1. HOW WILL I RECEIVE THE MONEY?

• HELOC: Home Equity Line of Credit-withdraw as needed
• Refinance: Lump Sum
• Private Second/Third Mortgages: Lump Sum

 
2. WHAT IS THE INTEREST RATE?
 

• HELOC: Prime Rate + premium 0.5%-1.5%
• Refinance: Best fixed or variable rate (dependent on what you and your broker decide)
• Private Second/Third Mortgages: 6.95%-19.95% typically with lender/broker fees

 
3. HOW IS THE INTEREST CALCULATED?
 

• HELOC: interest accrues on what you withdraw from your home’s equity.
• Refinance: interest accrues on the full loan amount that was taken out.
• Private Second/Third Mortgages: interest accrues on the full loan amount that was taken out.

 
4. WHAT IS MY PAYMENT?
 

• HELOC: You pay back the interest only, however, most banks will have a minimum rule so even if your HELOC value is $0 you will still have to pay a nominal fee each month.
• Refinance: You will pay the interest, plus the principle principal loan amount.
• Private Second/Third Mortgages: You can pay interest only payment or pay the interest plus the principle principal loan amount.

 
EQUITY
 
5. HOW MUCH EQUITY DO I NEED TO HAVE IN MY HOME IN ORDER TO ACCESS IT?

• HELOC: 20% minimum
• Refinance: 20% minimum
• Private Second/Third Mortgages: 5-10% minimum

 
6. HOW MUCH EQUITY CAN I ACCESS?

• HELOC: You can access up to 80%
• Refinance: 80% of your home’s equity is accessible
  • HELOC portion can be up to 65% of your home’s equity
  • Mortgage portion must be 15% – as per Bank of Canada guidelines
• Private Second/Third Mortgages: 1^stmortgage + 2^nd/3^rdmortgages up to 95% of home value

 
AVAILABILITY
 
7. ARE THERE FEES ASSOCIATED WITH IT?

• HELOC: No fees associated with it

• • At times
    • Appraisal fees
    • Legal fees

• Refinance: Prepayment penalty of Interest Rate Differential or 3 months interest* depends on your current mortgage terms.

• • At times
    • Appraisal fees
    • Legal fees

• Second/Third Mortgage: There are several fees associated with a second mortgage including:
  • Appraisal fees
  • Legal fees
  • Lenders fees
  • Broker Fees

 
***One final note on refinancing: With the new stress-testing you will have to qualify at a higher rate and you will also have to consider that lenders can no longer insure the product…meaning there are many different rates with different lenders.
 
Once you answer each of these questions and review your options, you can decide which one is best suited for your needs. You can also always call a Dominion Lending Centres Mortgage Broker and discuss it. DLC brokers are well versed in each of these options and can direct you towards the best option for your situation. We’ve seen a variety of situations with our clients and have helped each of them reach their goals.
 

The post 7 Questions to Help You Decide if You Should Pursue a HELOC (Home Equity Line of Credit), Refinance or Second Mortgage appeared first on GLM Mortgage Group.

1. It’s All In The Numbers

Just like house-shopping, building a home from the ground up requires you to know what you can afford. Most house plans offer a cost to build tool (usually for a nominal fee) to give you an accurate estimate of construction costs based on where you’re building. The numbers include the costs of construction, tax benefits, funds for the down payment and slush account, and other related calculations.
 
Once you have determined what you can and are willing to spend, meet with a mortgage broker to discuss how much you wish to borrow for your home.
 
Renovations and the actual building portion aside, we often are asked on what a mortgage looks like for an unbuilt home. This is where a “construction” mortgage comes into play.  The budget you give your broker should include your hard and soft costs as well as the reserve of money you plan to have set aside in case you run into unexpected events.
 
It’s this initial budget that a lender will determine how much you qualify for.
 

• For example, based on the lender loaning up to 75% of the total cost (with 25% down):

Land purchase price (as is) Total soft and hard costs Total Cost (as complete)
$200,000
$400,000
$600,000 x 75% = $450,000 available to loan
Keep in mind, the lender will also consider the appraised value of the finished product. In this example, the completed appraised value of the home would have to be at least $600,000 to qualify for the amount available to loan. The appraised value is determined before the project begins.
As well, the client will have to come up with the initial $150,000 to be able to finance the total cost of $600,000. A down payment of $150,000 plus the loan amount of $450,000 = the total cost of $600,000.
 

2. Choose a Reputable Builder

Builders are a dime a dozen, but not all of them are qualified or will be the right one for your project. Careful research is needed when determining who will be the head contractor of your home-building project. Alternatively, one of the best ways to find your perfect contractor is by asking friends and family who have gone through the process. Another great source is your mortgage broker! They often have many industry connections to some of the most qualified contractors and builders. Ask them if they know of anyone—we can almost guarantee they can will have at least one or more referrals for you.
 

3. Build a Home for Tomorrow

It can be tempting to personalize your home to the tenth degree—after all you are building it to meet your unique, customized wants and needs. However, keep resale value and practicality at the back of your mind at all times. Life can often throw a few curve balls that lead to you-for one reason or another-having to place the home for sale. If that time should ever come, you want to be able to appeal to all buyers easily and not have to hold the house longer than necessary. Ask yourself if the features you are putting into your home will appeal to others and if the features suit the neighborhood you are building in as well.
 

4. Go Green!

Now more than ever before energy efficient upgrades are easy to add to your home. When you are in the design stages, selecting energy efficient appliances, windows, HVAC systems, and more can save you money in the long run and may also make you eligible for certain grants and discounts. For example, the CMHC green building program rewards those who select energy efficient and environment friendly options.
 

5. Understand the Loan

As a final note, once construction is done it’s crucial to understand how a Construction Mortgage Loan repayment works. To make it easier, we have a list of points that you should know:

• Construction loans are usually fully opened and can be repaid at any time.
• Interest is charged only on amounts drawn. There are no “unused funds”
• Once construction is complete and project completion has been verified by the lender, the

construction mortgage is “moved over” to a normal mortgage.

• A lender will always take into consideration the marketability of a property. They will look at

not only the location based on demographic but also the location based on geography. For instance, a lot that is in a secluded area where no sales of lots have occurred in the last five years and mostly consisting of rock face may not be a property that they are willing to lend on.

• Depending on the lender, you may have a timeframe within which you need to complete construction (typically between 6 and 12 months).

 
There are a lot of things to consider when you build a home but a few things that can keep you on track and on budget are to have a solid plan in place, work with a builder you trust, build a strong team around you that can be there from start to finish, and to do your research.  Once you have decided to build, call your DLC agent—they can help you get the ball rolling and can guide you to the first step of breaking ground on your new home.

The post Top 5 Things To Consider When Building Your New Home appeared first on GLM Mortgage Group.

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The post Top Five Home Renovations that Increase Property Value appeared first on GLM Mortgage Group.

Have you been trying to find that almost perfect home? All homes have their flaws and imperfections. Some consumers can deal with these deficiencies in a home, but for others this can be a deal breaker.

Maybe the kitchen needs an update, the bathroom is in desperate need of a makeover or maybe the home just needs a fresh coat of paint with the enhancement of hardwood floors, the quickest, cost effective and most powerful impact on a home!

The purchase plus improvement product is for consumers looking to purchase a home that has great potential but needs a little TLC. With the purchase plus improvement program you can make those needed improvements on your home immediately after taking possession and you can have these improvement costs rolled into your home loan for one easy payment. All of these projects can increase functionality, beauty and potentially add value to your dream home.

As a rule with this home improvement financing option, your improvement maximum is 10% of the “as improved value” of the home to a maximum of $40,000 of improvements. With as little as 5% down payment, this product can work to get you into a home that is near perfect!

For example: if the purchase price of the home is $350,000 and the “as improved value” or post renovations of the home is valued at $390,000 you can qualify for 10% of the $390,000. Which means you can borrow $39,000 to cover your renovation expenses.

Once you have found a home, you will have to provide quotes from a licensed contractor including all costs associated with your renovations. Your mortgage planner will need to submit these quotes along with your purchase approval to the lender.

The lender may require an appraisal of the home with an as-is and as-complete value. However, if you are putting less than 20% down payment on the purchase, often only a final inspection is required to confirm the work on the quotes has, in fact, been done.

Once closing day has arrived, you will be required to pay your down payment, and at this point mortgage funds will be advanced. On the day you take possession of your home you can start working on the renovations. Make note that the renovations will have to be fully completed and inspected before the real estate lawyer can advance you the funds that the lender has been instructed to hold back. In other words, you will have to find some way to pay for the contractor to do the work, you will get reimbursed the funds once it has been inspected and confirmed that the work is completed. At no point will you be given the money prior to work being completed.

Depending on the lender, there are many variations to this mortgage product so it would be a good idea to speak with a mortgage professional at Dominion Lending Centres.

If you think that you can customize your home with this mortgage product, give us a call, we would love to help you through your home buying process and help you achieve your dream of home-ownership.

Thanks to my DLC colleague Josee Picco for this article.

The post Purchase Plus Improvement Program appeared first on GLM Mortgage Group.

However, decorating allowances can pose a problem with obtaining financing. Often times, the lender will reduce the amount of the mortgage proceeds by the amount of the decorating allowance. This is because the lender will not lend on perceived credit. A decorating allowance is perceived by the lender as credit.

What does this mean? When you apply for a mortgage, you are applying for the full purchase price of the property. If the new property price is $500,000, you are applying for $500,000 plus GST minus the down payment of at least 5% ($25,000). The total mortgage amount to be applied for equals $500,000 (purchase price $500,000 + GST ($25,000) – down payment ($25,000) = $500,000).

However, the lender will not lend on the decorating allowance, so the lender will release the mortgage amount minus the decorating allowance. For example, if the decorating allowance is $5,000, then the mortgage proceeds will be $495,000 instead of the $500,000 originally applied for, which leaves you $5,000 short for the purchase price. The seller will then credit your mortgage $5,000 (decorating allowance) which will make your mortgage $5,000 less (mortgage of $495,000). But keep in mind, you have to provide the full $500,000 as this is the purchase price.

Bottom line…. if you accept a “decorating allowance” it will be a credit to your mortgage and you have to provide the cash for the decorating allowance up front as the lender will not lend on a decorating allowance. If you need more information, GLM Mortgage Group can help!

Written by our very own Wrenetta Sinclair on the DLC blog. Thank you Wrenetta!

The post Understanding a Decorating Allowance appeared first on GLM Mortgage Group.

Here are 7 Questions you should ask yourself before making any concrete plans.

1. What are my expectations with this new home?

Are you looking for a custom home build where you are responsible for every single decision made or do you want to choose an existing floor plan and build a house that is almost entirely predetermined for you? Or maybe you are looking for a mix of both? Regardless…

Every home builder has a unique approach to building. Make sure your level of involvement is crystal clear from the start!

2. How familiar am I with the local builders and the homes they build?

Although there are standards for how your home will be built (code), there are no standards for pricing. Each builder will quote prices using different specifications for the different homes they build. If one builder is coming in with an estimated build price that is considerably less than another builder, you should dig deeper into the quality of materials being used.

Is the flooring hardwood and tile or carpet and lino? Am I getting the basic white appliance package or stainless steel (or are appliances even included?).

Knowing your local builders and the homes they build will let you compare apples to apples and ensure you get the best home!

3. Do I have any specific needs or features I want included?

If you are looking to add a feature to your home to meet a specific need, make sure your builder has previous experience building in this area. Practical features like wheel chair accessibility or a separate basement suite should be considered as well as lifestyle features like a backyard pool or a below the kitchen wine cellar.

Always consider experience when choosing a builder and don’t be afraid to ask for references!

4. Is possession date important to me?

Building a home is a long process – there are so many moving parts that delays are almost inevitable. If you have a specific timeline with a very narrow window for possession, building might not be your best option.

If you don’t have flexibility around when you take possession of your new home, building might not be your best option.

5. Can I afford this home if interest rates go up before I take possession?

Given that the building of a home has no guaranteed end date, it is important to take a comprehensive look at your personal finances and discuss your financing options with a mortgage professional. That is where I come in!

Because most lenders will only hold an interest rate for 120 days, it’s a good idea to make sure that you have allowed some room in your debt service ratios for a potential rate increase before possession date.

6. How well do I handle stressful situations?

Building a home can be a very stressful experience, there is no doubt about it. How well you handle stress should determine what type of house you build. Go back to point one and determine your expectations with an honest evaluation of not only what you want, but what you are capable of handling!

7. Is it better for me to build a home or buy an existing home?

Sometimes people fall in love with the idea of building a home more than they actually enjoy building the home! There is a chance your dream home is out there, already built, priced comparably, ready to buy without going through 2 years of waiting, decision making and delays!

Make sure you are looking at ALL your options and not just fixating on building for the sake of building!

If you are considering building a home, please let me know… I would love to discuss some of the financing options available to you through GLM Mortgage Group!

The post 7 Questions To Ask Yourself Before Building a Home appeared first on GLM Mortgage Group.

• hire an energy advisor (around $300) to come to your home BEFORE you start any work. They’ll do an energy assessment of your home and can give you suggestions on what will help improve your energy efficiency
• get the work done
• have the energy advisor come back to your home and document all of the changes that you made (you’ll need to have all of your receipts handy). They look after submitting for your rebate(s)
• deposit your rebate cheque (it’s also tax free which is an added bonus)

 
 
In my personal example, we maxed out both the Federal and Provincial rebates which totalled $12,000 at the time and improved our energy efficiency by almost 50% which was huge. We now save (on average) over $100 per month on our energy costs. $12,000 was really nice to get (although our renovation costs were FAR more than what we got back, it’s nice to get something).
 
Unfortunately, the Federal program is no longer around as it was limited to a certain number of households. Most provinces have their own energy rebate programs. In B.C., you can still receive thousands of dollars in rebates.
 
Does it make sense to apply for a rebate if you’re looking at changing 1 window or adding 1 bathroom fan? Probably not.
 
Yes we did do an extensive renovation. Yes it was during the time when rebates were being offered by both governments. My point is that new rebates are always being offered (again not really advertised) and so it’s important to stay in touch with your Dominion Lending Mortgage Broker on what’s available out there. More and more of my clients are renovating the homes that they’re buying, so this is just an added benefit.
 
Not planning on renovating your home anytime soon? There are other things that you can do to save some money. Do you have a pink or mint green toilet that you want to replace? Many municipalities offer rebates for buying low flush toilets. You can also buy weather-stripping at your local hardware store for about $10 and put it around your doors to help prevent drafts. It’s very easy to do and makes a big difference.
 
You can check to see what’s available in your province by checking out:
http://www.nrcan.gc.ca/energy/products/energystar/why-buy/14136
 
In B.C., please check out Fortis’ rebate offers page.
 
When in doubt, please consult your local Dominion Lending Centres Mortgage Broker for details on what’s out there and where to find it.
 
In the future, I believe that 2 things will really help make homes more marketable:
 

• being more energy efficient (energy costs are always going up)
• having a secondary suite to help pay your mortgage (especially in high priced markets such as Vancouver)

The post Renovate For Greater Energy Efficiency and Rebates appeared first on GLM Mortgage Group.

As a home owner, I understand the importance of maintaining my home and property to ensure it ages well with the times. But I also know that it can be daunting when you think about all the ongoing costs for renovations and maintenance required to keep your home to your liking – especially if you also own other property.

The good news is, if you have built up equity in your primary residence or even other properties, refinancing your mortgage is a cost-effective way to have funds available for upgrades to your getaway.

One refinance strategy that mortgage consumers often use involves extending their amortization period to a maximum of 35 years so they can lock into an excellent fixed rate for their mortgage and renovation expenses. In addition to setting you up with a new lower mortgage payment, GLM Mortgage Group can also find a lender that offers the most flexible prepayment privileges.

If you choose to refinance, it’s important to note that there may be penalties for paying our your existing mortgage loan prior to renewal, but these penalties will be offset by a lower interest rate and, at the same time, you can access extra money to put toward your home renovations.

By refinancing, thanks to lower interest rates, even though you are taking on more debt, you can pay of your mortgage faster. 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) in lump sum payments per calendar year. This will help reduce your amortization period (the length of your mortgage), which, in turn, save you money.

Another option to enable you to access funds for home renovations is to take out a home equity line of credit (HELOC) on your primary residence. HELOC interest rates are lower than credit cards and a little higher than the interest rate you will have on your mortgage. This line of credit is a good option for those that know they want to do renovations but want the flexibility of being in control of their own timeline. In other words, there are no time restrictions within which to get the work done. This way you only pay interest on the money that you borrow and you can pay it off anytime without penalty. Or, when you sell your home, this secured line of credit will automatically be paid off with the proceeds of the sale.

At GLM Mortgage Group we can help you with obtaining a Home Equity Line of Credit or refinancing your home so that you have the money available to you to do home improvements. Please go to www.glmmortgage.com and fill out our secure online application to see what home improvement financing options are available to you. We’ll get back to you within 4 business hours to discuss your financing needs and options.

The post Home Improvement Refinancing appeared first on GLM Mortgage Group.

1. Can I see your license/professional credentials and proof of insurance?
2. How many years’ experience do you have as a home inspector? (Make sure they’re talking specifically about home inspection and not just how much experience they have in a single trade.)
3. How many inspections have you personally completed?
4. What qualifications and training do you have? Are you a member of a professional organization? What’s your background – construction, engineering, plumbing, etc?
5. Can I see some references? (Make sure you also check the references.)
6. What kind of report do you provide? Do you take pictures of the house and add them to your report?
7. What kind of tools do you use during your inspection?
8. Can you give me an idea of what kind of repairs the house may need? (Be wary if they offer to fix the issues themselves or can recommend someone else to complete the job cheap.)
9. When do you do the inspection? (Let’s hope they don’t have a day job, and can only do them at night when it’s too dark to see the roof. It’s best to stay away from part-time inspectors.)
10. How long do your inspections usually take?

I know some extremely reputable home inspectors if you are in need. I’d be happy to pass on their number.

The post 10 Questions to Ask Your Home Inspector appeared first on GLM Mortgage Group.