GTV’s original boss babe – Sandra Rinomato

After taking a turn as the host of Property Virgins and Buy Herself, Sandra Rinomato has come full circle putting her efforts back into Toronto area real estate.

Sandra Rinomato fell into a career in real estate almost by accident. It was the mid-90s, and the future TV star was considering opening up a coffee shop in the Toronto area. She reached out to a friend and commercial realtor for help to find a space, and he obliged. But he asked her an important question: Why did she want to work so hard?
“I said I don’t, I said I want to work smart not hard,” Rinomato recalled of the conversation 22 years later.
The friend suggested instead of selling java, she get her real estate license. And just like that, she did. She began her real estate career in a prestigious area of Etobicoke, noting she got lucky getting into the industry at a time when the market was good.
In a sink or swim industry, Rinomato quickly established herself, relying on her people skills, especially during open houses.
“It was really a great learning experience to do open houses and get face-to-face with people because let’s face it, everybody loves to talk about real estate,” she said, adding those open houses taught her the publics perception of real estate and what the masses considered a good home.
By 2006, Rinomato’s success and personality eventually led her to being cast in the popular HGTV show Property Virgins.
For seven seasons, Rinomato crisscrossed the continent coaching first-time homebuyers through the process of buying a home.
When she left the show in 2011, she starred in another HGTV show Buy Herself for one season.
The series focused on single women who were buy their first home.
Rinomato was blindsided by the success of Property Virgins, admitting when she was originally asked to take part, she wondered why anyone would want to watch a show about her day-to-day job.
“The show was watched by five-year olds and 80-year olds. That was a real trip,” she said.
While Rinomato considers her turn on TV a blessing, it was also a lot of work. By 2016, she was feeling burned out and ready to take a
step away from media. Nowadays, she’s focused on her first love:
Real estate. She’s still busy running her successful real estate brokerage Sandra Rinomato Realty Inc., But time away from the tube has allowed Toronto resident to get her life back.
“I’m just really enjoying being a realtor, and being a person,” she said, noting she even has time to meet with girl friends for a weeknight dinner, something she could never fit in around her TV schedule.
Rinomato recently took some time to chat with Our House Magazine about some of her favourite topics including real estate, the current market and women’s empowerment.

Our House:

What is it about real estate that you love?

Sandra. I love that every day is different, every client is different, every property is different, every negotiation is different, I love the people contact and I feed off their energy. And I do love being able to share my knowledge and expertise with people. Because when I go to a professional, I know I really benefit when they are knowledgeable.
What are some of the key pieces of advice you give to a client, especially a first-time homebuyer when you meet them for the first time?
The most important thing is to communicate and be honest. That includes being honest with yourself and create a little bit of a plan. Understand your plan might go off the rails at some point, but if you have a plan you can proceed toward your goal. It’s not easy buying a place, it almost doesn’t matter what your budget is, it’s not easy to find everything you want or everything you’re dreaming about. Recognize that this is a big deal. This is serious and this affects your life. If you’re not prepared for it, chances are you’re going to just give up and rent.

Q: What are the common mistakes you see from people buying a home?

A: First time buyers don’t understand the financing. They go online and do a preapproval online and think, ‘Oh, I can get this much money because I make this much money.’ That’s not a preapproval. And if you do get a preapproval from a lender, it may have conditions, so you have to pay off your credit card or your student loans… and a lot of people make the mistake of not taking that seriously and then shopping and finding out too late they have to have that stuff before they can get the mortgage. The other mistake with first-time buyers especially, they expect to get their forever home right of the gate, but you have to take one step at a time. You may not want to, but in Toronto or Vancouver, the first step is a condo. People really may want a house, and you know what, you can get there. Get the condo, get used to the culture around budgeting and being a homeowner and build equity in the condo… and then you can move up. Another mistake people make, many people, don’t know that mortgages are products and there are many products, there are many things to consider other than the interest rate. For example, don’t assume you’re going to get a 25 year amortization. Talk to your mortgage professional to see what your options are.

Q: What do you make of the real estate market right now in Canada and where do you think its heading?

A: I can tell you what’s going on in Toronto, and Toronto is a mixed bag. It has every market. Condos are outperforming every other type of real estate. They are busy, the prices have gone up significantly just in the last six months because it is the last frontier, the last affordable product people can buy. Toronto grew up and I know in Vancouver people are raising families in condos and that’s what’s happening in Toronto. There’s no negative stigma that should be attached to that. The Toronto core, we really didn’t see any hesitation at all. For some reason, the peripheral or outlying areas were hard hit, and I don’t know why. I can’t make sense of it. Many properties are not selling in multiple offers, they’re lingering on the market. I’m going on statistics, I ran the statistics for my area around the office and we’re only four per cent up from last year, but we’re not 40 per cent don like people seem to want to believe. In the last three months it’s gone up eight percent. That little blip is over and I think we’ve come through the other side unscathed. The problem here with Toronto is infrastructure, there’s land that could be developed but there isn’t any money to build the water treatment plants, so the land can’t be developed yet. Even with what’s happening in the peripheral of Toronto with the downturn in the market, that is temporary because people need a place to live and we’re growing rapidly. If you think Toronto is expensive now, just wait.

Q: Have you kept an eye on the mortgage rules that came into effect in January?

A: Yes, people qualify for less. I feel bad for people who waited to have their 20 per cent down because as I said it’s a lot of work, it’s a lot of time to save those after tax dollars and you wanted to avoid the CMHC fees for being a high ratio mortgage. Now you’re in a conventional mortgage and they slap these rules on you and it’s like ‘Wow, I can afford $150,000 less’ which puts you right out of the market. I don’t disagree they should have a stress test to make sure people can afford houses, I think Canadian banks and lenders have been typically conservative and it’s worked well for our country. I do think there should be a little bit of leeway, for people who have to renew in a couple years who may not qualify under the stress test when they have to renew their mortgage. I’m not sure what that’s going to look like. I have clients who are worried and I’m worried for them.

Q: How important is financing and budgeting when it comes to buying a home?

A: It’s crucial. It’s not just a matter of the bank saying I can have this much money. I say calculate what you spend by tracking every penny you spend for a month. Whatever your fixed expenses are, and then anything you buy, either put it on debit or credit so you get a transaction report at the end of the month. If you just look at that and say, this is what I spent, these are my fixed costs, on top of that I have to put on vacation, gifts, entertainment not incorporated in that month… and then savings. Add in 10 per cent of your income or whatever you designate as your savings, and that’s how much money you need every month to survive. When you look at that, you freak out. That’s the real number. Of course you need to know what the bank will give you, but you also need to know what your spending habits are. Don’t lie to yourself, and say you’re going to stop spending money on such and such. If that’s what makes you happy and motivates you to get out of bed, you’re not going to stop. Accept it and embrace it. And so it means I can afford this amount of mortgage. That’s what it means.

Q: How do you see the role of a mortgage broker in the transaction of a home?

A: They’re critical. I don’t have any bearing on where people go, I make my recommendations, only because I know we may need to contact someone on a Saturday night if we’re in multiple offer. We need correct information, and sometimes if you just walk into a (bank) branch you don’t necessarily get a mortgage professional, so I insist they get a mortgage professional.

Jeremy Deutsch

Communications Advisor

7 things every self-employed individual should know — Before you apply for a mortgage

Self-employed individuals are quickly becoming one of the most common clients that we handle. Daily we have successful business owners come into our offices who enjoy the perks of being an entrepreneur. One of these includes fantastic write-offs that allow them to bring their income down to a low tax bracket.

However, this benefit can also mean that the same business owner may have a hard time qualifying for a mortgage all because their income is significantly reduced on paper… how frustrating ‘eh? But these savvy business owners know that there is advanced planning that is involved in being able to qualify for conventional financing. Back in 2015, Statistics Canada reported that there were about 2.7 million people self-employed in Canada… which is an astounding 14% of the total population of Canada! What does that stat mean? Two things:

1. That being self-employed is a more than viable way of earning income in today’s world.
2. That 14% may not fit into the conventional lending “box”

The Conventional Lending Box
To fit into this box, self-employed individuals must meet certain qualifications. For example, they must be able to provide:
>Two most recent years of personal tax returns
>Two most current years Notice of Assessments
>Two most current years financial statements
>Statement of Bank Account Activity
>Investment Income Statement
>Photo ID

Now, the one area that raises a red flag in the above is the tax returns. As we previously mentioned, their income claimed on the return itself might be significantly different than their actual income. Tax deductions related to business often reflect meals, rental spaces, credit card interest etc. The result is that the income the self-employed business owner shows on their tax return is a significantly lower figure than what their actual take home pay is. However, the conventional lending box requires income to justify the mortgage. So how do we pull this off?

The Unconventional Lending Box
Now please keep in mind that “unconventional” in this box just means that as a self-employed individua,l you are going to work with a Mortgage Broker to find an alternative to allow you to show that you can justify the mortgage. There are several well-known and consistently used pieces of advice that we would like to pass along to you:

1. If you are organized and planning (think 2 years out) you can plan to write off fewer expenses in the two years leading up to the property purchase. Yes, you will pay more personal taxes. However, your income will be higher, and it will be easier to qualify you for the mortgage amount you are seeking.
2. Set up your finances through a certified accountant. Many lenders want to see self-employed income submitted through a professional rather than doing it yourself. The truth is that the time you spend doing your own taxes will not be nearly as efficient both financially and time-wise as a professional. Make sure that you discuss with them what your goals are so that they can set up your taxes properly for you!
3. Choose your timing carefully. If you are leaving for an extended holiday within the two years before purchasing, your two-year average income may fluctuate. Plan your vacations and extended trips away with income in mind.
4. Consider using Stated Income. You have the option to state your income. This is based on you being in the same profession for 2+ years before being self-employed. The lender looks at the industry and researches the mean income of someone in that profession and with your experience. You will be required to provide additional documents such as bank statements, showing consistent deposits and other documentation may be asked of you to show your income.
5. Avoid Bankruptcy at all cost…. or if you do declare bankruptcy have all your discharge papers on hand to present to the lender and ensure you have two years of re-established your credit.
6. Mortgage Brokers can state income with lenders at the best discounted rates. But if you do not qualify with A lenders using stated income, then a broker will work with you to utilize a B Lender who are more lenient but may come with higher interest rates and applicable lending and broker fees.
7. Last but not least, if A or B lenders don’t fit, private financing can be looked at as an alternative option in order to get you into the market and offer a short-term solution to improve credit or top up your reporting income. Then you and your broker can refinance into an A or B lender at that time. Just keep in mind that private lending will have a higher rate associated with it , with lender and broker fees added on as well, if you choose to go with this option.

So, to all of our self-employed, hard-working, determined individuals, take heart! You can qualify for the mortgage you want, it just takes a little more planning to get everything in order. Keep in mind to that every lender has different guidelines as to how they view self-employment. Working with a Dominion Lending Centres broker leading up to your property purchase can help you ensure you get the mortgage you want.

Geoff Lee

Dominion Lending Centres – Accredited Mortgage Professional

Yup …. its almost tax time …. dont procrastinate …. be prepared ….. below from my DLC colleague is a good start to being prepared. Well said Kiki!

Are you behind on your CRA Taxes?

Nothing weighs heavy on one’s shoulders than owning a home and getting behind on your Canada Revenue taxes. Most banks will not be able to help you refinance your home to pay them off as CRA has first dibs on your house and assets. We have clients owing anywhere from $5,000- $300,000 in back taxes and have threatening letters from CRA that would keep anyone up at night.

There are options and strategies we can assist with financing your CRA debts:

1: We use alternative lenders that charge higher fees/rates for a 1-year term

2: Short term 2nd mortgage to pay off your CRA debts and then refinance back with your lender.

Find out who we can help with a no-obligation application. Let a Dominion Lending Centres mortgage professional get you back on track!

Some CRA notes on penalties for filing late:

The first time you file late you’ll pay:

• a late-filing penalty –5% of the amount of tax you owe, plus 1% for every month that your return is late, for up to 12 months. That adds up to a maximum of 17% of the tax you owe.
• interest – at the prescribed interest rate on the amount you owe, beginning on May 1. You’ll also be charged interest on any late-filing penalties. Interest is compounded daily, not monthly or annually. The prescribed interest rate can change every 3 months.
• If you miss the deadline again, the late-filing penalties are doubled. For example, if the CRA charged you late-filing penalties for any of the 3 previous years, you would pay a penalty of up to 50% made up of 10% of the taxes you owe, plus 2% of the taxes you owe for each full month that your return is late, to a maximum of 20 months.

Kiki Berg

Dominion Lending Centres – Accredited Mortgage Professional

Millennial’s please read this … you are the next biggest wave of Canada’s home buyers…… well said Karen !

A guide to your Home Buyers’ Plan

Start at the beginning…
Registered Retirement Savings Plan = one of the best ways to save for retirement and your down payment and continuing your education. With an RRSP, your contributions reduce your taxable income. This is different from your TFSA (Tax Free Savings Account) which does not reduce your taxable income, but it does give you the added benefit of tax-free withdrawals. What does that mean? Well, with the RRSP you get a tax deduction meaning money back to you!
This is different from your TFSA, Tax Free Savings Account which does not reduce your taxable income, but it does give you the added benefit of tax-free withdrawals. But, reality is the RRSP will have a lower tax rate in retirement.
Everyone can save for their RRSP with as little as $50 per paycheque or more, depending on your budget. You can also go to your bank, sometimes your broker and see about a line of credit, that would be essentially secured by the RRSP, so that you contribute as much as you can qualify for. With this option when you get your refund, put those funds toward the RRSP loan, DON’T use it for the get away we all deserve!
An RRSP line of credit based on a 5-year term at prime rate +/- would equate to about $10,000 in a refund, based on 40% tax margin. If you retire in 25 years you would have approximately $107,296 in your RRSP and that is based on an estimated 6% annual rate of return.
Did you know that you can use up to $25,000 from your Registered Retirement Savings Plan, for each applicant, towards your down payment and closing costs this is the Home Buyers’ Plan (HBP)?
Do you meet the RRSP withdrawal conditions?
• Resident of Canada at the time of withdrawal

• You cannot withdraw more than $25,000

• Only the person who is entitled to receive payments from the RRSP can withdraw funds from an RRSP. You can withdraw funds from more than one RRSP as long as you are the owner of each RRSP. Your RRSP issuer will not withhold tax on withdraw amounts of $25,000 or less.

• Normally, you will not be allowed to withdraw funds from a locked-in RRSP or a group RRSP.

• Your RRSP contributions must stay in the RRSP for at least 90 days before you can withdraw them under the HBP. If this is not the case, the contributions may not be deductible for any year.

• Neither you nor your spouse or common-law partner or the related person with a disability that you buy or build the qualifying home for can own the qualifying home more than 30 days before the withdrawal is made.

• You have to buy or build a qualifying home for yourself, for a related person with a disability, or to help a related person with a disability buy or build a qualifying home before October 1st of the year after the year of the withdrawal.

• You have to fill out Form T1036, Home Buyers’ Plan (HBP) Request to Withdraw Funds from an RRSP for each eligible withdrawal.

Under the HBP, the home must better fit the needs of the disabled person than his or her current home. You can withdraw funds from your RRSPs under the HBP to buy or build a home, if:

• you are a person with a disability;

• you are buying or building a home for a related person with a disability;

• you are helping a related person with a disability to buy or build a home.

Regardless of the situation, you are responsible for making sure that all applicable HBP conditions are met. If, at any time during your participation period, a condition is not met, your withdrawal will not be considered eligible and it will have to be included as income on your income tax and benefit return for the year it is received. Valuable information at your fingertips and from your broker.

Check for more information at Revenue Canada here. If you have any questions, contact a Dominion Lending Centres mortgage professional near you.

Karen Penner

Dominion Lending Centres – Accredited Mortgage Professional

Canadian Jobless Rate Fell To 40-Year Lows

Canada posted moderate employment gains as the unemployment rate dipped once again to historically low levels, which was the result of fewer people look for work. Despite very tight labour markets and rising job vacancy rates, wage growth weakened in October.

Statistics Canada released data today that showed a moderate 11.2k gain in employment, but also a falling labour force, which was down 18.2k. In consequence, the jobless rate fell back to 5.8% in October, matching a four-decade low. This is consistent with just under 2% economic growth as the Bank of Canada expects. This modest gain in employment suggests the Bank will hold interest rates steady in December, especially given that wage gains have slowed for the fifth consecutive month.

Continuing the see-saw pattern of late, full-time employment was in the driver’s seat, with 33.9k net positions added. Part-time work fell 22.6k. The overall gains were driven by the private sector (+20.3k) as public sector employment pulled back (-30.8k), leaving a 21.8k gain in self-employment.

These indicators are consistent with business surveys that are getting louder in their complaints that it’s difficult to find workers. But there is little evidence that firms are offering better pay to attract and retain employees. Wages were up 2.2% from a year ago, the slowest pace in more than a year and down from as high as 3.9% earlier this year. Wage gains for permanent workers were 1.9%, also the slowest in more than a year. This reduces the likelihood of a rate hike in December. The Bank of Canada’s wage common measure has been more stable at 2.3% so far this year. This is a better indicator of the underlying trend, but no doubt it’s still short of what we would expect at this point in the cycle.

Also, the participation rate fell to 65.2% last month, the lowest level in 20 years as the labour force increased by just 62.5k so far this year–one of the smallest 10-month gains in recent history. It is notable, however, that the participation rate for 25-54 year-olds–the core labour force–rose to a record high.

On a regional basis, employment rose slightly in Saskatchewan, while there was little change in all the other provinces (see table below).

More people were employed in business, building and other support services; wholesale and retail trade; and health care and social assistance. In contrast, there were fewer workers in “other services;” finance, insurance, real estate, rental and leasing; and natural resources. Employment in finance, insurance, real estate, rental and leasing declined by 15,000 in October, offsetting an increase the month before. On a year-over-year basis, employment in the industry was little changed as housing starts, and resales have slowed, especially in B.C. and Ontario.

Bottom Line: Income growth will be crucial in enabling households to manage debt loads in a rising rate environment and by extension a key determinant of the pace of future Bank of Canada interest rate hikes. Today’s jobs report along with other less timely data suggest the Bank of Canada will refrain from raising interest rates in December.

US Posted A Strong October Jobs Report

Hiring rebounded sharply last month in the US as non-farm payrolls added 250k new jobs, compared to 118k in September, which was restrained by disruption from Hurricane Florence. The unemployment rate held at its cycle-low 3.7%.

The closely watched measure of wage growth–average hourly earnings– rose 0.2% on the month. On a year-over-year basis, wages in the US were up 3.1%, a new post-recession high.

This is an unambiguously positive report. Hiring bounced back from a hurricane-dampened September. The number of Americans with jobs relative to the population reached a new post-recession high. And, perhaps most notably, wages continue to make progress.

With the Fed just having moved in September, we are not anticipating another hike at next week’s FOMC meeting as the central bank adheres to a gradual pace of tightening. However, our forecast does anticipate a 25-basis point increase at the next policy meeting in December followed by similar-sized hikes every quarter through next year. This results in the upper end of the fed funds rate range finishing 2019 at 3.50% compared to 2.25% currently.

Dr. Sherry Cooper

Chief Economist, Dominion Lending Centres

You got that right! No need to panic …… check out a great summary of our rates from my colleague….good read!

No need to panic after rate increase

You may have already seen the more technical BANK OF CANADA RATE ANNOUNCEMENT on October 24th, or you may not have. The Coles Notes (the simplest version) are as such:

• Global economy remains strong, the USMCA will reduce trading uncertainty
• Canadian economy is balanced for the foreseeable 2 years
• Household spending will increase, but backed by income growth
• Housing activity across Canada is stabilizing

On October 24th the Bank of Canada did what we all expected, they increased the Overnight lending rate by 0.25% to 1.75%. This equated to a PRIME being increased by 0.25% to 3.95%. All variable rate mortgages and lines of credit utilize PRIME to calculate the current interest rate.

Now the BIG QUESTION, how do we as mortgage consumers respond? First, ask your Dominion Lending Centres mortgage broker how they plan to react in accordance to his own financing.

No need to ask me, I will tell you. Variable, with no hesitation. I will stay the course by not pushing the panic button.

WHY?

Because if I decide to move, re-finance, consolidate, leverage equity or to simply break the mortgage for any reason my penalty will only be 3 months interest. I also need to consider how much money I have saved over the term by utilizing a variable rate mortgage rather than a fixed. During my current mortgage the spread between variable and fixed is approximately 1%.

Please excuse the following ‘tongue & cheek…’To go with a fixed mortgage tells me that you can predict the future with absolute certainty.

I know I can’t, so I rely on statistics. 65% of all fixed mortgage consumers will break their mortgage in 33 months, the penalty that follows is unavoidable. For the average B.C. mortgage of $350,000 the penalty is approximately $14,000. By opting for a fixed rate mortgage, you have declared to the universe that there is a zero percent chance you will need to access equity, amend the current mortgage or consider applying for a secured line of credit.

Real estate wealth is a long game, building net worth doesn’t happen overnight. Gains are not made in the short term. Just like other markets (stocks, bonds, mutuals, GICs RRSPs), there will be highs and lows.

What does this increase mean?

Dollarize it for your own personal consumption. For an increase of 0.25% the payment will go up $13 per every $100,000 borrowed. For some variable rate borrowers, the payment hasn’t even changed as the lender only adjusts the principal and interest allocation.

Now the question becomes, what do you do? Remain with variable or lock into a fixed. I recommend staying the course.

Michael Hallett

Dominion Lending Centres – Accredited Mortgage Professional

Many homeowners are vaguely aware of the fact that you can take out a second loan on your home. You hear your friends mention it or perhaps a family member close to you has gone through the process—but do you truly know what it means to take out a second mortgage? We have taken all the questions we get asked about second mortgages and compiled it into four key points.

A SECOND MORTGAGE IS BASED ON THE EQUITY IN YOUR HOME
The total loan amount that the second mortgage lender will offer you will depend on the equity that has been built up in your home. Second mortgages allow you to access up to 95% of the equity you have in your property. For instance:

House Value $850,000
95% LTV (maximum mortgage amount) $807,500.00
First Mortgage $550,000.00
Amount Available Through Second $257,500.00

INTEREST RATES WILL VARY AND BE HIGHER THAN YOUR FIRST MORTGAGE
This is because when a lender agrees to a second mortgage, they are taking a higher risk as he gets second priority in case of default. With that being said, we have options and solutions such as working with private lenders that can help you obtain a reduced rate and the right product for your mortgage situation. Typically, you can expect an interest rate of 6.95%-19.95% with lender and broker fees included.

YOUR PAYMENT CAN BE AS LOW AS INTEREST ONLY PAYMENTS
One of the advantages of selecting to use a second mortgage is the fact that the payments are attractive. You can pay interest only payments or you can also select to pay the interest plus the principle loan amount. You can work with your mortgage broker to discuss options and what would work best with your situation.

THERE ARE ADDITIONAL FEES TO CONSIDER
Since we want to have you understand ALL the fees associated, it is important to know that setting up a second mortgage will require you to pay: *note dollar amounts are approximations

An appraisal fee to assess the value of your home: $300
Legal fees to set it up: $2,000
Lenders & Broker fees: 1-5%

Second mortgages are a great option for many and may be a better solution than a refinance or a Home Equity Loan (HELOC). If you are interested in learning more or want to find out if a second mortgage is right for you, talk to your Dominion Lending Centres mortgage broker. We can guarantee they can guide you the process from start to finish!

Refinances, Renewals & Transfers

After you have purchased your new home, closed on your new mortgage, and are all moved in, what comes next?

Well, when it comes to your mortgage, the next step is to either refinance, renew, or transfer your mortgage. This decision can be made one month into your new mortgage or one month before your new mortgage is set to mature. Below is a break-down on what a refinance, renewal, and transfer mean.

Refinance
Refinances are when you decide to access the equity in your home. When your home rises in value, say $400,000 in 2016 to $500,000 in 2021, you can request your current lender, or a new lender, to pay you a portion of that increase in cash and they will in turn add that same portion to your mortgage for you to pay back- with interest.

There are many reasons to refinance; for home repairs, purchasing second properties, financial assistance with other outstanding loans or to have access to cash for larger purchases. It is only a refinance when you change the amount of your mortgage and borrow against the equity you have in your home.

Renewal
Renewals are quite straight forward. At the end of your mortgage term, your lender will offer you a renewal letter stating the remaining balance on your mortgage, what the remaining amortization is, and what interest rate options they can offer you.

The term can be 5-years for example, but most mortgages are on what’s called a 25-year amortization- the length of time it takes to pay off the entire mortgage. The 5-year term is just a length of time you are guaranteed a certain rate before you need to renew it. Renewals generally do not require any re-approval, documents, or applications as no new money is being added, the property is the same, and so is the lender. It is straight forward and allows you to continue paying your mortgage, just on a different interest rate.

Transfers
Transfers are a lot like renewals, the one difference is you are switching lenders. You are not adding more money, selling or buying a new home, everything is remaining the same except who you are paying interest to. One reason someone may want to transfer their mortgage from one lender to another is bad customer experience. Another could be to take advantage of a lower interest rate. Another reason could also be to take advantage of a lender’s product like a Home Equity Line of Credit or high pre-payment privileges.

Transfers are becoming more and more common as lenders are constantly looking to add clients and customers to their brand, being able to take advantage of interest payments as well as offer other products.

If your mortgage is up for renewal or you have been thinking about what kind of options may be available to you with your current mortgage, please reach out to a Dominion Lending Centres mortgage professional to discuss the different choices you have.

Exciting news from CMHC for all my self employed friends. Great article below from one of my DLC Colleagues, check it out

CMHC Changes to Assist Self-Employed Borrowers

As a self-employed person myself, I was happy to hear that CMHC is willing to make some changes that will make it easier for us to qualify for a mortgage.
In an announcement on July 19, 2018, the CMHC has said “Self-employed Canadians represent a significant part of the Canadian workforce. These policy changes respond to that reality by making it easier for self-employed borrowers to obtain CMHC mortgage loan insurance and benefit from competitive interest rates.” — Romy Bowers, Chief Commercial Officer, Canada Mortgage and Housing Corporation. These policy changes are to take effect Oct. 1, 2018.

Traditionally self-employed borrowers will write as many expenses as they can to minimize the income tax they pay each year. While this is a good tax-saving technique it means that often a realistic annual income can not be established high enough to meet mortgage qualification guidelines.
Plain speak, we don’t look good on paper.

Normally CMHC wants to see two years established business history to be able to determine an average income. But the agency said it will now make allowances for people who acquire existing businesses, can demonstrate sufficient cash reserves, who will be expecting predictable earnings and have previous training and education.
Take for example a borrower that has been an interior designer with a firm for the past eight years and in the same industry for the past 30 years, but just struck out on his own last year. His main work contract is with the firm he used to work for, but now he has the ability to pick up additional contracts from the industry in which he has vast connections.
Where previously he would have had to entertain a mortgage with an interest rate at least 1% higher than the best on the market and have to pay a fee, now he would be able to meet insurance requirements and get preferred rates.

The other change that CMHC has made is to allow for more flexible documentation of income and the ability to look at Statements of Business Professional Activity from a sole-proprietor’s income tax submission to support Add Backs of certain write-offs to support a grossing-up of income. Basically, recognizing that many write-offs are simply for tax-saving purposes and are not a reduction of actual income. This could mean a significant increase in income and buying power.

It is refreshing after years of government claw-backs and conservative policy changes to finally see the swing back in the other direction. Self-employed Canadians have taken on the burden of an often fluctuating income and responsible income tax management all for the ability to work for themselves. These measures will help them with the reward of being able to own their own home as well.

Exciting reassuring news from DLC’s very own Chief Economist, Dr Sherry Cooper. Wow this lady is smart!

First Monthly Canadian Home Sales Gain This Year In June

National home sales rose by 4.1% in June compared to May, the first such rise this year. Even so, June’s sales activity remains well below the monthly pace of the past five years (see chart). The sales gains were led by the Greater Toronto Area (GTA) as 60% of all local housing markets reported increased existing home sales.

According to the Toronto Real Estate Board, sales were up 17.6% in the GTA on a seasonally adjusted basis between May and June.

In contrast, sales in British Columbia continued to moderate. The Real Estate Board of Greater Vancouver reported a 14.4% decline in home sales last month compared to the month before. June’s sales for the GVA were 28.7% below the 10-year June sales average. On a year-over-year (y/y) basis, sales declined a whopping 37.7%.

National home sales activity declined almost 11% y/y. Annual sales hit a five-year low and stood nearly 7% below the 10-year average for June. Activity came in below year-ago levels in about two-thirds of all local markets, led overwhelmingly by those in the Lower Mainland of British Columbia.

“This year’s new stress-test on mortgage applicants has been weighing on homes sales activity; however, the increase in June suggests its impact may be starting to lift,” said CREA President Barb Sukkau. “The extent to which the stress-test continues to sideline home buyers varies by housing market and price range.”

B.C. was hit with a double whammy as the province raised the foreign purchase tax as well. Also, mortgage rates have risen increasing the burden of the new stress tests.

Looking ahead, home sales and price gains will likely be dampened by higher interest rates as the Bank of Canada just hiked the benchmark rate once more last week. The prime rate rose from 3.45% to 3.70% in the wake of the rate hike, while the posted 5-year fixed mortgage rate–the critical stress-test yield–remained steady at 5.34%. Nevertheless, more upward pressure on mortgage rates is likely over the next couple of years as economic activity bumps up against capacity limits and inflation edges upward. The Bank made it very clear that further interest rate hikes are on the way but reiterated that it will be taking a gradual approach to future increases, guided by incoming economic data and a recognition that the economy is more sensitive to interest rate movements now than it was in the past.

New Listings

The number of newly listed homes fell in June by 1.8% and also remained below levels for the month in recent years. New listings declined in a number of large urban markets including those in B.C.’s Lower Mainland, Calgary Edmonton, Ottawa and Montreal.

With new listings up and sales virtually unchanged, the national sales-to-new listings ratio eased to 50.6% in May compared to 53.2% in April and stayed within short reach of the long-term average of 53.4%. Based on a comparison of the sales-to-new listings ratio with its long-term average, about two-thirds of all local markets were in balanced market territory in May 2018.

There were 5.7 months of inventory on a national basis at the end of May 2018. While this marks a three-year high for the measure, it remains near the long-term average of 5.2 months.

Home Prices

On a national basis, the Aggregate Composite MLS Home Price Index (HPI) rose only 0.9% y/y in June 2018, marking the 14th consecutive month of decelerating y/y gains. It was also the smallest annual increase since September 2009.

Decelerating y/y home price gains have reflected mainly trends at play in Greater Golden Horseshoe (GGH) housing markets tracked by the index. Home prices in the region have begun to stabilize and trend higher on a month-over-month basis in recent months.

Condo apartment units again posted the most substantial y/y price gains in June (+11.3%), followed by townhouse/row units (+4.9%); However, price gains for these homes have decelerated this year. By contrast, one-storey and two-storey single-family home prices were again down in June (-1.8% and -4.1% y/y respectively).

Benchmark home prices in June were up from year-ago levels in 8 of the 15 markets tracked by the index (see Table below).

Home price growth is moderating in the Lower Mainland of British Columbia (Greater Vancouver Area: +9.5% y/y; Fraser Valley: (+18.4%), Victoria (+10.6%) and elsewhere on Vancouver Island (+16.5%).

Within the GGH region, price gains have slowed considerably on a y/y basis but remain above year-ago levels in Guelph (+3.5%). By contrast, home prices in the GTA, Oakville-Milton and Barrie were down from where they stood one year earlier (GTA: -4.8%; Oakville-Milton: -2.9%; Barrie and District: -6.5%). The declines reflect rapid price growth recorded one year ago and masks recent month-over-month price gains in these markets.

Calgary and Edmonton benchmark home prices were down slightly on a y/y basis (Calgary: -1.0%; Edmonton: -1.5%), while prices declines in Regina and Saskatoon were comparatively more substantial (-6.1% and -2.9%, respectively).

Benchmark home prices rose by 7.9% y/y in Ottawa (led by a 9.1% increase in two-storey single-family home prices), by 6.4% in Greater Montreal (driven by a 7.4% increase in townhouse/row unit prices) and by 6% in Greater Moncton (led by a 6.5% increase in one-storey single-family home prices).

The actual (not seasonally adjusted) national average price for homes sold in June 2018 was just under $496,000, down 1.3% from one year earlier. While this marked the fifth month in a row in which the national average price was down on a y/y basis, it was the smallest decline among them.

The national average price is heavily skewed by sales in the Greater Vancouver and GTA, two of Canada’s most active and expensive markets. Excluding these two markets from calculations cuts almost $107,000 from the national average price, trimming it to just over $389,000.

Bottom Line

Housing markets continue to adjust to regulatory and government tightening as well as to higher mortgage rates. The speculative frenzy has cooled, and multiple bidding situations are no longer commonplace in Toronto and surrounding areas. The housing markets in the GGH appear to have bottomed, and supply constraints may well stem the decline in home prices in coming months. The slowdown in housing markets in the Lower Mainland of B.C. accelerated last month as the sector continues to reverberate from provincial actions to dampen activity, as well as the broader regulatory changes and higher interest rates.

Five-year fixed mortgage rates have already risen roughly 110 basis points, while rates for new variable mortgages rose by close to 40 basis points. Since the implementation of new mortgage standards, nonprice lending conditions for mortgages and home equity lines of credit have also tightened. Additional rate hikes by the Bank of Canada are coming, although the Bank will remain cautious particularly in light of continued trade tensions with the United States.

Dr. Sherry Cooper

Chief Economist, Dominion Lending Centres
Sherry is an award-winning authority on finance and economics with over 30 years of bringing economic insights and clarity to Canadians.