As we age, maintaining independence and staying in the home we love can be a challenge, especially when faced with reduced mobility and the need for costly home modifications and personal care services. However, with the CHIP Reverse Mortgage by HomeEquity Bank, aging in place becomes more feasible and attainable. Here are three ways in which this unique financial solution can support you:

1. Enhance your home for accessibility and enjoyment.

The CHIP Reverse Mortgage enables you to make essential home improvements that improve accessibility, safety, and overall livability. For example, you can adjust electrical switches and outlets to a more comfortable height, eliminating the need for reaching overhead. You can also plan for features like relocating the laundry room from the basement to the main floor to facilitate single-level living.

2. Afford the convenience of at-home care.

With funds from the CHIP Reverse Mortgage, you can access financial resources to help with various at-home care needs. From hiring a cleaning crew to maintain your house regularly to securing 24/7 in-home caregivers, the funds provide the means to ensure you receive the necessary assistance and support.

3. Support for transitioning into assisted living or long-term care.

If your spouse or a loved one needs to move into assisted living or long-term care, the CHIP Reverse Mortgage can alleviate the financial strain of the transition. The funds can be used to pay for accommodation and meals, known as co-payment fees, ensuring that your loved one receives the care they need.

Ease financial burdens with the CHIP Reverse Mortgage

The CHIP Reverse Mortgage by HomeEquity Bank allows Canadians aged 55 + to unlock up to 55% of their home’s equity as tax-free cash. This enables you to revitalize your living space, afford at-home care services, or support your spouse’s transition to assisted living or long-term care. What’s more, there are no required monthly mortgage payments until you decide to move or sell your home.

Contact me today to discover how the CHIP Reverse Mortgage can empower your journey of aging in place, or that of someone you love.

Written by HomeEquity Bank for DLC Marketing

Image Credit: Ekaterina Shakharova on Unsplash

A pre-qualification is the first step in uncovering what you can afford when embarking on the search for your next property.  It should outline a realistic budget, including the costs to complete the purchase, including legal fees and applicable taxes, as well as estimated ongoing mortgage payments.

To arrive at an accurate budget and to move quickly once you find your perfect property, you’ll need to submit comprehensive documentation describing your current income amongst other details in advance.

A pre-qualification gives you an understanding of the maximum amount you can comfortably spend on your new home.  Armed with this knowledge, you can confidently search for properties within your price range.

At times it may make sense to lock in a favorable interest rate for a specified period (typically 90-120 days) allowing you to explore the market without worrying about potential interest rate fluctuations.

Once you receive your pre-qualification terms, it’s important to maintain the same financial picture until your mortgage is finalized.  Significant changes, such as switching jobs, making large purchases, or opening new credit cards can impact your final mortgage approval.

If you’re ready to see what you might qualify for, please don’t hesitate to ask, I am always happy to see how I can help.

Adapted from DLC Marketing

Photo Credit: Sshootz on Unsplash

Property Taxes are typically due in July in BC, and the Home Owner Grant gives owners a break if eligible.

The eligible property value limit increased to $1.975 million in 2022.  Homeowners in Metro Vancouver, the Fraser Valley, and the Captial Regional Districts owning property valued at less than that amount may be eligible for a discount of up to $570 for the basic grant.  Homeowners aged 65 or older, individuals with disabilities, or those living with a relative who has a disability are eligible for a grant of up to $845.

In northern or rural areas (outside Metro Vancouver and the Fraser Valley and Capital Regional districts) homeowners can claim up to $770, and seniors or people with disabilities can claim up to $1,045 for their grant.

A grant reduction applies at $5 for every $1,000 over the threshold but low-income seniors, veterans, and people with disabilities can apply for a low-income grant supplement to replace the lost grant amount.

To apply for the grant, visit: https://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/home-owner-grant/apply or call Phone: Call 1 800 663-7867.  Service BC is available to assist with more complex applications.

The best time to apply is before your taxes are due, optimally in May, once you have both your BC Assessment and municipal tax notice in hand, but you can apply at any point in the tax year.  You may be able to apply retroactively for up to one year if you missed a year as well.

Feel free to contact me with any questions you may have regarding your property and financing, I am always pleased to help.

Adapted from BC’s Home Owner Grant website https://www2.gov.bc.ca/gov/content/taxes/property-taxes/annual-property-tax/home-owner-grant/apply

and

BC’s Article entitled “Home Owner Grant helps people with property taxes” found here: https://news.gov.bc.ca/releases/2022FIN0001-000004

With the increase in the Overnight Rate of .25%, the Prime Rate has also risen by this amount in Canada.  If you have a Variable Rate mortgage, please feel free to contact me for strategies to discuss the rate outlook, manage a lengthening amortization, or manage your payment.  Static payment variable mortgage holders may be contacted by their lenders to discuss bringing their amortization back in line with the amortization they had at the beginning of their current term.  There are steps borrowers may be able to take to prevent having to make a large lump sum payment or to make a large increase to their regular payment.

From Dr. Sherry Cooper:

If there were any doubt that the Bank of Canada wanted inflation to fall to 2%, it would be obliterated today. In a relatively surprising move, the Bank hiked the overnight policy rate by 25 bps to 4.75%, and an equivalent hike will follow in the prime rate. Fixed mortgage rates had already leaped higher even before today’s move as market-determined bond yields have risen in the wake of the US debt-ceiling debacle. Now variable mortgage rates will increase as well. The central bank is determined to eliminate the excess demand in the economy.

“Monetary policy was not sufficiently restrictive to bring supply and demand into balance and return inflation sustainably to the 2% target,” the bank said, citing an “accumulation of evidence” that includes stronger-than-expected first-quarter output growth, an uptick in inflation and a rebound in housing-market activity.

I had thought that the Bank would want to see the May employment data and the next read on inflation before they resumed tightening, but with the substantial May numbers in the housing market, the Governing Council jumped the gun.

The Reserve Bank of Australia did the same thing earlier this week. But their economy was already softening. On the other hand, the Canadian economy grew by a whopping 3.1% in the first quarter and is likely to surprise on the upside in Q2, boosted by a strong rebound in housing. If the correction in housing is over, then the Bank has failed to cool the most interest-sensitive sector in the economy. Governing Council fears that inflation could get stuck at levels meaningfully above the 2% target.

The next Bank of Canada decision date is a mere five weeks away. While we will see two labour force surveys and one inflation report, the odds favour another rate hike before yearend. The BoC concluded in their press release that, “Overall, excess demand in the economy looks to be more persistent than anticipated.”

No doubt, if the data remain strong over the next several weeks, another 25 bps rate hike is likely in July. Deputy Governor Beaudry will flesh out today’s decision in his Economic Progress Report tomorrow.

Dr. Sherry Cooper
Chief Economist, Dominion Lending Centres
drsherrycooper@dominionlending.ca

I once had my eye on a new home to purchase, which had a style that really appealed to me.  The neighbourhood was beautiful and very close to the mountains, which perfectly suited my wish list.  The house looked very well built and I was certain it was the one!  Excited, I was ready to make an offer.  As a formality, I booked an inspection just to get to know what I was preparing to buy.  Sadly, after reading the report on the property’s numerous well-hidden issues, I passed on making the offer.  However, very luckily, the inspection had saved me a small fortune.

I eventually found my little piece of heaven, which proved to be a much better property.  I completed my purchase with confidence, as this one came with a much more favourable inspection report.

In selecting and working with a home inspector, be sure to keep the following in mind:

1. Is the inspector licensed, what are their professional credentials, and is their insurance up to date?

2. How many years of experience do they have specifically as a home inspector, and roughly how many inspections have they personally completed?

3. What is their specific industry knowledge and career background?

4. Do they have references?

5. What does the report entail? Are photos of each area, each system, and potential issues included?What kind of tools do they use during their inspection?

6. Will they outline any repairs the property may need?

7. Are inspections completed during daylight hours and is the roof inspected?

8. How long do property inspections usually take?

9. Do they provide follow up information such as a suggested maintenance schedule?

A property inspection may be the best money you ever spend in relation to your purchase – peace of mind is priceless. For further information please don’t hesitate to ask, I am always happy to help.

Adapted from DLC Marketing

Photo Credit: Pietro di Grandi  – Unsplash.com

Expert tips on planning your next backyard project.

Turning dreams of lounging in your private backyard oasis into reality has, well, blossomed.  Renovations and master creations of outdoor spaces have taken off in the last few years.  With lumber prices slowly coming down, a new deck or pergola could be yours.  Here are some things to consider before starting your next backyard project.

Inspiration

Sit back and daydream a bit about your ideal backyard. What features does it have?  A resort-like pool with a cabana, top notch greenery, outdoor chef’s kitchen?  Perhaps an unlimited budget could accommodate such a wish list.  The main goal during this exercise is to tap into how a dream backyard would make you feel and adjust those concepts to your budget.  A nook on the patio with a comfortable chair where morning coffee can be enjoyed while basking in the sunlight, for instance.  Put together a list of must haves, nice-to-haves and items you’d be willing to compromise on.  A budget and timeline will get you there.

Where to build?

Not all home purchases require a land survey or real property report, but if you have one, this would be a great time to consult it.  Learning the boundaries of your land can really help if you don’t have a fence delineating where your space ends and your neighbour’s begins.

Gas lines

Whether changes are being made to an existing structure, or the project is brand new, it’s what’s under the earth that matters.  Buried natural gas and utility lines should be located before digging.  Accidentally hitting one can have huge consequences.  Visit digsafecanada.ca to find out more.

Permits

Owning a home doesn’t necessarily mean you can do anything to the structure and land.  Zoning regulations impact what you can change relating to your property.

Obtaining proper permits is crucial before beginning any construction.  It establishes the scope of the job and ensures that fire safety, structural standards and zoning requirements are met.  Home Insurance can also be impacted if work is done without permits on your property.  Examples of building projects that need permits include cabanas, decks or outdoor kitchens and bathrooms (because of plumbing).

Once you sell your property, permits give comfort to potential buyers that work at your property was completed safely and legally.  Permits also puts the onus on contractors work according to plan and to code.

Landscaping

Spend time in your backyard to get a feel for light patterns and keep seasonal changes in mind.  Which areas provide shade and which feel the warmth of the sun?  Start by analyzing protected spots and those that might benefit from protection from the elements.  Factor in any existing items to be incorporated into the new design.

Contractors

Those with the skills to complete their backyard projects on their own may find a huge sense of joy accomplishing something so rewarding.  Consider saving money by giving your old fence a makeover.  Sanding it down and adding a fresh coat of exterior paint goes a long way.

But when it’s time to call in the experts such as landscapers, designers and building contractors, it’s important to do your due diligence.  Think about interviewing three of each.  Make sure recommendations are backed by solid references and reviews.

Having a welcoming and natural setting to retreat to in your backyard may add value to your home and some good old joy too.

Adapted from DLC Marketing

Photo Credit: Randy Fath on Unsplash.com

Twenty-five or thirty years is a long time to repay a loan. To pay off your mortgage faster, here are some tactics to get you on the road to financial freedom that much sooner.

1) Make a Double Mortgage Payment: A double monthly payment once a year will save you interest and will reduce a 25 year or 30 year amortization by approximately 3.5 or 4.5 years respectively.

2) Increase Your Payment Frequency: Changing your mortgage from monthly to bi-weekly accelerated payments will have the same effect as doubling up your monthly mortgage payment.

3) Lump Sum Payments:  Many lenders allow up 15 to 20% of your opening mortgage balance to be applied as a lump sum payment each year.  Annual work bonuses are a great option for this.  Lump sums can nicely bring down the interest costs and the time it takes to repay your mortgage as well.

4) Increase Your Payment:  A one-time 10% increase can shave four to five years off your mortgage. If you bumped the payment 10% every year, you would be mortgage-free in approximately half the time of your original amortization.  You could also consider increasing the payment by the amount of your annual raise should you receive them.

5) Make an RRSP Contribution: Looking for a way to find the funds to make a lump sum payment?  Consider making an RRSP contribution and using the income tax refund to pay down your mortgage.

6) Set Up Automatic Savings: Set aside a little each pay period.  When your extra savings reaches the amount of one mortgage payment, apply it to the mortgage.

7) Renegotiate When Rates Drop: Revisiting your mortgage is a good idea when rates drop. A 1% reduction on a $500,000 mortgage could save you approximately $24,000 in just 5 years.  Check with me to see when this might make sense for you.

In any case, these are just a few of the ways to repay your mortgage off faster.  Contact me to see how some of these may affect your interest savings. I’m always happy to help.

Adapted from DLC Marketing

Photo Credit: Pietro di Grandi  – Unsplash.com

When it comes to customizing your mortgage to fit your needs and goals, several aspects can be adjusted.

Interest Rate Type

The interest rate is a major component of your mortgage and can be fixed or variable.

A fixed-rate mortgage is ideal for those who are more comfortable with a stable monthly payment.

A variable-rate mortgage is ideal for individuals who have room in their budget for payment increases and who want to take advantage of potential interest rate drops should they occur.  Fixed-payment variable rate mortgages are also available but if rates rise considerably, the payment may increase with this type of variable rate mortgage as well.

Penalties to break fixed rate mortgages can at times be much higher than those of variable rate mortgages.

Amortization

Amortization refers to the number of years over which your mortgage payment is calculated to be repaid and is often set to 25 years.  Shorter amortization terms result in higher payments, but they allow you to pay less interest over the lifetime of your mortgage.  Longer amortization periods come with smaller monthly payments but higher interest costs.

Payment Schedule

Mortgage payments can be made monthly, bi-monthly, bi-weekly, or even weekly payments.  Paying every two to four weeks on a specific day of the week accelerates repayment by years in some cases and can save you considerably in interest.

Mortgage Term

A mortgage term refers to the length of time your rate and current mortgage terms are set.  When the term is up, you can renegotiate your mortgage and reset your rate type and term options without paying a penalty.  You can switch lenders at this time as well if you wish to secure a better rate and terms at that time.

Open vs. Closed

Open mortgages have a higher rate of interest but give you the option to repay the entire loan without a penalty. Closed mortgages come with lower rates and often allow for lump sum payments to reduce the loan amount without penalties.  However, repaying the entire loan before the term is up is not an option.

High Ratio vs. Conventional

High-ratio mortgages are insured in favour of the lender for borrowers with less than 20% down.  The borrower pays the mortgage insurance premium as part of the mortgage amount rather than paying for it up front.  Rates are lower on these loans, but the premium increases the overall cost.

Conventional mortgages are uninsured, saving the borrower the premium, but a 20% down payment is required.

For a closer comparison of options please don’t hesitate to reach out with your questions, I’m always happy to help.

Adapted from DLC Marketing

Photo Credit: Luwadlin Bosman Unsplash

Mortgage insurance protects a lender’s investment in certain types of loans, which typically come with lower rates but an insurance premium is charged.   Without mortgage insurance, borrowers can sometimes qualify for a larger loan, they can lower their monthly payments relative to the borrowed amount, and they can save on the cost of the insurance premium.

Mortgages are separated into three tiers, each of which have varying insurability:

1) Fully insured mortgages relate to purchases in which borrowers put less than 20% down, the purchase price is less than $1,000,000, and the amortization is set to 25 years or less.  These loans are insured through mortgage default insurance.

Canada has 3 mortgage insurers: CMHC, Sagen and Canada Guaranty.  Insured mortgage premiums are based on a percentage of the loan amount.  The borrower does not pay the premium in advance.  The insurance cost is added to the mortgage balance itself.  And because the loan is insured, and is therefore lower risk to the lender, the rate is typically lower.  Taking an insured mortgage lets you buy with less down and may allow you to purchase sooner than you might saving for a higher down payment.

2) Insurable mortgages relate to purchases where the down payment is over 20%, the purchase price is less than $1,000,000, and the amortization is set to 25 years or less.  Lenders who pay the mortgage premium on these loans still generally offer a lower rate of interest because insured mortgages are lower risk.  Insurable mortgages let you save on interest but the maximum amortization being set to 25 years may mean you will have a higher mortgage payment than you might have with an uninsured mortgage.

3) Lenders generally offer more flexibility on uninsurable mortgages. The amortization on uninsurable mortgages can be greater than 25 years, and the down payment must be more than 20%.  These mortgages can include refinances, longer amortizations, and property values greater than $1,000,000.

Without insurance coverage, lenders charge higher interest rates, though the borrower saves on paying mortgage insurance.  Lenders view these loans as higher risk as they are uninsured, though the borrower will have put more down than they would have on a purchase financed with an insured mortgage.  Taking an uninsured mortgage is sometimes the only option depending on the purchase price or amortization needed, but can often be beneficial in securing a lower payment or more leeway in qualifying.

Weighing the pros and cons across each of these loan types can be circuitous.  Please let me know if you have any questions about your mortgage or on an upcoming purchase, I’m always happy to help.

Adapted from DLC Marketing

Photo by Daniel Olah on Unsplash

Porting your mortgage enables you to move your existing mortgage to another property without having to lose your existing interest rate for the remainder of the existing term. Porting may also save you money on the break fee for not seeing the current mortgage through to the end of the term.  If you can’t port the mortgage but secure a new one through the same lender within in a certain timeframe, some lenders will reimburse the fee.

Keep in mind though, breaking the mortgage, paying the break fee and moving to a new lender with a lower rate of interest can sometimes save you more and should be reviewed before deciding on your next steps.

When porting does make sense, did you know you actually have to re-qualify for that mortgage before it can be transferred?

Porting may allow you to transfer your rate for the remaining term without penalty, but it is not a right to transfer your original mortgage approval.

Your lender will have to approve of your current financial situation in addition to approving of the new property you’re purchasing as well.  Location and property type can factor into the approval and portability, so it’s best to plan in advance before selling.

Portability is typically offered on fixed rate mortgages. To arrive at a new rate when you need more funds to complete the purchase, lenders often use a “blended” system. A new rate is calculated using the existing interest rate on the current balance, and using current market rates on the new funds.  The two prorated rates are blended together to arrive at the new rate in that case.

A variable rate mortgage may be converted to a fixed rate before porting. Variable rate mortgage penalties are lower however, and are calculated based on three months’ of interest.  This is often a far lower penalty than on a fixed rate mortgage.

If your mortgage is portable, there are a few considerations to keep in mind:

1) Timeframe: Portability timeframes can range from the same day as the sale of the property, to up to three months after the sale.

2) Terms: Some lenders don’t allow a change in the term or may require you to take a longer term than the time remaining on your original term.

3) Penalty Reimbursements: Some lenders may reimburse your entire penalty, whether you are a fixed or variable borrower, if you simply secure a new mortgage with them. Additionally, some lenders will even allow you to move into a brand-new term of your choice and start fresh.

Regardless of whether your financial picture has changed or not, making sure you qualify before you agree to sell your current property or committing to a new purchase is key.

Before you take the steps to sell, make sure you know the ins and outs of porting your particular mortgage, or leaving your lender prior to the end of your mortgage term, as porting terms can vary.

For more information, don’t hesitate to reach out, I’m happy to assist.

Adapted from DLC Marketing