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With 80% loan-to-value being the maximum you are now able to refinance your property, property values staying more level, and 25 years being the maximum amortization on high ratio deals, it's not as easy as it once was to simply refinance and pull some money out of a home when it's time for some upgrades.

In addition to the above, it seems that all of the new homes being built in the Fraser Valley lack a decent sized yard for the average family to live in and enjoy. Many of my clients are facing the dilemma of buying a new home with all the bells and whistles, but a lacklustre yard. Or, purchase an older home with a yard that their kids and pets can enjoy, but face the reality of having to upgrade or renovate the home they purchase.

The Purchase Plus Improvements mortgage is a great option for many people in this situation. They get credit for the increased home value, right off the bat, they get their money at a great interest rate, and they get to complete the upgrades right away and live in the home they really want!

Here's how the program works:

  • The amount allowed for improvements is typically 10% -20% of the purchase price, or up to $40,000 maximum.  The money is to be used for “improvements” or “upgrades”, not necessary repairs like leaks or structure issues.  Also must be for something that adds value to the home, not a chattel like appliances.

  • You need to get quotes for the cost of the improvements that the client wishes to complete.  Add the amount of the quote/s to the purchase price, and this becomes the new purchase price.  The down payment is now based on this new higher purchase price as well.

  • The mortgage is funded in order to purchase the home, but the money to be used for improvements is held at the solicitor’s office until the work is complete.

  • The work can be done by the client or a company/contractor, but client labor is not something that can be reimbursed for.  If a client does the work him or herself, only the cost of the materials is released.  If a contractor or company does the work, send us the invoice and we can pay them directly for the full amount. 

  • An inspection report from an appraiser is required when all is done so we can confirm that the said work was completed. 

  • If the final cost ended up being less than expected, the left over money is applied back against the mortgage.

This program is available at best rates, both fixed and variable, and may help those clients make an easier decision on which home is best for them.

Think this program might work for you or someone you know? Call me any time to discuss!

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Renovating homes is becoming ever-more popular these days. Part of the reason, as the following article eludes to, is the extremely popular reality TV shows that flood the airways today. Another big reason is the fact that it's almost impossible to find a newly designed home on any decent sized lot in today's market. If you want a home with a good sized yard for your pets and kids to play in, you are likely looking at older homes that may need some updating.

As you probably know, upgrading and renovating your home can positively increase the value of your home. However, certain upgrades will provide a better return on your investment, while others may have less of an affect on the value than you may think. This article offers some great advice on which projects will give you a better recovery rate than others, and which renos may prove to be more attractive to potential buyers.

Accessing the equity in your home with a refinance is a very common way that many Canadians are paying for these improvements and upgrades. With interest rates continuing to remain low, now is the cheapest time in history for you to finance your renos.

For you purchasers out there, the "Purchase Plus Improvements" program allows you to borrow extra money for your purchase of a home that you plan to improve. Be sure to have a mortgage professional on your team who knows the 'ins and outs' of such programs.

View the story here. Enjoy.

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Finally! After two years of waiting, the Finance Department has announced a new "code" that will force banks and lenders to clearly state how their pre-payment penalties will be calculated and explain to the consumer how they can pay off their mortgage faster, without incurring any penalty.

This article explains all of the changes.

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Clients ask me on a daily basis, "what are my closing costs going to be?" OR, "how much will I owe at the lawyers'?" These are great questions to ask, and someone has written a great article answering them. Click here to read it. (I know this is a lazy way of blogging, but this person did a fantastic job!)

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Here is a great summary on the BoC's Winter Review which was released last week. Definitely a few interesting points to take note of. Read the article here and let me know your thoughts.

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The government has announced a proposal for a First-Time New Home Buyers' Bonus to be introduced which will allow for a maximum $10,000 personal income tax credit. This still has to be approved by the legislature, however appears to be another creative new incentive for first-time buyers.

Read all the details about it here.

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A new year is upon us, and with a new year comes new goals.

Late last year, I joined an online community of mortgage professionals that stretch across the country. Together, we pool ideas and make suggestions on how we can create strategies and products to help better serve our clients. We all agree that 2012 will be a challenging year and that consumers are becoming resistant to our 'old-age' marketing approaches. I will have more to come on our products that are being launched to the public later. They save you thousands on your mortgage and knock years off your amortization – I would recommend you keep an eye out!

Part of this community offers some personal coaching from a caged vet in the industry who has a lot of ground-breaking ideas and enthusiasm to share with us. It's very refreshing and motivating! One of the things he had us do as part of our goal planning for 2012 was to think of three words that will define and shape the way we practice and play in both business and in life. Here are my three words for 2012:

FOCUS

I found in 2011 that I had a lot of really neat ideas that would come to my mind (usually while lying in bed). These ideas would make it to the 'Notes' section in my Blackberry and do nothing more than create a cluster of frustration and stress in my day-to-day goings-on. I would look at them from time to time, however the problem was I was not taking any action on them, and my list of ideas just kept growing! I found this began to affect my personal life as well, as I was constantly taking this 'baggage' home with me and nothing but work would be on my mind. In 2012, the idea is to focus on the good ideas and actually make something happen with them. Another large part of focus comes while I'm actually at the office. Out of the 8-10 hours that I spend at the office each day, how many of those are actually productive hours? This would result in me returning home some days with a frustration wondering what I accomplished all day. I plan to focus on being more productive with my time while at work.

INNOVATION

Innovation is going to be big for me in 2012. As I mentioned above, it is imperative that I shift the way I market and do business with both potential, and current clients. Things are changing and 2012 will be challenging. Bringing innovative ideas and strategies to my customers on paying off their mortgage faster and cutting years off their amortization is my pledge. Continuing to create and innovate is my promise.

VALUE

As a mortgage professional, I must always be bringing value to my clients and referral sources. In 2012, I want every one of my clients to leave our transaction thinking, "wow, that guy is valuable to have on my team!" If I leave my clients with this feeling, I know that I am referrable and can be confident that they will introduce me to their friends and families. To me, value will also mean receiving value from everyone I meet. Ralph Waldo Emerson said, "Every man I meet is my superior in some way. In that I learn of him." I truly believe everyone has something special to offer, and I plan to see the value and learn from all of the people I meet in 2012.

Those are my three words that I plan to live by this year. I hope that by posting this to the public, I am held more accountable both in business and my personal life.

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Early this week, an email came across my Blackberry with a link to an article that discussed how 2 out of 3 Canadians neglect to shop around for a better price/product when their mortgage comes up for renewal. At first, I was not surprised by this stat. After all, it is very common knowledge that banks PURPOSELY send out renewal offers with a much higher interest rate than is available in the market. Reason? OVER 85% OF PEOPLE SIMPLY SIGN IT AND RETURN IT WITHOUT KNOWING ANY BETTER! Therefore it would make sense for such a stat to come to fruition – just not sure why it took so long for someone to do the research and actually create a statistic out of it.

This email continued to haunt me for the next few days. I kept wondering why I couldn't take my mind away from it when, as I have already told you, I was not taken back by it. However the more and more I continued to think about it, the more and more it continued to eat away at me.

How can people be so naive and, for lack of a better word, lazy?! The article went on to explain how, on average, renewal offers are anywhere from a half, to three quarters of a percentage point HIGHER than what is available on the street! Using simple interest alone, this would cost someone with a $300,000 balance over $11,000 over their 5 year term! And all they had to do was pick up the phone and call their friendly neighbourhood mortgage broker.

If someone told me that by making one phone call I could save $11,000, you couldn't find me a phone fast enough! Now, I don't consider myself that much different from the average mortgage consumer, so I have been racking my brain trying to figure out why two-thirds of Canadians are still just signing and renewing? The conclusion I have come up with is that there has to be some major misconceptions out there, combined with a major lack of knowledge and understanding.

One of the common misconceptions I have heard is that there is a cost to switching your mortgage. This "cost" that people are referring to is a provincially legislated discharge fee of $75 (although I have seen many banks include their own "admin" fees in here so that the discharge total is $300). So, I just said I could save you $11,000 for making a phone call, but it's going to cost you $300 to do – NO BRAINER! Misconception number one, tackled!

Another common excuse I have heard is that it takes a lot of work to shop your mortgage around, and you have to get all that paperwork together again, and blah blah blah. Yes, you will have to gather up some paper work again, but is it not worth investing a couple hours of your time in order to save $11,000?! Take this $11,000 and invest it in to your child's RESP, come back to me in 20 years and tell me it wasn't worth the couple hours of your time. I dare you! Plus, if you're working with your friendly neighbourhood mortgage broker, he or she will do everything in their power to make this process as easy as possible, AND do all the shopping around for you! Heck, if you're working with me, these 'couple hours' will be the most fun couple hours you've had in a long time! Ok maybe not, but it will definitely be more fun than hanging out at home and watching Friends re-runs…

I hope you've received the message I've been attempting to portray here. SHOP AROUND AT RENEWAL! The savings could be VERY lucrative.


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This article is stating that many consumers out there are coming to mortgage brokers and demanding that their mortgage be placed with one of the big six banks. One mortgage broker even says that his client took a higher rate, just to have their mortgage with TD, as opposed to a mono-line lender.

Mono-line lenders are lenders that just do mortgages. They don't cross-sell you on chequing accounts, saving accounts, RRSPs, etc. They are also only accessible through the mortgage broker channel. They are very reputable, and many have been around for decades. In fact, a lot of these mono-line lenders' sources of funding come from big banks, themselves!

So why the apparent uproar from the market requesting their mortgage be held with a big bank? I placed the word "apparent" in there for a reason: I don't think there is an uproar. I have never once had a client request that their mortgage be placed with a big chartered bank, strictly for the warmth and security of knowing their mortgage will be safe.

Let's say, for arguments sake, that your mortgage was held with one of these 'unknown' mono-line lenders, and worst case scenarios take place all at once and this lender goes belly-up… Now all of a sudden you have no one to repay this money too… Oh darn! Remember… they don't have a dime of YOUR money; you have THEIRS.

Of course, this scenario would never actually take place as another bank/lender would surely come in and purchase all of the mortgages off their books and you would simply receive a letter in the mail saying that your payments are now being directed to a new party, but your contract remains the same because, well after all, it is a contract and a binding agreement! In essence, nothing would change!

Keep in mind that these are, in fact, worse case scenarios, and the odds of a reputable mono-line lender going belly up are just as good as a reputable bank going belly up. Most have been around for a long time and have very stable financial backing.

So… where is the risk to the client, exactly?