First let me be the first to say welcome to Canada. We are pretty darn proud of this amazing country and we know you will love it too.

Now that you have successfully navigated the immigration process, your thoughts have likely turned to owning your own home.  The mortgage lenders and insurers have come up with a few way to help you do this as soon as possible.  That being said, it is a special program so there are a few things you should know.

Borrower qualifications for all New to Canada programs

· You must have immigrated or relocated to Canada within the last 60 months. 

· 3 months minimum full time employment in Canada

· You must have a valid work permit or obtained landed immigrant status

· A full 5% of the down payment must come from your own resources

· All your debts outside of Canada will be included in your affordability ratios.  Including any mortgages

· We cannot use a guarantor

· You must pay Canadian taxes

Documentation requirements for all New to Canada applications

· Valid work permit or verification of landed immigrant status

· Income verification

· Down payment verification

· Purchase and sale agreement

With 10% or more down

· Letter of reference from a recognized financial institution  OR

· Or 6 months of bank statements from your primary account

With less than 10% down

· International credit report demonstrating a strong history

· 2 alternative sources of credit demonstrating timely payments, such as:

· A letter from your landlord after 12 months stating you have never been late

· 12 month history of another alternative source such as your insurance, utilities or cell phone.

Mortgage Insurance and other costs

1. Here in Canada, our mortgage lenders are willing to proceed with mortgage financing to people who have less than 20% down.  All of these mortgages must be insured through the insurers and this is a cost that you will have to pay.  It is added onto your mortgage loan so it is not an upfront expense.

2. Legal Fees –  Up to $2000

3. Title Insurance – $249+taxes

4. Appraisal Fees- $350

5. Property Taxes owing to the current owner – will be calculated by your lawyer

Given the more stringent guidelines for the New to Canada borrower, I would highly recommend that you start the process well in advance.  A letter from a bank in another country can take up to 3 weeks to arrive if their regulations do not allow it to be faxed or emailed.  Or maybe you are here ahead of your spouse?  In that case we may be required to obtain spousal consent which is legally prepared.  Again the delay can be lengthy.   

The CMHC website offers information in a variety of languages on all of this information to help you understand your rights and obligations and as always a qualified mortgage professional is invaluable to help you navigate the tricky world of Canadian mortgages.

Dominion Lending Centres Chief Economist Dr. Sherry Cooper Cautiously Optimistic After Bank of Canada’s April Rate Policy Announcement

April 15th 2015

Vancouver, BC – Following today’s Bank of Canada’s announcement that it will hold overnight rates steady at 0.75%, Dominion Lending Centres’ Chief Economist, Dr. Sherry Cooper, says the outlook is unclear for the Canadian economy and the prospects for a potential rebound in the second half of 2015 are still uncertain.

The Canadian economy has experienced a substantial slowdown in recent months due to drops in the price of oil, and Dr. Cooper expects that any changes to the nation’s economic performance will likely be a result of an improvement in non-energy sectors emanating from the weakness in the Canadian dollar.

“While March employment in Canada improved substantially, business investment remains disappointing,” added Dr. Cooper. “The Bank of Canada has suggested that we will see a transition towards positive growth in exports and capital spending by non-energy producers—both boosted by the depreciating Canadian dollar, but in the near-term, incoming data will likely confirm continued weakness in the manufacturing sector, particularly in autos, and only modest growth in retail sales.”

Dr. Cooper reiterated her confidence in the Bank of Canada’s monetary policy strategyfor 2015, despite the current weakened status of the Canadian economy: “I am cautiously optimistic that the Bank has got it right, but I continue to believe that the risks are on the downside for the economy and inflation.  My forecast for Canadian growth this year is 1.5 percent–below the Bank’s 1.9 percent forecast. Much hinges on the U.S. economy.”

For more information visit www.dominionlending.ca

About Dominion Lending Centres: Dominion Lending Centres is Canada’s #1 national mortgage company with more than 2,300 Mortgage Professionals spanning the country. Launched in January 2006, DLC quickly grew to fund more than $14 billion in mortgage volume in 2013 – the largest origination volume of any Canadian brokerage. DLC continues to be recognized by PROFIT Magazine as one of Canada’s Fastest-Growing Companies – making the PROFIT HOT 50 list of Emerging Growth Companies (2009 & 2010), PROFIT 200 (2012) and PROFIT 500 (2013 & 2014). DLC and our agents are recognized annually at the CMP Canadian Mortgage Awards – the Oscars of the Canadian mortgage brokering landscape.

About Dr. Sherry Cooper: Dr. Sherry Cooper took the position of Chief Economist, for Dominion Lending Centres in early 2014. Prior to joining DLC, Dr. Cooper was the Chief Economist with one of Canada’s largest financial institutions and is well versed in the mortgage sector. Dr. Cooper has an M.A. and Ph.D. in Economics from the University of Pittsburgh. She began her career at the United States Federal Reserve Board in Washington, D.C. where she worked very closely with then-Chairman, Paul Volcker, a relationship she maintains today. After five years at the Federal Reserve, she joined the Federal National Mortgage Association as Director of Financial Economics.

Article Source: Dave Teixeira Director, Public Relations & Communications

There is a constant bombardment by the media about all things financial.  The sky is either falling or everything is hunky dory.   You want to be a savvy consumer when it comes to your finances but it can be challenging to decipher all of the terms and conditions.  This week I am going to present you with the recipe for the perfect mortgage.

Add 2 parts Interest Rate –

Your payments are directly related to the interest rate you accept. 

$300,000 at 2.69% (5 Year Fixed) =$1372.45 /month and $254,878.62 upon renewal

$300,000 at 3.24% (5 Year Fixed) = $1456.94/month and $257,595.13 upon renewal

A little leg work can save you $84.49 a month which adds up to $5069.40 over the 5 years AND you will owe $2,716.51 less on renewal.  

Let’s take a minute and focus shall we?  I have heard the average consumer would rather get a root canal than renegotiate their mortgage to which I reply, really?   If we as consumers are willing to visit 3 stores to save $100 on a television then it only stands to reason that we would happily go through the mortgage process to save $7785.91. 

We can even set it up so that $84.49 a month that you will save could go directly into a High Interest Savings Account and make the magic of compound interest work for you.

Add 2 parts Best Mortgage Terms

All mortgages are NOT created equal.  This is nothing but the truth and once you sign the contract you have bound yourself to the terms as outlined.  But knowing what you should be looking out for can be tricky so let’s take a quick look.

1. Collateral Mortgage – Basically this is where the lender will register the full amount of your property value as compared to just the amount of your mortgage against the title.

* The benefit is that if you would like to borrow more against your current home down the road you can do so without needing a lawyer to register the new amount.

*The downside is that your bank is now able to tie any other borrowing you do with them to your mortgage meaning that when you go to sell, your equity can be used to pay out all debt obligations to them.  The other potential issue is that this type of a mortgage is not easily transferrable which may leave you in a position of having to accept a renewal offer which is higher than you may otherwise find in the market

* The easiest solution is to keep your mortgage with a different lender which sidesteps the tied lending issue or decline the offer to accept the collateral mortgage in the first place.

1. Prepayment Privileges – Make sure your prepayment benefits match your intentions.  If you are not likely to prepay on your mortgage then you may want to accept a product which offers a lower interest rate in exchange for a decreased pre-payment privilege.  If however you plan to be aggressive with your mortgage re-payment then make sure the terms are in your favor
2. Penalty – There is no set standard in Canada as to how the penalties are calculated if you break your mortgage contract early.   The onus is on you to ask questions about your lender’s calculation until you understand.  

The other thing to watch out for is that certain lenders will offer ridiculously low rates but will assess an additional fee on top of the penalty if you break the contract early

1. Portability – This is the ability to take your mortgage with you from property to property and avoid the penalty all together.

*Will your lender lend everywhere? Do they have property type restrictions?

For example if your dream is to own an acreage and to keep your costs in line you plan to start in a manufactured home you really should make sure the lender you are signing with likes this type of a property.

So there you have it.  The recipe for the perfect mortgage in bite size pieces.  As always contacting a mortgage professional is really the best strategy to avoid the pitfalls and perils of the mortgage world.  Have a great week!

So if you are considering building a home this year you may want to familiarize yourself with the differences between a draw mortgage and a completion mortgage.  You will discover very quickly once you start discussing terms with our area’s talented home builders that you need to understand what you are getting yourself into.

Let’s start with the completion mortgage.

In this case the builder builds the home and will not expect any funds until you take possession of the home or upon completion.  The process look like this, you choose your builder, lot and floor plan and head to your friendly neighborhood mortgage professional to get a mortgage in place to meet your condition of financing.  The lenders will verify your information and sign off on the application so that you can start to build. 

The upside of this type of mortgage is that as long as you stay within the lender’s guidelines as far as affordability you will be able to add your upgrades to the mortgage.   You will also not be required to pay a cent, except for the required deposits of course, until you take possession of the home.  But wait!!  What you really need to know is that the lender will require more information from you 30 days prior to possession.  They are going to want to see an updated pay stub as well as a new credit bureau.  If your financial picture has made a change for the worse then you may no longer qualify for your purchase.  Given the often long stretch of time between the application and the possession you will have to be diligent in ensuring your credit stays the same.  Any change you are considering making should be discussed with your mortgage professional first.  Switching to a new job or buying a new car could very well be very detrimental.

And now we take a look at the draw mortgage.

                The first part of the process is exactly the same of course.  You choose your lot and home and get the mortgage approved so that the builder can get to work.

                This type of mortgage is often preferred by home builders.  They are able to draw down the funds at predetermined stages of the home.  The upside to the builder with this product is that they can manage the cash flow for their business.  An inspector of the bank goes out to the site once the request for the money is made to determine the work is complete as expected after which the funds are released to the lawyer and then to the builder.

                There are costs associated with a draw mortgage. 

1. Inspection fees – Each inspection costs around $115 give or take and that cost is often passed onto the purchaser by the bank
2. Interest Payments – Some lenders will require you to make interest only payments during the build.  That means you could be making a payment on the new mortgage along the way as well as continuing to pay your current rent or mortgage.

You should also know that you will be unable to add the cost of any upgrades to this mortgage.  After the first advance the loan is considered to be set in stone so you will have to come up with the cash or another way of paying. 

So there you have it in a nutshell, the difference between a draw and a completion mortgage.  Until the next time my friends.  Have a great week.

I wanted to share a little video which shares some more information about Dominion Lending Centres and explains how I can help you with your mortgage questions as a Mortgage Broker for Lloydminster, Alberta and Saskatchewan areas. I hope you enjoy the video!

Val Thibault