will be limited. This sounds simple. However, some condos are zoned commercial if there is a large commercial component to the complex. Industrial, Agricultural Land Reserve (ALR), or leasehold (government or otherwise) will limit a buyer’s options.

Here is a list of some other potential deal breakers:

• cable cord construction
• oil tank(s) on the property
• self-managed stratas (no strata management company)
• size of the property- below 500 sq. feet, doesn’t use municipal sewage or waste
• former marijuana grow op or used for illegal activity
• outdated electrical
• over 1 Acre and/or multiple buildings
• age restriction(s)
• rental usage
• any animal use
• any structural issues/damages work done without permits
• ongoing or upcoming assessments or legal proceedings
• prior fixes in the building not done to the lender’s preference
• strata contingency fund with less than $1,500 per unit in the entire strata

The lender always reviews the details of each property only when an accepted offer is in place. The request for information can be a simple document or it can require an explanation/written documentation from various parties. This information may go back several years in order to get to the source of the issue. This, of course, takes more time.

With complexities such as these, it’s important that a real estate agent discloses the information to their buyer right away so that it can be brought to the lender’s attention. The agent should also be proactive in getting any and all documentation pertaining to the building/property so that the buyer can evaluate if a property has long term value to them. Many of the issues stated above can affect the long term value and marketability of a property.

As a mortgage professional, we share any and all information that the lender provides to us if they decide not to approve a property that is being purchased. We care about protecting borrowers from a bad real estate investment and are without bias in the advice that we provide.

We are always here to help.

Thanks to my DLC colleague Angela Calla for this article.

The post Unique Details On Properties Which Will Make Your Pre-Approval Void appeared first on GLM Mortgage Group.