who doesn’t love summer in beautiful Vancouver …. or anywhere in Canada really …. why not take this enjoyment to a new level and spruce up the home with some summer reno plans. Check out the below for some great tips

Remodeling Your Home This Summer

With most of the summer still ahead, it seems like the best time for rest and relaxation. Or… it could mean the perfect opportunity to make those changes around the house that they have been waiting to do since the Spring!

A renovation or remodel on your home could mean excellent returns on your investment. We’ve all seen the TV shows, like Fixer Upper or Love It or List It on HGTV, that demonstrate just how far a fresh coat of paint and decluttering can go to help raise the value of your home when trying to sell it. Sometimes a renovation budget can be as easy as a can of paint but there are other times that you need to add an extra bathroom or bedroom which cost substantially more.

Whatever the reason for your renovation, the question remains: how do everyday people get the money for these fixer-upper projects?

CASH OR CREDIT

For renovations under $5,000, you could probably pay cash or with your credit card. Saving up for these smaller renovation projects can prove very lucrative over the long term, especially if you want to make your everyday living experience a little more comfortable and/or are trying to increase your property value. As we’ve seen on the home renovation shows, the money that is invested in the renovations is likely going to see returns when selling a home.

For projects over $5,000, the projects are more elaborate and may or may not see the types of returns the smaller upgrades can. (Here’s an article with examples of renos that add value, and those that don’t.) However, they mean a lot for your living conditions. When considering these larger projects, there are a number of ways you could find the means to pay for them.

PERSONAL LOANS

The banks will likely suggest a Personal Line of Credit for these types of projects, however, you could also apply for a personal loan from the bank. The personal loan usually has a lower interest and can be paid off through regular payments in a few years. The line of credit may be better suited for ongoing or long-term projects, where you can access funds as you need them, and pay interest only on the amount used.

SECURED LINE OF CREDIT & HOME EQUITY LOANS

A secured line of credit is another option for bigger renovation projects. To secure one, you will likely need a credit score at or above 700 and have a good history of repaying debts in a timely fashion. They offer the advantages of regular lines of credit and loans, plus they often come with preferred interest rates. Since they will likely be secured by your home’s equity, they will require some set-up costs, such as legal fees.

For seniors looking to make adjustments to their home, they can apply for SHARP, the Seniors Home Adaptation and Repair Program. It provides low-interest home equity loans to help seniors with the necessary repairs, adaptations and renovations to their homes, up to a maximum loan of $40,000. In order to qualify, seniors need to have an annual total income of $75,000 (or less) and a minimum of 25% home equity in their primary residence.

MORTGAGE REFINANCING

Refinancing your mortgage may offer some advantages when looking to complete larger-scale renovations to your home. With mortgage interest rates still relatively low, much lower than those on a credit card or loan, refinancing may be an advantageous option. When refinancing, you will likely receive a lower mortgage rate that reduces the overall cost of the loan, ultimately resulting in savings. Refinancing at a lower rate could allow a homeowner to “cash out” with enough funds for the planned home repairs – without an increase in mortgage payments. The additional funds for the renovation are added to the total mortgage and spread out over a longer period of time.

RENOVATING A NEW HOME PURCHASE

If your planned renovations are for a new home you’re thinking about buying, you can also add that cost to your mortgage. If the price of the home (or condo) is $250,000, you can add the $10,000 (for example) renovation budget and secure the mortgage for $260,000, with the same amortization rate. This results in a lower interest rate, compared to a credit card or loan, and allows you to spread repayment over a longer period of time.

GRANTS & REBATES

In good Canadian fashion, the federal, provincial and municipal governments along with local utilities offer grants and rebates for energy-saving renovations. For example, CMHC Green Home offers a premium refund of up to 25%. You may be eligible if you buy, build or renovate for energy efficiency using CMHC-insured financing. Below is a list of other available financial options to help with your environmentally friendly home improvements.

CMHC Green Home premium refund
Environmental incentives (Alberta)
ENERGY STAR® rebates and incentives
Energy Efficiency Alberta (Home Improvement Rebates)

REMEMBER!

Whenever you decide to embark on a renovation project, remember to set money aside for any unexpected costs that may come up. By having this buffer, you are able to adjust your plans without renegotiating your finances or having to reapply for new funds.

Also, every homeowner’s financial needs are unique, so it’s best to meet a qualified professional to explore your options. For help with finding some financial options for your next renovation project, contact a Dominion Lending Centres mortgage professional near you.

Max Omar

Dominion Lending Centres – Accredited Mortgage Professional

another great post from my DLC friends …. also take note in BC there are new rules that apply to realtors about open houses and who they can represent. Love the safety comments below. Lets all be successful and safe out there

5 Reasons why every realtor needs a mortgage broker at their open houses

Realtor Safety – While we do not have the safety issues that realtors experience south of the border, there have been incidents involving female realtors being assaulted or feeling uncomfortable being alone with strangers walking around the house.

Property Safety – Did you know that when a realtor is holding an open house they are liable for any losses or damage to the property? It’s pretty easy to have one person distract the agent upstairs while their partner runs off with the flat screen TV or the silverware. Another person in the property discourages theft and can make the realtor feel safer.

Snagging new clients – sometimes people show up at open houses without any preparation. They may like a home but they have no idea whether they could afford it. Enter the mortgage broker- by being on the premises you can quickly pre-approve these prospective buyers giving the realtor an opportunity for a quick sale and to double end the deal.

Third Party Feedback – sometimes visitors are reluctant to say anything negative about a property to a realtor but are more open with their financial partner. The realtor can benefit from both the mortgage broker’s opinion and anything that they hear from visitors.

Programs that can help sell a home – some municipalities offer subsidized down payments for first time home buyers, others offer tax incentives . If a prospective buyer comments on the worn carpeting or the lack of a garage, it’s a good time for the mortgage broker to mention Purchase Plus Improvements programs available. The realtor may be aware of the programs but unaware of the program rules. The realtor will be really happy to have a mortgage broker find a solution to one sales objection and help them sell the house.

David Cooke

Dominion Lending Centres – Accredited Mortgage Professional

Check out this great post from one of my DLC colleagues….good news for sure!

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.

Kristin Woolard

Dominion Lending Centres – Accredited Mortgage Professional

As part of the review of its mortgage loan insurance business, CMHC is discontinuing its Second Home and Self-Employed Without 3rd Party Income Validation mortgage insurance products effective May 30, 2014. Self-employed Canadians can still qualify for CMHC insured financing through CMHC homeowner products with a validation of their income using traditional methods.

CMHC Second Home and Self-Employed Without 3^rd Party Income Validation will remain available for new mortgage loan insurance requests submitted to CMHC before May 30, 2014, regardless of the closing date of the home purchase. As is normal practice, complete borrower and property details must be submitted by a lender to CMHC when requesting mortgage loan insurance.

For the majority of self-employed borrowers, income validation is readily available. To validate their income, self-employed borrowers can provide copies of their Notice of Assessment, audited financial statements or unaudited financial statements prepared by an independent third party, for the previous two year period.

The Week in Economic and Real Estate News

Recently we learned that Canada’s two private mortgage insurers, Genworth and Canada Guarantee, will not match the changes CMHC announced to its product line-up the week before. But they will each modify their Second Home products by restricting eligible properties to one unit.

The Vancouver and Calgary real estate boards reported April results last week. Volumes in Vancouver were well up from a year ago as conditions there approach a seller’s market. In Calgary, new listings grew enough to provide some relief to tight market conditions and prices were up about 10% from a year ago. 

According to US Department of Labour statistics released last week, The American economy increased its pace of job creation in April, pushing the unemployment rate to 6.3%, its lowest level in more than five years. More than 200,000 new jobs have been created in the US for three consecutive months. 

The benchmark government of Canada five year bond yield ended the week at 1.63%, down from 1.67% the previous week. A month ago, it was 1.75%.