Is a recreation property right for you?

Whether it’s called a cottage, a chalet or a country
house, the lure of a recreation property far from the
hustle of the city, is too much for many of us to resist.

As Baby Boomers get ready to retire, they’re
driving up interest in these properties – especially
with the attractive financing options available for
second homes. If a recreation property is on your
radar, below are some important questions to ask
yourself before you make the leap.

How would a recreation property impact
my lifestyle?
Consider how a recreation property would fit into
the lifestyle you envision for you and your family –
both the benefits and the drawbacks. In addition to
the fun and leisure aspects of a recreation property,
you’ll also need to factor in the time and cost
involved in year-round property upkeep.

Can I afford the purchase price and/or
a mortgage?
You want to ensure you can afford not only the
purchase price or mortgage, but also the ongoing
– and often unexpected – expenses that are an
inevitable part of home ownership. Work with a
mortgage professional to fully assess your recreation
property ownership options. Many mortgage
professionals and lenders offer specialized
services and mortgage products, specifically
for second homes.

How far am I prepared to travel?
Peace and quiet often come with a price: distance.
Be realistic about the time you are willing to commit
to travel – to and from your recreation property.
You may even want to take ‘test drives’ on busy
weekends to determine travel times during peak
season.

Who should I call?
As you would with a primary property, call a
professional real estate agent who knows the
region where you would like to buy and work
with your mortgage professional to secure
financing to determine what you can afford –
before you begin.

For more information contact us at 866-544-4001!

More Canadians purchasing second homes

More Canadians than ever are purchasing second homes.
No longer just for the wealthy, second home ownership has
gone mainstream. For many Canadians, it’s the dream of a
summer cottage, golf retreat or a winter chalet. For others,
career or family demands fuel the desire for a second home:
for business stays or to shelter the university student studying
in a distant community.

When Canada Mortgage and Housing Corporation (CMHC)
introduced a Second Home Program – helping Canadians
borrow up to 95% of the home’s value – the purchase of a
second home is easier than ever. And, the attraction of this
real estate investment is just as compelling with your second
home, as it is with your first. Not only can it be a good financial
investment, but it’s an important emotional investment too.
Below are some questions to keep in mind when you finance
a second home.

Can you afford it? This is the most important question you
have to ask yourself. If you are planning to purchase a
second home, you’ll want the best possible financing for your
new real estate investment. There’s no question that financing
is easier than ever. But a mortgage professional can help you
figure out exactly how much second home you can comfortably
afford. It’s a great time to begin that conversation – and
mortgage interest rates are still at a near all-time historical low.

What are your financing options? The CMHC Second
Home Program has been a big breakthrough for Canadian
second-home buyers. CMHC will insure a property purchased
for a family member attending college or university away
from home. And the program is very popular as a means of
purchasing a vacation property. There are a few provisons
here: either the borrower must occupy the property for at
least some part of the year or a family member must occupy
the property on a rent-free basis. The property must be
winterized and be accessible for year-round occupancy.
And, it must be located in Canada. Be careful with island
properties; they should have year-round bridge or ferry
access. Note, too, the Second Home Program can’t be
used to purchase time-shares or similar rental pools.

What do the mortgages look like? By far, your best bet
is to talk to a mortgage professional with access to a wide
range of lenders. The mortgages for second homes can
vary widely in the rates and requirements.

Can I leverage my existing equity in my primary home?
This is an option that your mortgage professional can help
you look at. This involves a cash-out refinancing of your existing
primary home mortgage, with a higher borrowed amount.
Instead of waiting and saving years for a second home, you
can access money based on the value of your primary
residence and your present financial profile to help you
finance a second property.

A second mortgage for a second home? Is this the right
option for you? A second mortgage is the most common way
to use your home equity. No need to wait until you’ve saved
a down payment for a second home investment, but you must
have the funds and cash flow to comfortably make both mortgage
payments. Your mortgage professional will work out
the best terms for you.

It’s your second home. This means that it’s primarily for
your own or your family’s use (although you may rent it out
casually and temporarily). If you’re looking to purchase an
investment property, your mortgage professional can help with
that too… but it’s not the same as purchasing a second home.
If there’s a family cottage in your dreams or a student condo
in your plans, this is the time to get serious about a mortgage
plan to make it happen. Speak with me today to check out
your options.

Moving with Pets

Cat-fits in the car, guinea pigs escaped at the diner, the snake that
was left behind, and the dog that bit the moving man… you could
fill a book with tales of the trials of moving with pets. It doesn’t
have to be that way, if you do some planning and follow good
common sense.

Firstly, remember that your pet is also a member of the family,
and deserves some consideration in the moving plans. Your pet
will also be leaving familiar surroundings and you’ll have some
trouble helping your pet understand what’s happening and why.
Your goal will be to get your pet out of your present home and
into your new home as securely and smoothly as possible. Think
about your pet’s temperament and special needs and put together
a plan to help your pet make the transition.

1. Plan for your pet’s trip to the new home. Most pets will
make the move in a car with the rest of the family. In the event
that you’re traveling by air, you’ll need to make arrangements
for your pet several weeks in advance. If necessary, get your
pet used to a carrier.

2. Make a moving day plan for your pet. Ideally, on moving
day your pet should stay elsewhere, preferably in a familiar place:
a favourite kennel service or at a kind friend or relative’s home.
With all the comings and goings at your house – strange people
and vehicles and constantly open doors – there are just too many
chances for your pet to have a meltdown or meet with an accident.
Stressed pets and movers don’t mix well. If your pet must be in the
house, find an empty room with the least commotion and put your
pet there. Put a sign on the door to clearly indicate that the room is
not to be entered. Ensure that your pet has comfortable surroundings,
enough fresh water and some familiar toys.

3. Try to keep a calm environment. Your pet will be picking
up on the family’s signals in the weeks before and after the move.
If you’re experiencing stress, your pet will be tuning into the
change. No matter how crazy life gets, try to maintain – as
closely as possible – your pet’s feeding, watering, play, and exercise
routines. Keep their familiar foods, toys, and bedding accessible.
After all, there is upheaval enough in their surroundings now!

4. Think about your pet’s own personality. Cats are far more
territorial than dogs. Cats need to feel that they are in control of a
changing environment, whereas dogs are far more attached to
their owner than they are to the actual house. So make sure your
cat always has a nook or cranny or box to hide in or under at –
both ends of the move.

5. Make sure your pet is wearing identification. Also, take a
picture of your pet and jot down a written description. Pets can be
unpredictable when their home life is upset. There is a higher risk
of your pet escaping in the weeks before and after the move.

6. Prepare your pet for travel. When travelling by car with
your pet, remember to restrict its food intake several hours ahead
of the trip and during the trip too. Animals should be in a carrier
unless you are absolutely sure that they will not get under a brake
pedal or cause a dangerous commotion. Most cats will sleep
away their long trip. Your dog will be much happier if it has been
well exercised before the trip. Use a tranquilizer for your pet as a
very last resort and then only with your veter inarian’s instructions.

7. Pack a travel kit for your pet. Be sure that the food is easy to
digest and use water from your regular home supply; changing diet
or water sources are common causes of diarrhea and vomiting
from upset stomachs. If in doubt, check with your veterinarian for
food recommendations. Don’t forget extra food for your arrival
(can opener too!), medications and vet records, familiar toys, new
identification tags, and something with a reassuring scent.

Stay organized with a moving checklist!

The key to a smooth move is to stay organized. While you can
still find a pen and clipboard, get started on a moving checklist
of necessary tasks.

TWO MONTHS BEFORE YOU MOVE
- Book a mover. You’ll need to decide if you want to pack
and/or unpack yourself. If you do choose to do the packing,
ask about insurance on any breakage. In general, the
movers will only insure what they have packed.

ONE MONTH BEFORE YOU MOVE
- Get rid of it. Resolve not to move anything you don’t want
in your new home. To find a good home for old belongings
– quickly and as close as your front step – go to www.freecycle.org.
- Start a file for keeping receipts of any moving expenses. You can deduct these at tax time.
- Visit your local post office and fill out a Canada Post
change of address form.
- Notify Canada Revenue Agency of your address change
via their web site, at www.cra-arc.gc.ca. Also notify your
provincial health plan.
- Think about your medical services. Notify doctor dentist,
and your optometrist of your move. If necessary, get
copies of your records.
- If you are moving out of province, find out about driver’s license,
auto licensing and insurance.
- Contact your children’s schools and have their records
transferred to their new schools.
- Make any special arrangements for moving your pets.

TWO WEEKS BEFORE YOU MOVE
- Notify existing gas, electric, phone, internet and other utility
companies to make necessary arrangements. Make
plans to get these services set up at your new location.
- Gather up all your bills; they’ll contain valuable information
like account numbers and customer service phone
numbers. Keep these in a safe and accessible place.

ONE WEEK BEFORE YOU MOVE
- Get rid of flammables; drain fuel from the lawnmower and
other machinery.
- Pack your valuables. This includes valuable papers – like
passports, insurance papers, property deeds, automobile
ownership, etc. as well as cash and jewellery. Plan to keep
these valuables with you.
- What’s not at home? Remember to pick up any loaned
belongings, as well as anything in storage or at the dry
cleaners.
- Clear out the fridge; use up any perishable foods and limit
any repurchases.
- Pack a box of “first day essentials” and mark “DO NOT
MOVE”. Include toilet paper, flashlights, basic cleaning
supplies, pet food, handi-wipes, snackable food, etc. so
you can settle in quickly.
- Arrange for removal of "installed items" you are taking
with you, like a TV antenna or shelves.

ONE DAY BEFORE YOU MOVE
- Take down curtains and rods, as well as any other wall fixtures
that are coming with you.
- Empty, defrost and clean your refrigerator. Make sure it
has at least 24 hours to air dry.
- Clean and air your stove.
- Plan a self-contained breakfast “picnic” for moving day to
eat at home or on the road.
- Pack toiletries, medications and other necessities.
- Gather up all house keys for the new owner.

MOVING DAY
- Make yourself available to the moving crew, who may
need to inventory each room. Point out any large, antique
or unusual items.
- Double-check that the moving driver has the correct address
and a working telephone number to reach you.
- Before you leave, do a final walk through of every room.
Check all closets and cabinets. Turn off the lights, and
be sure that windows and doors are locked.

Enjoy your new home!

What’s the difference between “amortization” and “term”?

There are many stresses associated with home buying –
both financial and emotional. And frankly speaking, it
doesn’t help that the process comes with its very own
foreign language. While your mortgage professional
can help de-mystify these terms, it helps to have a bit
of a primer on what some of these terms mean. After all,
it’s your money and your home we’re talking about.
As a mortgagor, you have a right to understand what
you’re reading.

We'll start with “amortization” and “term”. Both refer to
periods of time in the life of your mortgage, and you’ll
want to be sure that you understand the difference.

The “amortization” of your mortgage is the length of
time that would be required to reduce your mortgage
debt to zero, based on regular payments at a specified
interest rate. The amortization period is typically 15, 20
or even 35 years, although it can be any number of
years or part years. You could establish that you are
able to make a certain payment each month of say
$950. for your $130,000. mortgage at 5.5%. In this
case, your amortization period will be just under 18
years. Or you could tell your mortgage professional that
you’d like to be mortgage-free in just 10 years. With an
amortization period of 10 years at the same interest rate,
your $130,000. mortgage will cost you about $1,407.
per month. That’s a tougher monthly payment, but you
would save thousands of dollars in interest more than
$35,000, in fact! As you arrange your mortgage, keep
in mind that your amortization period may be fairly long
– although the shorter you can make it, the less you’ll
wind up paying for your home in the long term.

The “term” of your mortgage will typically be shorter.
The “term” is the duration of your mortgage agreement,
at your agreed upon interest rate. This will be a very
specific length of time, although you will have several
choices. A 6-month mortgage is a very short-term
mortgage. A 10-year mortgage will be one of the
longest terms, generally with a higher rate of interest
to represent the higher degree of uncertainty in the
economic outlook. After your mortgage term expires,
you will need to either pay off the balance of the
mortgage principal, or negotiate a new mortgage
at rates that are available at that time.

Now, back to the term “mortgagor”. This is one
of three very similar terms: “mortgagee”, “mortgagor”,
and “mortgage”. A mortgagee is the lender of the
money: a bank, company, or individual. A mortgagor is
the borrower: the person or persons (or company) that is
borrowing the money and who will pay it back to the
mortgagee. The mortgage, of course, is the legal document
that pledges the property as a security for the debt.
Still confused? For further information speak with a
mortgage professional. Get the best mortgage suited to
your specific needs and all of your questions answered
in plain talk.

When it’s worth refinancing your mortgage

Many homeowners wished they had asked more
questions when they took out their mortgage. They
assume there’s nothing they can do until the mortgage
matures. Not so. A mortgage professional can review
your mortgage at any time and offer tips on how to
save you money.

Typically, we think of a fixed-term mortgage as a
non-negotiable contract. And, it’s true that there are
financial penalties to re-negotiate. Many homeowners
ask mortgage professionals for a mortgage analysis –
a detailed look at the penalties versus the payoffs
to determine whether it’s worth refinancing to get a
lower rate, finance a renovation or roll other debt into
the new mortgage. Like many Canadian homeowners,
you may find that refinancing makes sense.

There are two approaches to refinancing: you can
simply pay out the penalty on your existing mortgage
and start fresh with a new mortgage or you can opt
for what is termed a “blend and extend.”

Firstly, understand that you won’t reap immediate
rewards when you refinance; it will take time to see
the savings, since you’ll have some up-front penalties.
So if you’re going to be selling your home in the next
year, you’re unlikely to benefit from refinancing now.
Your mortgage professional can help you assess your
“payback” period: the length of time required to see
any savings, based on the penalties you will incur and
the difference between your existing rate and your
new one.

Speaking of penalties, what does it cost to get out of
your existing mortgage? Generally, you can expect
to pay out the greater of either a) three months’ interest,
or b) the interest-rate differential.* The interest rate
differential can be high; in effect, your mortgage
lender will expect you to pay them the equivalent of
what they will lose by releasing you from your mortgage
and lending the money at current rates. If you are
early in your mortgage arrangement, the penalties
may be high, so you should check with your mortgage
professional. Don’t be put off by what looks like a big
penalty: it’s only one factor in your analysis.

So is it worth it? Only your mortgage professional can
tell you for sure, but many homeowners experience
significant savings – even with rate differentials of two
points (or possibly more). Also factor in whether you
can roll other high-interest debt into your new mortgage,
slashing your overall interest costs. It’s also important
to consider whether your long-term goals
become more attainable.

Start with a visit to a mortgage professional, who has
access to rate information from a broad selection of
lending institutions – and who can provide you with
the kind of detailed analysis you’ll need to assess
your options.

Six Reasons to use a Mortgage Broker

For many people, mortgage payments are their single largest expense. Yet, when financing a home, most Canadians don’t comparison shop to ensure they’re getting the best mortgage rate and terms available. This mistake can cost homeowners tens of thousands of dollars over the course of their mortgage. Here are six ways mortgage professionals can help:

1. ACCESS TO COMPETITIVE RATES.
Brokers deal with multiple competing lenders
and can often access exclusive rates. They also
have the power to negotiate rate discounts from
lenders, which can be passed on to their clients.

2. KNOWLEDGEABLE ADVICE.
Brokers offer consultative service, advice and
solutions that are customized to each client’s
needs. And unlike banks, brokers work for you.

3. SPEED AND CONVENIENCE.
Brokers will work around a client’s schedule to
make the transaction as easy and convenient
as possible.

4. PRE-QUALIFICATION.
Whether you’re shopping for a new home or
refinancing your existing mortgage, a broker can
help you obtain a pre-approved mortgage, often
with up to a 120-day interest rate guarantee.

5. PRESERVED CREDIT RATING.
When you shop for a mortgage, there is an
accumulation of lender inquiries on your credit
bureau report, possibly affecting your credit
rating and, ultimately, the rate and terms of your
mortgage. This isn’t the case with a mortgage
broker, who only does one inquiry yet can still
get many competing lenders to quote on your
business.

6. PEACE OF MIND.
The Canadian Association of Accredited
Mortgage Professionals has a stringent Code
of Ethics that members are required to adhere
to in order to retain membership.

Accreditation for Mortgage Brokers

Mortgage brokers are gaining an
increasing share of the mortgage market
as more and more Canadians seek
their guidance and knowledge. This is
great news because you should consult
with a mortgage professional when
you’re making one of the most important
financial decisions of your life.

But, keep in mind, that not all mortgage
brokers have the same level of training
and experience. That’s why it’s such
great news for Canadians that the
mortgage industry now has national
accreditation: the Accredited Mortgage
Professional (AMP). When you meet
with a mortgage broker with an AMP,
you’ll be assured that your business is in
the hands of a professional.

Canadians are accustomed to purchasing
financial products like investments
and insurance from an accredited
professional. Now they can look for a
similar professional designation from
their mortgage expert. The program was
introduced by the Canadian Association
of Accredited Mortgage Professionals
(CAAMP). Like similar accreditation
programs for mutual fund sales people,
or stock brokers, the AMP is designed to
ensure an appropriate level of training
and experience.

Mortgage professionals from every field
are eligible to acquire the accreditation:
from mortgage brokers on the front lines
to those who specialize in lending or
mortgage insurance, for example. While
the vast majority of Canadian mortgage
brokers take seriously the important
responsibility that they have to their clients,
the designation provides mortgage
customers with a tool to help select their
mortgage expert. This kind of designation
is especially valuable in an industry where
provincial regulations vary – and so a
variety of practice standards are in place.
A single national proficiency standard
brings mortgage brokers in line with other
financial professionals.

The AMP designation offers you
confidence that your mortgage broker
has industry experience, has taken ethics
and industry training, and is committed
to a program of ongoing education
to retain their designation. In order to
qualify for the designation, mortgage
professionals must have at least five
years experience or successfully
complete a recognized mortgage
professional proficiency course, and
take an ethics training course. They
must also commit to a minimum 10
hours of continuing education each
year, and agree to be governed by
the professional code of the national
CAAMP organization. With a
growing number of Canadians now
seeking the services of independent
mortgage brokers to help them assess
their mortgage options, a national
designation will become increasingly important for customers.

It’s your money, after all, and you should
have the tools to make the best possible
decision. An independent mortgage
broker can offer you the broadest range
of mortgage rates and options.

Now they can also offer you the added
assurance of national accreditation:
the AMP.

Insure Your Home, Ensure Your Future

Home and life insurance options to keep your house and family safe

For many Canadians, their home is their single
largest asset. As such, homeowner’s insurance
has become essential coverage to protect
homeowners from damages resulting from
hazards such as storms and fire. Homeowner’s
insurance also covers liability on visitors to the
property, and replaces property lost to theft
and accidents.

When it comes to protecting that asset,
homeowners can be exposed to additional risk
stemming from accidents or illness. Carefully
consider your full range of insurance needs
before you buy property or apply for a
mortgage, including:

• Mortgage life insurance is an insurance
policy that will pay off your mortgage in the
event of the person’s death.

• Disability insurance is a type of insurance
that will cover your mortgage payments in the
event that the individual becomes ill and is
unable to work.

• Critical illness insurance coverage is
designed to ease financial pressures resulting
from a critical illness by paying a lump sum
benefit to the lender.
For one-stop home financing and more info
on mortgage insurance referrals, speak with
a mortgage professional.

Mortgage Types

Term of a mortgage:
The actual length of time money is loaned at the contractual rate of interest.
Terms range from three months to twenty-five years. Traditionally the longer
the term, the higher the rate.

First mortgage:
Mortgage given first priority at the registry office. Usually the only financing
required. Gives borrowers the best rate of interest.

Second mortgage:
A higher interest rate loan that provides borrowers with additional financing if the
first mortgage does not meet their total financial requirements. It is ideal for
those looking for secondary financing to bypass mortgage insurance, port an
existing mortgage, or for debt consolidation.

Fully open mortgage, with no penalty of notice:
With this type of mortgage, the entire principal or any part of it can be prepaid to
the lender at any time, without having to pay any penalty or bonus interest to the
lender.

Open mortgage, with a predetermined penalty or notice:
All or part of the principal can be prepaid at any time by paying a penalty or
giving a set amount of written notice. The amount of the penalty or the notice
period would have been predetermined at the time the mortgage was arranged.

Partially open mortgage, with no penalty or notice on that open portion:
This type of mortgage is partially open, but not fully open. The mortgage
contract permits a limited, fixed percentage to be returned to the lender each
year (up to 10%, 15% or even 20% depending on the lender), in addition to the
regular payment without any penalty being paid or notice being given. There
may also be some restrictions as to when during the year this prepayment can
be made. The balance of the mortgage (80% - 90%) is closed and can only be
prepaid if the lender allows – and then on the lenders terms!

Partially open mortgage, with a predetermined penalty or notice on that
open portion:
As above, this mortgage is partially open, but not fully open. The mortgage
contract would allow for a fixed percentage of principal to be prepaid, but
subject to a predetermined penalty (i.e. 3 months interest) or with a preestablished
amount of written notice. The lender may also have some
restrictions as to when the prepayment can be made during the year. The
balance of the mortgage is closed and does not allow for automatic early
prepayment of the loan.

Fully closed mortgage:
These types of mortgages have no pre-payment privileges at all. All mortgages
fall into this category unless the prepayment privileges appear right in the
mortgage documents. Although, all mortgages are fully open on maturity.

Convertible mortgage:
You can get the low rate typically associated with the short term, but the
freedom to lock in at anytime for longer, if you think rates are headed up. To
win, however, you’ve got to be an assiduous rate-watcher. These mortgages
are usually offered with a 3-month, 6-month or 12-month term.

Variable rate mortgage:
A loan whose interest rate is changed monthly or more frequently to keep it in
line with the general interest rate trends. Lenders often set the rate based on
their prime-lending rate. While the loan rate changes, the payment may stay
level each month. In that case, the amounts going to pay interest and principal
each month are adjusted to reflect the rate. VRMs are handy mortgages when
rates are falling because those rate breaks get passed along quickly as rates
are adjusted. However, if you fail to act quickly when rates begin to rise, you
may also miss the chance to switch to a fixed-term mortgage. Increases in
interest rates could create problems if your VRM monthly payment doesn’t
include any cushion for rate hikes. In that case the lender may require you to
increase your payment to prevent a “deficit interest” situation.

Hybrid (mutant) mortgages:
Lenders have different product names for their own mortgages to try to make
them sound unique or for marketing purposes, but all mortgages fall into one of
the above categories. Variations between and within each category help
distinguish different lender’s packages. Let your Mortgage Intelligence
consultant arrange the financing package best suited to your needs.

Mortgages for recreational & investment properties
Mortgage Intelligence offers mortgages for specific needs such as recreational
or investment properties.

Mortgages for impaired credit:
Mortgage Intelligence has a mortgage that can help clients who are considered
to have impaired credit because they have maximized their credit cards and
other debt. Even though they may be able to make their payments each month,
they may be considered a high-risk borrower. They can also save on interest
costs and have a more manageable monthly payment.

In the rush to buy, don’t skip the home inspection

What a ride! We’ve had one of the longest, hottest housing
markets in memory – with keen competition for homes in all
price brackets. Everyone has a story about a home that has
sold for considerably more than the original asking price. It’s
a seller’s market. Anxious buyers – worried about losing a
bidding war on a property that seems perfect – may feel
pressured to make an unconditional offer – which often means
skipping professional home inspection.

Traditionally, a home inspection was one of the common,
accepted “conditions” on any offer. Home buyers had a
specified period of time to conduct a home inspection and the
deal was dependent on a satisfactory outcome. In a seller’s
market like the one we’re experiencing, many vendors have the
luxury of insisting on unconditional offers. Those who want to
pause long enough for a home inspection can be left behind.

A professional home inspection is an important step in the purchase
process. Serious buyers will sometimes hire a “pre-offer
inspection” to check the condition of a home. Armed with that
knowledge, the buyer may have the confidence to make an
informed, unconditional offer.

Most home inspectors will encourage you to accompany them
on their visual inspection of the home. Do it! It will be the most
valuable house tour you’ll ever take. Every inspection, of course,
should also include a written report. In general, inspections
are visual and look at the house both inside and out – a great
reason why the inspection should take place in daylight.

Outdoors, expect a close examination of exterior features like
roofing, flashing, chimneys, gutters, downspouts, decks, walls,
and foundations – including grading and drainage away from
the house. Inside, the inspector will be looking at all the house
systems, including electrical, heating and cooling systems,
ventilation and plumbing. The inspection should also include
a close examination of structural features, floors, ceiling and
wall finishes, and the condition of windows and doors.

If the home has a swimming pool, a septic system, or significant
landscaping features, you may want to either look for an inspector
with specific expertise or bring in an other specialists.
Also, if you have a wood-burning fireplace or stove, look for
a house inspector who is certified by WETT (Wood Energy
Technology Training).

A professional home inspector will be formally trained,
experienced and impartial: that is, he or she will not have a
stake in the outcome of the inspection. For example, under
their professional code of ethics, home inspectors are not
allowed to be associated with any other construction or houserelated
trade. Many inspectors, of course, have valuable backgrounds
in civil engineering, the construction trades, or even
specialized areas, such as heating systems.

How do you find a good home inspector? Referrals are a
great way to begin. Or, you can look up an accredited member
of the new Canadian Association of Home and Property
Inspectors at www.cahpi.ca. The initials “RHI” denote the
highest accreditation of the association.

When the inspection goes well – as they generally do – you
get some important information about the house and you can
feel assured that you’re moving into a home that’s in good
condition. In the worst cases, buyers may want to re-negotiate
or back out of the deal based on the inspection’s findings.
Follow your instincts; if you’re worried about the condition of
the roof, for example, be wary about making an unconditional
offer without a prior house inspection.

Since prices vary, check with your real estate agent regarding
the cost of a home inspection. Remember: your home may be
the most expensive and most important purchase you will ever
make. And there’s no money-back guarantee.

The “Wow Factor”: First Impressions count in real estate

In the world of real estate, curb appeal is everything.
Whether you’re selling your home, getting ready for some
special entertaining, or just sprucing things up for spring…
you need to make an impact in a flash. The place doesn’t look
so good from the street, but it’s gorgeous inside? It better be…
it takes a lot of work to correct a bad first impression. And a
buyer may not take the time to get as far as the front door.

Take some time this month to re-think your home’s first impression.
Here’s some quick tips to help boost the “wow factor”:

•Take a drive or a walk. Then come back down the street
towards your home as if you are the one seeing it for the first
time. Take a notebook and be objective. Is there clutter in the
lawn, driveway, or yard? Maybe that pile of discarded
garden pots that you’ve been meaning to recycle? Check out
the roof. What about the eavestrough? Anything looking
crooked or in need of repair? Any cracked windows or peeling
paint? What do you see when you look in the windows?
Paraphernalia piled on a window ledge? Tatty curtain liners?
Make a note of everything you see.

•A yellow front door. Real estate agents have joked that
they can sell any house – if the front door is painted yellow.
Or if the home smells like green apples! What does this tell
us? Savvy agents know how easy it is to impress buyers with
a little “spit and polish” and a dash of flair. Your front door is
a focal point – make sure it looks fabulous.

•Sparkling windows. Your windows and doors must not
only be in excellent repair, but the glazing must be sparkling
clean too. If the exterior of your home is well kept, you’re
sending a signal that everything else is well cared-for, too.

•A pot of pansies is worth its weight in gold. Make sure you
have some lovely pots of flowers flanking the entrance of your
home. If you’re making an impression in the winter, it’s worth
beautifying your entryway with two urns of evergreens.

•Impressive house numbers matched to your home’s
“look”, a doorknocker, a kick plate, and sturdy doorknobs say
to a buyer: welcome to this solid, well-maintained home. Remember
that everything must work … especially the doorbell,
the door handle, the swinging screen or storm door, the front
porch light, the mailbox slot…. You can’t afford to slip up -- at
the entrance of your home!

•Wonderful walkways. An attractive front pathway will entice
buyers into your home. A few twinkling lights sprinkled
here and there create a magical mood for late-day visitors.
Spotlight a lovely tree or trimmed shrubbery for nighttime curb
appeal too.

•Enhance and downplay. Accentuate the positive and
eliminate the negative. If you have a pleasing curved
pathway, edge it and line it with boxwood shrubbery. If you
have an attached garage, paint it (camouflage it with the
colour of your exterior), then make your front door “pop”
by painting it an impactful colour.

You’ll be pleased by the big impact that just a little effort can
make. If you’re selling your home, then it’s in your very best
financial interest to make sure your home has great curb
appeal. And even if you’re not, imagine how wonderful it
will be to welcome family and friends to your own front door!

Consider adding a rental property to your investment portfolio

For Canadians with good credit and good income, a rental property can be a solid long term investment. Approximately 25% of all new condos being built in Canada are expected to be rental apartments. Other multi-unit properties – duplexes, triplexes and four-plexes – are also expected to provide housing for renters. Investors look to have the rent from these investments at least cover their costs and provide a reasonable investment return over the long term. “But it’s impossible,” you think. Mortgage insurance is required when there is less than a 20% down payment. And you
are required you to have a relatively high net worth and prove that you can carry the mortgage payments on a rental property on your own – without factoring in any rental income. And if you do qualify for an insured mortgage on a rental property, you may find the cost of qualifying too high.

Alternatively, you need to have a good amount of equity in your principal residence to take out in order to get a big enough down payment that qualifies you for a regular first mortgage. This certainly doesn’t leave room for many Canadians who want an investment property. It’s true that – not long ago – the rental business seemed to belong to a group of very affluent investors, but some innovative mortgage options are putting rental properties within reach of more Canadians. These
mortgages can in some cases upon qualification provide up to 95% financing for single family or duplex units or 90% financing for 3plex to a four-plex units. In all cases, of course, the property is expected to generate a positive cash flow.

A rental property can be a great addition to an investment portfolio. And if you’re excited about the low rates on your home mortgage, consider that a mortgage on a rental property actually goes one better: like all investments, the interest on the loan to purchase a rental property is tax-deductible. Like any investment, rental property isn’t an investment that you should jump into without doing your homework first.

Consider your own aptitude for managing a real estate investment, and then talk
to an independent mortgage professional about your mortgage options.

First-time homebuyer?

Your RRSP may be the down payment you’re looking for

Thinking about buying your first home? Wish you
had saved up a good down payment? Maybe
you have, but didn’t know it. First-time homebuyers
can tap into their RRSP to help with a home
purchase. Designed to help first-time buyers get
into home ownership, the federal Home Buyers
Program lets you access tax-free monies for use
towards the purchase or even construction of
your first home.

Why tap into your RRSP? The most common
reason is to boost the down payment on a home.
The bigger your down payment, after all, the
smaller your mortgage. And you may qualify
for better interest rates too; your healthy down
payment shows the lender that you are a low risk
candidate for a mortgage loan. Your RRSP can
help provide the funds for a down payment
that will make a difference to your costs in
the long run.

Here’s how it works. If you’ve been contributing
to an RRSP, then you already know that the
program is designed to set aside money for
retirement, with the money going into the program
tax-free (and the plan to pay taxes on the funds
when they’re withdrawn later). But there are some
valid reasons why you may want to access these
funds earlier. A home purchase may be one of
them. As a first-time homebuyer, you are allowed
to withdraw money: still tax-free, provided you
adhere to the easy repayment plan. (Just make
sure, of course, that your RSP is not a locked in
plan). You can withdraw up to $25,000.00 from
your plan. If your spouse qualifies as a first-time
homebuyer, then he or she will also be able to
withdraw $25,000.00. Between the two of you,
you could possibly have a hefty down payment
sum of $50,000.00. That’s enough to make a
substantial difference in the affordability of
home ownership!

Check online or ask your mortgage professional
for more information – there are some conditions
that you should know about. For example, you
need to spend the money once it’s withdrawn:
you must enter a written agreement (offer to
purchase) before you can withdraw money.
And you are expected to complete the home
purchase no later than October 1 of the
year following your withdrawal. And don’t
spread your withdrawals out; all HBP-eligible
withdrawals must be made in the same calendar
year. Above all, you must meet certain repayment
terms. Repayment to your RSP begins the second
year following the year of withdrawal. You have
up to fifteen years to repay, and each annual
repayment must be at least one-fifteenth of the
withdrawn amount.

A common question: so who exactly qualifies
as a first-time homebuyer? What if one partner
has owned a home before, for example? Well,
it often happens that only one partner qualifies
as a first-time homebuyer, so only one RRSP can
be tapped for funds. But if either of you has not
owned a home for the past five years, then you
meet the description of a first time homebuyer!
Keep that definition in mind as you plan the
timing of any RRSP withdrawals.

Any kind of home qualifies for the program –
detached, semi-detached, mobile, condominium,
etc. – as long as it is located within Canada.
If you’re thinking of using your RRSP for your first
home purchase, consider meshing your RRSP
strategy with your down payment savings. Putting
away funds in your RRSP not only saves you the
current income tax, but the tax saved translates
into more dollars towards your down payment.

It’s not too soon to begin a conversation
with a mortgage specialist about your
future plans for home ownership.
A good plan is always a great beginning!

Closing costs Shouldn't take you by suprise

You’ve come up with a down payment, searched for a good lawyer, and have found a reputable mortgage broker. Well done! You’re off to a great start in the house purchase process. Keep in mind that you’ll also be facing -- in addition to the expected legal fees and moving costs -- a few extra payouts when the final deal is done. Knowing about these “closing costs” in advance soothes their sting. The following list covers typical costs you’ll encounter when your purchase is completed or “closed”.

REIMBURSEMENTS
You’ll need to refund the money that the seller
has already paid out on your behalf: expenses
that are now fairly and rightfully owed by
you, the new homeowner. In your lawyer’s
office, on closing day, you’ll definitely run into
those famous last words: “subject to the usual
adjustments”. Typically these adjustments include
portions of municipal property and school taxes
for the months you’ll be resident, utility bills paid
in advance, fuel oil that you will be using – that
kind of thing. These expenses would have to be
paid by you anyway, so they are fair.

LAND TRANSFER OR SIMILAR TAX
Your province levies this tax whenever real
estate changes hands. The amount of this tax
is a percentage of the purchase price of your
property, so the more expensive the property, the
bigger the tax. Ask about Transfer Taxes in your
province or the province you are moving to for
full details..

HOME INSURANCE
This insurance, especially fire, must take effect
from the moment you are the owner of the home.
It’s all about protecting the investment for the
lender -- and in this case it works for you too.

MORTGAGE LIFE AND DISABILITY
INSURANCE
This is an especially good idea for young
parents or anyone else with dependents. If
anything should happen to either one of you,
your home ownership won’t be in jeopardy. The
mortgage would be paid in full – immediately –
on your behalf. You’ll appreciate and need this
peace of mind in a time of crisis, and you’ll save
your family the extra burden of wondering if they
would need to sell their home (even while they’re
coping with a loss). Your broker can often help
you find a policy that works for your situation.

HOME INSPECTION FEE
This is the fee you owe the inspector you hired to
check out the physical structure and mechanicals
of your home before you decided to buy it.

HOME APPRAISAL FEE
Your lender requires this appraisal before they
hand over any mortgage money. Naturally, they
want to be assured that the property is worth
an investment of their monies, and naturally, the
cost of this appraisal is passed on to you, the
customer. This fee normally ranges between one
and two hundred dollars – dependent upon
location and complexity of the property.

SURVEY
A legal survey of your land – its borders,
perimeters, house placement, etc. -- is sometimes
required by the lender, and will be performed
by a professional surveyor. If you’re lucky, a
recent survey is already available; if not, a
typical survey can cost you up to one thousand
dollars. In the last few years, lenders have
accepted title insurance (highly recommended
anyway) in lieu of a survey document. Which
brings us to…

TITLE INSURANCE
This covers a myriad number of situations that
could threaten your title to the property. Title
insurance is much less costly than a new survey,
for example, and would cover most survey
concerns anyway. Most homebuyers now look
at title insurance as a great way to protect their
biggest investment!

DON’T FORGET GST
This tax is charged on all professional fees.
There is no GST on the purchase price of a
resale home.

LEGAL FEES AND DISBURSEMENTS
Speak to your lawyer about their fee schedule.
Typically between $1,000 & $1500 but depends on many
factors.

Reduced monthly payments have Canadian homebuyers jumping on board

Amortization periods or the length of time
calculated to pay off the entire mortgage, are a
significant factor in the size of the monthly
payments. The extra five years or ten years to pay
off a mortgage can make a significant difference to
the household cash flow of Canadians who are
trying to manage a mortgage.

Let’s say that a young couple looking for their first
home can manage only $1100 to spend on a
monthly mortgage payment. They’ve found a home
they love, but it’s going to require a $190,000
mortgage. They’re just starting out in their jobs and
they know they shouldn’t exceed their budget, but
with interest rates at 6% and an amortization of 25
years, their monthly payments will be almost $1216:
a figure that’s likely to place an uncomfortable
crunch on cash flow and place the home out of
reach. If they extend their amortization to 35 years,
the monthly payments drop to about $1084 - well
within their budget.

Longer amortizations, of course, come at a cost,
although the 30-year amortization premium
surcharge is under a quarter of a per cent. (The
premium surcharge for the 35-year amortization is a
little higher, at .40 per cent). And, of course, the
homebuyers may pay more for the house in the
long run, but many homebuyers have the ability to
increase payments and shorten their amortization at
a later date. For many Canadians, the real
challenge is those first few years as they are getting
their financial feet under them.

Lower monthly payments mean a better chance at
owning a home, better cashflow if you’re struggling
month-to-month or more house for your monthly
payment. The longer amortizations are not for
everyone, but if you’re in the market for a high-ratio
mortgage, with an extended term, you’ll want to get
in to see an mortgage professional soon, and
review your options.

Making the leap to home ownership

Congratulations! You’ve decided you’d like to become a homeowner.
It’s a big responsibility, but one that comes with many rewards: both
emotional and financial.

There is however, some emotional and financial investment that
comes first. Yes, a home purchase is going to be among the biggest
and most important financial decision you’ll ever make. The good
news is that you’re part of a very lucky generation of homebuyers.
Lending rates are probably lower for you than they would have been
for your grandparents. We’ve become so accustomed to low lending
rates it’s hard to remember that homebuyers struggled with lending
rates of almost 20% in the early 80’s!

Today, a whole range of flexible mortgage options make the leap to
home ownership financially painless. What it takes is just some
planning and commitment. But here’s a quick-start guide for aspiring
home owners:

1. Educate yourself. You can actually start off by talking to a
mortgage professional – who are generally great at “plain talk”.
They can help familiarize you with the legal and real estate lingo,
because those industries seem to have a language all their own. Or
if you’re web-savvy, try looking up real estate or mortgage glossaries
online, to help you move into a purchaser’s comfort zone. A good
website for the beginner is the CMHC (Canada Mortgage and
Housing Corporation). It covers the basics – and more.

2. Be aware of the importance of a good credit rating.
Mortgage lenders will definitely check your credit profile and when
they do, you want to be sure that everything looks great. Not sure
what your credit rating even looks like… or if you even have one?
Go to www.equifax.ca, which can tell you everything you need to
know about what a lender might find when they check out your
profile. The higher your credit score, the better financing you will
receive -- amount and interest rate. The basics: you need to prove
you know how to pay money back. That means you should always
pay your bills on time and preferably in full. One or two credit cards,
regularly used and paid up, can help you establish credit. A
mortgage professional can offer more tips on building a good
credit rating quickly.

3. The right mortgage can save you thousands of dollars. Your
bank will want your mortgage of course, because it’s good business
for them, but the bank represents only one lender choice.
A mortgage professional can have access to more than 50 lenders,
including most of the banks. Best of all, they don’t work for the
lender; they work for you. Mortgage professionals are a wealth of
information, and they’re usually very easy to talk to. You want
someone who will take the time to understand your situation, and
will answer all your questions. This is an important decision; you
have a right to know what it’s all about.

4. Get pre-approved. We can’t emphasize this enough. Find a
mortgage professional that you trust. He or she will have the
maximum number of options for you. Don’t have a downpayment?
That may not be a problem; there are excellent options now for
homebuyers who haven’t saved up a downpayment. The important
thing is to look at the mortgage – before the house. Your mortgage
broker can help determine the amount of mortgage money that you
are qualified to borrow and you’ll ensure the right budget for things
like closing costs too. A letter of pre-approval is an enormously handy
document to have in your pocket before you start to view houses.
And, if you get into a bidding war on the home of your dreams, it’s
good to know your limit, since it’s easy to be swept up in the
excitement. So get pre-approved.

5. Location and planning. Armed with your pre-approval, you can
be practical and reasonable about how much house you can afford.
Stay within your means and focus on making the best possible home
selection – not just for the investment potential, but for the quality of
life you want to enjoy. For both, location will be a key consideration.
Many real estate experts still agree that the best real estate values
can be found by selecting the least expensive house in a good
neighbourhood. You’ll enjoy and benefit from the value of the
neighbourhood, without paying too much extra for it. A desirable
and stable location is the place to invest your money. Can’t afford
the house of your dreams yet? Take the long view. Your dream
house is in your future, but most of us have to work our way up the
real estate ladder.

Remind yourself that the decision to buy a house has its emotional
rewards too. A house is not just a house. It will soon become your
home. Happy homebuying!

Give Yourself the Credit You Deserve!

Last month you forgot to pay that measly $20
minimum payment on your credit card. No big
deal, you can just double up your payment this
month, right? Sure, but did you know that you
just lowered your credit score by up to 100
points, and, that even a delinquent payment of
$20 can adversely affect your credit rating for
up to six months? While the average Canadian
may not be thinking about their credit score,
if you’re in the market for a mortgage it’s
important to not only know your credit score,
but also what your credit history looks like and
how it can affect your rating. A poor credit
report can seriously jeopardize your ability to
get the financing you need at an interest rate
you can afford. And, when you consider that a
black mark on your credit history can stay there
for up to seven years, it becomes clear why
maintaining a good credit score is imperative.

A home buyer’s credit history is an integral part
of the mortgage approval process because a
person’s history is a reliable indicator of how
they will pay down their mortgage and manage
their finances in the future. A credit profile
provides a snap shot of what is happening with
a person’s finances today and lets us determine
if we are taking any risk if we issue the loan.

While the amount of available credit is
considered in your score, a more important
consideration is how responsibly you manage
your credit. Making regular monthly payments
on time and avoiding delinquencies is one
piece of the credit score puzzle, but of equal
importance is how you use your credit.

If you are going to carry a balance on a line
of credit or credit card, it’s important to keep it
well below the limit of that credit source. Even
if you make your minimum monthly payments,
consistently hovering around your credit card
limit can indicate a tendency to take on debt.
And, remember that department store credit
card you cut up years ago? Well if you forgot
to cancel the card, that, along with other
dormant accounts can also affect your rating.

You may be surprised to know that the number
of inquiries made on your credit report by
organizations assessing your credit profile
might also have an adverse affect. Every time
you apply for credit, whether it is at a car
dealership, furniture store, or another financial
institution, an inquiry is made on your credit
report, and too many inquiries can be a sign of
poor fiscal management. As a result, you may
want to consider holding off on large purchases
until after your mortgage financing is secured.

So, who makes a good candidate for a
mortgage? The ideal candidate generally has
a credit score above 680, a consistent payment
history and outstanding balances that are well
below their credit limits. We’re also looking for
a stable employment history, and the size and
source for the down payment. All of these things
help demonstrate whether a person can afford
to carry the mortgage they are applying for
and if they will pay it back. While there are a
wide variety of mortgage products available
today, even for homebuyers with bruised credit,
having good credit works to your advantage
because it helps to secure a lower interest rate.
That translates into savings over time as more
money goes toward your mortgage principal
rather than interest.

It is highly recommended that in addition
to making regular payments and keeping
balances low, Canadians review their credit
report on a regular basis to ensure that any
errors on their reports are caught prior to
applying for a mortgage. Regularly monitoring
your credit activity can also protect you against
identity theft and fraud.

GST New Housing Rebate?

You may be able to claim a rebate for a portion of the GST you pay on the
purchase price or cost of building your home if you buy a new or substantially
renovated home, mobile home, floating or modular home from a builder or
vendor. Or, you buy a share in the capital stock of a co-operative housing
corporation, or construct or substantially renovate your home (or hire someone
to do so). Also applicable if your home is destroyed by fire and is rebuilt.
Contact the Canada Customs and Revenue Agency in your community for the
Completion Guide and Application Form. In most cases, your solicitor will take
care of this for you.

Using your mortgage to manage your debt!

“Where the does all your money go?” You’re looking at
your T4 slip from last year… or maybe your most recent
pay stub. Sure, many people wish that those numbers after
the dollar sign were a little higher, but it’s the vanishing act
that alarms you most. Tax time is especially sobering; you
can see how much money you made… but your credit card
is still maxed out and you don’t have much to show for a
year’s income.

If you’re looking for the holes in your wallet, start by making
a list of your debts. Are your credit cards teetering at the top
of their limits? Do you make regular use of your overdraft
protection at the bank? Do you have escalating tax
liabilities? What about any retail store cards? And – quick –
what was the interest rate on those balances last month?
Have you added it up? Many Canadians are startled to see
how much they are actually paying to service their debt.

Industry Canada, which monitors consumer data, reports
interest rates for department store credit cards as high as
28%. Even competitive rate credit cards will often run at
18% or more. This is at a time when some mortgage rates
are still well below 5%.

Why then do the banks and department stores charge such
high rates? These are unsecured debts, meaning that if you
default on the debt, the lender has no easy recourse to
recover the money. Not surprisingly, they charge a higher
rate – sometimes a MUCH higher rate – to compensate for
the higher risk that an unsecured debt represents. A house
is considered a reliable security, so mortgages often offer
the best rates available anywhere.

Consider this, then. If you have equity in your home, you
can take advantage of attractive mortgage rates to save a
bundle on interest charges. Compare current mortgage
rates with the rates charged on your other debts. Get some
professional advice on whether it might pay to do some
refinancing and roll your other debt, such as credit card
debt and tax liabilities, into your mortgage. You can
consolidate your debt into fewer payments, save some
money on interest, and improve your cash flow.

You have a few options: A secured line of credit could
provide you with funds up to 75% of the value of your
home, minus any mortgage debt on the home. You can look
forward to a substantial reduction in the interest rate, and all
you need to pay each month is the interest. You can do the
math on this comparison yourself, or talk to a mortgage
professional. If you are carrying credit card debt, you’ll be
shocked at what you can save with a secured line of credit.

You could also consider increasing your existing
mortgage. If your mortgage is coming up for renewal, this is
the perfect time to reorganize and consolidate your debts at
today’s excellent rates. Even if you are in the last
year or two of your mortgage, it may make sense to renegotiate
your mortgage now and roll in your other debt at
a low rate. Or, you may be able to benefit from this kind of
debt consolidation through a second mortgage.

Your best option – have a mortgage professional outline
your options for using a mortgage to consolidate your debt
and increase your cash flow.

Downpayment

If you have less than 20% downpayment, mortgage insurance is required as
outlined on the previous page. Homeowners no longer need the minimum 5%
down payment from their own funds to purchase a home. You can now use
borrowed funds for your 5% down, but keep in mind that there are higher credit
criteria and your insurance premiums increase.

Downpayment from your own resources (non borrowed):
You must supply verification satisfactory to the lender of accumulated savings
from non-borrowed funds. This may be in the form of:

􀀹 Copy of your bank statement or bankbook (including cover) showing a
minimum three-month history. Any large deposits during this time period
must be explained and documented.

􀀹 Copy of RRSP statement, term deposits, CSBs, or other investments.

Downpayment from a gift (non borrowed):
All or part of the minimum equity requirement (5% for downpayment plus 1.5%
for closing costs) may be provided by way of a financial gift, as long as all of the
following conditions are met:

􀀹 The donor is an immediate relative of the borrower (recipient); and
􀀹 The Approved Lender has verified that the money is a genuine gift; and
􀀹 The Approved Lender has verified that the funds are in the borrower’s
(recipient’s) possession at least 15 days prior to closing.

The Approved Lender will verify the authenticity of the gift by obtaining a written
confirmation, signed by the donor and the borrower (recipient), which will
include the following points:

􀀹 The money is a genuine gift from the donor and does not ever have to be
repaid;
􀀹 No part of the financial gift is being provided by any third party having any
interest (direct or indirect) in the sale of the subject property.

Borrowed down payment:
Effective March 1, 2004, homebuyers can get their down payment from
borrowed sources that include:

􀀹 Lender cash back incentives;
􀀹 Personal loans, lines of credit or credit cards;
􀀹 Unsubstantiated gifts.

When using a borrowed downpayment, there are a higher credit criteria and
also increased insurance premiums.

Downpayment from the sale of an existing property:
You will be required to provide a copy of the unconditional Agreement of Purchase
and Sale on your existing property. This needs to be accompanied by a copy of a
recent mortgage statement, showing the balance owing, on any mortgages
presently registered against the property. The difference between the sale price
and the mortgages owing will substantiate the funds available for your
downpayment.

No downpayment mortgages

􀀹 If you can afford mortgage payments but can’t seem to save for a
downpayment, there are still a few no downpayment mortgage options,
including the borrowed downpayment program.
􀀹 No down payment mortgages can be ideal for:
􀀹 professionals and other high income earners just starting out who
may have large student loans.
􀀹 also consider renters who often worry they won’t be able to find an
affordable home by the time they’ve saved enough for a
downpayment.

Mortgage Intelligence still offers the no downpayment mortgages. To be sure, 0% down payment mortgages are not for everyone. The objective is not take on a higher debt load than can be comfortably handled. But for Canadians with strong credit and steady incomes, these mortgages can definitely help to make the dream of home ownership a reality.*

Conventional vs High Ratio Mortgages

Conventional:
Regulations under The Bank Act prohibit Bank, Trust and Insurance Companies
from lending in excess of 80% of the purchase price or the appraised value of a
property without obtaining Mortgage Loan (High Ratio) Insurance. A loan for up
to 80% of the purchase price of a property is a conventional mortgage.

High ratio:
A loan for 80.1% to 100% of the purchase price of a property.

Mortgage loan insurance (high ratio):
High ratio mortgages must be insured through CMHC (Canada Mortgage and
Housing Corporation) or GE (Genworth Financial Canada). CMHC and GE
provide default or high ratio insurance to the lenders protecting them against the
risk of lending to homebuyers who have less than 20% downpayment available.
An insurance premium is paid by the borrower on behalf of the lender. The
insurance premium that is paid to CMHC or GE is to protect the lender in the
event that the mortgage is not paid. This is not to be confused with life,
disability, or job loss insurance.

The insurance premium is calculated as a percentage of the mortgage amount,
depending on the loan to value, and may be added to the mortgage amount.

Mortgage Intelligence

If you are looking to buy or sell make sure you call
Justin or Keith for all of your financial needs.

Mortgage financing has become very complex with constantly changing rates,
terms and challenging conditions. Choosing the mortgage best suited to your
circumstances has never been more difficult. Banks, trust and insurance
companies are continually inventing new mortgage products to capture your
attention, and hopefully your business. In addition, ensuring that you get the
best possible rate and product depends on aggressively shopping the mortgage
marketplace. Often a mortgage lender’s posted rate may not be the best rate
available. You may be able to qualify for a lower rate, but not know it.

To maximize the benefits to you, you may want to consider enlisting the
services of a professional Mortgage Intelligence consultant. We negotiate with
major financial institutions, chartered banks, trust and insurance companies,
Canada Mortgage and Housing Corporation, Genworth and others to bring our
clients the most competitive mortgage rates and terms. Mortgage Intelligence
will usually earn a commission or fee from the lender* for all the work,
advertising and promotion done on their behalf. Our professional services are
provided, in most cases, at no cost to you. A professional Mortgage
Intelligence consultant is constantly updated on rate changes and new
products being introduced in the market. As our client, you can choose from the
widest range of options, obtain the most competitive rate and best product
suited to your specific needs. An extensive network of financial institutions has
enabled many of our clients to obtain substantial savings below posted lender rates.

Mortgage Intelligence is Canada’s largest and fastest growing mortgage
brokerage firm.

Before you make what is likely to be the biggest financial decision of your life,
talk to us!

“Good debt” versus “bad debt”

Not all debt is created equal… the difference lies in how it helps – or hurts – your pursuit of your financial goals.

Some debt can be seen as an investment
in one’s future:
• Borrowing money to maximize yourRRSP contributions.
• Loans with tax-deductible interest to earn investment income.
• Borrowing to acquire an asset that may increase in value, such as your home or
a rental property.
• Student loans that enable you to get an education and lay the groundwork for
a career.

However, other types of debt can be
a drag on future opportunities:
• Revolving consumer debt with high rates of interest, such as balances on certain credit cards or department store cards.
• Buying something that has little or no future financial value using
borrowed funds.
• Cash advances on your credit card. Interest is charged right from the date
of your advance.

Moving? What NOT to pack

When you’re preparing for a moving day, keep in mind that there are some items that should not be packed at all.

IRREPLACEABLE ITEMS
It is a good idea to carry your important items such as personal files, address books, photos, car and house keys, financial statements, cheque books, bonds, stocks, software, pricey jewellery, medicine, etc. Whether they have significant monetary value or sentimental value, if you can’t keep such items on your person, have them sent by a trackable shipping service.


DANGEROUS ITEMS
All items that are considered flammable, hazardous, corrosive or explosive (such as aerosol cans, paint thinners, gas for the mower) are dangerous and illegal for movers
to transport. Ask your neighbours if they can use these items; otherwise, dispose of them properly with assistance from your local recycling centre.

Condo buying tip

Monthly condo fees can affect how much home you can afford. By choosing a property where the monthly fees are just $200 lower, you can boost your purchasing power by $18,000.
Think twice about upscale amenities like pools and deluxe fitness areas that add to condo fees, but that you may end up not using.

Smart condo living: Closet Storage Solutions

Smaller spaces found in many condo apartments mean that homeowners need to be more organized when it comes to their storage.

Relatively inexpensive closet systems allow you to customize your storage with drawers, shelves, and create spaces for hanging clothes and putting shoes. Install pegboard on closet walls – this is a good way to open up wall space for hanging a range of items.

If ceilings are high, use the vertical space inside your closets and stack boxes on the upper shelf (just make sure to label the boxes, to save time when you need to look for something!).

In the bedroom, think about installing a wall-length closet with a 2’ depth - this prevents the room getting chopped up by a wardrobe in one corner. Also, use the valuable space under your bed: plastic bins with rollers hold a surprising amount.

When is a condo not a condo?

When condo shopping, be aware that different buildings may have very different types of ownership.

FREEHOLD UNITS
Most condos are freehold strata units, where typically you have ownership of your unit. The land as well as common areas are owned collectively by all the owners. With most freehold condos, you pay monthly strata fees for upkeep.

LEASEHOLD UNITS
Here you have a lease from a landlord for the right to use the unit for a specific number of years. Many leaseholds are created for 99 years, and you may only purchase your unit for the part of the lease that remains.

CO-OP UNITS
With this arrangement you purchase shares in a co-operative association which owns the land and building including individual units and common areas, and you have
a leasehold interest in your unit. You usually pay monthly dues to the co-op board
to cover the building’s taxes and upkeep.

Moving? Protect yourself from fraud

Moving is a busy and exciting time. It is also the ideal time for a criminal to grab your personal information and make your life difficult. Here are some ways to make sure you don’t become a victim of identity theft during your move.

1. Have Canada Post re-direct your mail. This will ensure your mail will not go to your previous address and cannot be intercepted.

2. Buy a shredder. While you’re packing, shred any personal documents before throwing them out. When moving, transport personal financial documents yourself.

3. Update your personal records at your financial institution. Contact all financial providers with whom you have a relationship and make sure they update their systems.

4. After the move, check all incoming mail and ensure your new address is used.

5. If you discover items on your credit card that are not yours – contact your card company immediately.

Did you know?

First-time buyers can purchase a property for investment rather than a home to live in. This particular strategy is growing in popularity with first time buyers living at home with parents and looking to build their investment portfolio. While government incentives are available to help first-timers enter the market, different conditions apply if you choose to purchase for investment purposes. Contact your mortgage professional for full details.

First-time buyers turn to mortgage brokers

More and more, first-time buyers are relying on a mortgage broker to guide them through the home financing process. Last year, 44% of first-time buyers in Canada used the services of a mortgage broker,
a large jump from 35% in 2007.
Source: 2009 Mortgage Consumer Survey, Canada Mortgage and Housing Corporation

More TIPS on buying a vacation home

1) Buy a property that can be rented out easily when you are not using it.

2) Turn to a local realtor to learn more about market conditions, including possible seasonal slumps in real estate prices in recreational areas.

3) Consider buying a property with family members or friends and sharing its use. Keep in mind that having the right mix of personalities is key to a longlasting
arrangement.

Is a recreation property right for you?

With mortgage rates having fallen in recent months, many Canadians are taking a close look at the long-term investment and lifestyle benefits of recreational property. If a vacation home is on your radar, here are some important questions to ask yourself before you make the leap:

How would a recreation property impact my lifestyle?
The key here is to envision both the benefits and possible drawbacks for you and your
family. In addition to the fun and leisure aspects of a vacation home, you’ll also need to factor in the time and cost involved in year-round upkeep.

Can I afford the financing?
Seek independent advice on what size of mortgage you can handle – a mortgage
professional can arrange a mortgage pre-approval. With a pre-approval, you can
establish a clear price range for properties you can reasonably afford.

How far am I prepared to travel?
Prices typically will be lower the longer the journey from a major city. However, be realistic about the time you are willing to commit to travel to and from your recreation property.

With careful planning and professional advice, your very own second home can become a reality.

Consider the Top 5 Reasons to Buy vs. Rent

5. Experience Freedom: Home ownership will free you from the tiesthat bind you to a landlord. You will no longer be dependent on someone
else’s schedule to change or fix things.

4. Take Advantage of Today’s Low Interest Rates: With today’sgreat rates, your monthly mortgage costs may be even less than the rent
you’re paying now!

3. Satisfaction and security: You can decorate and improve your home according to your own style, not your landlord’s style!

2. A sound investment: Take comfort knowing that a portion of your monthly mortgage payment will go towards your home equity. Over the long-term,
a home can actually appreciate or increase in value, building more equity.

1. Save money every month: Compare $1,200/month rent to a monthly mortgage payment of $1,046.99* on a $200,000 home based on a 35yr am with 5.54%. That’s a savings of $153.01 each and every month!

Using a mortgage to manage your debt and improve your credit

What if there was such a thing as a magic card that you
could carry with you, which had the power to open
doors for you all over the world? You show someone
your magic card and ‘voila’, you can have what you
wish for. You would want to protect that card very
carefully, wouldn’t you? Your credit is a little like that.
Your good credit is a passport to financial opportunities.
A poor credit rating can be a terrible obstacle… and
repairing your credit is often a slow and difficult process.

What you may not know is that you can actually use a
mortgage to re-establish your credit. Canadians are
carrying heavier loads of personal debt than ever
before. For some, the cost of servicing those debts is
itself an obstacle to correcting the problem. Each month
can be a chase to make the interest payments to keep
the debt afloat. But if debts are rolled into a new
mortgage, your credit can improve rapidly - assuming of
course that you don’t rack up any new debts!

Here’s how it works:

Perhaps you have maximized your credit cards – and
maybe even have a short-term loan or line of credit that
you are also trying to pay down, in addition to your
regular mortgage payments. You may be considered a
“high risk” borrower under these circumstances, even if
you are managing to squeeze out your payments each
month. Your overall payment history is satisfactory, but
your debt load is heavy. If you consolidate your debts
into a new mortgage, you can better manage those
debts, while also restoring your credit rating.

You may not have considered using a mortgage to
refinance and manage your debts, but there are a few
significant advantages. Your status as a homeowner can
give you access to a lower overall borrowing rate.
A house is considered very reliable security, so
mortgages often offer the best rates available anywhere.
In addition, your credit history enjoys an almost
immediate boost, as you begin to make your monthly
payments. There are many innovative mortgage options
available today, including a mortgage product that has
been designed specifically as a credit repair tool.

This specialized mortgage is good news for clients who
are trying to distance themselves from their past credit
problems. Debt is controlled quickly – since the new
mortgage offers an interest rate lower than credit cards
that can dramatically reduce the interest charges on your
debt. And your credit typically improves in only a few
months.

You probably already know that it makes sense to
consolidate your debt into one payment. You can
generally enjoy substantial savings on interest charges;
you have a more manageable monthly payment and
better monthly cash flow. Consider how a new mortgage
can help you manage your debts – and make it a goal
this year to improve your credit rating.

Understanding Your Credit Score

When deciding whether or not to grant a mortgage loan, lenders refer to an applicant’s
credit score, along with a range of other factors such as income, employment history, and down payment size. Generally, a credit score uses your past credit history to help predict how you might manage your credit in the future.
A credit score translates personal information from your credit report and other sources intoa number between 300 and 900, representing your overall credit-worthiness. The higher your score, the more likely you are to be approved for a mortgage and receive favourable rates because the lender considers you to be a better credit risk.

First, know the score
You can obtain a copy of your credit file free from Equifax (www.equifax.ca or 1-800-465-7166) and Trans Union (www.transunion.ca or 1-800-663-9980). These free reports will not contain a credit score and it’s a good idea to get both reports. You can order more comprehensive reports including your credit score online from these companies, for a fee.

Identify any errors
Nearly 80% of credit reports contain at least one error – this makes it critical that you check over your credit report to ensure it’s accurate. If there are errors on your report, you can fill out a dispute form available from the credit agencies, and mail it to them. Any item that is not verified as accurate must be removed from your report.

Tips on keeping your credit score healthy
1. Pay your debts on time – always meet due dates. Do not ignore unpaid bills.
2. Don’t max out your credit cards – use only up to 50% of a card’s credit limit.
3. Borrow only the amount you can afford to repay.
4. Several inquiries for your credit report in a short period of time can sometimes worsen your score. If someone is seeking credit card debt, furniture and department store loans then their credit score could be adversely affected. However, multiple inquiries within a 30 day period for car or mortgage loans are ignored.
5. Reviewing your own credit file regularly to stay informed about the details on your file.

Consult with your mortgage professional
Your mortgage professional can help you assess your credit file. For those with bruised credit,
a mortgage agent can coach you on the ins and outs of improving your credit score over time – as your good credit history is established, in due course your borrowing options will increase. If you wish to get a mortgage while you work on bettering your score, he or she can also advise on how to get a mortgage despite bruised credit.

Credit Repair 101

So you don’t have the best credit record in history. You’ve maxed out cards, missed monthly payments, and “robbed” from plastic Peter to pay plastic Paul. Your financial mistakes have finally caught up to you, and you’ve just found out officially that you have a poor credit score. In most cases, you can recover from your credit mistakes. Make a disciplined plan to repair your credit profile with our Credit Repair 101 tips:

MAKE A PLAN AND STICK TO IT.
You must be serious and committed to making changes in your
lifestyle – changes that will bring financial peace of mind. Above all,
restrict yourself to absolutely necessary purchases. Borrow wisely.
The two most important questions to ask yourself: “can I afford it?”
and “do I really need it?” As tempting as it is to cut up all of your
plastic, you must maintain responsible credit card use – your new
payment history will gradually rebuild a better credit rating for you.

PROMPT PAYMENT
of bills, especially of credit cards, is the surest way to repair your
credit rating. As you have discovered, we leave “financial footprints”
for all to see. Payment of our bills, both amount and timeliness,
are tracked by credit rating agencies such as Equifax Canada and
TransUnion of Canada.

SAY NO TO GRACE PERIODS
when offered by credit card companies. It’s hard to resist such offers,
and because your budget is tight, you naturally want to “legally” skip
payments -- but don’t do it. It’s a bad credit habit; only a financially
strapped customer would fall for this, and you no longer want to send
out that kind of message. Pay at least the minimum balance if you
are really tight, but ideally you want to pay above that.

ALWAYS TRY TO PAY MORE THAN THE MINIMUM BALANCE
due on your credit cards. Not only does it polish your credit rating,
but it also saves you a lot of money in interest, and makes a huge
difference in your eventual goal of debt retirement. A key credit skill.

KEEP YOUR BALANCES LOW
This is an important strategy, and one that will reflect well on your use
of credit. You want to keep your balance way below the credit available
to you.

DON’T SEND OUT FINANCIAL DISTRESS SIGNALS
Avoid excessive inquiries for credit. Do not use credit from one company
to pay off credit to another. The creation of multiple new accounts is
another red flag that works against you.

MAINTAIN AND USE BETWEEN TWO TO FOUR CARDS
-- less that two and it takes longer to create a new payment history.
More than four, and you look like you cannot manage your debt.
Remember – responsible, steady, and reliable use of your cards is your
first and best defense against a poor rating.

TRY TO KEEP YOUR OLDEST MOST ESTABLISHED CREDIT CARD ACTIVE
The longer your history is with a certain company, the better it is for
your credit rating. This is your most important account. If the interest
rate is excessive, contact the company and explain your situation to
them. Let them know that you are serious, and eager to maintain
them as a creditor. Their goal is to keep a reliable customer, so make
that work for you.

CONTACT YOUR CREDITORS
Don’t hide your head in the sand, and hope for the best. Take action.
Pick up the phone, and explain your situation. Be upfront and honest.
Remain cooperative and calm. Not only will they appreciate your
initiative, but also they will be willing to create a payment plan that
works for you. By calling, you are showing them that you are a
concerned low risk customer. And, by communicating, you will avoid
the dreaded collection agency round – a real downer for your
credit rating.

SLOW AND STEADY
wins the race. You’ll be rewarded for responsible longtime credit
handling. Be patient -- the passage of time will earn back your good
credit profile. Then, when you do need credit for a major purchase
-- such as a car or a house – it will be there for you. Once recovered,
maintaining a good credit rating takes vigilance, but it’s worth the
effort. You’ll be able to live and enjoy a financially stable life.