A recent report from TD Economics has just pushed back forecasts for interest rate hikes during 2011.

Many economists, TD included, believed that interest rates would begin to climb in mid-2011. However, economists have adjusted their earlier report in its Quarterly Economic Forecast regarding its outlook on monetary policy and interest rates.

Currently, TD does not expect the Bank of Canada to hike rates at any point in 2011, but rather they would start to increase in 2012 with the overnight rate finishing off 2012 at the 2.00% mark.

The TD report goes on to say that traditional thinking about monetary policy doesn’t bode well in this out of the ordinary recovery – the global economy hasn’t recovered at the pace forecasted at the onset.

There are a number of key factors considered by the TD economists when making their conclusions about interest rate movement. Firstly, they believe that inflation potential is well anchored and we have a reputation as an inflation fighter. As the output gap minimizes, the risk of inflation is limited since the markets will determine the price of commodities.

Secondly, there is a whole lot of risk at this point. Even though Canada doesn’t have a great deal of exposure to the real risky countries in Europe, the meltdown would have its effect in North America. The biggest concern is the recovery in the US. Right now there is a huge inventory of homes and many more on the brink of foreclosure, so it appears that the market will be flush for quite some time. The US Government has quite the juggling act with ensuring it doesn’t drive up inflation while still trying to stimulate the nation’s economy. Obviously, this has a far greater direct impact on Canada versus the rest of the world.

High energy prices as of late are a big concern to dragging down growth while heating up inflation, which is related to the unrest in the Middle Eastern nations. Factor in inflation in emerging countries like China and the natural disasters in Japan; it poses a barrier to progressing economically.

All of this uncertainly has lead to the conclusion by TD economists. When the Bank of Canada does move forward with rates, they still have mitigating factors to include and any slight changes could alter their path. These economists figure that once we reach the 2.00% mark we may pause there for a breather and take a look around to see how everyone else is faring. This gradual approach will also limit the upward pressure of our very strong loonie.

Like any economists prediction, it has a short shelf life because assumptions may prove incorrect and factors may change out of nowhere. There are many factors like those mentioned in the report that could change in a snap and force industry players to re-align their forecasts. If we start to fall behind inflation then we may have to kick into gear and start edging rates up.

Mortgage preparation made simple!

Buying a home is probably the single largest investment most people make in a lifetime. By preparing yourself and your finances before a home purchase, you can ensure a smooth finance process and can potentially save thousands on your loan.

Start by checking your credit

To get the best possible mortgage rate, make sure your credit history is healthy and accurate. Aim to raise your credit score above 750 in order to qualify for most prime loans.

If your credit score is not quite 750, focus your efforts on paying bills on time, reducing your debt balances, avoiding new inquiries and clearing negative inaccuracies from your credit profile. It is possible to improve your credit score quite a bit over a few months.

Make sure the information on your profile is correct and fix any problems you discover. Give yourself 30-90 days for correcting inaccuracies. You can learn more about the dispute process online at .

For an understanding of your credit history, check your credit profile from TransUnion.

Figure out how much you can afford

The rule of thumb is that most borrowers can afford a home that runs about two-and-one-half times their annual salary.

Calculate your loan-to-value ratio to see how much you can afford to borrow by dividing the loan amount by the property’s value. If your loan-to-value ration is above 80 percent your rates may increase significantly. Find a less expensive home or save up for a down payment to lower this percentage.

Calculate your debt-to-income ratio by adding up your monthly debts and dividing by your monthly income. A debt-to-income ratio under 20-39 percent is usually considered good and will help you be perceived as financially stable.

Don’t be afraid to start small. Just because you may qualify for a large loan doesn’t mean that it is a smart financial decision to buy as large a home as possible. Take a careful look at your family budget and your housing needs before you decide how much you can really afford.

Pick a mortgage to fit your finances

Fixed rate mortgages have a set monthly payment that remains constant through the life of the loan. The interest rates tend to be a bit higher on fixed rate loans.

Adjustable rate mortgages give you a lower initial interest rate with the risk of it rising in years to come. If interest rates decrease you will have an advantage over fixed rate borrowers. Setting a rate cap about 5-6 percent above your initial rate will protect you from extreme jumps in interest rates.

File away a list of all your account numbers — with expiration dates and telephone numbers. If your wallet is stolen, you will be able to quickly alert your creditors.

Improving your finances before you start to shop can help you save thousands on your mortgage. Reducing your loan rate by just 1/2 a percentage point can potentially save you thousands of dollars in interest payments over the life of your mortgage loan.

A true measure of the impact of change is not to look at it from a scholarly level, but to examine the depth to which it manifests itself when it moves from theory into practice. And such is the case with Jim Flaherty’s most recent round of mortgage and HELOC restrictions that were announced in January of this year, and then rolled out in March and April.

Two months later, as the market itself is hot (in some regions almost unbearably, unsustainably so), and the combustible combination of eroding affordability in the face of rising consumer and property prices alike faces mounting levels of consumer debt, the question remains- have these changes helped to lend stability or are consumers still biting off more than they can chew?

Canada is world-renowned for its’ stringent lending policies and many people attribute these to the fact that our economy was able to weather the recent global financial crisis fairly unscathed.

Flaherty’s changes this time around included reducing the maximum amortization on a mortgage from 35 years to 30 years in an effort to reduce interest payments for the average homeowner and to speed up the process of building up equity. He also reduced refinancing of mortgages from 90% to 85%, with the hopeful outcome of encouraging homeowners to save up for things, rather than lumping more money onto their mortgage. The final change was to withdraw government backing from HELOC’s- trying to transfer responsibility for this more consumer debt based product to the lending institution, rather than to the taxpayer.

“Canada’s well-regulated housing sector has been an important strength that allowed us to avoid the mistakes of other countries and helped protect us from the worst of the recent global recession,” said Minister Flaherty in a release. “The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and future.”

So, the best measure of what impact these changes have had is to go to the front lines- - to those who are qualifying people to borrow- and to those helping them put their financing to use, and to look at the system itself.

Sound system

Seemingly, there has not been huge impact, because of the already highly stringent lending policies in place. There seems to be an attitude of austerity and extreme responsibility, generally, when it comes to lending in Canada. This is in stark contrast with the complete economic collapse in the U.S., where the blame has fallen squarely at the feet of irresponsible, freewheeling lending, fuelled by greed rather than the principles of due diligence.

Brad Compton, Mortgage Agent, Invis Inc, says, “Canada has traditionally had quite strict rules when it comes to mortgages....at least when compared to our peers. I think our conservative view when it comes to mortgages is definitely why we fared the "economic meltdown" so well. Our recent changes to the mortgage rules has only strengthened mortgage/housing market.”

Rather, our lending system benefits from having a “worse case scenario” play itself out nearby- and where a market is still feeling the ill effects. A report released this week from the S&P Schiller Price Index, indicates that the US housing market has suffered another double dip in prices in the market- and have now experienced the most significant declines in price seen since the great depression. Despite aggressive and sustained measures, the US housing market cannot seem to get its’ feet back under it, and one can’t help but wonder what things would look like today, had more stringent lending practices been enforced from the get go.

After another reprieve from the Bank of Canada for an interest rate rise, there is much talk amongst Canadians about whether or not variable rate or fixed rate mortgages are the way to go.

CIBC recently conducted a poll which indicated that most Canadians are split on whether or variable or a fixed rate is the best strategy, even in light of the knowledge that rates are eventually going to go up. Highlights from the survey include: 39% of respondents said they would choose a fixed mortgage if they had to choose between a fixed or variable mortgage today; 32% said they would go with a fixed rate; 25% said that they could not choose between the two.

So, there is no clear-cut strategy favoured here.

Also the survey showed that 61% of respondents believe interest rates will be up this time next year, while 24% believe that rates will hold their own throughout the next year. A mere 3% believe that rates will actually go down through the next year.

"The divergent opinions on whether to go fixed or variable underscores what our advisors see everyday in their meetings with clients - choosing the right mortgage depends on your personal financial situation, and there's no single answer for everyone," commented Colette Delaney, Senior Vice President, Mortgages, Lending & Insurance, CIBC Retail Markets.

There are other factors at play than just the directional predictions for interest rates, as Delaney reminds mortgage holders. "You need to approach the fixed versus variable decision from the inside out, starting with your personal financial goals and working from there," added Ms. Delaney. "Your mortgage is a major part of your overall financial plan, and your decisions should be based on how your mortgage fits with your long term financial goals, not on short term rate fluctuations."

Interestingly, the type of rate that you choose seems to have a lot to do with the stage of life that you are in, according to the CIBC poll.  27% of 25-34 year olds (who are also mostly first time home buyers or relatively new homeowners) would choose a variable rate mortgage; 42% among respondents 45-54 years of age, would choose a variable rate and who incidentally “are more likely to be near the end of their mortgage and have greater tolerance for rate changes within their mortgage payment.”

Ms. Delaney noted that homeowners can look at both a fixed and variable strategy over the life of their mortgage. "For most people, your mortgage is a long term proposition, so your strategy should look beyond your first term," commented Ms. Delaney.  "You may choose to start with a fixed mortgage when you buy your first home, then transition to a variable mortgage in later terms when you have improved your financial situation and paid down some of the principal."

2. You want to pay off your house sooner. You can refinance to shorten the length of your mortgage and pay less in interest over the long run. Refinance at a lower rate, and you’ll save even more.

3. You have a lot of credit card debt. If you have enough equity in your home, you can refinance and roll your credit card debt and other loans into your mortgage. That can mean a drop in the interest rate from 19% to 3% and thousands of dollars of savings.

4. You want to convert a variable-rate mortgage into a fixed-rate mortgage. Many economists say interest rates will be heading up soon. If you want to lock in, now’s the time. As of mid-November, the five-year fixed rate was only about 3.8%—not much higher than its lowest point ever.

5. You can’t afford your payments. Lenders don’t like foreclosing on homes, so they’ll often help you refinance instead. Depending on the kind of mortgage you have and the amount of equity you have in your home, you may be able to extend the term of your mortgage loan and reduce your monthly payments.

We have great programs for those of us who are self-employed and in need of a fair mortgage.  Not all banks and lenders have programs specifically suited to us who are self-employed....call your favorite area mortgage broker for more information.

Apparently, many Canadians are saying “You’re not the boss of me” these days.

According to a new poll from RBC, self-employment- and interest in becoming self-employed is on a swift upswing. 32% Canadians who don't currently  own a business are intrigued by the idea of doing so; 20% have indicated that they intend to venture out on their own and start a business in the next five years, reports RBC Canadian Consumer Outlook. "Considering 12 per cent of Canadians are currently self-employed, seeing another 20 per cent interested in being their own boss is indeed significant," said Mike Michell, national director, Small Business, RBC. "Getting a business started can be challenging: you have to have passion for what you're doing, seek out good advice and be prepared with a well-developed business plan."

Starting up a business is not without its’ challenges though, and 28% of those planning to start a business, indicated that the greatest challenge is finding enough money to get going- or to expand. 14% felt the biggest challenge was finding clients.

Among those that are actually running their own business though, the results are reversed. 66% felt that the greatest challenge was soliciting and maintaining clients; only 15% felt that getting together money to expand was a barrier.

Perception and reality also differ slightly in terms of how long it actually takes to get a business off the ground, and running profitably.  40% of prospective business owners feel that three years is a reasonable time frame to start making money.  41%  of existing business owners indicated that it actually took ‘less than a year for their business to break even or make enough money to cover costs.’

"It appears most Canadians have a fairly realistic view of what it takes to be an entrepreneur, although there are a few misconceptions," said Michell. "The message for would-be small business owners is that financing should not hold them back.”

If you are self-employed are plan to be, and are also considering a new home purchase or a refinance of your current home, give me a call or email.  I am your local Kitchener-Waterloo and area mortgage agent.  Call me at 519-651-9615 or email me at gmiloje@mortgagealliance.com.

Follow my blog at www.MilojeMortgage.com, or follow me on facebook, Georgel Miloje - Mortgage Broker.

The Bank of Canada will keep its pivotal overnight interest rates unchanged at one per cent, with governor Mark Carney once again refusing to pinpoint when exactly he’ll nudge it upward.

Tuesday’s move – or rather, the absence of a move – is the sixth consecutive interest rate setting where Carney has maintained the status quo.

He suggested that global economic risks remain in place, although Canada’s recovery continues to chug along.

Inflation’s rise above three per cent – a rate that many economists thought would set off an interest rate hike – should readjust to two per cent by the middle of next year, said Carney, in Tuesday’s decision statement.

Brokers reaction to the announcement was muted, although largely positive.

“It may assist business a little bit,” Bob Smith, owner of Verico K-W Mortgage, told MortgageBrokerNews.ca. “Had they moved up the rate, it would have further dimmed the outlook for the rest of the year.”

Smith’s brokerage is already grappling with a 10-per cent volume drop from last year’s busy spring season. He wants to Carney to hold the rate steady for the rest of 2011, although, like most brokers, expects a move may come as early as the fall.

The Central Bank isn’t tipping its hand, although today’s reprieve will last until the next rate review announcement on July 19.

Still, extending the current rock-bottom rates may do little to encourage the housing market to pick up speed, said another broker.

“Keeping prime at the current rate isn’t going to counteract the many changes that have come into effect over the last year,” Mark Fidgett, owner of Verico Not A Penny Down Mortgages, told MortgageBrokerNews.ca ahead of the announcement. “But I do think it will have a more positive effect than raising the rates and getting people interested in buying that way.”

There’s increasing indication that many prospective homebuyers have already made their move, buying ahead of tougher qualifying terms brought in by the federal government in April 2010 and March and April of this year. Simply put, say analysts, there are fewer buyers left to jump off the fence, something reflected in the uptick in business for brokers just ahead of each rule change.

Ironically, said Smith, prolonging the low interest rate could conceivably frustrate originations in his market. "There’s some hesitancy with people who are in a cash postion and ready to buy because they're holding out for lower prices," the broker said Tuesday." But they may find themselves in a catch-22 situation because of the low rates with sellers less likely to drop their prices."

They are also predicting that the rate will only go up .75% for the remaining of the year (instead of 1% as previously predicted).  Canada's economy seems to be steady, and household credit seems to be rising, so they don't think the central bank will wait much longer than September to raise rates, as inflation is always a worry.

This sounds like good news for those holding variable rate mortgages, because as the central bank's rates go up, so do bank prime rates.

Does your team have style?

Could your team use $1,000 or even $5,000 to buy new equipment or supplies?

It’s easy. Just make a video of your team singing the Mortgage Alliance jingle.

Submit that video along with a brief essay on why you think your team should win and we’ll post your video on the Mortgage Alliance web site.

Once posted, web visitors will cast their vote for their favorite video and who knows, your team, club or association could be on of our 6 lucky winners!!

There are five $1,000 prizes available to be won and one Grand Prize of $5,000!!!!

Don’t wait. Get your team ready to sing their way to victory today!!!

Please note, any one under 18 years of age must submit a completed parental/guardian release form at the same time with the video and essay entry, please refer to the full rules & regulations of the Contest.

Submit your video now!

Call or email Georgel for details!

Fiscal prudence is the order of the day for an overwhelming number of Canadians, according to a new poll from CIBC. Ever mindful of the rising cost of everything- the majority of Canadians indicate that they intend to use any excess cash coming in to their households from their tax returns to either pay down existing debt, or to bulk up their savings.

Highlights from the poll include:  55 % of Canadians have received or are expecting to receive a refund; of those receiving a refund, 47 % expect less than a $1,000 refund; 5 % expect more than $5,000; 42 % plan to use their refund to pay down debt and 30 % plan to save or invest it; 74 % know they may be overpaying taxes on their regular paycheques if they are getting a refund this time of year.

"The fact that the majority of Canadians plan to pay down debts or shore up their bank accounts with their tax refund is a clear sign that Canadians are indeed focused on getting their financial house in order," says Jamie Golombek, CIBC's head of tax and estate planning.

"However, getting a refund each year is poor tax and financial planning as it's a sign that you are overpaying on your taxes throughout the year. At first glance, it might seem like good news but the reality is you are only getting your own hard-earned money back. Canadians would be better off receiving their tax "refund" with every paycheque so they could pay down debt and invest that money throughout the year."

Mr. Golombek calls Canadians reaction to a refund, "Intaxication", which he describes as the "short-term euphoria associated with a tax refund that quickly fades when you realize you are getting your own money back, interest-free, over a year later."

Of this group that suffers from “Intaxication”, most are between the ages of 35-44 (which historically, is also the group that often carries the most debt).  Also of interest with this group, 68% indicated that they expected a tax refund; among this group too, some of the largest refunds were anticipated- with 26% saying that they expect to see between $2000-$5000 come back. Also, this group was the most likely to say that they would use this windfall to pay down debt (52%) - and would be the least likely to spend any extra money (4%).

Golombek advises Canadians to do some tax planning in advance of tax season, and suggested investigating having tax reduced at the source, so as to increase cash flow throughout the year- and possibly be more supportive to ongoing budgeting- or to invest and earn money, depending on intent.

"Clearly, it would be better to avoid getting a tax refund by having your tax reduced at source by your employer and having the use of the funds throughout the year, which can be used to increase your monthly mortgage payments or put towards an RESP or TFSA contribution," adds Mr. Golombek.

Canadians would like nothing more than to be rid of their mortgage debt, according to a new poll released by Scotiabank.

Almost half of Canadians (46%) are saddled with mortgage debt; of those with a mortgage, a staggering 86% indicate that it is important to pay their mortgages expeditiously. "Many Canadians know ways to reduce the life of their mortgage - such as increasing, matching or making additional payments - but it can often seem difficult to implement, especially if your budget is already stretched," said David Stafford, Managing Director, Scotiabank Real Estate Secured Lending. "What many Canadians may not realize is that even small changes can shave years off a mortgage. “

The key to reducing what for many is their largest debt, is to have a strategy in place. Stafford reminds mortgage holders to utilize methods like making bi-weekly mortgage payments instead of monthly to shorten amortization and reduce interest over time; increase payments over time, if budget allows for it, and increase payments slightly year-over-year.

Also, Stafford suggests employing a strategy not only for paying down debt- but for taking on debt as well. There is much focus on deciding how you are going to pay down debt- but it only makes sense to plan ahead when taking out debt as well. 

In doing so, the debt holder is able to only take out the debt that they need, and to contribute as efficiently as possible to paying it down quickly.

Most Canadians are already taking advantage of bi-weekly payments- 46 % choose to make payments every other week. However, there are still nearly four-in-10 (38 %) Canadians who are making mortgage payments either monthly or semi-monthly.

Similarly, many Canadians are already taking advantage of options to make additional payments wherever possible: “The study showed that the majority of Canadians (65 %) are able to make additional payments on their mortgage and 75 % of those actually do it. One-third of Canadians (33 %) make additional payments whenever they can afford to, one-in-five (20 %) make additional payments annually and 8% make extra payments monthly.

There are steps you can take to ensure that each time a new "credit picture" is taken, it shows your best side. By observing the following guidelines, you can influence your credit worthiness for the better:

1. Be punctual - Pay all your bills on time. Late payments, collections, and bankruptcies have the greatest negative effect on your credit score.
2. Check your credit profile regularly and take the necessary steps to remove inaccuracies - Don't let your credit health suffer due to inaccurate information. If you find an inaccuracy on your credit profile contact the creditor associated with the account or the credit reporting agencies to correct it immediately.
3. Watch your debt - Keep your account balances below 50% of your available credit. For instance, if you have a credit card with a $1,000 limit, you should try to keep the balance owed below $500.
4. Give yourself time - Time is one of the most significant factors that can improve your credit score. Establish a long history of paying your bills on time and using credit responsibly. You may also want to keep the oldest account on your credit profile open in order to lengthen your period of active credit use.
5. Avoid excessive inquiries - A large number of inquiries occurred over a short period of time may be interpreted as a sign that you are opening numerous credit accounts due to financial difficulties or overextending yourself by taking on more debt than you can easily repay.

I recently read an article in the mortgage broker news website.  See excerpts below for some interesting information.  Please beware before getting a mortgage from one of the big banks that only offer this type of mortgage now, instead of the traditional mortgage....it may look good at first, but is it really there to help you?

article below:

“We’re saying 'no' more often now than we did in the past, and I can think of no less than six people since last year that we’ve simply had to turn away because there was nothing we could do for them,” David O’Gorman, broker/owner of MortgageLand Inc. in Markham, Ont., told MortgageBrokerNews.ca. “It’s because they’ve signed up for a collateral mortgage with the banks,  and have pledged all their equity to that bank. It makes it all but impossible for a second lender to come behind and provide a second mortgage or refinancing or even for a homeowner to switch lenders at renewal.”

Last fall, O’Gorman and other brokers raised the specter of a loss of business stemming from collateral mortgages when one of the major banks announced all new home loans would be secured by promissory note and backed by collateral – usually a first or second lien on the property. That supporting charge can be for as much as 125 per cent of the value, although, doesn’t, in fact, mean the borrower will have access to all those funds.

The collateral charges allow lenders to switch up the interest rate on a loan and lend more money to qualified borrowers after closing, without the client incurring additional legal costs. There is, however, a downside: they also limit the borrower’s ability to shop around for a new lender at renewal or to win refinance or to take out a second mortgage at another institution.

Most mono-lines and banks – as well as the private lenders O’Gorman deals with – refuse to accept the transfer of collateral mortgages, forcing homeowners to pay additional fees to register a new conventional or collateral mortgage in order to move the loan from the lending institution. 

The consequences for homeowners are tremendous, said O’Gorman, who wrote to Federal Finance Minister Jim Flaherty last November, outlining his concerns. He also challenged the motives of the bank industry, now prepared to extend its collateral mortgage portfolio.

“Lending money to people, with ‘different to the norm’ conditions and increasing the borrower’s exposure to significant loss, all the while flogging a cheap closing service, enticing the borrower to go without the opportunity of having an independent legal opinion of the documents they are signing, just plain stinks,” he wrote in the two-page letter. “We will have to wait awhile for a decision by a judge crushing the ‘one-sidedness’ of these contracts. In the meantime a significant number of consumers will make ill-informed decisions, unless consumers and/or bank regulators take action.”

A policy advisor for Flaherty did contact O’Gorman for a brief discussion, although the broker doubts the matter will move beyond that initial outreach. He’s more certain about potential negatives for the broker channel as banks continue to shift to collateral mortgages, used to help them retain clients for the full life of the mortgage and not just the first five-year term.

----------------------

This really sounds like a raw deal for the consumer....it limits your freedom to make choices....to switch to another bank if yours is no longer competitive, or due to other issues....it can limit your ability to get a second mortgage or to refinance....the big banks can do it because there are only a few out there and they have a majority of the business.....does this sound a bit like a monopoly????  There have been many comments posted on the site where this article appeared all expressing concern for the rights of the consumer, and fairness to the consumer.

Make a choice, ask for advice, work with a mortgage broker who works for you, not for the bank!

Call me at 519-651-9615

or email me at gmiloje@mortgagealliance.com

Check out my blog posts at www.MilojeMortgage.com or follow me Georgel Miloje - Mortgage Broker on Facebook, and stay up to date

One big cost that affects a lot of people is the penalty involved when paying out a mortgage early....I recently had a call from someone looking for help in a situation similar to the one about to be described below...

From the Propertywire website:

The issue of hidden costs may be more critical for first-time home buyers because they’re generally green when it comes to matters of real estate. Also, says Sukkau, they tend to have the bare minimum down for that first home, so costs that are hidden or extra may be even more overwhelming for them.

For example, on fixed-rate mortgages – the kind obtained by two-thirds of Canadians – there are “shocking” hidden costs to those who need to pay out their mortgage early, says independent Toronto mortgage planner David Larock. “You may be shocked when you see the penalty charged by your lender,” he says, “and even more so when you realize that you could have avoided most of that cost by simply choosing another lender offering the same interest rate.”

That, he says, is why he spends time railing against the powers that be for changes to Canada’s mortgage disclosure rules. He’s hoping Conservative Finance Minister Jim Flaherty will follow-up on his 2010 budget promise to address the issue.

As it now stands, the major banks can get away with big penalties because they do not have to disclose their method of calculating mortgage penalties, says Larock. While these penalties – Larock says they are often double or more that of other lenders – don’t surprise him, it’s the customers, who assume the banks are giving them fair terms that do.

Sukkau recently experienced this “hidden cost” issue when listing the home of a young military couple in Niagara. A transfer prompted the need to sell their home and Sukkau hoped the bank might show clemency on the penalty given that the couple was moving to a military base in an effort to serve the country. That, however, didn’t happen. The couple had to pay the bank a $7,500 penalty and because they didn’t have enough equity in the house, the couple took their home off the market and decided instead to rent it out.

“It did adversely affect them,” says Sukkau of her clients. “It’s an excellent, but unfortunate, example of a hidden cost that home buyers wouldn’t be aware of. I think its something that will become more of an issue. We may see CREA (Canadian Real Estate Association) picking up on this as a lobbying item. The penalties are awfully high. When you think about it, is it a fair way to treat consumers?”

------------------

Solution....see your friendly local mortgage agent for advice....don't necessarily trust what the banks tell you directly.  Remember the bank mobile mortgage specialist is an employee of that bank, and works firstly in the best interest of the bank (his/her employer).

More quotes below:

Closing or hidden costs vary depending on the price of the property, but are generally estimated to be 3 or 4 per cent of the purchase price. Expect to recommend that clients should earmark at least a few thousand dollars for these costs.

Here, thanks to CMHC, the Manitoba Real Estate Association and the Nova Scotia Association of Realtors, is a list of more unusual or lesser-known costs:

Mortgage application fee --Some lenders may charge a fee to process your mortgage application. However, with the highly competitive nature of the mortgage industry, many will waive the fee entirely, especially if you have other accounts with them.

Mortgage insurance -- If you have a high-ratio mortgage, the government requires that it be insured against default and that you pay the cost of insurance. The cost to you ranges from .51 to 2.90 per cent of the mortgage amount and is added to the mortgage principal.

Property and title insurance - Besides high-ratio mortgage insurance,  mortgage lenders require your client to have property insurance in place. This insurance covers the cost of replacing the structure of your home and the premiums depend on the value of your home, according to CMHC. The lender may also recommend title insurance. For a home worth $500,000, the cost would be about $350

Appraisal fee -- While it’s beneficial to know how much any prospective house your client is looking at is worth in order to negotiate price, home appraisals are also used to protect the lender’s interests. It’s likely a lender will ask for a recognized appraisal in order to complete a mortgage. Usually, the cost of an appraisal ranges from $250 to $350. However, some lenders will pay for the appraisal fees to get the business.

Home inspection -- an independent look at the house and property can cost in the $350-500 range for most single-family homes. Home inspections are recommended to identify if there are any other potentially costly expenses – issues not visible to the naked eye – that may impact the costs and upkeep of the home.

Property survey -- always a good idea, but not always carried out.  A land surveyor can make sure the buyer is getting the property they think they are buying.  A surveyor can properly install property markers on the corners of the lot.  With those, the buyer will precisely know the boundaries. 

Water testing -- for properties not on a municipal water system, most - if not all - financing institutions require the water source to be tested to ensure it meets standards for human consumption.  Some areas also have compounds in the water the prospective buyer may wish to know about. 

Status certificate fee -- When making an offer to purchase a condominium, it’s a good idea to ensure an offer is conditional upon obtaining and having time to review an Status certificate. This fee (not applicable in Quebec) applies when buying a condominium or strata unit and could cost up to $100.

Land transfer tax -- Land transfer tax is specific to each province and is a percentage of the purchase price, usually 0.5%. However, provinces such as Alberta and Saskatchewan have no land transfer tax, while others offer a full or partial exemption for first-time buyers.

Legal Fees -- A lawyer will help protect your clients legal interests and negotiate the terms of any offers made. Legal costs will depend on the complexity of the transaction and the lawyer’s experience.

Prepaid property tax or utility bills  --  If a closing date is mid month, a seller may have already prepaid taxes or utility bills. Buyers should be prepared to reimburse the seller for prepaid property tax and utility bills should they request it.

There are a number of other costs associated with buying a home, some that are well known and some that may be more "hidden".

----------

Many of these above costs are well known.  Not all are applicable to everyone, and some you cannot get around.  It is good to know what they are, and to educate yourself.  Talk to your professional mortgage agent regarding your situation.  It is always best to be armed with information before-hand, and not to be caught off-guard after you make your home purchase.

Give Your Credit a Check-up!

With a little research and 5 simple steps, it’s easy to spruce up your credit profile:

1.       Get the facts

The first step is to get a clear picture of your credit profile. Order your Credit Profile, Credit Score and Debt Analysis online to get a complete picture of your current status.

Look closely at the data from the credit reporting agency to see that it all matches up. Keep an eye out for:  

1. Wrong mailing addresses
2. Incorrect Social Insurance Number
3. Signs of identity theft
4. Errors in your credit accounts
5. Late payments
6. Unauthorized hard inquiries

2.       Right the wrongs

Contact your creditors or send letters of dispute to the credit reporting agency to have errors on your credit profile corrected.

3.       Improve your behaviour

Identify problem areas on your credit profile and make a plan for improvement. If you’ve had a hard time paying your bills on time, sign up for an automated payment service. If your debt levels are above 50% of your available limit, create a payment plan to reduce your balances. Set goals for improving your credit and be sure to celebrate when you reach a milestone.

4.       Follow up

Check your credit again 30-60 days after disputing errors and changing your behaviour to see how much you have improved. If any of the disputed inaccuracies remain, contact the credit grantor to further your dispute and determine if the item can be taken off your credit profile. If you want to tell your side of the story, forward a written request to the credit reporting agency to have a consumer statement added to your credit file.

5.       Monitor your credit

To guard against fraud and keep your credit healthy, sign up for a Credit Monitoring service that will quickly alert you to any changes in your profile. Keep copies of your old credit profiles and letters of dispute in a safe place for future reference. Make a plan to evaluate your progress quarterly.

History The credit scoring system became prevalent during the 1960's as a way for lenders to quickly evaluate a potential borrower's creditworthiness. The system was found to accurately predict financial risk over time and grew to several different industries. Now credit scoring is used by lenders, insurers, landlords, employers, and utility companies to evaluate your credit behaviour.

Algebra Thousands of different credit scoring formulas exist today for various evaluation purposes. Each unique credit scoring system is accurate and correct for its own application. The credit scores you can order online use an algorithm created for consumers that approximates these different formulas. Your online credit score may vary a bit from the score your lender uses, but they should be in the same range.

Chemistry The basic credit scoring formula takes into account several factors from your Credit Profile. The impact of each element fluctuates based your own credit profile:

• Payment history - A good record of on-time payments will help boost your credit score.
• Outstanding debt - Balances above 50 percent of your credit limits will harm your credit. Aim for balances under 30 percent.
• Credit account history - An established credit history makes you a less risky borrower. Think twice before closing old accounts before a loan application.
• Recent inquiries - When a lender or business checks your credit, it causes a hard inquiry to your credit file. Apply for new credit in moderation.
• Types of credit - A good record A healthy credit profile has a balanced mix of credit accounts and loans.

Economics When you are preparing for a major purchase make sure you check your Credit Profile and Credit Score from TransUnion. Looking at your profile and score a few months before your loan application will help you get a complete picture of your credit health. Worried if your credit score makes the grade? If your credit score is above 650 you will probably qualify for a standard loan. Under 650, you may have trouble receiving new credit. If your credit score is a little low, pay your bills on time, reduce your debt, remove inaccuracies and avoid new inquiries for a few months to give it a boost. Plus, don't forget that your credit score is not the only factor a lender may look at when they are evaluating your financial standing.

One place that this “hands-on management” is extremely prevalent in Canada is in the Real Estate Industry. Changes to the MLS mean that, in theory, the business of selling houses is wide open.  But just because you can do it all alone, does it mean you should?

Selling a home is more than marketing and salesmanship.  There is documentation, contracts, transferring of property and funds- all of which require singular interests to be sought out and protected.

Typically, knowledge is power, but in this instance, is it really empowerment, or a dangerous case of a little bit of knowledge where a lot of expertise is ultimately required?

Like any major undertaking, perhaps the greatest risks are the ones you don’t know about. The business of selling and buying properties is no place to rush in blindly.

Ready willing and able, but capable?

Lending credence to the suggestion that Canadian consumers may possess more enthusiasm than expertise as they decide to sell their own homes, a poll recently conducted by TitlePLUS/LawPRO suggests that an overwhelming majority (97%) of those Canadians who chose to sell or buy their own homes were aware of MLS, how it worked- and ultimately, probably of the tremendous value of the tool from a marketing standpoint.

But shockingly, a minute portion of that same group- only 11%- were able to translate what the changes to the MLS meant to the process of selling or buying a home privately.

And perhaps most telling of all, 45% indicated that they would “now consider using a real estate lawyer and selling privately rather than using a real estate agent.“

"What these findings show us is that there is an appetite among Canadians to conduct the sale of their home privately," says Ray Leclair, vice-president, TitlePLUS. "But buyers and sellers alike need to recognize the limitations of going it completely alone because of the intricacies of the often perceived common transaction. Consulting with a real estate lawyer early on in the process can ensure that consumers' interests are protected and that they are armed with the most up-to-date information available."

Don’t bite off more than you can chew

Regardless of motivation to sell privately or not- it is the sheer size of the transaction within one’s financial portfolio- that should be reason to pause and fully take stock.

In taking on something so financially substantial- there comes an inherent presence of risk- and that is why, at the very least, the transactional component of sales process cannot be left to amateurs. Risk, however, can be mitigated by education and access to information.

Leclair says that size does matter.  And that you need tools- or support- to eliminate problems before they even begin. “Because this is one of the largest, and therefore riskiest, financial decisions many people will ever make, Canadians should seek expert advice early on in the process in order to ensure that they have access to all the necessary information in a timely fashion.”

“Real estate, although often perceived to be a common transaction, is a very involved and a problem-prone process. The TitlePLUS program has advocated for years that a person should have all the information about the property and the real estate process before committing themselves to a deal, in order to make informed decisions and properly protect themselves. This becomes more crucial if someone is considering proceeding with a private sale. “

Leclair, then is not necessarily advocating the type of service- he is advocating  for advice- and for its’ place in due diligence- which is a consumer’s best ally in protecting their interests- private sale or not. “We are not advocating any one option, but simply encouraging anyone interested in buying or selling to educate consumers to do so and protect their interests is to consult a real estate lawyer early in the process to better understand their options and the ramifications of choosing one over the other; to then properly plan for the exercise.”

Like so many things in Real Estate, it comes down to strategy- and to the execution of it; “The success of a real estate transaction increases when it is well planned, the potential issues are identified and provided for and the proper parties are brought in when required.”

Weigh all the facts

Seemingly, the motivations of selling privately are largely financial- but the risks of doing the entire transaction on your own are substantial. If all the facts are not considered, then there remains the possibility that you may ending up losing money through carrying costs and through other avenues- which outweighs the savings made on commission.

There is the possibility that a private seller may luck into a sale immediately, and save not only lots of money on commissions, but also save money on carrying costs. 

In this environment, luck must be contrived, not hoped for. In order to mitigate risk, a private seller must understand everything right from the get go- even if they end up selling privately; they must understand all scenarios- and that involves understanding all the variables, whether though consultation at the beginning of the process with a Real Estate Lawyer- or with a Realtor.

Cathy Mudge, Sales Representative, Royal LePage 1st London Real Estate Services, Brokerage has had the opportunity to provide service to several clients who have first tried the FSBO route, but had little luck.

She reminds that she does not get paid unless she is successful in completing a sale- and for her, the successful sale comes about in providing end-to-end service.

“As a realtor, working on a contingency basis, I don't get paid until I am able to execute a successful sale. So I'm investing time and money into education, insurance, technology, security systems, marketing tools, relationships, meeting with buyers, pre qualifying buyers, educating buyers, showing properties, building relationships with other buyer realtors, lawyers, moving services, home stagers, mortgage lenders, upgrading contract skills and resources, negotiating, advising, researching market trends and sales, and so much more, so I can provide valuable service  and protection to my clients, while seeing them through to the very end so they can realize a successful sale, and purchase of their next home.”

In her experience as well, there are instances that owners could have benefitted from advice, before they even started the process- case in point- her clients. Mudge worries about sellers who are lured in based on commissions savings only, and who don’t weight everything equally.  “Unfortunately there is a lot of misinformation out there. These FSBO companies perpetuate the myths, and prey on unsuspecting sellers who think that by paying a FSBO company hundreds (sometimes thousands) of dollars up front, they will still have a successful sale, and save thousands that would otherwise be paid to a realtor after the sale is complete.”

Again, best decisions are made by having all the facts in front of you.

Is handing the reins over losing control?

For consumers, sometimes it just makes sense to take control ultimately by handing off the process to someone else.  Lesley Kelly, after consideration of all the possibilities, still elected to use a Realtor- because it fit best with her needs; ”Despite having a positive experience purchasing our new home through a private sale, we felt that it was very important to use the services of a realtor for the sale of our current home. As busy, full time working professionals and parents, we didn’t feel that we had the time to devote to adequately promoting our own home. We also felt that there was a network of resources which are still primarily available only to realtors... We also felt that the type of expertise and experience that a realtor could provide in terms of comparable market values and pricing was invaluable.”

Regardless what route consumers choose, it is essential to do the homework. Leclair suggests that  those who don’t make themselves aware of the implications of entering into the sales process alone, do so at possible peril. Things may work out- but they also may not- and without the advice of an expert, you are leaving the outcome largely to chance.

He suggests that those considering a private sale weigh through some sample questions, which he believes that many consumers do not readily know about; “Who prepares the agreement of purchase and sale?  Who negotiates the deal?  Who will prepare the house for showings?  Who will show the house to interested buyers?   How to price the house - How to determine its value?  Should there be an inspection report available for prospective buyers?”

Not just about peace of mind

Leclair too, suggests that the impetus for expert advice goes way beyond moral support through they sales process; “This is not simply a peace of mind issue but it has fundamental legal, financial and practical implications for the parties to the agreement of purchase and sale.  This is a legally binding contract once signed by the parties and before signing, they should understand what is being agreed to (does the written text reflect the intention) and does it address all the necessary issues.  Only then will surprises be avoided and the parties successfully accomplish what they set out to do.”

“Whether a real estate agent is involved or not, a purchaser or vendor should consult a real estate lawyer early in the process.  Then they will have peace of mind that comes from knowing they understand the greater financial and legal implications involved and have properly protected their interests in what is likely the single most expensive transaction they will undertake. “

Part of charting a successful course, no matter where you are going or what you are doing, is to flatten the potential impact of risk brought on by unanticipated events.  In the case of Real Estate, this risk can be neutralized and managed better through education and consultation at the beginning of the process- from an expert that meets the required need.

If you are a first-time homebuyer or know someone who is, getting professional mortgage advice is a great place to start. We specialize in the kind of homebuyer education that can help get new homebuyers off on the right foot.

Determine what you can afford. Before you start shopping for a home – and long before you consider putting an offer on one – let us help you determine how much home you can comfortably afford. This will keep you focused on shopping for homes within your price range.  If you qualify for a preapproved mortgage, you’ll be certain of the size of mortgage for which you qualify and guaranteed a rate for a specific period of time. If you don’t qualify for a pre-approved mortgage, we will be able to help you estimate a mortgage-qualifying amount.

Saving up. You know that you’ll need a downpayment to purchase your new home. If you’re in the “saving up” stage of preparing for home ownership, this is a great time to meet with us so we can discuss your downpayment options, which include the RRSP Homebuyer's Plan. We'll also discuss how to prepare your credit rating for your mortgage in your future.

Build a team of professionals.  We'd be happy to help you build a strong away team so that all aspects of your home buying journey are efficient and professional. Your team will include a realtor, lawyer, home inspector and of course your mortgage professional.

Plan for closing costs. There are additional costs that come with buying a home so you’ll need to have some extra funds set aside to cover these costs, which include appraisal fee, title insurance, legal fees, land transfer tax, property tax and interest adjustments, utility hook-ups, moving costs and what you’ll need in the way of furnishings or appliances. We can outline all of these so you won't be caught by surprise. 

Beyond the monthly payment. Remember that home ownership involves costs beyond the monthly mortgage payment. Many first-time homebuyers neglect to consider such baked-in costs as property taxes, utilities and insurance. Get a realistic picture of those annual costs, and imagine that sum on top of your mortgage payment.

While it’s important to be prudent of course, many first-time homebuyers can be too cautious about getting into the market. In fact, mortgage planners often surprise first-time buyers by showing them that they could have been building equity for the last few years – rather than paying someone else’s mortgage with their rent money. Remember too that for decades, Canadian homeowners have been able to leverage their property purchase into a large financial return.

Ensure you get off on the right foot in your home ownership journey! Call me today.

Q   How much house could my rent buy?

A   If you’re paying $1,250 in rent each month, you could be carrying a mortgage of $202,936. If you’re paying $1,500, that’s potentially a mortgage of $255,510. Paying over $1,750 each month? You could be paying off a mortgage of $308,085! How are the mortgage payments so affordable? Firstly, right now we’re benefiting from historically low mortgage rates. Secondly, you now have access to longer-amortization mortgages that lower your monthly mortgage payment. (These examples are based on that combination: a 4% rate and 30-year amortization, 5% flex down­payment plus 2.95% insurance premium, property taxes and heat of $285 per month). 

Q   Can I really buy a house with little money down?

A   You can buy a home with 5% down and use some of the flexible options to obtain the downpayment, for example, from gifts, through borrowing or cash-back incentives.

Q   If I’m self-employed, do I have to prove my income to get a mortgage?

A   No, not in today’s mortgage world. You can now qualify based on the income that you say you earn. This kind of mortgage is known as “stated income” because the lender takes into account the income you state, and not the income you can prove. The income should be reasonable, of course, and the lender may want proof of your self-employment, and may require up to 10% down. If you don’t want to state your income, you can also qualify on the strength of a strong credit history, rather than on your income. You’ll need a good credit score and proof that you’ve been self-employed for at least two years.

Q   Are there extra costs to consider?

A   Yes, you need to consider land transfer tax, property taxes, the cost of utilities, furnishings for the home, and any needed repairs. If you’re concerned with these extra costs, cash-back mortgages can offer some needed up-front cash.

Q   Where do I start?

A   Talk to a mortgage broker. Why? A mortgage broker deals with over 50 lending institutions, including major banks, credit unions, trusts and other national and regional lenders, which means they can put significant negotiating power behind finding the best mortgage to fit your specific situation. This service costs you nothing (oac). Instead, the lender selected pays compensation for the services and solution provided. And since a mortgage broker’s business is built primarily through referrals from satisfied customers, your positive mortgage experience is essential!

According to Jason Allen in a report entitled "Competition in the Canadian Mortgage Market", he writes, "Canadian lenders appear to be extremely slow to pass on changes in the bank rate to their customers."

The researchers found that 5 of the 6 largest Canadian banks adjust their rates upward quicker when there are upward cost pressures, and slower when their costs fall.  Whose interests are these banks looking out for?  Not yours or mine.

The article also suggests that the banks often hold off discounting their rates until after the end of the month....because renewal notices for maturing mortgages are printed at this time (in advance of the maturity date).  The renewal notices with a higher rate printed on them provide the illusion of a bigger discount that they will be able to offer to the client....so the client believes he is getting a deal and does not then put the effort into transferring the mortgage to a better lender.

Then there are the clients who are about to close their mortgage transactions...most lenders have a cut-off date around 7 days before a mortgage closes.  If the rate drops are delayed....this group will miss out on the better rates.  The lender figures that these clients are so close to their funding dates that it isn't feasible for the client to switch to another lender...

The same bit of research, from the Bank of Canada, also indicated that borrowers who use a MORTGAGE BROKER actually pay LESS, on average, than borrowers who negotiate with lenders directly.  Since Canada's mortgage markets are dominated by the 6 major banks....you see the power they have over you.

Mortgage brokers and its lenders are quicker to move to lower rates, and offer a larger scale of product offerings....therefore offering more potential solutions for the clients....as well as often a better value.  This really gives the consumer an advantage when using a mortgage broker instead of a bank. 

Many have the misconception that using a mortgage broker is a last resort...but really mortgage brokers should be a first resort if you want to save money, and pay less in interest over the term of your mortgage.  Mortgage brokers use many of the big banks, if you wish, but have access to so many other lenders that are very competitive with the banks....plus you get the services and advice of the broker for free.

Just some points to think about.....

Additionally, they are very cautious with their outlook, and it seems that rates may not be going up until maybe the July meeting.

With turmoil in Japan, affected the world economy, as well as a slower US recovery, and a very strong Canadian dollar, our economy may not be growing at rates previously predicted....so I am thinking theBank of Canada will think twice before raising interest rates.

As always, I will keep you posted regularly on mortgage rates, and financial news affecting mortgages and mortgage markets.

If you have any questions whatsoever about your mortgage, or variable vs. fixed rate mortgages, or any other questions, don't hesitate to contact me.

Rates have been extremely low for some time now....and everyone knows that there is nowhere to go but up....this along with a steady upward trend in home prices in many markets, has spurred many people thinking about buying their first home into taking action and actually shopping for and purchasing their first home.

There is also implication in the Re/Max report that first time buyers have some attitude changes....for the first time in a long time they are going into this with adjusted expectations that they may need to scale back on size of home, location, or the quality of home....that they can't get everything they want.  Their larger goal is to achieve the dream of home ownership first....and not ownership of their "dream home" on the first try.

This shows a level of maturity that hasn't been seen with first time home buyers for some time....I think it also is a good sign that Canadians are thinking about debt, and about the responsibility associated with debt....a good thing overall.

If anyone has any questions regarding buying their first home...how much home you can afford, how to get pre-approved, what type of information/documents the bank will need, help in figuring out what you can afford, even for help in finding a good, ethical realtor/lawyer/insurer....let me know.  I am always glad to help.  I have lived in the Kitchener-Waterloo region all of my life.  I understand life in Kitchener.  I have developed relationships with many realtors/lawyers and other professionals.  The people who know me, know my high-ethical standards.  I have no problem suggesting other professionals who I know adhere to similar high ethical standards.  I have also come across others whose ethics are not quite as polished, and can let you know who to be wary of....

Call me or email me if you have any questions whatsoever. 

Check out my other blog posts for more information...the education section is where I try to put postings with helpful information.  I will try to post some more information and tips for first-time buyers in the next little while.

I think it points to some good signs for our economy in the future:

Canadian businesses are poised to take the reins from government and consumers as the leading source of growth in the Canadian economy, finds a new report from CIBC World Markets Inc.

While both consumers and governments alike seem to be cutting back with spending, businesses are blazing out of the gates- with emphasis on emerging markets and export opportunities.

"By any measure, the current recovery in capital spending is impressive," says Avery Shenfeld, chief economist at CIBC. "The real return on capital employed is rising and is now currently at just under six per cent-a full point above its long term average, and return on equity is now above 12 per cent."

The report states, “All three of Canada's heavy hitters of capital investment, the oil ands, utilities and the manufacturing sector, are expected to add significantly to capacity, ensuring that business investment remains a consistent source of support for the domestic economy, not just in 2011 but also in the coming years. “

While the rising value of the Canadian dollar presents some problems in terms of exports, it presents opportunities as well.

"There has been a lot of discussion regarding the disappointing productivity numbers, but the reality is that we are seeing a much tighter correlation between the value of the dollar and purchases of machinery and equipment from abroad. The surge in imports of machinery and equipment has clearly been facilitated by a strengthening Canadian dollar. We expect the loonie's strength to persist over the longer term, which should help boost investments going forward in sectors that can remain competitive."

There is an expectation too, that manufacturing will have a good year in 2011 as well- with capacity utilization at 81%, moving close to pre-recession levels.

Emerging markets, and the improving US economy and their export growth will present opportunities for Canadian businesses as well.

"Canada's exports will tap into some of the resulting improvement in the U.S. economy, particularly for companies that can hitch themselves to the U.S. supply chains for products ultimately destined for higher growth economies overseas," says Mr. Shenfeld. "A strong Canadian dollar will remain a challenge for exporters, but we expect the improving global economy to generate increased opportunities over the next few years."

Earlier I posted about the announcement of the winner of the Minimize Your Mortgage Sweepstakes.

Well an update on the story.  The winner was presented his $100,000 cheque on March 29th, by our company president, Michael Beckette....

The same day the winner's wife went into labour with the couple's first child, and they had a healthy baby boy that same evening!!!

They definitely will remember March 29 as a special day...

Checkout my website for more information about our 2011 Sweepstakes, or call me, Georgel Miloje, your local Kitchener-Waterloo Mortgage Alliance agent.

Sure, you take good care of your bathroom – you’ve scrubbed the faucets to make them as shiny as you can and everything works the way it has for many years. But maybe it’s time you gave your bathroom a refreshing change – one that not only gives you the luxurious feeling of comfort and elegance, but also that benefits your wallet and the environment.

You may be surprised to learn that bathroom showers, toilets and sinks account for about 75 percent of the water used in the home. If you haven’t replaced any of your faucets or toilets for many years, you may be not only struggling with keeping these older fixtures looking clean and fresh, you may also be paying a lot of extra money to keep them running.

Consider your toilet. Older toilets can use as much as 5 gallons of water per flush, while stylish modern toilets are designed to cut that amount by more than a third. And some models, like the new high-efficiency Aquia Wall-Hung Dual Flush HET, which uses TOTO’s Dual-Max flushing system, can use as little as 0.9 gallons per flush. These qualities earn this toilet the EPA WaterSense label for being water efficient. And being wall hung makes sense aesthetically – by hiding the tank in the wall and lifting the toilet from the floor (making cleaning a breeze), you can save a total of 9 inches of precious room space.

Now take a look at your vanity and see your faucet for what it is. If the faucet has been around for many years, excessive use may have corroded some of the metal finish, or even worn away the hot and cold labels. A new faucet would not only freshen the look of the vanity, but also give your bathroom a beautiful new look. Standard bathroom faucets use 2.2 gallons of water per minute, newer models are available that provide the robust drenching needed to clean your hands while only using a modest 1.5 gallons per minute. One is TOTO’s chic Aquia Single Handle High-Efficiency Faucet, available in heights to match your sink selection (undermount, self-rimming, or vessel).

Finally, check out the showerhead in your tub. You may already have upgraded your showerhead once since 1992, when it became a requirement that showerheads use no more than 2.5 gallons per minute. But newer models allow you to save even more water. The average person showers for eight minutes each day, so switching to a high-efficiency showerhead can save a family of four more than 8,700 gallons of water each year and reduce the demand on their water heater, saving them enough energy to power their television for a year. The Nexus High-Efficiency Showerhead from TOTO offers an invigorating showering experience with a responsible 1.75 gallons per minute water volume being consumed – which is a 30 percent savings over the legal limit.

Freshening up your outdated plumbing fixtures is a great step toward creating a spa-like atmosphere in your bathroom. Not only will you be able to enjoy the comfortable and beautiful bath space, but you’ll also know that the changes are benefiting your pocketbook and the environment.

Mortgage Alliance president, Michael Beckette flew to Edmonton today to award the winners their prize.

Rajith Mathai, an oil worker who is employed at Fort McMurray, and his wife were  presented
with their $100,000 cheque at 2:00pm Edmonton time.

Congratulations to our winners!

There is a 2011 $100,000 Minimize Your Mortgage Sweepstakes.  You automatically take part by financing your mortgage through Mortgage Alliance.

The Federal Government has established a program where first time homebuyers can take advantage of savings they have accumulated in their RRSPs for the purchase of their first home. The program allows each participant to withdraw up to $20,000 in RRSPs to finance the purchase under the First Time Homebuyers’ Program ($40,000 per couple). The great news is that you have 15 years to pay it back!!

For those purchasers who already have the down payment saved, purchasing an RRSP with those funds may go financially further for you than the initial down payment. The transaction would also get you a tax deduction for the year in which the contribution was made. Potentially, at tax time, you would be eligible for a tax refund due to the RRSP contribution. The tax refund would represent additional funds that could be used for other incidentals and closing costs. One factor that is very important to remember here is that the RRSP funds must be on deposit for 90 days to be eligible.

The payback period is monitored and regulated by the Federal Government. They will remind you annually the amount that is required to be deposited in to your RRSP. As long as the program is adhered to, you have 15 years to repay with no penalty. It is borrowing from your golden years but not depleting your retirement savings.

Ask me, your local to Kitchener-Waterloo, Mortgage Alliance professional about other ideas to make your purchase a little easier.

For more information on the First Time Homebuyers’ Program please visit www.ccra.ca

I know from my own experience how frustrating it is.  You go see your banker, and they don't tell you up front what documentation is required....this is stuff you scramble to find after.

So...I am writing a list of documents in this post that are handy to have.  In fact, for the fastest and best service, having these documents upfront is necessary.

Even your own bank will need these documents.  Sometimes they may not ask for a couple of them, because they may already have the information from a past loan....and your savings, investments would already be in their records....otherwise all lenders need these documents.  Think about it....if you were going to lend somebody hundreds of thousands of dollars, wouldn't you want to know this information?

PURCHASE –
1. PURCHASE AND SALE AGREEMENT

2. MLS LISTING
-Must be Realtor copy
-Must contain Seller’s name and expiry date

3. INCOME
Salaried – job letter and paystub
Hourly, guaranteed hours – job letter and paystub
Hourly, non-guaranteed hours – job letter, paystub, and 2 yrs NOAs

Self-employed, stated – T1 Generals, proof of business ownership, NOA to show no taxes owing
Self-employed, qualified – T1 Generals, proof of business ownership, 2 yrs NOA average
Job letter must be within 30 days, be signed, have a start date and comment on client’s salary/hourly
wage. Also must contain contact information for the Lender to verify the details.

Paystub – hand-written paystubs are not acceptable. Amounts must correspond with job letter. Client
name must be printed on the paystub and dates must be recent. Some lenders will require 2 paystubs.
NOAs (Notice of Assessment....this is mailed to you every year after filing your taxes...shows that you have no taxes owing....and shows if your calculations are correct or if the government made adjustments)– some lenders ask for 2 years, for the self employed.

Proof of business ownership – Valid business license (not expired), articles of incorporation, business bank statements

4. DOWNPAYMENT

Savings - 3 months bank statements for each account being used. Bank statements must have clients
account number and name OR a document showing account ownership.

Gift – gift letter plus copy of bank statement showing gift being deposited into customer account. Gifted funds must be from an immediate family member, no exceptions. Some Lenders have a standard gift letter to be filled out.

Sale of existing property – copy of firm offer on existing. Some lenders will want a copy of the existing mortgage statement. The Lender will verify the equity in the property with the lawyer doing the sale.

REFINANCE/or a Switch –

1. INCOME – see notes above

2. MORTGAGE STATEMENT

In addition to the above documents, depending on the situation, there are other documents that may be necessary:

ADDITIONAL DOCUMENTS

SEPARATION AGREEMENT – Necessary if client is separated to prove that spousal support or to prove that the client is not responsible for spousal support, depending on the Lender. Always required if spousal support is being used for income.

For investment property/rental property purchases/refinances:  LEASE AGREEMENTS – Dated, with length of lease. Must have landlord’s name and tenant’s names and outline amount of monthly rent, as well as property address. Ensure that this is signed by both the tenant(s) and the landlord(s).

VOID CHEQUE – must be pre-printed.

CONDO CERTIFICATE – need full copy including minutes

I hope this list helps.  I don't see a lot of brokers who publish a list like this, but I really think it is necessary to know this information up front.

The Investment Industry Association of Canada (IIAC) welcomed the federal 2011-12 budget, which sets out a credible five-year plan to eliminate the deficit and places the debt-to-GDP ratio firmly on a sustained downward trajectory. Canada is leading the way to meet the G20 targets of halving its deficit by 2013 and stabilizing the public debt burden by 2016.

"We are pleased to see a long-term commitment to deficit and debt reduction in this five-year 'Next Phase of the Economic Action Plan'," said Ian Russell, President and CEO, IIAC. "Sound management of public finances gives manœuvrability for further incentives for savings and investment, the key to growth and job creation, as well as scope to meet the social spending demands from an aging demographic."

The Association also applauds the two-year extension of the accelerated capital cost allowance for manufacturing investment that, together with the final reduction of the corporate tax rate to a globally competitive 15%, will boost business spending. "More still needs to be done to reduce taxes on savings to encourage capital-raising in the job-creating small- and mid-sized business sector," Russell added. "The stand-out success of TFSAs is testament to the responsiveness of Canadians to incentives for savings."

The Budget also introduced several laudable measures to support low-income Canadians and small businesses coping with a slowly recovering economy.

I discussed the fule changes in past postings.  Below is a discussion/article I found in Property Wire that talks about what effect these rules will have, positive and negative:

Tougher mortgage rules starting today are getting a failing grade by mortgage industry professionals who say the federal government effectively dropped the ball in a half-hearted attempt to deal with rising consumer debt.

If Ottawa were genuinely interested in tackling high amounts of personal debt, it needs to address other means of high-interest loans such as credit cards, personal loans and lines of credit, they say.

“We need more legislation on access to other types of loans,” says Claire Drage, a mortgage agent with  Dominion Lending Centres Home Capital Solutions Inc. in Oakville, Ont.

“Do you really need a Chase card? Capital One? Visa and Mastercard? Sears? Bay card? There’s so much easy access to high interest consumer debt.”

As for how the mortgage changes will affect the housing industry, Drage suspects it will be business as usual for the most part.

“The demand will still be there,” she says. “Consumers might have to cut their choices a bit. It’s like going to an arcade and winning coupons and instead of getting to choose prizes from the bottom three shelves, now you get to choose from the bottom two.”

In January, federal finance minister Jim Flaherty announced he would shorten the maximum amortization on Canadian mortgages to 30 years from 35 years, and lower the refinancing limit from 90 per cent of a home’s value to 85 per cent. The government also announced it would withdraw insurance on home equity lines of credit.

The move came after reports about the rising debt load of Canadians.  Statistics showed household debt in Canada surpassed the U.S. for the first time in 12 years. Statistics Canada reported the average Canadian debt-to-income ration hit a record 148.1 per cent.

Kristian Harris, a mortgage broker with Monstermortgage.ca in Toronto believes the government’s mortgage changes will have little impact.

“The government’s purpose of making these changes is to slow down the housing market,” Harris says. “They’re worried about consumer household debt. I think this is a sign the government doesn’t think interest rates will rise substantially over the next 12 to 18 months so they felt the need to implement these new rules. If the government thought rates were going to increase significantly, they wouldn’t need to make these changes.”

Although many focus on the mortgage market when it comes to consumer debt, they should also look at the easy access available to many Canadians for other types of credit, he says, adding that the government should eliminate giving credit cards out to students and distributing Visa card applications at hockey games.

Furthermore, Harris doesn’t think the changes are going to impact the industry or the real estate market all that much. The reduction on a mortgage’s amortization period to 30 years will, however, impact some borrowers as to how much they can qualify for. But at about $100 a month on a $300,000 mortgage, the amount is not overly significant.

“It’s only $35 for every $100,00,” he says. “It’s not a huge difference at the end of the day.”

Adam Hawryluk, a mortgage consultant for INVIS Mortgages in Nananimo, B.C., believes the government’s mortgage changes are a step in the right direction. But he would like to see more sweeping changes that also target education and credit regulations addressing the whole spectrum of debt.

Canadians would be better served if they were somehow educated about debt and money issues, he says. In addition, Hawryluk would like to see the government step in to either lower the interest rates that credit card companies are allowed to charge or make access to credit cards more stringent.

“When people are financially extended beyond their means, it’s a scary situation for the whole country,” says Hawryluk. “The mortgage changes are a step in the right direction because we’ve learned from U.S. housing industry.”

The issue of Canadians carrying debts close to or over the edge has been a challenge for many mortgage professionals. Hawryluk recalls an experience with older clients whose monthly debt payments on credit cards and loans climbed to $3,100. The couple had the added burden of being on a fixed income. Fortunately, they had some equity in their home and Hawryluk managed to consolidate their debts in a new mortgage, giving them much-needed breathing space.

“The woman was crying in my office,” he recalls. “They know they’ll never be mortgage free but on a month-to-month basis, they can survive now. They wished they would have come to me years ago.”

Robert McLister, a mortgage professional who writes about the industry for Canadian Mortgage Trends, gives the new mortgage rules a varied critique. Given Canadians’ record debt levels, McLister believes the government had to pull in the reins on borrowing. He’s just not wild about what they decided to focus on.

“The spirit behind it is wise and well intended,” says McLister. “But I think the actual execution of it is poor because it reduces the probability of excess borrowing overall which is great but, at same time, it handicaps highly qualified borrowers that present virtually no default risk for no good reason at all.”

There are many reasons, says McLister, why a borrower might need an additional five per cent on a refinancing. And they don’t have to do with luxury items. He’s referring to being suddenly faced with an illness or a divorce or perhaps having to send your child off to university. The rules also penalize the self-employed person, who might save the extra funds in a mortgage with a 35-year amortization to keep as a back up for their lack of steady income.

“Removing the flexibility from the market in general for people that are extremely low risk makes no economic sense whatsoever,” he adds.

Calgary’s Marty Laframboise, a mortgage broker with VERICO: Mortgage Planning Central, is critical of the changes. He thinks the government should have mandated that if those with strong credit scores  wanted to stay on a 35-year amortization,  they could do so with biweekly accelerated payments, which would automatically reduce the mortgage term down to 30 years.

“I don’t like the changes,” he said. “They should have been handled differently. It really does take a lot of people out of the price range they’re shopping in.”

Laframboise points to a client who had found a house he liked for $425,000, affordable thanks to the 35-year amortization period. The client had the additional stress that his wife wouldn’t be able to see the house until the end of this month, which means the couple will only be able to afford $395,000 on the new 30-year limit.

“The client is now faced with a situation of having to decide whether to take a leap of faith and hope that his wife will like the house or wait until she comes back and look for something $30,000.00-$35,000.00 cheaper.”

Drage agrees that the country’s overall financial literacy needs a boost. She thinks money, budgeting and debt should be taught to Canadians once they’re in high school. That, she believes, would help prepare post-secondary school students, who are often introduced to credit cards during their college and university days.

Drage has taken some extreme measures with clients struggling to manage their debt loads. She’s taken scissors with her to a client’s home when working on a refinancing application.

“They wanted to swipe and play instead and swipe and pay,” she says.

She’s even advised clients to tear up all but one main credit card. If the client insists on keeping a second card, Drage has advised that the client keep it frozen in ice in an old plastic container in the freezer.

“There’s a way of thinking that it’s easy to get, so it’s easy to spend,” she says. “It’s just a matter of looking at your situation and being realistic. Have a budget and a plan and spend within your means."

Title insurance is a much better form of protecting yourself.  You are covered by an insurance policy from a variety of risks.

Some of the risks that may be covered by title insurance are listed below:

1) it covers matters not included in a title opinion,

2) you don't have to sue your lawyer if something goes wrong,

3) it provides funds to solve the problem,

4) the insurer provides creative solutions to rectify the issues,

5) it pays your legal fees,

6) it provides compensation to you, if your problem cannot be resolved,

7) it covers the claim and legal fees if someone sues you,

8) it's inexpensive, and there is a one-time premium,

9) you may save on the usual disbursements in a transaction because some searches are not completed,

10) you may save the cost of a new survey in most cases,

11) it protects you against survey errors, in both old an new surveys,

12) it protects against errors in information provided by municipalities and utilities,

13) you may negotiate to obtain additional coverage for other issues including environmental hazards, native land claims and risks you have assumed by contract,

14) it protects you against certain construction liens,

15) it protects you against fraud and forgery,

16) it continues to provide coverage for problems arising after the closing date,

17) it protects your mortgagee so that the deal will be closed and the mortgage funds advanced,

You see that you get a lot of bang for your buck by purchasing title insurance....this is a good thing to discuss with your lawyer.

Cut your food bill with these tips

Every time I take my kids grocery shopping, I end up paying more at the checkout than I intended. This past weekend, for example, my $35 bill in. While I might be able to cut my grocery bill by 10 per cent if I left my kids at home, that’s not the only reason my wallet is lighter than usual. Thanks to higher costs for commodities such as wheat, sugar and oil, the price of food has been creeping up. Baked goods giant George Weston announced last week it will raise prices by an average of 5 per cent starting April 1, and the Metro, Sobeys and Loblaws grocery store chains have all hinted that price hikes are on the way.

Christina Spence, the Calgary author of Living Large on Less, says she has noticed prices on essentials are starting to rise. She has adopted a few habits to help keep her spending in check, including carrying a notebook with her when she shops, in which she keeps track of the stores that offer the best prices for the products she buys the most often.

She also pays attention to the Scanner Price Accuracy Voluntary Code, which states that if the scanned price of an item is higher than the displayed price, the customer is entitled to receive the item free, up to a $10 maximum.

Here are a few more tips from Ms. Spence for saving money on food:

Look for loss leaders. As an enticement to get more customers through the door, retailers will often take a loss on certain products. Scanning the grocery flyers frequently will help you spot these deals.

Double your discounts. While she's no extreme couponer, Ms. Spence clips coupons for her favourite products and then waits for them to go on sale to maximize the savings.

Sign up for loyalty programs. Most supermarkets have a loyalty program, where you earn points toward free groceries, products or travel. Just make sure you’re not paying more for the products in order to get these bonuses.

Calculate the savings. Bring a calculator to the supermarket so you can compare the prices of various package sizes.

Stock up on necessities. A well-stocked pantry means that you can whip up a meal on the fly without grabbing at that handy takeout menu.

Limit extras. The supplies you need to make meals are essentials; the snacks and goodies are extras. Make sure you treat them that way.

Eat real. Avoid processed foods as much as possible. Make it a goal to buy and consume more whole foods, such as fish, cheese, fruit, vegetables and whole grains. Your health will thank you, as will your wallet.

Buy reduced meats and produce. Food marked for clearance is perfectly safe to eat – but you’ll need to use it up or freeze it quickly. Check with the store’s meat and produce department supervisors to see when items are marked down to snag the best stuff.

Go generic. They don’t have the stylish, glossy packaging, but generic products are often just as good as their pricier brand name counterparts. Don’t be a food snob!

Another tip from Ms. Spence is to avoid impulse purchases by sticking to your list. That means not caving in to your children’s demands, no matter how many times they say please. It seems I’ll need a bit of practise with that one.

cluded about $3 in items my son talked me into buying: an apple, a lemon and a tub of strawberry yogurt. (Well, at least it wasn’t chips and pop.)

You think you know what you can afford.  You know what you want.  Can you really afford it?  When you go to your bank, are they willing to explain all the different complexities of mortgages?  How an ammortization works?  What you can really afford and why?  Can you get your approval quickly when you are competing to purchase that home you really want?  What types of products are out there for you?  Everyone's situation is different, and honestly not every bank or lender has the product that is right for you. 

Well, I went to one of the Big Banks in downtown Kitchener.  I had some experience with this bank because I actually did have a mortgage with them on a property that I had inherited.  I never had to apply for that mortgage though, I assumed the existing mortgage on the property, so I won't write too much about that experience.  I thought it would be just as easy getting approved for a mortgage for my own home as it was that time.  Well, things were a bit more complicated.  Basically the Big Bank told me that they weren't comfortable giving me this mortgage because I am a self-employed person.  At the time I had already been self-employed for 8 years and had a track record of fairly steady income.  We went through what my down payment would be (30%) and what my monthly payments would be.  I knew I could afford those monthly payments.  They had issue with a business owner borrowing....if I was a salaried employee elsewhere, it would have been no problem, even with a smaller income.  So what I thought would be an easy thing, wasn't.

Taking advice from my father, I went to my neighbourhood bank branch, which happened to be another of the big banks.  I did get lucky that the mortgage officer in that branch was a hard-working person, who took the time to explain to me what can be done, and what can't be done.  And although I was self-employed, she helped me get the mortgage.  She helped me achieve my goal of being a homeowner.  The house of my choice.  It was her work ethic, and helfulness that I remembered when I decided to help people by being a mortgage broker.  I will be the one that will help others navigate the complexities of the mortgage markets, and help you get your dream home. There are programs out there for the self-employed.  There are programs for new-to-Canada residents.  There are programs out there for people who don't have the best credit due to past issues.

Nothing is easy though.  Don't expect to not do your homework.  Some paperwork is always necessary.  You cannot expect someone to lend you a hundred or more thousand dollars without paperwork showing that you earn what you say you earn, that you have a job or have your own business, that you do not have outstanding taxes, that the home is really worth what you think it is...This is common sense.  If you have your paperwork ready for your mortgage professional, it will definitely make things easier.  They will be armed with all the information they need when they approach the lenders to get you the best mortage possible as quickly as possible.  That's what you want....you want to know you can buy your dream home.  You want the lifestyle goals associated with being a home owner.  You don't want the hassles of going to and shopping many lenders on your own.  I will write in a future post about some of the paperwork that you should have prepared before talking to your mortgage professional.

As I mentioned, I was lucky.  Most bank mortgage people also sell mutual funds, GIC's, handle customer service issues, open new bank accounts, etc. etc.  They may only spend a small portion of their time on mortgages, so how knowledgable are they really. Additonally, not every bank has the right mortgage for you.  You are limited to the products that only that one bank offers.  "Mobile Mortgage Specialists"  are still bank employees that offer the products of only one bank...yes they are mobile....(maybe they want you to think they are mortgage brokers in disguise....but they are not)... they still work for only one bank.  If I knew then what I know now, I definitely would have found a good mortgage broker. 

A good broker will shop around and find not only the best rates, the best mortgage product for their customer.  You may need good prepayment privileges, or maybe not.  You may want to see how you can pay your mortgage faster, and pay the least amount of interest over time.  You may want a low payment to have easier cash-flow.  A mortgage broker will ask the right questions, and then look at products from many banks and lenders, and offer what is best for you.  Is the right question, "what is your best rate?" or should it be, how can I pay the least amount of interest over the life of my mortgage?  How can I have the most flexibility if my situation changes (upsizing, downsizing, renovating, paying for my kids' university, paying off high interest debts I have accumulated)?  What difference does a .01% rate reduction really make, especially if you are sacrificing flexibilty to pay less interest over time?  How would you like to build your own mortgage?  To put in the features and terms that you want?  Call me to find out more.  A good mortgage professional who cares will help answer those questions and look for the Right Mortgage that suits you. 

If I could change the past, I would have found a broker who would have shopped for me, instead of my having to go to different places on my own.  I know I definitely would have benefited from the experience of a mortgage professional.  Come renewal time, a mortgage professional is an even greater help...because you can renegotiate your mortgage, or even switch to a different lender who may have a product that suits your needs better.  I will write in a future post about my experiences at renewal time, and also at refinance/time to add a Home Equity Line of Credit (HELOC) time.

Use the tools available on my website to help plan your mortgage.  Call me at 519-651-9615 or email me at gmiloje@mortgagealliance.com if you have questions.  As always I will do my best to help you.  Or email me your own stories about your first home purchase or search for your first home.

Arm yourself with the latest rates and mortgage information by signing up for my Rate Advisor at the following link http://www.milojemortgage.com/index.php/newsletter . 

That hard working bank mortgage person who helped me, by the way, now is also mortgage broker and is busy helping many people choose from a much larger variety of mortgage products.

Georgel

"Get a mortgage broker, but get a good one"  Donald Trump

I have lived in the Kitchener-Waterloo region all of my life.  I understand our region and the specific needs of our residents.  As a Mortgage Alliance agent I am trained specifically in mortgages (not GICS's, opening bank accounts, mutual funds, etc. etc, as well as the odd mortgage) and have access to a huge variety of products from a large number of lenders, including some of the Big Banks.  I will work for you to give you the convenience, counsel, and choice that you deserve.  I am licenced in the Province of Ontario, and carry Errors and Ommissions insurance.  As a mortgage professional I am a member of CAAMP (the Canadian Association of Accredited Mortgage Professionals).

Call me at 519-651-9615 or toll free at 1-877-366-3487

Or...email me at gmiloje@mortgagealliance.com

Follow me on facebook, Georgel Miloje - Mortgage Broker

www.MilojeMortgage.com

Contrary to expectations, inflation in Canada actually fell in January, according to the recent Consumer Price Index released by Statistics Canada.

Most other nations around the world are working hard to curb rising inflation; Canada is bucking the trend by going- albeit modestly-in the other direction.

Gasoline prices were up, pushing prices up overall; the annual  inflation rate itself fell by .10 of a point- down to 2.3% in January.  Month-to-month, the price of gasoline went up by 3.5% in January. Overall consumer prices increased by 0.3% in January.

Year-over-year, price gains were seen in seven of the eight major components, the only difference being clothing and footwear. The largest increase came in transportation, which rose 4.8%; Food prices rose 2.1%. Household operations  furnishings and equipment increased 1.6%; recreation, education and reading price index rose 1.6%; shelter costs rose 2.2%.

Of note, the report says, “the mortgage interest cost index, which measures the change in the interest portion of payments on outstanding mortgage debt, continued to decrease.”

Across the country, on an annual basis, consumer prices rose in every single province. Drivers in every province were faced with significant increases in gasoline prices- in the double digits, in fact.
Nova Scotia saw the highest rise in prices- they came in at 3%. Alberta was home to the most stable- registering only 1%.

The Bank of Canada’s core index rose by 1.4% in January on an annual basis - on the heels of a 1.5% rise in December.
There is expectation, with the Bank of Canada’s next rate announcement coming up soon,  that inflation will not be a cause for reactionary concern.

Your Word of Mouth referrals are critical to my success and growth, without them I will have to devote an enormous amount of time and energy looking for new clients.  When I do this it takes away precious time that I would rather spend improving and refining my service program for you.  I look forward to growing my business by serving you and other people like you.

It is a line of credit that is secured against the title of your home/property.  It gives you access to a much lower interest rate than using an unsecured line of credit, and generally has more funds available to you.  The interest rate is generally tied to the Prime rate.  It is a powerful tool that one can use for extra investment money when needed, or to add to an rsp, and then pay back after your tax refund, or to finance a home renovation, vacation, university education, to pay out other higher interest loans or credit cards, or more.  Usually the minimum payment is an interest only payment, and it is fully open so you can pay back as much as you want, or the entire amount any time.  Used wisely and prudently, you can save a lot of interest each year in using a HELOC.

About a year after that first time I enquired about the line of credit, I went out asking again.  Last year I thought it would be good to have, but now I needed it.  There were some major repairs needed on my rental property.  I had a great deal of equity in the property, but no cash to pay for the major expenses, which ran into the 10's of thousands of dollars.

So, I decided to ask around....find some answers, to see what else was out there other than from the Really Big banking Corporation that held the mortgage on the property.  What I did find is that there were several other institutions willing, and pretty much guaranteeing the line of credit with no problem.  So....I decided to see how I could break my current mortgage, and move it to another lender, and bundle it with the line of credit program.

If you remember, I wasn't turned down....the bank's "mobile specialist" just neglected to ever follow up and finish the deal.....probably because I didn't ask for as much money as he wanted to lend....and there wasn't enough commission in it for him, or maybe other reasons.  By the way a bank mobile mortgage person is not a mortgage broker.  He works for the bank and only the bank....not really for the client.  He works for RBC or TD or whichever bank he represents.  Don't let him allude otherwise.    A mortgage broker or mortgage agent is licenced by the province of Ontario to deal in mortgages.  We must carry Errors and Ommissions insurance.  The bank mobile specialists do not.  They may have a bit of extra mortgage training over the inhouse financial people at the branch....but the are still employees of that bank.  Easy job.  They do not have to work to earn your trust and your business.  They just convince bank customers that they should be lucky to deserve a mortgage from the bank....hmmm.

  Again, at the time I was not in the mortgage industry at the time....was just a consumer looking for some help.

I was still a novice....did not know I could negotiate...(later when talking to others about their mortgages, I found that they all have different rates even on their lines of credit.  Another bad-faith strategy of the banks, where you feel like you are at a market, bartering for your mortgage.  How will you ever know if you got the best deal you deserve?)  If the bank was up front right away, and all the time, wouldn't life be easier?  Would you not trust that institution more than if they give you a higher rate....see if you bite....then incrementally go down until you finally bite.  Who would do something so revolutionary as be honest, transparent, upfront.  A mortgage broker, who has to work to earn your business will work honestly, and transparently.  The banks are not set up to train their people like that.  Their arrogance assumes that you should see them, hat in hand, begging for a loan.  A very 1950's mentality.   Their people are obligated to get the best deal for the bank, and not the client.  A mortgage broker negotiates on your behalf.  We shop all the banks and lenders and find the best deals possible.  Up-front, and honest.

I got lucky again to find a good bank employee who gave me what I wanted...and fairly fast.  I do wonder if it was only because I was prepared to walk away from them.  I did as that person why I was not helped last year.  She didn't know.  She said she would look into it, because she saw no reason at all as to why I wouldn't have had the line granted a year earlier.  But eventually she said she did not know how I slipped between the cracks.  If anyone else has any story about their experience, I would love to hear from you.  Positive or negative, it always feels good to share with others.  The bank got lucky this time; they had an employee who did put in the work to earn back my trust.  Looking back, maybe I should have taken the risk and moved to another lender...if enough people do that, maybe the banks will learn.  I am not sure if this mortgage person is still at the bank.  Because she was so good at her job, I would not be surprised if she decides to become a mortgage broker or agent, and really help people with their needs.

I live in Kitchener, and have lived in the Kitchener Waterloo Region all my life.  I am a licenced Mortgage Agent in the province of Ontario, and can help people Ontario-wide with their mortgage needs.  If you have any questions, feel free to call 519-651-9615, or email me any time at gmiloje@mortgagealliance.com.  It will always be my pleasure to help you, and be open an honest.  Checkout my other blog posts at www.MilojeMortgage.com, or follow me on Facebook, Georgel Miloje - Mortgage Broker.

Thanks!

A Home Equity Line of Credit (HELOC) can be a powerful tool in your investment plan.  If you have any questions about how to use the power of the equity in your home, give me a call, 519-651-9615, or email me now at gmiloje@mortgagealliance.com.  You can also learn more about HELOC's and other mortgage products by browsing though my website, www.MilojeMortgage.com.  I am based in Kitchener, Ontario, and have lived in Waterloo region for my entire life.  However, I am licenced and can help you anywhere in Ontario with good, honest mortgage advice.  Call me now and see the difference in working with someone who cares.

See the article below:

According to a new forecast released by the Laurentian Bank, 2011 provides great promise for investors and investments in Canada.

Laurentian’s chief economist, Mr. Carlos Leitao, believes that the recent economic improvements in the US will set the tone for the rest of the world. Similarly, he believes that the circumstances are being created for an excellent environment for investment. Low prices that are set to rise- in equities and real estate- will set the tone.

"Two significant events occurred at the end of 2010 that generated significant momentum for the American economy," explains Mr. Leitao. "The first was a new wave of quantitative easing, known under the acronym of QE2, which was announced in November.

The second was the prolongation in December of the Bush era's tax relief. These two interventions will serve to accelerate economic growth."

Leitao predicts that economic growth in the US will reach 3-3.5% in 2011, taking into account the flood of cash into the system with tax relief and quantitative easing programs- and the eventual impact on the country’s deficit.

“The stock market, which posted a strong finish in 2010, should be a major beneficiary of these measures in 2011," predicts Mr. Leitao. "In the wake of the sluggishness that prevailed during the months of July and August due primarily to the concern over sovereign debts in Europe, the tone has changed over the past few months and confidence has begun to reappear. As such, we anticipate that the economic environment in 2011 will be quite favourable for investment."

Considering also that the recession is over and the continued decline of the bond market- and the lows that many US stocks reached last year- there is no where to go but up in 2011. With this in mind, Leitao encourages Canadians to consider the US as a spot for investment- for securities – and in blue chip companies in particular.

"With the increased value of the dollar," emphasizes Mr. Leitao, "Canadian investors can now take advantage of a greater lever effect to purchase foreign assets." Blue chip securities are the most promising," he underlines, "particularly those of companies that offer products and services related to industrial and computer equipment. What should be avoided are the consumer staples and discretionary consumption sectors. The priority should be to consider companies that are leaders in their markets and that pay dividends.”

See article below:

Should You Insure Your Mortgage?

When you buy a home and arrange a mortgage, the lender usually asks if you’d like to include life insurance to pay off your mortgage in case you die. Sounds like a wise choice. So you agree and fill out the forms. It’s simple. Your family now has the coverage to pay off the mortgage.

But what do you really have?

The lender probably sold you reducing term insurance with the lender as the beneficiary, which means that the amount of coverage is reduced as you pay off your mortgage, and any life insurance payable will be paid to the lender.

Lending institutions prefer you pay the premium while they collect the insurance, and it helps to lock you in as their customer. In addition, you have to renew your insurance every time you renew your mortgage.  The only advantage to your family is that it pays off the mortgage in the event of your untimely death.

Is that really an advantage?  It may be more beneficial for your family if they could collect the insurance and decide whether to pay off the mortgage or direct the money elsewhere. Consider too, what happens if you increase your mortgage, sell your present home to buy another home with a higher mortgage, or decide to switch banks. You will probably have to re-apply for coverage and if your health has changed, you might not be eligible for coverage when you need it!  These are all possibilities. However, most lending institutions don’t cater to your individual needs.

Consider a recent situation in BC where a couple had a five-year mortgage with their bank – the same financial institution they had been dealing with for more than 15 years. Each time they renewed their mortgage they had to apply for new insurance. Prior to the third renewal, the husband was diagnosed with cancer and the couple was not able to obtain insurance on their mortgage, and was probably not able to obtain coverage elsewhere. As a result, when he died there was no insurance to pay off the mortgage, even though they had been paying for coverage prior to the mortgage renewal.

The solution to these unanticipated situations is to purchase a policy that belongs to you, rather than the lender. The insurance will be paid to your beneficiary, not the lender, and you won’t have to provide proof of insurability every time you renew your mortgage, move homes, or switch banks.

The final decision rests with you. The Co-operators can provide you with a policy to benefit you and your family. The question to ask yourself is, “can my bank do the same for me?”

Slow and steady wins the race was the message today from the Bank of Canada.

As expected- stability was the order of the day in Tuesday’s interest rate announcement.  Rates will remain unchanged- which will keep the status quo in terms of monetary stimulus.

The overnight rate will maintain its’ position at 1%. The Bank Rate is correspondingly 1 1/4 % and the deposit rate is 3/4%.

This maintenance plan is attributed to global economic recovery carrying ahead at a healthier pace than had previously been forecast. In the U.S., domestic demand has increased- and it expected to increase more with new stimulus to be offered soon. In Europe, growth has outpaced forecasts as well- although the region is the source of uncertainty- from a global perspective. These markets have begun to introduce measures to rectify this, so there is hope for stability.

On the domestic front, the Canadian economic recovery is continuing on much as had been expected. There are concerns, that have been voiced recently by various government agencies, about the overextension of household consumer debt, but the thinking is that the combination of low interest rates coupled with newly introduced lending restrictions will create a favourable environment for continued modest growth.

The Bank of Canada predicts for 2011 growth at a rate of 2.4% and 2.8% in 2012- with an expectation to return to full economic capacity by the end of 2012.

Inflation has not been a major factor as of yet, with prices remaining subdued, likely because of “considerable slack in the Canadian Economy.” Inflation is forecasted to reach a manageable 2% by 2012.

Again, Ottawa has put some restrictions on the mortgage qualification rules.
·         that new federal rules will reduce the maximum amortization period to 30 years from 35 years for government-backed insured mortgages with loan-to-value ratios of more than 80 percent
·         Ottawa will lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 percent from 90 percent of the value of their homes
·         In addition to cutting mortgage terms, Ottawa is taking action to reduce the rapid rise in home equity lines of credit, or HELOCs. The government will do this by clamping down on the insurance that Canada Mortgage and Housing Corp. offers to the lines of credit.

As we know these rules will be phased in over the next few weeks. We will have to wait to hear from the lenders and CMHC to see when these rules will be in effect.

If you are considering a home purchase, refinance, or addition of a Home Equity Line of Credit, now is the time to act before the new rules come into effect and make it harder to do what you need.

Need help or advice?  Call me or email me with your mortgage questions.  It is my pleasure to help.  There is no obligation.  No fee.  I live in Kitchener, but can help people with their questions Ontario wide.  Call 519-651-9615 in Kitchener, Waterloo, and Cambridge areas.  Email me at gmiloje@mortgagealliance.com.  Check out my website for lots of useful information or to fill out a no obligation application at www.MilojeMortgage.com

See the below article taken from the Globe and Mail for more explanation:

Bill Curry, The Globe and Mail
7:20 AM, E.T. | January 17, 2011
Canadian, Economy, Real Estate

Finance Minister Jim Flaherty announced Monday that new federal rules will reduce the maximum amortization period to 30 years from 35 years for government-backed insured mortgages with loan-to-value ratios of more than 80 percent.
Secondly, Ottawa will lower the maximum amount Canadians can borrow in refinancing their mortgages to 85 percent from 90 percent of the value of their homes.
Thirdly, Ottawa will withdraw government insurance banking on lines of credit secured by homes.
Though longer amortization periods reduce monthly payments, they greatly increase the amount of interest paid over the life of the mortgage and make it harder to build up equity.
The average Canadian resale home sold for $344,551 in December. Assuming a five-year mortgage at 4 percent interest, and the minimum 5 percent down payment of $17,227, a 35-year mortgage would have monthly payments of $1,441. Shorten the amortization period to 30 years, and the monthly payment increases to $1,555.
At a news conference in Ottawa, Flaherty said the measures will encourage Canadians to save more through home ownership. He said they will also reduce the exposure of Canadians to financial risks.
Flaherty said his concern is not Canada's mortgage default rate - which is less than 1 percent. Rather his concern is those who are borrowing as much as possible.
"We're seeing people borrow to the max, and borrowing to the max at low interest rates," he said. "Most Canadians are not doing that."
Flaherty predicted the measures will have "some moderating" impact on the housing market.
In addition to cutting mortgage terms, Ottawa is taking action to reduce the rapid rise in home equity lines of credit, or HELOCs. The government will do this by clamping down on the insurance that Canada Mortgage and Housing Corp. offers to the lines of credit.
Home-equity lines of credit and loans have surged in Canada, rising at almost twice the pace of mortgages over the past decade to account now for 12 percent of overall household debt.
The government is also planning a third measure that will reduce how much Canadians can draw on their home equity. Last February the Finance Department announced that it would lower the maximum amount Canadians could withdraw in refinancing their mortgages to 90 percent from 95 percent of the value of their homes. It is now reducing that maximum to 85 percent from 90 percent.
Observers have been speculating that Finance Minister Jim Flaherty would take steps to tighten mortgage credit in the next federal budget. The timing of the move suggests concerns are growing in government circles about household debt and its impact on the economy.
It's not the first time the Conservative government has tinkered with the mortgage market. In 2008, Flaherty announced Ottawa would no longer back 40-year amortizations, with a goal of cooling down a hot real estate market and preventing the emergence of a housing bubble in Canada. At that time, the government said it would also back only mortgages where the buyer has put down at least 5 percent, effectively eliminating zero-down mortgages.
Last February the Finance Department lowered the maximum amount Canadians could withdraw in refinancing their mortgages to 90 percent from 95 percent of the value of their homes. Flaherty also introduced a measure requiring borrowers to qualify for a five-year fixed-rate mortgage, even if they sought a variable mortgage at a lower rate. Until that change, home buyers only had to qualify for the higher of either a three-year fixed-rate or variable-rate mortgage.

Historically low rates.   Remember last year the economists said that rates would go up in the spring, and they did.  We did get lucky though because rates started going back down in the second half of the year, to really low rates.  They have started lately to rise again, and many think that they will continue to rise in 2011.  The fact that rates did go down gives the perfecdt opportunity to purchase that home now, or to do that refinance and use the equity in your home to pay for that renovation, or to pay off  high interest  debt.  There is still a chance before rates go up, and up they must go eventually.  Take advantage of the opportunity now.

Variables at “prime minus”. For those with "prime plus" variable mortgages, it could make excellent financial sense to switch to today's "prime minus" variables, depending on your situation. If you got your prime "plus" variable mortgage two years ago, your rate may be prime plus 0.5% or higher, while today's variables are prime minus 0.65% or lower. If you break your mortgage and take a new one, you could save on interest costs over the next three years, after you net out the penalty to break your mortgage. Your principal balance may also be slightly lower after those three years, which is a further benefit. Ask for an analysis of your situation!

Slash your high-interest debt. High-interest consumer debt – like department store cards or credit cards – can derail the best financial plan. They’ll eat into your cashflow and cost you big money in interest costs. Put an end to wealth-killing debt. Have your mortgage professional advise you on the best strategy for slashing that non-mortgage debt. Worried about your holiday bills? Roll them into your mortgage and get a fresh start on your finances: better cash-flow and big savings!

Build a financial cushion. Many Canadians find themselves turning to their credit cards to get through a financial emergency. Instead, make a New Year’s resolution to build a financial cushion. Get in the habit of putting a small sum from every pay into a special emergency fund. If you are buying a new home, don't borrow your maximum amount.  And always try to take advantage of your lender's prepayment privileges. Variable mortgage holders should also consider setting their payments higher than required to more easily absorb any prime rate increases.  

Renewal Time...a time for review and possible change for the better!  Always be sure to come back to talk your mortgage professional if you get a letter or call from your lender regarding refinancing or your renewal.  Remember, we work for you and are in touch with a wide variety of lenders so we can always make sure you are in the best position possible. In particular, when you are four months from renewal, contact your mortgage professional so you can review all of your options and strategies, not just those presented by your current lender.

Give me a call.  I have lived in Kitchener-Waterloo all my life and understand the markets and lifestyle in Waterloo Region.  I work for you to find you the mortgage with the best rates and terms possible for your situation.  Give me a call for expert advice, there is no fee and no obligation. 519-651-9615.  Email me at gmiloje@mortgagealliance.com.  Follow my blog and check out other helpful information on my website, www.MilojeMortgage.com.  And you can always follow me on facebook, Georgel Miloje – Mortgage Broker, for news, tips, and information.

If your bank has not called you yet to talk about changes in the mortgage markets, and about changes in your life, then call me.  It is my pleasure to help!

There was a surge of home buying early in 2010, mainly due to fears of interest rates going up, tighter mortgage rules imposed by the government, and the coming of the HST.  Overall more homes changed hands in our region in 2010 than in 2009, and in fact this was the second best year in the history of the board.  The best year ever was in 2007, the year before the current recession hit.

This is good news for the Kitchener and Waterloo region.  It points to it being a "very resilient market" again accoring to Mr. Patton.  We are lucky because our economy in the region is diverse, between high-tech industries, insurance industries, and still some manufacturing, among others....along with our good education base (2 strong universities, and a strong community college).

In addition to the increases in sales, homes seemed to appreciate on average.  Another good thing for our region. 

Looking into the future, the board predicts that things will begin slow in 2011, but they expect it to pick up in the spring. 

I am thinking that as long as interest rates and mortgage rates don't dramatically increase, and as long as the world economy seems to be stabilizing, we should be looking at a good year again.

Currently there is talk of fixed rates going up, but are still very low when you consider historically how rates behave; variable rates do seem stable and a good deal for the time being.

Choice of over 60 lenders (including many of the big banks) and all their products. Your bank will sell you their products only.

A broker offers:

Convenience. One stop shopping for all your mortgage products. Also line of credit, and... even leases. All at great rates! And no need to haggle over rates, like you would with the bank. I will always give you the best rates and terms possible and you choose. An in most cases, I do not charge fees.

A broker offers:

Counsel. We work for YOU. A bank person works for the bank, not you.  They are too busy taking deposits, selling GIC's, selling other loans, etc. etc. to care about you.

So why use a bank?  I really don't know.

Call Georgel today and find out how we can save some of your hard earned money!
Rates shown are valid at time ad was published in Homes and Land of Kitchener. Rates subject to change without notice. OAC. In Kitchener Waterloo Cambridge and area call 519-651-9615. Or email me at gmiloje@mortgagealliance.com.
www.MilojeMortgage.com

Follow me on facebook.  Just search, Georgel Miloje - Mortgage Broker

Mortgage Free Sooner

Common Sense Ways to Trim Years Off Your Mortgage

Shop around! Bank employees are paid to protect the bank, and getting the right mortgage from them usually involves playing games. Why waste your time? Getting a good interest rate is crucial, but don’t forget, flexibility and options are also important. Talk to a mortgage professional who can give you impartial advice and is not tied to any one specific lender. 

Whether applying for a credit card, personal loan, or a mortgage all creditors will want to review your credit history. The best thing you can do is to avoid consumer debt as much as possible, always pay your bills on time, and the less you inquire for credit the better. Visit www.equifax.ca to get a free copy of your credit report. Your credit history can affect more aspects of your life than you think.

Match the frequency of your mortgage payments with the frequency of your pay periods. Not only is it easier to budget and monitor your cash flow, you’ll shave years off your amortization. Bi-weekly payments, for example, means you’ll make 26 payments in a year, equal to 13 monthly payments instead of 12. It’s this “accelerated” pace of repayment that allows you to repay your principal quicker, saving you money in interest.

For some homebuyers with budgeting room, see what your payments would be with a 20-year amortization instead of 25 years. In return for slightly higher payments, you could shave 5 years off your amortization, build equity in your home quicker, and be well on the road to being mortgage-free sooner. For existing homeowners who are now renewing mortgages at much lower interest rates, instead of taking the lower payment, keep the payments the same or make them higher, and shorten your amortization.

Many borrowers consider pre-payment privileges an important feature when taking out a mortgage, yet only 3% of consumers actually take advantage of them. Extra payments go directly in your pocket, either by paying less interest, building equity more quickly, or being mortgage-free sooner. Every dollar you pay over and above your regular mortgage payment goes directly to principal. That means that whenever possible, a few hundred dollars here and there can quickly add up to a few thousand saved later on. 

While it varies with each lender, most financial institutions will allow a lump sum prepayment up to a maximum of 25% of the original mortgage amount in any one calendar year. This privilege is usually not cumulative so if you don’t use it, you lose it – you can’t carry them forward. Most people make the mistake of thinking all or nothing. If they can’t come up with a substantial prepayment they don’t bother at all. Even small extra payments could pay big dividends later on. Income tax refunds (or any portion of) are tailor-made for extra payments of principal on a mortgage.

A forced savings plan is exactly the kind of discipline that leads to powerful money saving benefits, especially for those whose income is steadily increasing. A new promotion or raise, maybe a spouse has recently returned to work, or an unfinished basement was converted to a rental suite, surely some of this new money could be used towards paying off the mortgage by permanently increasing your mortgage payments.

Many people struggle with saving for a down payment and it still remains the single biggest obstacle to home-ownership. However, recently many financial institutions have come up with a program that lets you buy with No Money Down. It’s not for everyone and just remember, all other things being equal, the bigger the down payment the better. Don’t forget the current Home Buyers’ Plan permits first-time homebuyer’s to use up to $20,000 each from their RRSP’s, that’s $40,000 per couple.

Life and disability protection are an important cornerstone of any family’s overall financial health. Though most lenders offer creditor life insurance, you’re not required to buy it. The bank owns group plans and you have no ability to designate a beneficiary. Coverage amount is limited to exactly your mortgage amount, no more no less, and it’s the bank that’s insured, not your family. It may be easier and more convenient to purchase insurance through your lender, however it is often more expensive.

It seems like lenders are introducing products with new bells and whistles on a regular basis. Understand the programs and who they are likely to benefit and why. As long as you know the cost and benefits, the risk and the rewards, you can make an informed decision. Too many borrowers make decisions based on what they heard from a friend, what they read in the newspaper, what their parents advised, etc… 

With more and more banks and lending institutions competing for your mortgage business, it’s tough to determine which mortgage is best for you. The good news is that you really do have options. Your independent Mortgage Consultant should be willing to work with you every step of the way; from talking about long-term financial goals and how to achieve them, to eventually finding a lender best suited for your needs. At Mortgage Alliance, we do the shopping for you and aggressively negotiate on your behalf so you don’t have to. That saves you time and stress and best of all, our services are usually free (OAC).

Give me a call and let's talk about how you can be mortgage free faster!

Call Georgel at 519-651-9615

...or email me at gmiloje@mortgagealliance.com

What is the definition of a collateral mortgage?  It’s a loan attached to a promissory note and backed up by the collateral security of a mortgage on a property.

Normally collateral mortgages have been used exclusively for secured lines of credits
Some collateral mortgages are registered for the full value of the property.
The lender then allows, say, 80% of the value of the property to be advanced. As the value of the property increases over time, the borrower(s) can takeout funds up to 80% of the value of the new appraised value. All this for only the cost of an appraisal. ScotiaBank, National Bank & others have such secured lines of credit products.

In TD's case, they will allow the collateral charge to be registered for 125% of the value of the property, so if the value of the home increases, and you want to borrow more money, it makes it easier to do so.

Major chartered banks will accept “transfers” of conventional mortgages from one to the other at little or no cost. They will not accept "transfers" of collateral charges however as a switch.  One will have to do a new mortage, generally with a lawyer and incur more costs if wanting to switch to another lender with better terms.  The no fee programs do not cover switches of collateral charge mortgages.  This is good for TD.  Not so good for the consumer.

So: my Pros & Cons of collateral mortgages.

Pros: I’ll discuss later

Cons:
i) Most chartered banks will not accept “transfers” of collateral mortgages from other chartered banks. If the consumer wishes to switch their collateral mortgage to another lender upon maturity, there will be legal & appraisal costs. Approx $750-$1000
ii) Upon maturity, would the lender offer only a posted fixed rate or just a slightly lower rate knowing the costs associated with transferring to another lender has legal & appraisal costs.
iii) Collateral charges allow lenders to change the interest rate and/or loan more money to qualified borrowers after closing. On secured lines of credit, the interest rate registered at Prime + upwards of 10%.
iv) Collateral loan involves the other debts you may have. Under Canadian law, a lender may seize equity to cover other debt you have with the same lender. So, in essence, you’re possibly securing all your loans that you have with that financial institution; be it credit cards, unsecured lines of credit, car loans, or overdraft etc.

Now the Pros:
I can’t think of any!

If you have any questions regarding the differences between standard charge and collateral charge mortgages, it is best to go to a mortgage professional who will listen to you about what you need and want, and will explain your options.

Call me at 519-651-9615.  It will be my pleasure to help!

Prices rose by 2% in November compared to the previous year.  This is down from 2.4% increase in October's number.  This made the core inflation rate to  be around 1.4% in November, compared to 1.8% in October.

Many economists and analysts expected a 2.2% increase in rate for November, and a core rate of 1.6% in November.

I think this slowing of inflation, along with a recent Nanos poll showing that Canadian consumer confidence is at an all time low, this should signal the Bank of Canada that interest rates should remain the same, and that the likelihood should be low that there would be further interest rate hikes in the near future.  So although economically this may not be the best news, it is good news for those of us with variable rate mortgages!

Check back with my blog often to get more news about mortgages, mortgage interest, local Kitchener-Waterloo and region real-estate and mortgage news, as well as some personal insights and tips for consumers.

Having a big family, my own home, and my aging investment property (which I own along with my brother, Val), the time came when I needed extra cash for repairs, and renovations at the investment property.  The rents do help with cashflow, but sometimes you have larger expenses.  Well, you don't always have extra cash on hand for these expenses/emgergencies.  Fortunately since we have owned the building for a while, and had a good deal of equity in the building, we figured a line of credit, or a home equity line of credit, would be the best way to have the extra cash available when we needed it.  Remember at the time I was not in the mortgage business.  I did not know a whole lot about the business, for example what is a HELOC?  How is one different from another.  How is it different from a mortgage?  Although I already got a mortgage on my home, and had the mortgage on the investment property, I really was still pretty naive.

A Home Equity Line of Credit (this is a HELOC) is a line of credit that is secured against the title of your home, similar to a mortgage.  Because it is a secured loan, it means you have access to much lower rates than you would with an unsecured line of credit, or with a credit card.  Usually these loans follow prime.  (Prime rate, or Prime Lending Rate, is a term applied in many countries to a reference interest rate used by banks. The term originally indicated the rate of interest at which banks lent to favored customers, i.e., those with high credibility, though this is no longer always the case.)  At the time of writing this article we have prime plus 0.5 available in our lines of credit, oac, and rates are subject to change. 

At the time I was searching for a line for my property, the going rate was Prime plus 1.)  This is better than unsecured lines at Prime plus 2 or more....up to 20 or 30% interest on credit cards.  Another good thing about a HELOC is that you have access to up to 65% (and sometimes more) of the equity in the home....so it can be a huge line of credit, not something that is normally available in an unsecured loan.  Also, you take out cash when you need it, and pay it back as you can.  The only think you are usually responsible for are monthly interest only payments on the actual amount that you have borrowed, not on the credit limit.  The loan is usually fully open and can get paid back all at once, or in installments.  It offers great flexibility for property investors, rsp investors, home renovations, paying tuition....anything.  You do need some discipline, so as not to max it out, but it is a powerful financial tool.  It also can be used in the Smith Manoeuvre as a way to maximize investment, and minimize tax (ask your tax accountant for advice please, as this is a complicated tax strategy).

I live in Kitchener, and went first to the big bank that has the mortgage on the property (remember from an earlier post that I assumed the mortgage on this property when we inherited it).  I spoke with one of their financial officers...first about a refinance, and then about the line of credit.  She showed me a pamphlet on their plan.  I didn't understand all of it, but it looked good, and it promised to give me the funds I needed.

During our conversations, I mentioned that I did no want to tap into the maximum equity allowed....I gave them a budget as to how much money I would need,,.and to leave extra room available.  I had documents ready that she requested, including tax returns and business financials since I was self-employed.  Then I was told that I would be referred to their mobile mortgage specialist.  I still didn't understand why in the past I worked with a branch, and then all of a sudden they're sending me off.  This was the time that the banks came up with the idea of mobile specialists to try compete with mortgage brokers....these guys aren't mortgage brokers.  They are bank employees....their sales staff selling their products.  Their job is to help the bank.

The mobile rep called me.  He said he has the information from the bank rep and will call back.  He called back, asked more questions about my situation, why I needed the money, and tried to convince me to go to the maximum (which I told him no...I told him my budget as I told the in-branch officer).  Well, he never called me back again.  Did not return a call, did not do anything to help.  He didn't even call to say if there was a problem or if they could not help and why.  I have asked myself why ever since....is it because I am self employed?  My credit rating was good.  I was still earning well.  Why?  Was he too busy for me, and it was too small a loan for him?  I ended up not pursuing it at the time, because the expenses I had were not as much as I thought, and I was able to take care of them with credit cards and family help.

I cannot guarantee everyone that I can get them the loans they need.  BUT I will do my research, and work for you.  I will call you back and let you know what I can and what I cannot do.  I won't let greed get in the way...small or large loan I will always try to help.  Big banks are just that.  They are big.  It is easy to slip through the cracks.  You are just another account to them.  My clients are important to me.  I understand how you feel when you are looking for a mortgage,  because I was in the same situation, without the benefit of someone with knowledge and experience in my corner.  I will take a personal interest in you, and be the one in your corner.

I did end up going back and getting a line of credit a year later (apparently no one working at the branch at that time understood why I slipped through the cracks, as there were no issues), when the renovations/repairs required got very expensive.  I will write about that experience and adventure in a future post.

If you ever have any questions or need help with a mortgage or line of credit, don't hesitate to call, 519-651-9615, or email me at gmiloje@mortgagealliance.com.  I will do my best for you.  I care. Because I am not an employee of any bank, I will work for you.  I will shop the Big Banks (you know who they are) as well as other banks and lenders  to find the best mortgage or line of credit product for your needs.  Living in Kitchener, I service mainly the Kitchener, Waterloo, Cambridge areas, but do also help people anywhere in Ontario with their mortgage needs.  I also post a lot of information on my facebook site, Georgel Miloje - Mortgage Broker, where you can follow me.  Or, stay tuned on my website blog at www.MilojeMortgage.com

Why go to a big bank branch, when you can get someone who cares about you, and who will shop them all for you?  Call Georgel!

That is a valid question....most people don't know why you need to use a mortgage broker. 

One thing many people don't know is that as a mortgage broker I can get you a mortgage at your bank, for the same or usually better rates than if you went direct.  And you know what, I don't haggle with you over rates.  You get the best rate I can find.  I haggle with the banks and lenders for you and give you the best rate possible.  If your bank has the most competitive rates and products for you, we go with them. 

However that may not be the case....your bank may have been competive last year or a few months ago, but right now, in your situation, and at the going market rates, there may be other banks or lenders out there with lower rates and better mortgage products.  You come to a mortgage broker because he is someone who will work with you and look at all the options from all the different lenders we work with, and present you with your best options. 

You don't have to visit 5 banks, and fill out 5 applications, have 5 credit checks, explain your situation to 5 different people, and maybe still not get what you need....we will check with 50 lenders for you and you only fill out one application, and work with one person who cares about you.  Let me do your shopping for you.  To find the best product I can for you.  Additionally I will keep in touch with you over the years to make sure things are going well with you, and to advise you if things change and you should consider making a change.  Don't you want to be told when you can save money?  How many times has your bank called on their own, and offered you a better deal?  Usually the only time they will try to really help is if they think they are in danger of losing you as a customer.  Otherwise, working with the big banks on your own, you fend for yourself.

It may be that TD has a mortgage that suits you.  Then I will recommend we get the mortgage with TD.  Or you know what, we may want to use someone else who is more competitive or who offers something better for you.  The decision will be yours, after I present you with your options.

Like your banker, I can help you get a first mortgage, or second mortgage, or a line of credit.  Through Mortgage Alliance you can also use our Right Lease program for business equipment leasing.  Need Insurance products, or RSP or investment products?  I can recommend professionals who think like me and who will work closely with you to help you get the best of these products for you.

Many people assume that you use a mortgage broker if you don't want to work with your bank, or cannot work with your bank, but the case is not true. We can use your bank, or can find a better option.  The only time there are fees is for the most challenging of transactions that require extra work from lenders who specialize in those difficult cases.  For most people who don't have these types of issues, you get all these services for FREE.  Call me to discuss all your options.  519-651-9615.

At Mortgage Alliance we offer you:

• Choice... of over 50 lenders, from major banks to private sources.
• Convenience... with one place to compare lenders and get the Right Mortgage for your needs.
• Counsel... from an independent professional who works for you.

The question really should be, Why not use a mortgage broker?

Below is a list of just a few of the more than 50 lenders with whom my company works:

TD Canada Trust

ING

Scotia

First National

FirstLine Mortgages (a division of CIBC)

National Bank

Laurentian Bank

MCAP

Home Trust

and many more...

"Get a mortgage broker, but get a good one." Donald Trump

Before you call the Realtor, callo me to make it a Reality!

There is nothing more valuable you can do to help yourself than calling to get a pre-approval before you start shopping for your home.

In the past we usually called our banks and had them do that for us, but as Canada's largest network of mortgage professionals, Mortgage Alliance works with over 50 lenders on a daily basis-providing you with more choices, which means you will enjoy more options when you go look at your new home.

Knowing that you have been pre-approved will provide you with the comfort of shopping with your heart and head!

We work for you with our lenders for a fast pre-approval that you can live and grow with.

Call me today to discuss refinancing options.  Refinance your home at a low rate, save money every month and pay no legal fees with our Right Mortgage no fee refinance program.  oac.

I'm your local Kitchener Waterloo and area mortgage broker who cares and will work to help you get the right mortgage for your needs.  Although I specialize in homes in the Waterloo region, I help people Ontario-wide with mortgages and lines of credit for homes, cottages, investment properties, commercial properties.

Are you still paying for your landlord's mortgage?

You can own YOUR own home - possibly for less than you pay in rent!

See the below table:

Assumptions made in calculating the above amounts include estimated property taxes, maintenance fees, heat and no more than 8% of the applicant's gross income towards personal debt payments (ie: credit cards, car payment, personal loans, etc.).  The above amounts are estimates and qualification still depends on a formal mortgage application, credit verification and other conditions as may be necessary for approval.  The above rates are subject to change without notice.

For more information or for a Pre-Approval, call me, Georgel Miloje, your Kitchener-Waterloo and region mortgage broker, at 519-651-9615, or email me at gmiloje@mortgagealliance.com

AGAIN FOR PAYING HIS MORTGAGE

Before you make another payment on your landlord’s mortgage, here are a few things you should know: 

Many people who rent can actually afford to buy their own home—so what’s stopping them?  Many tenants believe that they’d require a big down payment, which is difficult if not impossible to save while trying to keep up with payments on all their other bills.  Others are convinced that they won’t qualify for a mortgage and that the payment would be just too difficult to carry anyway.

Just about everybody is overwhelmed over the legal and financial red tape which often surrounds the purchase of a first home.  It seems a whole lot easier to just keep paying rent.

Here are a few facts:

FACT: Many people actually qualify for a 5% down payment mortgage and don’t realize it.

FACT: The average mortgage payment costs about the same as the average monthly rent payment.

FACT: Many renters have funds in RRSP’s that can be used as part of a down payment without paying Income tax on the withdrawal.

FACT: A lot of people don’t want to ask a salesperson anything because they’re afraid of feeling obligated to buy something.

MY GUARANTEE TO YOU…

  •   I will consult with you on an individual basis to help you determine what you can afford.  (And you won’t have to sit in a bank to do it).

 •    I will explain the whole process and answer any questions that you have until you feel you are ready to take the next step.

•     Most importantly, if at anytime you choose not to proceed, just tell me.  There will be no pressure to continue.  I know that buying a home can be stressful.  It is my job to make it as easy and comfortable for you as possible!

Call me now at 519-651-9615 and we can discuss how you can get pre-approved and get your home!  Or email me at gmiloje@mortgagealliance.com

Opting for the longer ammortization period gives lower monthly payments on your mortgage, because the payments are spread out over more years.  Therefore helping out with monthly cash-flow. 

When dealing with a bank, you are only negotiating with one lender and only for their limited line-up of products.  Even if you have been a long time customer of a bank, does not mean you will be offered the best rates possible.

Georgel Miloje, a Mortgage Alliance  professional, deals with many lenders, from financial institutions to private lenders, and is able to provide for his clients the best mortgage possible from a vast array of financing options from all the competing lenders in the market.  Each real estate transaction is unique and each lender caters its mortgage products to attract a certain sector of the mortgage loan business.

It starts with listening to his clients, to better understand their situation and their needs. Not every borrower is the same, and many face challenges. Georgel's background allows him to examine all the available mortgage products to determine that which is best suited to his client’s needs.  All mortgages are not created equal and one mortgage could be more suitable and economical than another. Georgel continually keeps abreast of the various types of mortgage products available such that his clients can ultimately benefit from his  knowledge.

Furthermore, should interest rates go down while we are working with a client, Georgel is quick to respond and will lock into the best rate of the day.  This is not a service offered by all banks and brokers.  Even the slightest adjustment in the interest rate downwards can save you a significant amount of money over time.

Through Mortgage Alliance, Georgel enjoys special status and receives volume benefits such as lower interest rates and faster approvals from the lending institutions.  Those benefits are passed on to you providing you with the best service and rates possible.

Most people don't know that they can re-negotiate at mortgage renewal time, and if you are not satisfied, that is the right time to move your mortgage to another lender of your choice without penalty.  Mortgage professionals are there for your first purchase to help you with navigating the complicated waters of the mortgage financing business.  They are there at renewal time to look out for your interests.  They are there for the times in your life where things change, and maybe you need a refinance or to take out a line of credit, pay out debts, have extra cash for RSP's or investments.  Your mortgage professional is there to help you live the lifestyle you deserve.  At Mortgage Alliance we know you don't want a mortgage, you want a Home and the lifestyle that comes with home ownership.  Because we specialize in mortgages, we are knowledgable in mortgages and how to use them as a powerful tool.

Basically, Georgel strives to give his clients the Right Choice, the Right Counsel, and the Right Convenience, to make the mortgage process as smooth as possible. 

Georgel is as comfortable speaking Romanian as English.  Georgel has lived in the Kitchener-Waterloo area his entire life, has has graduated from the University of Waterloo, and understands the quirks of the Region of Waterloo.

Georgel's services are typically free to his customers.  On standard residential transactions, the client does not pay a fee for his services.   Rather, the lenders pay him a fee.  In difficult situations where clients do not meet standard mortgage approval guidelines there may be a fee charged. 

That's why at Mortgage Alliance we say that when you choose the Right Broker, you  get the Right Mortgage.

Below is an article that explains a bit of how the HST affects home sales.  I'm still not a fan of taxes no matter how they package it.  So they just penalize people who want a new home....

It seems that the majority of Ontarians still don’t get it.

Let the equity in your home work for you and consolidate your debt once and for all!

All Mortgage Alliance clients who fund a mortgage through us this year have a chance to win the value of their mortgage up to $100,000. Check out my website for contest rules and regulations.

www.MilojeMortgage.com

Or go to http://www.milojemortgage.com/index.php/newsletter and sign up for my Rate Advisor.  It is free and a good way to keep up with what is going on in the market.

Any questions, don't hesitate to call 519-651-9615, or email me at gmiloje@mortgagealliance.com.  I will do my best to answer any questions you have.  No obligation....just good advice.

The Bank of Canada is leaving its key interest rate unchanged at one per cent as it monitors the slowing economy and fears of a weaker-than-projected recovery in the United States.

The central bank's move comes after three consecutive 25-basis-point increases.

Correspondingly, the bank rate is 1¼ per cent and the deposit rate is three-quarters of a per cent, Bank of Canada said in a release Tuesday.

The central bank began hiking rates in June after a 14-month period when the key lending rate was taken down to 0.25 per cent.

Economists will scrutinize the news release accompanying Tuesday's decision, as well as the bank's release of its monetary policy report, on Wednesday for clues on its view of the economy and when rates should resume rising.

The central bank said the recovery is much weaker than it had thought last July, both domestically and around the world.

Canada's economy will likely grow by only three per cent this year, it said, mostly due to the fast start.

And instead of a solid 2.9 per cent advance next year, growth will average only 2.3 per cent.

Even more surprising, the bank said the economy will take a full year longer than it had previously projected to return to full capacity. The so-called output gap won't be closed until the end of 2012, it now says.

The bank also revised its language about when to expect future rate hikes, a signal it may stay put for some time.

"The economic outlook for Canada has changed," the bank's senior officials wrote.

"At this time of transition in the global recovery, with a weaker U.S. outlook, constraints beginning to moderate growth in emerging-market economies and domestic considerations that are expected to slow consumption and housing activity in Canada, any further reduction in monetary policy stimulus would need to be carefully considered."

Robert Kavcic, economist for BMO Capital Markets says that he expects the cool down in starts to continue for the next several quarters.

On a good note, housing starts are still up for the year over last year.

In Kitchener, Waterloo, Cambridge construction began on 145 homes, down from the 160 units started in the same month last year.

According to finance Minister Jim Flaherty, the federal government doesn't have plans to make mortgage rules tighter again.

Recently, economists have raised concerns about a housing bubble getting ready to burst, and about how much debt Canadian households are carrying. The average Canadian household shoulders a debt equal to 146 per cent of their income.

Well, I don't know if I fully agree with his reasoning, but it is a good thing.  The tighter the rules are, the more difficult it is for regular Canadians to buy that home they want.

Market consensus was for a headline rate of 1.9% and a core reading of 1.7% in August.

The mortgage interest cost index was down by 3.8 per cent in August following a 4.2 per cent fall in July.

These numbers show that inflation isn't posing a threat currently to our economy.

This has analysts suggesting the Bank of Canada might not raise raising its benchmark rate again at its next meeting in October.

The central bank sets its policy rate in an effort to attain and maintain 2% inflation.

In seasonally adjusted terms, core prices were flat in August, and the six-month trend has ebbed to a mere 0.3% annualized rate -- which is the lowest pace in over 25 years of data, said Douglas Porter, deputy chief economist at BMO Capital Markets.

“Inflation remains well under wraps in Canada,” he said. “If anything, some measures of core inflation trends are even lower than in the United States, where deflation chatter is rampant.”

The Bank of Canada raised rates their last 3 meetings.  I think this slowdown in inflation and in the economy should have them thinking twice before raising interest rates again.  For people with variable rate mortgages, it is somewhat of a good sign, as your rates should not be going up again next month.

Any further cool down in economic growth could put pressure on retailers to cut prices further to attract buyers -- particularly on big-ticket items such as cars, added TD economist Diana Petramala.

In Kitchener-Waterloo, I think we have been feeling the slowdown in the real-estate markets.  Homes seem to be selling slower and prices aren't rising as fast as in the past.  I do not think raising interest rates would help an already slowing down segment of the economy.  HST has hurt home sales enough in Ontario....any further raising of interest rates would just make it more difficult for people to 1.  qualify for a mortgage and 2.  to afford their mortgages.  Let's hope these analysts are correct, and the Bank of Canada prime remains where it is.

Who checks your credit report and credit score?
 
Big companies – banks, utilities and telecom firms – do so when you apply for credit. Some property insurance companies use creditworthiness as a factor in setting rates.
So, why aren’t you checking your credit report and credit score to make sure they’re accurate and up to date?

No one else but you can find errors and correct them. It’s your duty to do it, despite the roadblocks you may encounter.

Canada has two credit reporting agencies, Equifax and TransUnion, which gather and store information about credit transactions in your name.

Once you get a free copy of your credit report in the mail, look for any outdated information. Then, call your credit granters to ask them to update the credit bureaus on your status.

Here’s what my readers are telling me about their credit reports.

“Credit reports do a great job of recording any loans or car leases you might take on, but are poor at removing them once paid or expired,” says DC.

“I had outdated loans and leases for cars I no longer possessed and on which I owed no money. The credit bureaus wanted a lot of documentation, which I didn’t have readily available, to remove these loans/leases.

“I suspect most people don’t understand it’s their responsibility to provide evidence of paid off loans.”

LM and her husband discharged their mortgage two years ago and have no outstanding loans. They recently went to the Equifax website to check their credit reports and credit scores (for a $23.95 fee).

“Our scores weren’t bad, but should have been better,” LM says.

“Here’s why: We changed our credit cards quite a few times, chasing better air miles deals or in-store promotions. Many of these old cards remained on our reports, even though we cancelled them by phone years ago.

“Also, we foolishly allowed the three cards we do use to keep bumping up our credit limits, way beyond what we needed or would ever use.

“We found out the hard way that you can’t trust credit card issuers to notify the credit bureaus about cards you have cancelled voluntarily.”

Having too much available credit can hurt you. Lenders may worry that you have the ability to spend more than you can possibly pay back.

“You might want to consider closing a few accounts or asking to have your credit limits reduced,” TransUnion says on its credit score report.

Take care, however, because closing too many accounts – especially the oldest accounts on your credit report – can also hurt your credit score.

Suppose you have three credit cards with total available credit of $20,000. Your balances never exceed more than $6,000, which means you’re using less than a third of your available credit.

“Since creditors like to see a credit utilization ratio of 30 to 35 per cent or less, you’re in good shape,” says Bankrate.com, a consumer advisory source.

Now, assume you cancel a card with a zero balance and a $10,000 limit. Suddenly, your utilization ratio jumps to 60 per cent and your credit score drops.

Impersonal credit scoring systems aren’t concerned so much with how much available credit you have, but with how you manage that credit. To them, a 30 per cent utilization rate is better than a 60 per cent one

The Conference Board of Canada has released some numbers in reference to existing homes sales.  According to their report, existing home sales have gone down 11% between June and July, and down 31% year over year.  They found this true in all 28 regions that they study.  26 of the 28 regions had drops of 10 or more percent.

The Canadian Centre for Policy Alternatives came out with a report that all 6 major markets in Canada are in danger of a housing bubble, where housing prices are increasing at a higher rate than inflation, household incomes and economic growth...even with the recent slowdown in home sales, citing that even though sales have fallen, home prices in many regions have gone up.

CMHC economists are predicting a slowdown in housing sales, but a stabilization in 2011.

"A number of temporary factors have boosted Ontario home sales and prices from this time last year," said Ted Tsiakopoulos, CMHC's Ontario regional economist. "However, higher mortgage carrying costs, increasing supply pressures and declining first-time buyer demand will temper Ontario's housing momentum later this year and into 2011."

Now, according to CIBC chief executive officer Gerry McCaughey,the Canadian housing market is poised to strengthen after a brief slowdown.

In a television interview with Business News Network McCaughey said the slowdown in the Canadian housing market is healthy as it allows the industry to "catch a breath."

"The indications are Canada is doing reasonably well, the recovery in the U.S. and probably in Canada seems to be slowing somewhat, but I believe this is probably a pause," McCaughey said. "I think all recoveries from recessions have a lot of doubt and hesitation around them, and I think the main thing is for us to keep our eye on the ball for the future."  His prediction seems to be that this slowdown is a healthy one.

In the mean time, mortgage rates have been getting quite competitive.  BMO which in the last couple of years has lost market share in the mortgage business recently announced that it is dropping its "low frills" rate to 3.59% on a 5 year term.  By low frills, this means that you can't break BMO's mortgage to go somewhere else. Plus, pre-payments are limited to 10 per cent a year. 

Most Canadians break their mortgages before their 5 year term is up, so this may not be the best choice for everyone.  However, this does heat up the competition between all lenders.  There will definitely be lenders out there willing to meet or beat this rate.  Also, I believe it will put downward pressure for the short term at least on 5 year rates with more "frills" and options.  With all the different options out there offered by so many companies, it is a great time to speak to a mortgage broker who can present their client with good alternatives, and who can give the right advice.

1. Return on investment. Certainly, residential real estate is a solid long-term investment, typically appreciating faster than inflation. Even Canadians who have chosen their stock portfolio very carefully may find that their home is their best-performing investment. Many investment advisors recommend diversifying stock and bond portfolios to include real estate. Initially the goal is to have rental income cover all or most of the costs of the property. Over time the goal is to see an increase in the value of the real estate, with rent turning to profit once the mortgage is paid off. Expenses related to the property are of course tax deductible, offsetting the rental income

2. A pension plan for the future. Over the long term, an investment property or multiple real estate holdings can be a great source of retirement funds. Many Canadians do not have a pension plan, which means they need to take their own action to create sources of retirement income

3. A better alternative to student residence. Many Canadians are shipping off their university-age children, and housing them in an investment property purchased specifically for that purpose. They can save money on out-of-town accommodations for the student, and use revenue from other renting students to pay the mortgage and maintenance expenses.

4. Earlier access to a first home. For first-time home-buyers, a duplex or triplex can be a terrific way to get onto the home ownership ladder. Rental income from the extra units can help offset the cost of the mortgage as the new homeowners get on their financial feet.

Rules have changed however for investment property mortgages since the government's new mortgage rules that came into effect April 19, 2010. A minimum downpayment of 20% is required for an investment property i.e. you’re not personally living in the property that you own, which is up from 5% prior to the new rules.  You can put down less than 20%, but you’ll need to use an uninsured lender, which can mean higher interest rates. If you only have 1 to 4 properties, there are several CMHC lenders from which to choose from. Once you have more than 4 properties you need to start spreading out your business among several lenders so as to not reach the maximum number of mortgages a lender will approve per investor.

Other underwriting or qualifying rules have also come into play; Canada Mortgage & Housing Corp (CMHC), Canada's largest mortgage insurer, has changed the way they treat rental income in their debt service calculation, which can make qualifying more difficult.

Sound confusing?  It absolutely is.  That’s why you need to speak with an experienced mortgage agent who can help you better understand what's involved in financing investment properties. There’s no cost or obligation.  We’re up-to-date on current rates and all of the opportunities available for property investors from all of the lenders in the marketplace.  Whether you need an investment property mortgage or just looking for some advice, a mortgage broker is ready to help!

Spent too much on that summer vacation?  Credit card bills piling up?  Give me a call or email and we can discuss how to work on getting those high-interest debts under control.  In the mean time, read the article for some great tips on how much one should be spending on life's big expenses.

In these recessionary times, financial tips are flowing fast and furious about how to save money and stick to a budget. Facing a sea of information many people are asking, "Where do I start?" For most of us, five areas of spending will consume over 50% of the money we earn during our lifetime, so that's the best place to begin.
The five areas are: Home, car, children, education and retirement.
 Here's what you need to know about each

• Don't bite off more HOME than you can chew. How much house can you comfortably afford? For most people the answer is a house with a purchase price of no more than 3x their annual household income. Rationale: the cost of a home includes much more than the monthly mortgage payment. It's also property tax, insurance, upkeep, etc. Typically these costs run 2%-3% of the price of your home each year. Assuming a 20% down payment, a 5-year fixed rate mortgage, and interests rates in the 5%-6% rate, the 3x your income rule of thumb will translate into total housing costs of roughly 30% of your gross income.

• Don't let your CAR drive you to the poor house. The same logic applies to your car. Most people can comfortably afford a car that is 1/3rd of their annual income. If you make $60,000 you can comfortably afford a car that costs $20,000. If that seems low — now you know why so many Americans are in financial trouble. They are driving it. A car has many other costs than simply the monthly payment. There's insurance, gas, parking, maintenance, etc. If you follow this rule of thumb, your total transportation costs should be 10% or less of your gross income.

• Don't let your KIDS kick you in the wallet. Kids are expensive. From a purely clinical standpoint the Dept. of Agriculture estimates it will cost $220,000 to raise a child born in 2008 from diapers to age 18. And that figure is before you add in the cost of college! Deciding to be a parent is a major financial obligation. Don't make it worse by over-indulging your love bundles.

• Don't forget to ask "How high is too high for higher EDUCATION?" It used to be good debt was defined as mortgage and student loan debt… and bad debt was everything else. Not anymore. We've now learned that too much of a good thing can indeed be bad. Rough rule of thumb, don't take on more in total education debt than you think you are going to earn on average annually during your first 10 years after graduating (from college or grad school). In plain English, if you think you'll make $50,000 a year, don't take out more than $50,000 in loans. The logic behind this is that if it takes you more than 10 years of paying 10% of your income a year in student loan repayments, it's going to be tough to meet your other financial obligations.

• Don't underestimate the need to feed your RETIREMENT nest egg. How much will you need to retire? A simple rule of thumb is to multiply your current income by 25. So if you make $50,000 a year and want to maintain that standard of living in retirement, you'll need a nest egg of at least $1,250,000. Understanding early on in your working life what "your number" is… will help you see just how important it is to plan for this major savings goal.

In 1992, the Canadian Customs and Revenue Agency (CCRA) introduced the Home Buyers’ Plan (HBP). The HBP plan allows for Canadian consumers to withdraw up to $20,000 from their RRSP, to use in assistance of purchasing their first home. In the case of a couple if they are both eligible, the number is doubled up to a total of $40,000.

Most people use this RRSP withdrawal to add to any down payment they have already amassed to put down against the purchase price of their home, to either lower the amount of mortgage they will require, or increase the amount of the mortgage they can carry.

Sound too good to be true? Not exactly. Any amount that you may have deducted must be repaid back into your RRSP account in annual payments. You have 15 years to repay this amount, or if you don’t it will be added to your taxable income for the year and you will be taxed accordingly.

By using these funds, if you have them invested in RRSPs, you get the money working for you in a tax free and efficient way. What happens if you don’t have any RRSPs? The following strategy may be right for you. If you have the room under your RRSP cap, you can borrow funds from your bank and purchase RRSPs to later contribute to your down payment. Not only are you helping yourself today, but building a nest egg for your future.

 To find out if you have room under your RRSP cap to contribute look in your Notice Of Assessment (NOA). The government will give you a figure, which is usually a percentage of your reported income annually.  If you haven’t used the RRSP for that year, either partially or in full, the balance gets carried forward and added to the next year’s total. If you don’t keep your NOA’s, you can get your latest one by calling the CCRA at 1-800-959-8281.

A couple of words of caution: plan early. If you think that this may make sense for you and your financial position, take the steps you need to commence and start today. In an interest rate environment such as the one we face today, where rates are on the rise, make your decisions early. It could save you hundreds if not thousands of dollars.

Keep in mind, an RRSP is an investment into your future, so in case you can’t afford to pay your mortgage or have no income for a while and are forced to sell your home, you may lose your down payment, along with it your future savings.

For more information contact a mortgage professional who can give you guidance, and help you decide what’s right for your situation.

"When You Use the Right Broker...You Get the Right Mortgage"

This contest basically is a win-win situation for my clients.  First you get to have expert mortgage advice from someone who really cares, and pays attention to all of your needs.  Mortgages can be complicated to navigate on your own.  Just going to your bank only gives you access to their products, which may not be the most competitive out there. 

With Access to over 40 lenders, I will find you the Right Mortgage!  If you choose to get a mortgage through me, and it funds, you will automatically be entered in the contest.  The contest will give my clients a chance to win the value of their mortgage, up to $100,000.00!  What a great bonus for the lucky Mortgage Alliance customer who wins!

See below for contest rules:

2010 Contest Rules & Regulations:

Minimize your mortgage payments with the RightBroker™ and you could win up to $100,000*

PURCHASE NECESSARY

The sweepstakes is open to lawful residents of Canada (except Quebec) who have reached the age of majority in their province/territory of residence. Officers, directors, representatives and employees of Mortgage Alliance (“Sponsors”), their respective parents, affiliates brokers, franchisees or subsidiaries, their advertising, promotional, publicity, production or judging agencies, and all those living in the same households are not eligible to enter. The sweepstakes commences Friday January 1, 2010 and closes Friday December 31, 2010 (“SWEEPSTAKES CLOSING DATE”).

HOW TO ENTER:

Submit a bona fide mortgage application through a Mortgage Alliance Broker/Agent or Franchisee. Provided your mortgage application has been approved by all the appropriate parties/creditors and subsequently funded through Mortgage Alliance before the Sweepstakes Closing Date (“Qualifying Mortgage”), your name will be automatically entered– Limit one entry per Qualifying Mortgage.

THE PRIZE:

Grand Prize: There is one grand prize to be won consisting of the value of your Qualifying Mortgage up to a maximum of $100,000. Prize will be awarded in the form of a cheque payable to the winner. For example, if the mortgage is for $90,000, the Grand Prize will be $90,000. If the mortgage is for $120,000 the Grand Prize is for $100,000. In the event that the Qualifying Mortgage selected has more than one applicant, the prize will be divided evenly among the qualifying applicants.

THE DRAW:

The Grand Prize winner will be selected in one random draw to be conducted by an independent judging organization at 8:30 a.m. E.S.T. on Monday February 28, 2011 from all eligible entries received.

The selected entrant will be contacted by phone or mail. The prize will be confirmed within two weeks of contact from the winner. In order to win, the selected entrant or, in the event there is more than one mortgagor associated with the selected Qualifying mortgage, one of the mortgagors associated with the selected Qualifying Mortgage who has been designated by the mortgagors, must first correctly answer without any electronic, mechanical or other assistance a time limited mathematical skill testing question to be administered by telephone or mail at a pre-arranged, mutually convenient time.

The selected Prize winner will be required to sign a standard declaration and release form (i.e., a Declaration of Eligibility and a Liability and Publicity Release) confirming compliance with the sweepstakes rules and acceptance of the prize as awarded, within 14 days after prize notification is sent to the address on the potential winner’s entry.

If the selected entrant can not be contacted in a timely fashion, or if for any other reason the prize cannot be awarded, another sweepstakes entry may be randomly selected and an alternate winner chosen in Sponsors’ sole discretion until the prize has been awarded.

Failure of a potential winner to complete, sign and return any requested documents within such period or the return of any prize notification or prize as undeliverable may result in disqualification and selection of an alternate winner in Sponsors’ sole discretion.

You are not a winner until your submissions are validated. The prize will be delivered to the confirmed winner. By entering or accepting the sweepstakes prize, the winner accepts all the conditions, restrictions; requirements and/or regulations required by the Sponsors’ in connection with the prizes and also agree to accept delivery of the prize based on availability. By entering or accepting a prize in the sweepstakes, the winner agrees to be bound by the decisions of the judges and these Official Rules and Regulations and to comply with all applicable, provincial and local laws and regulations. In addition, the winner agrees to allow the Sponsors’ to use their name and/or photograph of the winner in future advertising materials with no fees to be paid to the winner for this usage.

GENERAL:

The odds of being selected depend upon the total number of eligible entries received for the draw. Maximum one Grand Prize per Qualifying Mortgage/person. The drawing will be conducted by an independent judging organization whose decisions regarding all aspects of the sweepstakes shall be deemed final and binding in all respects. The sweepstakes is subject to all applicable federal, provincial, municipal and local laws, and is void where prohibited or restricted by law. Sponsors and those working on their behalf will not be responsible for entries that are lost, delayed, damaged or misdirected. Sponsors assumes no responsibility for lost, stolen, delayed, damaged or misdirected entries or for any failure of the website during the promotional period, for any problems or technical malfunction of any telephone network or lines, computer on-line systems, servers, access providers, computer equipment, software, failure of any e-mail or entry to be received by Sponsors on account of technical problems or traffic congestion on the Internet or at any website, or any combination thereof including any injury or damage to an entrant’s or any other person’s computer related to or resulting from playing or down loading any material in the promotion.

No correspondence will be entered into except with selected entrant(s) who will be notified by mail and/or telephone.

By entering the sweepstakes or accepting a prize, the winner consents to the use of his or her name and/or photograph in any publicity carried out by Sponsors in connection with this and/or similar promotions, without compensation, unless otherwise prohibited by law. Entries are subject to verification and will be declared invalid if they are altered or tampered with in any way.

The Grand Prize winner agrees to release and hold harmless Sponsors , their respective parents, affiliates and subsidiaries, and each of their directors, officers, employees, agents, successors and assigns, from any damage, injury, death, loss or other liability that may arise from winner’s participation in the Sweepstakes or the awarding, acceptance, use or misuse of any prize.

This contest is available only through authorized Mortgage Alliance Consultants, Brokers, Agents and Franchisees.

Between 2000 and the first half of 2010 the average cost of a new home increased by about 50 per cent while the average price of a resale home more than doubled, according to a report released Tuesday by Scotiabank.

The bank attributes the robust resale numbers to a multitude of factors including the tight supply of resale homes, low interest rates and mortgage market innovation.

Scotiabank also reports that increased household wealth has led to more renovations, adding additional value to resale homes.

"The typical Canadian resale home likely contains more updated and sought-after features which would account for some of the rise in average selling prices," the release said.
 
Residential renovation expenditures increased at an over seven per cent average annual rate between 2000 and 2009. Between 1990 and 1999, they declined by an average of one per cent annually.

Canada's housing market may have peaked this year, as Vancouver and Calgary sales were down 45 and 42 per cent, respectively, compared to last July.

Mortgage rates are at a record low and there are many homes available for sale yet new buyers are still not entering the market.

"We expected the market to soften because we've seen such a flood of listings," said Laura Parsons, a Calgary-based manager at Bank of Montreal who specializes in mortgages, to The Globe and Mail. "You can look at this as a bad thing, but affordability has improved for many buyers and rates are still very low."

Even still, it is likely many felt pressured to buy earlier this year to secure a cheap mortgage, and avoid the harmonized sales tax that came into effect July 1 in Ontario and British Columbia.

Canada is the only G7 country to have raised its interest rates since the international crisis began.

What does this mean?  Well for one thing, I'm worried about this slowing down our Canadian economy before it really has had the chance to rebound and stabilize properly.

I don't think that our GDP will grow at the levels the central bank is estimating.  I also know that our economy depends on exports, especially to our neighbour to the south, where their economy is still in somewhat of a crisis.  With a higher interest rate, more than likely we will have an even stronger Canadian dollar, thus hurting exports.

Hopefully mortgage rates will not be affected too much.  Already some of the larger lending institutions have offered variable rates with more of a discount off of the prime lending rate.

I guess all we can do is wait and see what happends in the coming months, but I am hoping there will not be any more interest rate hikes for the remainder of the year.

Effective today, their benchmark five-year closed rate dropped by 10 basis points to 5.79 per cent matching changes made by Canada's other major institutions.

By the way, with Mortgage Alliance we have 5 year fixed rates available at 3.99%.  Much better than the banks.  OAC.  If you need free mortgage advice, contact Georgel at gmiloje@mortgagealliance.com.  Or call me 519-651-9615.  Additionally anyone who gets a mortgage funded through Mortgage Alliance has the chance to win our yearly Minimize Your Mortgage Sweepstakes.  See link for contest rules and details  http://mortgagealliance.com/?page_id=111

You have a chance to win the value of your mortgage up to $100,000.

The Royal LePage House Price Survey and Market Survey Forecast, released today, predicts that, by the end of 2010, home appreciation will average almost seven per cent year-over-year and home sales will increase by just over one per cent.

"We have seen an unusual pattern of activity in the housing market over the past 12 months, with the market experiencing a surge of activity and price increases that peaked in the fall of 2009 rather than spring," said Royal LePage president Phil Soper. "An expected increase in the supply of homes on the market will now bring stabilization in prices and, in some cities, we will see both prices and unit sales decline towards the end of the year. This should not be interpreted as a severe correction but rather a natural reaction to the market having peaked quite early this year."

According to Soper, home prices will stay consistent or decline negligibly in most of Canada with the exception of energy-producing markets like Alberta.

Home prices in Vancouver were up by an average of 17.8 per cent year-over-year while, in Toronto, prices rose by an average of 9.5 per cent. St. John's, NL also posted sharp increases with prices up an average of 19 per cent.

In the second quarter, the average price of a detached bungalow reached $331, 868, up 9 per cent from last year. Standard two-storey homes rose 8.7 per cent to $367, 835. Standard condominiums averaged just over $230,000, up over 7 per cent from 2009.

It seems that home buyers today are concerned about rising rates.  A pre-approval generally gets them a "rate-lock" while they search for that perfect home.

Industrial and Commercial Bank of China (ICBC), the world's largest bank by market value, is moving into Canada and will offer a wide range of retail and corporate banking products, including mortgages and commercial loans.

ICBC purchased six branches in Canada formerly owned by Bank of East Asia, and will start its Canadian expansion through those storefronts, reported The Globe and Mail. The main consumer target will be the prime growing markets of newcomers from China and businesses dealing with both China and Canada.

"We consider it the best time to launch the banking business in Canada," wrote Mingqiang Bi, CEO of the Canadian operations, in an email to the Globe. "While countries across the globe were hit hard by the financial crisis, Canada withstood many of its shocks. We are inspired and impressed by Canada's sound and stable banking system and supervisory regime."

Initially, ICBC will focus on Toronto and Vancouver, and there is roughly 1.4 million Chinese people living in Canada.

"In the past few years, the number of new immigrants from Mainland China increased sharply, which is a huge retail banking potential market to be explored," added Bi.

RBC Royal Bank, TD Canada Trust and Bank of Montreal also lowered most of their posted fixed-term mortgages by one-tenth of a point on Thursday June 24.

The banks' left their variable-rate mortgages the same.

This decrease was mostly due to changes in the bond markets.  The variable rates are probably staying the same, as there is still uncertainty as to what the Bank of Canada will do with their overnight rates at their next meeting.  There is speculation they may increase again .25 to .5%, but then there is also speculation that things may stay the same, stemming from fears of the fallout from the European debt crisis.

In his talk, Mr. Tsiakopoulos talked about the Economic and Housing outlook across Canada.

The largest factors affecting housing in Canada are jobs and interest rates.  From his forecasts suggest a cooling in home sales in the near future, thinking that the recent spike in home sales has reached a peak, and that home sales have been doing much better than the job numbers.  The recent historically low interest rates have helped fuel the spike in home sales, but predictions are that interest rates will go higher, therefore having a negative impact on housing sales.  Predicted is a 0.5% increase in the central bank rate before the end of the year, and maybe a 0.75% increase in the following year.  The stated goal of the Bank of Canada is to bring interets rate back to historical levels...meaning a 4.5 to 5% overnight rate within the next couple of years.  This was buffered however by a comment that due to some of the issues in Europe and to the fact that the US recovery may be slower than initially thought, that these increases may be delayed a bit or come slower....but the increases will eventually happen.

Also discussed were that in 2010 most of the economic recovery has been happening in Ontario and Quebec, with some manufacturing strength, as well as strength in banking, real estate, and technology.  Predicted for 2011 is that the Industrial goods and commodities sectors, as well as transportation will lead economic expansion.  Ontario and Quebec will probably cool off slightly and the western economies will take the lead.

Predicted is that first time buyer demand will wane as homes get more expensive (not just due to prices of homes going up, but with the introduction of the HST in Ontario as well as higher interest rates).  Now that can be good news for rental apartment landords, as apartment vacancy rates will probably get tighter.  As well, for prospective buyers looking for homes this may not be a bad thing either, because housing prices will more than likely level out over the near future.

Things can change, however.  If the US has a stronger than predicted recovery, it would also boost Canadian employment and housing demand....more jobs as we export more.  If the US recovery is weaker, it can dampen confidence in employment, and dampen housing demand.

If interest rates remain stable or ever lower, it can strengthen housing demand.  If the Bank of Canada raises rates at a faster rate, it can weaken housing demand, as well as economic growth.

As well, the supply of new listings; that is the numbers of homes put up for sale, if more homes come up for sale, it can put downward pressure on prices, and if fewer homes are listed, that can put upward pressure on home prices.

To summarize the seminar:

Most coniditions for economic recovery are in place

The developing world must lead consumer recovery (ie, consumers in these newly rich developing countries need to spend money to keep factories working)

The Canadian recovery is mostly consumer led

The worst of the goods sector downturn is behind us, BUT....

...An improving economy will trigger higher interest rates

Central Canada has led the housing recovery to date, but the west will probably lead it in 2011.

Affordability erosion will dampen resale activity

The market will move towards balance by 2011

Home prices will most likely level out

I found the information quite interesting.  If anyone has any comments about the above, I would love to hear from you.  You can email me at gmiloje@mortgagealliance.com